Revenue Performance - For the three months ended December 31, 2024, net revenues decreased by 23.6% to $5.7 million, down from $7.4 million for the same period in 2023, primarily due to a drop in total units sold from 13,500 to 9,989 units [181]. - For the nine months ended December 31, 2024, net revenues decreased by 15.2% to $20.4 million, compared to $24.0 million for the same period in 2023, driven by a decrease in total units sold from 49,503 to 41,925 units [182]. - Total net revenues decreased by 23.6% to $5.7 million for the three months ended December 31, 2024, down from $7.4 million in the same period of 2023 [204]. - Retail sales revenue fell by 21.9% to $4.9 million, while wholesale revenue decreased by 37.1% to $0.7 million, primarily due to reduced consumer interest in E-Bikes following lithium-battery incidents [205]. - Net revenues for the nine months ended December 31, 2024, were $20.4 million, a decrease of 15.2% from $24.0 million in the same period of 2023, driven by a reduction of 7,578 units sold [219]. Production and Product Development - The company produced 728 E-motorcycles, 930 E-bikes, and 200 E-scooters for the three months ended December 31, 2024, and 3,842 E-motorcycles, 5,713 E-bikes, and 1,480 E-scooters for the nine months ended December 31, 2024 [172]. - The company launched a rental program in October 2024, providing e-bike rental services in New York City and Los Angeles, with plans to expand to Miami and Toronto [176]. - The company plans to open a second online store focusing on selling gas bikes in the future, expanding its product offerings [169]. Financial Performance - Gross profit for the three months ended December 31, 2024, was $2.6 million, a decrease of 13.9% from $3.0 million in 2023, with a gross margin increase to 45.1% from 39.0% [209]. - Total operating expenses rose by 26.0% to $3.5 million, driven by increased general and administrative expenses, which surged by 84.7% to $1.6 million [210]. - Net loss for the three months ended December 31, 2024, was $684,487, a significant decline of 3376.8% from a net income of $20,889 in the same period of 2023 [215]. - EBITDA for the three months ended December 31, 2024, was $(804,993), a decrease of 624.8% compared to $153,394 in 2023, with an EBITDA margin of -14.2% [217]. - Net loss for the nine months ended December 31, 2024, was $2.0 million, a decline of $3.2 million or 266.1% from net income of $1.2 million in 2023 [228]. - EBITDA for the nine months ended December 31, 2024, was $(1.9) million, a decrease of $4.2 million compared to $2.2 million in 2023, with an EBITDA margin of negative 9.5% [230]. Expenses and Cost Management - Selling expenses remained relatively stable, increasing slightly by 0.4% to $1.9 million, while advertising expenses surged to $32,681 from $6,629 due to increased marketing efforts [212]. - General and administrative expenses included a rise in professional fees to $0.4 million and insurance expenses to $0.3 million, reflecting the costs associated with being a public company [213]. - Total operating expenses increased by 45.5% to $10.9 million, driven by higher payroll, rent, and professional fees associated with business expansion [224]. - Selling expenses rose by 20.7% to $5.6 million, while general and administrative expenses surged by 86.9% to $5.2 million, reflecting increased operational costs [223]. - Cost of revenues decreased by 30.0% to $3.1 million, primarily due to a reduction in units sold, which fell by 3,511 units to 9,989 units [208]. - Cost of revenues decreased by 19.0%, from $14.6 million in 2023 to $11.8 million in 2024, attributed to favorable pricing from suppliers and reduced battery sales volume [221]. Cash Flow and Working Capital - As of December 31, 2024, the company had cash of $1.4 million and working capital of $3.0 million, with net cash used in operating activities amounting to approximately $9.4 million [231]. - Net cash used in operating activities for the nine months ended December 31, 2024, was $9.4 million, attributed to a net loss of $2.0 million and an increase in inventories of $4.0 million [240]. - The company reported net cash provided by financing activities of $12.2 million for the nine months ended December 31, 2024, including net proceeds from the IPO and loan proceeds [244]. - Total outstanding loan principal increased to $7.1 million as of December 31, 2024, with interest expenses for the nine months amounting to $247,550 [238]. Inventory and Accounts Management - Inventories increased significantly to $10.0 million as of December 31, 2024, up from $5.4 million, primarily due to preparations for a new rental business [237]. - The company's accounts payable increased to $1.3 million as of December 31, 2024, with a turnover period rising from 25 days to 31 days [235]. - As of December 31, 2024, the company's accounts receivable was $0.3 million, with a turnover period reduced from 69 days to 62 days [234]. - The inventory allowance for obsolescence was recorded at $936,030 as of December 31, 2024, up from $514,021 [252]. Tax and Compliance - The company operates in multiple tax jurisdictions, including New York, New Jersey, Texas, Florida, California, Washington, D.C., and Canada, which impacts its income tax expenses [253]. - Deferred tax assets and liabilities are measured using enacted tax rates applicable for differences expected to reverse, reflecting a proactive tax strategy [254]. - The company did not record any valuation allowance for deferred tax assets as of December 31, 2024, and March 31, 2024, suggesting confidence in the realization of these assets [255]. - The company follows a two-step process for uncertain tax positions, ensuring that only positions with a greater than 50% likelihood of being sustained are recognized [256]. - The company has not reported any significant unrecognized uncertain tax positions as of December 31, 2024, indicating a stable tax position [257]. - The company’s income tax expense includes penalties and interest related to underpayment, which are classified as income tax expense in the period incurred [257].
Fly-E Group, Inc.(FLYE) - 2025 Q3 - Quarterly Report