FLYE 10-Q
Fly-E Group, Inc. (FLYE)
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM
For the quarterly period ended
OR
For the transition period from ______to _______
Commission file number
(Exact name of registrant as specified in its charter)
| (State or other jurisdiction of incorporation or organization) | (I.R.S. Employer Identification No.) | |
| | ||
| (Address of principal executive offices) | (Zip Code) |
Registrant’s telephone number, including
area code:
Securities registered pursuant to Section 12(b) of the Act:
| Title of each class | Trading Symbol(s) | Name of each exchange on which registered | ||
Indicate by check mark whether
the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the
preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days.
Indicate by check mark whether
the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T
(§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit
such files).
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
| Large accelerated filer | ☐ | Accelerated filer | ☐ | |
| ☒ | Smaller reporting company | |||
| Emerging growth company |
If an emerging growth company,
indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial
accounting standards provided pursuant to Section 13(a) of the Exchange Act.
Indicate by check mark whether
the registrant is a shell company (as defined in Rule 12b-2 of the Act) Yes ☐ No
As of December 18, 2025, there
were
INDEX
i
CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS
This Quarterly Report on Form 10-Q (the “Report”) contains “forward-looking statements” within the meaning of Section 27A of the Securities Act, as amended (the “Securities Act”), Section 21E of the Exchange Act, as amended (the “Exchange Act”), and the Private Securities Litigation Reform Act of 1995. Forward-looking statements may be preceded by, or contain, words such as “may,” “will,” “expect,” “anticipate,” “intend,” “plan,” “believe,” “estimate,” “predict,” “potential,” “might,” “could,” “would,” “should” or other words indicating future results, though not all forward-looking statements necessarily contain these identifying words. All statements other than statements of historical fact are statements that could be deemed forward-looking statements, including, without limitation, statements about our future business operations and results, our strategy and competition. These statements represent our current expectations or beliefs concerning various future events and involve numerous risks and uncertainties that could cause actual results to differ materially from expectations, including, but not limited to:
| ● | our ability to obtain additional funding to market our vehicles and develop new products; |
| ● | our ability to produce our vehicles with sufficient volume and quality to satisfy customers; |
| ● | the inability of our principal vendors to deliver the necessary components for our vehicles at prices and volumes acceptable to us; |
| ● | our principal vendors failing to perform quality control on our products; |
| ● | the inability to obtain sufficient intellectual property protection for our brand and technologies; |
| ● | our vehicles failing to perform as expected; |
| ● | our facing product warranty claims or product recalls; |
| ● | our facing adverse determinations in significant product liability claims; |
| ● | customers not adopting electric vehicles; |
| ● | the development of alternative technology that adversely affects our business; |
| ● | increased government regulation of our industry; |
| ● | the risk of losing cash balances exceeding insurance limits held at banks; | |
| ● | our ability to grow the rental services; | |
| ● | our ability to continue as a going concern; | |
| ● | our ability to maintain compliance with the continued listing standards of the Nasdaq Capital Market (“Nasdaq”); | |
| ● | the changes or developments with respect to domestic and international customs, tariffs, and trade policies, corresponding or retaliatory actions by other countries and related uncertainties; | |
| ● | tariffs and currency exchange rates; and | |
| ● | the other risks and uncertainties discussed under the section titled “Risk Factors” beginning on page 56 of this Report and our other filings with the Securities and Exchange Commission (the “SEC”). |
Although we believe that the expectations reflected in the forward-looking statements are reasonable, we cannot guarantee future results, levels of activity, performance, or achievements. We undertake no obligation to update or revise any of the forward-looking statements, whether as a result of new information, future events or otherwise, except as required by law. In light of these risks, uncertainties and assumptions, the forward-looking events discussed or incorporated by reference in this Report may not occur.
You should read this Report with the understanding that our actual future results may be materially different from what we expect. We qualify all of the forward-looking statements in this Report by these cautionary statements.
ii
PART I - FINANCIAL INFORMATION
Item 1. Financial Statements
FLY-E GROUP, INC.
UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS
(Expressed in U.S. dollars, except for the number of shares)
| September 30, 2025 | March 31, 2025 | |||||||
| ASSETS | ||||||||
| Current Assets | ||||||||
| Cash | $ | $ | ||||||
| Accounts receivable, net | ||||||||
| Accounts receivable, net – a related party | ||||||||
| Inventories, net | ||||||||
| Prepayments and other receivables | ||||||||
| Prepayments and other receivables – related parties | ||||||||
| Assets held for sale | ||||||||
| Total Current Assets | ||||||||
| Property and equipment, net | ||||||||
| Security deposits | ||||||||
| Deferred tax assets, net | ||||||||
| Operating lease right-of-use assets | ||||||||
| Intangible assets, net | ||||||||
| Long-term prepayment for software development – a related party | ||||||||
| Total Assets | $ | $ | ||||||
| LIABILITIES AND STOCKHOLDERS’ EQUITY | ||||||||
| Current Liabilities | ||||||||
| Accounts payable | $ | $ | ||||||
| Short-term loan payables | ||||||||
| Current portion of long-term loan payables | ||||||||
| Accrued expenses and other payables | ||||||||
| Accrued expenses and other payables – related parties | ||||||||
| Operating lease liabilities – current | ||||||||
| Liabilities held for sale | ||||||||
| Total Current Liabilities | ||||||||
| Long-term loan payables | ||||||||
| Operating lease liabilities – non-current | ||||||||
| Total Liabilities | ||||||||
| Commitment and Contingencies | ||||||||
| Stockholders’ Equity | ||||||||
| Preferred stock, $ | ||||||||
| Common stock, $ | ||||||||
| Additional paid-in capital | ||||||||
| Shares subscription receivable | ( | ) | ( | ) | ||||
| Accumulated deficit | ( | ) | ( | ) | ||||
| Accumulated other comprehensive loss | ( | ) | ( | ) | ||||
| Total FLY-E Group, Inc. Stockholders’ Equity | ||||||||
| Total Liabilities and Stockholders’ Equity | $ | $ | ||||||
| * |
The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.
1
FLY-E GROUP, INC.
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND
COMPREHENSIVE LOSS
(Expressed in U.S. dollars, except for the number of shares)
| For the Three Months Ended September 30, | For the Six Months Ended September 30, | |||||||||||||||
| 2025 | 2024 | 2025 | 2024 | |||||||||||||
| Revenues | $ | $ | $ | $ | ||||||||||||
| Cost of Revenues | ||||||||||||||||
| Gross Profit | ||||||||||||||||
| Operating Expenses | ||||||||||||||||
| Selling Expenses | ||||||||||||||||
| General and Administrative Expenses | ||||||||||||||||
| Total Operating Expenses | ||||||||||||||||
| Loss from Operations | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||
| Other Expenses, net | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||
| Interest Expenses, net | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||
| Loss Before Income Taxes | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||
| Income Tax (Expense) Benefit | ( | ) | ||||||||||||||
| Net Loss | $ | ( | ) | $ | ( | ) | $ | ( | ) | $ | ( | ) | ||||
| Other Comprehensive (Loss) Income | ||||||||||||||||
| Foreign currency translation adjustment | ( | ) | ( | ) | ||||||||||||
| Total Comprehensive Loss | $ | ( | ) | $ | ( | ) | $ | ( | ) | $ | ( | ) | ||||
| Losses per Share* | $ | ( | ) | $ | ( | ) | $ | ( | ) | $ | ( | ) | ||||
| Weighted Average Number of Common Stock | ||||||||||||||||
| – Basic and Diluted* | ||||||||||||||||
| * |
The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.
2
FLY-E GROUP, INC.
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN
STOCKHOLDERS’ EQUITY
(Expressed in U.S. dollars, except for the number of shares)
| Preferred Stock | Common Stock | Additional Paid-in | Shares Subscription | Accumulated Comprehensive | Accumulated | Total Stockholders’ | ||||||||||||||||||||||||||||||
| Shares* | Amount | Shares* | Amount | Capital | Receivables | Loss | Deficit | Equity | ||||||||||||||||||||||||||||
| Balance at March 31, 2025 | $ | $ | $ | $ | ( | ) | $ | ( | ) | $ | ( | ) | $ | |||||||||||||||||||||||
| Net loss | — | — | ( | ) | ( | ) | ||||||||||||||||||||||||||||||
| Issuance of common stock upon registered direct offering, net | ||||||||||||||||||||||||||||||||||||
| Foreign currency translation adjustment | — | — | ||||||||||||||||||||||||||||||||||
| Balance at June 30, 2025 | $ | $ | $ | $ | ( | ) | $ | ( | ) | $ | ( | ) | $ | |||||||||||||||||||||||
| Balance at June 30, 2025 | $ | $ | $ | $ | ( | ) | $ | ( | ) | $ | ( | ) | $ | |||||||||||||||||||||||
| Net loss | — | — | ( | ) | ( | ) | ||||||||||||||||||||||||||||||
| Issuance of common stock upon private placement offering, net | ( | ) | ||||||||||||||||||||||||||||||||||
| Exercise of warrants | ( | ) | ||||||||||||||||||||||||||||||||||
| Round up of shares for reverse stock split | ( | ) | ||||||||||||||||||||||||||||||||||
| Foreign currency translation adjustment | — | — | ( | ) | ( | ) | ||||||||||||||||||||||||||||||
| Balance at September 30, 2025 | $ | $ | $ | $ | ( | ) | $ | ( | ) | $ | ( | ) | $ | |||||||||||||||||||||||
| * |
The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.
3
| Preferred Stock | Common Stock | Additional Paid-in | Shares Subscription | Accumulated Other Comprehensive | Retained | Total Stockholders’ | ||||||||||||||||||||||||||||||
| Shares* | Amount | Shares* | Amount | Capital | Receivables | Loss | Earnings | Equity | ||||||||||||||||||||||||||||
| Balance at March 31, 2024 | $ | $ | $ | $ | ( | ) | $ | ( | ) | $ | $ | |||||||||||||||||||||||||
| Net loss | — | — | ( | ) | ( | ) | ||||||||||||||||||||||||||||||
| Issuance of common stock upon initial public offering, net | ||||||||||||||||||||||||||||||||||||
| Foreign currency translation adjustment | — | — | ( | ) | ( | ) | ||||||||||||||||||||||||||||||
| Balance at June 30, 2024 | $ | $ | $ | $ | ( | ) | $ | ( | ) | $ | $ | |||||||||||||||||||||||||
| Balance at June 30, 2024 | $ | $ | $ | $ | ( | ) | $ | ( | ) | $ | $ | |||||||||||||||||||||||||
| Net loss | — | — | ( | ) | ( | ) | ||||||||||||||||||||||||||||||
| Foreign currency translation adjustment | — | — | ||||||||||||||||||||||||||||||||||
| Balance at September 30, 2024 | $ | $ | $ | $ | ( | ) | $ | ( | ) | $ | $ | |||||||||||||||||||||||||
| * |
The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.
4
FLY-E GROUP, INC.
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Expressed in U.S. dollars, except for the number of shares)
| For the Six Months Ended September 30, | ||||||||
| 2025 | 2024 | |||||||
| Cash flows from operating activities | ||||||||
| Net loss | $ | ( | ) | $ | ( | ) | ||
| Adjustments to reconcile net loss to net cash used in operating activities: | ||||||||
| Loss on disposal of property and equipment | ||||||||
| Gain on disposal of subsidiaries | ( | ) | ||||||
| Depreciation expense | ||||||||
| Amortization expense | ||||||||
| Deferred income taxes benefits | ( | ) | ( | ) | ||||
| Amortization of operating lease right-of-use assets | ||||||||
| Inventories impairment loss | ||||||||
| Changes in operating assets and liabilities: | ||||||||
| Accounts receivable | ( | ) | ( | ) | ||||
| Accounts receivable – a related party | ||||||||
| Inventories | ( | ) | ( | ) | ||||
| Prepayments and other receivables | ( | ) | ( | ) | ||||
| Prepayments for operation services to a related party | ( | ) | ||||||
| Security deposits | ( | ) | ||||||
| Accounts payable | ( | ) | ( | ) | ||||
| Accrued expenses and other payables | ( | ) | ( | ) | ||||
| Accrued expenses and other payables - related parties | ||||||||
| Operating lease liabilities | ( | ) | ( | ) | ||||
| Taxes payable | ( | ) | ( | ) | ||||
| Net cash used in operating activities | ( | ) | ( | ) | ||||
| Cash flows from investing activities | ||||||||
| Purchases of properties and equipment | ( | ) | ( | ) | ||||
| Purchase of software from a related party | ( | ) | ||||||
| Payments of property rights | ( | ) | ||||||
| Prepayment for purchasing software from a related party | ( | ) | ||||||
| Cash released from disposal of entities | ( | ) | ||||||
| Repayment from a related party | ||||||||
| Advance to a related party | ( | ) | ( | ) | ||||
| Net cash used in investing activities | ( | ) | ( | ) | ||||
| Cash flows from financing activities | ||||||||
| Proceeds from borrowings | ||||||||
| Repayments of borrowings | ( | ) | ( | ) | ||||
| Repayments on other payables - related parties | ( | ) | ||||||
| Payments of offering cost | ( | ) | ( | ) | ||||
| Net proceeds from issuance of common stock | ||||||||
| Net cash provided by financing activities | ||||||||
| Net changes in cash including cash classified within current assets held for sale | ( | ) | ||||||
| Effect of exchange rate changes on cash | ( | ) | ||||||
| Less: net increase in cash classified within current assets held for sale | ||||||||
| Cash at beginning of the period | ||||||||
| Cash at the end of the period | $ | $ | ||||||
| Supplemental disclosure of cash flow information | ||||||||
| Cash paid for interest expense | $ | $ | ||||||
| Cash paid for income taxes | $ | $ | ||||||
| Supplemental disclosure of non-cash investing and financing activities | ||||||||
| Subscription receivables from share placement | $ | $ | ||||||
| Purchase of vehicle funded by loan | $ | $ | ||||||
| Purchase of office funded by loan | $ | $ | ||||||
| Purchase of software by using previous prepayments | $ | $ | ||||||
| Properties used for rental services | $ | $ | ||||||
| Deferred IPO cost recognized as additional paid-in capital | $ | $ | ||||||
| Uncollected proceeds from disposal of subsidiaries | $ | $ | ||||||
| Termination of operating lease right-of-use assets and operating lease liabilities | $ | $ | ( | ) | ||||
| Right-of-use assets obtained in exchange for operating lease liabilities | $ | $ | ||||||
The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.
5
FLY-E GROUP, INC.
Notes to Unaudited Condensed Consolidated Financial Statements
1 — DESCRIPTION OF BUSINESS, ORGANIZATION AND BASIS OF PRESENTATION
Organization and principal activities
Fly-E Group, Inc. (the “Company” or “Fly-E Group”) was incorporated under the laws of the State of Delaware on November 1, 2022. The Company has no substantive operations other than holding all of the issued and outstanding shares of Fly E-Bike Inc. (“Fly E-Bike”) and Fly EV, Inc. (“Fly EV”). Fly E-Bike and Fly EV were incorporated under the laws of the State of Delaware on August 22, 2022 and November 1, 2022, respectively. Fly EV has no substantive operations. The Company, through its wholly owned subsidiaries, is principally engaged in designing, installing and selling smart electric bikes (“E-bikes”), electric motorcycles (“E-motorcycles”), electric scooters (“E-scooters”), and related accessories under the brand name of “Fly E-Bike.” The Company’s principal operations and geographic markets are mainly in the United States of America (the “U.S.”). During the six months ended September 30, 2025, the Company closed one store in U.S. During the year ended March 31, 2025, the Company closed four stores in the U.S. As of December 16, 2025, the Company currently operates a total of 13 retail stores, including 12 retail stores in the U.S and one retail store in Canada. During the three months ended September 30, 2025, 9 retail stores in the U.S were sold for streamlining the Company’s corporate structure and reducing complexity in financial reporting and operating costs. These 9 retail stores were operated through certain subsidiaries of the Company that were disposed of pursuant to share transfer agreements dated July 1, 2025, August 1, 2025, and September 1, 2025, respectively, as discussed in Note 14 to the Unaudited Condensed Consolidated Financial Statements in this Report. The Company offers rental services from selected locations. The Company also operates one online store, focusing on selling E-motorcycles, E-bikes, and E-scooters. The Company plans to open another online store focusing on selling gas bikes in the future.
The Company’s business was initially operated under CTATE INC. (“Ctate”), a corporation formed under the laws of the State of New York in 2018. Before merging with Fly E-Bike, Ctate owned 27 companies, each of which operated a Fly E-Bike store. On September 12, 2022, Ctate and Fly E-Bike, which was a wholly-owned subsidiary of Ctate, entered into an Agreement and Plan of Merger, pursuant to which Ctate merged into and with Fly E-Bike, with Fly E-Bike being the surviving corporation (the “Merger”). As a result of the Merger, the original shareholders of Ctate became the stockholders of Fly E-Bike and subsequently effectively controlled the combined entity.
On December 21, 2022, Fly-E Group and Fly E-Bike entered into a Share Exchange Agreement, pursuant to which Fly-E Group acquired all of the issued and outstanding shares of Fly E-Bike by issuing its shares to the stockholders of Fly E-Bike on a one-for-one basis (the “Share Exchange”). As a result of the Share Exchange, Fly E-Bike became a wholly owned subsidiary of Fly-E Group.
As a result of the Merger and the Share Exchange, Fly E-Bike and its subsidiaries are under common control of Fly-E Group, resulting in the consolidation of Fly E-Bike and its subsidiaries, which was accounted as a reorganization of entities under common control at carrying value. The unaudited condensed consolidated financial statements are prepared on the basis as if the reorganization became effective as of the beginning of the first period presented in the unaudited condensed consolidated financial statements of Fly-E Group.
On June 7, 2024, the Company issued
On June 4, 2025, the Company issued
On September 18, 2025, the Company entered into a securities purchase
agreement with third-party individuals offering of
6
On July 3, 2025 and November 4, 2025, the Company
implemented a
The reverse stock split was accounted for retrospectively in the accompanying unaudited condensed consolidated financial statements and notes for all periods presented. All references to the number of shares of common stock, including per share amounts, have been adjusted to reflect the reverse stock split.
The unaudited condensed consolidated financial statements include the financial statements of the Company and each of the following subsidiaries as of September 30, 2025.
| Name | Background | Ownership | ||
| FLY-E GROUP, INC. | ● A Delaware corporation ● Incorporated on November 1, 2022 ● A holding company | Parent Company | ||
| FLY EV, INC. | ● A Delaware corporation ● Incorporated on November 1, 2022 ● A holding Company | |||
| FLY E-BIKE, INC. | ● A Delaware Company ● Incorporated on August 22, 2022 ● A holding Company | |||
| UNIVERSE KING CORP | ● A New York corporation ● Incorporated on November 19, 2018 ● A retail store |
| FLYFLS INC | ● A New York corporation ● Incorporated on October 13, 2020 ● A retail store and corporate office | |||
| FLY37 INC | ● A New York corporation ● Incorporated on October 14, 2020 ● No operation | |||
| FLYEBIKE INC | ● A New York corporation ● Incorporated on March 30, 2021 ● A retail store |
7
| FLYEBIKE NJ INC | ● A New Jersey corporation ● Incorporated on June 8, 2021 ● No operation | |||
| GOFLY INC | ● A Texas corporation ● Incorporated on July 23, 2021 ● No operation | |||
| FLYNJ2 INC. | ● A New Jersey corporation ● Incorporated on February 10, 2022 ● A retail store | |||
| FLYBWY INC. | ● A New York corporation ● Incorporated on March 2, 2022 ● No operation | |||
| FLY E BIKE NJ3, INC | ● A New Jersey corporation ● Incorporated on July 18, 2022 ● A retail store | |||
| FLY E-BIKE SAN ANTONIO INC | ● A Texas corporation ● Incorporated on January 1, 2023 ● No operation | |||
| FLYEBIKE WORLD INC. | ● A New York corporation ● Incorporated on February 27, 2023 ● A retail store | |||
| FLY DELIVERY INC. | ● A New York corporation ● Incorporated on March 2, 2023 ● A delivery store |
8
| FLYEBIKE MIAMI2 INC. | ● A Florida corporation ● Incorporated on April 13, 2023 ● A retail store | |||
| FLYDC INC. | ● A Washington, DC corporation ● Incorporated on May 31, 2023 ● A retail store | |||
| FLYJH8509 INC. | ● A New York corporation ● Incorporated on August 30, 2023 ● No operation | |||
| FLYNJ4 INC. | ● A New York corporation ● Incorporated on October 4, 2023 ● A retail store | |||
| FLYTORONTO Corp. | ● A Toronto corporation ● Incorporated on October 18, 2023 ● A retail store | |||
| FLYLA INC. | ● A California corporation ● Incorporated on December 1, 2023 ● A retail and rental store | |||
| FWMOTOR INC. | ● A New York corporation ● Incorporated on April 3, 2024 ● A retail store | |||
| DCMOTOR INC. | ● A Maryland corporation ● Incorporated on April 9, 2024 ● A retail store | |||
| AOFL LLC | ● A New York corporation ● Incorporated on June 25, 2024 ● A holding company | |||
| GOBIKE INC | ● A New York corporation ● Incorporated on July 16, 2024 ● A rental store | |||
| FLYEBIKE BOSTON INC. | ● A Massachusetts corporation ● Incorporated on September 1, 2024 ● A retail store | |||
| FLYNJ1 INC | ● A Massachusetts corporation ● Incorporated on January 29, 2025 ● A retail store |
9
Liquidity and Going Concern
In assessing the Company’s liquidity, the Company monitors and analyzes its cash on-hand and its operating and capital expenditure commitments. The Company’s liquidity needs are to meet its working capital requirements, operating expenses and capital expenditure obligations. Debt financing from financial institutions and equity financings have been utilized to finance the working capital requirements of the Company.
On June 4, 2025, the Company closed a public offering of (i)
2 — SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
(a) Basis of Presentation
The accompanying unaudited condensed consolidated financial statements of the Company have been prepared in accordance with accounting principles generally accepted in the U.S. (the “U.S. GAAP”) and regulations of the Securities Exchange Commission (the “SEC”). The accompanying unaudited condensed consolidated financial statements contemplate the realization of assets and the satisfaction of liabilities in the normal course of business. The realization of assets and the satisfaction of liabilities in the normal course of business are dependent on, among other things, the Company’s ability to operate profitably, to generate cash flows from operations, and its ability to attract investors and to borrow funds on reasonable economic terms. The results of operations for the six months ended September 30, 2025 are not necessarily indicative of results to be expected for any other interim period or for the full fiscal year ending March 31, 2026. Accordingly, these statements should be read in conjunction with the Company’s audited financial statements and note thereto as of and for the years ended March 31, 2025 and 2024.
(b) Principles of Consolidation
The unaudited condensed consolidated financial statements include the financial statements of the Company and its subsidiaries over which the Company exercises control and, when applicable, entities for which the Company has a controlling financial interest. All transactions and balances among the Company and its subsidiaries have been eliminated upon consolidation.
(c) Segment Information
The Company adopted ASU No. 2023-07 (“ASU 2023-07”),
Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures for the year ended March 31, 2025 and applied it retrospectively
for the prior period presented.
10
(d) Use of Estimates
In the application of the Company’s accounting policies, management is required to make judgments, estimates and assumptions about the carrying amounts of assets and liabilities that are not readily apparent from other sources. The estimates and associated assumptions are based on historical experience and other factors that are considered relevant. Significant accounting estimates include allowance for inventories. Changes in facts and circumstances may result in revised estimates. Actual results could differ from those estimates, and as such, differences may be material to the unaudited condensed consolidated financial statements.
(e) Commitments and Contingencies
In the normal course of business, the Company is subject to loss contingencies, such as legal proceedings and claims arising out of its business, which cover a wide range of matters, including, among others, government investigations, shareholder lawsuits, and non-income tax matters.
An accrual for a loss contingency is recognized when it is probable that a liability has been incurred and the amount of loss can be reasonably estimated. If a potential material loss contingency is not probable but is reasonably possible, or is probable but cannot be estimated, then the nature of the contingent liability, together with an estimate of the range of possible loss if determinable and material, is disclosed.
(f) Cash
Cash consists of cash on hand and cash deposited
with banks. The Company’s cash is maintained at financial institutions in the U.S. Deposits in these financial institutions
may, from time to time, exceed the Federal Deposit Insurance Corporation’s (the “FDIC”) federally insured limit, which
is $
(g) Accounts Receivable
Accounts receivable includes trade account due from customers. Accounts receivable is recorded at the invoiced amount less an allowance for any credit loss and does not bear interest, which is due after 30 to 90 days, depending on the credit term with the customers. Accounts receivable which is deemed to be uncollectible is charged off against the allowance after all means of collection have been exhausted and the potential for recovery is considered remote.
The Company adopt the current expected credit
loss model (“CECL model”) to estimate the expected credit losses, which is determined by multiplying the probability of default.
In determining the probability of default, the Company mainly considers factors such as aging schedule of receivables, migration rate
of receivables, assessment of receivables due from specific identifiable counterparties that are considered at risk or uncollectible,
current market conditions, as well as reasonable and supportable forecasts of future economic conditions. As of September 30, 2025
and March 31, 2025, the Company provided allowance for credit losses of $
11
(h) Inventories, Net
Inventories, consisting of products available for sale, are stated
at the lower of cost or net realizable value using the first-in-first-out method. Adjustments to the carrying value are recorded for estimated
obsolescence or excess inventory equal to the difference between the cost of inventory and the estimated net realizable value based upon
assumptions about future demand and market conditions. Inventory cost consists of the direct cost of merchandise including freight. For
the three months ended September 30, 2025 and 2024, impairment loss was $
(i) Prepayments and Other Receivables
Prepayments and other receivables are mainly prepayments to vendors, prepaid expenses paid to service providers, prepaid taxes, advances to employees, and other deposits. Management regularly reviews the aging of such balances and changes in payment and realization trends and records allowances when management believes that the collection of amounts due is at risk. Accounts considered uncollectable are written off against allowances after exhaustive efforts at collection are made. As of September 30, 2025 and March 31, 2025, no allowance for credit losses provided against prepayments and other receivables was recorded.
(j) Property and Equipment, Net
Property and equipment are stated at cost less accumulated depreciation and any recorded impairment.
The estimated useful lives are as follows:
| Furniture and fixtures | ||
| Machinery and equipment | ||
| Automobile | ||
| Leasehold improvements | ||
| Buildings | ||
| Computer hardware and software | ||
| Properties used for rental business |
Depreciation on property and equipment is calculated on the straight-line method over the estimated useful lives of the assets. The cost and related accumulated depreciation of assets sold or otherwise retired are eliminated from the accounts and any gain or loss is included in the consolidated statements of operations. Expenditures for maintenance and repairs are charged to earnings as incurred, while additions, renewals, and betterments, which are expected to extend the useful life of assets, are capitalized. The Company also re-evaluates the periods of depreciation to determine whether subsequent events and circumstances warrant revised estimates of useful lives.
(k) Intangible Assets
Intangible asset is stated at cost less accumulated amortization and amortized in a method which reflects the pattern in which the economic benefits of the intangible asset are expected to be consumed or otherwise used up. The balance of intangible asset represents internal use software and property rights. The software is acquired externally tailored to the Company’s requirements. The Company capitalizes the costs associated with design, development, acquisition and maintenance of its acquired intangible assets and amortizes these assets over their remaining useful lives on a straight-line basis. Any further payments made to maintain or develop these assets would be capitalized and amortized over the balance of the useful life for the assets. The estimated useful life and amortization method are reviewed at the end of each reporting period, with the effect of any changes in the estimate being accounted for on a prospective basis.
The estimated useful lives of intangibles assets are as follows:
| Property rights | ||
| Software |
12
(l) Impairment of Long-lived Assets
At the end of each reporting period, the Company reviews the carrying amounts of its property and equipment, intangible assets subject to depreciation and amortization, and right-of-use assets, to determine whether there is any indication that the carrying value of an asset may not be recoverable. The Company assesses the recoverability of the assets based on the undiscounted future cash flows the assets are expected to generate and recognize an impairment loss when estimated undiscounted future cash flows expected to result from the use of the asset plus net proceeds expected from disposition of the asset, if any, are less than the carrying value of the asset. If an impairment is identified, the Company will reduce the carrying amount of the asset to its estimated fair value based on a discounted cash flows approach or, when available and appropriate, to comparable market values. As of September 30, 2025 and March 31, 2025, impairment of long-lived assets was recognized.
(m) Fair Value Measurements
Fair value is defined as the price that would be received for an asset, or paid to transfer a liability, in an orderly transaction between market participants at the measurement date. Valuation techniques maximize the use of observable inputs and minimize the use of unobservable inputs. When determining the fair value measurements for assets and liabilities, the Company considers the principal or most advantageous market in which it would transact and consider assumptions that market participants would use when pricing the asset or liability. The following summarizes the three levels of input required to measure fair value, of which the first two are considered observable and the third is considered unobservable:
| Level-1 | — | Observable inputs that reflect quoted prices (unadjusted) for identical assets or liabilities in active markets. |
| Level-2 | — | Include other inputs that are directly or indirectly observable in the marketplace. |
| Level-3 | — | Unobservable inputs which are supported by little or no market activity. |
The fair value for certain assets and liabilities such as cash, accounts receivable, other receivables, prepayments and other current assets, short-term loans, accounts payable, accrued expenses and other payables, operating lease liabilities – current, and tax payables have been determined to approximately carrying amounts due to the short maturities of these instruments. The Company believes that its long-term loan to a third party approximates the fair value based on current yields for debt instruments with similar terms. The Company and its subsidiaries did not have any non-financial assets or liabilities that are measured at fair value on a recurring basis as of September 30, 2025 and March 31, 2025.
(n) Revenue Recognition
Product revenue
The Company follows the revenue accounting requirements of Accounting Standards Codification (“ASC”) Topic 606, Revenue from Contracts with Customers. The core principle underlying the revenue recognition of this ASC allows the Company to recognize revenue that represents the transfer of products and services to customers in an amount that reflects the consideration to which the Company expects to be entitled in such exchange. This will require the Company to identify contractual performance obligations and determine whether revenue should be recognized at a point in time or over time, based on when control of products and services transfers to a customer.
To achieve that core principle, the Company applies a five-step model to recognize revenue from customer contracts. The five-step model requires that the Company (i) identify the contract with the customer, (ii) identify the performance obligations in the contract, (iii) determine the transaction price, including variable consideration to the extent that it is probable that a significant future reversal will not occur, (iv) allocate the transaction price to the respective performance obligations in the contract, and (v) recognize revenue when (or as) the Company satisfies the performance obligation.
13
The Company generates substantially all its revenues from sales of products such as smart E-bikes, E-motorcycles, E-scooters and accessories to the retail and wholesale customers through its wholly owned subsidiaries stores. In accordance with ASC 606, the Company’s performance obligations are satisfied upon the control of products being passed to the customer, which is the point in time that the customers are able to direct the use of and obtain substantially all of the economic benefit of the products or services. The transfer of control typically occurs at a point in time based on consideration of when the customer has an obligation to pay for the products, and physical possession of, legal title to, and the risks and rewards of ownership of the products have been transferred, and the customer has accepted the products. Revenue is recognized net of estimates of variable consideration, including product returns, customer discounts and allowance. which occurs at the point of sale, or the services have been rendered. Historically, the Company has not experienced any significant returns nor provided significant customer discounts.
The Company offers an assurance-type warranty to its customers. An assurance-type warranty guarantees that the product will perform as promised and is not a performance obligation. This type of warranty promises to repair or replace a delivered good or service if it does not perform as expected. Since an assurance-type warranty guarantees the functionality of a product, the warranty is not accounted for as a separate performance obligation, and thus no transaction price is allocated to it. Rather, to account for an assurance-type warranty the vendor should estimate and accrue a warranty liability when the promised good or service is delivered to the customer (see ASC 460-10).
Since the contract price and term are fixed and
enforceable, and an assurance-type warranty guarantees the functionality of a product, and the warranty is not accounted for as a separate
performance obligation, no transaction price is allocated to it. The Company recognizes sales in full at the point in time when the products
are delivered or accepted by the customers, in accordance with the acceptance term specified in the contract. The Company records estimated
future warranty costs under ASC 460. Such estimated costs for warranties are estimated at the time of delivery and these warranties
are not service warranties separately sold by the Company. Generally, the estimated claim rates of warranty are based on actual warranty
experience or the Company’s best estimate. The Company accrued $
Rental Revenue
The Company operates rental business primarily from the Go Fly rental mobile app and selected Fly E-Bike stores that provide users with a flexible and affordable e-bike rental option.
The Company offers rental services through its subsidiaries, GOBIKE INC, FLYLA INC, and FLYTORONTO CORP. All the products available for rent are owned by the Company. The Company leases products to customers, and as a result, the Company considers itself to be the accounting lessor, as applicable, in these arrangements in accordance with ASC 842. Rental business operating costs include refunded products repair fee and other operating costs, as applicable.
Due to the short-term nature of the rental business, the Company classifies these rentals operating leases. Revenue generated from the rental services is recognized over the rental period, which is typically one day, one week or more.
Disaggregated information of revenues by business lines are as follows:
| For the Three Months Ended September 30, | For the Six Months Ended September 30, | |||||||||||||||
| 2025 | 2024 | 2025 | 2024 | |||||||||||||
| Product revenues-retail (ASC 606) | $ | $ | $ | $ | ||||||||||||
| Product revenues-wholesale (ASC 606) | ||||||||||||||||
| Revenues - rental services (ASC 842) | ||||||||||||||||
| Net revenues | $ | $ | $ | $ | ||||||||||||
14
(o) Selling Expenses
Selling expenses mainly consist of advertising
costs, and payroll and related expenses for personnel engaged in selling and marketing activities. Advertising expenses, which consist
primarily of online and offline advertisements, are expenses when the services are received. The advertising expenses were $
(p) Research and Development Expenses
Research and development expenses include salaries
for the Company’s research and development personnel, as well as related development expenses paid to the third-party development
team. The Company recognizes internal use software acquired and internally developed in accordance with ASC 350-40 “Software—internal
use software”. The Company expenses all costs that are incurred in connection with the planning and implementation phases of development,
and costs that are associated with maintenance of the existing software for internal use. Certain costs associated with developing internal-use
software are capitalized when such costs are incurred within the application development stage of software development. As a result, the
Company expensed the development costs of the Fly E-Bike app as they incurred. For the three months ended September 30, 2025 and 2024,
development costs amounted to $
(q) Income Taxes
Current income taxes are provided based on net income/(loss) for financial reporting purposes and adjusted for income and expense items which are not assessable or deductible for income tax purposes, in accordance with the regulations of the relevant tax jurisdictions.
Deferred taxes are accounted for using the asset and liability method in respect of temporary differences arising from differences between the carrying amount of assets and liabilities in the unaudited condensed consolidated financial statements and the corresponding tax basis used in the computation of assessable tax profit. In principle, deferred tax liabilities are recognized for all taxable temporary differences. Deferred tax assets (the “DTAs”) are recognized to the extent that it is probable that taxable profit will be available against which deductible temporary differences can be utilized.
Deferred tax is calculated using tax rates that are expected to apply to the period when the asset is realized, or the liability is settled. Deferred tax is charged or credited in the income statement, except when it is related to items credited or charged directly to equity, in which case the deferred tax is also dealt with in equity. DTAs are reduced by a valuation allowance when, in the opinion of management, it is more likely than not that some portion or all the DTAs will not be realized. Current income taxes are provided for in accordance with the laws of the relevant taxing authorities.
An uncertain tax position is recognized as a benefit
only if it is “more likely than not” that the tax position would be sustained in a tax examination, with a tax examination
being presumed to occur. The amount recognized is the largest amount of tax benefit that is greater than 50% likely of being realized
on examination. For tax positions not meeting the “more likely than not” test, no tax benefit is recorded. Penalties and interest
incurred related to underpayment of income tax are classified as income tax expense in the period incurred. The tax returns filed in 2018
to 2024 are subject to examination by any appropriate tax authorities. For the three months ended September 30, 2025 and 2024, the Company
accrued and $
15
(r) Leases
The Company accounts for leases in accordance with ASC 842. The Company leases premises for offices, warehouses, and retail stores under non-cancellable operating leases, and the Company leases its products to customers under non-cancellable operating leases.
Lessor
The Company’s lease arrangements include products rentals to customers. The lease term is from one hour to one month. Due to the short-term nature of these arrangements, the Company classifies these leases as operating leases. The Company does not separate lease and non-lease components, such as insurance or roadside assistance provided to the lessee, in its lessor lease arrangements. Lease payments are primarily fixed and are recognized as revenue in the period over which the lease arrangement occurs. Taxes or other fees assessed by governmental authorities that are both imposed on and concurrent with each lease revenue-producing transaction and collected by the Company from the lessee are excluded from the consideration in its lease arrangements. The Company mitigates residual value risk of its leased assets by performing regular maintenance and repairs, as necessary, and through periodic reviews of asset depreciation rates based on the Company’s ongoing assessment of present and estimated future market conditions.
Lessee
The Company recognizes right-of-use assets and lease liabilities for all leases at the commencement date of a lease, except for short-term leases and low-value asset leases accounted for applying a recognition exemption where lease payments are recognized as expenses on a straight-line basis over the lease terms. Leases with an initial term of 12 months or less are short-term leases and not recognized as operating lease right-of-use assets and operating lease liabilities on the consolidated balance sheets. The Company recognizes lease expense for short-term leases on a straight-line basis over the lease term.
Right-of-use assets are initially measured at cost, which comprises the initial measurement of lease liabilities adjusted for lease payments made at or before the commencement date, plus any initial direct costs incurred and an estimate of costs needed to restore the underlying assets, and less any lease incentives received. Right-of-use assets are subsequently measured at cost less accumulated depreciation and impairment losses and adjusted for any remeasurement of the lease liabilities. Right-of-use assets are presented on a separate line in the consolidated balance sheets.
Right-of-use assets are depreciated using the straight-line method from the commencement dates to the earlier of the end of the useful lives of the right-of-use assets or the end of the lease terms.
Lease liabilities are initially measured at the
present value of the lease payments, which comprise fixed payments, in-substance fixed payments, variable lease payments which depend
on an index or a rate. The lease payments are discounted using the interest rate implicit in a lease if that rate can be readily determined.
If that rate cannot be readily determined, the Company uses the lessee’s incremental borrowing rate. Subsequently, lease liabilities
are measured at amortized cost using the effective interest method, with interest expense recognized over the lease terms. When there
is a change in a lease term or a change in future lease payments resulting from a change in an index or a rate used to determine those
payments, the Company remeasures the lease liabilities with a corresponding adjustment to the right-of-use-assets. However, if the carrying
amount of the right-of-use assets is reduced to
Variable lease payments that do not depend on an index or a rate are recognized as expenses in the periods in which they are incurred.
(s) Concentration Risk
Concentration of customers and suppliers
No customers individually represented greater
than 10% of total net revenues of the Company for the three months ended September 30, 2025 and 2024, and for the six months ended September
30, 2025 and 2024, respectively. As of September 30, 2025, three customers accounted for approximately
16
For the three months ended September 30, 2025,
the Company’s top one supplier represented approximately
Concentration of credit risk
Financial instruments that are potentially subject to credit risk consist principally of accounts receivable. The Company believes the concentration of credit risk in its account receivable is substantially mitigated by its ongoing credit evaluation process and relatively short collection terms. The Company does not generally require collateral from customers. The Company evaluates the need for an allowance for doubtful accounts based upon factors surrounding the credit risk of specific customers, historical trends, and other information. Historically, the Company did not have any bad debt on its account receivable.
Financial instruments that potentially expose the Company to concentrations of credit risk consist principally of cash and cash equivalents, term deposits, restricted cash, short-term investments, and accounts receivable, net. The Company’s investment policy requires cash and cash equivalents, term deposits, restricted cash, and short-term investments to be placed with high-quality financial institutions and to limit the amount of credit risk from any one issuer. The Company regularly evaluates the credit standing of the counterparties or financial institutions.
(t) Related Parties
A related party is generally defined as (i) any person and or their immediate family hold 10% or more of the Company’s securities (ii) the Company’s management and/or their immediate family, (iii) someone that directly or indirectly controls, is controlled by or is under common control with the Company, or (iv) anyone who can significantly influence the financial and operating decisions of the Company. A transaction is considered to be a related party transaction when there is a transfer of resources or obligations between related parties. Related parties may be individuals or corporate entities. Transactions involving related parties cannot be presumed to be carried out on an arm’s length basis, as the requisite conditions of competitive, free market dealings may not exist. Representations about transactions with related parties, if made, shall not imply that the related party transactions were consummated on terms equivalent to those that prevail in arm’s length transactions unless such representations can be substantiated.
(u) Earnings (Loss) Per Share
The Company computes earnings per share (“EPS”) in accordance with ASC 260, “Earnings per Share”. ASC 260 requires companies to present basic and diluted EPS. Basic EPS is measured as net income divided by the weighted average common stock outstanding for the period. Diluted EPS takes into account the potential dilution that could occur if securities or other contracts to issue ordinary shares were exercised and converted into ordinary shares. Potential shares of common stock that have an anti-dilutive effect (i.e., those that increase income per share or decrease loss per share) are excluded from the calculation of diluted EPS.
For the three months ended September 30, 2025
and 2024, the Company had
17
(v) Foreign Currencies Translation
Transactions denominated in currencies other than the functional currency are translated into the functional currency at the exchange rates prevailing at the dates of the transaction. Monetary assets and liabilities denominated in currencies other than the functional currency are translated into the functional currency using the applicable exchange rates at the balance sheet dates. The resulting exchange differences are recorded in the statement of operations. The reporting currency of the Company is United States Dollar ($). The Company’s subsidiary in Canada maintains its books and records in its local currency, Canadian dollar (CAD), which is the functional currency for this subsidiary as it is the primary currency of the economic environment in which this entity operates.
In general, for consolidation purposes, assets and liabilities of subsidiaries whose functional currency is not United States Dollar are translated into United States Dollar in accordance with ASC Topic 830-30, “Translation of Financial Statement”, using the exchange rate on the balance sheet date. Revenues and expenses are translated at average rates prevailing during the period. The gains and losses resulting from translation of financial statements of foreign subsidiaries are recorded as a separate component of accumulated other comprehensive income within the statement of stockholders’ equity.
(w) Representative’s Warrants
Upon the closing of the IPO in June 2024, the
Company issued to Benchmark underwriters warrants (the “Representative’s Warrants”) to purchase
(x) Warrants
On June 4, 2025, the Company closed of its public
offering and issued
The Company accounts for its warrants as equity that meet all of the criteria (i) require physical settlement or net-share settlement or (ii) give the Company a choice of net-cash settlement or settlement in its own shares (physical settlement or net-share settlement), the warrants are required to be recorded as a component of additional paid-in capital at the time of issuance and subsequent changes in fair value are not recognized as long as the warrants continue to be classified as equity.
(y) Held for Sale
The Company classifies assets and liabilities to be sold (disposal group) as held for sale in the period when all of the applicable criteria are met, including: (i) management commits to a plan to sell, (ii) the disposal group is available to sell in its present condition, (iii) there is an active program to locate a buyer, (iv) the disposal group is being actively marketed at a reasonable price in relation to its fair value, (v) significant changes to the plan to sell are unlikely, and (vi) the sale of the disposal group is generally probable of being completed within one year. Management performs an assessment at least quarterly or when events or changes in business circumstances indicate that a change in classification may be necessary.
18
Assets and liabilities held for sale are presented separately within the consolidated balance sheets with any adjustments necessary to measure the disposal group at the lower of its carrying value or fair value less costs to sell. For each period the disposal group remains classified as held for sale, its recoverability is reassessed, and any necessary adjustments are made to its carrying value.
The Company does not report the results of operations of a business as discontinued operations as the disposal is not a strategic shift that will have a major effect on its operations and financial results.
(z) Recent accounting pronouncements not yet adopted
The Company considers the applicability and impact of all accounting standards updates (“ASUs”). Management periodically reviews new accounting standards that are issued. Under the Jumpstart Our Business Startups Act of 2012, as amended (the “JOBS Act”), the Company meets the definition of an emerging growth company and has elected the extended transition period for complying with new or revised accounting standards, which delays the adoption of these accounting standards until they would apply to private companies.
In December 2023, the FASB issued ASU 2023-09, “Income Taxes (Topic 740): Improvements to Income Tax Disclosures.” This guidance requires a public entity to disclose in their rate reconciliation table additional categories of information about federal, state and foreign income taxes and to provide more details about the reconciling items in some categories if the items meet a quantitative threshold. The guidance also requires all entities to disclose annually income taxes paid (net of refunds received) disaggregated by federal (national), state and foreign taxes and to disaggregate the information by jurisdiction based on a quantitative threshold. This guidance is effective for annual periods beginning after December 15, 2024. Early adoption is permitted, and this guidance should be applied prospectively but there is the option to apply it retrospectively. The Company is currently evaluating the impact of this guidance on its unaudited condensed consolidated financial statements.
In November 2024, the FASB issued ASU 2024-03, “Income Statement – Reporting Comprehensive Income - Expense Disaggregation Disclosures (Subtopic 220-40): Disaggregation of Income Statement Expenses, requiring public business entities to disclose additional information about specific expense categories in the notes to the financial statements at interim and annual reporting periods, including purchases of inventory, employee compensation, depreciation, and intangible asset amortization.” The provisions of this update are effective for annual periods beginning after December 15, 2026, and interim reporting periods beginning after December 15, 2027, using either a prospective or retrospective approach. The Company is currently evaluating the impact of this guidance on its unaudited condensed consolidated financial statements.
3 — INVENTORIES, NET
Inventories, net consisted of the following:
| September 30, 2025 | March 31, 2025 | |||||||
| Batteries | $ | $ | ||||||
| Electric Vehicles | ||||||||
| Tires | ||||||||
| Accessories | ||||||||
| Inventories | ||||||||
| Inventory reserves | ( | ) | ( | ) | ||||
| Inventories, net | $ | $ | ||||||
Movements of inventory reserves are as follows:
| For the Six Months Ended September 30, | ||||||||
| 2025 | 2024 | |||||||
| Beginning balance | $ | $ | ||||||
| Addition | ||||||||
| Write off | ( | ) | ( | ) | ||||
| Ending Balance | $ | $ | ||||||
As of September 30, 2025 and March 31, 2025, the
inventory reserves balance was $
19
4 — PREPAYMENTS AND OTHER RECEIVABLES
Prepayments and other receivables as of September 30, 2025 and March 31, 2025 consisted of the following:
| September 30, 2025 | March 31, 2025 | |||||||
| Prepaid rent | $ | $ | ||||||
| Prepayments to vendors (i) | ||||||||
| Prepaid insurance | ||||||||
| Prepayments to other service providers | ||||||||
| Prepaid income tax | ||||||||
| Other receivable from third parties (ii) | ||||||||
| Total Prepayment and Other Receivables | $ | $ | ||||||
| (i) |
| (ii) | On January 1, 2025, the Company entered into share transfer agreements for sales of
On April 1, 2025, the Company entered into share transfer agreements for the sale of
On May 1, 2025, the Company entered into share transfer agreements for the sale of
On June 1, 2025, the Company entered into share transfer agreements for the sale of
On July 1, 2025, the Company entered into share transfer agreements for the sale of
On August 1, 2025, the Company entered into share transfer agreements for the sale of
On September 1, 2025, the Company entered into
share transfer agreements for the sale of
As of September 30, 2025 and March 31, 2025, the Company had other receivables of $ |
20
5 — PROPERTY AND EQUIPMENT, NET
Property and equipment as of September 30, 2025 and March 31, 2025 consisted of the following:
| September 30, 2025 | March 31, 2025 | |||||||
| Furniture and Fixtures | $ | $ | ||||||
| Machinery and Equipment | ||||||||
| Automobile | ||||||||
| Leasehold improvements | ||||||||
| Building | ||||||||
| Computer hardware and software (i) | ||||||||
| Properties for rental business (ii) | ||||||||
| Property and Equipment | ||||||||
| Less: Accumulated depreciation | ( | ) | ( | ) | ||||
| Property and Equipment, net | $ | $ | ||||||
For the three months ended September 30, 2025
and 2024, the depreciation expenses were $
| (i) | |
| (ii) |
6 — INTANGIBLE ASSETS, NET
Intangible assets as of September 30, 2025 and March 31, 2025 consisted of the following:
| September 30, 2025 | March 31, 2025 | |||||||
| Property rights | $ | $ | ||||||
| GO FLY App | ||||||||
| Total Intangible assets | ||||||||
| Less: Accumulated Amortization | ( | ) | ( | ) | ||||
| Intangible assets, net | $ | $ | ||||||
For the three months ended September 30, 2025
and 2024, the amortization expenses were $
21
7 — ACCRUED EXPENSES AND OTHER PAYABLES
| September 30, 2025 | March 31, 2025 | |||||||
| Accrued payroll | $ | $ | ||||||
| Advances from customers | ||||||||
| Advances from IGH Holding Inc | ||||||||
| Accrued warranty | ||||||||
| Payroll tax and sales tax payable | ||||||||
| Accrued store expenses | ||||||||
| Accrued freight in cost | ||||||||
| Accrued UL penalty(i) | ||||||||
| Accrued Interest | ||||||||
| Accrued Expenses and Other Payables | $ | $ | ||||||
| (i) |
8 — LOAN PAYABLES
A summary of the Company’s loans is listed as follows:
| Lender | Due Date | September 30, 2025 | March 31, 2025 | |||||||
| Chase Bank(i) | $ | $ | ||||||||
| Leaf Capital Funding, LLC(ii) | ||||||||||
| Automobile Loan – Honda(iii) | ||||||||||
| Milea Truck Sales of Queens Inc. (iv) | ||||||||||
| Milea Truck Sales of Queens Inc. (iv) | ||||||||||
| Peapack-Gladstone Bank(v) | ||||||||||
| Velocity Commercial Capital, LLC (vi) | ||||||||||
| AOWINV LLC (vii) | ||||||||||
| Agile Lending, LLC(viii) | ||||||||||
| Stripe, Inc. (ix) | ||||||||||
| Stripe, Inc. (ix) | ||||||||||
| Total loan payables | ||||||||||
| Short-term loan payables | ( | ) | ( | ) | ||||||
| Current portion of long-term loan payables | ( | ) | ( | ) | ||||||
| Long-term loan payables | $ | $ | ||||||||
| (i) |
| (ii) |
22
| (iii) |
| (iv) | On August 22, 2024, Fly E-Bike, Inc. obtained a three-year long-term loan of $
On July 26, 2024, Fly E-Bike, Inc. obtained a three-year long-term loan of $ |
| (v) |
| (vi) |
| (vii) |
| (viii) |
| (ix) |
23
For the three months ended September 30, 2025
and 2024, the total interest expenses on the Company’s outstanding loans amounted to $
9 — STOCKHOLDERS’ EQUITY
Prior to the effectiveness of the stock splits
discussed below, the Company was authorized to issue
2024 Stock Split
On March 27, 2024, the Company’s board of
directors approved a
On June 7, 2024, the Company completed its initial
public offering and issued
2025 Reverse Stock Split
On July 3, 2025, the Company implemented a
On November 4, 2025, the Company implemented a
The reverse stock splits were accounted for retrospectively
in the accompanying unaudited condensed consolidated financial statements and notes for all periods presented. All references to the number
of shares of common stock, including per share amounts, have been adjusted to reflect the reverse stock split. As of September 30, 2025
and March 31, 2025, the number of issued and outstanding shares of common stock was
Representative’s Warrants
Upon the closing of IPO offering in June 2024,
the Company issued to Benchmark the representative of the underwriters warrants to purchase
24
The fair value of the warrant, using the Black-Scholes
Model on the date of issuance was $
| June 7, 2024 |
||||
| Stock price | $ | |||
| Risk-free interest rate | % | |||
| Volatility | % | |||
| Exercise price | $ | |||
| Dividend yield | $ | |||
The stock price and exercise prices stated herein have been retroactively adjusted to reflect the reverse stock split that occurred in July 2025 and November 2025.
Registered Direct Offering Warrants
On June 4, 2025, the Company closed its public
offering of
The fair value of the 2025 Warrant, using the
Black-Scholes Model on the date of issuance was $
| June 4, 2025 | ||||
| Stock price | $ | |||
| Risk-free interest rate | % | |||
| Volatility | % | |||
| Exercise price | $ | |||
| Dividend yield | $ | |||
The stock price and exercise prices stated herein have been retroactively adjusted to reflect the reverse stock split that occurred in July 2025 and November 2025.
The following table summarizes the Company’s activities and status of the Representative’s Warrants and 2025 Warrants:
| Number of Warrant | Weighted Average Exercise Price | Weighted Average Remaining Term (Years) | ||||||||||
| Outstanding as of March 31, 2025 | $ | |||||||||||
| Issued | $ | |||||||||||
| Exercised | ( | ) | $ | |||||||||
| Forfeited or expired | $ | |||||||||||
| Outstanding as of September 30, 2025 | $ | |||||||||||
25
| Number of Warrant | Weighted Average Exercise Price | Weighted Average Remaining Term (Years) | ||||||||||
| Outstanding as of June 30, 2025 | $ | |||||||||||
| Issued | $ | |||||||||||
| Exercised | ( | ) | $ | |||||||||
| Forfeited or expired | $ | |||||||||||
| Outstanding as of September 30, 2025 | $ | |||||||||||
The number of shares and warrants, as well as the exercise prices stated herein, have been retroactively adjusted to reflect the reverse stock split that occurred in July 2025 and November 2025.
During the three months ended September 30, 2025,
all holders of the Company’s 2025 Warrants exercised their rights to acquire common stock. The exercises were completed on a cashless
basis pursuant to the terms of the warrant agreements. The exercises did not generate any cash proceeds to the Company. All share numbers
for warrant exercises prior to the reverse stock split have been retroactively adjusted to reflect the 1-for-5 reverse stock split and
the 1-for-20 reverse stock split. During the three and six months ended September 30, 2025,
Subscription Receivable
As of September 30, 2025 and March 31, 2025, the
subscription receivable represents the unpaid capital contribution of $
10 — INCOME TAX
(a) Income Tax Expense
Income tax expense for the three months ended
September 30, 2025 was $
| For the Six Months Ended September 30, | ||||||||
| 2025 | 2024 | |||||||
| Current | ||||||||
| Federal | $ | ( | ) | $ | ||||
| State | ||||||||
| City | ( | ) | ||||||
| Deferred | ||||||||
| Federal | ( | ) | ||||||
| State | ( | ) | ||||||
| City | ( | ) | ||||||
| Foreign | ( | ) | ( | ) | ||||
| Total | $ | ( | ) | $ | ( | ) | ||
The provision (benefit) for income taxes is based on the following pretax loss:
| For the Six Months Ended September 30, | ||||||||
| 2025 | 2024 | |||||||
| U.S. | $ | ( | ) | $ | ( | ) | ||
| Canada | ( | ) | ( | ) | ||||
| Total | $ | ( | ) | $ | ( | ) | ||
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For the three months ended September 30, 2025,
the total pre-tax loss was approximately $
The following table reconciles the Company’s effective tax rate:
| For the Six Months Ended September 30, | ||||||||
| 2025 | 2024 | |||||||
| Pre-tax book loss | $ | ( | ) | $ | ( | ) | ||
| Federal Statutory rate | % | % | ||||||
| State income tax rate, net of federal income tax benefit | % | % | ||||||
| City income tax rate, net of federal income tax benefit | % | % | ||||||
| Foreign statutory rate | % | % | ||||||
| Permanent differences | % | ( | )% | |||||
| Valuation allowance of deferred tax assets | ( | )% | ||||||
| Return to project adjustment | ( | )% | ( | ) | ||||
| Total | % | % | ||||||
Penalties
and interest incurred related to underpayment of income tax are classified as income tax expenses in the period incurred. For the three
months ended September 30, 2025 and 2024, the Company accrued and $
United States
Income tax expense for the three months ended
September 30, 2025 amounted to $
Significant components of the provision (benefit) for income taxes are as follows:
| For the Six Months Ended September 30, | ||||||||
| 2025 | 2024 | |||||||
| Current | ||||||||
| Federal | $ | ( | ) | $ | ||||
| State | | |||||||
| City | ( | ) | ||||||
| Deferred | ||||||||
| Federal | ( | ) | ||||||
| State | ( | ) | ||||||
| City | ( | ) | ||||||
| Total | $ | $ | ( | ) | ||||
27
Canada
Fly Toronto Corp, a subsidiary of the Company, was formed under the laws of Canada and conducts its business primarily in Canada.
Income tax (expense) benefit for the three months
ended September 30, 2025 and 2024 amounted to $(
| For the Six Months Ended September 30, | ||||||||
| 2025 | 2024 | |||||||
| Current | ||||||||
| Federal | $ | $ | ||||||
| State | ||||||||
| City | ||||||||
| Deferred | ||||||||
| Federal | ( | ) | ( | ) | ||||
| State | ( | ) | ( | ) | ||||
| City | ||||||||
| Total | $ | ( | ) | $ | ( | ) | ||
(b) Deferred Tax Assets (Liabilities)
Net DTAs as of September 30, 2025 and March 31,
2025 amounted to $
| As of September 30, 2025 | As of March 31, 2025 | |||||||
| Net operating loss carry forwards | $ | $ | ||||||
| Inventory reserve | ||||||||
| Operating lease liabilities | ||||||||
| Amortization difference | ||||||||
| Total deferred tax assets (DTAs) | ||||||||
| Valuation allowance | ( | ) | ( | ) | ||||
| Deferred tax assets, net of valuation allowance | $ | $ | ||||||
| Accumulated depreciation | ( | ) | ( | ) | ||||
| Operating lease right-of-use assets | ( | ) | ( | ) | ||||
| Total deferred tax liabilities (DTLs) | ( | ) | ( | ) | ||||
| Deferred tax assets, net | $ | $ | ||||||
| Deferred tax assets (liabilities) – U.S., net | $ | ( | ) | $ | ||||
| Deferred tax assets – Canada, net | $ | $ | ||||||
As of September 30, 2025 and March 31, 2025, the
Company had approximately $
28
As of September 30, 2025 and March 31, 2025, the
Company had approximately $
Deferred tax assets and liabilities are recognized
for the estimated future tax consequences attributable to differences between the financial statement carrying amounts of existing assets
and liabilities and their respective tax bases, and operating loss and tax credit carryforwards. As of September 30, 2025 and March 31,
2025, the Company recorded $
As a result of the Tax Cuts and Jobs Act (TCJA),
US NOLs arising after December 31, 2017, may be carried forward indefinitely and can offset only up to
Uncertain Tax Positions
The Company evaluates each uncertain tax position (including the potential application of interest and penalties) based on the technical merits, and measures the unrecognized benefits associated with the tax positions. As of September 30, 2025 and March 31, 2025, the Company did not have any significant unrecognized uncertain tax positions.
11 — LEASES
The Company adopted Topic 842 for all periods presented. At the inception of a contract, the Company determines if the arrangement is, or contains, a lease. The leases of the Company mainly consisted of offices, retail stores, and warehouses.
The Company’s operating right-of-use (“ROU”) assets and lease liabilities were as follows:
| September 30, 2025 | March 31, 2025 | |||||||
| Operating ROU: | ||||||||
| ROU assets | $ | $ | ||||||
| Total operating ROU assets | $ | $ | ||||||
| September 30, 2025 | March 31, 2025 | |||||||
| Operating lease obligations: | ||||||||
| Current operating lease liabilities | $ | $ | ||||||
| Non-current operating lease liabilities | ||||||||
| Total lease liabilities | $ | $ | ||||||
The Company had
29
The weighted average lease term, discount rates, and remaining lease terms for the operating leases as of September 30, 2025 were as follows:
Remaining lease term and discount rate:
| Weighted average annual discount rate | % | |||
| Weighted average remaining lease term (years) |
The weighted average lease term, discount rates, and remaining lease terms for the operating leases as of March 31, 2025 were as follows:
Remaining lease term and discount rate:
| Weighted average annual discount rate | % | |||
| Weighted average remaining lease term (years) |
The Company leases its offices, warehouse, and
retail stores under non-cancellable operating lease agreements. During the three months ended September 30, 2025, lease expenses were
$
Lease expenses were $
For the three months ended September 30, 2025, the Company terminated 1 lease. For the six months ended September 30, 2025, the Company terminated 10 leases.
As of September 30, 2025, future minimum lease liabilities, all under office and facilities non-cancellable operating lease agreements, were as follows:
| Twelve months ending September 30, | Operating Lease Liabilities | |||
| 2026 | $ | |||
| 2027 | ||||
| 2028 | ||||
| 2029 | ||||
| 2030 | ||||
| Thereafter | ||||
| Total lease payments | ||||
| Less: interest | ( | ) | ||
| Present value of lease liabilities | $ | |||
12 — COMMITMENTS AND CONTINGENCIES
Commitments
The Company has not entered any off-balance sheet financial guarantees or other off-balance sheet commitments to guarantee the payment obligations of any third parties. The Company has not entered any derivative contracts that are indexed to its shares and classified as shareholder’s equity or that are not reflected in its unaudited condensed consolidated financial statements. Furthermore, the Company does not have any retained or contingent interest in assets transferred to an unconsolidated entity that serves as credit, liquidity or market risk support to such entity. The Company does not have any variable interest in any unconsolidated entity that provides financing, liquidity, market risk or credit support to itself or engages in leasing, hedging or product development services with itself.
30
Contingencies
Legal
From time to time, the Company is a party to certain legal proceedings, as well as certain asserted and unasserted claims. Amounts accrued, as well as the total amount of reasonably possible losses with respect to such matters, individually and in the aggregate, are not deemed to be material to the unaudited condensed consolidated financial statements.
The Company’s products and other production facilities as well as the packaging, storage, distribution, advertising and labeling of its products, are subject to extensive legal and regulatory requirements. For example, pursuant to the DMV registration requirement, the Company must satisfy the DMV Registration requirements and conduct required testing for all of its products sold in U.S. Loss of or failure to renew or obtain necessary permits, licenses, registrations, or certificates could prevent the Company from legally selling its products in the U.S. If the Company were found to be in violation of applicable laws and regulations, it could be subject to administrative punishment, including fines, injunctions, recalls or asset seizures, as well as potential criminal sanctions, any of which could have a material adverse effect on its business, financial condition, results of operations and prospects. As of the date hereof, the Company believes it is in compliance with the relevant regulations in the U.S.
Federal securities class action instituted on September 8, 2025
On September 8, 2025, a federal securities class
action was filed in the United States District Court, Eastern District of New York, by plaintiff Dino Kurt, individually and on behalf
of all others similarly situated, against defendants, the Company, chief executive officer (the “CEO”) Zhou Ou, and former
chief financial officer (the “CFO”) Shiwen Feng. The complaint alleges violations of Sections 10(b) and 20(a) of the Exchange
Act and Rule 10b-5 during the class period spanning from July 15, 2025, to August 14, 2025. The plaintiff claims that defendants provided
materially false and misleading positive statements about revenue growth, brand reputation, and business expansion, while concealing or
minimizing material adverse facts concerning the safety of the Company’s lithium battery and inadequate forecasting processes, which
were already taking a material toll on E-vehicle (the “EV”) sales revenue. The plaintiff alleged when the Company filed a
form NT 10-Q on August 14, 2025, which disclosed a
The relief sought includes determining that the
action may be maintained as a class action, requiring defendants to pay damages sustained by the plaintiff and the class, and awarding
pre-judgment and post-judgment interest, along with reasonable attorneys’ fees, expert fees, and other costs, with the monetary
damages sought being certified to be in excess of $
Shareholder derivative action instituted on November 17, 2025
An action titled Kishan Shah, derivatively on behalf of FLY-E GROUP, INC. v. Zhou Ou, et al., was instituted on November 17, 2025 and is pending in the United States District Court, Eastern District of New York.
The principal parties include plaintiff Kishan Shah, representing the Company (the nominal defendant), against Individual defendants Zhou Ou, the Company’s CEO and Chairman, Shiwen Feng, the Company’s former CFO and director, Lun Feng, Bin Wang, and Zanfeng Zhang, former directors of the Company.
The factual basis centers on the individual defendants’
knowing or reckless breaches of fiduciary duties concerning Lithium Battery Misconduct (as defined below) during the relevant period of
July 15, 2025, through August 14, 2025. Plaintiff alleges that defendants consistently represented that the Company’s EVs were safe,
but concealed that the lithium batteries used in their products lacked required New York City safety certification, were substandard quality,
and posed a significant safety hazard, having resulted in multiple deadly fires in the greater New York City area (the “Lithium
Battery Misconduct”). The plaintiff alleged that that, when the Company filed a Form NT 10-Q on August 14, 2025, disclosing a
The relief sought, on behalf of the Company, includes a declaration that the individual defendants breached their fiduciary duties, an award of damages against the individual defendants (jointly and severally), restitution and disgorgement of profits from the individual defendants, and court orders directing the Company to implement improved corporate governance and internal control procedures to prevent future damaging events.
31
Shareholder derivative action instituted on October 28, 2025
Due to the similar factual basis, on October 28, 2025, another shareholder derivative action, Martin Flynn, derivatively on behalf of FLY-E GROUP, INC. v. Zhou (Andy) Ou, et al., was instituted in the United States District Court, Eastern District of New York.
The principal parties are Plaintiff Martin Flynn, derivatively acting on behalf of the nominal defendant, the Company, against individual defendants who served as directors and officers, including Zhou Ou, the CEO and chairman of the board, Shiwen Feng, the former CFO, Bin Wang, Lun Feng, and Zanfeng Zhang, the former directors.
The action alleges that during the relevant time
period (July 15, 2025, to August 14, 2025), these defendants breached their fiduciary duties and engaged in gross mismanagement by making
materially false and misleading statements and omissions, specifically concerning the safety of the Company’s lithium battery. Although
defendants provided overwhelmingly positive statements regarding growth and brand reputation, they concealed or failed to disclose the
true impact of “recent lithium-battery accidents involving E-Bikes and E-Scooters” on sales revenues. The complaint alleged,
when the Company filed a form NT 10-Q on August 14, 2025 disclosing a
UL Litigation
On or about March 12, 2025, UL LLC (“UL”)
filed a complaint against the Company, along with the Company’s certain subsidiaries and certain individuals, in the Eastern District
of New York (the “Complaint”). The Complaint alleges that the Company improperly used UL’s trademark by claiming certain
products were certified by UL. On May 21, 2025, the Company and UL entered into a settlement and release agreement (the “Settlement
Agreement”) on mutually acceptable settlement terms. Pursuant to the Settlement Agreement, the Company agreed to pay UL an aggregate
amount of $
Inflation
Inflationary factors, such as increases in personnel and overhead costs, could impair the Company’s operating results. Although the Company does not believe that inflation has had a material impact on the Company’s financial position or results of operations to date, a high rate of inflation in the future may have an adverse effect on the Company’s ability to maintain current levels of gross margin and operating expenses as a percentage of sales revenue if the revenues do not increase with such increased costs.
13 — RELATED PARTY TRANSACTIONS
(A) Related party balances
Accounts receivable, net — a related party
| Name of Related Party | Relationship | Nature | September 30, 2025 | March 31, 2025 | ||||||||
| Fly E Bike SRL | $ | $ | ||||||||||
| Accounts receivable – a related party | ||||||||||||
| Less: Allowance for credit losses | ( | ) | ( | ) | ||||||||
| Accounts receivable, net – a related party | $ | $ | ||||||||||
During the three and six months ended September 30, 2025, the Company received $5,435 from Fly E Bike SRL.
32
Prepayments and other receivables — related parties
| Name of Related Party | Relationship | Nature | September 30, 2025 | March 31, 2025 | ||||||||
| Fly E Bike SRL | $ | $ | ||||||||||
| PJMG LLC | ||||||||||||
| Prepayments and other receivables – related parties | $ | $ |
During the six months ended September 30,
2025, the Company advanced $
On April 1, 2023, the Company agreed to retain
the services of PJMG, a company in which Mr. Guo, the Company’s former CFO who resigned on November 6, 2024, holds over
Long-term prepayment for software development – a related party
| Name of Related Party | Relationship | Nature | September 30, 2025 | March 31, 2025 | ||||||||
| DF Technology US Inc (“DFT”) | $ | $ | ||||||||||
| Long-term prepayment for software development — a related party | $ | $ | ||||||||||
In December 2023, the Company engaged DFT
for development of certain technology services. Mr. Guo, the Company’s former CFO who resigned on November 6, 2024, owns over
33
(B) Related party transactions
Revenues — a related party
| For the three Months Ended September 30 | For the Six Months Ended September 30 | |||||||||||||||||||
| Name of Related Party | Relationship | Nature | 2025 | 2024 | 2025 | 2024 | ||||||||||||||
| Fly E Bike SRL | $ | $ | $ | $ | ||||||||||||||||
| Revenues — a related parties | $ | $ | $ | $ | ||||||||||||||||
During the three months ended September 30, 2025
and 2024, Fly E Bike SRL, a distributor the Company works with and in which Mr. Ou holds over
(C) Other Related Party Transactions
On March 6, 2021, the Company and DGLG entered
into an engagement letter, pursuant to which the Company engaged DGLG as a consultant to assist the Company in its IPO planning, financing
and tax services. Mr. Guo, the Company’s former CFO who resigned on November 6, 2024, is a partner at DGLG. Under
the terms of the engagement agreement with DGLG, the Company has agreed to compensate DGLG for consulting services based on an hourly
fee arrangement. DGLG’s consulting fees were and for the three months ended September 30, 2025 and 2024, respectively,
and and $
On April 1, 2023, the Company agreed to retain
the services of PJMG, a company in which Mr. Guo, the Company’s former CFO who resigned on November 6, 2024, holds over
34
14 — DISPOSAL OF SUBSIDIARIES
During the three and six months ended September 30, 2025, the Company committed to the disposal of certain subsidiaries. The decision was driven by two primary factors: (1) to simplify the Company’s legal and operational structure, and (2) to create a more streamlined and transparent organizational structure, thereby reducing the complexity of consolidation across auditing, finance, and tax reporting. These subsidiaries were not part of a strategic exit from the New York region or the retail industry. Rather, the disposal was intended to enhance administrative efficiency and align the Company’s structure with its long-term operational goals.
In December 2024, the Company decided to proceed
with the disposal plan and sell
On March 11, 2025, the management team approved
to sell
On April 2, 2025, the management team approved
to sell
On May 6, 2025, the management team approved
to sell
On June 17, 2025, the management team approved
to sell
On
July 18, 2025, the management team approved to sell
35
On
August 19, 2025, the management team approved to sell
There was gain on the sale of subsidiaries of
$
The disposal of these subsidiaries were not considered discontinued operations under ASC 205-20, as their disposal did not represent a strategic shift that had a major effect on the Company’s operations and financial results.
As of March 31, 2025, the Company had classified the assets and liabilities of the subsidiaries that were sold on after March 31, 2025 as held for sale in accordance with ASC 360-10. The classification criteria were met when the management committed to a plan to sell.
Summarized Held for Sale Financial Information
A summary of the carrying amounts of major classes of assets and liabilities, which are included in assets and liabilities held for sale in the consolidated balance sheet, is as follows:
| September 30, 2025 | March 31, 2025 | |||||||
| ASSETS | ||||||||
| Cash | $ | $ | ||||||
| Inventories, net | ||||||||
| Prepayments and other receivables | ||||||||
| Property and equipment, net | ||||||||
| Security deposits | ||||||||
| Operating lease right-of-use assets | ||||||||
| Assets held for sale | $ | $ | ||||||
| LIABILITIES | ||||||||
| Short-term loan payables | $ | $ | ||||||
| Operating lease liabilities – current | ||||||||
| Operating lease liabilities – non-current | ||||||||
| Liabilities held for sale | $ | $ | ||||||
15 — SUBSEQUENT EVENTS
There were no significant events affecting the Company nor any of its subsidiaries after the end of the financial period and up to the date of this report requiring disclosure in this report.
36
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations
The following discussion of our financial condition and results of operations should be read in conjunction with the unaudited condensed consolidated financial statements and the notes thereto included in this quarterly report. The following discussion contains forward-looking statements. Actual results could differ materially from the results discussed in the forward-looking statements. See “Item 1A. Risk Factors” and “Cautionary Note Regarding Forward-Looking Statements”.
Overview
We are an EV company that is principally engaged in designing, installing, selling and renting E-motorcycles, E-bikes, E-scooters and related accessories under the brand “Fly E-Bike.” At Fly E-Bike, our commitment is to encourage people to incorporate eco-friendly transportation into their active lifestyles, ultimately contributing towards building a more environmentally friendly future.
Fly E-Bike was established in 2018 with its first store opened in New York. Our business has grown rapidly since then and we are now one of the leading providers of E-bikes for food delivery workers in New York City. As of December 16, 2025, we have 13 stores, including 12 retail stores in the U.S and one retail store in Canada. The Company offers rental services from selected locations in New York, Toronto, and Los Angeles. We also operate one online store at flyebike.com, focusing on selling E-motorcycles, E-bikes and E-scooters, serving customers in the United States. In addition, we plan to open a second online store focusing on selling gas bikes in the future. We plan to extend our business into South America and Europe in the future.
We have a diversified product portfolio that is designed to satisfy the various demands of our customers and address different urban travel scenarios. Additionally, we aim to refresh our product offerings continuously to align with evolving market trends. As of December 16, 2025, we offered 27 E-motorcycle products, 37 E-bike products and 38 E-scooter products.
We also operate a rental program to meet the increasing market demand for safe, UL-certified e-bikes in compliance with New York State regulations. The rental service, now available in New York City, and Los Angeles via the Go Fly rental service mobile app and select Fly E-Bike stores, provides users with a flexible and affordable e-bike rental option. As part of our growth strategy, we plan to expand the rental service to Miami in the near term.
We are currently in the process of developing a Fly E-Bike app, which is a management service mobile software for our EVs, enabling customers to purchase bikes, locate company stores, schedule bike repairs, and more. We aim to design an app that will bring users a comprehensive intelligent experience to create a safer and more satisfying riding life. The development of the app is still in its preliminary stage. We have launched a testing version of the app, which is currently unavailable to our customers. In December 2023, the Company engaged DF Technology US Inc (“DFT”) for certain technology services including the development of an enterprise resource planning system (“ERP system”), and in July 2024, the Company engaged DFT to develop a mobile phone application for its renal services, the GO FLY APP. The GO FLY APP is fully completed and delivered on September 9, 2024. The ERP system is fully completed and delivered on May 20, 2025.
We source a significant portion of our vehicle components from China and the United States, and then assemble them into our vehicles in a facility located in Maspeth, New York. For the three months ended September 30, 2025, we produced 1,146 E-motorcycles, 3,270 E-bikes and 756 E-scooters at the same facility. For the six months ended September 30, 2025, we produced 3,114 E-motorcycles, 4,783 E-bikes and 1,280 E-scooters at the same facility.
37
Recent Developments
Federal securities class action instituted on September 8, 2025
On September 8, 2025, a federal securities class action was filed in the United States District Court, Eastern District of New York, by plaintiff Dino Kurt, individually and on behalf of all others similarly situated, against defendants, the Company, chief executive officer (the “CEO”) Zhou Ou, and former chief financial officer (the “CFO”) Shiwen Feng. The complaint alleges violations of Sections 10(b) and 20(a) of the Exchange Act and Rule 10b-5 during the class period spanning from July 15, 2025, to August 14, 2025. The plaintiff claims that defendants provided materially false and misleading positive statements about revenue growth, brand reputation, and business expansion, while concealing or minimizing material adverse facts concerning the safety of the Company’s lithium battery and inadequate forecasting processes, which were already taking a material toll on E-vehicle (the “EV”) sales revenue. The plaintiff alleged when the Company filed a form NT 10-Q on August 14, 2025, which disclosed a 32% decrease in net revenues primarily driven by a decline in total units sold, attributed by the Company to “recent lithium-battery accidents involving E-Bikes and E-Scooters”; the price of Company’s common stock declined dramatically by about 87% in a single day, resulting in economic loss for the plaintiff and the class.
The relief sought includes determining that the action may be maintained as a class action, requiring defendants to pay damages sustained by the plaintiff and the class, and awarding pre-judgment and post-judgment interest, along with reasonable attorneys’ fees, expert fees, and other costs, with the monetary damages sought being certified to be in excess of $150,000.00.
Shareholder derivative action instituted on November 17, 2025
An action titled Kishan Shah, derivatively on behalf of FLY-E GROUP, INC. v. Zhou Ou, et al., was instituted on November 17, 2025 and is pending in the United States District Court, Eastern District of New York.
The principal parties include plaintiff Kishan Shah, representing the Company (the nominal defendant), against Individual defendants Zhou Ou, the Company’s CEO and Chairman, Shiwen Feng, the Company’s former CFO and director, Lun Feng, Bin Wang, and Zanfeng Zhang, former directors of the Company.
The factual basis centers on the individual defendants’ knowing or reckless breaches of fiduciary duties concerning Lithium Battery Misconduct (as defined below) during the relevant period of July 15, 2025, through August 14, 2025. Plaintiff alleges that defendants consistently represented that the Company’s EVs were safe, but concealed that the lithium batteries used in their products lacked required New York City safety certification, were substandard quality, and posed a significant safety hazard, having resulted in multiple deadly fires in the greater New York City area (the “Lithium Battery Misconduct”). The plaintiff alleged that that, when the Company filed a Form NT 10-Q on August 14, 2025, disclosing a 32% decline in net revenue due primarily to consumer apprehension stemming from an “increasing number of lithium-battery explosion incidents in New York,” causing the Company’s stock price to plummet approximately 87.1%. As a result of the alleged misconduct, the plaintiff claims that the Company has incurred and will continue to incur significant damages, including substantial legal fees and costs associated with the class action and related internal investigations, and many other expenditures.
The relief sought, on behalf of the Company, includes a declaration that the individual defendants breached their fiduciary duties, an award of damages against the individual defendants (jointly and severally), restitution and disgorgement of profits from the individual defendants, and court orders directing the Company to implement improved corporate governance and internal control procedures to prevent future damaging events.
Shareholder derivative action instituted on October 28, 2025
Due to the similar factual basis, on October 28, 2025, another shareholder derivative action, Martin Flynn, derivatively on behalf of FLY-E GROUP, INC. v. Zhou (Andy) Ou, et al., was instituted in the United States District Court, Eastern District of New York.
The principal parties are Plaintiff Martin Flynn, derivatively acting on behalf of the nominal defendant, the Company, against individual defendants who served as directors and officers, including Zhou Ou, the CEO and chairman of the board, Shiwen Feng, the former CFO, Bin Wang, Lun Feng, and Zanfeng Zhang, the former directors.
The action alleges that during the relevant time period (July 15, 2025, to August 14, 2025), these defendants breached their fiduciary duties and engaged in gross mismanagement by making materially false and misleading statements and omissions, specifically concerning the safety of the Company’s lithium battery. Although defendants provided overwhelmingly positive statements regarding growth and brand reputation, they concealed or failed to disclose the true impact of “recent lithium-battery accidents involving E-Bikes and E-Scooters” on sales revenues. The complaint alleged, when the Company filed a form NT 10-Q on August 14, 2025 disclosing a 32% decrease in net revenues attributed to a decline in units sold due to an “increasing number of lithium battery explosion incidents in New York,” which caused the Company’s stock price to drop approximately 87%. The misconduct resulted in substantial harm to the Company, including costs incurred for defending the separate Securities Class Action. The relief sought, on behalf of the Company, includes a declaration that the action may be maintained as a derivative action, an award of damages sustained by the Company, restitution and disgorgement of profits from the Individual Defendants, and the granting of appropriate equitable relief, such as the institution of appropriate corporate governance measures.
38
UL Litigation
On or about March 12, 2025, UL LLC (“UL”) filed a complaint against the Company, along with the Company’s certain subsidiaries and certain individuals, in the Eastern District of New York (the “Complaint”). The Complaint alleges that the Company improperly used UL’s trademark by claiming certain products were certified by UL. The Complaint seeks $2,000,000 for each instance an allegedly counterfeit UL mark was used and asserts claims for federal trademark infringement and counterfeiting, unfair competition and false designations of the origin and false and misleading representations, common law unfair competition, common law unjust enrichment, and unlawful deceptive acts and practices.
On May 21, 2025, Company, along with its certain subsidiaries and certain individuals, and UL entered into a settlement and release agreement (the “Settlement Agreement”) on mutually acceptable settlement terms. Pursuant to the Settlement Agreement, the Company and the other defendants agreed to pay UL an aggregate amount of $1,000,000 before November 30, 2025, and entered into a Consent Judgment and Permanent Injunction pursuant to which the Company and the other defendants agreed not to offer for sale, sell, or distribute products with UL Marks that were not tested and certified by UL. During the six months ended September 30, 2025, the Company paid $800,000 to UL. From October 1, 2025 to the date of this report, the Company paid $200,000 to UL.
The Settlement Agreement fully resolves all pending litigation between UL and the Company, and each party fully releases the other party from any and all past or present claims, demands, causes of action, obligations, damages, liabilities, expenses, or compensation of whatever kind or nature, that were or could have been asserted in connection with the Company’s sales of products with a UL Mark which were not tested and certified by UL.
2025 Reverse Stock Split
On March 10, 2025, the Company held a special meeting of stockholders. At the special meeting, the stockholders approved a proposal to amend the Company’s amended and restated certificate of incorporation to effect a reverse stock split of the Company’s issued and outstanding shares of common stock, par value $0.01 per share, by a ratio in the range of 1-for-2 to 1-for-15, with such ratio to be determined in the discretion of the board of directors of the Company and with such action to be effected at such time and date, if at all, as determined by the board of directors within one year after the conclusion of the special meeting.
On June 16, 2025, the board of directors approved a one-for-five (1:5) reverse stock split of the Company’s issued and outstanding shares of common stock (the “2025 First Reverse Stock Split”). On July 2, 2025, the Company filed with the Secretary of State of the State of Delaware the Second Certificate of Amendment to its Certificate of Incorporation (the “Certificate of Amendment”) to effect the 2025 First Reverse Stock Split. The 2025 First Reverse Stock Split became effective as of 5:00 p.m., Eastern Time, on July 3, 2025, and the Company’s common stock began trading on the Nasdaq Stock Market on a split-adjusted basis on July 7, 2025.
After the 2025 First Reverse Stock Split, every five (5) shares of the Company’s issued and outstanding common stock have been automatically converted into one share of common stock, without any change in the par value per share. In addition, (i) a proportionate adjustment has been made to the per share exercise price and the number of shares issuable upon the exercise of all outstanding warrants to purchase shares of common stock, and (ii) the number of shares reserved for issuance pursuant to the Company’s stock incentive plan has been reduced proportionately. Any fraction of a share of common stock created as a result of the 2025 First Reverse Stock Split was rounded up to the nearest whole share. The Company’s common stock continues to trade on the Nasdaq Capital Market under the symbol “FLYE.”
On September 15, 2025,the Company planned to hold a special meeting of stockholders, but adjourned to October 13, 2025 in order to achieve a quorum (the “Special Meeting”). At the special meeting, the stockholder approved a proposal to amend the Company’s amended and restated certificate of incorporation to effect a reverse stock split of the Company’s issued and outstanding shares of common stock, par value $0.01 per share, , by a ratio in the range of 1-for-2 to 1-for-20, with such ratio to be determined in the discretion of the board of directors of the Company and with such action to be effected at such time and date, if at all, as determined by the board of directors within one year after the conclusion of the special meeting.
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On October 13, 2025, the board of directors approved a one-for-twenty (1:20) reverse stock split of the Company’s issued and outstanding shares of common stock (the “2025 Second Reverse Stock Split”). On October 23, 2025, the Company filed with the Secretary of State of the State of Delaware the Second Certificate of Amendment to its Certificate of Incorporation (the “Certificate of Amendment”) to effect the 2025 Second Reverse Stock Split. The 2025 Second Reverse Stock Split became effective on November 4, 2025, and the Company’s common stock began trading on the Nasdaq Stock Market on a split-adjusted basis on November 4, 2025.
After the 2025 Second Reverse Stock Split, every twenty (20) shares of the Company’s issued and outstanding common stock have been automatically converted into one share of common stock, without any change in the par value per share. In addition, (i) a proportionate adjustment has been made to the per share exercise price and the number of shares issuable upon the exercise of all outstanding warrants to purchase shares of common stock, and (ii) the number of shares reserved for issuance pursuant to the Company’s stock incentive plan has been reduced proportionately. Any fraction of a share of common stock created as a result of the 2025 Second Reverse Stock Split was rounded up to the nearest whole share. The Company’s common stock continues to trade on the Nasdaq Capital Market under the symbol “FLYE.”
Unless otherwise noted, the share and per share information in this report reflects the two 2025 Reverse Stock Split.
Registered Direct Offering and Private Placement Offering
On June 2, 2025, we closed our registered direct offering of an aggregate of (i) 285,956 shares of our common stock, par value $0.01 and (ii) 571,912 warrants (the “Warrants”) to purchase 571,912 shares of common stock at a combined purchase price per share and accompanying Warrants of $24.28, resulting in net proceeds to us of $6.24 million after deducting placement agent fees and offering expenses. All of the shares (including shares underlying the Warrants) were registered under the Securities Act pursuant to a registration statement on Form S-1, as amended (File No. 333-286678), which was declared effective by the Securities and Exchange Commission on May 15, 2025. American Trust Investment Services, Inc. (“ATIS”) acted as the exclusive placement agent for the offering. We paid ATIS aggregate commissions of $219,430 and incurred offering expenses of $178,625.
On September 18, 2025, the Company entered into a securities purchase agreement with third-party individuals offering of (i) 687,500 shares of the common stock at the price of $16.0 per share for a total consideration of $11,000,000. During the Six months ended September 30, 2025, the Company received proceeds of $3,400,000 from the investors. The remaining net proceeds of $7,596,558 were held in escrow as of September 30, 2025, and were all received in October and November 2025. The disclosure that the closing of this transaction occurred on September 30, 2025, in the Form 8-K filed with the SEC was incorrect and is hereby corrected.
Disposal of Certain Subsidiaries
During the six months ended September 30, 2025, the Company disposed several subsidiaries as part of a disposal plan aimed at simplifying its legal and operational structure and improving administrative efficiency. The divestitures were not intended to be a strategic withdrawal from any specific geographic region or industry, but rather a measure to streamline the Company’s corporate structure and reduce complexity in financial reporting. Between April and September 2025, the Company sold 17 subsidiaries to third-party individuals in multiple transactions, for an aggregated cash consideration of approximately $0.9 million. See “Note 14— Disposal of Subsidiaries” in the accompanying consolidated financial statements for details.
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Key Factors that Affect Operating Results
Our results of operations and financial condition are affected by the general factors driving the U.S.’s electric two-wheeled vehicles industry, including, among others, the U.S.’s overall economic growth, the increase in per capita disposable income, the expansion of urbanization, the growth in consumer spending and consumption upgrades, the competitive environment, governmental policies and initiatives towards electric two-wheeled vehicles, as well as the general factors affecting the electric two-wheeled vehicles industry in overseas markets. Unfavorable changes in any of these general industry conditions could negatively affect demand for our products and materially and adversely affect our results of operations.
While our business is influenced by these general factors, our results of operations are more directly affected by company specific factors, including the following major factors:
New Customers
Our growth will depend on our ability to achieve sales targets, including our ability to attract new customers, which in turn depends in part on our ability to execute our retail strategy and produce effective marketing initiatives to expand our brand perception with prospective customers. As of December 16, 2025, we currently operate 13 stores, including 12 retail stores in the U.S. and one retail store in Canada. During the three months ended September 30, 2025, 9 retail stores in the U.S were sold for streamlining the Company’s corporate structure and reducing complexity in financial reporting and operating costs. We offer rental services from selected locations. We also operate one online store, focusing on selling E-motorcycles, E-bikes, and E-scooters and selling our product in the United States. It is critical for us to successfully manage production ramp-up and quality control to deliver to customers in adequate volume and quality.
With respect to branding and marketing, we plan to raise brand awareness through both traditional and social media channels and connect with customers through physical touchpoints such as our retail stores and distributors. We believe that effective marketing can boost our brand awareness and contribute to increased sales. In addition, we intend to provide superior customer experience through our trained technicians who will provide after-sale maintenance and repair services at our retail stores. An inability to attract new customers would substantially impact our ability to grow revenue or improve our financial results.
Product Sales Price and Volume
For the three months ended September 30, 2025, our net revenues decreased by 42.7% to $3.9 million, compared to $6.8 million for the same period in 2024, which was primarily driven by a decrease in average unit price of EVs which dropped by 61% as a result of lowering the selling prices to reduce aged inventory for the three months ended September 30, 2025.
For the six months ended September 30, 2025, our net revenues decreased by 37.2% to $9.2 million, compared to $14.7 million for the same period in 2024, which was primarily driven by a decrease in total units sold and reductions in selling prices to reduce aged inventory for the six months ended September 30, 2025.
We currently have a streamlined product portfolio consisting of three categories, with multiple models and specifications for each category. Our ability to increase the sales price and volume will depend on our ability to continually enhance our brand to attract customers, as well as our ability to successfully operate our retail stores and expand our sales network globally. However, our product sales price is influenced by various factors such as market demand and competitors’ pricing, and although we continue working on product improvements and retail expansion, there can be no guarantee of sustained sales price increase or improved sales volume. If our prices remain stable, increasing sales volume would become important for continued revenue growth, and failure to do so would significantly impact our ability to grow revenue or improve our financial results.
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Employees
Our payroll expenses were $0.6 million for the three months ended September 30, 2025, compared to $0.9 million for the three months ended September 30, 2024. Our payroll expenses were $1.2 million for the six months ended September 30, 2025, compared to $1.5 million for the six months ended September 30, 2024. As 17 stores were sold and 1 store was closed during the six months ended September 30, 2025, and the Company is planning to sell more stores in the subsequent quarter we expect a decrease in payroll expenses in the next quarter due to reduced demand for store sales staff. Each of our retail stores has a minimum of two employees, and additional office employees will be hired to support retail stores in customer service and marketing. In addition, to maintain excellent customer service in our retail stores, each store will have at least one trained repair professional. Effective management of payroll expenses remains crucial to our ability to grow revenue and enhance our financial results, especially as we navigate a reduced workforce.
Vendor and Supply Management
During the three months ended September 30, 2025, we worked with two principal vendors, Depcl Corp. and Xiamen Innolabs Technology Co., Ltd, each of which respectively supplied approximately 72.0% and 6.6% of the accessories and components used in all our products for the three months ended September 30, 2025. During the six months ended September 30, 2025, we worked with two principal vendors, Depcl Corp. and Xiamen Innolabs Technology Co., Ltd, each of which respectively supplied approximately 68% and 7.6% of the accessories and components used in all our products for the six months ended September 30, 2025.
We have implemented a centralized vendor management system that streamlines purchasing, enhances our negotiating power and maintains strong vendor relationships. We believe this approach delivers cost savings, improved risk management and increased negotiating power, ultimately benefiting our operating results. Changes in costs related to our major vendors can significantly affect our financial condition and operating results.
Market Trends, Competition and Tariff
We operate in a rapidly growing EV market with a special focus on E-motorcycles, E-bikes and E-scooters. However, increased competition may pressure prices and margins, reducing sales volume, revenues, and sales margin for us. Additionally, marketing and advertising costs may rise as we differentiate ourselves and maintain our market position. Moreover, competitors may impact customer acquisition and retention, satisfaction and loyalty. While we believe we maintain competitive advantages in several areas, including brand, product design and quality, smart features, omnichannel retail model, customer satisfaction and loyalty, we must continuously innovate, invest in research and development and marketing to maintain our competitive edge and unique selling points. Recently, the U.S. government issued executive orders imposing tariffs on products from key international suppliers, citing national security and public health concerns. These tariffs are expected to impact a wide range of imported goods, including components used in e-bike and e-scooter manufacturing. 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 and e-scooters 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 and e-scooter market.
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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 substantial majority of our revenues from sales of E-bikes, E-motorcycles and E-scooters directly to customers through our online store and retail stores, and to our distributors.
Accessories and spare parts sales. We also sell accessories and spare parts for our EVs, such as rear storage boxes and front baskets. In addition, we offer Fly E-Bike branded accessories and general merchandise, such as decorative car plates, key chains and apparel.
Service revenues. We also provide repair services at our retail stores for a fee. The Company operates rental business primarily from the Go Fly rental mobile app and selected Fly E-Bike stores that provide users with a flexible and affordable e-bike rental option.
Cost of Sales
Cost of sales includes product costs, warehouse rent expenses, payroll costs, depreciation costs, inventory reserves, warranty costs, and logistic costs. The logistic costs incurred to receive products from our vendors are included in our inventory and recognized as cost of sales upon sale of products to our customers.
Gross Profit and Gross Margin
We calculate gross profit as net sales less cost of revenue. Gross margin represents gross profit as a percentage of net sales.
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Selling, General and Administrative Expenses
Selling, general and administrative expenses primarily consist of retail operational expenses, salaries and benefits costs, marketing, advertising, and corporate overhead.
Marketing costs primarily consist of advertising and payroll and related expenses for personnel engaged in marketing and selling activities.
We expect that our selling and marketing expenses will decrease in the foreseeable future, as more retail stores are expected to be sold with reduced selling and marketing activities.
General and administrative expenses primarily consist of costs for corporate functions, including payroll and related expenses, facilities and equipment expenses, such as depreciation and amortization expense and rent, and professional fees. We expect that our general and administrative will decrease in the foreseeable future, as more retail stores are expected to be sold with reduced general and administrative activities.
Non-GAAP Financial Measures
To supplement our financial information presented in accordance with the generally accepted accounting principles in the United States (the “U.S. GAAP”), management periodically uses certain “non-GAAP financial measures,” as such term is defined under the rules of the SEC, to clarify and enhance understanding of past performance and prospects for the future. Generally, a non-GAAP financial measure is a numerical measure of a company’s operating performance, financial position or cash flows that excludes or includes amounts that are included in or excluded from the most directly comparable measure calculated and presented in accordance with U.S. GAAP. For example, non-GAAP measures may exclude the impact of certain items such as acquisitions, divestitures, gains, losses and impairments, or items outside of management’s control. Management believes that the following non-GAAP financial measure provides investors and analysts useful insight into our financial position and operating performance. Any non-GAAP measure provided should be viewed in addition to, and not as an alternative to, the most directly comparable measure determined in accordance with U.S. GAAP. Further, the calculation of these non-GAAP financial measures may differ from the calculation of similarly titled financial measures presented by other companies and therefore may not be comparable among companies.
We use EBITDA (earnings before interest, taxes, depreciation, and amortization) to evaluate our operating performance. We believe EBITDA provides additional insight into our underlying, ongoing operating performance and facilitates year-to-year comparisons by excluding the earnings impact of interest, tax, depreciation and amortization and that presenting EBITDA is more representative of our operational performance and may be more useful for investors.
We reconcile our non-GAAP financial measure to our net income, which is our most directly comparable financial measure calculated and presented in accordance with U.S. GAAP. EBITDA includes adjustments for provision for income taxes, as applicable, interest income and expense, depreciation, and amortization. EBITDA does not represent and should not be considered an alternative to net income as determined by U.S. GAAP, and our calculations thereof may not be comparable to those reported by other companies. We believe EBITDA is an important measure of operating performance and provides useful information to investors because it highlights trends in our business that may not otherwise be apparent when relying solely on U.S. GAAP measures and because it eliminates items that have less bearing on our operating performance. EBITDA, as presented herein, is a supplemental measure of our performance that is not required by, or presented in accordance with, U.S. GAAP. We use non-GAAP financial measures as supplements to our U.S. GAAP results in order to provide a more complete understanding of the factors and trends affecting our business. EBITDA is a measure of operating performance that is not defined by U.S. GAAP and should not be considered a substitute for net (loss) income as determined in accordance with U.S. GAAP.
EBITDA along with a reconciliation to net income is shown within the Results of Operations below.
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Results of Operations for the Three Months Ended September 30, 2025 and 2024
The following table sets forth the components of our results of operations for the three months ended September 30, 2025 and 2024:
| For the Three Months Ended September 30, | ||||||||||||||||
| 2025 | 2024 | Change | Percentage Change | |||||||||||||
| Revenues, Net | $ | 3,908,862 | $ | 6,824,406 | $ | (2,915,544 | ) | (42.7 | )% | |||||||
| Cost of Revenues | 2,932,341 | 3,919,952 | (987,611 | ) | (25.2 | )% | ||||||||||
| Gross Profit | 976,521 | 2,904,454 | (1,927,933 | ) | (66.4 | )% | ||||||||||
| Operating Expenses | ||||||||||||||||
| Selling Expenses | 1,027,726 | 2,041,435 | (1,013,709 | ) | (49.7 | )% | ||||||||||
| General and Administrative Expenses | 997,218 | 2,094,078 | (1,096,860 | ) | (52.4 | )% | ||||||||||
| Total Operating Expenses | 2,024,944 | 4,135,513 | (2,110,569 | ) | (51.0 | )% | ||||||||||
| Loss from Operations | (1,048,423 | ) | (1,231,059 | ) | 182,636 | (14.8 | )% | |||||||||
| Other Expenses, Net | (148,153 | ) | (53,929 | ) | (94,224 | ) | 174.7 | % | ||||||||
| Interest Expense, Net | (539,537 | ) | (23,795 | ) | (515,742 | ) | 2,167.4 | % | ||||||||
| Income Taxes Benefit (Expense) | (40,012 | ) | 165,935 | (205,947 | ) | (124.1 | )% | |||||||||
| Net Loss | $ | (1,776,125 | ) | $ | (1,142,848 | ) | $ | (633,277 | ) | 55.4 | % | |||||
Revenues
| For the Three Months Ended September 30, | ||||||||||||||||
| 2025 | 2024 | Change | Percentage Change | |||||||||||||
| Sales-Retail | $ | 2,071,031 | $ | 5,923,576 | $ | (3,896,545 | ) | (65.8 | )% | |||||||
| Sales-Wholesale | $ | 1,722,868 | $ | 900,830 | $ | 822,038 | 91.3 | % | ||||||||
| Sales-Rental services | $ | 158,963 | $ | — | $ | 158,963 | N/A | |||||||||
| Total Net Revenues | $ | 3,908,862 | $ | 6,824,406 | $ | (2,915,544 | ) | (42.7 | )% | |||||||
For the three months ended September 30, 2025, our net revenues decreased by 42.7% to $2.9 million, compared to $6.8 million for the same period in 2024, which was primarily driven by decrease in average unit price of EV s, which dropped by 61% as a result of lowering the selling prices to reduce aged inventory for the three months ended September 30, 2025. The reason for, and the percentage of the decrease in net revenues for the three months ended September 30, 2025 compared to the figure for the same period in 2024 that were disclosed in the NT 10-Q filed with the SEC on November 17, 2025, was incorrect and is hereby corrected.
Our retail sales revenue decreased by $3.9 million, or 65.8%, from $5.9 million for the three months ended September 30, 2024 to $2.0 million for the three months ended September 30, 2025. Our wholesale revenue increased by $0.8 million, or 91.3%, from $0.9 million for the three months ended September 30, 2024 to $1.7 million for the three months ended September 30, 2025. The decrease in retail sales revenue is mainly due to recent lithium-battery accidents involving E-Bikes and E-Scooters. With an increasing number of lithium-battery explosion incidents in New York, customers are less inclined to purchase E-Bikes. Consequently, sales have declined as customers opt for oil-powered vehicles over electric vehicles. The decrease in retail sales also attributed in part to the closures and disposition of our retail stores during the three months ended September 30, 2025. The increase in wholesales revenue was driven primarily by revenue contribution from the dispositioned entities during the three months ended September 30, 2025. Although certain retail stores were sold, these stores continued to purchase products from the Company, which contributes an increase of wholesale revenue.
Cost of Revenues
Cost of revenues decreased by 25.2%, from $3.9 million for the three months ended September 30, 2024, to $2.9 million for the three months ended September 30, 2025. The decrease in cost of revenues was primarily attributable to a reduction in sales volume, as discussed above.
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Gross Margin
The following table shows our gross profit and gross margin for the three months ended September 30, 2025 and 2024:
| For the Three Months Ended September 30, | ||||||||||||||||
| 2025 | 2024 | Change | Percentage Change | |||||||||||||
| Gross Profit | $ | 976,521 | $ | 2,904,454 | $ | (1,927,933 | ) | (66.4 | )% | |||||||
| Gross Margin | 25.0 | % | 42.6 | % | ||||||||||||
Gross profit for the three months ended September 30, 2025 and 2024 was $1.0 million and $2.9 million, respectively. Gross margin was 25.0% and 42.6% for the three months ended September 30, 2025 and 2024, respectively. The decrease in gross margin was mainly due to a combined effect of decrease in average unit price of EVs, which dropped by 61% for the three months ended September 30, 2025 and the increased revenues from rental business with higher margin than our other businesses. The rental business was launched in the fourth quarter of 2024. Gross margin of rental business was 79.8% and nil for the three months ended September 30, 2025 and 2024, respectively.
Total Operating Expenses
The following table sets forth the components of our total operating expenses for the three months ended September 30, 2025 and 2024:
| For the Three Months Ended September 30, | ||||||||||||||||
| 2025 | 2024 | Change | Percentage Change | |||||||||||||
| Selling Expenses | $ | 1,027,726 | $ | 2,041,435 | $ | (1,013,709 | ) | (49.7 | )% | |||||||
| General and Administrative Expenses | 997,218 | 2,094,078 | (1,096,860 | ) | (52.4 | )% | ||||||||||
| Total Operating Expenses | $ | 2,024,944 | $ | 4,135,513 | $ | (2,110,569 | ) | (51.0 | )% | |||||||
| Percentage of Revenue | 51.8 | % | 60.6 | % | ||||||||||||
Total operating expenses were $2.0 million for the three months ended September 30, 2025, a decrease of $2.1 million, or 51.0%, compared to $4.1 million for the three months ended September 30, 2024. The increase in operating expenses was attributable to the increase in our depreciation expense, professional fees, product and software development expenses, as more fully discussed below.
Selling Expenses
Selling expenses primarily consist of payroll expenses, rent, and advertising expenses of retail stores. Total payroll expenses were $0.6 million for the three months ended September 30, 2025, compared to $0.9 million for the three months ended September 30, 2024. Rent was $0.3 million for the three months ended September 30, 2025, compared to $0.8 million for the three months ended September 30, 2024. Advertising expenses were $15,457 for the three months ended September 30, 2025, compared to $129,542 for the three months ended September 30, 2024 . The decrease in these expenses was primarily due to the closures and dispositions of retail stores during this quarter.
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General and Administrative Expenses
General and administrative expenses decreased during the three months ended September 30, 2025 compared to the same period of previous year. Professional fees decreased to $0.5 million for the three months ended September 30, 2025, compared to $0.9 million for the three months ended September 30, 2024, primarily attributable to the decrease in audit fee, consulting fee, legal fee and IR expenses associated with our public offering and ongoing reporting obligations. Payroll expenses decreased to $0.1 million for the three months ended September 30, 2025 from $0.4 million for the three months ended September 30, 2024 primarily due to decrease in headcount of office assistants. Depreciation expense increased to $0.06 million for the three months ended September 30, 2025, compared to $0.04 million for the same period in prior year due to the increasing cost basis of fixed assets.
Interest expenses, net
Interest expenses, net were $0.54 million for the three months ended September 30, 2025, an increase of $0.52 million from interest expenses, net of $0.02 million for the three months ended September 30, 2024. This increase was primarily because of an increase in loans payable with higher average annual interest rate to finance the business operation of the Company for the three months ended September 30, 2025.
Income Tax Benefits (Provisions)
Income taxes expense was $40,012 for the three months ended September 30, 2025, a change from income tax benefit of $165,935 for the three months ended September 30, 2024. Although the Company incurred pre-tax losses in both periods, the change was primarily because of differences in the recognition of deferred tax assets and related valuation allowance.
Net Loss
Net loss was $1.8 million for the three months ended September 30, 2025, an increase of $0.6 million, or 55.4%, from net loss of $1.1 million for the three months ended September 30, 2024, which was mainly attributable to the reasons discussed above.
EBITDA
The following table sets forth the components of our EBITDA for the three months ended September 30, 2025 and 2024:
| For the Three Months Ended September 30, | ||||||||||||||||
| 2025 | 2024 | Change | Percentage Change | |||||||||||||
| Net loss | $ | (1,776,125 | ) | $ | (1,142,848 | ) | $ | (633,277 | ) | 55.4 | % | |||||
| Income tax provision (benefit) | 40,012 | (165,935 | ) | 205,947 | (124.1 | )% | ||||||||||
| Depreciation | 204,466 | 85,859 | 118,607 | 138.1 | % | |||||||||||
| Interest Expenses | 539,537 | 23,795 | 515,742 | 2,167.4 | % | |||||||||||
| Amortization | 27,446 | 7,895 | 19,551 | 247.6 | % | |||||||||||
| EBITDA | $ | (964,664 | ) | $ | (1,191,234 | ) | $ | 226,570 | (19.0 | )% | ||||||
| Percentage of Revenue | (24.7 | )% | (17.5 | )% | (7.2 | )% | ||||||||||
Before interest expenses, income tax, depreciation, and amortization, for the three months ended September 30, 2025, our net loss was approximately $1.0 million, a decrease of approximately $0.2 million, compared to net loss of $1.2 million for the three months ended September 30, 2024, which was mainly attributable to the decrease in revenue, selling expenses and general and administrative expenses described above. The ratio of EBITDA to revenue was negative 24.7% and negative 17.5% for the three months ended September 30, 2025 and 2024, respectively.
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Results of Operations for the Six Months Ended September 30, 2025 and 2024
The following table sets forth the components of our results of operations for the six months ended September 30, 2025 and 2024:
| For the Six Months Ended September 30, | ||||||||||||||||
| 2025 | 2024 | Change | Percentage Change | |||||||||||||
| Revenues, Net | $ | 9,237,060 | $ | 14,697,832 | $ | (5,460,772 | ) | (37.2 | )% | |||||||
| Cost of Revenues | 5,999,164 | 8,693,744 | (2,694,580 | ) | (31.0 | )% | ||||||||||
| Gross Profit | 3,237,896 | 6,004,088 | (2,766,192 | ) | (46.1 | )% | ||||||||||
| Operating Expenses | ||||||||||||||||
| Selling Expenses | 2,348,943 | 3,653,930 | (1,304,987 | ) | (35.7 | )% | ||||||||||
| General and Administrative Expenses | 3,442,151 | 3,626,716 | (184,565 | ) | (5.1 | )% | ||||||||||
| Total Operating Expenses | 5,791,094 | 7,280,646 | (1,489,552 | ) | (20.5 | )% | ||||||||||
| Loss from Operations | (2,553,198 | ) | (1,276,558 | ) | (1,276,640 | ) | 100.0 | % | ||||||||
| Other Expenses, Net | (156,051 | ) | (47,411 | ) | (108,640 | ) | 229.1 | % | ||||||||
| Interest Expenses, Net | (1,085,771 | ) | (91,877 | ) | (993,894 | ) | 1,081.8 | % | ||||||||
| Income Taxes Benefit (Expense) | 10,247 | 93,490 | (83,243 | ) | (89.0 | )% | ||||||||||
| Net Loss | $ | (3,784,773 | ) | $ | (1,322,356 | ) | $ | (2,462,417 | ) | 186.2 | % | |||||
Revenues
| For the Six Months Ended September 30, | ||||||||||||||||
| 2025 | 2024 | Change | Percentage Change | |||||||||||||
| Sales-Retail | $ | 5,789,860 | $ | 12,793,994 | $ | (7,004,134 | ) | (54.7 | )% | |||||||
| Sales-Wholesale | $ | 3,150,099 | $ | 1,903,838 | $ | 1,246,261 | 65.5 | % | ||||||||
| Sales-rental services | $ | 297,101 | $ | — | $ | 297,101 | N/A | |||||||||
| Total Net Revenues | $ | 9,237,060 | $ | 14,697,832 | $ | (5,460,772 | ) | (37.2 | )% | |||||||
Our net revenues were $9.2 million for the six months ended September 30, 2025, a decrease of 37.2%, from $14.7 million for the six months ended September 30, 2024. The decrease in our net revenues was driven by a decrease in total units sold, which decreased by 2,924 units, from 31,936 units for the six months ended September 30, 2024 to 29,012 units for the six months ended September 30, 2025, and as a result of lowering the selling prices to reduce aged inventory. From the six months ended September 30, 2024 to the six months ended September 30, 2025, while the number of units sold of certain other types of products increased, the quantities of motorcycles and batteries sold, which normally contribute significantly to revenues, decreased by 641 units and 5,332 units, respectively, thereby resulting in an overall decrease in the total number of units sold.
Our retail sales revenue decreased by $7.0 million, or 54.7%, from $12.8 million for the six months ended September 30, 2024 to $5.8 million for the six months ended September 30, 2025. Our wholesale revenue increased by $1.2 million, or 65.5%, from $1.9 million for the six months ended September 30, 2024 to $3.2 million for the six months ended September 30, 2025. The decrease in retail sales revenue is mainly due to decrease in number of retail stores during the six months ended September 30, 2025. The increase in wholesales revenue was driven primarily by contributions from the disposed entities during the six months ended September 30, 2025. Although certain retail stores were sold, these stores continued to purchase products from the Company, which contributed to the increase of wholesale revenue.
Cost of Revenues
Cost of revenues decreased by 31.0 %, from $8.7 million for the six months ended September 30, 2024, to $6.0 million for the six months ended September 30, 2025. The decrease in cost of revenues was primarily attributable to a reduction in battery sales volume, as discussed previously. These factors collectively contributed to the overall decrease in cost of revenues.
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Gross Margin
The following table shows our gross profit and gross margin for the six months ended September 30, 2025 and 2024:
| For the Six Months Ended September 30, | ||||||||||||||||
| 2025 | 2024 | Change | Percentage Change | |||||||||||||
| Gross Profit | $ | 3,237,896 | $ | 6,004,088 | $ | (2,766,192 | ) | (46.1 | )% | |||||||
| Gross Margin | 35.1 | % | 40.9 | % | ||||||||||||
Gross profit for the six months ended September 30, 2025 and 2024 was $3.2 million and $6.0 million, respectively. Gross margin was 35.1% and 40.9% for the six months ended September 30, 2025 and 2024, respectively. The decrease in gross margin was driven primarily by the decrease of the average sale price of our EVs for the six months ended September 30, 2025 when compared with the six months ended September 30, 2024, and increased revenues from rental business with higher margin than our other businesses.
Total Operating Expenses
The following table sets forth the components of our total operating expenses for the six months ended September 30, 2025 and 2024:
| For the Six Months Ended September 30, | ||||||||||||||||
| 2025 | 2024 | Change | Percentage Change | |||||||||||||
| Selling Expenses | $ | 2,348,943 | $ | 3,653,930 | $ | (1,304,987 | ) | (35.7 | )% | |||||||
| General and Administrative Expenses | 3,442,151 | 3,626,716 | (184,565 | ) | (5.1 | )% | ||||||||||
| Total Operating Expenses | $ | 5,791,094 | $ | 7,280,646 | $ | (1,489,552 | ) | (20.5 | )% | |||||||
| Percentage of Revenue | 62.7 | % | 49.5 | % | ||||||||||||
Total operating expenses were $5.8 million for the six months ended September 30, 2025, a decrease of $1.5 million, or 20.5%, compared to $7.3 million for the six months ended September 30, 2024. The decrease in operating expenses was attributable to the decrease in our payroll expenses, rent expenses, meals and entertainment expenses, professional fees, and development expenses as we downsized our business as discussed below.
Selling Expenses
Selling expenses primarily consist of payroll expenses, rent, utilities expenses, and advertising expenses of retail stores. Total payroll expenses were $1.2 million for the six months ended September 30, 2025, compared to $1.5 million for the six months ended September 30, 2024. Rent expenses were $0.7 million for the six months ended September 30, 2025, compared to $1.5 million for the six months ended September 30, 2024. Utilities expenses were $81,468 for the six months ended September 30, 2025, compared to $119,252 for the six months ended September 30, 2024. Advertising expenses were $32,870 for the six months ended September 30, 2025, compared to $0.2 million for the six months ended September 30, 2024 . The decrease in these expenses was primarily due to the closures and dispositions of retail stores in the six months ended September 30, 2025.
General and Administrative Expenses
General and administrative expenses decreased during the six months ended September 30, 2025 compared to the previous year. Professional fees increased to $2.0 million for the six months ended September 30, 2024, compared to $1.3 million for the six months ended September 30, 2024, primarily attributable to the increase in audit fee, consulting fee, legal fee and IR expenses associated with our initial public offering and ongoing reporting obligations. Payroll expenses decreased to $0.4 million for the six months ended September 30, 2025 from $0.8 million for the six months ended September 30, 2024 primarily due to employees terminated in operation and accounting departments. Insurance expenses decreased to $0.3 million for the six months ended September 30, 2025, compared to $0.5 million for the same period of prior year as a result of less insurance policies purchased for closed stores during the six months ended September 30, 2025. Software development fee decreased to $0.27 million for the six months ended September 30, 2025, compared to $0.31 million for the same period in prior year as a result of less maintenance services required for Fly E-Bike app as a result of the closures and dispositions of retail stores during the six months ended September 30, 2025.
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Income Tax Benefit
Income tax benefit was $10,247 for the six months ended September 30, 2025, a decrease of $83,243 from income tax benefit of $93,490 for the six months ended September 30, 2024. This decrease was primarily because of differences in the recognition of deferred tax assets and related valuation allowance for the six months ended September 30, 2025.
Net Loss
Net loss was $3.8 million for the six months ended September 30, 2025, an increase of $2.5 million, or 186.2%, from net loss of $1.3 million for the six months ended September 30, 2024, which was mainly attributable to the reasons discussed above.
EBITDA
The following table sets forth the components of our EBITDA for the six months ended September 30, 2025 and 2024:
| For the Six Months Ended September 30, | ||||||||||||||||
| 2025 | 2024 | Change | Percentage Change | |||||||||||||
| Loss from Operations | $ | (3,784,773 | ) | $ | (1,322,356 | ) | $ | (2,462,417 | ) | 186.2 | % | |||||
| Income Tax Benefit | (10,247 | ) | (93,490 | ) | 83,243 | (89.0 | )% | |||||||||
| Depreciation | 417,258 | 180,910 | 236,348 | 130.6 | % | |||||||||||
| Interest Expenses | 1,085,771 | 91,877 | 993,894 | 1081.8 | % | |||||||||||
| Amortization | 54,761 | 8,846 | 45,915 | 519.0 | % | |||||||||||
| EBITDA | $ | (2,237,230 | ) | $ | (1,134,213 | ) | $ | (1,103,017 | ) | 97.2 | % | |||||
| Percentage of Revenue | (24.2 | )% | (7.7 | )% | (16.5 | )% | ||||||||||
Before interest expenses, income tax, depreciation, and amortization, for the six months ended September 30, 2025, our net loss was $2.2 million, an increase of $1.1 million, compared to net loss of $1.1 million for the six months ended September 30, 2024, which was mainly attributable to the decrease in revenue, decrease in selling and general and administrative expense described above. The ratio of EBITDA to revenue was negative 24.2% and 7.7% for the six months ended September 30, 2025 and 2024, respectively.
Liquidity and Capital Resources
As of September 30, 2025, we had cash of $2.5 million. We had working capital of $8.1 million and $1.3 million as of September 30, 2025 and March 31, 2025, respectively. We had net loss of $3.7 million and $1.3 million for the six months ended September 30, 2025 and 2024, respectively. During the six months ended September 30, 2025, net cash used in operating activities of the Company was approximately $7.7 million. As of September 30, 2025, the Company had a current portion of contractual obligation of approximately $7.8 million, including short-term loan payables of approximately $5.5 million, current portion of long-term loan payables of approximately $0.2 million, accrued UL penalty of $0.2 million and current portion of operating lease liabilities of approximately $1.8 million.
We have funded our working capital and other capital requirements in the past primarily by equity contributions from our stockholders and net proceeds received from IPO and equity financing, cash flow from operations, and bank loans. Our ability to repay our current obligation will depend on the future realization of our current assets. Management has considered the historical experience, the economy, trends in the retail industry, the expected collectability of the accounts receivable and the realization of the inventories as of September 30, 2025. Our ability to continue to fund working capital and other capital requirements may be affected by general economic, competitive and other factors, many of which are outside of our control.
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On June 4, 2025, the Company issued 285,956 shares of common stock, at a price of $24.28 per share in its follow-on public offering for gross proceeds of $6.9 million, prior to deducting the placement agent’s fees and offering expenses payable by the Company.
On September 18, 2025, the Company entered into a securities purchase agreement with third-party individuals offering of (i) 687,500 shares of the common stock at the price of $16.0 per share for a total consideration of $11,000,000. During the Six months ended September 30, 2025, the Company received proceeds of $3,400,000 from the investors. The remaining net proceeds of $7,596,558 were all collected in October and November 2025.
As of September 30, 2025, the Company had working capital of approximately $8.1 million and cash of approximately $2.5 million. The main cash outflow for the six months ended September 30, 2025 was from net loss of $3.8 million, a decrease in accounts payable of $0.7 million, an increase in accounts receivable of $1.0 million, an increase in inventory of $1.1 million, and an increase in prepayments and other receivables of $1.4 million. As of September 30, 2025, the Company had a current portion of contractual obligation of approximately $7.8 million, including short-term loan payables of approximately $5.5 million, current portion of long-term loan payables of approximately $0.2 million, accrued UL penalty of $0.2 million and current portion of operating lease liabilities of approximately $1.8 million. The Company became default of repayment for loan with Peapack-Gladstone Bank since August 31, 2025. For the six months ended September 30, 2025, the Company paid $373,683 on interest of the line of credit without further penalty. From October 1 to December 16, 2025, the Company paid $1,000,000, $172,693 and $117,921 on principal, interest and forbearance fee of the loan, respectively. Up to the date of this report, the Company entered into forbearance and modification agreement with the bank on November 7, 2025 for extension of repayment deadline with interest rate of 12.875% to March 31, 2026. These factors raise substantial doubt as to the Company’s ability to continue as a going concern. For the next 12 months from the issuance date of this report, we plan to alleviate the going concern risk through (i) equity financing to support the Company’s working capital; (ii) other available sources of financing (including debt) from banks and other financial institutions; and (iii) financial support from the Company’s related parties. The issuance and sale of additional equity would result in further dilution to our stockholders. The incurrence of indebtedness would result in increased fixed obligations and could result in operating covenants that would restrict our operations. We cannot assure you that financing will be available in amounts or on terms acceptable to us, if at all. In the event that financing sources are not available, or that we are unsuccessful in increasing our gross profit margin and reducing operating losses, we may be unable to implement our current plans for expansion, repay debt obligations or respond to competitive pressures, any of which would have a material adverse effect on our business, financial condition and results of operations and may materially adversely affect our ability to continue as a going concern. The unaudited condensed consolidated financial statements do not include any adjustments related to the recoverability and classification of recorded assets or the amounts and classification of liabilities or any other adjustments that might be necessary should we be unable to continue as a going concern.
Our accounts receivable represent primarily accounts receivable from distributors that purchased our EVs and other products. As of September 30, 2025 and March 31, 2025, our accounts receivable, net of allowance for credit losses, was $1.5 million and $0.5 million, respectively. Our accounts receivable turnover period decreased from 71 days in the year ended March 31, 2025 to 69 days in the six months ended September 30, 2025 which was mainly attributable to the implementing stricter credit policies to customers.
Our accounts payable represent primarily accounts payable to suppliers from whom we purchased accessories and components for our products. As of September 30, 2025 and March 31, 2025, our accounts payable were $0.6 million and $1.3 million, respectively. Our accounts payable turnover period decreased to 20 days for the six months ended September 30, 2025 from 33 days for the year ended March 31, 2025, which was primarily due to the Company’s accelerated payments to certain suppliers during the quarter. The company pay invoices more promptly to ensure continued favorable terms and reliable service.
Our prepayments and other receivables primarily represent prepayments to vendors and other service providers. These prepayments and receivables increased by $2.3 million, from $3.7 million as of March 31, 2025, to $5.9 million as of September 30, 2025. This significant increase is mainly due to the launch of Company’s E-bike rental services, which required additional inventory. As a result, during the six months ended September 30, 2025, the Company made substantial prepayments to vendors to secure inventory for the new services.
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Our inventories primarily include our EVs, their accessories and spare parts. As of September 30, 2025 and March 31, 2025, our inventories, net of allowance, were $6.5 million and $6.4 million, respectively. The increase in inventories was primarily due to our plan for the new rental and maintenance services business. Our inventory turnover days increased to 273 days in the six months ended September 30, 2025, from 143 days in the year ended March 31, 2025, which was primarily due to strategic inventory buildup, allowing us to start new services.
As of September 30, 2025 and March 31, 2025, the total outstanding amount of loan principal was $7.8 million and $7.4 million, respectively. For the six months ended September 30, 2025 and 2024, the interest expenses on our loans amounted to $1.1 million and $91,877, respectively. See Note 8 to the Unaudited Condensed Consolidated Financial Statements included within this quarterly report for further information on details of our outstanding loans.
The following table summarizes our cash flow data for the six months ended September 30, 2025 and 2024:
| For the Six Months Ended September 30, | ||||||||
| 2025 | 2024 | |||||||
| Net Cash Used in Operating Activities | $ | (7,707,529 | ) | $ | (9,412,145 | ) | ||
| Net Cash Used in Investing Activities | (452,040 | ) | (2,845,468 | ) | ||||
| Net Cash Provided by Financing Activities | 9,803,019 | 12,126,060 | ||||||
| Net changes in cash including cash classified within current assets held for sale | $ | 1,643,450 | $ | (131,553 | ) | |||
Operating Activities
Net cash used in operating activities for the six months ended September 30, 2025 was $7.7 million, which was due to net loss of $3.8 million, a decrease in accounts payable of $0.7 million, a decrease of accrued expenses and other payables of $0.8 million, an increase in accounts receivable of $1.0 million, an increase in inventory of $1.1 million, an increase in prepayments and other receivables of $1.4 million, and decrease in operating lease liabilities of $2.7 million partially offset by amortization of right-of-use assets of $2.7 million, depreciation expenses of $0.4 million, and inventories impairment loss of $0.6 million provided during the six months ended September 30, 2025.
Net cash used in operating activities for the six months ended September 30, 2024 was $9.4 million, which was due to net loss of $1.3 million, a decrease in tax payable of $1.5 million, and a decrease in accrued expenses and other payables of $0.4 million, an increase in inventories of $3.6 million, a decrease in account payable of $0.8 million, a decrease in operating lease liabilities of $1.5 million, and an increase in prepayments and other receivables of $1.8 million, partially offset by amortization of right-of-use assets of $1.7 million and a decrease in accounts receivables-related parties of $0.2 million.
Investing Activities
Net cash used in investing activities was $0.5 million for the six months ended September 30, 2025, which was due to purchase of properties and equipment of $0.04 million, advance to a related party of $0.2 million, and cash released from disposal of entities of $0.2 million.
Net cash used in investing activities was $2.8 million for the six months ended September 30, 2024, which was due to purchases of properties and equipment of $1.6 million, purchase of GO FLY App from a related party of $0.5 million, purchase of software from a related party of $0.8 million, the advance to a related party of $0.5 million, and partially offset by the repayment from a related party of $0.5 million.
Financing Activities
Net cash provided by financing activities was $9.8 million for the six months ended September 30, 2025, which consisted of net proceeds from our follow-on public offering and private placement offering of $9.8 million, and loan proceeds of $1.9 million, partially offset by repayments of loans of $1.3 million and payment of public offering costs of $0.5 million.
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Net cash provided by financing activities was $12.1 million for the six months ended September 30, 2024, which consisted of net proceeds of the IPO of $9.2 million, and loan proceeds of $3.7 million, partially offset by repayments of loans of $0.4 million and payment of IPO costs of $0.3 million.
Commitments and Contractual Obligations
The following table presents our material contractual obligations as of September 30, 2025:
| Contractual Obligations | Total | Less than 1 year | 1 – 2 years | 3 – 5 years | Thereafter | |||||||||||||||
| Operating Lease Obligations and Others | $ | 7,538,167 | $ | 1,819,910 | $ | 4,050,575 | $ | 1,304,095 | $ | 363,587 | ||||||||||
| Loan Payable | 7,758,832 | 5,741,239 | 108,170 | 30,870 | 1,878,553 | |||||||||||||||
| UL Litigation | 200,000 | 200,000 | — | — | — | |||||||||||||||
| Total Contractual Obligations | $ | 15,496,999 | $ | 7,761,149 | $ | 4,158,745 | $ | 1,334,965 | $ | 2,242,140 | ||||||||||
Off-Balance Sheet Arrangements
We have not entered into any transactions, agreements or other contractual arrangements that would result in off-balance sheet liabilities.
Quantitative and Qualitative Disclosures about Market Risk
Foreign Exchange Risk
A substantial majority of all of our revenues and expenses are denominated in U.S. dollars. We do not believe that we currently have any significant direct foreign exchange risk and have not used any derivative financial instruments to hedge exposure to such risk. In addition, as our business and operation expand in European and other overseas markets in the future, we may be exposed to increased foreign exchange risks for other currencies.
Interest Rate Risk
Our exposure to interest rate risk primarily relates to the interest expenses on our short-term and long-term loan payables. Our short-term and long-term loan payables bear interests at fixed rates. We have not been exposed to, nor do we anticipate being exposed to, material risks due to changes in market interest rates. However, our future interest expenses may exceed expectations due to changes in market interest rates. If we were to renew these short-term and long-term loan payables, we might be subject to interest rate risk.
Critical Accounting Estimates
An accounting estimate is considered critical if it requires to be made based on assumptions about matters that are highly uncertain at the time such estimate is made, and if different accounting estimates that reasonably could have been used, or changes in the accounting estimate that are reasonably likely to occur periodically, could materially impact the unaudited condensed consolidated financial statements.
We prepare our unaudited condensed consolidated financial statements in conformity with U.S. GAAP, which requires us to make estimates and assumptions. We continually evaluate these estimates and assumptions based on the most recently available information, our own historical experiences and various other assumptions that we believe to be reasonable under the circumstances. Since the use of estimates is an integral component of the financial reporting process, actual results could differ from our expectations as a result of changes in our estimates. Some of our accounting policies require a higher degree of judgment than others in their application and require us to make significant accounting estimates.
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 unaudited condensed consolidated financial statements and related disclosures to fulfill U.S. GAAP and SEC financial reporting requirements, (ii) formal internal control policies and internal independent supervision functions to establish formal risk assessment process and internal control framework, and (iii) sufficient controls designed and implemented in IT environment and IT general control activities, which are mainly associated with areas of logical access management, change management, computer operation, service organization management as well as cyber security management. To remediate the material weaknesses, we have engaged a third party consultant to perform internal review and assist us to set up more reliable internal control processes. The consultant commenced work in February 2025. We have begun organizing regular training programs for our accounting personnel, with a focus on U.S. GAAP and SEC reporting requirements, in order to improve the competence and awareness of our finance team. In addition, we plan to enhance our IT infrastructure by outsourcing our IT department to a provider to manage PC operations and system monitoring. Furthermore, we are developing and plan to implement an enterprise resource planning system to streamline sales, inventory, financial reporting, and order management. We will devote resources to remediate these material weaknesses as we grow and such resources required for implementing proper internal controls for financial reporting are available. We have performed testing to evaluate the operating effectiveness of these remediation measures. Based on the results of our testing, we concluded that these material weaknesses had not been fully remediated as of September 30, 2025. Accordingly, we continue to consider these material weaknesses to be ongoing as of that date.
As of September 30, 2025, we believe that our internal controls over financial reporting were not effective in providing reasonable assurance regarding the reliability of our financial reporting due to the material weaknesses identified above.
We do not expect that our disclosure controls and procedures will prevent all errors and all instances of fraud. Disclosure controls and procedures, no matter how well conceived and operated, can provide only reasonable, not absolute, assurance that the objectives of the disclosure controls and procedures are met. Further, the design of disclosure controls and procedures must reflect the fact that there are resource constraints, and the benefits must be considered relative to their costs. Because of the inherent limitations in all disclosure controls and procedures, no evaluation of disclosure controls and procedures can provide absolute assurance that we have detected all our control deficiencies and instances of fraud, if any. The design of disclosure controls and procedures also is based partly on certain assumptions about the likelihood of future events, and there can be no assurance that any design will succeed in achieving its stated goals under all potential future conditions.
Changes in Internal Control over Financial Reporting
There was no change in our internal control over financial reporting that occurred during the period covered by this Report that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.
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PART II - Other Information
Item 1. Legal Proceedings.
From time to time, we may be subject to legal proceedings arising in the ordinary course of business. Regardless of the outcome of any existing or future litigation, litigation can have an adverse impact on us because of defense and settlement costs, diversion of management resources, and other factors.
Federal securities class action instituted on September 8, 2025
On September 8, 2025, a federal securities class action was filed in the United States District Court, Eastern District of New York, by plaintiff Dino Kurt, individually and on behalf of all others similarly situated, against defendants, the Company, chief executive officer (the "CEO") Zhou Ou, and former chief financial officer (the "CFO") Shiwen Feng. The complaint alleges violations of Sections 10(b) and 20(a) of the Exchange Act and Rule 10b-5 during the class period spanning from July 15, 2025, to August 14, 2025. The plaintiff claims that defendants provided materially false and misleading positive statements about revenue growth, brand reputation, and business expansion, while concealing or minimizing material adverse facts concerning the safety of the Company’s lithium battery and inadequate forecasting processes, which were already taking a material toll on E-vehicle (the "EV") sales revenue. The plaintiff alleged when the Company filed a form NT 10-Q on August 14, 2025, which disclosed a 32% decrease in net revenues primarily driven by a decline in total units sold, attributed by the Company to "recent lithium-battery accidents involving E-Bikes and E-Scooters"; the price of Company’s common stock declined dramatically by about 87% in a single day, resulting in economic loss for the plaintiff and the class.
The relief sought includes determining that the action may be maintained as a class action, requiring defendants to pay damages sustained by the plaintiff and the class, and awarding pre-judgment and post-judgment interest, along with reasonable attorneys’ fees, expert fees, and other costs, with the monetary damages sought being certified to be in excess of $150,000.00.
Shareholder derivative action instituted on November 17, 2025
An action titled Kishan Shah, derivatively on behalf of FLY-E GROUP, INC. v. Zhou Ou, et al., was instituted on November 17, 2025 and is pending in the United States District Court, Eastern District of New York.
The principal parties include plaintiff Kishan Shah, representing the Company (the nominal defendant), against Individual defendants Zhou Ou, the Company's CEO and Chairman, Shiwen Feng, the Company's former CFO and director, Lun Feng, Bin Wang, and Zanfeng Zhang, former directors of the Company.
The factual basis centers on the individual defendants' knowing or reckless breaches of fiduciary duties concerning Lithium Battery Misconduct (as defined below) during the relevant period of July 15, 2025, through August 14, 2025. Plaintiff alleges that defendants consistently represented that the Company’s EVs were safe, but concealed that the lithium batteries used in their products lacked required New York City safety certification, were substandard quality, and posed a significant safety hazard, having resulted in multiple deadly fires in the greater New York City area (the "Lithium Battery Misconduct"). The plaintiff alleged that when the Company filed a Form NT 10-Q on August 14, 2025, disclosing a 32% decline in net revenue due primarily to consumer apprehension stemming from an "increasing number of lithium-battery explosion incidents in New York," causing the Company’s stock price to plummet approximately 87.1%. As a result of the alleged misconduct, the plaintiff claims that the Company has incurred and will continue to incur significant damages, including substantial legal fees and costs associated with the class action and related internal investigations, and many other expenditures.
The relief sought, on behalf of the Company, includes a declaration that the individual defendants breached their fiduciary duties, an award of damages against the individual defendants (jointly and severally), restitution and disgorgement of profits from the individual defendants, and court orders directing the Company to implement improved corporate governance and internal control procedures to prevent future damaging events.
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Shareholder derivative action instituted on October 28, 2025
Due to the similar factual basis, on October 28, 2025, another shareholder derivative action, Martin Flynn, derivatively on behalf of FLY-E GROUP, INC. v. Zhou (Andy) Ou, et al., was instituted in the United States District Court, Eastern District of New York.
The principal parties are Plaintiff Martin Flynn, derivatively acting on behalf of the nominal defendant, the Company, against individual defendants who served as directors and officers, including Zhou Ou, the CEO and chairman of the board, Shiwen Feng, the former CFO, Bin Wang, Lun Feng, and Zanfeng Zhang, the former directors.
The action alleges that during the relevant time period (July 15, 2025, to August 14, 2025), these defendants breached their fiduciary duties and engaged in gross mismanagement by making materially false and misleading statements and omissions, specifically concerning the safety of the Company’s lithium battery. Although defendants provided overwhelmingly positive statements regarding growth and brand reputation, they concealed or failed to disclose the true impact of "recent lithium-battery accidents involving E-Bikes and E-Scooters" on sales revenues. The complaint alleged, when the Company filed a form NT 10-Q on August 14, 2025 disclosing a 32% decrease in net revenues attributed to a decline in units sold due to an "increasing number of lithium battery explosion incidents in New York," which caused the Company’s stock price to drop approximately 87%. The misconduct resulted in substantial harm to the Company, including costs incurred for defending the separate Securities Class Action. The relief sought, on behalf of the Company, includes a declaration that the action may be maintained as a derivative action, an award of damages sustained by the Company, restitution and disgorgement of profits from the Individual Defendants, and the granting of appropriate equitable relief, such as the institution of appropriate corporate governance measures.
Item 1A. Risk Factors.
There have been no material changes to our Risk Factors as disclosed in our Annual Report on Form 10-K for the year ended March 31, 2025 as filed with the SEC on July 15, 2025 other than those included below.
An adverse determination in any significant product liability claim against us could materially adversely affect our business, results of operations or financial condition.
The development, production, marketing, sale and usage of our vehicles will expose us to significant risks associated with product liability claims. As a provider of consumer products, we are, from time to time, subject to civil litigation regarding those products, including in publicly-available court filings. Our business is vulnerable to product liability claims, and we may face inherent risk of exposure to claims in the event our vehicles do not perform or are claimed to not have performed as expected. If our products are defective, malfunction or are used incorrectly by our customers, it may result in bodily injury, property damage or other injury, including death, which could give rise to product liability claims against us. For example, our certain EVs use lithium-ion batteries, which, if not appropriately managed and controlled, can rapidly release energy by venting smoke and flames that can ignite nearby materials. Any potential issues with the lithium-ion batteries used in our EVs could have a material adverse effect on our business, financial condition, and results of operations, including a significant negative impact on our revenue. Furthermore, there is some risk of electrocution if individuals who attempt to repair battery packs do not follow applicable maintenance and repair protocols. Any such damage or injury would likely lead to product liability claims against us and potentially a safety recall. Any losses that we may suffer from any liability claims and the effect that any product liability litigation may have upon the brand image, reputation and marketability of our products could have a material adverse impact on our business, results of operations or financial condition. No assurance can be given that material product liability claims will not be made in the future against us, or that claims will not arise in the future in excess or outside of our insurance coverage and contractual indemnities with suppliers and manufacturers. We may not be able to obtain adequate product liability insurance for our existing or new products or the cost of doing so may be prohibitive. Adverse determinations of material product liability claims made against us could also harm our reputation and cause us to lose customers and could have a material adverse effect on our business, prospects, financial condition and operating results.
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Item 2. Unregistered Sales of Equity Securities and Use of Proceeds
None.
Item 3. Defaults Upon Senior Securities.
None.
Item 4. Mine Safety Disclosures.
Not applicable.
Item 5. Other Information.
Trading Arrangements
During the quarterly period ended September 30,
2025, none of our directors or officers (as defined in Rule 16a-1(f) promulgated under the Exchange Act)
Item 6. Exhibits
| * | Filed herewith |
| ** | Furnished herewith |
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SIGNATURES
In accordance with the requirements of Securities Exchange Act of 1934, the registrant has caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
| FLY-E GROUP, INC. | ||
| By: | /s/ Zhou Ou | |
| Zhou Ou | ||
| Chief Executive Officer | ||
| (Principal Executive Officer) | ||
| December 18, 2025 | ||
| By: | /s/ Lisa Fan | |
| Lisa Fan | ||
| Chief Financial Officer | ||
| (Principal Financial and Accounting Officer) | ||
| December 18, 2025 | ||
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