FLYE 10-K & 10-Q changes, risk factors and insider trading
Fly-E Group, Inc. · Nasdaq · Motor Vehicles & Passenger Car Bodies · CIK 1975940 · All filings on SEC.gov
At a glance
What changed in the latest 10-K
Risk Factors
New heading “An adverse determination in any significant product liability claim against us could materially adversely affect our business, results of operations or financial condition.”
New heading “We are subject to a pending securities class action lawsuit, and we may become subject to additional legal proceedings that could adversely affect our business, financial condition, and results of operations.”
New heading “We are subject to an SEC investigation, which could adversely affect our business, financial condition, results of operations and stock price.”
New heading “We are subject to a securities class action lawsuit and may be subject to similar litigation in the future, which could adversely affect our business, financial condition, results of operations and stock price.”
Removed heading “Because our directors and executive officers own or have the right to vote approximately 18.7% of our outstanding common stock, they may be able to elect all directors, approve all matters requiring stockholder approval and block any action which may be beneficial to stockholders.”
Largest changes
“We are subject to a securities class action lawsuit and may be subject to similar litigation in the future, which could adversely affect our business, financial condition, results of operations and stock price.”see in full comparison
“On January 21, 2026, the Company was notified by the U.S. Securities and Exchange Commission (the “Commission”) that it has initiated an investigation involving the Company. The Company has not been provided with substantive details regarding the investigation, and is fully cooperating with the investigation. SEC investigations can be lengthy, expensive and disruptive. We have incurred and may continue to incur significant legal and other expenses in connection with the investigation. …”see in full comparison
“On September 8, 2025, a federal securities class action was filed against the Company, our chief executive officer, and our former chief financial officer in the United States District Court, Eastern District of New York. …”see in full comparison
“Securities Class Action and the Flynn Action may result in substantial costs and divert our management’s attention and resources, which could harm our business. Any adverse determination in the Lawsuit or similar litigation could require us to pay significant monetary damages and could harm our reputation. We cannot predict the outcome of the legal proceedings or estimate the range of potential loss, if any, that could result from an adverse judgment. …”see in full comparison
“On May 22, 2026, the lead plaintiff in the Class Action filed an Amended Complaint. The Company's response to the Amended Complaint is due August 14, 2026. Given the preliminary stage of the lawsuit and the inherent uncertainties of litigation, the Company cannot determine with certainty the outcome of the Class Action at this time.”see in full comparison
“We are subject to a pending securities class action lawsuit, and we may become subject to additional legal proceedings that could adversely affect our business, financial condition, and results of operations.”see in full comparison
Full comparison: every changed paragraph (19)
An adverse determination in any significant product liability claim against us could materially adversely affect our business, results of operations or financial condition.
The development, production, marketing, sale and usage of our vehicles will expose us to significant risks associated with product liability claims. As a provider of consumer products, we are, from time to time, subject to civil litigation regarding those products, including in publicly-available court filings. Our business is vulnerable to product liability claims, and we may face inherent risk of exposure to claims in the event our vehicles do not perform or are claimed to not have performed as expected. If our products are defective, malfunction or are used incorrectly by our customers, it may result in bodily injury, property damage or other injury, including death, which could give rise to product liability claims against us. For example, our certain EVs use lithium-ion batteries, which, if not appropriately managed and controlled, can rapidly release energy by venting smoke and flames that can ignite nearby materials. Any potential issues with the lithium-ion batteries used in our EVs could have a material adverse effect on our business, financial condition, and results of operations, including a significant negative impact on our revenue. Furthermore, there is some risk of electrocution if individuals who attempt to repair battery packs do not follow applicable maintenance and repair protocols. Any such damage or injury would likely lead to product liability claims against us and potentially a safety recall. Any losses that we may suffer from any liability claims and the effect that any product liability litigation may have upon the brand image, reputation and marketability of our products could have a material adverse impact on our business, results of operations or financial condition. No assurance can be given that material product liability claims will not be made in the future against us, or that claims will not arise in the future in excess or outside of our insurance coverage and contractual indemnities with suppliers and manufacturers. We may not be able to obtain adequate product liability insurance for our existing or new products or the cost of doing so may be prohibitive. Adverse determinations of material product liability claims made against us could also harm our reputation and cause us to lose customers and could have a material adverse effect on our business, prospects, financial condition and operating results.
We are subject to a pending securities class action lawsuit, and we may become subject to additional legal proceedings that could adversely affect our business, financial condition, and results of operations.
On September 8, 2025, a federal securities class action was filed in the United States District Court, Eastern District of New York, by plaintiff Dino Kurt, individually and on behalf of all others similarly situated, against defendants, the Company, chief executive officer, Zhou Ou, and former chief financial officer, Shiwen Feng (the “Class Action”). On October 28, 2025, a shareholder derivative lawsuit was filed purportedly on behalf of the Company, as nominal defendant, against certain of its current and former directors and officers in the United States Court for the Eastern District of New York, captioned Flynn v. Ou et al, No. 1:25-cv-06036 (E.D.N.Y.) (the “Flynn Action”). On May 22, 2026, the lead plaintiff in the Class Action filed an Amended Complaint. The Company's response to the Amended Complaint is due August 14, 2026.
Securities Class Action and the Flynn Action may result in substantial costs and divert our management’s attention and resources, which could harm our business. Any adverse determination in the Lawsuit or similar litigation could require us to pay significant monetary damages and could harm our reputation. We cannot predict the outcome of the legal proceedings or estimate the range of potential loss, if any, that could result from an adverse judgment. We may also become subject to additional litigation or legal proceedings in the future, including stockholder derivative suits or additional securities class actions. Such litigation could be time-consuming and expensive to defend, and could result in the diversion of time and attention by our management and in substantial damages, settlement costs, or judgments against us. Our insurance may not cover all claims that may be asserted against us, and any claims asserted against us, regardless of merit or eventual outcome, may harm our reputation. The occurrence of any of these events could have a material adverse effect on our business, financial condition, results of operations, and the trading price of our common stock.
As of March 31, 2025,2026, we
had had
cash of $0.8$0.3 million. We had working capital of $1.3$10.0 million and $0.3$1.3 million as of March 31, 20252026 and March 31, 2024,2025,
respectively. We had net loss of $5.3$9.3 million and net income of $1.9$5.3 million for the year ended March 31, 20252026 and 2024,2025, respectively.
During the year
ended March 31, 2025,2026, net cash used in operating activities of the Company was approximately $10.1$13.8 million. As of
March 31, 2025, 2026,
we had a current portion of contractual obligation of approximately $8.9$5.5 million. 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.
There is no assurance
that we will be successful in implementing the foregoing plans or that additional financing will be available to
us on commercially reasonable
terms, or at all. Our inability to secure needed financing when required could require material changes
to our business plans and could
have a material adverse effect on our ability to continue as a going concern and results of operations.
As of July 15,23, 2025,2026, there
are 3,432,000shares77,000 shares of restricted common stock, which constitute approximately 32.3%4.717% of our outstanding common stock, may be eligible for
for sale pursuant to Rule 144 at various times, subject to limitations provided by Rule 144 and lock-up agreements which our stockholders,
including our directors and officers, who hold 3,366,000shares have signed lock-ups for period of 180 days from the closing of the registered
direct offering, which expires on December 1, 2025, release from the lock-up restriction at the discretion of the placement agent for
the registered direct offering.144. If placement agent for the registered direct
offering waives or releases parties to the lock-up, the
market price for our common stock could be adversely impacted.
Because our directors and executive officers
own or have the right to vote approximately 18.7% of our outstanding common stock, they may be able to elect all directors, approve
all matters requiring stockholder approval and block any action which may be beneficial to stockholders.
As of July 15, 2025, our
directors and executive officers beneficially own approximately 18.7% of our outstanding common stock. Our bylaws provide that a majority
of the aggregate voting power of the stock issued and outstanding and entitled to vote constitutes a quorum for a meeting of stockholders.
As a result, they may have the ability to elect all of our directors and to approve actions requiring stockholder approval as well as
to prevent any action from being taken which they oppose even if such action would benefit stockholders.
We are subject to an SEC investigation, which could adversely affect our business, financial condition, results of operations and stock price.
On January 21, 2026, the Company was notified by the U.S. Securities and Exchange Commission (the “Commission”) that it has initiated an investigation involving the Company. The Company has not been provided with substantive details regarding the investigation, and is fully cooperating with the investigation. SEC investigations can be lengthy, expensive and disruptive. We have incurred and may continue to incur significant legal and other expenses in connection with the investigation. Management’s attention may be diverted from other business concerns, which could have a material adverse effect on our business, financial condition and results of operations. We cannot predict the timing, outcome or consequences of the investigation. If the SEC were to determine that we have violated federal securities laws, we could be subject to civil or criminal sanctions, including monetary penalties, cease and desist orders, injunctions or other equitable relief. Any such sanctions or the continuation of the investigation could have a material adverse effect on our business, reputation, financial condition and the market price of our common stock.
We are subject to a securities class action lawsuit and may be subject to similar litigation in the future, which could adversely affect our business, financial condition, results of operations and stock price.
On September 8, 2025, a federal securities class action was filed against the Company, our chief executive officer, and our former chief financial officer in the United States District Court, Eastern District of New York. The complaint alleges violations of Sections 10(b) and 20(a) of the Securities Exchange Act of 1934 and Rule 10b-5 thereunder, claiming that defendants made materially false and misleading statements about revenue growth, brand reputation, and business expansion, while concealing or minimizing material adverse facts concerning the safety of the Company’s lithium battery and inadequate forecasting processes. Securities litigation is often expensive and diverts management’s attention and Company resources. There can be no assurance that we will prevail in this action. An unfavorable outcome in this or similar litigation could result in substantial monetary damages, and could have a material adverse effect on our business, financial condition, results of operations and the market price of our common stock. In addition, the SEC investigation and the class action litigation, whether or not resolved in our favor, could result in substantial costs, divert management’s attention and resources, cause us reputational harm, and make it more difficult for us to raise capital or attract and retain qualified personnel.
On May 22, 2026, the lead plaintiff in the Class Action filed an Amended Complaint. The Company's response to the Amended Complaint is due August 14, 2026. Given the preliminary stage of the lawsuit and the inherent uncertainties of litigation, the Company cannot determine with certainty the outcome of the Class Action at this time.
Our eligibility for listing on Nasdaq depends on our ability to comply with Nasdaq’s continued listing requirements. On April 17, 2026, the Company received a letter from the Listing Qualifications Staff (the “Staff”) of Nasdaq notifying the Company that it currently does not satisfy Listing Rule 5620(a), which requires listed companies to hold an annual meeting of shareholders within twelve months of the end of their fiscal year. The Company did not hold an annual meeting of shareholders within twelve months of its fiscal year ended March 31, 2025. The Deficiency Letter is only a notification of deficiency, not of imminent delisting, and has no immediate effect on the listing or trading of the Company’s securities on the Nasdaq Capital Market. The Deficiency Letter states that the Company has 45 calendar days, or until June 1, 2026, to submit to Nasdaq a plan to regain compliance with the Nasdaq Listing Rule 5620(a). If the Company submits a plan to Nasdaq and Nasdaq accepts the plan, Nasdaq can grant an exception of up to 180 calendar days from the fiscal year end, or until September 28, 2026, to regain compliance. If Nasdaq does not accept the Company’s plan, the Company will have the opportunity to appeal the decision to a Nasdaq Hearings Panel.
The Company filed the proxy for its 2026 annual general meeting (“2026 AGM”) on May 26, 2026 and the 2026 AGM was held on June 17, 2026. Accordingly, Staff has determined that the Company complies with the Listing Rule 5620(a) and this matter is now closed.
On July 21, 2026, the Company received a delinquency notification letter (the “Notice”) from the Listing Qualifications Staff of Nasdaq due to the Company’s non-compliance with Nasdaq Listing Rule 5250(c)(1) as a result of the Company’s failure to timely file its Annual Report on Form 10-K for the period ended March 31, 2026. Nasdaq Listing Rule 5250(c)(1) requires listed companies to timely file all required periodic financial reports with the SEC. This Notice has no immediate effect on the listing of the Company’s securities on Nasdaq. However, if the Company fails to timely regain compliance with the Rule, the Company’s securities will be subject to delisting from Nasdaq. The Notice provides that the Company may submit to Nasdaq a plan to regain compliance with the Nasdaq Listing Rule by September 21, 2026. If Nasdaq accepts the Company’s plan, then Nasdaq may grant the Company up to 180 calendar days from the filing’s due date, or until January 11, 2027, to regain compliance. If Nasdaq does not accept the Company’s plan, then the Company will have the opportunity to appeal that decision to a Nasdaq Hearings Panel. There can be no assurance that the Company will be able to regain compliance with the Nasdaq Listing Rule 5250(c)(1) or maintain compliance with any other continued listing requirements.
Our eligibility for listing
on Nasdaq depends on our ability to comply with Nasdaq’s continued listing requirements. On October 2, 2024, we received written
notice from Nasdaq indicating that the bid price for our common stock for the last 31 consecutive business days, had closed below
the minimum $1.00 per share and, as a result, we are not in compliance with the $1.00 minimum bid price requirement for the continued
listing on Nasdaq, as set forth in Nasdaq Listing Rule 5550(a)(2).
In accordance with Nasdaq
Listing Rule 5810(c)(3)(A), we have a period of 180 calendar days, or until March 31, 2025, to regain compliance with
the minimum bid price requirement. To regain compliance, the closing bid price of our common stock must meet or exceed $1.00 per share
for a minimum of 10 consecutive business days during this 180 day period. On April 2, 2025, Nasdaq notified us that, although
the Company has not regained compliance with the minimum bid price requirement, the Company is eligible to receive an additional 180
calendar day period or until September 29, 2025, to regain compliance with the minimum bid price requirement, pursuant to Nasdaq
Listing Rule 5810(c)(3)(A). We will monitor the closing bid price of our common stock and may, if appropriate, consider implementing
available options, including, but not limited to, implementing a reverse share split of our common stock, to regain compliance with the
minimum bid price requirement under the Nasdaq Listing Rules. On June 16, 2025, our board of directors approved a one-for-five (1:5)
reverse stock split of our issued and outstanding shares of common stock. On July 3, 2025, we filed with the Secretary of State of the
State of Delaware a Certificate of Amendment to our Certificate of Incorporation to effect the 2025 Reverse Stock Split. The 2025 Reverse
Stock Split became effective on July 3, 2025, and our common stock began trading on a split-adjusted basis on Nasdaq on July 7, 2025.
However, there can be no assurance that we will be able to regain such compliance.
Management's Discussion & Analysis (MD&A)
New heading “SEC Investigation”
New heading “Federal securities class action instituted on September 8, 2025”
New heading “Shareholder derivative actions instituted on October 28, 2025 and November 17, 2025”
New heading “2025 Reverse Stock Split”
New heading “Registered Direct Offering and Private Placement Offering”
New heading “Disposal of Certain Subsidiaries”
New heading “Other (Expenses)/ Income, net”
New heading “Interest expenses, net”
New heading “Estimated Allowance for Expected Credit Losses”
New heading “Item 3. Quantitative and Qualitative Disclosures About Market Risk.”
New heading “Item 4. Controls and Procedures.”
New heading “Management’s Annual Report on Internal Control over Financial Reporting”
New heading “Changes in Internal Control over Financial Reporting”
Removed heading “See “Item 1. Business — Recent Developments.””
Largest changes
“The Flynn Action and Shah Action are based on the same alleged facts and circumstances as the Class Action and seek damages from the current and former directors and officers and an order directing the Company and current and former directors and officers to take actions to reform and improve corporate governance and internal procedures. On December 9, 2025, the Court consolidated the Flynn Action and Shah Action into a single consolidated action captioned In re Fly-E Group, Inc. Stockholder Derivative Litigation, No. …”see in full comparison
“On May 22, 2026, the lead plaintiff in the Class Action filed an Amended Complaint. The Company's response to the Amended Complaint is due August 14, 2026. Given the preliminary stage of the lawsuit and the inherent uncertainties of litigation, the Company cannot determine with certainty the outcome of the Class Action at this time.”see in full comparison
As of March 31,see in full comparison2025,2026, the Company had working capital of approximately$1.3$10.0 million and cash of approximately$0.8$0.3 million. The main cash outflow for the year ended March 31,20252026 was from net loss of$5.3$9.3 million, a decrease in accounts payable of $0.8 million, an increase in accounts receivable of $6.8 million, a decrease intax payableinventory of$1.5$1.9 million,an increase in inventories of $2.5 million,and a decreasein operating lease liabilities of $4.9 million, purchase of software from a related party of $0.9 million, purchase of equipment of $1.6 million and an increasein prepayments and other receivables of$2.5$0.9 million. The Company became default of repayment for loan with Peapack-Gladstone Bank since August 31, 2025. During the year ended March 31, 2026, the Company paid $1,000,000, $669,725 and $117,921 on principal, interest and forbearance fee of the loan, respectively. The Company entered into forbearance and modification agreement with the bank on November 7, 2025 for extension of repayment deadline with interest rate of 12.875% to March 31, 2026. Subsequent to the execution of the forbearance agreement, the Company has received written notices from Peapack Private Bank asserting defaults and reserving the lender’s rights to pursue remedies under the applicable loan documents. The Company entered into a forbearance and modification agreement with the bank on May 28, 2026, extending the repayment deadline to June 30, 2026, at an interest rate of 12.875%, and the agreement requires the Company to pay $123,877 in interest and a $4,000 forbearance fee in respect of the loan. As ofMarchJuly31, 2025,23, 2026, the Company ishadin ongoing negotiations with the bank for acurrent portion of contractual obligation of approximately $8.9 million.renewal. 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 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.
“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.”see in full comparison
“General and administrative expenses increased during the year ended March 31, 2026 compared to the prior year, primarily due to increases in inventory clearance losses, impairment loss on property and equipment, and repair and maintenance expenses, partially offset by decreases in payroll expenses, meals, entertainment and travel expenses, and insurance expenses. …”see in full comparison
“Federal securities class action instituted on September 8, 2025”see in full comparison
Full comparison: every changed paragraph (97)
We are an EV company that is principally engaged
in designing, installinginstalling, selling and sellingrenting 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 sinceuntil then and we are now one of the leading providers of E-bikes for food
delivery workers in New York City.mid-2024. As of July 15,23, 2025,2026, we
have 20 stores, including
194 retail stores in the U.S and one retail store in Canada.U.S. 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 also operate a rental program to meet the increasing market demand for safe, UL-certified e-bikes in compliance with New York State regulations. The rental service, now available in New York City, and Los Angeles via the Go Fly rental service mobile app and select Fly E-Bike stores, provides users with a flexible and affordable e-bike rental option.
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
the app, which is currently unavailable to our customers. In December 2023, the Company engaged DF Technology US Inc (“DFT”) for
for certain technology services,services forincluding the development of thean 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 total contract price
for the GO FLY APP is $500,000,fully completed
and the GO FLY APP was delivered and launched in the rental business on September 5,9, 2024. The total
contract price for the ERP system is $2,500,000. The ERP system is fully completed and delivered on May 20, 2025. DuringFor the fiscalyear yearended March 31, 2026,
ofwe 2025,engaged thePhecda CompanyTechnology started(HK) Limited to use part ofenhance the ERP system which was valued at $2,310,000functions and treateddevelop thatapp partfor asFlyebike, computerRiding, hardware
and softwareLease and startedRental. forThese depreciation. As developments
of March 31, 2025, the Companyapp paidare $136,580still toin DFTdevelopment as prepayment for software development.stage.
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,Maspeth and New York.
For the year ended March
31, 2025,2026, we producedassembled 4,5952,714 E-motorcycles, 5,9746,722 E-bikes and 1,5571,830 E-scooters at the same facility.
SEC Investigation
On January 21, 2026, the Company was notified by the U.S. Securities and Exchange Commission (the “Commission”) that it has initiated an investigation involving the Company. The Company has not been provided with substantive details regarding the investigation, and is fully cooperating with the investigation.
Federal securities class action instituted on September 8, 2025
On September 8, 2025, a federal securities class action was filed in the United States District Court, Eastern District of New York, by plaintiff Dino Kurt, individually and on behalf of all others similarly situated, against defendants, the Company, chief executive officer (the “CEO”) Zhou Ou, and former chief financial officer (the “CFO”) Shiwen Feng (the “Class Action”). The complaint alleges violations of Sections 10(b) and 20(a) of the Exchange Act and Rule 10b-5 during the class period spanning from July 15, 2025, to August 14, 2025. The plaintiff claims that defendants provided materially false and misleading positive statements about revenue growth, brand reputation, and business expansion, while concealing or minimizing material adverse facts concerning the safety of the Company’s lithium battery and inadequate forecasting processes, which were already taking a material toll on E-vehicle (the “EV”) sales revenue. The plaintiff alleged when the Company filed a form NT 10-Q on August 14, 2025, which disclosed a 32% decrease in net revenues primarily driven by a decline in total units sold, attributed by the Company to “recent lithium-battery accidents involving E-Bikes and E-Scooters”; the price of Company’s common stock declined dramatically by about 87% in a single day, resulting in economic loss for the plaintiff and the class.
The relief sought includes determining that the action may be maintained as a class action, requiring defendants to pay damages sustained by the plaintiff and the class, and awarding pre-judgment and post-judgment interest, along with reasonable attorneys’ fees, expert fees, and other costs, with the monetary damages sought being certified to be in excess of $150,000.
On May 22, 2026, the lead plaintiff in the Class Action filed an Amended Complaint. The Company's response to the Amended Complaint is due August 14, 2026. Given the preliminary stage of the lawsuit and the inherent uncertainties of litigation, the Company cannot determine with certainty the outcome of the Class Action at this time.
Any potential loss associated with the action is not reasonably estimable at this early stage. The Company did not accrue any material loss contingencies in this respect as of March 31, 2026.
Shareholder derivative actions instituted on October 28, 2025 and November 17, 2025
On October 28, 2025, a shareholder derivative lawsuit was filed purportedly on behalf of the Company, as nominal defendant, against certain of its current and former directors and officers in the United States Court for the Eastern District of New York, captioned Flynn v. Ou et al, No. 1:25-cv-06036 (E.D.N.Y.) (the “Flynn Action”). The complaint filed in the Flynn Action alleges claims for alleged breach of fiduciary duties and gross mismanagement, among others. On November 17, 2025, an additional putative shareholder derivative lawsuit was filed purportedly on behalf of the Company, as nominal defendant, against certain of its current and former directors and officers in the United States Court for the Eastern District of New York, captioned Shah v. Ou et al, No. 1:25-cv-06372 (E.D.N.Y.) (the “Shah Action”). The complaint filed in the Shah Action alleges claims for alleged breach of fiduciary duty, unjust enrichment, waste of corporate assets, gross mismanagement, abuse of control, among others.
The Flynn Action and Shah Action are based on the same alleged facts and circumstances as the Class Action and seek damages from the current and former directors and officers and an order directing the Company and current and former directors and officers to take actions to reform and improve corporate governance and internal procedures. On December 9, 2025, the Court consolidated the Flynn Action and Shah Action into a single consolidated action captioned In re Fly-E Group, Inc. Stockholder Derivative Litigation, No. 1:25-cv-06036 (E.D.N.Y.) (the “Consolidated Derivative Action”), and appointed co-lead counsel. The current and former director and officer defendants dispute the allegations in the complaints and intend to vigorously defend against all claims. Given the preliminary stage of the lawsuit and the inherent uncertainties of litigation, we cannot determine with certainty the outcome of the Consolidated Derivative Action at this time.
UL Litigation
On or about March 12, 2025, UL LLC (“UL”) filed a complaint against the Company, along with the Company’s certain subsidiaries and certain individuals, in the Eastern District of New York (the “Complaint”). The Complaint alleges that the Company improperly used UL’s trademark by claiming certain products were certified by UL. The Complaint seeks $2,000,000 for each instance an allegedly counterfeit UL mark was used and asserts claims for federal trademark infringement and counterfeiting, unfair competition and false designations of the origin and false and misleading representations, common law unfair competition, common law unjust enrichment, and unlawful deceptive acts and practices.
On May 21, 2025, Company, along with its certain subsidiaries and certain individuals, and UL entered into a settlement and release agreement (the “Settlement Agreement”) on mutually acceptable settlement terms. Pursuant to the Settlement Agreement, the Company and the other defendants agreed to pay UL an aggregate amount of $1,000,000 before November 30, 2025, and entered into a Consent Judgment and Permanent Injunction pursuant to which the Company and the other defendants agreed not to offer for sale, sell, or distribute products with UL Marks that were not tested and certified by UL. During the year ended March 31, 2026, the Company paid $1,000,000 to UL.
The Settlement Agreement fully resolves all pending litigation between UL and the Company, and each party fully releases the other party from any and all past or present claims, demands, causes of action, obligations, damages, liabilities, expenses, or compensation of whatever kind or nature, that were or could have been asserted in connection with the Company’s sales of products with a UL Mark which were not tested and certified by UL.
2025 Reverse Stock Split
On March 10, 2025, the Company held a special meeting of stockholders. At the special meeting, the stockholders approved a proposal to amend the Company’s amended and restated certificate of incorporation to effect a reverse stock split of the Company’s issued and outstanding shares of common stock, par value $0.01 per share, by a ratio in the range of 1-for-2 to 1-for-15, with such ratio to be determined in the discretion of the board of directors of the Company and with such action to be effected at such time and date, if at all, as determined by the board of directors within one year after the conclusion of the special meeting.
On June 16, 2025, the board of directors approved a one-for-five (1:5) reverse stock split of the Company’s issued and outstanding shares of common stock (the “2025 First Reverse Stock Split”). On July 2, 2025, the Company filed with the Secretary of State of the State of Delaware the Second Certificate of Amendment to its Certificate of Incorporation (the “Certificate of Amendment”) to effect the 2025 First Reverse Stock Split. The 2025 First Reverse Stock Split became effective as of 5:00 p.m., Eastern Time, on July 3, 2025, and the Company’s common stock began trading on the Nasdaq Stock Market on a split-adjusted basis on July 7, 2025.
After the 2025 First Reverse Stock Split, every five (5) shares of the Company’s issued and outstanding common stock have been automatically converted into one share of common stock, without any change in the par value per share. In addition, (i) a proportionate adjustment has been made to the per share exercise price and the number of shares issuable upon the exercise of all outstanding warrants to purchase shares of common stock, and (ii) the number of shares reserved for issuance pursuant to the Company’s stock incentive plan has been reduced proportionately. Any fraction of a share of common stock created as a result of the 2025 First Reverse Stock Split was rounded up to the nearest whole share. The Company’s common stock continues to trade on the Nasdaq Capital Market under the symbol “FLYE.”
On September 15, 2025, the Company planned to hold a special meeting of stockholders, but adjourned to October 13, 2025 in order to achieve a quorum (the “Special Meeting”). At the special meeting, the stockholder approved a proposal to amend the Company’s amended and restated certificate of incorporation to effect a reverse stock split of the Company’s issued and outstanding shares of common stock, par value $0.01 per share, , by a ratio in the range of 1-for-2 to 1-for-20, with such ratio to be determined in the discretion of the board of directors of the Company and with such action to be effected at such time and date, if at all, as determined by the board of directors within one year after the conclusion of the special meeting.
On October 13, 2025, the board of directors approved a one-for-twenty (1:20) reverse stock split of the Company’s issued and outstanding shares of common stock (the “2025 Second Reverse Stock Split”). On October 23, 2025, the Company filed with the Secretary of State of the State of Delaware the Second Certificate of Amendment to its Certificate of Incorporation (the “Certificate of Amendment”) to effect the 2025 Second Reverse Stock Split. The 2025 Second Reverse Stock Split became effective on November 4, 2025, and the Company’s common stock began trading on the Nasdaq Stock Market on a split-adjusted basis on November 4, 2025.
After the 2025 Second Reverse Stock Split, every twenty (20) shares of the Company’s issued and outstanding common stock have been automatically converted into one share of common stock, without any change in the par value per share. In addition, (i) a proportionate adjustment has been made to the per share exercise price and the number of shares issuable upon the exercise of all outstanding warrants to purchase shares of common stock, and (ii) the number of shares reserved for issuance pursuant to the Company’s stock incentive plan has been reduced proportionately. Any fraction of a share of common stock created as a result of the 2025 Second Reverse Stock Split was rounded up to the nearest whole share. The Company’s common stock continues to trade on the Nasdaq Capital Market under the symbol “FLYE.”
Unless otherwise noted, the share and per share information in this report reflects the two 2025 Reverse Stock Split.
Registered Direct Offering and Private Placement Offering
On June 2, 2025, we closed our registered direct offering of an aggregate of (i) 285,956 shares of our common stock, par value $0.01 and (ii) 571,912 warrants (the “Warrants”) to purchase 571,912 shares of common stock at a combined purchase price per share and accompanying Warrants of $24.28, resulting in net proceeds to us of $6.24 million after deducting placement agent fees and offering expenses. All of the shares (including shares underlying the Warrants) were registered under the Securities Act pursuant to a registration statement on Form S-1, as amended (File No. 333-286678), which was declared effective by the Securities and Exchange Commission on May 15, 2025. American Trust Investment Services, Inc. (“ATIS”) acted as the exclusive placement agent for the offering. We paid ATIS aggregate commissions of $219,430 and incurred offering expenses of $178,625.
On September 18, 2025, the Company entered into a securities purchase agreement with third-party individuals offering of (i) 687,500 shares of the common stock at the price of $16.0 per share for a total consideration of $11,000,000. During the year ended March 31, 2026, the Company received net proceeds of $10,996,558 from the investors. The disclosure that the closing of this transaction occurred on September 30, 2025, in the Form 8-K filed with the SEC was incorrect and is hereby corrected.
Disposal of Certain Subsidiaries
During the year ended March 31, 2026, 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. As part of this plan, as of March 31, 2026, the Company had sold an aggregate of 28 subsidiaries to third-party individuals in multiple transactions, for total cash consideration of approximately $2.9 million, of which approximately $0.1 million had been received. Between April 2025 and March 2026, the Company further sold 100% of its equity interests in 24 subsidiaries to third-party buyers for total cash consideration of approximately $2.3 million, with no contingent payments or adjustments. As of July 23, 2026, the Company had not received any remaining consideration under these transactions. (See Note - 15 — DISPOSAL OF SUBSIDIARIES in the accompanying consolidated financial statements for details).
See “Item 1. Business
— Recent Developments.”
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 July 15,23, 2025,2026, we havecurrently 20
stores,operate including 194 retail stores in the U.SU.S. During the year ended March 31, 2026, 23 retail stores in the U.S.
and one1 retail store in Canada.Canada were sold to streamline the Company’s corporate structure and reduce complexity in financial reporting
and operating costs. We offer rental services from selected locations.
We also operate one online store, focusing on selling E-motorcycles,
E-bikes, and E-scooters and selling our product in the United States.
It is critical for us to successfully manage production ramp-up and quality control to deliver
to customers in adequate volume and quality.
For the year ended March 31, 2026, our net revenues decreased by 25.0% to $19.1 million, compared to $25.4 million for the same period in 2025, which was primarily driven by a decrease in total units sold and reductions in selling prices to reduce aged inventory for the year ended March 31, 2026.
For the year ended March 31, 2025, our net revenues
decreased by 21.0% to $25.4 million, compared to $32.2 million for the same period in 2024, which was primarily driven by a decrease
in total units sold, which dropped by 10,846 units, from 69,611 units for the year ended March 31, 2024, to 58,765 units for the year
ended March 31, 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 year ended March 31, 2025. The average sales price per EV increased by
$29, from $960 in the year ended March 31, 2024 to $989 in the year ended March 31, 2025. These improvements were driven by product upgrades
and enhanced sales channels in the market.
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 both domestically and 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.
Our payroll expenses were $4.7$2.5 million for the
the year ended March 31, 2025,2026, compared to $2.9$4.7 million for the year ended March 31, 2024.2025. As four stores were closed and four others
were sold duringDuring the year ended March 31, 2025,2026, the Company
closed 8 stores and an additional six stores were sold subsequently,24 stores, and we expect a decrease in payroll
expenses in the next fiscal yearquarter 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.
During the year ended March
31, 2025,2026, we worked
with two principal vendors, Depcl Corp. and Xiamen Innolabs Technology Co., Ltd and Depcl Corp.,Ltd, each of which respectively supplied
approximately 41.9%
70.3% and 32.3%19.2% of the accessories and components used in all our products for the year ended March 31, 2025.products.
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.
We expect that our selling and marketing expenses
will continue to increasedecrease in the foreseeable future, as wemore planretail stores are expected to furtherbe expandsold ourwith sales network and retail channels, and engage in
morereduced selling and marketing activities to enhance our brand and attract more purchases from new and existing customers.activities.
General and administrative expenses primarily
consist of costs for corporate functions, including payroll and related expenses, facilities and equipment expenses, such as depreciation
and amortization expense and rent, and professional fees. We expect that our general and administrative will increasedecrease in the foreseeable
future, as wemore hireretail additionalstores personnelare expected to be sold with reduced general and incuradministrative 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.activities.
Our net revenues were $25.4 million for
the year ended March 31, 2025, a decrease of 21.0%, from $32.2 million forFor the year ended March 31, 2024.2026, our net revenues decreased by 25.0%
to $19.1 million, compared to $25.4 million for the same period in 2025. The decrease in our net
revenues was primarily driven by a decrease
in sales volume byof 10,84616,664 units, from 69,611 units for the year ended March 31, 2024, to
58,765 units for the year ended March 31, 2025.2025, to 42,101 units for the year ended March 31, 2026,
and a decrease in selling prices in order to reduce aged inventory.
Our retail sales revenue decreased by $4.7$14.8 million,
or 17.7%,68.1%, from $26.4 million for the year ended March 31, 2024 to $21.7 million for the year ended March 31, 2025.2025 Ourto wholesale
revenue decreased by $2.3 million, or 39.3%, from $5.8$6.9 million for the year ended March 31, 20242026. toOur wholesale revenue
increased by $8.0 million, or 227.5%, from $3.5 million for the year
ended March 31, 2025.2025 to $11.6 million for the year ended March 31,
2026. The decrease in retail sales revenue iswas mainlyprimarily dueattributable to recentsoftened lithium-batteryconsumer accidentsdemand involvingfor E-BikesE-bicycles and E-Scooters.E-scooters, partly
Withdriven anby increasingsafety numberconcerns ofstemming lithium-batteryfrom explosionlithium-ion battery-related incidents in New York,York during the period, which prompted some customers are less inclined
to purchasereconsider E-Bikes.their Consequently,
salespurchases haveand declinedexplore asalternative customerstransportation optoptions. forIn oil-poweredaddition, vehiclesthe overdecline electricwas vehicles.partly The decrease in retail sales also attributed in
partdue to the closuresclosure and disposition
disposal of ourcertain retail stores during the year ended March 31, 2025.2026. The decreaseincrease in wholesaleswholesale revenue was
mainly driven primarily by thecontinued
purchases closurefrom entities that were disposed of stores byduring the topsame twoperiod, customersas who closed theirthese stores in December 2023 duecontinued to lacksource ofproducts profitability.from us following the
disposals.
Cost of revenues decreased by 3.8%, from $15.0 million for the year ended March 31, 2025, to $14.4 million for the year ended March 31, 2026. The decrease was primarily attributable to the reduction in sales volume resulting from the decrease in the number of retail stores during the year, as discussed above.
Cost of revenues decreased by 21.6%, from $19.1 million for the
year ended March 31, 2024, to $15.0 million for the year ended March 31, 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
previously. These factors collectively contributed to the overall decrease in cost of revenues. The unit cost for battery decreased by
11%, from $112 in the year ended March 31, 2024, to $99 in the year ended March 31, 2025.
Gross Margin
Gross Margin The following table shows
our gross profit and gross margin for the
years year ended March 31, 2025 and 20242026:
Gross profit for the years ended March 31, 2026 and 2025 was $4.7 million and $10.5 million, respectively. Gross margin was 24.4% and 41.1% for the years ended March 31, 2026 and 2025 respectively. The decrease in gross margin was primarily attributable to lower average selling prices of our EVs implemented to clear aged inventory and an increase in procurement costs driven by upstream price movements, as well as a shift in sales channel mix following the disposal of certain retail stores, which resulted in a higher proportion of wholesale sales and a lower proportion of retail sales — the latter of which typically generates higher margins. These negative factors were partially offset by increased rental services revenue with higher margins than our other businesses, though its contribution remained relatively small. As a result, gross margin decreased by 16.7 percentage points from 41.1% to 24.4% for the year ended March 31, 2026.
Gross profit for the years ended March 31, 2025
and 2024 was $10.5 million and $13.1 million, respectively. Gross margin was 41.1% and 40.7% for the year ended March 31, 2025 and
2024, respectively. The gross margin remained at the same level for the two periods.
Total operating expenses were $15.0 million for
the year ended March 31, 2025, an increase of $5.2 million, or 52.5%, compared to $9.8$11.1 million for the year ended March
31, 2026, a decrease of $3.9 million, or 26.1%, compared to $15.0 million for the years ended March 31,
2024. 2025. The increasedecrease in operating
expenses was attributable to the increasecombined effect of (i) reductions in our payroll expenses, rent,rent professionalexpenses, fees, productmeals and entertainment expenses,
softwareand developmentinsurance expenses as a result of the reduction in retail stores and settlementthe payments,downsizing of our business operations, partially offset by
(ii) increases in warehouse maintenance costs, impairment loss on equipment, and inventory clearance losses, as more fully discussed below.
Selling expenses primarily consist of payroll expenses, rent, utilities, and advertising expenses of retail stores. For the year ended March 31, 2026, selling expenses decreased significantly compared to the prior year, primarily due to the closures and dispositions of retail stores during the year, which reduced the scale of our operations and resulted in lower associated expenses. Payroll expenses were $1.7 million for the year ended March 31, 2026, compared to $3.3 million for the year ended March 31, 2025. Rent expenses were $1.1 million for the year ended March 31, 2026, compared to $2.9 million for the year ended March 31, 2025. Utilities expenses were $0.1 million for the year ended March 31, 2026, compared to $0.2 million for the year ended March 31, 2025. Advertising expenses were $36,604 for the year ended March 31, 2026, compared to $0.3 million for the year ended March 31, 2025.
Selling expenses primarily consist of payroll
expenses, rent, and advertising expenses of retail stores. Total payroll expenses were $3.3 million for the year ended March 31, 2025,
compared to $1.6 million for the year ended March 31, 2024. Rent was $2.9 million for the year ended March 31, 2025, compared to
$2.4 million for the year ended March 31, 2024. Advertising expenses were $0.3 million for the year ended March 31, 2025, compared
to $64,423 for the year ended March 31, 2024. The increase in payroll expenses was primarily due to the increased number of new employees
hired for business operations in the first three quarters of the year ended March 31, 2025, despite a reduction in headcounts in the
last quarter resulting from closures and dispositions of retail stores. The increase in rental expense was primarily due to the expansion
of retail stores to support the Company’s business growth and operational needs. The rise in advertising expense was mainly driven
by intensified marketing campaigns and promotional activities aimed at enhancing brand visibility. Total commission expenses were $9,980
for the year ended March 31, 2025, compared to $1.1 million for the year ended March 31, 2024. The decrease in the commission expenses
was primarily due to the Company’s discontinuation of marketing referral expenses for promotions as of January 1, 2024.
General and administrative expenses increased during the year ended March 31, 2026 compared to the prior year, primarily due to increases in inventory clearance losses, impairment loss on property and equipment, and repair and maintenance expenses, partially offset by decreases in payroll expenses, meals, entertainment and travel expenses, and insurance expenses. Inventory clearance losses increased to $1.9 million for the year ended March 31, 2026 from nil for the year ended March 31, 2025, primarily attributable to losses incurred from inventory clearance and count processes in connection with the closures and dispositions of retail stores; impairment loss on property and equipment increased to $0.6 million for the year ended March 31, 2026 from nil for the year ended March 31, 2025, primarily due to impairment charges recorded for assets that were idle or no longer expected to generate economic benefits. Payroll expenses decreased to $0.5 million for the year ended March 31, 2026 from $1.5 million for the year ended March 31, 2025, primarily due to headcount reductions in operations and accounting departments; meals, entertainment and travel expenses decreased to $0.3 million for the year ended March 31, 2026 from $0.5 million for the year ended March 31, 2025, primarily as a result of reduced business entertainment and travel activities following the workforce reduction; and insurance expenses decreased to $0.3 million for the year ended March 31, 2026 from $1.1 million for the year ended March 31, 2025, primarily due to lower general insurance coverage purchased for closed and disposed retail stores.
Other (Expenses)/ Income, net
Other expenses, net were $0.7 million for the year ended March 31, 2026, compared to other income, net of $10,588 for the year ended March 31, 2025. The change was primarily attributable to the net impact of losses and gains arising from the closure and disposition of retail stores during the year, with losses from store closures and asset disposals partially offset by gains on certain dispositions, resulting in a net expense.
Interest expenses, net
Interest expenses, net were $1.8 million for the year ended March 31, 2026, an increase of $1.4 million from $0.4 million for the year ended March 31, 2025. This increase was primarily attributable to interest expenses incurred on new borrowings from financial institutions to fund our business operations, as well as extension fees paid for certain loan renewals and the higher average annual interest rates following such renewals.
General and administrative expenses increased
during the year ended March 31, 2025 compared to the previous year. Professional fees increased to $2.0 million for the year ended
March 31, 2025, compared to $1.0 million for the year ended March 31, 2024, primarily attributable to the increase in audit fee,
consulting fee, legal fee and IR expenses associated with our initial public offering and ongoing reporting obligations. Payroll
expenses increased to $1.5 million for the year ended March 31, 2025 from $1.1 million for the year ended March 31, 2024 primarily
due to additional employees hired in operation and accounting departments. Insurance expenses increased to $1.1 million for the
year ended March 31, 2025, compared to $0.2 million for the same period of prior year as a result of increased general insurance
of the stores and the purchase of directors and officers liability insurance after initial public offering in the year ended March 31,
2025. Software development fee increased to $0.5 million for the year ended March 31, 2025, compared to $0.3 million for the same period
in prior year due to the increasing development fee of Fly E-Bike app and the increasing maintenance fee of Go Fly App. There were settlement
payments of $1.0 million for the year ended March 31, 2025, in connection with the UL Litigation.
Income taxestax provision was $0.3$0.33 million for the
year ended March 31, 2025,2026, a change from $1.2$0.34 million income tax provision for the year ended March 31, 2024.2025. This change was primarily
due
to our pre-tax loss for the year ended March 31, 2025.2026.
What changed in the latest 10-Q
Risk Factors
New heading “Our financial condition has been adversely affected by recent developments, and we face risks related to our credit facility, pending litigation, and ability to continue as a going concern.”
New heading “We have received a deficiency notice from Nasdaq relating to our failure to timely file periodic reports, and our failure to maintain compliance with Nasdaq listing requirements could result in delisting of our common stock.”
Removed heading “An adverse determination in any significant product liability claim against us could materially adversely affect our business, results of operations or financial condition.”
Largest changes
“Our financial condition has been adversely affected by recent developments, and we face risks related to our credit facility, pending litigation, and ability to continue as a going concern.”see in full comparison
We are subject to asee in full comparisonpendingfederal securities classactionaction,lawsuit,consolidated shareholder derivative litigation, andweanmaySECbecomeinvestigation.subjectThetodefenseadditionaloflegaltheseproceedingsmattersthatwill require management attention and resources, and an adverse outcome in any of these matters couldadverselyhaveaffecta material adverse effect on our business, financial condition,andresults ofoperations.operations, and reputation.
“We have received a deficiency notice from Nasdaq relating to our failure to timely file periodic reports, and our failure to maintain compliance with Nasdaq listing requirements could result in delisting of our common stock.”see in full comparison
“We have identified material weaknesses in our internal control over financial reporting, including insufficient accounting personnel with GAAP and SEC reporting knowledge, lack of formal internal control policies, and insufficient IT general controls. Until remediated, there is a possibility that a material misstatement of our financial statements will not be prevented or detected on a timely basis, which could result in restatements, loss of investor confidence, or regulatory scrutiny.”see in full comparison
“Securities Class Action and the Flynn Action may result in substantial costs and divert our management’s attention and resources, which could harm our business. Any adverse determination in the Lawsuit or similar litigation could require us to pay significant monetary damages and could harm our reputation. We cannot predict the outcome of the legal proceedings or estimate the range of potential loss, if any, that could result from an adverse judgment. …”see in full comparison
“On September 1, 2026, we received a letter from Nasdaq notifying us that we were not in compliance with Nasdaq Listing Rule 5250(c)(1), which requires timely filing of periodic reports with the SEC, due to our failure to timely file this Quarterly Report on Form 10-Q for the quarter ended June 30, 2026. We filed the Form 10-Q on September 1, 2026, which we believe cured the deficiency. Although we believe we have regained compliance, there can be no assurance that we will maintain compliance with all applicable Nasdaq continued listing requirements in the future. …”see in full comparison
Full comparison: every changed paragraph (13)
ThereExcept as set forth below, 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, 20252026 as filed with the SEC on July 15,23, 2025 other
than those included below.2026.
Our financial condition has been adversely affected by recent developments, and we face risks related to our credit facility, pending litigation, and ability to continue as a going concern.
As of June 30, 2026, we had cash of approximately $60,281 and working capital of approximately $8.1 million. We incurred a net loss of approximately $3.9 million for the three months ended June 30, 2026.
We are seeking to resolve a payment default under our $5 million credit facility with Peapack-Gladstone Bank that arose in August 2025. We entered into forbearance agreements with the lender in November 2025 and May 2026, with the most recent forbearance period having expired on June 30, 2026. As of the date of this Report, we are in ongoing negotiations with the lender regarding a renewal or further extension; however, there can be no assurance that such negotiations will be successful. The credit facility is secured by substantially all of our assets, and the lender has reserved its rights to pursue remedies, including acceleration and foreclosure, which could have a material adverse effect on our business, financial condition, and results of operations.
An adverse determination in any significant
product liability claim against us could materially adversely affect our business, results of operations or financial condition.
The development, production, marketing, sale
and usage of our vehicles will expose us to significant risks associated with product liability claims. As a provider of consumer products,
we are, from time to time, subject to civil litigation regarding those products, including in publicly-available court filings. Our business
is vulnerable to product liability claims, and we may face inherent risk of exposure to claims in the event our vehicles do not perform
or are claimed to not have performed as expected. If our products are defective, malfunction or are used incorrectly by our customers,
it may result in bodily injury, property damage or other injury, including death, which could give rise to product liability claims against
us. For example, our certain EVs use lithium-ion batteries, which, if not appropriately managed and controlled, can rapidly release energy
by venting smoke and flames that can ignite nearby materials. Any potential issues with the lithium-ion batteries used in our EVs could
have a material adverse effect on our business, financial condition, and results of operations, including a significant negative impact
on our revenue. Furthermore, there is some risk of electrocution if individuals who attempt to repair battery packs do not follow applicable
maintenance and repair protocols. Any such damage or injury would likely lead to product liability claims against us and potentially
a safety recall. Any losses that we may suffer from any liability claims and the effect that any product liability litigation may have
upon the brand image, reputation and marketability of our products could have a material adverse impact on our business, results of operations
or financial condition. No assurance can be given that material product liability claims will not be made in the future against us, or
that claims will not arise in the future in excess or outside of our insurance coverage and contractual indemnities with suppliers and
manufacturers. We may not be able to obtain adequate product liability insurance for our existing or new products or the cost of doing
so may be prohibitive. Adverse determinations of material product liability claims made against us could also harm our reputation and
cause us to lose customers and could have a material adverse effect on our business, prospects, financial condition and operating results.
We are subject to a pendingfederal securities
class actionaction, lawsuit,consolidated shareholder derivative litigation, and wean maySEC becomeinvestigation. subjectThe todefense additionalof legalthese proceedingsmatters thatwill require management attention and resources, and an adverse outcome in any of these matters could adverselyhave affecta material adverse effect on our business, financial condition,
and results of operations.operations, and reputation.
We have restructured our retail operations, reducing from 36 stores to 4 stores since mid-2024. Our net revenues decreased by 48.4% for the three months ended June 30, 2026 compared to the prior year period, and our retail revenue decreased by 84.3%. Our reduced scale may affect our ability to negotiate favorable terms with suppliers, attract and retain customers, and compete effectively.
We have identified material weaknesses in our internal control over financial reporting, including insufficient accounting personnel with GAAP and SEC reporting knowledge, lack of formal internal control policies, and insufficient IT general controls. Until remediated, there is a possibility that a material misstatement of our financial statements will not be prevented or detected on a timely basis, which could result in restatements, loss of investor confidence, or regulatory scrutiny.
We have received a deficiency notice from Nasdaq relating to our failure to timely file periodic reports, and our failure to maintain compliance with Nasdaq listing requirements could result in delisting of our common stock.
On September 1, 2026, we received a letter from Nasdaq notifying us that we were not in compliance with Nasdaq Listing Rule 5250(c)(1), which requires timely filing of periodic reports with the SEC, due to our failure to timely file this Quarterly Report on Form 10-Q for the quarter ended June 30, 2026. We filed the Form 10-Q on September 1, 2026, which we believe cured the deficiency. Although we believe we have regained compliance, there can be no assurance that we will maintain compliance with all applicable Nasdaq continued listing requirements in the future. If we fail to meet any of the continued listing requirements, Nasdaq could initiate delisting procedures, which could result in our common stock being delisted from the Nasdaq Capital Market. Delisting could adversely affect the liquidity and market price of our common stock, our ability to raise capital, and investor confidence in our Company.
On September
8, 2025, a federal securities class action was filed in the United States District Court, Eastern District of New York, by plaintiff Dino
Kurt, individually and on behalf of all others similarly situated, against defendants, the Company, chief executive officer, Zhou Ou,
and former chief financial officer, Shiwen Feng (the “Class Action”). On October 28, 2025, a shareholder derivative lawsuit
was filed purportedly on behalf of the Company, as nominal defendant, against certain of its current and former directors and officers
in the United States Court for the Eastern District of New York, captioned Flynn v. Ou et al, No. 1:25-cv-06036 (E.D.N.Y.) (the “Flynn
Action”).
Securities
Class Action and the Flynn Action may result in substantial costs and divert our management’s attention and resources, which could
harm our business. Any adverse determination in the Lawsuit or similar litigation could require us to pay significant monetary damages
and could harm our reputation. We cannot predict the outcome of the legal proceedings or estimate the range of potential loss, if any,
that could result from an adverse judgment. We may also become subject to additional litigation or legal proceedings in the future, including
stockholder derivative suits or additional securities class actions. Such litigation could be time-consuming and expensive to defend,
and could result in the diversion of time and attention by our management and in substantial damages, settlement costs, or judgments against
us. Our insurance may not cover all claims that may be asserted against us, and any claims asserted against us, regardless of merit or
eventual outcome, may harm our reputation. The occurrence of any of these events could have a material adverse effect on our business,
financial condition, results of operations, and the trading price of our common stock.
Management's Discussion & Analysis (MD&A)
New heading “SEC Investigation”
New heading “Nasdaq Deficiency Notice”
New heading “Other Expenses, net”
New heading “Estimated Allowance for Expected Credit Losses”
Removed heading “Results of Operations for the Nine Months Ended December 31, 2025 and 2024”
Removed heading “Cost of Revenues”
Removed heading “Total Operating Expenses”
Removed heading “Selling Expenses”
Removed heading “General and Administrative Expenses”
Removed heading “Income Tax Benefit”
Largest changes
As ofsee in full comparisonDecemberJune31,30,2025,2026, the Company had working capital of approximately$13.4$8.1 million and cash of approximately$0.3 million.$60,281. The main cash outflow for theninethree months endedDecember 31,June202530, 2026 was from net loss of$5.7$3.9 million,aandecreaseincrease in accounts payable of$0.9$0.7 million, an increase in accounts receivable of$1.2$1.6 million,anaincreasedecrease in inventory of$1.0$0.06 million, andanaincreasedecrease in prepayments and other receivables of$6.4$0.7 million. The Company became default of repayment for loan with Peapack-Gladstone Bank since August 31, 2025.For the nine months ended December 31, 2025, the Company paid $582,307 on interest of the line of credit without further penalty.During thethree monthsyear endedDecemberMarch 31,2025,2026, the Company paid $1,000,000,$172,693$669,725 and $117,921 on principal, interest and forbearance fee of the loan, respectively. The Company entered into forbearance and modification agreement with the bank on November 7, 2025 for extension of repayment deadline with interest rate of 12.875% to March 31, 2026. Subsequent to the execution of the forbearance agreement, the Company has received written notices fromPeapack PrivatePeapack-Gladstone Bank asserting defaults and reserving the lender’s rights to pursue remedies under the applicable loan documents. The Company entered into a forbearance and modification agreement with the bank on May 28, 2026, extending the repayment deadline to June 30, 2026, at an interest rate of 12.875%, and the agreement requires the Company to pay $123,877 in interest and a $4,000 forbearance fee in respect of the loan. As of September 1, 2026, the June 30, 2026 repayment deadline has passed and the Company remains in default under the credit facility. The Company is in ongoing negotiations with the bank for a renewal or further extension; however, there can be no assurance that such negotiations will be successful or that the bank will not exercise its remedies under the loan documents. 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. Theunaudited condensedconsolidated 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.
“On May 22, 2026, the lead plaintiff in the Class Action filed an Amended Complaint. The Company’s response to the Amended Complaint is due August 14, 2026. Given the preliminary stage of the lawsuit and the inherent uncertainties of litigation, the Company cannot determine with certainty the outcome of the Class Action at this time.”see in full comparison
“General and administrative expenses increased during the nine months ended December 31, 2025 compared to the previous year. Professional fees increased to $2.7 million for the nine months ended December 31, 2025, compared to $1.7 million for the nine months ended December 31, 2024, primarily attributable to the increase in audit fee, consulting fee, legal fee and IR expenses associated with litigations and ongoing reporting obligations. …”see in full comparison
“General and administrative expenses increased during the three months ended December 31, 2025 compared to the same period of previous year. Professional fees increased to $0.8 million for the three months ended December 31, 2025, compared to $0.4 million for the three months ended December 31, 2024, primarily attributable to the increase in legal fee associated with our litigations and ongoing reporting obligations. …”see in full comparison
“On January 21, 2026, the Company was notified by the U.S. Securities and Exchange Commission (the “Commission”) that it has initiated an investigation involving the Company. The Company has not been provided with substantive details regarding the investigation, and is fully cooperating with the investigation.”see in full comparison
Full comparison: every changed paragraph (102)
The following discussion of our financial condition
and results of operations should be read in conjunction with the unaudited condensed consolidated financial statements and the notes
thereto included in this quarterlyannual 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”.
Fly E-Bike was established in 2018 with its first store opened in New
York. Our business has grown rapidly until mid 2024.mid-2024. As of AprilSeptember 20,1, 2026, we have 64 retail stores in the U.S. The Company offers rental
services from selected locations in New York, 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.
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 AprilSeptember 20,1, 2026, we offered 27 E-motorcycle products, 37 E-bike products and 38
E-scooter products.
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. DuringFor the threeyear months
ended DecemberJune 31,30, 2025,2026, we engaged Phecda Technology (HK) Limited to enhance the ERP functions and develop app for Flyebike, Riding,
Lease and Rental. TheseAll enhancements and app developments were finalized and delivered as of June 30, 2026. We intend to continue investing in future feature enhancements and iterative releases to support the appplatform’s arelong-term stillevolution, insubject developmentto stage.our ongoing assessment of business needs and resource allocation.
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 and New York.
For the three months ended DecemberJune 31,30, 2025,2026, we producedassembled 459400 E-motorcycles, 306961 E-bikes and 124207 E-scooters at the same facility. For
the nine months ended December 31, 2025, we produced 3,573 E-motorcycles, 5,089 E-bikes and 1,404 E-scooters at the same facility.
SEC Investigation
On January 21, 2026, the Company was notified by the U.S. Securities and Exchange Commission (the “Commission”) that it has initiated an investigation involving the Company. The Company has not been provided with substantive details regarding the investigation, and is fully cooperating with the investigation.
Nasdaq Deficiency Notice
On September 1, 2026, the Company received a letter from the Listing Qualifications Department of The Nasdaq Stock Market LLC (“Nasdaq”) notifying the Company that it was not in compliance with Nasdaq Listing Rule 5250(c)(1), which requires timely filing of periodic reports with the Securities and Exchange Commission, due to the Company’s failure to timely file its Quarterly Report on Form 10-Q for the quarter ended June 30, 2026. The Company filed the Form 10-Q on September 2, 2026. As a result of this filing, the Company believes it has regained compliance with Nasdaq Listing Rule 5250(c)(1), and expects to receive written confirmation of compliance from Nasdaq. The Nasdaq deficiency notice has no immediate effect on the listing or trading of the Company’s common stock on the Nasdaq Capital Market.
On May 22, 2026, the lead plaintiff in the Class Action filed an Amended Complaint. The Company’s response to the Amended Complaint is due August 14, 2026. Given the preliminary stage of the lawsuit and the inherent uncertainties of litigation, the Company cannot determine with certainty the outcome of the Class Action at this time.
Any potential loss associated with the action
is not reasonably estimable at this early stage. The Company did not accrue any material loss contingencies in this respect as of December
31,June 2025.30, 2026.
On May 21, 2025, Company, along with its certain
subsidiaries and certain individuals, and UL entered into a settlement and release agreement (the “Settlement Agreement”)
on mutually acceptable settlement terms. Pursuant to the Settlement Agreement, the Company and the other defendants agreed to pay UL
an aggregate amount of $1,000,000 before November 30, 2025, and entered into a Consent Judgment and Permanent Injunction pursuant to
which the Company and the other defendants agreed not to offer for sale, sell, or distribute products with UL Marks that were not tested
and certified by UL. During the nine monthsyear ended DecemberJune 31,30, 2025,2026, the Company paid $1,000,000 to UL.
On September 18, 2025, the Company entered into
a securities purchase agreement with third-party individuals offering of (i) 687,500 shares of the common stock at the price of $16.0
per share for a total consideration of $11,000,000. During the nine monthsyear ended DecemberJune 31,30, 2025,2026, the Company received net proceeds
of $10,996,558 from the investors. The disclosure that the closing of this transaction occurred on September 30, 2025, in the Form 8-K
filed with the SEC was incorrect and is hereby corrected.
As part of a disposal plan aimed at simplifying its legal and operational structure and improving administrative efficiency, from December 2024 to December 2025, the management of the Company successively approved the sale of 100% of the Company’s equity interests in 28 subsidiaries to third-party individuals through multiple transactions, for total cash consideration of approximately $2.9 million. The divestitures were not intended to be a strategic withdrawal from any specific geographic region or industry, but rather to streamline the Company’s corporate structure and reduce complexity in financial reporting.
As of June 30, 2025, the Company had disposed of an aggregate of 12 subsidiaries for total cash consideration of approximately $1.2 million, of which 4 subsidiaries were disposed of from January to March 2025 and 8 subsidiaries from April to June 2025. As of June 30, 2026, the Company had disposed of an aggregate of 28 subsidiaries for total cash consideration of approximately $2.9 million, and had collected approximately $1.0 million of the consideration for these transactions. (See Note - 14 — DISPOSAL OF SUBSIDIARIES in the accompanying consolidated financial statements for details).
During the nine months ended December 31, 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 December
2025, the Company sold 19 subsidiaries to third-party individuals in multiple transactions, for an aggregated cash consideration of approximately
$0.9 million. On January 1, 2026, the Company entered into share transfer agreements for the sale of 100% of its equity interests in subsidiaries
– FLYFLS INC, FLYNJ2 INC., FLYE BIKE NJ3, INC, FLYNJ4 INC. and FLYTORONTO CORP. – to third-party buyers for a total cash consideration
of $69,420, $68,627, $511,353, $146,473 and $628,151, respectively, with no contingent payments or adjustments. As of April 20, 2026,
the Company did not receive any consideration from the third-party individuals. (See Note - 14 — DISPOSAL OF SUBSIDIARIES in the
accompanying unaudited condensed consolidated financial statements for details).
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 AprilSeptember 20,1, 2026, we currently operate 64 retail stores
in the U.S..U.S. During the three months ended DecemberJune 31,30, 2025,2026, 2we did not sell or close any retail stores in the U.S were sold for streamlining the Company’s
corporate structure and reducing complexity in financial reporting and operating costs.stores. 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.
For the three months ended June 30, 2026, our net revenues decreased by 48.4% to $2.7 million, compared to $5.3 million for the same period in 2025. This decrease was primarily attributable to a significant reduction in retail revenue due to the closure and sale of retail stores in prior periods, as well as market competition that pressured our product pricing, prompting us to adjust our product mix and promotional pricing strategies accordingly. The decline was partially offset by an increase in wholesale revenue, as the stores sold in prior periods continued to purchase from us as external wholesale customers. The decrease in rental services revenue was primarily due to the reduced scale of our rental operations following the closure and sale of retail stores in prior periods, which eliminated the economies of scale we had previously enjoyed.
For the three months ended December 31, 2025,
our net revenues decreased by 53.3% to $2.6 million, compared to $5.7 million for the same period in 2024, which was primarily driven
by a decrease in total units sold and reductions in selling prices to reduce aged inventory for the three months ended December 31, 2025.
For the nine months ended December 31, 2025,
our net revenues decreased by 41.7% to $11.9 million, compared to $20.4 million for the same period in 2024, which was primarily driven
by a decrease in total units sold and reductions in selling prices to reduce aged inventory for the nine months ended December 31, 2025.
Our payroll expenses were $0.4 million$185,865 for the
three months ended DecemberJune 31,30, 2025,2026, compared to $1.3$1.0 million for the three months ended DecemberJune 30, 2025. This decrease was primarily due to the significant reduction in our retail store count, which decreased from 36 stores to 4 stores as of March 31, 2024. Our payroll expenses were
$1.9 million for the nine months ended December 31, 2025, compared to $3.6 million for the nine months ended December 31, 2024. As 8
stores were sold2026, and 1remained storeunchanged wasas closed during the three months endedof June 30, 2025,2026. 9We storesexpect were sold and 1our store was closed during
the three months ended September 30, 2025 and 2 stores were sold during the three months ended December 31, 2025, respectively, and the
Company is planningcount to sellremain more storesstable in the subsequentnear quarterterm weand expectdo anot decreaseanticipate any significant fluctuations in payroll expenses in the next quarter due to
reduced demand for store sales staff.quarter. 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.
During the three months ended June 30, 2026, as a result of the reduction in our retail store count and the corresponding scale-down of sales operations, we worked with one principal vendor, Depcl Corp., which supplied approximately 83.1% of the accessories and components used in all our products.
During the three months ended December 31,
2025, we worked with two principal vendors, Depcl Corp. and Xiamen Innolabs Technology Co., Ltd, each of which respectively supplied
approximately 76.2% and 5.1% of the accessories and components used in all our products. During the nine months ended December 31,
2025, we worked with two principal vendors, Depcl Corp. and Xiamen Innolabs Technology Co., Ltd, each of which respectively supplied
approximately 70.2% and 6.9% of the accessories and components used in all our products.
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. The principal vendor supplies the majority of procurement needs, and we also source from other vendors for the remaining portion. Changes in costs related to our major vendors can significantly affect our financial condition and operating results.
We expect that our selling and marketing expenses
will decreasethat, in the foreseeable future, as more retail stores are expected to be sold with reduced selling and marketing activities.expenses will remain generally stable, primarily due to the fact that our retail store count has been streamlined and is not expected to undergo further changes; however, should we further expand our market presence, such expenses may rise accordingly.
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 thatthat, ourin the foreseeable future, general and administrative expenses will decreaseremain generally stable, primarily as a result of our streamlined retail store count, which is not expected to undergo further changes; however, should we further expand our market presence in the foreseeable
future, as more retail stores are expected to be sold with reduced general and administrative activities.activities may increase, and such expenses will rise accordingly.
Results of Operations for the Three Months Ended DecemberJune 31,30, 2026 and 2025
and 2024
The following table sets forth the components of our results of operations
for the three months ended DecemberJune 31,30, 20252026 and 20242025:
For the three months ended June 30, 2026, our net revenues decreased by 48.4% to $2.7 million, compared to $5.3 million for the same period in 2025. The decrease in our net revenues was primarily driven by a decrease in retail revenue as a result of the reduction in our retail store count to four stores, and a decrease in sales volume of 2,890 units, from 10,448 units for the three months ended June 30, 2025, to 7,558 units for the three months ended June 30, 2026. This decline was partially offset by an increase in wholesale revenue, which was primarily attributable to wholesale demand resulting from our sales channel adjustments, albeit at lower wholesale prices. The decrease in rental services revenue was primarily due to the reduction in our retail store count..
For the three months ended December 31, 2025,
our net revenues decreased by 53.3% to $2.6 million, compared to $5.7 million for the same period in 2024, which was primarily driven
by decrease in quantity of EVs sold which dropped by 87% and as a result of reductions in selling prices to reduce aged inventory for
the three months ended December 31, 2025.
Our retail sales revenue decreased by $4.3$3.2 million,
or 86.8%,84.3%, from $4.9$3.8 million for the three months ended DecemberJune 31,30, 20242025 to $0.6 million for the three months ended DecemberJune 31,30, 2025.
2026. Our wholesale revenue increased by $1.1$0.7 million, or 153.4%,46.9%, from $0.7$1.4 million for the three months ended DecemberJune 31,30, 20242025 to $1.8$2.1 million
for the three months ended DecemberJune 31,30, 2025.2026. The decrease in retail sales revenue iswas mainlyprimarily dueattributable to recentthe lithium-batteryreduction accidents
involvingin E-Bikesour retail store count, as well as market competition, which prompted us to adjust our product mix and E-Scooters.promotional Withpricing anstrategies. increasingIn numberaddition, ofsafety-related lithium-batterymarket explosionattention arising from prior lithium-ion battery incidents in the New York,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 salesarea also attributedhad ina partcertain toimpact theon closuresconsumer and disposition of our retail storesdemand during the three months ended December 31,
2025.period. The increase in wholesaleswholesale revenue was mainly driven primarily by revenuecontinued contributionpurchases from thestores dispositioned entities during the three
months ended December 31, 2025. Although certain retail storesthat were sold,sold thesein storesprior periods, which transitioned to wholesale customers and continued to purchasesource products from the Company,
which contributes an increase of wholesale revenue.us.
Cost of revenues decreased by 48.6%,20.2%, from $3.1
million for the three months ended December 31, 2024, to $1.6 million for the three months ended DecemberJune 31,30, 2025.2025, to $2.4 million for the three months ended June 30, 2026. The decrease in cost
of revenues was primarily attributable to a significant decline in retail sales volume resulting from the reduction in retail stores, which led to a decrease in overall sales volume,volume and a corresponding reduction in cost of revenues, as discussed above.
Gross
Margin
Gross Margin The
following table shows our gross profit and gross margin for the three months ended DecemberJune 31,30, 20252026 and 20242025:
Gross profit for the three months ended June 30, 2026 and 2025 was $0.3 million and $2.3 million, respectively. Gross margin was 10.9% and 42.4% for the three months ended June 30, 2026 and 2025 respectively. The decrease in gross margin was primarily attributable to a shift in sales channel mix, as the reduction in our retail store count led to a lower proportion of retail sales, with the stores previously operating as our retail locations transitioning to wholesale customers to whom we continue to sell on a wholesale basis, at prices that reflect standard wholesale market rates, which are inherently lower than retail price levels. At the same time, competitive pressure in our retail operations also had an impact on our product pricing, including price reductions to clear certain aged inventory, which further pressured our gross margin to a certain extent.
Gross profit for the three months ended December 31, 2025 and 2024
was $1.1 million and $2.6 million, respectively. Gross margin was 39.6% and 45.1% for the three months ended December 31, 2025 and 2024,
respectively. The decrease in gross margin was mainly due to a combined effect of decrease in quantity of EV sold, which dropped by 87%
as a result of decrease in number of retail stores during the nine months ended December 31, 2025 and the increased revenues from rental
business with higher margin than our other businesses. The rental business was launched in October 2024. Gross margin of rental business
was 79.8% and $100.0% for the three months ended December 31, 2025 and 2024, respectively.
The following table sets forth the components of our total operating
expenses for the three months ended DecemberJune 31,30, 20252026 and 20242025:
Total operating expenses were $2.6 million for the three months ended
December 31, 2025, a decrease of $0.9 million, or 25.6%, compared to $3.5$3.8 million for the three months ended DecemberJune 31,30, 2024.2026, an increase of $0.07 million, or 1.9 %, compared to $3.8 million for the three months ended June 30, 2025. The decrease
net increase in operating expenses was primarily attributable to (i) an increase in expected credit losses, and (ii) increased development fees incurred in connection with iterative updates and enhancements to our ERP system and mobile applications, partially offset by (a) reductions in payroll expenses, rent expenses, insurance expenses, depreciation expenses, and other related expenses as a result of the combinedreduction effectin retail stores and the downsizing of our business operations, and (b) a decrease in out payroll and rent expenses and increase in our depreciation
expense, professional fees, and impairment loss on property and equipment, as more fully discussed below.fees.
Selling expenses primarily consist of payroll expenses, rent, utilities, insurance, and depreciation and amortization of retail stores. For the three months ended June 30, 2026, selling expenses decreased significantly compared to the prior year, primarily due to the reduction in retail stores and the downsizing of our operations. Payroll expenses were $0.2 million for the three months ended June 30, 2026, compared to $0.6 million for the three months ended June 30, 2025. Rent expenses were $0.1 million for the three months ended June 30, 2026, compared to $0.4 million for the three months ended June 30, 2025. Utilities expenses were $9,116 for the three months ended June 30, 2026, compared to $40,560 for the three months ended June 30, 2025. Depreciation and amortization expenses were $41,405 for the three months ended June 30, 2026, compared to $67,561 for the three months ended June 30, 2025. These reductions were partially offset by a slight increase in insurance expenses, which amounted to $0.1 million for the three months ended June 30, 2026, compared to $83,533 for the three months ended June 30, 2025.
Selling expenses primarily consist of payroll
expenses, rent, and advertising expenses of retail stores. Total payroll expenses were $0.1 million for the three months ended December
31, 2025, compared to $0.9 million for the three months ended December 31, 2024. Rent was $0.3 million for the three months ended December
31, 2025, compared to $0.7 million for the three months ended December 31, 2024. Advertising expenses were $3,234 for the three months
ended December 31, 2025, compared to $32,681 for the three months ended December 31, 2024. The decrease in these expenses was primarily
due to the closures and dispositions of retail stores during this quarter.
General and administrative expenses increased slightly to $3.4 million for the three months ended June 30, 2026, from $2.4 million for the three months ended June 30, 2025. The net increase was primarily attributable to increases in development fees and expected credit losses, partially offset by reductions in professional fees, payroll expenses, insurance expenses, and meals and entertainment and travel expenses. Professional fees decreased to $0.3 million for the three months ended June 30, 2026, from $1.5 million for the three months ended June 30, 2025, primarily due to the scale-down of our operations and the corresponding reduction in professional service needs. Payroll expenses decreased to $1,385 for the three months ended June 30, 2026, from $0.2 million for the three months ended June 30, 2025, primarily due to the reduction in related personnel costs following the reduction in retail stores. Insurance expenses decreased to $35,691 for the three months ended June 30, 2026, from $0.2 million for the three months ended June 30, 2025, primarily due to reduced insurance coverage following the reduction in retail stores. Meals and entertainment and travel expenses decreased to $12,623 for the three months ended June 30, 2026, from $0.1 million for the three months ended June 30, 2025, primarily as a result of reduced business activities following the scale-down of our operations. These reductions were partially offset by an increase in development fees, which rose to $1.8 million for the three months ended June 30, 2026, from $0.2 million for the three months ended June 30, 2025, primarily incurred in connection with the iterative updates and enhancements to our ERP system and mobile applications, which, being primarily for maintenance and enhancements, did not meet capitalization criteria and were expensed as incurred. Expected credit losses increased to $1.0 million for the three months ended June 30, 2026, from nil for the three months ended June 30, 2025, primarily due to expected credit losses recognized on prepayments and other receivables.
Other Expenses, net
Other expenses, net were $122,395 for the three months ended June 30, 2026, compared to other income, net of $7,898 for the three months ended June 30, 2025. The change was primarily attributable to losses from uncollectible receivables and cash shortages, partially offset by gains on disposal of certain right-of-use assets.
General and administrative expenses increased during the three months
ended December 31, 2025 compared to the same period of previous year. Professional fees increased to $0.8 million for the three months
ended December 31, 2025, compared to $0.4 million for the three months ended December 31, 2024, primarily attributable to the increase
in legal fee associated with our litigations and ongoing reporting obligations. Payroll expenses decreased to $0.2 million for the three
months ended December 31, 2025 from $0.4 million for the three months ended December 31, 2024 primarily due to decrease in headcount of
office assistants. Depreciation expense decreased to $30,526 for the three months ended December 31, 2025, compared to $54,152 for the
same period in prior year due to the closures and dispositions of retail stores. Impairment loss on property and equipment increase to
$0.6 million for the three months ended December 31, 2025, compared to nil for the three months ended December 31, 2024,
Interest expenses, net were $0.2 million for the three months ended June 30, 2026, a decrease of $0.3 million from $0.5 million for the three months ended June 30, 2025. The interest expenses were primarily attributable to interest on borrowings from financial institutions to fund our operations. The decrease was mainly due to a reduction in outstanding bank loan principal, partially offset by extension fees paid for certain loan renewals and higher average annual interest rates following such renewals.
Interest expenses, net were $0.5 million for
the three months ended December 31, 2025, an increase of $0.3 million from interest expenses, net of $0.2 million for the three months
ended December 31, 2024. This increase was primarily because of an increase in loans payable with higher average annual interest rate
to finance the business operation of the Company for the three months ended December 31, 2025.
Income Tax Benefits(Provision) /Benefit
Income taxestax benefitsprovision was $149,830$0.09 for the three
months ended December 31, 2025, decreased from income tax benefit of $428,164million for the three months ended DecemberJune 31,30, 2024.2026, Although
compared to income tax benefit of $0.05 million for the Companythree incurredmonths pre-taxended lossesJune in30, both2025. periods, theThis change was primarily becauseattributable to the recognition of Delaware franchise tax in the current period, while the prior-year benefit was primarily due to differences in the recognition of deferred tax
assets and related valuation allowance.allowances.
Net loss was $1.9$3.9 million for the three months ended DecemberJune 31,30, 2025,
2026, an increase of $1.2$1.9 million, or 181.0%,96.1%, from net loss of $0.7$2.0 million for the three months ended DecemberJune 31,30, 2024,2025, which was mainly attributable
to the reasons discussed above.
The following table sets forth the components of our EBITDA for the
three months ended DecemberJune 31,30, 20252026 and 20242025:
Before interest expenses, income tax, depreciation, and amortization,
for the three months ended DecemberJune 31,30, 2025,2026, our net loss was approximately $1.4$3.4 million, an increase of approximately $0.6$1.2 million,
compared to net loss of $0.8$2.2 million for the three months ended DecemberJune 31,30, 2024,2025, which was mainly attributable to the decrease in revenue
and selling expenses and increase in general and administrative expenses described above. The ratio of EBITDA to revenue was negative
53.6% 126.3% and negative 14.3%23.9% for the three months ended DecemberJune 31,30, 20252026 and 2024,2025, respectively.
Results of Operations for the Nine Months Ended December 31, 2025
and 2024
The following table sets forth the components of our results of operations
for the nine months ended December 31, 2025 and 2024:
Revenues
Our net revenues were $11.9 million for the nine
months ended December 31, 2025, a decrease of 41.7%, from $20.4 million for the nine months ended December 31, 2024. The decrease in
our net revenues was driven by a decrease in total units sold, which decreased by 15,447 units, from 41,925 units for the nine months
ended December 31, 2024 to 26,478 units for the nine months ended December 31, 2025, and as a result of lowering the selling prices to
reduce aged inventory. From the nine months ended December 31, 2024 to the nine months ended December 31, 2025, while the number of units
sold of certain other types of products increased, the quantities of motorcycles and batteries sold, which normally contribute significantly
to revenues, decreased by 641 units and 5,332 units, respectively, thereby resulting in an overall decrease in the total number of units
sold.
Our retail sales revenue decreased by $11.3 million,
or 63.6%, from $17.7 million for the nine months ended December 31, 2024 to $6.4 million for the nine months ended December 31, 2025.
Our wholesale revenue increased by $2.3 million, or 89.5%, from $2.6 million for the nine months ended December 31, 2024 to $5.0 million
for the nine months ended December 31, 2025. The decrease in retail sales revenue is mainly due to decrease in number of retail stores
during the nine months ended December 31, 2025. The increase in wholesales revenue was driven primarily by contributions from the disposed
entities during the nine months ended December 31, 2025. Although certain retail stores were sold, these stores continued to purchase
products from the Company, which contributed to the increase of wholesale revenue.
Cost of Revenues
Cost of revenues decreased by 35.7%, from $11.8
million for the nine months ended December 31, 2024, to $7.6 million for the nine months ended December 31, 2025. The decrease in cost
of revenues was primarily attributable to a reduction in motorcycles and batteries sales volume, as discussed previously. These factors
collectively contributed to the overall decrease in cost of revenues.
Gross
Margin
The
following table shows our gross profit and gross margin for the nine months ended December 31, 2025 and 2024:
FLYE insider buying and selling (Form 4)
Since 2026-04-11, insiders reported open-market purchases in 0 Form 4 filings and open-market sales in 0 filings. Totals add up every open-market (code P and S) line in those filings, using the prices reported in the filings. Awards, option exercises, tax withholding and gifts are listed below but not counted.
No Form 4 stock transactions in this period.
Well-known investors holding FLYE (13F)
| Investor | Quarter | Shares | Reported value | % of their 13F | Change vs prior quarter |
|---|---|---|---|---|---|
| Citadel Advisors (Ken Griffin) | 2026-06-30 | 14,702 | $31.0K | 0.0% | New position |
| Renaissance Technologies | 2026-06-30 | 12,600 | $26.5K | — | Sold out |