UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

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

For the quarterly period ended June 30, 2025

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

For the transition period from ______to _______

Commission file number 001-42122

FLY-E GROUP, INC.

(Exact name of registrant as specified in its charter)

Delaware		92-0981080
(State or other jurisdiction of incorporation or organization)		(I.R.S. Employer Identification No.)

136-40 39th Avenue Flushing, New York		11354
(Address of principal executive offices)		(Zip Code)

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

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

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

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer	☐	Accelerated filer	☐
Non-accelerated filer	☒	Smaller reporting company	☒
		Emerging growth company	☒

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act) Yes ☐ No ☒

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

INDEX

		Page Number

	Cautionary Statement Regarding Forward Looking Statements	ii
PART I	FINANCIAL INFORMATION	1
Item 1.	Unaudited Condensed Consolidated Financial Statements	1
	Unaudited Condensed Consolidated Balance Sheets as of June 30, 2025 and March 31, 2025	1
	Unaudited Condensed Consolidated Statements of Operations and Comprehensive Loss for the Three Months Ended June 30, 2025 and 2024	2
	Unaudited Condensed Consolidated Statement of Changes in Stockholders’ Equity for the Three Months Ended June 30, 2025 and 2024	3
	Unaudited Condensed Consolidated Statements of Cash Flows for the Three Months Ended June 30, 2025 and 2024	4
	Notes to Unaudited Condensed Consolidated Financial Statements	5
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	33
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	44
Item 4.	Controls and Procedures	44

PART II	OTHER INFORMATION	45
Item 1.	Legal Proceedings	45
Item 1A.	Risk Factors	45
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	45
Item 3.	Defaults Upon Senior Securities	45
Item 4.	Mine Safety Disclosures	45
Item 5.	Other Information	45
Item 6.	Exhibits	45
	Signatures	46

CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS

This Quarterly Report on Form 10-Q (the “Report”) contains “forward-looking statements” within the meaning of Section 27A of the Securities Act, as amended (the “Securities Act”), Section 21E of the Exchange Act, as amended (the “Exchange Act”), and the Private Securities Litigation Reform Act of 1995. Forward-looking statements may be preceded by, or contain, words such as “may,” “will,” “expect,” “anticipate,” “intend,” “plan,” “believe,” “estimate,” “predict,” “potential,” “might,” “could,” “would,” “should” or other words indicating future results, though not all forward-looking statements necessarily contain these identifying words. All statements other than statements of historical fact are statements that could be deemed forward-looking statements, including, without limitation, statements about our future business operations and results, our strategy and competition. These statements represent our current expectations or beliefs concerning various future events and involve numerous risks and uncertainties that could cause actual results to differ materially from expectations, including, but not limited to:

●

our ability to obtain additional funding to market our vehicles and develop new products;

●

our ability to produce our vehicles with sufficient volume and quality to satisfy customers;

●

the inability of our principal vendors to deliver the necessary components for our vehicles at prices and volumes acceptable to us;

●

our principal vendors failing to perform quality control on our products;

●

the inability to obtain sufficient intellectual property protection for our brand and technologies;

●

our vehicles failing to perform as expected;

●

our facing product warranty claims or product recalls;

●

our facing adverse determinations in significant product liability claims;

●

customers not adopting electric vehicles;

●

the development of alternative technology that adversely affects our business;

●

increased government regulation of our industry;

	●	the risk of losing cash balances exceeding insurance limits held at banks;

	●	our ability to grow the rental services;

	●	our ability to continue as a going concern;

	●	our ability to maintain compliance with the continued listing standards of the Nasdaq Capital Market (“Nasdaq”);

	●	the changes or developments with respect to domestic and international customs, tariffs, and trade policies, corresponding or retaliatory actions by other countries and related uncertainties;

	●	tariffs and currency exchange rates; and

	●	the other risks and uncertainties discussed under the section titled “Risk Factors” beginning on page 45 of this Report and our other filings with the Securities and Exchange Commission (the “SEC”).

Although we believe that the expectations reflected in the forward-looking statements are reasonable, we cannot guarantee future results, levels of activity, performance, or achievements. We undertake no obligation to update or revise any of the forward-looking statements, whether as a result of new information, future events or otherwise, except as required by law. In light of these risks, uncertainties and assumptions, the forward-looking events discussed or incorporated by reference in this Report may not occur.

You should read this Report with the understanding that our actual future results may be materially different from what we expect. We qualify all of the forward-looking statements in this Report by these cautionary statements.

PART I - FINANCIAL INFORMATION

Item 1. Financial Statements

FLY-E GROUP, INC.

UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS

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

	June 30, 2025			March 31, 2025
ASSETS
Current Assets
Cash	$	2,334,288		$	840,102
Accounts receivable, net		1,071,622			466,187
Accounts receivable, net – a related party		37,465			37,465
Inventories, net		5,943,790			6,397,274
Prepayments and other receivables		6,250,792			3,676,986
Prepayments and other receivables – related parties		222,288			120,000
Assets held for sale		897,293			2,462,502
Total Current Assets		16,757,538			14,000,516
Property and equipment, net		7,126,245			7,287,213
Security deposits		638,115			728,450
Deferred tax assets, net		153,087			94,983
Operating lease right-of-use assets		8,584,684			10,933,068
Intangible assets, net		498,550			525,865
Long-term prepayment for software development – a related party		—			136,580
Total Assets	$	33,758,219		$	33,706,675

LIABILITIES AND STOCKHOLDERS’ EQUITY
Current Liabilities
Accounts payable	$	419,128		$	1,272,305
Short-term loan payables		6,317,712			5,191,058
Current portion of long-term loan payables		262,069			100,835
Accrued expenses and other payables		977,120			1,366,968
Operating lease liabilities – current		2,106,614			2,617,762
Liabilities held for sale		662,446			2,152,447
Total Current Liabilities		10,745,089			12,701,375
Long-term loan payables		2,092,257			2,065,040
Operating lease liabilities – non-current		7,217,325			9,106,928
Total Liabilities		20,054,671			23,873,343

Commitment and Contingencies

Stockholders’ Equity
Preferred stock, $0.01 par value, 10,000,000 shares authorized and nil outstanding as of June 30, 2025 and March 31, 2025*		—			—
Common stock, $0.01 par value, 300,000,000 shares authorized and 10,636,611 shares outstanding as of June 30, 2025 and 300,000,000 shares authorized and 4,917,500 shares outstanding as of March 31, 2025*		106,366			49,175
Additional paid-in capital		16,740,043			10,940,724
Shares subscription receivable		(219,998	)		(219,998	)
Accumulated deficit		(2,904,158	)		(895,510	)
Accumulated other comprehensive loss		(18,705	)		(41,059	)
Total FLY-E Group, Inc. Stockholders’ Equity		13,703,548			9,833,332
Total Liabilities and Stockholders’ Equity	$	33,758,219		$	33,706,675

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

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

FLY-E GROUP, INC.

UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND

COMPREHENSIVE LOSS

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

	For the Three Months Ended June 30,
	2025			2024
Revenues	$	5,328,198		$	7,873,426
Cost of Revenues		3,066,823			4,773,792
Gross Profit		2,261,375			3,099,634

Operating Expenses
Selling Expenses		1,321,217			1,612,495
General and Administrative Expenses		2,444,933			1,532,638
Total Operating Expenses		3,766,150			3,145,133
Loss from Operations		(1,504,775	)		(45,499	)

Other Income (Expenses), net		(7,898	)		6,518
Interest Expenses		(546,234	)		(68,082	)
Loss Before Income Taxes		(2,058,907	)		(107,063	)
Income Tax Benefit (Expense)		50,259			(72,445	)
Net Loss	$	(2,008,648	)	$	(179,508	)

Other Comprehensive Income (Loss)
Foreign currency translation adjustment		22,354			(1,324	)
Total Comprehensive Loss	$	(1,986,294	)	$	(180,832	)

Losses per Share*	$	(0.30	)	$	(0.04	)
Weighted Average Number of Common Stock
– Basic and Diluted*		6,696,779			4,527,250

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

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

FLY-E GROUP, INC.

UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN

STOCKHOLDERS’ EQUITY

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

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

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

	Preferred Stock				Common Stock				Additional Paid-in		Shares Subscription			Retained			Accumulated Other Comprehensive			Total Stockholders’
	Shares*		Amount		Shares*		Amount		Capital		Receivables			Earnings			Loss			Equity

Balance at March 31, 2024		—	$	—		4,400,000	$	44,000	$	2,576,000	$	(219,998	)	$	4,395,649		$	(13,829	)	$	6,781,822
Net Loss		—		—		—		—		—		—			(179,508	)		—			(179,508	)
Issuance of common stock upon initial public offering, net		—		—		517,500		5,175		8,364,724		—			—			—			8,369,899
Foreign currency translation adjustment		—		—		—		—		—		—			—			(1,324	)		(1,324	)
Balance at June 30, 2024		—	$	—		4,917,500	$	49,175	$	10,940,724	$	(219,998	)	$	4,216,141		$	(15,153	)	$	14,970,889

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

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

FLY-E GROUP, INC.

UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

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

	For the Three Months Ended June 30,
	2025			2024
Cash flows from operating activities
Net loss	$	(2,008,648	)	$	(179,508	)
Adjustments to reconcile net loss to net cash used in operating activities:
Loss on disposal of property and equipment		68,188			—
Depreciation expense		212,792			95,051
Amortization expense		27,315			951
Deferred income taxes benefits		(42,861	)		(59,099	)
Amortization of operating lease right-of-use assets		828,458			798,044
Inventories reserve		229,780			176,072
Changes in operating assets and liabilities:
Accounts receivable		(605,435	)		(159,112	)
Accounts receivable – a related party		—			279,172
Inventories		(63,902	)		(901,095	)
Prepayments and other receivables		(1,974,220	)		(2,065,536	)
Prepayments for operation services to a related party		45,000			(180,000	)
Security deposits		2,148			(23,854	)
Accounts payable		(853,177	)		(774,347	)
Accrued expenses and other payables		(345,649	)		(503,291	)
Operating lease liabilities		(803,823	)		(626,205	)
Taxes payable		—			(399,407	)
Net cash used in operating activities		(5,284,034	)		(4,522,164	)

Cash flows from investing activities
Purchases of properties and equipment		(141,624	)		(351,524	)
Cash released from disposal of entities		(119,720	)		—
Repayment from a related party		—			180,256
Advance to a related party		(147,288	)		(162	)
Prepayments for property		—			(775,000	)
Payments of property rights		—			(119,700	)
Net cash used in investing activities		(408,632	)		(1,066,130	)

Cash flows from financing activities
Proceeds from borrowings		1,917,100			247,500
Repayments of borrowings		(601,995	)		(375,625	)
Repayments on other payables - related parties		—			(90,000	)
Payments of offering cost		(516,490	)		(282,403	)
Net proceeds from issuance of common stock		6,373,000			9,154,500
Net cash provided by financing activities		7,171,615			8,653,972
Net changes in cash including cash classified within current assets held for sale		1,478,949			3,065,678
Effect of exchange rate changes on cash		22,354			(1,324	)
Less: net increase in cash classified within current assets held for sale		(7,117	)		—
Cash at beginning of the period		840,102			1,403,514
Cash at the end of the period	$	2,334,288		$	4,467,868

Supplemental disclosure of cash flow information
Cash paid for interest expense	$	546,234		$	68,082
Cash paid for income taxes	$	42,640		$	481,929

Supplemental disclosure of non-cash investing and financing activities
Purchase software by using previous prepayments	$	136,580		$	—
Properties used for rental services	$	49,811		$	—
Deferred IPO cost recognized as additional paid-in capital	$	—		$	502,198
Uncollected proceeds from disposal of subsidiaries	$	526,779		$	—
Termination of operating lease right-of-use assets and operating lease liabilities	$	3,089,912		$	(2,962	)
Right-of-use assets obtained in exchange for operating lease liabilities	$	—		$	557,643

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

FLY-E GROUP, INC.

Notes to Unaudited Condensed Consolidated Financial Statements

1 — DESCRIPTION OF BUSINESS, ORGANIZATION AND BASIS OF PRESENTATION

Organization and principal activities

Fly-E Group, Inc. (the “Company” or “Fly-E Group”) was incorporated under the laws of the State of Delaware on November 1, 2022. The Company has no substantive operations other than holding all of the issued and outstanding shares of Fly E-Bike Inc. (“Fly E-Bike”) and Fly EV, Inc. (“Fly EV”). Fly E-Bike and Fly EV were incorporated under the laws of the State of Delaware on August 22, 2022 and November 1, 2022, respectively. Fly EV has no substantive operations. The Company, through its wholly owned subsidiaries, is principally engaged in designing, installing and selling smart electric bikes (“E-bikes”), electric motorcycles (“E-motorcycles”), electric scooters (“E-scooters”), and related accessories under the brand name of “Fly E-Bike.” The Company’s principal operations and geographic markets are mainly in the United States of America (the “U.S.”). During the three months ended June 30, 2025, the Company closed one store in U.S. During the year ended March 31, 2025, the Company closed four stores in the U.S. As of August 19, 2025, the Company has opened a total of 16 retail stores, including 15 retail stores in the U.S and one retail store in Canada. The Company offers rental services from selected locations. The Company also operates one online store, focusing on selling E-motorcycles, E-bikes, and E-scooters. The Company plans to open another online store focusing on selling gas bikes in the future.

The Company’s business was initially operated under CTATE INC. (“Ctate”), a corporation formed under the laws of the State of New York in 2018. Before merging with Fly E-Bike, Ctate owned 27 companies, each of which operated a Fly E-Bike store. On September 12, 2022, Ctate and Fly E-Bike, which was a wholly-owned subsidiary of Ctate, entered into an Agreement and Plan of Merger, pursuant to which Ctate merged into and with Fly E-Bike, with Fly E-Bike being the surviving corporation (the “Merger”). As a result of the Merger, the original shareholders of Ctate became the stockholders of Fly E-Bike and subsequently effectively controlled the combined entity.

On December 21, 2022, Fly-E Group and Fly E-Bike entered into a Share Exchange Agreement, pursuant to which Fly-E Group acquired all of the issued and outstanding shares of Fly E-Bike by issuing its shares to the stockholders of Fly E-Bike on a one-for-one basis (the “Share Exchange”). As a result of the Share Exchange, Fly E-Bike became a wholly owned subsidiary of Fly-E Group.

As a result of the Merger and the Share Exchange, Fly E-Bike and its subsidiaries are under common control of Fly-E Group, resulting in the consolidation of Fly E-Bike and its subsidiaries, which was accounted as a reorganization of entities under common control at carrying value. The unaudited condensed consolidated financial statements are prepared on the basis as if the reorganization became effective as of the beginning of the first period presented in the unaudited condensed consolidated financial statements of Fly-E Group.

On June 7, 2024, the Company issued 450,000 shares of common stock, at a price of $20.00 per share in its initial public offering (“IPO”). The gross proceeds of the offering were $9.0 million, prior to deducting the underwriting discounts, commissions and offering expenses payable by the Company. In addition, the Company granted the underwriters a 30-day option to purchase an additional 67,500 shares of common stock at the initial public offering price, less underwriting discounts and commissions, to cover over-allotments. On June 25, 2024, the Company issued an additional 67,500 shares of common stock to the underwriters of its IPO for gross proceeds of $1.4 million upon full exercise of the underwriters’ over-allotment option. Net proceeds received by the Company from its initial public offering, including the exercise of the over-allotment option, were approximately $9.2 million. The Company also issued to The Benchmark Company, LLC (“Benchmark”), the representative of the underwriters warrants to purchase 25,875 shares.

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

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

The unaudited condensed consolidated financial statements include the financial statements of the Company and each of the following subsidiaries as of June 30, 2025.

Name	Background	Ownership
FLY-E GROUP, INC.	● A Delaware corporation ● Incorporated on November 1, 2022 ● A holding company	Parent Company

FLY EV, INC.	● A Delaware corporation ● Incorporated on November 1, 2022 ● A holding Company	100% owned by Fly-E Group, Inc.

FLY E-BIKE, INC.	● A Delaware Company ● Incorporated on August 22, 2022 ● A holding Company	100% owned by Fly-E Group, Inc.

UNIVERSE KING CORP	● A New York corporation ● Incorporated on November 19, 2018 ● A retail store	100% owned by Fly E-Bike, Inc.

TKPGO CORP.	● A New York corporation ● Incorporated on July 3, 2018 ● A retail store	100% owned by Fly E-Bike, Inc.

FLYFLS INC	● A New York corporation ● Incorporated on October 13, 2020 ● A retail store and corporate office	100% owned by Fly E-Bike, Inc.

FLY37 INC	● A New York corporation ● Incorporated on October 14, 2020 ● No operation	100% owned by Fly E-Bike, Inc.

FIYET INC	● A New York corporation ● Incorporated on November 12, 2020 ● A retail store	100% owned by Fly E-Bike, Inc.

FLYAM INC	● A New York corporation ● Incorporated on February 19, 2021 ● A retail store	100% owned by Fly E-Bike, Inc.

OFLYO INC	● A New York corporation ● Incorporated on March 29, 2021 ● A retail store	100% owned by Fly E-Bike, Inc.

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

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

FLYEBIKE NJ INC	● A New Jersey corporation ● Incorporated on June 8, 2021 ● No operation	100% owned by Fly E-Bike, Inc.

FLYEBIKEMIAMI INC	● A Florida corporation ● Incorporated on June 30, 2021 ● No operation	100% owned by Fly E-Bike, Inc.

GOFLY INC	● A Texas corporation ● Incorporated on July 23, 2021 ● No operation	100% owned by Fly E-Bike, Inc.

FLYTRON INC.	● A New York corporation ● Incorporated on November 9, 2021 ● A retail store	100% owned by Fly E-Bike, Inc.

FLYCYCLE INC.	● A New York corporation ● Incorporated on January 10, 2022 ● A retail store	100% owned by Fly E-Bike, Inc.

FLYNJ2 INC.	● A New Jersey corporation ● Incorporated on February 10, 2022 ● A retail store	100% owned by Fly E-Bike, Inc.

FLYBWY INC.	● A New York corporation ● Incorporated on March 2, 2022 ● No operation	100% owned by Fly E-Bike, Inc.

MEEBIKE	● A New York corporation ● Incorporated on March 25, 2022 ● A retail store	100% owned by Fly E-Bike, Inc.

FLY E BIKE NJ3, INC	● A New Jersey corporation ● Incorporated on July 18, 2022 ● A retail store	100% owned by Fly E-Bike, Inc.

FLY E-BIKE SAN ANTONIO INC	● A Texas corporation ● Incorporated on January 1, 2023 ● No operation	100% owned by Fly E-Bike, Inc.

FLYEBIKE WORLD INC.	● A New York corporation ● Incorporated on February 27, 2023 ● A retail store	100% owned by Fly E-Bike, Inc.

FLY DELIVERY INC.	● A New York corporation ● Incorporated on March 2, 2023 ● A delivery store	100% owned by Fly E-Bike, Inc.

FLYEBIKE MIAMI2 INC.	● A Florida corporation ● Incorporated on April 13, 2023 ● A retail store	100% owned by Fly E-Bike, Inc.

FLYDC INC.	● A Washington, DC corporation ● Incorporated on May 31, 2023 ● A retail store	100% owned by Fly E-Bike, Inc.

FLYJH8509 INC.	● A New York corporation ● Incorporated on August 30, 2023 ● No operation	100% owned by Fly E-Bike, Inc.

FLYBX2381 INC.	● A New York corporation ● Incorporated on August 30, 2023 ● A retail store	100% owned by Fly E-Bike, Inc.

FLYNJ4 INC.	● A New York corporation ● Incorporated on October 4, 2023 ● A retail store	100% owned by Fly E-Bike, Inc.

FLYTORONTO Corp.	● A Toronto corporation ● Incorporated on October 18, 2023 ● A retail store	100% owned by Fly E-Bike, Inc.

FLYLA INC.	● A California corporation ● Incorporated on December 1, 2023 ● A retail and rental store	100% owned by Fly E-Bike, Inc.

FWMOTOR INC.	● A New York corporation ● Incorporated on April 3, 2024 ● A retail store	100% owned by Fly E-Bike, Inc.

DCMOTOR INC.	● A Maryland corporation ● Incorporated on April 9, 2024 ● A retail store	100% owned by Fly E-Bike, Inc.

AOFL LLC	● A New York corporation ● Incorporated on June 25, 2024 ● A holding company	100% owned by Fly E-Bike, Inc.

GOBIKE INC	● A New York corporation ● Incorporated on July 16, 2024 ● A rental store	100% owned by Fly E-Bike, Inc.

FLYEBIKE BOSTON INC.	● A Massachusetts corporation ● Incorporated on September 1, 2024 ● A retail store	100% owned by Fly E-Bike, Inc.

FLYNJ1 INC	● A Massachusetts corporation ● Incorporated on January 29, 2025 ● A retail store	100% owned by Fly E-Bike, Inc.

Liquidity and Going Concern

In assessing the Company’s liquidity, the Company monitors and analyzes its cash on-hand and its operating and capital expenditure commitments. The Company’s liquidity needs are to meet its working capital requirements, operating expenses and capital expenditure obligations. Debt financing from financial institutions and equity financings have been utilized to finance the working capital requirements of the Company.

On June 4, 2025, the Company closed a public offering of (i) 5,719,111 shares of the common stock at the price of $1.2140 per share and (ii) 11,438,222 warrants to purchase 11,438,222 shares of common stock, resulting in net proceeds to the Company of approximately $6.1 million after deducting placement agent’s fees and offering expenses. As of June 30, 2025, the Company had working capital of approximately $6.0 million and cash of approximately $2.3 million. During the three months ended June 30, 2025, the Company had net loss of approximately $2.0 million. During the three months ended June 30, 2025, net cash used in operating activities of the Company was approximately $5.3 million. As of June 30, 2025, the Company had a current portion of contractual obligation of approximately $9.3 million. Management has determined there is substantial doubt about its ability to continue as a going concern. Management plans to alleviate the going concern risk through (i) equity financing to support the Company’s working capital; (ii) other available sources of financing (including debt) from banks and other financial institutions; and (iii) financial support from the Company’s related parties. There is no assurance that the Company will be successful in implementing the foregoing plans or that additional financing will be available to the Company on commercially reasonable terms, or at all. The Company’s inability to secure needed financing when required could require material changes to the Company’s business plans and could have a material adverse effect on the Company’s ability to continue as a going concern and results of operations. The unaudited condensed consolidated financial statements have been prepared on a going concern basis, which contemplates the realization of assets and liquidation of liabilities in the normal course of business. The unaudited condensed consolidated financial statements do not include any adjustments that might result from the outcome of such uncertainties.

2 — SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

(a) Basis of Presentation

The accompanying unaudited condensed consolidated financial statements of the Company have been prepared in accordance with accounting principles generally accepted in the U.S. (the “U.S. GAAP”) and regulations of the Securities Exchange Commission (the “SEC”). The accompanying unaudited condensed consolidated financial statements contemplate the realization of assets and the satisfaction of liabilities in the normal course of business. The realization of assets and the satisfaction of liabilities in the normal course of business are dependent on, among other things, the Company’s ability to operate profitably, to generate cash flows from operations, and its ability to attract investors and to borrow funds on reasonable economic terms. The results of operations for the three months ended June 30, 2025 are not necessarily indicative of results to be expected for any other interim period or for the full fiscal year ending March 31, 2026. Accordingly, these statements should be read in conjunction with the Company’s audited financial statements and note thereto as of and for the years ended March 31, 2025 and 2024.

(b) Principles of Consolidation

The unaudited condensed consolidated financial statements include the financial statements of the Company and its subsidiaries over which the Company exercises control and, when applicable, entities for which the Company has a controlling financial interest. All transactions and balances among the Company and its subsidiaries have been eliminated upon consolidation.

The Company adopted ASU No. 2023-07 (“ASU 2023-07”), Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures for the year ended March 31, 2025 and applied it retrospectively for the prior period presented. The Company’s chief operating decision-makers (“CODM”) (i.e., chief executive officer and his direct reports) review financial information presented on a consolidated basis, accompanied by disaggregated information about revenues by different revenues streams for purposes of allocating resources and evaluating financial performance. The Company and its subsidiaries offer E-bikes, E-motorcycles, E-scooters and other items and services in its stores. The Company’s retail operating divisions are geographically based, have similar economic characteristics and similar expected long-term financial performance. Because substantially all of the Company’s long-lived assets and revenues are located in and derived from the U.S., geographical segments are not presented. The Company’s operating segments are reported in one reportable segment. There are no segment managers who are held accountable for operations, operating results and plans for levels or components below the consolidated unit level. Based on qualitative and quantitative criteria established by Accounting Standards Codification (“ASC”) 280, “Segment Reporting”, the Company considers itself to be operating within one reportable segment. The Company has concluded that consolidated net loss is the measure of segment profitability. The CODM assesses performance for the Company, monitors budget versus actual results, and determines how to allocate resources based on consolidated net loss as reported in the consolidated statements of operations and other comprehensive loss. There are no other expense categories regularly provided to the CODM that are not already included in the primary financial statements herein.

(d) Use of Estimates

In the application of the Company’s accounting policies, management is required to make judgments, estimates and assumptions about the carrying amounts of assets and liabilities that are not readily apparent from other sources. The estimates and associated assumptions are based on historical experience and other factors that are considered relevant. Significant accounting estimates include allowance for inventories. Changes in facts and circumstances may result in revised estimates. Actual results could differ from those estimates, and as such, differences may be material to the unaudited condensed consolidated financial statements.

(e) Commitments and Contingencies

In the normal course of business, the Company is subject to loss contingencies, such as legal proceedings and claims arising out of its business, which cover a wide range of matters, including, among others, government investigations, shareholder lawsuits, and non-income tax matters.

An accrual for a loss contingency is recognized when it is probable that a liability has been incurred and the amount of loss can be reasonably estimated. If a potential material loss contingency is not probable but is reasonably possible, or is probable but cannot be estimated, then the nature of the contingent liability, together with an estimate of the range of possible loss if determinable and material, is disclosed.

(f) Cash

Cash consists of cash on hand and cash deposited with banks. The Company’s cash is maintained at financial institutions in the U.S. Deposits in these financial institutions may, from time to time, exceed the Federal Deposit Insurance Corporation’s (the “FDIC”) federally insured limit, which is $250,000. The Company has not incurred any losses in the past for amount over the FDIC limits. As of June 30, 2025 and March 31, 2025, $920,754 and nil deposited with banks was uninsured, respectively.

(g) Accounts Receivable

Accounts receivable includes trade account due from customers. Accounts receivable is recorded at the invoiced amount less an allowance for any credit loss and does not bear interest, which is due after 30 to 90 days, depending on the credit term with the customers. Accounts receivable which is deemed to be uncollectible is charged off against the allowance after all means of collection have been exhausted and the potential for recovery is considered remote.

The Company adopt the current expected credit loss model (“CECL model”) to estimate the expected credit losses, which is determined by multiplying the probability of default. In determining the probability of default, the Company mainly considers factors such as aging schedule of receivables, migration rate of receivables, assessment of receivables due from specific identifiable counterparties that are considered at risk or uncollectible, current market conditions, as well as reasonable and supportable forecasts of future economic conditions. As of June 30, 2025 and March 31, 2025, the Company provided allowance for credit losses of $116,746, consisting of $41,100 related to accounts receivable from a related party customer and $75,646 related to accounts receivable from a third party customer, respectively.

(h) Inventories, Net

Inventories, consisting of products available for sale, are stated at the lower of cost or net realizable value using the first-in-first-out method. Adjustments to the carrying value are recorded for estimated obsolescence or excess inventory equal to the difference between the cost of inventory and the estimated net realizable value based upon assumptions about future demand and market conditions. Inventory cost consists of the direct cost of merchandise including freight. For the three months ended June 30, 2025 and 2024, the impairment loss was $229,780 and $176,072, respectively.

(i) Prepayments and Other Receivables

Prepayments and other receivables are mainly prepayments to vendors, prepaid expenses paid to service providers, prepaid taxes, advances to employees, and other deposits. Management regularly reviews the aging of such balances and changes in payment and realization trends and records allowances when management believes that the collection of amounts due is at risk. Accounts considered uncollectable are written off against allowances after exhaustive efforts at collection are made. As of June 30, 2025 and March 31, 2025, no allowance for credit losses provided against prepayments and other receivables was recorded.

(j) Property and Equipment, Net

Property and equipment are stated at cost less accumulated depreciation and any recorded impairment.

The estimated useful lives are as follows:

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

Depreciation on property and equipment is calculated on the straight-line method over the estimated useful lives of the assets. The cost and related accumulated depreciation of assets sold or otherwise retired are eliminated from the accounts and any gain or loss is included in the consolidated statements of operations. Expenditures for maintenance and repairs are charged to earnings as incurred, while additions, renewals, and betterments, which are expected to extend the useful life of assets, are capitalized. The Company also re-evaluates the periods of depreciation to determine whether subsequent events and circumstances warrant revised estimates of useful lives.

(k) Intangible Assets

Intangible asset is stated at cost less accumulated amortization and amortized in a method which reflects the pattern in which the economic benefits of the intangible asset are expected to be consumed or otherwise used up. The balance of intangible asset represents internal use software and property rights. The software is acquired externally tailored to the Company’s requirements. The Company capitalizes the costs associated with design, development, acquisition and maintenance of its acquired intangible assets and amortizes these assets over their remaining useful lives on a straight-line basis. Any further payments made to maintain or develop these assets would be capitalized and amortized over the balance of the useful life for the assets. The estimated useful life and amortization method are reviewed at the end of each reporting period, with the effect of any changes in the estimate being accounted for on a prospective basis.

The estimated useful lives of intangibles assets are as follows:

Property rights		5-20 years
Software		5 years

(l) Impairment of Long-lived Assets

At the end of each reporting period, the Company reviews the carrying amounts of its property and equipment, intangible assets subject to depreciation and amortization, and right-of-use assets, to determine whether there is any indication that the carrying value of an asset may not be recoverable. The Company assesses the recoverability of the assets based on the undiscounted future cash flows the assets are expected to generate and recognize an impairment loss when estimated undiscounted future cash flows expected to result from the use of the asset plus net proceeds expected from disposition of the asset, if any, are less than the carrying value of the asset. If an impairment is identified, the Company will reduce the carrying amount of the asset to its estimated fair value based on a discounted cash flows approach or, when available and appropriate, to comparable market values. As of June 30, 2025 and March 31, 2025, no impairment of long-lived assets was recognized.

(m) Fair Value Measurements

Fair value is defined as the price that would be received for an asset, or paid to transfer a liability, in an orderly transaction between market participants at the measurement date. Valuation techniques maximize the use of observable inputs and minimize the use of unobservable inputs. When determining the fair value measurements for assets and liabilities, the Company considers the principal or most advantageous market in which it would transact and consider assumptions that market participants would use when pricing the asset or liability. The following summarizes the three levels of input required to measure fair value, of which the first two are considered observable and the third is considered unobservable:

Level-1

—

Observable inputs that reflect quoted prices (unadjusted) for identical assets or liabilities in active markets.

Level-2

—

Include other inputs that are directly or indirectly observable in the marketplace.

Level-3

—

Unobservable inputs which are supported by little or no market activity.

The fair value for certain assets and liabilities such as cash, accounts receivable, other receivables, prepayments and other current assets, short-term loans, accounts payable, accrued expenses and other payables, operating lease liabilities – current, and tax payables have been determined to approximately carrying amounts due to the short maturities of these instruments. The Company believes that its long-term loan to a third party approximates the fair value based on current yields for debt instruments with similar terms. The Company and its subsidiaries did not have any non-financial assets or liabilities that are measured at fair value on a recurring basis as of June 30, 2025 and March 31, 2025.

(n) Revenue Recognition

Product revenue

The Company follows the revenue accounting requirements of Accounting Standards Codification (“ASC”) Topic 606, Revenue from Contracts with Customers. The core principle underlying the revenue recognition of this ASC allows the Company to recognize revenue that represents the transfer of products and services to customers in an amount that reflects the consideration to which the Company expects to be entitled in such exchange. This will require the Company to identify contractual performance obligations and determine whether revenue should be recognized at a point in time or over time, based on when control of products and services transfers to a customer.

To achieve that core principle, the Company applies a five-step model to recognize revenue from customer contracts. The five-step model requires that the Company (i) identify the contract with the customer, (ii) identify the performance obligations in the contract, (iii) determine the transaction price, including variable consideration to the extent that it is probable that a significant future reversal will not occur, (iv) allocate the transaction price to the respective performance obligations in the contract, and (v) recognize revenue when (or as) the Company satisfies the performance obligation.

The Company generates substantially all its revenues from sales of products such as smart E-bikes, E-motorcycles, E-scooters and accessories to the retail and wholesale customers through its wholly owned subsidiaries stores. In accordance with ASC 606, the Company’s performance obligations are satisfied upon the control of products being passed to the customer, which is the point in time that the customers are able to direct the use of and obtain substantially all of the economic benefit of the products or services. The transfer of control typically occurs at a point in time based on consideration of when the customer has an obligation to pay for the products, and physical possession of, legal title to, and the risks and rewards of ownership of the products have been transferred, and the customer has accepted the products. Revenue is recognized net of estimates of variable consideration, including product returns, customer discounts and allowance. which occurs at the point of sale, or the services have been rendered. Historically, the Company has not experienced any significant returns nor provided significant customer discounts.

The Company offers an assurance-type warranty to its customers. An assurance-type warranty guarantees that the product will perform as promised and is not a performance obligation. This type of warranty promises to repair or replace a delivered good or service if it does not perform as expected. Since an assurance-type warranty guarantees the functionality of a product, the warranty is not accounted for as a separate performance obligation, and thus no transaction price is allocated to it. Rather, to account for an assurance-type warranty the vendor should estimate and accrue a warranty liability when the promised good or service is delivered to the customer (see ASC 460-10).

Since the contract price and term are fixed and enforceable, and an assurance-type warranty guarantees the functionality of a product, and the warranty is not accounted for as a separate performance obligation, no transaction price is allocated to it. The Company recognizes sales in full at the point in time when the products are delivered or accepted by the customers, in accordance with the acceptance term specified in the contract. The Company records estimated future warranty costs under ASC 460. Such estimated costs for warranties are estimated at the time of delivery and these warranties are not service warranties separately sold by the Company. Generally, the estimated claim rates of warranty are based on actual warranty experience or the Company’s best estimate. The Company accrued $8,158 and $20,131 of warranty reserves under accrued expenses and other payables as of June 30, 2025 and March 31, 2025, respectively. The Company has no contract assets and contract liabilities balances as of June 30, 2025 and March 31, 2025, respectively.

Rental Revenue

The Company operates rental business primarily from the Go Fly rental mobile app and selected Fly E-Bike stores that provide users with a flexible and affordable e-bike rental option.

The Company offers rental services through its subsidiaries, GOBIKE INC, FLYLA INC, and FLYTORONTO CORP. All the products available for rent are owned by the Company. The Company leases products to customers, and as a result, the Company considers itself to be the accounting lessor, as applicable, in these arrangements in accordance with ASC 842. Rental business operating costs include refunded products repair fee and other operating costs, as applicable.

Due to the short-term nature of the rental business, the Company classifies these rentals operating leases. Revenue generated from the rental services is recognized over the rental period, which is typically one day, one week or more.

Disaggregated information of revenues by business lines are as follows:

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

(o) Selling Expenses

Selling expenses mainly consist of advertising costs, and payroll and related expenses for personnel engaged in selling and marketing activities. Advertising expenses, which consist primarily of online and offline advertisements, are expenses when the services are received. The advertising expenses were $17,413 and $68,519 for the three months ended June 30, 2025 and 2024, respectively.

(p) Research and Development Expenses

Research and development expenses include salaries for the Company’s research and development personnel, as well as related development expenses paid to the third-party development team. The Company recognizes internal use software acquired and internally developed in accordance with ASC 350-40 “Software—internal use software”. The Company expenses all costs that are incurred in connection with the planning and implementation phases of development, and costs that are associated with maintenance of the existing software for internal use. Certain costs associated with developing internal-use software are capitalized when such costs are incurred within the application development stage of software development. As a result, the Company expensed the development costs of the Fly E-Bike app as they incurred. For the three months ended June 30, 2025 and 2024, development costs amounted to $169,299 and $145,582, respectively, which were recorded under general and administrative expenses.

(q) Income Taxes

Current income taxes are provided based on net income/(loss) for financial reporting purposes and adjusted for income and expense items which are not assessable or deductible for income tax purposes, in accordance with the regulations of the relevant tax jurisdictions.

Deferred taxes are accounted for using the asset and liability method in respect of temporary differences arising from differences between the carrying amount of assets and liabilities in the unaudited condensed consolidated financial statements and the corresponding tax basis used in the computation of assessable tax profit. In principle, deferred tax liabilities are recognized for all taxable temporary differences. Deferred tax assets (the “DTAs”) are recognized to the extent that it is probable that taxable profit will be available against which deductible temporary differences can be utilized.

Deferred tax is calculated using tax rates that are expected to apply to the period when the asset is realized, or the liability is settled. Deferred tax is charged or credited in the income statement, except when it is related to items credited or charged directly to equity, in which case the deferred tax is also dealt with in equity. DTAs are reduced by a valuation allowance when, in the opinion of management, it is more likely than not that some portion or all the DTAs will not be realized. Current income taxes are provided for in accordance with the laws of the relevant taxing authorities.

An uncertain tax position is recognized as a benefit only if it is “more likely than not” that the tax position would be sustained in a tax examination, with a tax examination being presumed to occur. The amount recognized is the largest amount of tax benefit that is greater than 50% likely of being realized on examination. For tax positions not meeting the “more likely than not” test, no tax benefit is recorded. Penalties and interest incurred related to underpayment of income tax are classified as income tax expense in the period incurred. The tax returns filed in 2018 to 2024 are subject to examination by any appropriate tax authorities. For the three months ended June 30, 2025 and 2024, the Company accrued nil and $60,076 income tax related penalty included in current income taxes expenses, respectively.

(r) Leases

The Company accounts for leases in accordance with ASC 842. The Company leases premises for offices, warehouses, and retail stores under non-cancellable operating leases, and the Company leases its products to customers under non-cancellable operating leases.

Lessor

The Company’s lease arrangements include products rentals to customers. The lease term is from one hour to one month. Due to the short-term nature of these arrangements, the Company classifies these leases as operating leases. The Company does not separate lease and non-lease components, such as insurance or roadside assistance provided to the lessee, in its lessor lease arrangements. Lease payments are primarily fixed and are recognized as revenue in the period over which the lease arrangement occurs. Taxes or other fees assessed by governmental authorities that are both imposed on and concurrent with each lease revenue-producing transaction and collected by the Company from the lessee are excluded from the consideration in its lease arrangements. The Company mitigates residual value risk of its leased assets by performing regular maintenance and repairs, as necessary, and through periodic reviews of asset depreciation rates based on the Company’s ongoing assessment of present and estimated future market conditions.

Lessee

The Company recognizes right-of-use assets and lease liabilities for all leases at the commencement date of a lease, except for short-term leases and low-value asset leases accounted for applying a recognition exemption where lease payments are recognized as expenses on a straight-line basis over the lease terms. Leases with an initial term of 12 months or less are short-term leases and not recognized as operating lease right-of-use assets and operating lease liabilities on the consolidated balance sheets. The Company recognizes lease expense for short-term leases on a straight-line basis over the lease term.

Right-of-use assets are initially measured at cost, which comprises the initial measurement of lease liabilities adjusted for lease payments made at or before the commencement date, plus any initial direct costs incurred and an estimate of costs needed to restore the underlying assets, and less any lease incentives received. Right-of-use assets are subsequently measured at cost less accumulated depreciation and impairment losses and adjusted for any remeasurement of the lease liabilities. Right-of-use assets are presented on a separate line in the consolidated balance sheets.

Right-of-use assets are depreciated using the straight-line method from the commencement dates to the earlier of the end of the useful lives of the right-of-use assets or the end of the lease terms.

Lease liabilities are initially measured at the present value of the lease payments, which comprise fixed payments, in-substance fixed payments, variable lease payments which depend on an index or a rate. The lease payments are discounted using the interest rate implicit in a lease if that rate can be readily determined. If that rate cannot be readily determined, the Company uses the lessee’s incremental borrowing rate. Subsequently, lease liabilities are measured at amortized cost using the effective interest method, with interest expense recognized over the lease terms. When there is a change in a lease term or a change in future lease payments resulting from a change in an index or a rate used to determine those payments, the Company remeasures the lease liabilities with a corresponding adjustment to the right-of-use-assets. However, if the carrying amount of the right-of-use assets is reduced to zero, any remaining amount of the remeasurement is recognized in profit or loss. Lease liabilities are presented on a separate line in the consolidated balance sheets.

Variable lease payments that do not depend on an index or a rate are recognized as expenses in the periods in which they are incurred.

(s) Concentration Risk

Concentration of customers and suppliers

No customers individually represented greater than 10% of total net revenues of the Company for the three months ended June 30, 2025 and 2024.

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

Concentration of credit risk

Financial instruments that are potentially subject to credit risk consist principally of accounts receivable. The Company believes the concentration of credit risk in its account receivable is substantially mitigated by its ongoing credit evaluation process and relatively short collection terms. The Company does not generally require collateral from customers. The Company evaluates the need for an allowance for doubtful accounts based upon factors surrounding the credit risk of specific customers, historical trends, and other information. Historically, the Company did not have any bad debt on its account receivable.

Financial instruments that potentially expose the Company to concentrations of credit risk consist principally of cash and cash equivalents, term deposits, restricted cash, short-term investments, and accounts receivable, net. The Company’s investment policy requires cash and cash equivalents, term deposits, restricted cash, and short-term investments to be placed with high-quality financial institutions and to limit the amount of credit risk from any one issuer. The Company regularly evaluates the credit standing of the counterparties or financial institutions.

(t) Related Parties

A related party is generally defined as (i) any person and or their immediate family hold 10% or more of the Company’s securities (ii) the Company’s management and/or their immediate family, (iii) someone that directly or indirectly controls, is controlled by or is under common control with the Company, or (iv) anyone who can significantly influence the financial and operating decisions of the Company. A transaction is considered to be a related party transaction when there is a transfer of resources or obligations between related parties. Related parties may be individuals or corporate entities. Transactions involving related parties cannot be presumed to be carried out on an arm’s length basis, as the requisite conditions of competitive, free market dealings may not exist. Representations about transactions with related parties, if made, shall not imply that the related party transactions were consummated on terms equivalent to those that prevail in arm’s length transactions unless such representations can be substantiated.

(u) Earnings (Loss) Per Share

The Company computes earnings per share (“EPS”) in accordance with ASC 260, “Earnings per Share”. ASC 260 requires companies to present basic and diluted EPS. Basic EPS is measured as net income divided by the weighted average common stock outstanding for the period. Diluted EPS takes into account the potential dilution that could occur if securities or other contracts to issue ordinary shares were exercised and converted into ordinary shares. Potential shares of common stock that have an anti-dilutive effect (i.e., those that increase income per share or decrease loss per share) are excluded from the calculation of diluted EPS.

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

(v) Foreign Currencies Translation

Transactions denominated in currencies other than the functional currency are translated into the functional currency at the exchange rates prevailing at the dates of the transaction. Monetary assets and liabilities denominated in currencies other than the functional currency are translated into the functional currency using the applicable exchange rates at the balance sheet dates. The resulting exchange differences are recorded in the statement of operations. The reporting currency of the Company is United States Dollar ($). The Company’s subsidiary in Canada maintains its books and records in its local currency, Canadian dollar (CAD), which is the functional currency for this subsidiary as it is the primary currency of the economic environment in which this entity operates.

In general, for consolidation purposes, assets and liabilities of subsidiaries whose functional currency is not United States Dollar are translated into United States Dollar in accordance with ASC Topic 830-30, “Translation of Financial Statement”, using the exchange rate on the balance sheet date. Revenues and expenses are translated at average rates prevailing during the period. The gains and losses resulting from translation of financial statements of foreign subsidiaries are recorded as a separate component of accumulated other comprehensive income within the statement of stockholders’ equity.

(w) Representative’s Warrants

Upon the closing of the IPO in June 2024, the Company issued to Benchmark underwriters warrants (the “Representative’s Warrants”) to purchase 25,875 shares of common stock which warrants are also exercisable on a cashless basis. The Company accounts for these warrants as either equity-classified or liability-classified instruments based on an assessment of the warrant’s specific terms and applicable authoritative guidance in Financial Accounting Standards Board (“FASB”) Accounting Standards Codification ASC 480, Distinguishing Liabilities from Equity and ASC 815, Derivatives and Hedging. The Company accounts for its warrants as equity that meet all of the criteria (i) require physical settlement or net-share settlement or (ii) give the Company a choice of net-cash settlement or settlement in its own shares (physical settlement or net-share settlement), the warrants are required to be recorded as a component of additional paid-in capital at the time of issuance and subsequent changes in fair value are not recognized as long as the warrants continue to be classified as equity.

(x) Warrants

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

The Company accounts for its warrants as equity that meet all of the criteria (i) require physical settlement or net-share settlement or (ii) give the Company a choice of net-cash settlement or settlement in its own shares (physical settlement or net-share settlement), the warrants are required to be recorded as a component of additional paid-in capital at the time of issuance and subsequent changes in fair value are not recognized as long as the warrants continue to be classified as equity.

(y) Held for Sale

The Company classifies assets and liabilities to be sold (disposal group) as held for sale in the period when all of the applicable criteria are met, including: (i) management commits to a plan to sell, (ii) the disposal group is available to sell in its present condition, (iii) there is an active program to locate a buyer, (iv) the disposal group is being actively marketed at a reasonable price in relation to its fair value, (v) significant changes to the plan to sell are unlikely, and (vi) the sale of the disposal group is generally probable of being completed within one year. Management performs an assessment at least quarterly or when events or changes in business circumstances indicate that a change in classification may be necessary.

Assets and liabilities held for sale are presented separately within the consolidated balance sheets with any adjustments necessary to measure the disposal group at the lower of its carrying value or fair value less costs to sell. For each period the disposal group remains classified as held for sale, its recoverability is reassessed, and any necessary adjustments are made to its carrying value.

The Company does not report the results of operations of a business as discontinued operations as the disposal is not a strategic shift that will have a major effect on its operations and financial results.

(z) Recent accounting pronouncements not yet adopted

The Company considers the applicability and impact of all accounting standards updates (“ASUs”). Management periodically reviews new accounting standards that are issued. Under the Jumpstart Our Business Startups Act of 2012, as amended (the “JOBS Act”), the Company meets the definition of an emerging growth company and has elected the extended transition period for complying with new or revised accounting standards, which delays the adoption of these accounting standards until they would apply to private companies.

In December 2023, the FASB issued ASU 2023-09, “Income Taxes (Topic 740): Improvements to Income Tax Disclosures.” This guidance requires a public entity to disclose in their rate reconciliation table additional categories of information about federal, state and foreign income taxes and to provide more details about the reconciling items in some categories if the items meet a quantitative threshold. The guidance also requires all entities to disclose annually income taxes paid (net of refunds received) disaggregated by federal (national), state and foreign taxes and to disaggregate the information by jurisdiction based on a quantitative threshold. This guidance is effective for annual periods beginning after December 15, 2024. Early adoption is permitted, and this guidance should be applied prospectively but there is the option to apply it retrospectively. The Company is currently evaluating the impact of this guidance on its unaudited condensed consolidated financial statements.

In November 2024, the FASB issued ASU 2024-03, “Income Statement – Reporting Comprehensive Income - Expense Disaggregation Disclosures (Subtopic 220-40): Disaggregation of Income Statement Expenses, requiring public business entities to disclose additional information about specific expense categories in the notes to the financial statements at interim and annual reporting periods, including purchases of inventory, employee compensation, depreciation, and intangible asset amortization.” The provisions of this update are effective for annual periods beginning after December 15, 2026, and interim reporting periods beginning after December 15, 2027, using either a prospective or retrospective approach. The Company is currently evaluating the impact of this guidance on its unaudited condensed consolidated financial statements.

3 — INVENTORIES, NET

Inventories, net consisted of the following:

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

Movements of inventory reserves are as follows:

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

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

4 — PREPAYMENTS AND OTHER RECEIVABLES

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

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

(i)

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

(ii)

On January 1, 2025, the Company entered into share transfer agreements for sales of 100% of its equity interests in subsidiaries – FLYMHT INC, FLY14 CORP, EDISONEBIKE INC, and FLY6AVE INC – to third-party buyers for a total cash consideration of $635,193, with no contingent payments or adjustments. In June 2025, the Company received $103,000 from the buyers. As of June 30, 2025, the remaining consideration due from such buyers was $532,193 (See Note - 14 — DISPOSAL OF SUBSIDIARIES).

On April 1, 2025, the Company entered into share transfer agreements for the sale of 100% of its equity interests in subsidiaries – FLYEBIKE BROOKLYN INC, FLYMHT659 INC, and FLYBX745 INC – to third-party buyers for a total cash consideration of $310,055, with no contingent payments or adjustments. In June 2025, the Company received $30,000 from the buyers. As of June 30, 2025, the remaining consideration due from such buyers was $280,055 (See Note - 14 — DISPOSAL OF SUBSIDIARIES).

On May 1, 2025, the Company entered into share transfer agreements for the sale of 100% of its equity interests in subsidiaries – ARFY CORP., FLY GC INC., and ESEBIKE INC – to third-party buyers for a total cash consideration of $156,517, with no contingent payments or adjustments. In June 2025, the Company received $55,000 from the buyers. As of June 30, 2025, the remaining consideration due from such buyers was $101,517 (See Note - 14 — DISPOSAL OF SUBSIDIARIES).

On June 1, 2025, the Company entered into share transfer agreements for the sale of 100% of its equity interests in subsidiaries – UFOTS CORP and FLYCORONA INC – to third-party buyers for a total cash consideration of $60,207, with no contingent payments or adjustments. In June 2025, the Company received $27,000 from the buyers. As of June 30, 2025, the remaining consideration due from such buyers was $33,207 (See Note - 14 — DISPOSAL OF SUBSIDIARIES).

As of June 30, 2025 and March 31, 2025, the Company had other receivables of $15,677 and $29,074 from a third-party individual, respectively.

5 — PROPERTY AND EQUIPMENT, NET

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

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

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

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

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

6 — INTANGIBLE ASSETS, NET

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

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

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

7 — ACCRUED EXPENSES AND OTHER PAYABLES

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

(i)	See Note 12 — Commitments and contingencies

8 — LOAN PAYABLES

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

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

(i)

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

(ii)

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

(iii)

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

(iv)

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

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

(v)

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

(vi)

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

(vii)

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

(viii)

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

(ix)

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

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

9 — STOCKHOLDERS’ EQUITY

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

2024 Stock Split

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

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

2025 Reverse Stock Split

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

The reverse stock split was accounted for retrospectively in the accompanying unaudited condensed consolidated financial statements and notes for all periods presented. All references to the number of shares of common stock, including per share amounts, have been adjusted to reflect the reverse stock split. As of June 30, 2025 and March 31, 2025, the number of issued and outstanding shares of common stock was 10,636,611 and 4,917,500, respectively.

Representative’s Warrants

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

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

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

The stock price and exercise prices stated herein have been retroactively adjusted to reflect the reverse stock split that occurred in July 2025.

Registered Direct Offering Warrants

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

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

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

The stock price and exercise prices stated herein have been retroactively adjusted to reflect the reverse stock split that occurred in July 2025.

The following table summarizes the Company’s activities and status of the Representative’s Warrants and 2025 Warrants:

	Number of Warrant		Weighted Average Exercise Price		Weighted Average Remaining Term (Years)
Outstanding as of March 31, 2025		25,875	$	20.0000		4.2
Issued		11,438,222	$	1.4565
Exercised		—	$	—
Forfeited or expired		—	$	—
Outstanding as of June 30, 2025		11,464,097	$	1.4984		4.9

The number of shares and warrants, as well as the exercise prices stated herein, have been retroactively adjusted to reflect the reverse stock split that occurred in July 2025.

From July 1, 2025 to July 28, 2025, certain holders of the Company’s 2025 Warrants exercised their rights to acquire common stock. The exercises were completed on a cashless basis pursuant to the terms of the warrant agreements, resulting in the issuance of 8,219,634 shares of common stock. The exercises did not generate any cash proceeds to the Company. All share numbers for warrant exercises prior to the reverse stock split have been retroactively adjusted to reflect the 1-for-5 reverse stock split. As of August 19, 2025, 11,438,218 2025 Warrants were exercised.

Subscription Receivable

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

10 — INCOME TAX

(a) Income Tax Expense

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

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

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

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

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

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

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

Penalties and interest incurred related to underpayment of income tax are classified as income tax expenses in the period incurred. For the three months ended June 30, 2025 and 2024, the Company accrued nil and $60,076 in income tax related penalty included in current income taxes expenses, respectively.

United States

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

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

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

Canada

Fly Toronto Corp, a subsidiary of the Company, was formed under the laws of Canada and conducts its business primarily in Canada.

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

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

(b) Deferred Tax Assets (Liabilities)

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

	As of June 30, 2025			As of March 31, 2025
Net operating loss carry forwards	$	738,792		$	1,506,378
Inventory reserve		431,000			410,000
Operating lease liabilities		3,349,000			4,837,000
Amortization difference		21,000			10,000
Total deferred tax assets (DTAs)		4,539,792			6,763,378
Valuation allowance		(974,000	)		(1,714,000	)
Deferred tax assets, net of valuation allowance	$	3,565,792		$	5,049,378

Accumulated depreciation		(325,705	)		(460,395	)
Operating lease right-of-use assets		(3,087,000	)		(4,494,000	)
Total deferred tax liabilities (DTLs)		(3,412,705	)		(4,954,395	)
Deferred tax assets, net	$	153,087		$	94,983

Deferred tax assets (liabilities) – U.S., net	$	—		$	—
Deferred tax assets – Canada, net	$	153,087			94,983

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

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

Deferred tax assets and liabilities are recognized for the estimated future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases, and operating loss and tax credit carryforwards. As of June 30, 2025 and March 31, 2025, the Company recorded $153,087 and $94,983 , respectively, in the net DTAs. The tax losses in Canada can be carried forward for twenty years to offset future taxable profit. The tax losses of entities in Canada will begin to expire in 2044, if not utilized. As of June 30, 2025, management considered it more likely than not that the Company will have sufficient taxable income in the future that will allow the Company to realize these net DTAs.

As a result of the Tax Cuts and Jobs Act (TCJA), US NOLs arising after December 31, 2017, may be carried forward indefinitely and can offset only up to 80% of taxable income in any future year. Based upon the Company’s recent taxable loss history, the Company performed an analysis and determined that it was necessary to establish a valuation allowance of $974,000 with respect to its net deferred income tax assets as of June 30, 2025.

Uncertain Tax Positions

The Company evaluates each uncertain tax position (including the potential application of interest and penalties) based on the technical merits, and measures the unrecognized benefits associated with the tax positions. As of June 30, 2025 and March 31, 2025, the Company did not have any significant unrecognized uncertain tax positions.

11 — LEASES

The Company adopted Topic 842 for all periods presented. At the inception of a contract, the Company determines if the arrangement is, or contains, a lease. The leases of the Company mainly consisted of offices, retail stores, and warehouses.

The Company’s operating right-of-use (“ROU”) assets and lease liabilities were as follows:

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

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

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

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

Remaining lease term and discount rate:

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

The weighted average lease term, discount rates, and remaining lease terms for the operating leases as of March 31, 2025 were as follows:

Remaining lease term and discount rate:

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

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

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

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

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

12 — COMMITMENTS AND CONTINGENCIES

Commitments

The Company has not entered any off-balance sheet financial guarantees or other off-balance sheet commitments to guarantee the payment obligations of any third parties. The Company has not entered any derivative contracts that are indexed to its shares and classified as shareholder’s equity or that are not reflected in its unaudited condensed consolidated financial statements. Furthermore, the Company does not have any retained or contingent interest in assets transferred to an unconsolidated entity that serves as credit, liquidity or market risk support to such entity. The Company does not have any variable interest in any unconsolidated entity that provides financing, liquidity, market risk or credit support to itself or engages in leasing, hedging or product development services with itself.

Contingencies

Legal

From time to time, the Company is a party to certain legal proceedings, as well as certain asserted and unasserted claims. Amounts accrued, as well as the total amount of reasonably possible losses with respect to such matters, individually and in the aggregate, are not deemed to be material to the unaudited condensed consolidated financial statements.

The Company’s products and other production facilities as well as the packaging, storage, distribution, advertising and labeling of its products, are subject to extensive legal and regulatory requirements. For example, pursuant to the DMV registration requirement, the Company must satisfy the DMV Registration requirements and conduct required testing for all of its products sold in U.S. Loss of or failure to renew or obtain necessary permits, licenses, registrations, or certificates could prevent the Company from legally selling its products in the U.S. If the Company were found to be in violation of applicable laws and regulations, it could be subject to administrative punishment, including fines, injunctions, recalls or asset seizures, as well as potential criminal sanctions, any of which could have a material adverse effect on its business, financial condition, results of operations and prospects. As of the date hereof, the Company believes it is in compliance with the relevant regulations in the U.S.

UL Litigation

On or about March 12, 2025, UL LLC (“UL”) filed a complaint against the Company, along with the Company’s certain subsidiaries and certain individuals, in the Eastern District of New York (the “Complaint”). The Complaint alleges that the Company improperly used UL’s trademark by claiming certain products were certified by UL. On May 21, 2025, the Company and UL entered into a settlement and release agreement (the “Settlement Agreement”) on mutually acceptable settlement terms. Pursuant to the Settlement Agreement, the Company agreed to pay UL an aggregate amount of $1,000,000 before November 30, 2025 (Refer to Note 7 — Accrued Expenses and other payables). From July 1 to August 19, 2025, the Company paid $350,000 to UL.

Inflation

Inflationary factors, such as increases in personnel and overhead costs, could impair the Company’s operating results. Although the Company does not believe that inflation has had a material impact on the Company’s financial position or results of operations to date, a high rate of inflation in the future may have an adverse effect on the Company’s ability to maintain current levels of gross margin and operating expenses as a percentage of sales revenue if the revenues do not increase with such increased costs.

13 — RELATED PARTY TRANSACTIONS

(A) Related party balances

Accounts receivable, net — a related party

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

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

Prepayments and other receivables — related parties

Name of Related Party

Relationship

Nature

SEC Form 10-Q filed by Fly-E Group Inc.