[10-Q] Fly-E Group, Inc. Quarterly Earnings Report

Rhea-AI Filing Summary

Fly-E Group, Inc. reported a quarterly net loss of approximately $2.0 million for the three months ended June 30, 2025, and used about $5.3 million in net cash from operating activities during the quarter. The company had working capital of approximately $6.0 million and cash of approximately $2.3 million as of June 30, 2025, but management disclosed substantial doubt about the company's ability to continue as a going concern. The company completed a registered direct offering on June 2, 2025, raising net proceeds of approximately $6.24 million and earlier received net IPO proceeds of about $9.2 million. Current contractual obligations include about $9.3 million. Management intends to seek additional equity or debt financing and related-party support, but stated there is no assurance additional funding will be available.

Positive

• Completed a June 2, 2025 registered direct offering raising net proceeds of approximately $6.24 million
• Earlier IPO proceeds totaled approximately $9.2 million net, providing prior capital
• Working capital of approximately $6.0 million as of June 30, 2025

Negative

• Substantial doubt about going concern explicitly stated by management
• Quarterly net loss of approximately $2.0 million and net cash used in operating activities of ~$5.3 million
• Current contractual obligations of approximately $9.3 million, creating near-term liquidity pressure
• Sharp increase in interest expense contributing to losses (interest expense rose materially versus prior period)
• Uninsured cash balance of $920,754 as of June 30, 2025 and supplier concentration in purchases/accounts payable

Insights

Financial Analyst

TL;DR: Operating cash burn and a $2.0M quarterly loss strain liquidity despite recent financings.

The company reported a net loss of ~ $2.0 million and negative operating cash flow of ~ $5.3 million for the quarter, while cash totaled ~$2.3 million and working capital was ~$6.0 million. Recent financings produced net proceeds of ~$6.24 million from a June 2025 registered direct offering and prior IPO proceeds of ~$9.2 million; however, current contractual obligations of ~$9.3 million and management's disclosure of substantial doubt on going concern materially increase financing dependency. Interest expense rose sharply, contributing to the period loss.

Risk Analyst

TL;DR: Significant going-concern risk and high short-term obligations raise material downside risk.

Management explicitly stated substantial doubt about the company’s ability to continue as a going concern. The company used ~$5.3 million in operating cash in the quarter, carries ~$9.3 million of current contractual obligations, and has elevated interest expense levels. Supplier concentration disclosures (major suppliers representing large percentages of purchases/accounts payable) and uninsured cash balances ($920,754 uninsured as of June 30, 2025) further increase operational and counterparty risk. The Company’s remediation plans depend on uncertain future financing and related-party support.

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended June 30, 2025

OR

☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from ______to _______

Commission file number 001-42122

FLY-E GROUP, INC. 

(Exact name of registrant as specified in its charter)

Delaware		92-0981080
(State or other jurisdiction of incorporation or organization)		(I.R.S. Employer Identification No.)
136-40 39th Avenue Flushing, New York		11354
(Address of principal executive offices)		(Zip Code)

Registrant’s telephone number, including area code: (929) 410-2770

Securities registered pursuant to Section 12(b) of the Act:

Title of each class		Trading Symbol(s)		Name of each exchange on which registered
Common Stock, $0.01 par value per share		FLYE		The Nasdaq Stock Market LLC

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. Yes ☒ No ☐

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). Yes ☒ No ☐

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	☐
Non-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 August 19, 2025, there were 18,897,030 shares of the registrant’s common stock, par value $0.01 per share, issued and outstanding.

INDEX

		Page Number
	Cautionary Statement Regarding Forward Looking Statements	ii
PART I	FINANCIAL INFORMATION	1
Item 1.	Unaudited Condensed Consolidated Financial Statements	1
	Unaudited Condensed Consolidated Balance Sheets as of June 30, 2025 and March 31, 2025	1
	Unaudited Condensed Consolidated Statements of Operations and Comprehensive Loss for the Three Months Ended June 30, 2025 and 2024	2
	Unaudited Condensed Consolidated Statement of Changes in Stockholders’ Equity for the Three Months Ended June 30, 2025 and 2024	3
	Unaudited Condensed Consolidated Statements of Cash Flows for the Three Months Ended June 30, 2025 and 2024	4
	Notes to Unaudited Condensed Consolidated Financial Statements	5
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	33
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	44
Item 4.	Controls and Procedures	44
PART II	OTHER INFORMATION	45
Item 1.	Legal Proceedings	45
Item 1A.	Risk Factors	45
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	45
Item 3.	Defaults Upon Senior Securities	45
Item 4.	Mine Safety Disclosures	45
Item 5.	Other Information	45
Item 6.	Exhibits	45
	Signatures	46

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 45 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)

		June 30, 2025				March 31, 2025
ASSETS
Current Assets
Cash		$	2,334,288			$	840,102
Accounts receivable, net			1,071,622				466,187
Accounts receivable, net – a related party			37,465				37,465
Inventories, net			5,943,790				6,397,274
Prepayments and other receivables			6,250,792				3,676,986
Prepayments and other receivables – related parties			222,288				120,000
Assets held for sale			897,293				2,462,502
Total Current Assets			16,757,538				14,000,516
Property and equipment, net			7,126,245				7,287,213
Security deposits			638,115				728,450
Deferred tax assets, net			153,087				94,983
Operating lease right-of-use assets			8,584,684				10,933,068
Intangible assets, net			498,550				525,865
Long-term prepayment for software development – a related party			—				136,580
Total Assets		$	33,758,219			$	33,706,675
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current Liabilities
Accounts payable		$	419,128			$	1,272,305
Short-term loan payables			6,317,712				5,191,058
Current portion of long-term loan payables			262,069				100,835
Accrued expenses and other payables			977,120				1,366,968
Operating lease liabilities – current			2,106,614				2,617,762
Liabilities held for sale			662,446				2,152,447
Total Current Liabilities			10,745,089				12,701,375
Long-term loan payables			2,092,257				2,065,040
Operating lease liabilities – non-current			7,217,325				9,106,928
Total Liabilities			20,054,671				23,873,343
Commitment and Contingencies
Stockholders’ Equity
Preferred stock, $0.01 par value, 10,000,000 shares authorized and nil outstanding as of June 30, 2025 and March 31, 2025*			—				—
Common stock, $0.01 par value, 300,000,000 shares authorized and 10,636,611   shares outstanding as of June 30, 2025 and 300,000,000 shares authorized and 4,917,500 shares outstanding as of March 31, 2025*			106,366				49,175
Additional paid-in capital			16,740,043				10,940,724
Shares subscription receivable			(219,998	)			(219,998	)
Accumulated deficit			(2,904,158	)			(895,510	)
Accumulated other comprehensive loss			(18,705	)			(41,059	)
Total FLY-E Group, Inc. Stockholders’ Equity			13,703,548				9,833,332
Total Liabilities and Stockholders’ Equity		$	33,758,219			$	33,706,675

* Shares and per share data are presented on a retroactive basis to reflect the 1-for-5 reverse stock split completed on July 3, 2025.

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 June 30,
		2025				2024
Revenues		$	5,328,198			$	7,873,426
Cost of Revenues			3,066,823				4,773,792
Gross Profit			2,261,375				3,099,634
Operating Expenses
Selling Expenses			1,321,217				1,612,495
General and Administrative Expenses			2,444,933				1,532,638
Total Operating Expenses			3,766,150				3,145,133
Loss from Operations			(1,504,775	)			(45,499	)
Other Income (Expenses), net			(7,898	)			6,518
Interest Expenses			(546,234	)			(68,082	)
Loss Before Income Taxes			(2,058,907	)			(107,063	)
Income Tax Benefit (Expense)			50,259				(72,445	)
Net Loss		$	(2,008,648	)		$	(179,508	)
Other Comprehensive Income (Loss)
Foreign currency translation adjustment			22,354				(1,324	)
Total Comprehensive Loss		$	(1,986,294	)		$	(180,832	)
Losses per Share*		$	(0.30	)		$	(0.04	)
Weighted Average Number of Common Stock
– Basic and Diluted*			6,696,779				4,527,250

* Shares and per share data are presented on a retroactive basis to reflect the 1-for-110,000 stock split completed on April 2, 2024 and the 1-for-5 reverse stock split completed on July 3, 2025.

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				Accumulated Other Comprehensive				Total Stockholders’
		Shares*				Amount				Shares*				Amount				Capital				Receivables				deficit				Loss				Equity
Balance at March 31, 2025			—			$	—				4,917,500			$	49,175			$	10,940,724			$	(219,998	)		$	(895,510	)		$	(41,059	)		$	9,833,332
Net loss			—				—				—				—				—				—				(2,008,648	)			—				(2,008,648	)
Issuance of common stock upon registered direct offering, net			—				—				5,719,111				57,191				5,799,319				—				—				—				5,856,510
Foreign currency translation adjustment			—				—				—				—				—				—				—				22,354				22,354
Balance at June 30, 2025			—			$	—				10,636,611			$	106,366				16,740,043				(219,998	)		$	(2,904,158	)		$	(18,705	)		$	13,703,548

* Shares and per share data are presented on a retroactive basis to reflect the 1-for-5 reverse stock split completed on July 3, 2025.

		Preferred Stock								Common Stock								Additional Paid-in				Shares Subscription				Retained				Accumulated Other Comprehensive				Total Stockholders’
		Shares*				Amount				Shares*				Amount				Capital				Receivables				Earnings				Loss				Equity
Balance at March 31, 2024			—			$	—				4,400,000			$	44,000			$	2,576,000			$	(219,998	)		$	4,395,649			$	(13,829	)		$	6,781,822
Net Loss			—				—				—				—				—				—				(179,508	)			—				(179,508	)
Issuance of common stock upon initial public offering, net			—				—				517,500				5,175				8,364,724				—				—				—				8,369,899
Foreign currency translation adjustment			—				—				—				—				—				—				—				(1,324	)			(1,324	)
Balance at June 30, 2024			—			$	—				4,917,500			$	49,175			$	10,940,724			$	(219,998	)		$	4,216,141			$	(15,153	)		$	14,970,889

* Shares and per share data are presented on a retroactive basis to reflect the 1-for-110,000 stock split completed on April 2, 2024 and the 1-for-5 reverse stock split completed on July 3, 2025.

The accompanying notes are an integral part of these unaudited condensed consolidated financial statements. 

3

FLY-E GROUP, INC.

UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS 

(Expressed in U.S. dollars, except for the number of shares)

		For the Three Months Ended June 30,
		2025				2024
Cash flows from operating activities
Net loss		$	(2,008,648	)		$	(179,508	)
Adjustments to reconcile net loss to net cash used in operating activities:
Loss on disposal of property and equipment			68,188				—
Depreciation expense			212,792				95,051
Amortization expense			27,315				951
Deferred income taxes benefits			(42,861	)			(59,099	)
Amortization of operating lease right-of-use assets			828,458				798,044
Inventories reserve			229,780				176,072
Changes in operating assets and liabilities:
Accounts receivable			(605,435	)			(159,112	)
Accounts receivable – a related party			—				279,172
Inventories			(63,902	)			(901,095	)
Prepayments and other receivables			(1,974,220	)			(2,065,536	)
Prepayments for operation services to a related party			45,000				(180,000	)
Security deposits			2,148				(23,854	)
Accounts payable			(853,177	)			(774,347	)
Accrued expenses and other payables			(345,649	)			(503,291	)
Operating lease liabilities			(803,823	)			(626,205	)
Taxes payable			—				(399,407	)
Net cash used in operating activities			(5,284,034	)			(4,522,164	)
Cash flows from investing activities
Purchases of properties and equipment			(141,624	)			(351,524	)
Cash released from disposal of entities			(119,720	)			—
Repayment from a related party			—				180,256
Advance to a related party			(147,288	)			(162	)
Prepayments for property			—				(775,000	)
Payments of property rights			—				(119,700	)
Net cash used in investing activities			(408,632	)			(1,066,130	)
Cash flows from financing activities
Proceeds from borrowings			1,917,100				247,500
Repayments of borrowings			(601,995	)			(375,625	)
Repayments on other payables - related parties			—				(90,000	)
Payments of offering cost			(516,490	)			(282,403	)
Net proceeds from issuance of common stock			6,373,000				9,154,500
Net cash provided by financing activities			7,171,615				8,653,972
Net changes in cash including cash classified within current assets held for sale			1,478,949				3,065,678
Effect of exchange rate changes on cash			22,354				(1,324	)
Less: net increase in cash classified within current assets held for sale			(7,117	)			—
Cash at beginning of the period			840,102				1,403,514
Cash at the end of the period		$	2,334,288			$	4,467,868
Supplemental disclosure of cash flow information
Cash paid for interest expense		$	546,234			$	68,082
Cash paid for income taxes		$	42,640			$	481,929
Supplemental disclosure of non-cash investing and financing activities
Purchase software by using previous prepayments		$	136,580			$	—
Properties used for rental services		$	49,811			$	—
Deferred IPO cost recognized as additional paid-in capital		$	—			$	502,198
Uncollected proceeds from disposal of subsidiaries		$	526,779			$	—
Termination of operating lease right-of-use assets and operating lease liabilities		$	3,089,912			$	(2,962	)
Right-of-use assets obtained in exchange for operating lease liabilities		$	—			$	557,643

The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.

4

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 three months ended June 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 August 19, 2025, the Company has opened a total of 16 retail stores, including 15 retail stores in the U.S and one retail store in Canada. 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 450,000 shares of common stock, at a price of $20.00 per share in its initial public offering (“IPO”). The gross proceeds of the offering were $9.0 million, prior to deducting the underwriting discounts, commissions and offering expenses payable by the Company. In addition, the Company granted the underwriters a 30-day option to purchase an additional 67,500 shares of common stock at the initial public offering price, less underwriting discounts and commissions, to cover over-allotments. On June 25, 2024, the Company issued an additional 67,500 shares of common stock to the underwriters of its IPO for gross proceeds of $1.4 million upon full exercise of the underwriters’ over-allotment option. Net proceeds received by the Company from its initial public offering, including the exercise of the over-allotment option, were approximately $9.2 million. The Company also issued to The Benchmark Company, LLC (“Benchmark”), the representative of the underwriters warrants to purchase 25,875 shares.

On June 4, 2025, the Company issued 5,719,111 shares of common stock, at a price of $1.2140 per share in its second public offering. The gross proceeds of the offering were $6.9 million, prior to deducting the placement agent’s fees and offering expenses payable by the Company. Each share of common stock was sold together with two warrants, with each warrant to purchase one share of common stock. Each warrant is exercisable immediately with an exercise price equal to 120% of the offering price ($1.4565 per share) and expires on the fifth anniversary of the issuance date, subject to certain adjustments.

On July 3, 2025, the Company implemented a 1-for-5 reverse stock split of its issued and outstanding shares of common stock. As a result, all share and per share information has been retroactively adjusted to reflect the reverse stock split for all periods presented. The reverse stock split reduced the number of shares of common stock issued and outstanding from 53,183,053 to 10,636,611 as of June 30, 2025. The par value per share remained unchanged at $0.01.

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.

5

The unaudited condensed consolidated financial statements include the financial statements of the Company and each of the following subsidiaries as of June 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		100% owned by Fly-E Group, Inc.
FLY E-BIKE, INC.		● A Delaware Company ● Incorporated on August 22, 2022 ● A holding Company		100% owned by Fly-E Group, Inc.
UNIVERSE KING CORP		● A New York corporation ● Incorporated on November 19, 2018 ● A retail store		100% owned by Fly E-Bike, Inc.

TKPGO CORP.		● A New York corporation ● Incorporated on July 3, 2018 ● A retail store		100% owned by Fly E-Bike, Inc.
FLYFLS INC		● A New York corporation ● Incorporated on October 13, 2020 ● A retail store and corporate office		100% owned by Fly E-Bike, Inc.
FLY37 INC		● A New York corporation ● Incorporated on October 14, 2020 ● No operation		100% owned by Fly E-Bike, Inc.
FIYET INC		● A New York corporation ● Incorporated on November 12, 2020 ● A retail store		100% owned by Fly E-Bike, Inc.
FLYAM INC		● A New York corporation ● Incorporated on February 19, 2021 ● A retail store		100% owned by Fly E-Bike, Inc.
OFLYO INC		● A New York corporation ● Incorporated on March 29, 2021 ● A retail store		100% owned by Fly E-Bike, Inc.

6

FLYEBIKE INC		● A New York corporation ● Incorporated on March 30, 2021 ● A retail store		100% owned by Fly E-Bike, Inc.
FLYCLB INC		● A New York corporation ● Incorporated on April 15, 2021 ● A retail store		100% owned by Fly E-Bike, Inc.

FLYEBIKE NJ INC		● A New Jersey corporation ● Incorporated on June 8, 2021 ● No operation		100% owned by Fly E-Bike, Inc.
FLYEBIKEMIAMI INC		● A Florida corporation ● Incorporated on June 30, 2021 ● No operation		100% owned by Fly E-Bike, Inc.
GOFLY INC		● A Texas corporation ● Incorporated on July 23, 2021 ● No operation		100% owned by Fly E-Bike, Inc.
FLYTRON INC.		● A New York corporation ● Incorporated on November 9, 2021 ● A retail store		100% owned by Fly E-Bike, Inc.
FLYCYCLE INC.		● A New York corporation ● Incorporated on January 10, 2022 ● A retail store		100% owned by Fly E-Bike, Inc.
FLYNJ2 INC.		● A New Jersey corporation ● Incorporated on February 10, 2022 ● A retail store		100% owned by Fly E-Bike, Inc.
FLYBWY INC.		● A New York corporation ● Incorporated on March 2, 2022 ● No operation		100% owned by Fly E-Bike, Inc.
MEEBIKE		● A New York corporation ● Incorporated on March 25, 2022 ● A retail store		100% owned by Fly E-Bike, Inc.
FLY E BIKE NJ3, INC		● A New Jersey corporation ● Incorporated on July 18, 2022 ● A retail store		100% owned by Fly E-Bike, Inc.
FLY E-BIKE SAN ANTONIO INC		● A Texas corporation ● Incorporated on January 1, 2023 ● No operation		100% owned by Fly E-Bike, Inc.
FLYEBIKE WORLD INC.		● A New York corporation ● Incorporated on February 27, 2023 ● A retail store		100% owned by Fly E-Bike, Inc.
FLY DELIVERY INC.		● A New York corporation ● Incorporated on March 2, 2023 ● A delivery store		100% owned by Fly E-Bike, Inc.

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FLYEBIKE MIAMI2 INC.		● A Florida corporation ● Incorporated on April 13, 2023 ● A retail store		100% owned by Fly E-Bike, Inc.
FLYDC INC.		● A Washington, DC corporation ● Incorporated on May 31, 2023 ● A retail store		100% owned by Fly E-Bike, Inc.
FLYJH8509 INC.		● A New York corporation ● Incorporated on August 30, 2023 ● No operation		100% owned by Fly E-Bike, Inc.

FLYBX2381 INC.		● A New York corporation ● Incorporated on August 30, 2023 ● A retail store		100% owned by Fly E-Bike, Inc.
FLYNJ4 INC.		● A New York corporation ● Incorporated on October 4, 2023 ● A retail store		100% owned by Fly E-Bike, Inc.
FLYTORONTO Corp.		● A Toronto corporation ● Incorporated on October 18, 2023 ● A retail store		100% owned by Fly E-Bike, Inc.
FLYLA INC.		● A California corporation ● Incorporated on December 1, 2023 ● A retail and rental store		100% owned by Fly E-Bike, Inc.
FWMOTOR INC.		● A New York corporation ● Incorporated on April 3, 2024 ● A retail store		100% owned by Fly E-Bike, Inc.
DCMOTOR INC.		● A Maryland corporation ● Incorporated on April 9, 2024 ● A retail store		100% owned by Fly E-Bike, Inc.
AOFL LLC		● A New York corporation ● Incorporated on June 25, 2024 ● A holding company		100% owned by Fly E-Bike, Inc.
GOBIKE INC		● A New York corporation ● Incorporated on July 16, 2024 ● A rental store		100% owned by Fly E-Bike, Inc.
FLYEBIKE BOSTON INC.		● A Massachusetts corporation ● Incorporated on September 1, 2024 ● A retail store		100% owned by Fly E-Bike, Inc.
FLYNJ1 INC		● A Massachusetts corporation ● Incorporated on January 29, 2025 ● A retail store		100% owned by Fly E-Bike, Inc.

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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) 5,719,111 shares of the common stock at the price of $1.2140 per share and (ii) 11,438,222 warrants to purchase 11,438,222 shares of common stock, resulting in net proceeds to the Company of approximately $6.1 million after deducting placement agent’s fees and offering expenses. As of June 30, 2025, the Company had working capital of approximately $6.0 million and cash of approximately $2.3 million. During the three months ended June 30, 2025, the Company had net loss of approximately $2.0 million. During the three months ended June 30, 2025, net cash used in operating activities of the Company was approximately $5.3 million. As of June 30, 2025, the Company had a current portion of contractual obligation of approximately $9.3 million. Management has determined there is substantial doubt about its ability to continue as a going concern. Management plans 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. There is no assurance that the Company will be successful in implementing the foregoing plans or that additional financing will be available to the Company on commercially reasonable terms, or at all. The Company’s inability to secure needed financing when required could require material changes to the Company’s business plans and could have a material adverse effect on the Company’s ability to continue as a going concern and results of operations. The unaudited condensed consolidated financial statements have been prepared on a going concern basis, which contemplates the realization of assets and liquidation of liabilities in the normal course of business. The unaudited condensed consolidated financial statements do not include any adjustments that might result from the outcome of such uncertainties.

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 three months ended June 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. The Company’s chief operating decision-makers (“CODM”) (i.e., chief executive officer and his direct reports) review financial information presented on a consolidated basis, accompanied by disaggregated information about revenues by different revenues streams for purposes of allocating resources and evaluating financial performance. The Company and its subsidiaries offer E-bikes, E-motorcycles, E-scooters and other items and services in its stores. The Company’s retail operating divisions are geographically based, have similar economic characteristics and similar expected long-term financial performance. Because substantially all of the Company’s long-lived assets and revenues are located in and derived from the U.S., geographical segments are not presented. The Company’s operating segments are reported in one reportable segment. There are no segment managers who are held accountable for operations, operating results and plans for levels or components below the consolidated unit level. Based on qualitative and quantitative criteria established by Accounting Standards Codification (“ASC”) 280, “Segment Reporting”, the Company considers itself to be operating within one reportable segment. The Company has concluded that consolidated net loss is the measure of segment profitability. The CODM assesses performance for the Company, monitors budget versus actual results, and determines how to allocate resources based on consolidated net loss as reported in the consolidated statements of operations and other comprehensive loss. There are no other expense categories regularly provided to the CODM that are not already included in the primary financial statements herein.

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(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 $250,000. The Company has not incurred any losses in the past for amount over the FDIC limits. As of June 30, 2025 and March 31, 2025, $920,754 and nil deposited with banks was uninsured, respectively.

(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 June 30, 2025 and March 31, 2025, the Company provided allowance for credit losses   of $116,746, consisting of $41,100 related to accounts receivable from a related party customer and $75,646 related to accounts receivable from a third party customer, respectively.

(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 June 30, 2025 and 2024, the impairment loss was $229,780 and $176,072, respectively.

(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 June 30, 2025 and March 31, 2025, no allowance for credit losses provided   against prepayments and other receivables was recorded.

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(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		5 years
Machinery and equipment		5 years
Automobile		5 years
Leasehold improvements		3 – 10 years (shorter of lease term or useful lives)
Buildings		30 years
Computer hardware and software		10 years
Properties used for rental business		2 years

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		5-20 years
Software		5 years

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(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 June 30, 2025 and March 31, 2025, no 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 June 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.

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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 $8,158 and $20,131 of warranty reserves under accrued expenses and other payables as of June 30, 2025 and March 31, 2025, respectively. The Company has no contract assets and contract liabilities balances as of June 30, 2025 and March 31, 2025, respectively.

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 June 30,
		2025				2024
Product revenues - retail (ASC 606)		$	3,762,829			$	6,870,418
Product revenues - wholesale (ASC 606)			1,427,231				1,003,008
Revenues - rental services (ASC 842)			138,138				—
Net revenues		$	5,328,198			$	7,873,426

(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 $17,413 and $68,519 for the three months ended June 30, 2025 and 2024, respectively.

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(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 June 30, 2025 and 2024, development costs amounted to $169,299 and $145,582, respectively, which were recorded under general and administrative expenses.

(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 June 30, 2025 and 2024, the Company accrued nil and $60,076 income tax related penalty included in current income taxes expenses, respectively.

(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.

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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 zero, any remaining amount of the remeasurement is recognized in profit or loss. Lease liabilities are presented on a separate line in the consolidated balance sheets.

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 June 30, 2025 and 2024.

For the three months ended June 30, 2025, the Company’s top two suppliers represented approximately 65% and 12% of total purchases of the Company, respectively. For the three months ended June 30, 2024, the Company’s top two suppliers represented approximately 41% and 38% of total purchases of the Company, respectively. As of June 30, 2025, three suppliers accounted for approximately 56%, 23%, and 16% of accounts payable balance, respectively.   As of March 31, 2025, two suppliers accounted for approximately 63% and 25% of accounts payable balance, respectively.

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.

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(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 June 30, 2025 and 2024, the Company had 11,464,097 and 25,875 potential shares of common stock issuable upon the exercise of the Representative’s Warrants and 2025 Warrants (as defined below). As the Company incurred losses for the three months ended June 30, 2025 and 2024, inclusion of these potential shares of common stock would have reduced the net loss per share. Therefore, these potential shares were excluded from the calculation of diluted net loss per share.  

(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 25,875 shares of common stock which warrants are also exercisable on a cashless basis. The Company accounts for these warrants as either equity-classified or liability-classified instruments based on an assessment of the warrant’s specific terms and applicable authoritative guidance in Financial Accounting Standards Board (“FASB”) Accounting Standards Codification ASC 480, Distinguishing Liabilities from Equity and ASC 815, Derivatives and Hedging. 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.  

(x) Warrants

On June 4, 2025, the Company closed of its public offering and issued 11,438,222 warrants (“2025 Warrants”) to purchase common stock at an exercise price equal to $1.4565. The 2025 Warrants are also exercisable on a cashless basis. The Company accounts for warrants as either equity-classified or liability-classified instruments based on an assessment of the warrant’s specific terms and applicable authoritative guidance in FASB Accounting Standards Codification ASC 480, Distinguishing Liabilities from Equity and ASC 815, Derivatives and Hedging. The assessment considers whether the warrants are freestanding financial instruments pursuant to ASC 480, meet the definition of a liability pursuant to ASC 480, and whether the warrants meet all of the requirements for equity classification under ASC 815, including whether the warrants are indexed to the Company’s own shares and whether the warrant holders could potentially require “net cash settlement” in a circumstance outside of the Company’s control, among other conditions for equity classification. This assessment, which requires the use of professional judgment, is conducted at the time of warrant issuance and as of each subsequent quarterly period end date while the warrants are outstanding.

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.

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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:

		June 30, 2025				March 31, 2025
Batteries		$	1,803,102			$	2,084,890
Electric Vehicles			3,059,766				3,070,224
Tires			457,548				482,364
Accessories			1,812,829				1,867,365
Inventories			7,133,245				7,504,843
Inventory reserves			(1,189,455	)			(1,107,569	)
Inventories, net		$	5,943,790			$	6,397,274

Movements of inventory reserves are as follows:

		For the Three Months Ended June 30,
		2025				2024
Beginning balance		$	1,107,569			$	514,021
Addition			229,780				176,072
Write off			(147,894	)			(131,930	)
Ending Balance		$	1,189,455			$	558,163

As of June 30, 2025 and March 31, 2025, the inventory allowance balance was $1,189,455 and $1,107,569 respectively. For the three months ended June 30, 2025 and 2024, the impairment loss was $229,780 and $176,072, respectively.

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4 — PREPAYMENTS AND OTHER RECEIVABLES

Prepayments and other receivables   as of June 30, 2025 and March 31, 2025 consisted of the following:

		June 30, 2025				March 31, 2025
Prepaid rent		$	159,495			$	157,683
Prepayments to vendors (i)			3,947,312				2,353,105
Prepaid insurance			155,481				214,111
Prepayments to other service providers			957,664				269,693
Prepaid income tax			68,191				18,127
Other receivable from third parties (ii)			962,649				664,267
Total Prepayment and Other Receivables		$	6,250,792			$	3,676,986

(i) As of June 30, 2025 and March 31, 2025, the prepayments to vendors were approximately $3.9 million and $2.4 million, respectively. The increase in prepayments to vendors was primarily due to the Company’s anticipation of growth in future sales and rental services. The Company plans to purchase more E-vehicles and related accessories from overseas and U.S. vendors to support the expansion in retail and rental markets. These prepayments to vendors are expected to be utilized   by the end of October 2025.

(ii) On January 1, 2025, the Company entered into share transfer agreements for sales of 100% of its equity interests in subsidiaries – FLYMHT INC, FLY14 CORP, EDISONEBIKE INC, and FLY6AVE INC – to third-party buyers for a total cash consideration of $635,193, with no contingent payments or adjustments. In June 2025, the Company received $103,000 from the buyers. As of June 30, 2025, the remaining consideration due from such buyers was $532,193 (See Note - 14 — DISPOSAL OF SUBSIDIARIES).   On April 1, 2025, the Company entered into share transfer agreements for the sale of 100% of its equity interests in subsidiaries – FLYEBIKE BROOKLYN INC, FLYMHT659 INC, and FLYBX745 INC – to third-party buyers for a total cash consideration of $310,055, with no contingent payments or adjustments. In June 2025, the Company received $30,000 from the buyers. As of June 30, 2025, the remaining consideration due from such buyers was $280,055 (See Note - 14 — DISPOSAL OF SUBSIDIARIES).   On May 1, 2025, the Company entered into share transfer agreements for the sale of 100% of its equity interests in subsidiaries – ARFY CORP., FLY GC INC., and ESEBIKE INC – to third-party buyers for a total cash consideration of $156,517, with no contingent payments or adjustments. In June 2025, the Company received $55,000 from the buyers. As of June 30, 2025, the remaining consideration due from such buyers was $101,517 (See Note - 14 — DISPOSAL OF SUBSIDIARIES).   On June 1, 2025, the Company entered into share transfer agreements for the sale of 100% of its equity interests in subsidiaries – UFOTS CORP and FLYCORONA INC – to third-party buyers for a total cash consideration of $60,207, with no contingent payments or adjustments. In June 2025, the Company received $27,000 from the buyers. As of June 30, 2025, the remaining consideration due from such buyers was $33,207 (See Note - 14 — DISPOSAL OF SUBSIDIARIES).   As of June 30, 2025 and March 31, 2025, the Company had other receivables of $15,677 and $29,074 from a third-party individual, respectively.

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5 — PROPERTY AND EQUIPMENT, NET

Property and equipment as of June 30, 2025 and March 31, 2025 consisted of the following:

		June 30, 2025				March 31, 2025
Furniture and Fixtures		$	372,039			$	400,080
Machinery and Equipment			212,015				230,015
Automobile			670,465				669,902
Leasehold improvements			400,151				683,595
Building			3,663,215				3,663,215
Computer hardware and software (i)			2,500,000				2,310,000
Properties for rental business (ii)			243,776				193,963
Property and Equipment			8,061,661				8,150,770
Less: Accumulated depreciation			(935,416	)			(863,557	)
Property and Equipment, net		$	7,126,245			$	7,287,213

For the three months ended June 30, 2025 and 2024, the depreciation expenses were $212,792 and $95,051, respectively.

(i)

In December 2023, the Company engaged DFT, a former related party, for certain technology services, such as ERP system. The total contract price for the ERP system is $2,500,000. The ERP system is fully completed and delivered on May 20, 2025. During the fiscal year of 2025, the Company started to use part of the ERP system which was valued at $2,310,000 and treated that part as computer hardware and software and started for depreciation. As of June 30, 2025 and March 31, 2025, the Company had a prepayment of $nil and $136,580, respectively, to DFT (see Note 13 – Long-term prepayment for software development – a related party).

(ii)

In October 2024, the Company started to offer rental services through its subsidiaries, GOBIKE INC, in New York, FLYLA INC, in Log Angeles, and FLYTORONTO CORP., in Toronto. The rental term is from one hour to one month. In New York, the Company offers a single model of E-Bike for rent, FLY 11 PRO GOFLY as of the date of this report. In Log Angeles, the Company offers 31 types of E-Bikes and E-scooters for rent, including FLY AIR2, FLY TANK, and FLY 11 PRO. In Toronto, the Company offers three types of E-Bikes for rent, FLY 7, FLY 11, and FLY 11 PRO.

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6 — INTANGIBLE ASSETS, NET

Intangible assets as of June 30, 2025 and March 31, 2025 consisted of the following:

		June 30, 2025				March 31, 2025
Property rights		$	92,604			$	92,604
GO FLY App			500,000				500,000
Total Intangible assets			592,604				592,604
Less: Accumulated Amortization			(94,054	)			(66,739	)
Intangible assets, net		$	498,550			$	525,865

For the three months ended June 30, 2025 and 2024, the amortization expenses were $27,315 and $951, respectively.

7 — ACCRUED EXPENSES AND OTHER PAYABLES

		June 30, 2025				March 31, 2025
Accrued payroll		$	59,955			$	62,068
Advances from customers			32,069				28,144
Advances from IGH Holding Inc			49,000				49,000
Accrued warranty			8,158				20,131
Payroll tax and sales tax payable			131,783				113,601
Accrued store expenses			39,782				58,044
Accrued freight in cost			—				35,980
Accrued UL penalty(i)			650,000				1,000,000
Accrued Interest			6,373				—
Accrued Expenses and Other Payables		$	977,120			$	1,366,968

(i) See Note 12 — Commitments and contingencies

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8 — LOAN PAYABLES

A summary of the Company’s loans is listed as follows:

Lender		Due Date		June 30, 2025				March 31, 2025
Chase Bank(i)		January 12, 2028			—				301
Leaf Capital Funding, LLC(ii)		September 30, 2027			31,424				34,620
Automobile Loan – Honda(iii)		June 25, 2027			18,182				20,353
Milea Truck Sales of Queens Inc. (iv)		August 22, 2027			96,253				106,093
Milea Truck Sales of Queens Inc. (iv)		July 26, 2027			69,140				76,779
Peapack-Gladstone Bank(v)		August 31, 2025			4,936,058				4,936,058
Velocity Commercial Capital, LLC (vi)		December 1, 2054			1,926,141				1,927,729
AOWINV LLC (vii)		June 10, 2025			—				255,000
Agile Lending, LLC(viii)		November 27, 2025			1,258,862				—
Stripe, Inc. (ix)		April 20, 2026			122,793				—
Stripe, Inc. (ix)		December 22, 2026			213,185				—
Total loan payables					8,672,038				7,356,933
Short-term loan payables					(6,317,712	)			(5,191,058	)
Current portion of long-term loan payables					(262,069	)			(100,835	)
Long-term loan payables				$	2,092,257			$	2,065,040

(i) On January 12, 2023, the Company’s subsidiary, Arfy Corp. obtained a five-year long-term loan of $70,000 from JPMorgan Chase Bank, N.A. with an annual interest rate of 9.8%. Mr. Tong Chen, an original stockholder of the Company, provided a guarantee on this loan. To secure payment and performance of the liabilities, Arfy Corp. pledged to JPMorgan Chase Bank, N.A., a continuing security interest in all of its right, title and interest in all of its properties, whether now owned or hereinafter acquired and whether now existing or hereafter arising. As of June 30, 2025, the Company paid off this loan in full.

(ii) On August 24, 2022, Universe King Corp. obtained a five-year long-term loan of $63,674 from Leaf Capital Funding, LLC with an annual interest rate of 7.0%. The collateral provided included the Fuso trucks, whether now owned or hereafter acquired by Universe King Corp., and together with all accessories, accessions, attachments thereto, and all other substitutions, renewals, replacements and improvements and all proceeds of the foregoing. As of June 30, 2025, the outstanding balance is $31,424. From July 1 to August 19, 2025, the Company paid $2,523 on principal and interest of the loan.

(iii) On June 12, 2023, Flyebikemiami Inc obtained a four-year long-term loan of $34,974 from AutoNation Honda Miami Lakes with an annual interest rate of 3.98%. The collateral provided was the Honda vehicle purchased by Flyebikemiami Inc. As of June 30, 2025, the outstanding balance is $18,182. From July 1 to August 19, 2025, the Company paid $790 on principal and interest of the loan.

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(iv) On August 22, 2024, Fly E-Bike, Inc. obtained a three-year long-term loan of $128,132 from Milea Truck Sales of Queens Inc. with an annual interest rate of 9.90%. The collateral provided was the FTR 2025 vehicle purchased by Fly E-Bike, Inc. As of June 30, 2025, the outstanding balance is $96,253. From July 1 to August 19, 2025, the Company paid $8,251 on principal and interest of the loan. On July 26, 2024, Fly E-Bike, Inc. obtained a three-year long-term loan of $96,506 from Milea Truck Sales of Queens Inc. with an annual interest rate of 7.03%. The collateral provided was the NRR-CAB 2025 vehicle purchased by Fly E-Bike, Inc. As of June 30, 2025, the outstanding balance is $69,140. From July 1 to August 19, 2025, the Company paid $5,962 on principal and interest of the loan.

(v) On August 5, 2024, Fly-E Group, Inc obtained a line of credit of $5 million from Peapack-Gladstone Bank with a floating annual interest rate and the current annual interest rate is 8.8%. From August 5 to August 6, 2024, the Company withdrew $996,476 and $423,506 from its line of credit to repay loans from Bank of Hope and JPMorgan Chase Bank, N.A., respectively. From August 7 to August 19, 2024, the Company withdrew $3,490,000 from the line of credit. Mr. Zhou Ou, the Company’s Chief Executive Officer, and Mr. Ke Zhang, the Company’s Chief Human Resource Officer, provided a guarantee on this loan. To secure payment and performance of the liabilities, Fly-E Group granted Peapack-Gladstone Bank a continuing lien on and security interest in all assets of the Company, including accounts, chattel paper, documents, instruments, inventory, general intangibles, equipment, fixtures, deposit accounts, goods, letter-of-credit rights, supporting obligations, investment property, commercial tort claims, property in the Lender’s possession, additions, and proceeds of first 39 incorporated subsidiaries of the Company. From July 1 to August 19, 2025, the Company paid $162,410 on interest of the line of credit. The company is in the process of negotiating of extension.

(vi) On November 27, 2024, the Company’s subsidiary, AOFL LLC (the “borrower”) obtained four thirty-year long-term loans of $525,000, $560,000, $595,000, and $420,000, respectively, from Velocity Commercial Capital, LLC (the “lender”) with an annual interest rate of 11.24%. The lender charged a total of $170,933 loan settlement fees for closing the loan which included attorney fee, escrow fee, origination fee, and so on. The Company amortized the $170,933 over the loan term. To secure payment and performance of the liabilities, AOFL LLC pledged to Velocity Commercial Capital, LLC a continuing lien on and security interest in any and all deposits or other sums at any time credited by or due from lender to the borrower and any cash, securities, instruments or other property of the borrower in the possession of lender. From July 1 to August 19, 2025, the Company paid $46,655 on principal and interest of the loan.

(vii) On February 10, 2025, Fly E-Bike, Inc. obtained a five-month short-term loan of $255,000 from AOWINV LLC with no interest. On June 10, 2025, the Company paid off this loan in full.

(viii) On April 29, 2025, the Company obtained a 30-week short-term loan of $1,575,000 from Agile Capital Funding, LLC, with an annual interest rate of 72.8%, which requires weekly repayments of $74,550. The collateral provided included all properties, rights and assets of FLY E-BIKE, INC. From July 1 to August 19, 2025, the Company paid $521,850 on principal and interest of the loan.

(ix) On June 23, 2025, a total of 8 subsidiaries of the Company obtained 42-week short-term loans from Stripe, Inc. with an aggregate principal amount of $126,100 and 18-month long-term loans from Stripe, Inc. with an aggregate principal amount of $216,000. Repayment schedules differ by agreement and include both weekly and 60-day installment options. The stated annual interest rates range from 10.2% to 20.4%.

For the three months ended June 30, 2025 and 2024, the total interest expenses on the Company’s outstanding loans amounted to $546,234 and $68,082, respectively. The weighted average annual interest rate   on short-term borrowings outstanding as of June 30, 2025 and March 31, 2025 was 37% and 13.1%, respectively.

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9 — STOCKHOLDERS’ EQUITY

Prior to the effectiveness of the stock splits discussed below, the Company was authorized to issue 400 shares of common stock having a par value of $0.01 per share and 40 shares of preferred stock having a par value of $0.01 per share. There were 200 shares of common stock were issued and outstanding prior to the effectiveness of the stock splits.

2024 Stock Split

On March 27, 2024, the Company’s board of directors approved a 1-for-110,000 stock split of the Company’s capital stock. The stock split became effective on April 2, 2024. The par value of the Company’s common stock remained unchanged at $0.01 per share, and the number of authorized shares of the Company’s capital stock was increased from 440 to 48,400,000, with the number of authorized shares of common stock and preferred stock being increased from 400 to 44,000,000 and from 40 to 4,400,000, respectively. On June 7, 2024, the Company amended and restated the certificate of incorporation to authorize the Company to issue up to 110,000,000 shares. The par value of the Company’s common stock remained unchanged at $0.01 per share, and the number of authorized shares of the Company’s capital stock increased to 110,000,000, with the number of authorized shares of common stock and preferred stock being increased 100,000,000 and 10,000,000, respectively. On March 10, 2025, the Company amended and restated the certificate of incorporation to authorize the Company to increase the authorized shares of common stock of the Company from 100,000,000 shares to 300,000,000 shares. The par value of the Company’s common stock remained unchanged at $0.01 per share.

On June 7, 2024, the Company completed its initial public offering and issued 450,000 shares of common stock, at a price of $20.00 per share. The gross proceeds of the offering were $9.0 million, prior to deducting the underwriting discounts, commissions and offering expenses payable by the Company. In addition, the Company granted the underwriters a 30-day option to purchase an additional 67,500 shares of common stock at the initial public offering price, less underwriting discounts and commissions, to cover over-allotments. On June 25, 2024, the Company issued an additional 67,500 shares of common stock to the underwriters for gross proceeds of $1.4 million upon full exercise of the underwriters’ over-allotment option. Net proceeds received by the Company from the initial public offering, including the exercise of over-allotment option, were approximately $9.2 million.

2025 Reverse Stock Split

On July 3, 2025, the Company implemented a 1-for-5 reverse stock split of its issued and outstanding shares of common stock. The par value per share remained unchanged at $0.01.

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. As of June 30, 2025 and March 31, 2025, the number of issued and outstanding shares of common stock was 10,636,611 and 4,917,500, respectively.

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 25,875 shares of common stock. The Representative’s Warrants have an exercise price equal to $20.00 per share and are exercisable until the date on June 7, 2029, after the date of commencement on December 7, 2024. The Representative’s Warrants are also exercisable on a cashless basis. As the Representative’s Warrants are considered indexed to the Company’s own stock and meet the criteria for equity classification according to ASC:815-40, the Representative’s Warrants are classified as equity.  None of the Representative’s Warrants were exercised as of June 30, 2025.

The fair value of the warrant, using the Black-Scholes Model on the date of issuance was $274,472. The key inputs into the Black-Scholes Model variables were as follows at measurement date:

		June 7, 2024
Stock price		$	20.00
Risk-free interest rate			4.46	%
Volatility			56.52	%
Exercise price		$	20.00
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.

Registered Direct Offering Warrants

On June 4, 2025, the Company closed its public offering of 5,719,111 shares of common stock and 11,438,222 warrants (“2025 Warrants”) to purchase common stock (including shares of common stock underlying warrants) at a public offering price of $1.214. Each share of common stock was sold together with two 2025 Warrants, with each Existing Warrant to purchase one share of common stock. Each Existing Warrant is exercisable immediately upon issuance, have an exercise price equal to $1.4565, which is 120% of the offering price and will expire five years from the date of issuance. Each Existing Warrant is exercisable for one share of common stock, subject to adjustment in the event of stock dividends, stock splits, stock combinations, reclassifications, reorganizations or similar events affecting the Company’s common stock. A holder may not exercise any portion of an Existing Warrant to the extent that the holder, together with its affiliates and any other person or entity acting as a group, would own more than 4.99% of the Company’s outstanding shares of common stock after exercise, as such ownership percentage is determined in accordance with the terms of the 2025 Warrants, except that upon notice from the holder to the Company, the holder may waive such limitation up to a percentage, not in excess of 9.99%. The 2025 Warrants are also exercisable on a cashless basis. 2025 Warrants are classified as equity as they are indexed to the Company’s own stock and meet the criteria for equity classification according to ASC:815-40. None of the 2025 Warrants were exercised as of June 30, 2025.

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The fair value of the Existing Warrant, using the Black-Scholes Model on the date of issuance was $21,296,598. The key inputs into the Black-Scholes Model variables were as follows at measurement date:

		June 4, 2025
Stock price		$	2.7750
Risk-free interest rate			3.93	%
Volatility			53.92	%
Exercise price		$	1.4565
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.

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			25,875			$	20.0000				4.2
Issued			11,438,222			$	1.4565
Exercised			—			$	—
Forfeited or expired			—			$	—
Outstanding as of June 30, 2025			11,464,097			$	1.4984				4.9

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.

From July 1, 2025 to July 28, 2025, certain 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, resulting in the issuance of 8,219,634 shares of common stock. 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. As of August 19, 2025,  11,438,218 2025 Warrants were exercised.

Subscription Receivable

As of June 30, 2025 and March 31, 2025, the subscription receivable represents the unpaid capital contribution of $219,998 by the stockholders.

10 — INCOME TAX  

(a) Income Tax Expense

Income tax benefit for the three months ended June 30, 2025 was $50,259, and income tax expense for the three months ended June 30, 2024 amounted to $72,445. Significant components of the provision for income taxes are as follows:

		For the Three Months Ended June 30,
		2025				2024
Current
Federal		$	(3,108	)		$	53,738
State			4,554				46,669
City			(8,844	)			31,669
Deferred
Federal			—				(38,000	)
State			—				(12,000	)
City			—				(9,000	)
Foreign			(42,861	)			(631	)
Total		$	(50,259	)		$	72,445

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The provision (benefit) for income taxes   is based on the following pretax loss:

		For the Three Months Ended June 30,
		2025				2024
U.S.		$	(1,894,156	)		$	(99,838	)
Canada			(164,751	)			(7,225	)
Total		$	(2,058,907	)		$	(107,063	)

For the three months ended June 30, 2025, the total pre-tax loss was approximately $2.1 million, which included approximately $1.9 million pre-tax loss in the U.S. and approximately $0.2 million pre-tax loss in Canada. For the three months ended June 30, 2024, the total pre-tax loss was $107,063, which included $99,838 pre-tax loss in U.S. and $7,225 million pre-tax loss in Canada.

The following table reconciles the Company’s effective tax rate:

		For the Three Months Ended June 30,
		2025				2024
Pre-tax book loss		$	(2,058,907	)		$	(107,063	)
Federal Statutory rate			21.0	%			21.0	%
State income tax rate, net of federal income tax benefit			6.8	%			(11.4	)%
City income tax rate, net of federal income tax benefit			6.1	%			(0.5	)%
Foreign statutory rate			0.1	%			(0.1	)%
Permanent differences			1.9	%			(76.8	)%
Valuation allowance of deferred tax assets			(33.4	)%			0.1	%
Return to project adjustment			(0.1	)%			—
Total			2.4	%			(67.7	)%

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 June 30, 2025 and 2024, the Company accrued nil and $60,076 in income tax related penalty included in current income taxes expenses, respectively.

United States

Income tax benefit for the three months ended June 30, 2025 was $7,398, and income tax expense for the three months ended June 30, 2024 amounted to $73,076.

Significant components of the provision (benefit) for income taxes are as follows:

		For the Three Months Ended June 30,
		2025				2024
Current
Federal		$	(3,108	)		$	53,738
State			4,554				46,669
City			(8,844	)			31,669
Deferred
Federal			—				(38,000	)
State			—				(12,000	)
City			—				(9,000	)
Total		$	(7,398	)		$	73,076

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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 benefit for the three months ended June 30, 2025 and 2024 amounted to $42,861 and $631, respectively. Significant components of the income taxes benefit   are as follows:

		For the Three Months Ended June 30,
		2025				2024
Current
Federal		$	—			$	—
State			—				—
City			—				—
Deferred
Federal			(24,261	)			(357	)
State			(18,600	)			(274	)
City			—				—
Total		$	(42,861	)		$	(631	)

(b) Deferred Tax Assets (Liabilities)

Net DTAs as of June 30, 2025 and March 31, 2025 amounted to $153,087 and $94,983 , respectively. Significant components of DTAs (DTLs), net are as follows:

		As of June 30, 2025				As of March 31, 2025
Net operating loss carry forwards		$	738,792			$	1,506,378
Inventory reserve			431,000				410,000
Operating lease liabilities			3,349,000				4,837,000
Amortization difference			21,000				10,000
Total deferred tax assets (DTAs)			4,539,792				6,763,378
Valuation allowance			(974,000	)			(1,714,000	)
Deferred tax assets, net of valuation allowance		$	3,565,792			$	5,049,378
Accumulated depreciation			(325,705	)			(460,395	)
Operating lease right-of-use assets			(3,087,000	)			(4,494,000	)
Total deferred tax liabilities (DTLs)			(3,412,705	)			(4,954,395	)
Deferred tax assets, net		$	153,087			$	94,983
Deferred tax assets (liabilities) – U.S., net		$	—			$	—
Deferred tax assets – Canada, net		$	153,087				94,983

As of June 30, 2025 and March 31, 2025, the Company had approximately $3.6 million and $5.0 million, respectively, in the DTAs, which respectively included approximately $0.7 million and $1.5 million related to net operating loss carryforwards that can be used to offset taxable income in future periods, approximately $3.3 million and $4.8 million related to operating lease liabilities, and approximately $0.4 million and $0.4 million related to inventory reserve.

As of June 30, 2025 and March 31, 2025, the Company had approximately $3.4 million and $5.0 million, respectively, in the DTLs, which included approximately $0.3 million and $0.5 million, respectively related to accumulated depreciation and approximately $3.1 million and $4.5 million related to ROU assets.

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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 June 30, 2025 and March 31, 2025, the Company recorded $153,087 and $94,983 , respectively, in the net DTAs. The tax losses in Canada can be carried forward for twenty years to offset future taxable profit. The tax losses of entities in Canada will begin to expire in 2044, if not utilized. As of June 30, 2025, management considered it more likely than not that the Company will have sufficient taxable income in the future that will allow the Company to realize these net DTAs.

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 80% of taxable income in any future year. Based upon the Company’s recent taxable loss history, the Company performed an analysis and determined that it was necessary to establish a valuation allowance of $974,000 with respect to its net deferred income tax assets as of June 30, 2025.

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 June 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:

		June 30, 2025				March 31, 2025
Operating ROU:
ROU assets		$	8,584,684			$	10,933,068
Total operating ROU assets		$	8,584,684			$	10,933,068

		June 30, 2025				March 31, 2025
Operating lease obligations:
Current operating lease liabilities		$	2,106,614			$	2,617,762
Non-current operating lease liabilities			7,217,325				9,106,928
Total lease liabilities		$	9,323,939			$	11,724,690

The Company had 27 and 36 leases as of June 30, 2025 and March 31, 2025, respectively.

The weighted average lease term, discount rates, and remaining lease terms for the operating leases as of June 30, 2025 were as follows:

Remaining lease term and discount rate:

Weighted average annual discount rate		7.3%
Weighted average remaining lease term (years)		4.34 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		7.2%
Weighted average remaining lease term (years)		4.67 years

The Company leases its offices, warehouse, and retail stores under non-cancellable operating lease agreements. During the three months ended June 30, 2025, lease expenses were $0.8 million, including $0.4 million in cost of revenues and $0.4 million in selling expense. During the three months ended June 30, 2024, lease expenses were $1.1 million, including $0.3 million in cost of revenues, $0.7 million in rent expense included in selling expense, and $0.1 million in rent expense included in general and administrative expense.

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For the three months ended June 30, 2025, the Company terminated 9 leases.

As of June 30, 2025, future minimum lease liabilities, all under office and facilities non-cancellable operating lease agreements, were as follows:

Twelve months ending June 30,		Operating Lease Liabilities
2026		$	2,698,678
2027			2,676,687
2028			2,468,939
2029			1,856,316
2030			387,789
Thereafter			882,555
Total lease payments			10,970,964
Less: interest			(1,647,025	)
Present value of lease liabilities		$	9,323,939

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.

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.

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 $1,000,000 before November 30, 2025 (Refer to Note 7 — Accrued Expenses and other payables). From July 1 to August 19, 2025, the Company paid $350,000 to UL.

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.

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13 — RELATED PARTY TRANSACTIONS

(A) Related party balances

Accounts receivable, net — a related party

Name of Related Party		Relationship		Nature		June 30, 2025				March 31, 2025
Fly E Bike SRL		Zhou Ou (CEO), owns over 50% equity interest of this entity		Accounts receivable		$	78,565			$	78,565
Accounts receivable – a related party							78,565				78,565
Less: Allowance for credit losses							41,100				41,100
Accounts receivable, net - a related party						$	37,465			$	37,465

During the three months ended June 30, 2025, the Company received nil from Fly E Bike SRL.

Prepayments and other receivables — related parties

Name of Related Party		Relationship		Nature		June 30, 2025				March 31, 2025
Fly E Bike SRL		Zhou Ou (CEO), owns over 50% equity interest of this entity		Other receivables		$	147,288			$	—
PJMG LLC		Ruifeng Guo (former CFO who resigned on November 6, 2024), owns over 50% equity interest of this entity		Prepayments			75,000				120,000
Prepayments and other receivables – related parties						$	222,288			$	120,000

During the three months ended June 30, 2025, the Company advanced $147,288 to Fly E Bike SRL, a distributor the Company works with and in which Mr. Ou holds over 50% of the equity interest.

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 50% of the equity interests as a consultant following the completion of its IPO. PJMG was engaged to provide compliance consulting services related to accounting, finance, and management, as well as to oversee market planning and development, follow-on fundraising, and investor relationship management originally from June 2024 to May 2025, further extended to September 2025. The service fee is $45,000 for the first month and from the second month the fees will be $15,000 per month.

Long-term prepayment for software development – a related party

Name of Related Party		Relationship		Nature		June 30, 2025				March 31, 2025
DF Technology US Inc (“DFT”)		Ruifeng Guo (former CFO who resigned on November 6, 2024), owns over 50% equity interest of this entity		Long-term prepayment for software development		$	—			$	136,580
Long-term prepayment for software development — a related party						$	—			$	136,580

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 50% of the equity interest in DFT. As of June 30, 2025 and March 31, 2025, the Company paid $nil and $136,580 to DFT as prepayment for software development, respectively. The total contract price for the ERP system is $2,500,000, and the ERP system was delivered on May 20, 2025. (see Note 5 – Property and Equipment).

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(B) Related party transactions  

Revenues — a related party

						For the Three Months Ended June 30
Name of Related Party		Relationship		Nature		2025				2024
Fly E Bike SRL		Zhou Ou (CEO), owns over 50% equity interest of this entity		Product sales		$	—			$	3,642
Revenues — a related party						$	—			$	3,642

During the three months ended June 30, 2025 and 2024, Fly E Bike SRL, a distributor the Company works with and in which Mr. Ou holds over 50% of the equity interest, purchased certain EV products from the Company in the amount of $nil and $3,642, respectively.

(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 nil and $225,000 for the three months ended June 30, 2025 and 2024, respectively. In addition, during the three months ended June 30, 2025 and 2024, the Company paid DGLG a total of $106,175 and $15,600 for tax services, including sales tax services, payroll tax services, and income tax services, rendered by DGLG, respectively.

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 50% of the equity interests as a consultant following the completion of its IPO. To secure these services, the Company prepaid a total of $75,000 to PJMG as of June 30, 2025, and $45,000 was expensed as consulting expenses during the three months ended June 30, 2025. During the three months ended June 30, 2025, the Company paid PJMG $45,000 for offering costs related to the Company’s secondary offering which has been deducted from the Company’s additional paid-in capital. During the three months ended June 30, 2024, $15,000 was expensed as consulting expenses.  

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14 — DISPOSAL OF SUBSIDIARIES

During the three months ended June 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 100% of its equity interests in subsidiaries FLYMHT INC, FLY14 CORP, EDISONEBIKE INC, and FLY6AVE INC to third-party individuals (the “Buyers”). On January 1, 2025, the Company entered into share transfer agreements with the Buyers. Pursuant to the terms of the agreements, the Company agreed to sell, transfer, and assign all its rights, title, and interests in the shares of the subsidiaries to the Buyers, free and clear of all liens and encumbrances. The Buyers agreed to purchase the shares for total cash consideration of $635,193. There were no contingent payments, earn-outs, or post-closing adjustments specified in the agreements. There was $84,302 gain from this disposal. In June, 2025, the Company received $103,000 from the Buyers.

On March 11, 2025, the management team approved to sell 100% of its equity interests in subsidiaries FLYEBIKE BROOKLYN INC, FLYMHT659 INC, and FLYBX745 INC to third-party individuals (the “Buyers”). On April 1, 2025, the Company entered into share transfer agreements with the Buyers. Pursuant to the terms of the agreements, the Company agreed to sell, transfer, and assign all its rights, title, and interests in the shares of the subsidiaries to the Buyers, free and clear of all liens and encumbrances. The Buyers agreed to purchase the shares for total cash consideration of $310,055. There were no contingent payments, earn-outs, or post-closing adjustments specified in the agreements. In June 2025, the Company received $30,000 from the Buyers. There was no gain or loss on the sale of subsidiaries.

On April 2, 2025, the management team approved to sell 100% of its equity interests in subsidiaries ARFY CORP., FLY GC INC., and ESEBIKE INC to third-party individuals (the “Buyers”). On May 1, 2025, the Company entered into share transfer agreements with the Buyers. Pursuant to the terms of the agreements, the Company agreed to sell, transfer, and assign all its rights, title, and interests in the shares of the subsidiaries to the Buyers, free and clear of all liens and encumbrances. The Buyers agreed to purchase the shares for total cash consideration of $156,517. There were no contingent payments, earn-outs, or post-closing adjustments specified in the agreements. In June 2025, the Company received $55,000 from the Buyers. There was no gain or loss on the sale of subsidiaries.

On May 6, 2025, the management team approved to sell 100% of its equity interests in subsidiaries UFOTS CORP and FLYCORONA INC to third-party individuals (the “Buyers”). On June 1, 2025, the Company entered into share transfer agreements with the Buyers. Pursuant to the terms of the agreements, the Company agreed to sell, transfer, and assign all its rights, title, and interests in the shares of the subsidiaries to the Buyers, free and clear of all liens and encumbrances. The Buyers agreed to purchase the shares for total cash consideration of $60,207. There were no contingent payments, earn-outs, or post-closing adjustments specified in the agreements. In June 2025, the Company received $27,000 from the Buyers. There was no gain or loss on the sale of subsidiaries.

On June 17, 2025, the management team approved to sell 100% of its equity interests in subsidiaries OFLYO INC, FLYCYCLE INC, and FLYBX2381 INC to third-party individuals (the “Buyers”). On July 1, 2025, the Company entered into share transfer agreements with the Buyers. Pursuant to the terms of the agreements, the Company agreed to sell, transfer, and assign all its rights, title, and interests in the shares of the subsidiaries to the Buyers, free and clear of all liens and encumbrances. The Buyers agreed to purchase the shares for total cash consideration of $235,939. There were no contingent payments, earn-outs, or post-closing adjustments specified in the agreements.

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 June 30, 2025, the Company had classified the assets and liabilities of the subsidiaries that were sold on July 1, 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.

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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:

		June 30, 2025				March 31, 2025
ASSETS
Cash		$	68,665			$	61,548
Inventories, net			95,167				195,192
Prepayments and other receivables			—				22,096
Property and equipment, net			104,165				154,876
Security deposits			40,334				73,025
Operating lease right-of-use assets			588,962				1,955,765
Assets held for sale		$	897,293			$	2,462,502
LIABILITIES
Short-term loan payables			37,800				25,498
Accrued expenses and other payables			15,334				—
Operating lease liabilities – current			184,101				319,874
Operating lease liabilities – non-current			425,211				1,807,075
Liabilities held for sale			662,446				2,152,447

There was $1,092 gain on the sale of subsidiaries on July 1, 2025:

Total consideration determined: $235,939

Net assets disposed excluded intercompany other receivables: $234,847

Gain on disposal: $1,092

15 — SUBSEQUENT EVENTS   

On July 1, 2025, the Company sold three subsidiaries: OFLYO INC, FLYCYCLE INC, and FLYBX2381 INC to third-party individuals. The consideration determined was $235,939. As of August 19, 2025, the Company did not receive any consideration from the third-party individuals.

From July 1, 2025 to July 28, 2025, certain holders of the Company’s outstanding warrants exercised their rights to acquire common stock. The exercises were completed on a cashless basis pursuant to the terms of the warrant agreements, resulting in the issuance of 8,219,634 shares of common stock. 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. As of August 19, 2025, 11,438,218 warrants were exercised.

On August 1, 2025, the Company sold three subsidiaries: FLAM, FLYTRON, and MEEBIKE to third-party individuals. The consideration determined was $96,327. As of August 19, 2025, the Company did not receive any consideration from the third-party individuals.

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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 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 August 19, 2025, we have 16 stores, including 15 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 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 August 19, 2025, we offered 27 E-motorcycle products, 36 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, Toronto, 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 June 30, 2025, we produced 1,236 E-motorcycles, 384 E-bikes and 88 E-scooters at the same facility.

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Recent Developments

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. From May 28 to July 15, 2025, the Company paid $350,000 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 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 Reverse Stock Split. The 2025 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 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 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 2025 Reverse Stock Split.

Registered Direct Offering

On June 2, 2025, we closed our registered direct offering of an aggregate of (i) 5,719,111 shares of our common stock, par value $0.01 and (ii) 11,438,222 warrants (the “Warrants”) to purchase 11,438,222 shares of common stock at a combined purchase price per share and accompanying Warrants of $1.2140, 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.

Disposal of Certain Subsidiaries

During the three months ended June 30, 2025 and from July to August 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 August 2025, the Company sold 14 subsidiaries to third-party individuals in multiple transactions, for an aggregated cash consideration of approximately $1.5 million, of which $112,000 has been collected as of August 19, 2025.  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 August 19, 2025, we have 16 stores, including 15 retail stores in the U.S. and one retail store in Canada. 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 June 30, 2025, our net revenues decreased by 32.3% to $5.3 million, compared to $7.9 million for the same period in 2024, which was primarily driven by a decrease in total units sold, which dropped by 6,432 units, from 16,880 units for the three months ended June 30, 2024, to 10,448 units for the three months ended June 30, 2025, and by the decreased average sales price of EV, which decreased by $93 per EV, from $1,053 in the three months ended June 30, 2024 to $960 in the three months ended June 30, 2025. The decrease in volume 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 volume also attributed in part to the closures and disposition of our retail stores during the three months ended June 30, 2025. The decrease in average sales price was primarily attributable to changes in product mix and promotional pricing strategies implemented during the three months ended June 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 $1.0 million for the three months ended June 30, 2025, compared to $1.0 million for the three ended June 30, 2024. As eight stores were sold during the three months ended June 30, 2025, and an additional three stores were sold subsequently, 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 June 30, 2025, we worked with two principal vendors, Depcl Corp. and Xiamen Innolabs Technology Co., Ltd, each of which respectively supplied approximately 64.5% and 11.7% of the accessories and components used in all our products for the three months ended June 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.

Regulatory Landscape

We operate in an industry that is subject to extensive environmental, safety and other laws and regulations, which include products safety and testing, as well as battery safety and disposal. These requirements create additional costs and possible production delay in connection with the testing and manufacturing of our products. We also benefit from environmental regulations in our target markets which include economic incentives to purchasers of EVs and tax credits for EV manufacturers. The Governor of New York State signed a legislative package in July 2024 aimed at raising awareness about the safe use of e-bikes and lithium-ion battery products, prohibiting the sale of non-compliant batteries, requiring safety protocols and training for first responders, mandating operating manuals for e-bike retailers, and improving accident reporting and registration processes for e-bikes and mopeds. Additionally, in January 2025, the New York City Department of Transportation launched a $2 million trade-in program, allowing eligible food delivery workers to replace their unsafe e-bikes, e-mobility devices, and batteries with certified, high-quality versions. Our Fly-11 PRO was chosen for the official model of DOT and participates in this program. From January 2025 to June 2025, we participated in this program and completed the delivery of Fly-11 Pro models to our retail partner participating in the program. While we expect relevant regulations to provide a tailwind to our growth, it is possible for other regulations to result in margin pressures.

How to Assess Our Performance

In assessing performance, management considers a variety of performance and financial measures, including principal growth in net sales, gross profit, gross margin, selling, general and administrative expenses and EBITDA. The key measures that we use to evaluate the performance of our business are set forth below.

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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.

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 continue to increase in the foreseeable future, as we plan to further expand our sales network and retail channels, and engage in more selling and marketing activities to enhance our brand and attract more purchases from new and existing customers.

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 increase in the foreseeable future, as we hire additional personnel and incur additional expenses related to the anticipated growth of our business and our operation as a public company after the completion of our initial public offering.

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.

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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.

Results of Operations for the Three Months Ended June 30, 2025 and 2024

The following table sets forth the components of our results of operations for the three months ended June 30, 2025 and 2024:

		For the Three Months Ended June 30,
		2025				2024				Change				Percentage Change
Revenues, Net		$	5,328,198			$	7,873,426			$	(2,545,228	)			(32.3	)%
Cost of Revenues			3,066,823				4,773,792				(1,706,969	)			(35.8	)%
Gross Profit			2,261,375				3,099,634				(838,259	)			(27.0	)%
Operating Expenses
Selling Expenses			1,321,217				1,612,495				(291,278	)			(18.1	)%
General and Administrative Expenses			2,444,933				1,532,638				912,295				59.5	%
Total Operating Expenses			3,766,150				3,145,133				621,017				19.7	%
Loss from Operations			(1,504,775	)			(45,499	)			(1,459,276	)			3,207.3	%
Other Income (Expenses), Net			(7,898	)			6,518				(14,416	)			(221.2	)%
Interest Expense			(546,234	)			(68,082	)			(478,152	)			702.3	%
Income Taxes Benefit (Expense)			50,259				(72,445	)			122,704				(169.4	)%
Net Loss		$	(2,008,648	)		$	(179,508	)		$	(1,829,140	)			1,019.0	%

Revenues

		For the Three Months Ended June 30,
		2025				2024				Change				Percentage Change
Sales-Retail		$	3,762,829			$	6,870,418			$	(3,107,589	)			(45.2	)%
Sales-Wholesale		$	1,427,231			$	1,003,008			$	424,223				42.3	%
Sales-Rental services			138,138				—				138,138				100.0	%
Total Net Revenues		$	5,328,198			$	7,873,426			$	(2,545,228	)			(32.3	)%

Our net revenues were $5.3 million for the three months ended June 30, 2025, a decrease of 32.3%, from $7.9 million for the three months ended June 30, 2024. The decrease in our net revenues was primarily driven by a decrease in sales volume by 6,432 units, from 16,880 units for the three months ended June 30, 2024, to 10,448 units for the three months ended June 30, 2025 and the decreased average sales price of EV, which decreased by $93 per EV, from $1,053 in the three months ended June 30, 2024 to $960 in the three months ended June 30, 2025.

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Our retail sales revenue decreased by $3.1 million, or 45.2%, from $6.9 million for the three months ended June 30, 2024 to $3.8 million for the three months ended June 30, 2025. Our wholesale revenue increased by $0.4 million, or 42.3%, from $1.0 million for the three months ended June 30, 2024 to $1.4 million for the three months ended June 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 June 30, 2025. The increase in wholesales revenue was driven primarily by the increase number of our dealers  during the three months ended June 30, 2025.

Cost of Revenues

Cost of revenues decreased by 35.8%, from $4.8 million for the three months ended June 30, 2024, to $3.1 million for the three months ended June 30, 2025. The decrease in cost of revenues was primarily attributable to more favorable pricing obtained from our suppliers, particularly for batteries, as well as a reduction in sales volume, as discussed above.

Gross Margin

The following table shows our gross profit and gross margin for the three months ended June 30, 2025 and 2024:

		For the Three Months Ended June 30,
		2025				2024				Change				Percentage Change
Gross Profit		$	2,261,375				3,099,634				(838,259	)			(27.0	)%
Gross Margin			42.4	%			39.4	%

Gross profit for the three months ended June 30, 2025 and 2024 was $2.3 million and $3.1 million, respectively. Gross margin was 42.4% and 39.4% for the three months ended June 30, 2025 and 2024, respectively. The increase in gross margin was mainly because of the increased revenues from rental business with higher margin than our other businesses. Gross margin of rental business was 79.8% and nil for the three months ended June 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 June 30, 2025 and 2024:

		For the Three Months Ended June 30,
		2025				2024				Change				Percentage Change
Selling Expenses		$	1,321,217				1,612,495				(291,278	)			(18.1	)%
General and Administrative Expenses			2,444,933				1,532,638				912,295				59.5	%
Total Operating Expenses		$	3,766,150				3,145,133				621,017				19.7	%
Percentage of Revenue			70.7	%			39.9	%

Total operating expenses were $3.8 million for the three months ended June 30, 2025, an increase of $0.6 million, or 19.7%, compared to $3.1 million for the three months ended June 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.

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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 June 30, 2025, compared to $0.6 million for the three months ended June 30, 2024. Rent was $0.4 million for the three months ended June 30, 2025, compared to $0.7 million for the three months ended June 30, 2024. Advertising expenses were $17,413 for the three months ended June 30, 2025, compared to $68,519 for the three months ended June 30, 2024. The decrease in rental expense was primarily due to the closures and dispositions of retail stores during this quarter.

General and Administrative Expenses

General and administrative expenses increased during the three months ended June 30, 2025 compared to the same period of previous year. Professional fees increased to $1.5 million for the three months ended June 30, 2025, compared to $0.4 million for the three months ended June 30, 2024, primarily attributable to the increase in audit fee, consulting fee, legal fee and IR expenses associated with our public offering and ongoing reporting obligations. Payroll expenses decreased to $0.2 million for the three months ended June 30, 2025 from $0.4 million for the three months ended June 30, 2024 primarily due to decrease in headcount of office assistants. Depreciation expense increased to $0.6 million for the three months ended June 30, 2025, compared to $0.2 million for the same period in prior year due to the increasing cost basis of fixed assets.

Income Tax Benefits (Provisions)  

Income taxes benefit was $50,259 for the three months ended June 30, 2025, a change from $72,445 income tax provision for the three months ended June 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 $2.0 million for the three months ended June 30, 2025, an increase of $1.7 million, or 1,019.0%, from net loss of $0.2 million for the three months ended June 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 June 30, 2025 and 2024:

		For the Three Months Ended June 30,
		2025				2024				Change				Percentage Change
Net loss		$	(2,008,648	)		$	(179,508	)		$	(1,829,140	)			1019.0	%
Income Tax provision			(50,259	)			72,445				(122,704	)			(169.4	)%
Depreciation			212,792				95,051				117,741				123.9	%
Interest Expenses			546,234				68,082				478,152				702.3	%
Amortization			27,315				951				26,364				2,772.2	%
EBITDA		$	(1,272,566	)		$	57,021			$	(1,329,587	)			(2,331.7	)%
Percentage of Revenue			(23.9	)%			0.7	%							(24.6	)%

Before interest expenses, income tax, depreciation, and amortization, for the three months ended June 30, 2025, our net loss was $1.3 million, a change of $1.3 million, compared to net income of $57,021 for the three months ended June 30, 2024, which was mainly attributable to the decrease in revenue, and increase in general and administrative expenses described above. The ratio of EBITDA to revenue was (23.9)% and 0.7% for the three months ended June 30, 2025 and 2024, respectively.

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Liquidity and Capital Resources

As of June 30, 2025, we had cash of $2.3 million. We had working capital of $6.0 million and $1.3 million as of June 30, 2025 and March 31, 2025, respectively. We had net loss of $2.0 million and $0.2 million for the three months ended June 30, 2025 and 2024, respectively. During the three months ended June 30, 2025, net cash used in operating activities of the Company was approximately $5.3 million. As of June 30, 2025, the Company had a current portion of contractual obligation of approximately $9.3 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 June 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.

On June 4, 2025, the Company issued 5,719,111 shares of common stock, at a price of $1.2140 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.

As of June 30, 2025, the Company had working capital of approximately $6.0 million and cash of approximately $2.3 million. The main cash outflow for the three months ended June 30, 2025 was from net loss of $2.0 million, a decrease in accounts payable of $0.9 million, an increase in accounts receivable of $0.6 million, and an increase in prepayments and other receivables of $1.9 million. As of June 30, 2025, the Company had a current portion of contractual obligation of approximately $9.3 million. 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 June 30, 2025 and March 31, 2025, our accounts receivable, net of allowance for credit losses, was $1.1 million and $0.5 million, respectively. Our accounts receivable turnover period decreased from 71 days in the year ended March 31, 2025 to 57 days in the quarter ended June 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 June 30, 2025 and March 31, 2025, our accounts payable were $0.4 million and $1.3 million, respectively. Our accounts payable turnover period decreased to 30 days for the quarter ended June 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.

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Our prepayments and other receivables primarily represent prepayments to vendors and other service providers. These prepayments and receivables increased by $2.6 million, from $3.7 million as of March 31, 2025, to $6.3 million as of June 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 three months ended June 30, 2025, the Company made substantial prepayments to vendors to secure inventory for the new services.

Our inventories primarily include our EVs, their accessories and spare parts. As of June 30, 2025 and March 31, 2025, our inventories, net of allowance, were $5.9 million and $6.4 million, respectively. The decrease in inventories was primarily due to our preparation for the new rental business. Our inventory turnover days increased to 196 days in the quarter ended June 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 June 30, 2025 and March 31, 2025, the total outstanding amount of loan principal was $8.7 million and $7.4 million, respectively. For the three months ended June 30, 2025 and 2024, the interest expenses on our outstanding loans amounted to $546,234 and $68,082, 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 three months ended June 30, 2025 and 2024:

		For the Three Months Ended June 30,
		2025				2024
Net Cash Used in Operating Activities		$	(5,284,034	)		$	(4,522,164	)
Net Cash Used in Investing Activities			(408,632	)			(1,066,130	)
Net Cash Provided by Financing Activities			7,171,615				8,653,972
Net changes in cash including cash classified within current assets held for sale		$	1,478,949			$	3,065,678

Operating Activities

Net cash used in operating activities for the three months ended June 30, 2025 was $5.3 million, which was due to net loss of $2.0 million, an increase in accounts receivable of $0.6 million, a decrease in accounts payable of $0.9 million, a decrease in operating lease liabilities of $0.8 million, a decrease in accrued expenses and other payables of $0.3 million, and an increase in prepayments and other receivables of $2.0 million, partially offset by amortization of right-of-use assets of $0.8 million, depreciation expenses of $0.2 million, and additional inventories reserve of $0.2 million provided during the quarter.

Net cash used in operating activities for the three months ended June 30, 2024 was $4.5 million, which was due to net loss of $0.2 million, a decrease in tax payable of $0.4 million, and a decrease in accrued expenses and other payables of $0.5 million, an increase in inventories of $0.9 million, a decrease in account payable of $0.8 million, a decrease in operating lease liabilities of $0.6 million, an increase in prepayments for operation services to a related party of $0.2 million and an increase in prepayments and other receivables of $2.1 million, partially offset by amortization of right-of-use assets of $0.8 million and a decrease in accounts receivables - a related party of $0.3 million.

Investing Activities

Net cash used in investing activities was $0.4 million for the three months ended June 30, 2025, which was due to purchase of properties and equipment of $0.1 million, advance to a related party of $0.2 million, and cash released from disposal of entities of $0.1 million.

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Net cash used in investing activities was $1.1 million for the three months ended June 30, 2024, which was due to prepayment made for purchase of software from a related party of $0.8 million, prepayments for property rights of $0.1 million, and the purchase of equipment of $0.4 million, partially offset by the repayment from a related party of $0.2 million. 

Financing Activities

Net cash provided by financing activities was $7.1 million for the three months ended June 30, 2025, which consisted of net proceeds from our follow-on public offering of $6.4 million, and loan proceeds of $1.9 million, partially offset by repayments of loans of $0.6 million and payment of public offering costs of $0.5 million.

Net cash provided by financing activities was $8.7 million for the three months ended June 30, 2024, which consisted of net proceeds of the IPO of $9.2 million, and loan proceeds of $0.2 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 June 30, 2025:

Contractual Obligations		Total				Less than 1 year				1 – 2 years				3 – 5 years				Thereafter
Operating Lease Obligations and Others		$	9,323,939				2,106,614				4,424,584				2,037,060				755,681
Loan Payable			8,672,038				6,579,781				189,517				21,157				1,881,583
UL Litigation			650,000				650,000				—				—				—
Total Contractual Obligations		$	18,645,977				9,336,395				4,614,101				2,058,217				2,637,264

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 bank borrowings. Our short-term and long-term bank borrowings 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 bank borrowings, 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.

43

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 June 30, 2025 and March 31, 2025, we recorded inventory allowance balance of $1,189,455 and $1,107,569, respectively.

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 June 30, 2025. Accordingly, we continue to consider these material weaknesses to be ongoing as of that date.

As of June 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.

44

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.

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.

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 June 30, 2025, none of our directors or officers (as defined in Rule 16a-1(f) promulgated under the Exchange Act) adopted or terminated any “Rule 10b5-1 trading arrangement” or any “non-Rule 10b5-1 trading arrangement,” as each term is defined in Item 408 of Regulation S-K.

Item 6. Exhibits 

3.1		The Second Certificate of Amendment of Amended and Restated Certificate of Incorporation (incorporated by reference to Exhibit 3.1 to Form 8-K filed on July 2, 2025)
10.1		Form of Securities Purchase Agreement (incorporated by reference to Exhibit 10.1 to Form 8-K filed on June 5, 2025)
10.2		Joint Amendment to Placement Agency Agreement and Engagement Letter, dated May 13, 2025, by and between the Company and American Trust Investment Services, Inc. (incorporated by reference to Exhibit 10.9 to Form 10-K filed on July 15, 2025)
31.1*		Section 302 Certification of Principal Executive Officer
31.2*		Section 302 Certification of Principal Financial Officer
32.1**		Section 906 Certification of Principal Executive Officer
32.2**		Section 906 Certification of Principal Financial Officer
101.INS		Inline XBRL Instance Document.
101.SCH		Inline XBRL Taxonomy Extension Schema Document.
101.CAL		Inline XBRL Taxonomy Extension Calculation Linkbase Document.
101.DEF		Inline XBRL Taxonomy Extension Definition Linkbase Document.
101.LAB		Inline XBRL Taxonomy Extension Label Linkbase Document.
101.PRE		Inline XBRL Taxonomy Extension Presentation Linkbase Document.
104		Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101).

*	Filed herewith
**	Furnished herewith

45

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)
August 19, 2025
	By:	/s/ Shiwen Feng
		Shiwen Feng
		Chief Financial Officer
		(Principal Financial and Accounting Officer)
August 19, 2025

46

On January 1, 2025, the Company entered into share transfer agreements for sales of 100% of its equity interests in subsidiaries – FLYMHT INC, FLY14 CORP, EDISONEBIKE INC, and FLY6AVE INC – to third-party buyers for a total cash consideration of $635,193, with no contingent payments or adjustments. In June 2025, the Company received $103,000 from the buyers. As of June 30, 2025, the remaining consideration due from such buyers was $532,193 (See Note - 14 — DISPOSAL OF SUBSIDIARIES). On April 1, 2025, the Company entered into share transfer agreements for the sale of100% of its equity interests in subsidiaries – FLYEBIKE BROOKLYN INC, FLYMHT659 INC, and FLYBX745 INC – to third-party buyers for a total cash consideration of $310,055, with no contingent payments or adjustments. In June 2025, the Company received $30,000 from the buyers. As of June 30, 2025, the remaining consideration due from such buyers was $280,055 (See Note - 14 — DISPOSAL OF SUBSIDIARIES). On May 1, 2025, the Company entered into share transfer agreements for the sale of 100% of its equity interests in subsidiaries – ARFY CORP., FLY GC INC., and ESEBIKE INC – to third-party buyers for a total cash consideration of $156,517, with no contingent payments or adjustments. In June 2025, the Company received $55,000 from the buyers. As of June 30, 2025, the remaining consideration due from such buyers was $101,517 (See Note - 14 — DISPOSAL OF SUBSIDIARIES). On June 1, 2025, the Company entered into share transfer agreements for the sale of 100% of its equity interests in subsidiaries – UFOTS CORP and FLYCORONA INC – to third-party buyers for a total cash consideration of $60,207, with no contingent payments or adjustments. In June 2025, the Company received $27,000 from the buyers. As of June 30, 2025, the remaining consideration due from such buyers was $33,207 (See Note - 14 — DISPOSAL OF SUBSIDIARIES). 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FAQ

What was FLYE's net loss for the quarter ended June 30, 2025?

Approximately $2.0 million net loss for the three months ended June 30, 2025.

How much cash and working capital did Fly-E Group have as of June 30, 2025?

Cash of approximately $2.3 million and working capital of approximately $6.0 million as of June 30, 2025.

Did Fly-E Group raise financing in 2025?

Yes. The company completed a June 2, 2025 registered direct offering generating net proceeds of approximately $6.24 million and previously received ~ $9.2 million net from its IPO.

What did management say about the company’s ability to continue as a going concern?

Management stated there is substantial doubt about the company’s ability to continue as a going concern and plans to seek equity, debt, or related-party support.

How much cash did the company use from operations in the quarter?

Approximately $5.3 million of net cash was used in operating activities during the three months ended June 30, 2025.