Fly-E Group, Inc.(FLYE) - 2025 Q4 - Annual Report

Cautionary Note Regarding Forward-Looking Statements This note clarifies that forward-looking statements are subject to risks, and actual results may differ materially Forward-Looking Statements Disclaimer This disclaimer details forward-looking statements, their risks, and the company's limited obligation to update them - Forward-looking statements are identified by terms like "believes," "estimates," "anticipates," "expects," "intends," "plans," "may," "will," "potential," "projects," "predicts," "continue," or "should"[14] - Actual results may differ materially from expectations due to various factors, including funding, production quality and volume, vendor reliability, intellectual property protection, product performance, market adoption of EVs, regulatory changes, and tariffs[15][16] - The company undertakes no obligation to update or revise any forward-looking statements, except as required under applicable securities laws[15] Part I This part covers the company's business, risk factors, properties, legal proceedings, and cybersecurity posture Item 1. Business Fly-E Group specializes in E-motorcycles, E-bikes, and E-scooters, operating retail stores and an online platform - Fly-E Group, Inc. is an EV company focused on E-motorcycles, E-bikes, E-scooters, and accessories under the 'Fly E-Bike' brand, promoting eco-friendly transportation[18] - The company operates 20 stores (19 U.S., 1 Canada) and an online store, with rental services in New York, Toronto, and Los Angeles, and plans to expand into South America and Europe[19] Net Revenues by Segment (FY2024 vs. FY2025) | Revenue Type | FY2025 (approx.) | FY2024 (approx.) | Change (approx.) | Percentage Change | | :---------------- | :--------------- | :--------------- | :--------------- | :---------------- | | Retail Sales | $21.7 million | $26.4 million | -$4.7 million | -17.8% | | Wholesale Revenue | $3.5 million | $5.8 million | -$2.3 million | -39.7% | | Rental Services | $171,867 | $0 | +$171,867 | N/A | | Total Net Revenues | $25.4 million | $32.2 million | -$6.8 million | -21.1% | Overview This section provides a general introduction to Fly-E Group's business, products, and market position - Fly-E Group, Inc. designs, installs, and sells smart E-motorcycles, E-bikes, E-scooters, and related accessories under the 'Fly E-Bike' brand[18] - The company started in 2018 in New York and is a leading provider of E-bikes for food delivery workers in New York City[19] - As of July 15, 2025, Fly-E Group operates 20 stores (19 U.S., 1 Canada), an online store, and offers rental services in New York, Toronto, and Los Angeles[19] - The product portfolio includes 27 E-motorcycle, 36 E-bike, and 38 E-scooter products, with a focus on advanced technologies and user-centric design, including features for food delivery workers[20][21] Recent Developments This section outlines key corporate actions and business initiatives undertaken by the company recently - In April 2024, the company effected a 1-for-110,000 stock split, increasing authorized shares[23] - The company consummated its IPO on June 7, 2024, selling 450,000 shares at $20.00/share, raising $9.0 million gross, with an additional $1.4 million from over-allotment exercise[24] - A $5 million revolving credit facility was secured with Peapack-Gladstone Bank on August 5, 2024, for operating needs and acquisitions, bearing interest at term SOFR plus 3.50% (min 5.50%)[25] - A rental program for UL-certified e-bikes was launched in October 2024 in New York City, Toronto, and Los Angeles, with plans to expand to Miami[27] - The Fly-11 PRO model was chosen for the NYC DOT's $2 million trade-in program for food delivery workers, participating from January to June 2025[28] - Authorized common stock shares were increased from 100,000,000 to 300,000,000 in March 2025[29] - A UL litigation regarding improper trademark use was settled in May 2025 for $1,000,000, with $350,000 paid by July 15, 2025[30][31][32] - A 1-for-5 reverse stock split became effective on July 3, 2025, with trading on a split-adjusted basis starting July 7, 2025[35] - A registered direct offering closed on June 2, 2025, raising $6.24 million net proceeds from selling 5,719,111 common shares and 11,438,222 warrants[38] - The company disposed of 15 subsidiaries between December 2024 and July 2025 for approximately $1.3 million cash consideration to streamline its structure[39] Our History and Corporate Structure This section details the company's formation, evolution, and current organizational structure - The business began in 2018 as Ctate Inc., with each retail store managed by a separate wholly-owned company[40] - Ctate merged into Fly E-Bike, Inc. in September 2022, with Fly E-Bike as the surviving entity[41] - Fly-E Group, Inc. was incorporated in November 2022 and acquired Fly E-Bike via a Share Exchange in December 2022, making Fly E-Bike a wholly-owned subsidiary[43] - Fly-E Group primarily conducts business through Fly E-Bike and its subsidiaries, with Fly-E Group itself having no substantive operations other than holding shares[43] Our Industry This section describes the growth drivers and market dynamics of the electric vehicle industry - The EV industry, including E-motorcycles, E-bikes, and E-scooters, is experiencing significant growth driven by technology advancements, demand for eco-friendly transportation, and government incentives[44][45][46] - The Asia-Pacific region is the largest market, but North America is expected to see significant growth due to government initiatives[47] - The rise in small package deliveries in major cities like New York City, accelerated by e-commerce and the COVID-19 pandemic, further boosts demand for E-bikes as an efficient and environmentally friendly option[49][50] Our Strengths This section highlights the company's competitive advantages, including early market entry and brand reputation - Early entry into the EV market in 2018 allowed the company to capitalize on e-commerce growth and increased demand during the COVID-19 pandemic[51] - Strong brand reputation for high-quality products and excellent customer service, particularly among food delivery workers in New York City, has built a loyal customer base[52] - Continuous innovation with over 67 new products and upgrades since 2018, plus development of the 'Fly E-Bike app' and 'Fly E-Bike Care' extended warranty program[53] Our Strategies This section outlines the company's plans for market leadership, brand enhancement, and sales network expansion - Enhance position as a leader in urban mobility, especially for food and package delivery workers, through brand enhancement, innovation, and sales network expansion[54] - Improve brand recognition by providing exceptional customer service, upgrading retail stores, opening flagship stores, increasing accessory offerings, and collaborating with lifestyle brands[55] - Continue innovation in product design, user experience, and performance, including developing the 'Fly E-Bike app' and launching 'Fly E-Bike Care' for extended maintenance services[56] - Expand sales network internationally into growth markets like South America and Europe, and domestically through a second online store for gas bikes[57] - Diversify service offerings by leveraging retail stores as logistics hubs for small package delivery, seeking partners, assembling a delivery team, and developing a delivery app[58] Our Products This section details the diverse portfolio of E-motorcycles, E-bikes, E-scooters, and accessories offered - The company offers a diverse product portfolio including 27 E-motorcycle products (E-moped, E-motorcycle, E-tricycle), 36 E-bike products (City E-bike, foldable E-bike, standard E-bike), and 38 E-scooter products[20][59][60][71][81] - E-mopeds offer ranges of 20-70 miles, top speeds of 20-38 mph, and payloads of 185-400 lbs, with features like remote key fobs, alarm systems, and easy operation[63][64] - E-motorcycles are designed for urban commuting, with ranges of 25-80 miles, top speeds of 30-59 mph, and advanced safety features like anti-lock brakes[67] - E-tricycles (Fly-Tricycle) are three-wheel vehicles with three seats, a range of 43-62 miles, a top speed of 30 mph, and a payload capacity of 1,239 lbs[70] - Foldable E-bikes (e.g., Dolphin E-Bike, Air-2) offer 20-25 miles range, 23 mph top speed, and 250 lbs payload, ideal for space-conscious urban dwellers[75] - E-scooters provide 15-45 miles range, 15-40 mph top speed, and 250-330 lbs weight capacity, equipped with hydraulic disc brakes and electronic braking systems[83] - The company also sells Fly E-Bike branded accessories (riding gear, storage, smartphone holders, apparel) and performance upgrades (wheels, shock absorbers, carbon fiber panels), along with traditional bikes[84][85] Fly E-Bike App This section describes the ongoing development of a mobile application for EV management and intelligent riding - The company is developing the 'Fly E-Bike app' as a mobile management service for EVs, aiming to provide a comprehensive intelligent riding experience[89] - Expected functions include GPS, navigation, battery and tire pressure management, online shopping, and anti-theft features[89] - A testing version of the app has been launched but is not yet available to customers[89] After Sales Services This section covers the repair, maintenance, warranty, and planned extended care programs for EVs - EVs are primarily serviced through retail stores, offering repair, maintenance (exterior, mechanical, motor, electrification, battery, tire pressure, cleaning), and bodywork services[90] - Value-added services include GPS add-on/installation and theft reporting[90] - A three-month limited manufacturer's warranty covers factory defects and minor cosmetic damages for E-bikes, E-motorcycles, and E-scooters[91] - A separate three-month battery warranty covers manufacturer defects, with free replacement if faulty[92] - The 'Fly E-Bike Care' program is planned for future launch, offering insurance-like coverage and continuous maintenance beyond standard warranties, including accidental damages[93] Manufacturing and Assembly This section details the sourcing of components, assembly process, and production volumes for EVs - Substantially all vehicle components are sourced from China (over 50% in FY2025 and FY2024) and the United States (over 40% in FY2025 and FY2024)[94] - A centralized vendor management system streamlines purchasing, enhances negotiating power, and manages supply chain risks by ensuring each critical component has at least three vendors[95][97] - Key vendors in FY2025 were Xiamen Innolabs Technology Co., Ltd. (XFT) at 42% and Depcl Corp. at 32% of accessories and components[96] - Vehicles are assembled in a leased facility in Maspeth, New York[98] Vehicle Production (FY2024 vs. FY2025) | Product Category | FY2025 | FY2024 | | :--------------- | :----- | :----- | | E-motorcycles | 4,595 | 8,390 | | E-bikes | 5,974 | 7,638 | | E-scooters | 1,557 | 3,171 | Quality Control This section describes the stringent quality assurance processes for components and finished electric vehicles - Stringent quality control systems are implemented, with XFT (a principal vendor) monitoring factories for China-sourced parts[99] - Quality control procedures include factory checks (size, capacity, certifications, equipment, QA processes), proofing with 'golden samples,' and first article inspections during mass production[99][100][101] - XFT conducts random inspections after mass production, and similar procedures are followed by U.S. principal vendors and the internal quality control team for U.S.-sourced parts[102][103] - The company has not experienced any significant product recalls, refunds, or quality control outbreaks since operations began[104] Sales and Marketing This section outlines the omnichannel retail model and brand promotion strategies for electric vehicles - An omnichannel retail model includes 20 retail stores, 85 distributors in the U.S., and an online store (flyebike.com), with the upcoming Fly E-Bike app also serving as a marketing venue[105] - Marketing focuses on promoting the brand as a lifestyle brand for high-quality smart EVs through digital (social media: Facebook, Instagram, TikTok, Xiaohongshu, WeChat) and experiential activities[106][107] - Offline marketing includes in-store promotions, targeted advertising (local newspapers, magazines, flyers), and leveraging visibility among food delivery workers in New York City[108] Our Distribution Channels This section details the company's retail stores, distributors, and online platforms for product sales - Retail distribution network includes 20 stores (9 in New York, 4 in New Jersey, 2 in Florida, 1 each in Maryland, Massachusetts, California, Washington D.C., and 1 in Canada)[110] - Distributors, mostly in the U.S., purchase products wholesale and handle logistics, warehousing, and distribution, with most making upfront payments[111] - International expansion includes one distributor in the Dominican Republic[112] - Online distribution is via flyebike.com, with plans for a second online store for gas bikes[113] - An online-to-offline model allows customers to order online and pick up products at retail stores, integrating networks for a cohesive experience[114] Our Customers This section describes the customer base, primarily food delivery workers, and acquisition strategies - Customers are acquired through referrals, distributors, and marketing activities, with significant growth opportunities expected due to strong brand image and evolving product portfolio[115] - The majority of customers (72% in FY2025, 70% in FY2024) are food delivery workers in New York City[115] - No single customer accounted for more than 10% of revenues in FY2025 or FY2024[115] Environmental Matters This section addresses the company's compliance with environmental laws and safety programs - The company is subject to federal, state, and local Environmental Laws regarding pollutant discharge, handling of materials, waste disposal, and remediation[116] - An environmental and safety program is maintained, including obtaining permits, disposing of waste, tracking hazardous waste, managing air emissions, and auditing compliance[117] Intellectual Property This section outlines the company's trademarks and plans for further intellectual property protection - The company holds one trademark in the U.S. (logo), four in China ('FLY E-BIKE', 'FLY EBIKE', 'FLYEBIKE', logo), two in the Dominican Republic ('FLY E-BIKE', logo), and one in Panama ('FLY E-BIKE')[118] - All current trademarks are effective from 2022 to 2033[118] - No other patents, copyrights, or intellectual property registrations are held in the U.S., but the company plans to seek further registrations and protects trade secrets via common law[119] Competition This section discusses the highly competitive EV market and factors influencing the company's success - The EV market is highly competitive, with numerous companies selling E-bikes, E-motorcycles, and E-scooters globally, based on factors like innovation, performance, price, and brand recognition[120] - Competitors include companies with greater financial and marketing resources such as Trek Bicycle Corporation, Specialized Bicycle Components, Inc., and Rad Power Bikes Inc[121] - Success depends on capitalizing on competitive strengths and building brand recognition in this nascent market[120][121] Regulation This section details the complex federal, state, and local regulations impacting the company's operations - The company is subject to a wide array of complex and evolving federal, state, and local laws and regulations covering labor, product liability, consumer protection, taxation, privacy, and environmental matters[122][123] - Environmental regulations include those for hazardous substances, solid wastes (RCRA), and battery recycling, with potential for strict liability under CERCLA[124][125] - Products are regulated by the CPSC (Consumer Product Safety Commission) and NHTSA (National Highway Traffic Safety Administration) for safety defects, and EPA/CARB for emissions[126][128] - New York City regulations, effective September 2023, require powered mobility devices and batteries to be UL-certified, with additional laws in 2024-2025 addressing safety, operating manuals, and potential registration[129] - Data privacy laws (e.g., CAN-SPAM, TCPA, HIPAA, FTC Act) apply due to handling of personally identifiable information[130] Employees This section provides information on the company's workforce, including full-time and part-time staff - As of July 15, 2025, the company had 64 employees, comprising 35 full-time and 29 part-time staff[132] - Employees are not unionized or covered by collective bargaining agreements, and the company reports a good working relationship with no significant labor disputes[132] Item 1A. Risk Factors This section outlines significant risks to Fly-E Group's business, operations, industry, and securities - The company may not meet production and delivery plans, harming business prospects[134][136] - Heavy reliance on a limited number of principal vendors in China for vehicle components poses supply chain risks and potential cost increases[134][137][138] - International trade tensions, particularly between the U.S. and China, and rising tariffs could adversely impact supply chain, costs, and product margins[134][140][143] - Substantial doubt exists about the company's ability to continue as a going concern due to net losses and significant cash outflows[134][165][166] - Material weaknesses in internal control over financial reporting have been identified, potentially affecting financial reporting accuracy and stock price[134][167] - The electric two-wheel vehicle market is highly competitive and in its infancy, with many competitors having greater resources[134][170] - Product liability claims, especially concerning lithium-ion battery safety, could lead to significant financial harm, recalls, and reputational damage[134][171] - The price of common stock may be volatile and fluctuate substantially due to limited trading volume, commercialization success, competitive developments, and other factors[135][188] - Directors and executive officers hold approximately 18.7% of outstanding common stock, limiting other shareholders' influence and potentially delaying corporate control changes[135][186][202] - The company may fail to comply with Nasdaq's continued listing standards, including the minimum bid price requirement, potentially leading to delisting[135][209][210] Item 1B. Unresolved Staff Comments This item is not applicable, indicating no unresolved comments from the SEC staff Item 1C. Cybersecurity Fly-E Group monitors cybersecurity risks, implements risk management, and uses third-party providers for data security - The company monitors cybersecurity risks through annual reviews at senior management levels and with the Audit Committee[216] - Processes are in place for assessing, identifying, and managing cybersecurity risks, with plans to create a technology officer role for information security oversight[217] - Primary strategy for mitigating cyber risks involves storing sensitive data with trusted, SOC-compliant third-party providers[218] - Plans include engaging a third-party service provider for network monitoring, prevention, detection, and response to security incidents, and maintaining backup data for recovery[219] Item 2. Properties This section details the company's owned corporate offices and leased warehouse and retail store properties - Corporate and executive offices are owned in Flushing, NY, and are encumbered by debt[220] - A 52,264 sq ft warehouse in Maspeth, NY, is leased for vehicle assembly, with the lease expiring on April 30, 2029, at an annual rent of approximately $1.2 million[220] - All retail stores are leased, with aggregate rent payments of $2.9 million for FY2025 and $2.4 million for FY2024[221] - Current facilities are believed to be sufficient for the near term, but additional space may be required for expanding operations[221] Item 3. Legal Proceedings This section describes the company's legal proceedings and claims, none expected to have a material adverse effect - The company is subject to civil litigation regarding its consumer products and intellectual property rights[222] - Management does not believe any current legal proceedings, investigations, or claims are likely to have a material adverse effect on the business, financial condition, or results of operations[222] Item 4. Mine Safety Disclosures This item is not applicable, as the company is not involved in mining operations Part II This part covers market information for common equity, management's discussion and analysis, and controls and procedures Item 5. Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities This section details the Nasdaq listing of common stock, stockholder information, and the company's dividend policy - Common stock commenced trading on the Nasdaq Capital Market on June 6, 2024, under the symbol "FLYE"[226] - As of July 15, 2025, there were 26 stockholders of record[227] - The company has never declared or paid cash dividends and does not expect to in the foreseeable future, prioritizing retention of earnings for business growth[229] Item 6. [Reserved] This item is reserved and contains no information Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations This section analyzes financial performance, highlighting decreased revenues, a net loss, and going concern doubts - Net revenues decreased by 21.0% to $25.4 million for the year ended March 31, 2025, from $32.2 million in the prior year[22][261] - The decrease in revenue was primarily due to a 10,846-unit drop in total units sold (from 69,611 to 58,765) and reduced customer inclination to purchase E-Bikes following lithium-battery accidents[239][261][262] - The company reported a net loss of $5.3 million for FY2025, a significant change from a net income of $1.9 million for FY2024[260][269] - Total operating expenses increased by 52.5% to $15.0 million in FY2025, driven by higher payroll, rent, professional fees, and settlement payments[265] - As of March 31, 2025, the company had cash of $0.8 million and a net cash outflow from operating activities of $10.1 million, raising substantial doubt about its ability to continue as a going concern[271][275] Overview_MD&A This section provides a general overview of Fly-E Group's business, products, and operational highlights - Fly-E Group is an EV company designing, installing, and selling E-motorcycles, E-bikes, E-scooters, and accessories under the 'Fly E-Bike' brand[231] - The company operates 20 stores (19 U.S., 1 Canada), offers rental services, and has an online store, with plans for international expansion and a second online store for gas bikes[232] - A diversified product portfolio includes 27 E-motorcycle, 36 E-bike, and 38 E-scooter products, with continuous refreshment to align with market trends[233] - Development of the 'Fly E-Bike app' is underway for EV management, and an ERP system was completed in May 2025, with a GO FLY APP for rental services launched in September 2024[234] - Components are sourced from China and the U.S., assembled in Maspeth, NY, with 4,595 E-motorcycles, 5,974 E-bikes, and 1,557 E-scooters produced in FY2025[235] Key Factors that Affect Operating Results This section discusses internal and external factors influencing the company's financial performance - Operating results are influenced by U.S. EV industry factors like economic growth, disposable income, urbanization, consumer spending, competition, and government policies[236] - Growth depends on attracting new customers through retail strategy, effective marketing, and successful production ramp-up and quality control[237][238] - Net revenues decreased by 21.0% in FY2025 due to a drop in units sold (10,846 fewer units) and reduced E-Bike sales following lithium-battery accidents, leading customers to opt for oil-powered vehicles[239] - Average sales price per EV increased by $29 (from $960 to $989) in FY2025, driven by product upgrades and enhanced sales channels[239] - Payroll expenses increased to $4.7 million in FY2025 from $2.9 million in FY2024, but are expected to decrease in the next fiscal year due to retail store closures and dispositions[242] - The centralized vendor management system aims for cost savings, improved risk management, and increased negotiating power, but changes in vendor costs can significantly affect financial results[244] - Increased competition and U.S. government tariffs on imported EV components pose risks of price pressure, reduced margins, and supply chain disruptions[245] - Regulatory landscape, including product safety, battery safety, and environmental laws, creates additional costs but also opportunities like EV purchase incentives and trade-in programs (e.g., NYC DOT's $2 million program)[246] How to Assess Our Performance This section explains the key financial metrics and non-GAAP measures used to evaluate company performance - Management assesses performance using net sales, gross profit, gross margin, selling, general and administrative expenses, and EBITDA[247] - Revenue is generated from retail and wholesale sales of EVs, accessories, spare parts, and repair/rental services, recognized net of discounts and returns[248][249][250] - Cost of sales includes product costs, warehouse rent, payroll, depreciation, inventory reserves, warranty, and logistics[251] - Selling, general, and administrative (SG&A) expenses include retail operational costs, salaries, marketing, advertising, and corporate overhead, expected to increase with business expansion and public company operations[253][254][255] - EBITDA (Earnings Before Interest, Taxes, Depreciation, and Amortization) is used as a non-GAAP financial measure to evaluate operating performance and facilitate year-to-year comparisons[257][258] Results of Operations for the Years Ended March 31, 2025 and 2024 This section provides a detailed comparison of the company's financial results for fiscal years 2025 and 2024 Consolidated Results of Operations (FY2024 vs. FY2025) | Metric | FY2025 ($) | FY2024 ($) | Change ($) | % Change | | :-------------------------- | :----------- | :----------- | :----------- | :--------- | | Revenues, Net | 25,427,163 | 32,205,666 | (6,778,503) | (21.0)% | | Cost of Revenues | 14,976,266 | 19,099,120 | (4,122,854) | (21.6)% | | Gross Profit | 10,450,897 | 13,106,546 | (2,655,649) | (20.3)% | | Total Operating Expenses | 15,010,863 | 9,845,989 | 5,164,874 | 52.5% | | (Loss) Income from Operations | (4,559,966) | 3,260,557 | (7,820,523) | (239.9)% | | Net (Loss) Income | (5,291,159) | 1,895,222 | (7,186,381) | (379.2)% | | EBITDA | (3,853,007) | 3,504,561 | (7,357,568) | (209.9)% | Revenue Breakdown (FY2024 vs. FY2025) | Revenue Type | FY2025 ($) | FY2024 ($) | Change ($) | % Change | | :---------------- | :----------- | :----------- | :----------- | :--------- | | Sales-Retail | 21,725,817 | 26,389,720 | (4,663,903) | (17.7)% | | Sales-Wholesale | 3,529,479 | 5,815,946 | (2,286,467) | (39.3)% | | Sales-Rental services | 171,867 | — | 171,867 | 100.0% | | Total Net Revenues | 25,427,163 | 32,205,666 | (6,778,503) | (21.0)% | - Cost of revenues decreased by 21.6% to $15.0 million in FY2025, primarily due to more favorable battery pricing (unit cost decreased 11% from $112 to $99) and reduced sales volume[263] - Gross margin remained stable at 41.1% in FY2025 compared to 40.7% in FY2024[264] - Selling expenses increased by 25.2% to $7.4 million in FY2025, driven by higher payroll ($3.3M vs $1.6M), rent ($2.9M vs $2.4M), and advertising ($0.3M vs $64K), partially offset by a decrease in commission expenses[266] - General and administrative expenses surged by 93.5% to $7.6 million in FY2025, mainly due to increased professional fees ($2.0M vs $1.0M), payroll ($1.5M vs $1.1M), insurance ($1.1M vs $0.2M), software development fees ($0.5M vs $0.3M), and $1.0 million in UL litigation settlement payments[267] - Income tax provision decreased to $0.3 million in FY2025 from $1.2 million in FY2024, reflecting the pre-tax loss[268] - EBITDA shifted from a positive $3.5 million (10.9% of revenue) in FY2024 to a negative $3.9 million (-15.2% of revenue) in FY2025[270] Liquidity and Capital Resources This section analyzes the company's cash, working capital, and financing activities, noting going concern doubts Key Liquidity Metrics (as of March 31) | Metric | 2025 ($) | 2024 ($) | | :----------------- | :----------- | :----------- | | Cash | 0.8 million | 1.4 million | | Working Capital | 1.3 million | 0.3 million | | Net (Loss) Income | (5.3 million) | 1.9 million | | Net Cash (Used in) Provided by Operating Activities | (10.1 million) | 4.3 million | | Current Contractual Obligation | 8.9 million | N/A | - The company's ability to continue as a going concern is in substantial doubt due to net losses and significant cash outflows from operations[275] - Financing efforts include $9.2 million net proceeds from IPO (June 2024) and $6.1 million net proceeds from a secondary public offering (June 2025)[273][275] - A 1-for-5 reverse stock split was implemented on July 3, 2025, reducing outstanding common stock shares from 24,587,500 to 4,917,500 as of March 31, 2025[274][275] - Accounts receivable turnover increased from 69 days (FY2024) to 71 days (FY2025) due to longer payment terms for dealers[276] - Accounts payable turnover increased from 25 days (FY2024) to 33 days (FY2025) due to longer payment cycles[277] - Prepayments and other receivables significantly increased by $3.1 million to $3.7 million in FY2025, mainly for additional inventory for the new E-bike rental services[278] - Inventories increased to $6.4 million in FY2025 from $5.4 million in FY2024, primarily for the new rental business, increasing inventory turnover days from 89 to 143[279] Cash Flow Summary (FY2024 vs. FY2025) | Cash Flow Activity | FY2025 ($) | FY2024 ($) | | :----------------------------- | :------------ | :------------ | | Operating Activities | (10,059,466) | 4,308,920 | | Investing Activities | (2,901,272) | (3,200,843) | | Financing Activities | 12,486,104 | (49,628) | | Net changes in cash | (474,634) | 1,058,449 | Contractual Obligations (as of March 31, 2025) | Obligation Type | Total ($) | Less than 1 year ($) | 1 – 2 years ($) | 3 – 5 years ($) | Thereafter ($) | | :-------------------------- | :----------- | :------------------- | :-------------- | :-------------- | :------------- | | Operating Lease Obligations | 11,724,690 | 2,617,762 | 5,290,390 | 2,842,381 | 974,157 | | Loan Payable | 7,356,936 | 5,291,893 | 160,004 | 20,515 | 1,884,524 | | UL Litigation | 1,000,000 | 1,000,000 | — | — | — | | Total | 20,081,626 | 8,909,655 | 5,450,394 | 2,862,896 | 2,858,681 | Quantitative and Qualitative Disclosures about Market Risk This section discusses the company's exposure to foreign exchange and interest rate market risks - The company does not currently have significant direct foreign exchange risk as most revenues and expenses are in U.S. dollars, and no derivative financial instruments are used for hedging[290] - Interest rate risk primarily relates to fixed-rate short-term and long-term bank borrowings; no material risks from market interest rate changes are anticipated, but future renewals could expose the company to such risks[291] Critical Accounting Estimates This section highlights key accounting estimates requiring significant judgment, such as inventory obsolescence - Critical accounting estimates involve assumptions about highly uncertain matters that could materially impact financial statements, with significant judgment required[292][293] - A key estimate is the allowance for inventory obsolescence, based on inventory aging, historical/forecasted demand, and market conditions[294] Inventory Allowance Balance (as of March 31) | Metric | 2025 ($) | 2024 ($) | | :----------------- | :---------- | :---------- | | Inventory Allowance | 1,107,569 | 514,021 | Item 7A. Quantitative and Qualitative Disclosures About Market Risk This item is not applicable, as market risk disclosures are included in Item 7 Item 8. Financial Statements and Supplementary Data This item incorporates the consolidated financial statements and related notes by reference from page F-1 - The financial statements and supplementary data are included starting on page F-1 of this annual report[296] Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosures This item is not applicable, indicating no changes or disagreements with accountants on financial disclosures Item 9A. Controls and Procedures Disclosure controls and procedures were ineffective due to material weaknesses in internal control over financial reporting, with ongoing remediation - Disclosure controls and procedures were evaluated as not effective as of March 31, 2025, due to material weaknesses in internal control over financial reporting[299][302] - Identified material weaknesses include: (i) insufficient financial reporting and accounting personnel with U.S. GAAP and SEC reporting knowledge, (ii) lack of formal internal control policies and risk assessment framework, and (iii) insufficient controls in IT environment and general control activities (logical access, change management, computer operation, service organization, cyber security)[167][300] - Remediation efforts include hiring qualified accounting staff, providing U.S. GAAP/SEC training, outsourcing IT, and developing an ERP system, but these were not fully remediated as of March 31, 2025[169][301] - No material changes in internal control over financial reporting occurred during the fourth quarter of FY2025, other than additional controls in the revenue process[304] Item 9B. Other Information The company adopted an insider trading policy to regulate securities transactions by directors, officers, and employees - The company adopted an insider trading policy on May 3, 2024, to regulate securities transactions by directors, officers, and employees[306][324] - The policy is designed to promote compliance with insider trading laws, rules, regulations, and applicable Nasdaq listing standards[324] Item 9C. Disclosure Regarding Foreign Jurisdiction that Prevent Inspections. This item is not applicable, indicating no foreign jurisdictions prevent inspections of the company's operations Part III This part covers directors, executive officers, corporate governance, executive compensation, and security ownership Item 10. Directors, Executive Officers and Corporate Governance This section details executive officers, directors, board structure, committee functions, and corporate governance policies Executive Officers and Directors | Name | Age | Position | | :---------- | :-- | :------------------------------------- | | Zhou Ou | 36 | Chairman of the Board and CEO | | Shiwen Feng | 29 | Director and CFO | | Rui Feng | 40 | Chief Operating Officer | | Ke Zhang | 38 | Chief Human Resource Officer | | Bin Wang | 67 | Director | | Lun Feng | 65 | Director | | Zanfeng Zhang | 51 | Director | - The board of directors is classified into three classes with staggered three-year terms, with approximately one-third elected each year[317] - Three independent committees are established: Audit Committee (Chair: Bin Wang, includes Lun Feng, Zanfeng Zhang), Compensation Committee (Chair: Lun Feng, includes Bin Wang, Zanfeng Zhang), and Nominating and Governance Committee (Chair: Zanfeng Zhang, includes Bin Wang, Lun Feng)[318][319][320][321] - The company has adopted a written Code of Business Conduct and Ethics, an Insider Trading Policy (adopted May 3, 2024), and a clawback policy for incentive-based compensation[323][324][325] - The clawback policy mandates recovery of incentive-based compensation from executive officers if an accounting restatement is required due to material noncompliance with U.S. financial reporting requirements[326] Item 11. Executive Compensation This section details executive officer compensation and the 2024 Omnibus Incentive Plan for equity-based awards Summary Executive Compensation (FY2024 vs. FY2025) | Name and Position | Year | Salary ($) | Bonus ($) | Stock Awards ($) | Option Awards ($) | All Other Compensation ($) | Total ($) | | :---------------- | :--- | :--------- | :-------- | :--------------- | :---------------- | :------------------------- | :-------- | | Zhou Ou, CEO | 2025 | 100,000 | — | — | — | — | 100,000 | | | 2024 | 100,000 | — | — | — | — | 100,000 | - CEO Zhou Ou's employment agreement (April 1, 2023) provides a monthly base salary of $8,333 and includes non-disclosure, non-solicitation, and non-competition covenants for two years post-termination[331] - CFO Shiwen Feng's employment agreement (November 7, 2024) provides a monthly base salary of $6,667 and includes similar non-disclosure, non-solicitation, and non-competition covenants[333] - The Fly-E Group Inc. 2024 Omnibus Incentive Plan was approved by stockholders on March 10, 2025, reserving 740,000 shares for awards, with an automatic annual increase provision[335][339] - Awards under the 2024 Plan can be granted to employees, officers, directors, consultants, and advisors, and include stock options, SARs, restricted stock, and other equity-based awards[338][341] - As of March 31, 2025, there were no option or stock awards outstanding[334] Item 12. Security Ownership of Certain Beneficial Owner and Management and Related Stockholder Matters This section details beneficial ownership of common stock by management and the shares reserved under the incentive plan Beneficial Ownership of Common Stock (as of July 15, 2025) | Name | Shares Beneficially Owned | Percentage Owned | | :-------------------------- | :------------------------ | :--------------- | | Zhou Ou | 1,540,000 | 8.5% | | Rui Feng | 352,000 | 1.9% | | Ke Zhang | 1,474,000 | 8.1% | | Directors and Officers as a group (seven persons) | 3,366,000 | 18.7% | - The 2024 Omnibus Incentive Plan has 740,000 shares of common stock reserved for future issuance[359] - No grants or awards have been issued under the 2024 Plan as of July 15, 2025[359] Item 13. Certain Relationships and Related Transactions, and Director Independence This section discloses related party transactions, including financial support, services, product sales, and director independence - CEO Zhou Ou provided financial support to the company, advancing $3,274,924 and receiving $1,207,404 in repayments from April 2023 to March 2025. A payable balance of $2,263,630 was transferred to capital contribution[361] - COO Rui Feng and CHRO Ke Zhang advanced $8,711 and $52,802, respectively, to subsidiaries for business operations, which were fully repaid by March 31, 2025[362][363] - DGLG Accounting and Tax LLC (associated with former CFO Mr. Guo) provided consulting services ($225,000 in FY2025, $100,000 in FY2024) and tax services ($61,050 in FY2025, $123,000 in FY2024)[364] - PJMG LLC (associated with former CFO Mr. Guo) provided consulting services, with $372,047 paid in FY2025, and $120,000 prepaid as of March 31, 2025[365] - Fly E Bike SRL (controlled by CEO Mr. Ou) purchased $42,010 in EV products in FY2025 and $326,914 in FY2024. The company also advanced $143,455 to Fly E Bike SRL in FY2025, which was repaid by July 15, 2025[366] - DF Technology US Inc (associated with former CFO Mr. Guo) was engaged for ERP system development ($2,500,000 accumulative payments by March 31, 2025) and GO FLY APP development ($500,000 contract price)[367] - Directors Bin Wang, Lun Feng, and Zanfeng Zhang are considered independent under Nasdaq listing rules[368] - A written Audit Committee Charter outlines procedures for identifying, reviewing, approving, and disclosing related party transactions exceeding $120,000 or 1% of total assets[370][371] Item 14. Principal Accounting Fees and Services This section details audit and other fees paid to the independent accounting firm, all pre-approved by the Audit Committee Principal Accounting Fees (FY2024 vs. FY2025) | Fee Type | FY2025 ($) | FY2024 ($) | | :------------ | :--------- | :--------- | | Audit fees | 608,727 | 552,065 | | Tax Fees | — | — | | All Other Fees | — | — | | Total All Fees | 608,727 | 552,065 | - Audit fees cover professional services for annual financial statement audits, quarterly reviews, and registration statement reviews[374] - All audit and permissible non-audit services performed by the independent accountants are pre-approved by the Audit Committee[375] Part IV This part lists exhibits, financial statement schedules, and the Form 10-K summary Item 15. Exhibits, Financial Statement Schedules This section lists the financial statements, schedules, and exhibits filed as part of the 10-K report - Financial statements, including the Report of Independent Registered Public Accounting Firm, Consolidated Balance Sheets, Statements of Operations, Changes in Stockholders' Equity, and Cash Flows, are filed as part of this report, starting on page F-2[377] - All financial statement schedules are omitted because they are not applicable, immaterial, or the information is presented in the financial statements and notes[378] - A list of exhibits is provided, with some incorporated by reference from previous SEC filings[379] Item 16. Form 10-K Summary This item is not applicable, as a separate Form 10-K summary is not provided Signatures This section contains the official signatures of the company's executive officers and directors Signatures_Details This section lists the specific individuals, including CEO, CFO, and directors, who signed the annual report - The annual report is signed by Zhou Ou (Chief Executive Officer and Director), Shiwen Feng (Chief Financial Officer and Director), Bin Wang (Director), Lun Feng (Director), and Zanfeng Zhang (Director)[386] - All signatures are dated July 15, 2025[386] INDEX TO CONSOLIDATED FINANCIAL STATEMENTS This section provides a comprehensive index to the consolidated financial statements and related notes Financial Statements Listing This section lists all components of the consolidated financial statements, including the auditor's report and notes - The index lists the Report of Independent Registered Public Accounting Firm, Consolidated Balance Sheets, Consolidated Statements of Operations and Comprehensive (Loss) Income, Consolidated Statements of Changes in Stockholders' Equity, Consolidated Statements of Cash Flows, and Notes to Consolidated Financial Statements[388] Report of Independent Registered Public Accounting Firm This section presents the independent auditor's report on the consolidated financial statements Auditor's Opinion and Going Concern The auditor issued an unqualified opinion but noted substantial doubt about the company's ability to continue as a going concern - Marcum Asia CPAs LLP provided an unqualified opinion, stating the financial statements for FY2025 and FY2024 present fairly the financial position and results of operations[392] - An explanatory paragraph notes substantial doubt about the company's ability to continue as a going concern due to significant losses and cash outflows from operating and investing activities[393] - The financial statements do not include adjustments that might result from the outcome of the going concern uncertainty[393] - The auditor did not perform an audit of internal control over financial reporting and thus expresses no opinion on its effectiveness[395] CONSOLIDATED FINANCIAL STATEMENTS This section contains the complete set of consolidated financial statements for the company Consolidated Balance Sheets This statement presents the company's financial position, including assets, liabilities, and equity, as of March 31, 2025 and 2024 Consolidated Balance Sheet Summary (as of March 31) | Metric | 2025 ($) | 2024 ($) | | :-------------------------- | :----------- | :----------- | | ASSETS | | | | Total Current Assets | 14,000,516 | 8,136,208 | | Property and equipment, net | 7,287,213 | 1,755,022 | | Operating lease right-of-use assets | 10,933,068 | 16,000,742 | | Total Assets | 33,706,675 | 28,976,334 | | LIABILITIES | | | | Total Current Liabilities | 12,701,375 | 7,794,816 | | Long-term loan payables | 2,065,040 | 412,817 | | Operating lease liabilities – non-current | 9,106,928 | 13,986,879 | | Total Liabilities | 23,873,343 | 22,194,512 | | STOCKHOLDERS' EQUITY | | | | Common stock | 49,175 | 44,000 | | Additional paid-in capital | 10,940,724 | 2,576,000 | | (Accumulated deficit) Retained Earnings | (895,510) | 4,395,649 | | Total Stockholders' Equity | 9,833,332 | 6,781,822 | - Cash decreased from $1.4 million in 2024 to $0.8 million in 2025[399] - Inventories, net, increased to $6.4 million in 2025 from $5.4 million in 2024[399] - Short-term loan payables increased significantly from nil in 2024 to $5.2 million in 2025[399] Consolidated Statements of Operations and Comprehensive (Loss) Income This statement details the company's revenues, expenses, and net income or loss for fiscal years 2025 and 2024 Consolidated Statements of Operations Summary (FY2024 vs. FY2025) | Metric | FY2025 ($) | FY2024 ($) | | :-------------------------- | :----------- | :----------- | | Revenues | 25,427,163 | 32,205,666 | | Cost of Revenues | 14,976,266 | 19,099,120 | | Gross Profit | 10,450,897 | 13,106,546 | | Selling Expenses | 7,403,374 | 5,914,786 | | General and Administrative Expenses | 7,607,489 | 3,931,203 | | Total Operating Expenses | 15,010,863 | 9,845,989 | | Income (Loss) from Operations | (4,559,966) | 3,260,557 | | Net Income (Loss) | (5,291,159) | 1,895,222 | | Earnings (Losses) per Share | (1.10) | 0.43 | - Net revenues decreased by 21.0% from $32.2 million in FY2024 to $25.4 million in FY2025[401] - Total operating expenses increased by 52.5% from $9.8 million in FY2024 to $15.0 million in FY2025[401] - The company reported a net loss of $5.3 million in FY2025, a significant decline from a net income of $1.9 million in FY2024[401] Consolidated Statements of Changes in Stockholders' Equity This statement outlines changes in stockholders' equity, including capital contributions and net loss, for fiscal years 2025 and 2024 Consolidated Statements of Changes in Stockholders' Equity Summary (as of March 31) | Metric | 2025 ($) | 2024 ($) | | :-------------------------- | :----------- | :----------- | | Common Stock | 49,175 | 44,000 | | Additional Paid-in Capital | 10,940,724 | 2,576,000 | | Shares Subscription Receivables | (219,998) | (219,998) | | (Accumulated Deficit) Retained Earnings | (895,510) | 4,395,649 | | Accumulated Other Comprehensive Loss | (41,059) | (13,829) | | Total Stockholders' Equity | 9,833,332 | 6,781,822 | - Net loss of $5.3 million in FY2025 reduced retained earnings, which was $4.4 million in FY2024[405] - Issuance of common stock upon IPO contributed $8.4 million to additional paid-in capital in FY2025[405] - All share and per share data are retroactively adjusted to reflect the 1-for-110,000 stock split in April 2024 and the 1-for-5 reverse stock split in July 2025[405] Consolidated Statements of Cash Flows This statement presents cash flows from operating, investing, and financing activities for fiscal years 2025 and 2024 Consolidated Statements of Cash Flows Summary (FY2024 vs. FY2025) | Cash Flow Activity | FY2025 ($) | FY2024 ($) | | :----------------------------- | :------------ | :------------ | | Net Cash (Used in) Provided by Operating Activities | (10,059,466) | 4,308,920 | | Net Cash Used in Investing Activities | (2,901,272) | (3,200,843) | | Net Cash Provided by (Used in) Financing Activities | 12,486,104 | (49,628) | | Net changes in cash | (474,634) | 1,058,449 | | Cash at the end of the year | 840,102 | 1,403,514 | - Net cash used in operating activities was $10.1 million in FY2025, a reversal from $4.3 million provided in FY2024, mainly due to net loss, increased inventories, and prepayments[282][409] - Net cash used in investing activities was $2.9 million in FY2025, primarily for purchases of properties, equipment, and software[284][409] - Net cash provided by financing activities was $12.5 million in FY2025, driven by $9.2 million net proceeds from the IPO and $7.4 million in loan proceeds, partially offset by loan repayments[286][409] - Cash paid for interest expense increased from $152,050 in FY2024 to $405,615 in FY2025[409] Notes to Consolidated Financial Statements This section provides detailed explanations and supplementary information for the consolidated financial statements 1 — DESCRIPTION OF BUSINESS, ORGANIZATION AND BASIS OF PRESENTATION This note describes Fly-E Group's business, corporate history, recent capital events, and the going concern uncertainty - Fly-E Group, Inc. was incorporated on November 1, 2022, as a holding company for its EV business, primarily through Fly E-Bike Inc. and its subsidiaries[413] - The company's business originated in 2018 as CTATE INC., which merged into Fly E-Bike in September 2022, followed by Fly-E Group acquiring Fly E-Bike in December 2022 through a Share Exchange[414][415] - The company completed its IPO on June 7, 2024, raising approximately $9.2 million in net proceeds, and a secondary public offering on June 4, 2025, raising $6.1 million in net proceeds[417][418][426][427] - A 1-for-5 reverse stock split was implemented on July 3, 2025, retroactively adjusting all share and per share information[419][420][427] - As of March 31, 2025, the company had $0.8 million cash, $1.3 million working capital, a $5.3 million net loss, and $10.1 million net cash used in operating activities, leading to substantial doubt about its ability to continue as a going concern[427] - Management plans to alleviate going concern risk through equity financing, other debt financing, and financial support from related parties[427] 2 — SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES This note details the company's significant accounting policies, including revenue recognition, inventory, property, and lease accounting - Consolidated financial statements are prepared in accordance with U.S. GAAP and SEC regulations, including subsidiaries where the company exercises control[428][429] - The company operates as a single reportable segment, with financial information reviewed on a consolidated basis[430] - Significant accounting estimates include allowance for inventories, which is based on factors like aging, demand, and market conditions[431][438] - Accounts receivable are recorded at invoiced amounts less an allowance for credit loss, estimated using the CECL model[435][436] - Inventories are stated at the lower of cost or net realizable value using the first-in-first-out (FIFO) method[438] - Property and equipment are stated at cost less accumulated depreciation, calculated using the straight-line method over estimated useful lives (e.g., machinery 5 years, buildings 30 years)[440] - Intangible assets (internal use software, property rights) are amortized on a straight-line basis over their useful lives (e.g., software 5 years)[442][443] - Revenue from product sales is recognized under ASC 606 when control transfers to the customer, while rental services revenue is recognized over the rental period under ASC 842[448][451][454][456] - The company recognizes right-of-use (ROU) assets and lease liabilities for all leases (except short-term/low-value) at commencement, depreciating ROU assets straight-line[465][466][467] - No single customer accounted for more than 10% of total net revenues in FY2025 or FY2024, but top two suppliers represented 42% and 32% of purchases in FY2025[470][471] - The company adopted ASU 2023-07 (Segment Reporting) for FY2025 retrospectively, with no material impact on reportable segments[483] 3 — INVENTORIES, NET This note details the composition and valuation of inventories, net, including reserves for obsolescence Inventories, Net (as of March 31) | Category | 2025 ($) | 2024 ($) | | :---------------- | :---------- | :---------- | | Batteries | 2,084,890 | 1,009,228 | | Electric Vehicles | 3,070,224 | 2,634,643 | | Tires | 4