Business Operations - As of December 16, 2025, the company operates 13 stores, including 12 in the U.S. and one in Canada, and plans to expand into South America and Europe [196]. - The company has a diversified product portfolio with 27 E-motorcycle products, 37 E-bike products, and 38 E-scooter products as of December 16, 2025 [197]. - The company engaged DF Technology US Inc for the development of an ERP system and a mobile app for rental services, with the ERP system completed by May 20, 2025 [199]. - The company plans to expand its rental services to Miami in the near term to meet increasing market demand [198]. - The company executed a one-for-five reverse stock split effective July 3, 2025, and a one-for-twenty reverse stock split effective November 4, 2025 [214][216]. - The company disposed of 17 subsidiaries for approximately $0.9 million as part of a plan to simplify its structure and improve efficiency [220]. Financial Performance - The company reported a 32% decrease in net revenues attributed to a decline in total units sold, primarily due to safety concerns regarding lithium batteries [201]. - Net revenues for the three months ended September 30, 2025, decreased by 42.7% to $3.9 million, primarily due to a 61% drop in average unit price of EVs [224]. - For the six months ended September 30, 2025, net revenues decreased by 37.2% to $9.2 million, driven by a decrease in total units sold and lower selling prices [225]. - Retail sales revenue fell by $3.9 million, or 65.8%, from $5.9 million in Q3 2024 to $2.0 million in Q3 2025, influenced by safety concerns over lithium-battery incidents [246]. - Wholesale revenue increased by $0.8 million, or 91.3%, from $0.9 million in Q3 2024 to $1.7 million in Q3 2025, driven by sales from disposed entities [246]. - Gross profit decreased by 66.4% to $976,521 in Q3 2025 from $2.9 million in Q3 2024, with gross margin dropping to 25.0% from 42.6% [248]. - Total operating expenses were $2.0 million in Q3 2025, a decrease of 51.0% from $4.1 million in Q3 2024, primarily due to reduced selling and administrative expenses [249]. - Net loss for Q3 2025 was $1.8 million, an increase of 55.4% from a net loss of $1.1 million in Q3 2024 [255]. - EBITDA for Q3 2025 was $(964,664), a decrease of 19.0% compared to $(1,191,234) in Q3 2024, with EBITDA margin at negative 24.7% [256]. - Net loss for the six months ended September 30, 2025, was $3.8 million, an increase of 186.2% from a net loss of $1.3 million in 2024 [265]. - EBITDA for the six months ended September 30, 2025, was $(2.2) million, a deterioration of 97.2% compared to $(1.1) million in 2024 [266]. Cash Flow and Working Capital - As of September 30, 2025, the company had cash of $2.5 million and working capital of $8.1 million, up from $1.3 million in March 2025 [267]. - The net loss for the six months ended September 30, 2025 was $3.8 million, with net cash used in operating activities amounting to $7.7 million [279]. - Accounts receivable increased from $0.5 million as of March 31, 2025 to $1.5 million as of September 30, 2025, with a turnover period decreasing from 71 days to 69 days [273]. - Accounts payable decreased from $1.3 million as of March 31, 2025 to $0.6 million as of September 30, 2025, with a turnover period decreasing from 33 days to 20 days [274]. - Prepayments and other receivables increased significantly from $3.7 million as of March 31, 2025 to $5.9 million as of September 30, 2025, primarily due to the launch of E-bike rental services [275]. - Inventories increased slightly from $6.4 million as of March 31, 2025 to $6.5 million as of September 30, 2025, with inventory turnover days rising from 143 days to 273 days [276]. - Total outstanding loan principal increased from $7.4 million as of March 31, 2025 to $7.8 million as of September 30, 2025, with interest expenses rising from $91,877 to $1.1 million [277]. - Net cash provided by financing activities was $9.8 million for the six months ended September 30, 2025, primarily from follow-on public offering and private placement [283]. Legal and Regulatory Issues - The company has incurred significant legal fees and costs due to ongoing litigation related to lithium battery safety and trademark infringement [205][210]. - The Company entered into a forbearance and modification agreement with Peapack-Gladstone Bank on November 7, 2025, extending the repayment deadline to March 31, 2026 [272]. Market Conditions - The company operates in a rapidly growing EV market, but faces increased competition that may pressure prices and margins [230]. - The company expects selling and marketing expenses to decrease in the foreseeable future as more retail stores are sold [239].
Fly-E Group, Inc.(FLYE) - 2026 Q2 - Quarterly Report