What changed in this filing

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Item 7. Management’s Discussion and Analysis

2025-07-15 compared with 2024-06-28 · 408 added, 419 removed, 185 unchanged (82% of the section changed)

Management’s Discussion and Analysis

of Financial Condition and Results of Operations

Management’s Discussion and

Analysis of Financial Condition and Results of Operations

The following discussion of our financial condition

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contributing towards building a more environmentally friendly future.

Fly E-Bike was established in 2018 with its first store opened in New York.

Our business has grown rapidly since then and we are now one of the leading providers of E-bikes for food delivery workers in New York

As of June 27, 2024, we have 40 stores, including 39 stores in the U.S and one store in Canada.

We also operate one online store

at flyebike.com, focusing on selling E-motorcycles, E-bikes and E-scooters, serving customers in the United States.

In addition, we plan

to open a second online store focusing on selling gas bikes in the future.

We plan to expand our presence in the United States and

extend our business into South America and Europe in the future.

We have a diversified product portfolio that is designed to satisfy

the various demands of our customers and address different urban travel scenarios.

Additionally, we aim to refresh our product offerings

continuously to align with evolving market trends.

As of June 27, 2024, we offered 21 E-motorcycle products, 21 E-bike products and 34

E-scooter products.

Fly E-Bike was established in 2018 with its first

store opened in New York.

Our business has grown rapidly since then and we are now one of the leading providers of E-bikes for food

delivery workers in New York City.

As of July 15, 2025 , we have 20 stores, including

19 retail stores in the U.S and one retail store in Canada.

The Company offers rental services from selected locations in New York,

Toronto, and Los Angeles.

We also operate one online store at flyebike.com, focusing on selling E-motorcycles, E-bikes and E-scooters,

serving customers in the United States.

In addition, we plan to open a second online store focusing on selling gas bikes in the future.

We plan extend our business into South America and Europe in the future.

We have a diversified product portfolio that

is designed to satisfy the various demands of our customers and address different urban travel scenarios.

Additionally, we aim to refresh

our product offerings continuously to align with evolving market trends.

As of July 15, 2025 ,

we offered 27 E-motorcycle products, 36 E-bike products and 38 E-scooter products.

We are currently in the process of developing

a Fly E-Bike app, which is a management service mobile software for our EVs.

We aim to design an app that will bring users a comprehensive

intelligent experience to create a safer and more satisfying riding life.

a Fly E-Bike app, which is a management service mobile software for our EVs, enabling customers to purchase bikes, locate company stores,

schedule bike repairs, and more.

We aim to design an app that will bring users a comprehensive intelligent experience to create a safer

and more satisfying riding life.

The development of the app is still in its preliminary stage.

We have launched a testing version of the app, which is currently unavailable to our customers.

In December 2023, the Company engaged

DF Technology US Inc (“DFT”) for certain technology services, for example enterprise resource planning system (“ERP

We have launched a testing version of

the app, which is currently unavailable to our customers.

In December 2023, the Company engaged DF Technology US Inc (“DFT”)

for certain technology services, for the development of the enterprise resource planning system (“ERP system”), and in July

2024, the Company engaged DFT to develop a mobile phone application for its renal services, the GO FLY APP.

The total contract price

for the GO FLY APP is $500,000, and the GO FLY APP was delivered and launched in the rental business on September 5, 2024.

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 March 31, 2025, the Company paid $136,580 to DFT as prepayment for software development.

We source a significant portion of our vehicle

components from China and the United States, and then assemble them into our vehicles in a facility located in Brooklyn, New York.

For the year ended March 31, 2023, we produced 2,039 E-motorcycles, 5,953 E-bikes and 2,279 E-scooters at this facility.

year ended March 31, 2024, we produced 8,390 E-motorcycles, 7,638 E-bikes and 3,171 E-scooters at the same facility.

In response to the

increasing demand for our products, we are currently looking to lease a larger assembling facility to replace our current facility in

the near future.

components from China and the United States, and then assemble them into our vehicles in a facility located in Maspeth, New York.

For the year ended March 31, 2025, we produced 4,595 E-motorcycles, 5,974 E-bikes and 1,557 E-scooters at the same facility.

Recent Developments

In April 2024, we effected a stock split of our

authorized and all issued and outstanding shares of our common stock and preferred stock at a split ratio of 1-for-110,000,

where 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.

The issued and outstanding common stock and

preferred stock increased at a split ratio of 1-for-110,000.

The share number and related data in this annual report has been updated to reflect the stock split referenced above.

Initial Public Offering

On June 7, 2024, we sold 2,250,000 shares of common stock, at a price

of $4.00 per share in our 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, we granted the underwriters a 30-day option to purchase an additional 337,500

shares of common stock at the initial public offering price, less underwriting discounts and commissions, to cover over-allotments.

June 25, 2024, we sold an additional 337,500 shares of common stock to the underwriters of our IPO for gross proceeds of $1.4 million

upon full exercise of the underwriters’ over-allotment option.

Net proceeds received by us from our initial public offering, including

the exercise of the over-allotment option, were approximately $9.2 million.

We also issued to The Benchmark Company, LLC, the representative

of the underwriters, and its designees warrants to purchase 129,375 shares.

Impact of COVID-19

The United States Center for Disease Control announced

that the COVID-19 public health emergency ended in May 2023, with the result that the COVID restrictions in the United States are no longer

in effect and restrictions have been terminated worldwide.

Although the anti-pandemic policies have been eased in China since the beginning

of 2023, it is uncertain whether the Chinese government will tighten its restrictive policies and measures again in the future.

the lingering impacts of COVID-19 may continue adversely affecting our supply chain, which in turn may materially and adversely affect

our business and results of operations.

We rely on a global supply chain network,

with a significant portion of our supplies coming from China.

Disruptions in this network, caused by factors such as COVID-19 lockdowns,

port congestion, and geopolitical tensions, had resulted in supply shortages and increased freight costs.

These issues had resulted in,

and may continue to lead to, production delays and inventory shortages, affecting our ability to fulfill customer orders timely.

Although our business operations were not materially impacted because of measures we took during the lockdown period in China in 2022,

which included increasing order quantities for vehicle components and maintaining higher inventory levels, as well as avoiding heavy reliance

on a single vendor, there can be no assurance as to whether and to what extent these mitigation measures will be effective in the event

of future supply chain disruptions.

Maintenance of high inventories can increase our costs and involve other risks.

Risk Factors – Risks Related to the Company’s Business, Operations, and Industry - Changes in our supply chain may result

in increased cost.

If we are unsuccessful in our efforts to control and reduce supplier costs and manage inventory at optimal levels,

our operating results will suffer .”

The global economic environment has experienced

significant inflationary pressures, affecting various cost components, including labor, raw materials, and transportation.

we face higher operating costs, which could impact our pricing strategies and profit margins.

These challenges may lead to increased costs

for raw materials, longer lead times, and potential delays in product availability, which could adversely affect our profitability and

ability to meet customer demand.

In addition, if we encounter unexpected difficulties

with our principal vendors, and if we are unable to fill these needs from other vendors in a timely manner, we could experience production

delays and potential loss of access to important technology and parts for producing, servicing and supporting our vehicles.

any vendors or the disruption in the supply of components from these vendors could lead to design changes and delays in product deliveries

to our customers, which could hurt our relationships with our customers and result in negative publicity, damage to our brand and a material

and adverse effect on our business, prospects, financial condition and operating results.

We are actively monitoring these developments

and implementing mitigation strategies, such as diversifying our supplier base, increasing inventory levels where feasible, and exploring

alternative logistics solutions.

However, there can be no assurance that these measures will fully offset the adverse effects of inflation

and supply chain disruptions on our business.

See “ Item 1.

— Recent Developments .”

Key Factors that Affect Operating Results

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New Customers

Our growth will depend on our ability to achieve sales targets, including

our ability to attract new customers, which in turn depends in part on our ability to execute on our retail strategy and produce effective

marketing initiatives to expand our brand perception with prospective customers.

As of June 27, 2024, we have 40 stores, including 39

stores in the U.S and one store in Canada.

We also operate one online store, focusing on selling E-motorcycles, E-bikes, and E-scooters

and sell our product.

It is critical for us to successfully manage production ramp-up and quality control to deliver to customers in adequate

volume and quality.

Our growth will depend on our ability to achieve

sales targets, including our ability to attract new customers, which in turn depends in part on our ability to execute our retail strategy

and produce effective marketing initiatives to expand our brand perception with prospective customers.

As of July 15, 2025, we have 20

stores, including 19 retail stores in the U.S and one retail store in Canada.

We offer rental services from selected locations.

We also operate one online store, focusing on selling E-motorcycles, E-bikes, and E-scooters and selling our product in the United States.

It is critical for us to successfully manage production ramp-up and quality control to deliver to customers in adequate volume and quality.

With respect to branding and marketing, we plan

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as our retail stores and distributors.

We believe that effective marketing can boost our brand awareness and contribute to increased sales.

We believe that effective marketing can boost our brand awareness and contribute to increased

In addition, we intend to provide superior customer experience through our trained technicians who will provide after-sale maintenance

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For the year ended March 31, 2025, our net revenues

increased by 47.9% to $32.2 million, compared to $21.8 million for the same period in 2023, which was primarily driven by increased product

sales volume and higher average sales price.

In particular, the number of EVs sold increased by 7,389, or 65.6%, from 11,263 in the year

ended March 31, 2023 to 18,652 in the year ended March 31, 2024.

The average sales price per EV increased by $19, or 2.0%, from $941 in

the year ended March 31, 2023 to $960 in the year ended March 31, 2024.

In the future, our ability to increase our product

sales price and volume will depend on our ability to innovate in design and technology and offer products that meet the customers’

We currently have a streamlined product portfolio consisting of three categories, with multiple models and specifications for

each category.

Moreover, our ability to increase the sales price and volume will depend on our ability to continually enhance our brand

to attract customers, as well as our ability to successfully operate our retail stores and expand our sales network both domestically

and globally.

However, our product sales price is influenced by various factors such as market demand and competitors’ pricing,

and although we continue working on product improvements and retail expansion, there can be no guarantee of sustained sales price increase

or improved sales volume.

If our prices remain stable, increasing sales volume would become important for continued revenue growth, and

failure to do so would significantly impact our ability to grow revenue or improve our financial results.

decreased by 21.0% to $25.4 million, compared to $32.2 million for the same period in 2024, which was primarily driven by a decrease

in total units sold, which dropped by 10,846 units, from 69,611 units for the year ended March 31, 2024, to 58,765 units for the year

ended March 31, 2025.

The decrease in volume is mainly due to recent lithium-battery accidents involving E-Bikes and E-Scooters.

an increasing number of lithium-battery explosion incidents in New York, customers are less inclined to purchase E-Bikes.

Consequently,

sales have declined as customers opt for oil-powered vehicles over electric vehicles.

The decrease in volume also attributed in part

to the closures and disposition of our retail stores during the year ended March 31, 2025.

The average sales price per EV increased by

$29, from $960 in the year ended March 31, 2024 to $989 in the year ended March 31, 2025.

These improvements were driven by product upgrades

and enhanced sales channels in the market.

We currently have a streamlined product portfolio

consisting of three categories, with multiple models and specifications for each category.

Our ability to increase the sales price and

volume will depend on our ability to continually enhance our brand to attract customers, as well as our ability to successfully operate

our retail stores and expand our sales network both domestically and globally.

However, our product sales price is influenced by various

factors such as market demand and competitors’ pricing, and although we continue working on product improvements and retail expansion,

there can be no guarantee of sustained sales price increase or improved sales volume.

If our prices remain stable, increasing sales volume

would become important for continued revenue growth, and failure to do so would significantly impact our ability to grow revenue or improve

our financial results.

Our payroll expenses were $4.7 million for

the fiscal year 2024, compared to $1.9 million for the fiscal year 2023.

As our business expands, we expect increased payroll expenses

due to hiring more employees for our retail stores and corporate office.

Each of our retail stores has a minimum of two employees, and

additional office employees will be hired to support retail stores in customer service and marketing.

the year ended March 31, 2025, compared to $2.9 million for the year ended March 31, 2024.

As four stores were closed and four others

were sold during the year ended March 31, 2025, and an additional six stores were sold subsequently, we expect a decrease in payroll

expenses in the next fiscal year due to reduced demand for store sales staff.

Each of our retail stores has a minimum of two employees,

and additional office employees will be hired to support retail stores in customer service and marketing.

In addition, to maintain excellent

customer service in our retail stores, each store will have at least one trained repair professional, further contributing to the increase

in payroll expenses.

An inability to effectively manage payroll expenses while expanding the business would significantly impact our ability

to grow revenue or improve our financial results.

customer service in our retail stores, each store will have at least one trained repair professional.

Effective management of payroll

expenses remains crucial to our ability to grow revenue and enhance our financial results, especially as we navigate a reduced workforce.

Vendor and Supply Management

During the year ended March 31, 2024, we

worked with three principal vendors, Depcl Corp.(previously known as Fly Wing E-Bike Inc.), Xiamen Innolabs Technology Co., Ltd.

Ineo International Trading Co., Ltd., each of which respectively supplied approximately 36.4%, 21.5% and 13.0% of the accessories and

components used in all our products for the year ended March 31, 2024.

During the year ended March 31, 2025, we worked

with two principal vendors, Xiamen Innolabs Technology Co., Ltd and Depcl Corp., each of which respectively supplied approximately 41.9%

and 32.3% of the accessories and components used in all our products for the year ended March 31, 2025.

We have implemented a centralized vendor management

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in costs related to our major vendors can significantly affect our financial condition and operating results.

Market Trends and Competition

Market Trends, Competition and Tariff

We operate in a rapidly growing EV market with

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Moreover, competitors may impact customer acquisition and retention, satisfaction and loyalty.

While we believe we

maintain competitive advantages in several areas, including brand, product design and quality, smart features, omnichannel retail model,

customer satisfaction and loyalty, we must continuously innovate, invest in research and development and marketing to maintain our competitive

edge and unique selling points.

While we believe

we maintain competitive advantages in several areas, including brand, product design and quality, smart features, omnichannel retail

model, customer satisfaction and loyalty, we must continuously innovate, invest in research and development and marketing to maintain

our competitive edge and unique selling points.

Recently, the U.S.

government issued executive orders imposing tariffs on products from

key international suppliers, citing national security and public health concerns.

These tariffs are expected to impact a wide range of

imported goods, including components used in e-bike and e-scooter manufacturing.

While some agreements have temporarily delayed their

implementation, ongoing trade tensions could lead to supply chain disruptions, increased costs, and pricing pressures within the industry.

Tariffs on e-bikes and e-scooters or their components would likely increase prices for consumers, and create challenges for U.S.

manufacturers

and retailers.

While there could be long-term opportunities for domestic production, the immediate impact would likely be negative for

the growing e-bike and e-scooter market.

Regulatory Landscape

We operate in an industry that is subject to extensive

environmental, safety and other laws and regulations, which include products safety and testing, as well as battery safety and disposal.

These requirements create additional costs and possible production delay in connection with the testing and manufacturing of our products.

We also benefit from environmental regulations in our target markets which include economic incentives to purchasers of EVs and tax credits

for EV manufacturers.

As such, while we expect environmental regulations to provide a tailwind to our growth, it is possible for other

regulations to result in margin pressures.

We operate in an

industry that is subject to extensive environmental, safety and other laws and regulations, which include products safety and

testing, as well as battery safety and disposal.

These requirements create additional costs and possible production delay in

connection with the testing and manufacturing of our products.

We also benefit from environmental regulations in our target markets

which include economic incentives to purchasers of EVs and tax credits for EV manufacturers.

The Governor of New York State signed a

legislative package in July 2024 aimed at raising awareness about the safe use of e-bikes and lithium-ion battery products,

prohibiting the sale of non-compliant batteries, requiring safety protocols and training for first responders, mandating operating

manuals for e-bike retailers, and improving accident reporting and registration processes for e-bikes and mopeds.

Additionally, in

January 2025, the New York City Department of Transportation launched a $2 million trade-in program, allowing eligible food delivery

workers to replace their unsafe e-bikes, e-mobility devices, and batteries with certified, high-quality versions.

Our Fly-11 PRO was

chosen for the official model of DOT and participates in this program.

From January 2025 to June 2025, we participated in this

program and completed the delivery of Fly-11 Pro models to our retail partner participating in the program.

While we expect relevant

regulations to provide a tailwind to our growth, it is possible for other regulations to result in margin pressures.

How to Assess Our Performance

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Return allowances, which reduce net revenues, are estimated based on historical experience.

E-bikes, E-motorcycles and

E-scooters sales.

We generate a substantial majority of our revenues from sales of E-bikes, E-motorcycles and

E-scooters directly to customers through our online store and retail stores, and to our distributors.

Accessories and spare parts

We also sell accessories and spare parts for our EVs, such as rear storage boxes and front baskets.

In addition, we offer Fly E-Bike branded accessories and general merchandise, such as decorative car plates, key chains and apparel.

E-bikes, E-motorcycles and E-scooters sales.

We generate a

substantial majority of our revenues from sales of E-bikes, E-motorcycles and E-scooters directly to customers through our online store

and retail stores, and to our distributors.

Accessories and spare parts sales.

also sell accessories and spare parts for our EVs, such as rear storage boxes and front baskets.

In addition, we offer Fly E-Bike branded

accessories and general merchandise, such as decorative car plates, key chains and apparel.

Service revenues.

also provide repair services at our retail stores for a fee.

We also provide

repair services at our retail stores for a fee.

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.

Cost of Sales

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Selling, General and Administrative Expenses

Selling, general and administrative expenses primarily

consist of retail operational expenses, salaries and benefits costs, marketing, advertising, and corporate overhead.

Selling, general and administrative expenses

primarily consist of retail operational expenses, salaries and benefits costs, marketing, advertising, and corporate overhead.

Marketing costs primarily consist of advertising

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For example, non-GAAP

measures may exclude the impact of certain items such as acquisitions, divestitures, gains, losses and impairments, or items outside of

management’s control.

Management believes that the following non-GAAP financial measure provides investors and analysts useful insight

into our financial position and operating performance.

Any non-GAAP measure provided should be viewed in addition to, and not as an alternative

to, the most directly comparable measure determined in accordance with U.S.

Further, the calculation of these non-GAAP

financial measures may differ from the calculation of similarly titled financial measures presented by other companies and therefore may

not be comparable among companies.

We use EBITDA (earnings before interest, taxes,

depreciation, and amortization) to evaluate our operating performance.

We believe EBITDA provides additional insight into our underlying,

ongoing operating performance and facilitates year-to-year comparisons by excluding the earnings impact of interest, tax, depreciation

and amortization and that presenting EBITDA is more representative of our operational performance and may be more useful for investors.

measures may exclude the impact of certain items such as acquisitions, divestitures, gains, losses and impairments, or items outside

of management’s control.

Management believes that the following non-GAAP financial measure provides investors and analysts useful

insight into our financial position and operating performance.

Any non-GAAP measure provided should be viewed in addition to, and not

as an alternative to, the most directly comparable measure determined in accordance with U.S.

Further, the calculation

of these non-GAAP financial measures may differ from the calculation of similarly titled financial measures presented by other companies

and therefore may not be comparable among companies.

We use EBITDA (earnings before interest, taxes, depreciation, and

amortization) to evaluate our operating performance.

We believe EBITDA provides additional insight into our underlying, ongoing operating

performance and facilitates year-to-year comparisons by excluding the earnings impact of interest, tax, depreciation and amortization

and that presenting EBITDA is more representative of our operational performance and may be more useful for investors.

We reconcile our non-GAAP financial measure to

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financial measures as supplements to our U.S.

GAAP results in order to provide a more complete understanding of the factors and trends

affecting our business.

GAAP results in order to provide a more complete understanding of the factors and

trends affecting our business.

EBITDA is a measure of operating performance that is not defined by U.S.

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March 31, 2025 and 2024

The following table sets forth

the components of our results of operations for the years ended March 31, 2024 and 2023:

The following table sets forth the components

of our results of operations for the years ended March 31, 2025 and 2024:

For the Year Ended March 31,

Revenues, Net

$ (6,778,503 )

Cost of Revenues

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Total Operating Expenses

Income from Operations

Other Expenses, Net

(Loss) Income from Operations

Other Income (Expenses), Net

Interest Expenses, Net

Provision for Income Taxes

Income Taxes Expense

Net (Loss) Income

$ (5,291,159 )

$ (7,186,381 )

For the Year Ended March 31,

$ (4,663,903 )

Sales-Wholesale

$ (2,286,467 )

Sales-Rental services

Total Net Revenues

Our net revenues were $32.2 million for the year ended March 31,

2024, an increase of $10.4 million, or 47.9%, from $21.8 million for the year ended March 31, 2023.

The increase in our

net revenues was driven primarily by the increase of the average sale price of our EVs by $19 or 2.0%, from $941 in the year ended March

31, 2023 to $960 in the year ended March 31, 2024, and our sales volume of EVs increased by 7,389 units, from 11,263 units in

the year ended March 31, 2023 to 18,652 units in the year ended March 31, 2024.

Our retail sales revenue increased by $7.5 million,

$ (6,778,503 )

Our net revenues were $25.4 million for

the year ended March 31, 2025, a decrease of 21.0%, from $32.2 million for the year ended March 31, 2024.

The decrease in our net

revenues was primarily driven by a decrease in sales volume by 10,846 units, from 69,611 units for the year ended March 31, 2024, to

58,765 units for the year ended March 31, 2025.

Our retail sales revenue decreased by $4.7 million,

or 17.7%, from $26.4 million for the year ended March 31, 2024 to $21.7 million for the year ended March 31, 2025.

Our wholesale revenue increased by $2.9 million, or 98.5%, from $2.9 million for the year ended March 31, 2023 to $5.8 million

for the year ended March 31, 2024.

Our wholesale

revenue decreased by $2.3 million, or 39.3%, from $5.8 million for the year ended March 31, 2024 to $3.5 million for the year

ended March 31, 2025.

The decrease in retail sales revenue is mainly due to recent lithium-battery accidents involving E-Bikes and E-Scooters.

With an increasing number of lithium-battery explosion incidents in New York, customers are less inclined to purchase E-Bikes.

Consequently,

sales have declined as customers opt for oil-powered vehicles over electric vehicles.

The decrease in retail sales also attributed in

part to the closures and disposition of our retail stores during the year ended March 31, 2025.

The decrease in wholesales revenue was

driven primarily by the closure of stores by the top two customers who closed their stores in December 2023 due to lack of profitability.

Cost of Revenues

Cost of revenues increased by $5.6 million,

or 41.6%, from $13.5 million for the year ended March 31, 2023, to $19.1 million for the year ended March 31, 2024.

The increase in cost of revenues was primarily attributable to the increase in sales volume mentioned above and increase in logistics

costs as the Company sourced and imported more EV parts and accessories outside the United States during the year ended March 31,

Cost of revenues decreased by 21.6%, from $19.1 million for the

year ended March 31, 2024, to $15.0 million for the year ended March 31, 2025.

The decrease in cost of revenues was primarily attributable

to more favorable pricing obtained from our suppliers, particularly for batteries, as well as a reduction in sales volume, as discussed

These factors collectively contributed to the overall decrease in cost of revenues.

The unit cost for battery decreased by

11%, from $112 in the year ended March 31, 2024, to $99 in the year ended March 31, 2025.

The following table shows our gross profit and gross margin for the

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For the Year Ended March 31,

Gross profit was $13.1 million and $8.3 million for the year

ended March 31, 2024 and 2023, respectively.

Gross margin was 40.7% and 38.1% for the years ended March 31, 2024 and 2023,

Gross profit for the years ended March 31, 2025

and 2024 was $10.5 million and $13.1 million, respectively.

Gross margin was 41.1% and 40.7% for the year ended March 31, 2025 and

2024, respectively.

The increase in gross profit and gross margin was a result of higher average per unit selling price, increasing from $941

for the year ended March 31, 2023 to $960 for the year ended March 31, 2024.

These improvements were driven by product upgrades, enhanced

sales channels, and an improved brand image in the market.

The gross margin remained at the same level for the two periods.

Total Operating Expenses

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Percentage of Revenue

Total operating expenses were $9.8 million

for the year ended March 31, 2024, an increase of $3.8 million, or 64.7%, compared to $6.0 million for the year ended March 31,

The increase in operating expenses was attributable to the increase in our payroll expenses, rent expenses, meals and entertainment

expenses, professional fees, and development expenses as we expanded our business.

Total operating expenses were $15.0 million for

the year ended March 31, 2025, an increase of $5.2 million, or 52.5%, compared to $9.8 million for the year ended March 31,

The increase in operating expenses was attributable to the increase in our payroll expenses, rent, professional fees, product and

software development expenses and settlement payments, as more fully discussed below.

Selling Expenses

Selling expenses primarily consist of payroll

expenses, rent and utilities expenses of retail stores and other sales and marketing expenses.

Total payroll expenses were $1.6 million

for the year ended March 31, 2024, compared to $1.4 million for the year ended March 31, 2023.

Rent expenses were $2.4 million

expenses, rent, and advertising expenses of retail stores.

Total payroll expenses were $3.3 million for the year ended March 31, 2025,

compared to $1.6 million for the year ended March 31, 2024.

Rent was $2.9 million for the year ended March 31, 2025, compared to

$2.4 million for the year ended March 31, 2024.

Advertising expenses were $0.3 million for the year ended March 31, 2025, compared

to $64,423 for the year ended March 31, 2024.

The increase in payroll expenses was primarily due to the increased number of new employees

hired for business operations in the first three quarters of the year ended March 31, 2025, despite a reduction in headcounts in the

last quarter resulting from closures and dispositions of retail stores.

The increase in rental expense was primarily due to the expansion

of retail stores to support the Company’s business growth and operational needs.

The rise in advertising expense was mainly driven

by intensified marketing campaigns and promotional activities aimed at enhancing brand visibility.

Total commission expenses were $9,980

for the year ended March 31, 2025, compared to $1.1 million for the year ended March 31, 2024.

Because delivery drivers

are our main retail customers, customer referral is the most effective way to market promotion.

August through November is the low-season

comparing to other months, as such, the Company focuses on client referrals during this period to boost sales.

As a result, our marketing

referral expense increased to $1.1 million for the year ended March 31, 2024, compared to $15,756 for the year ended March 31,

Utilities expenses were $0.16 million for the year ended March 31, 2024, compared to $0.13 million for the year

ended March 31, 2023.

The increase in these expenses was primarily due to the increase in the number of new stores and new employees

hired for these new stores in the year ended March 31, 2024.

The decrease in the commission expenses

was primarily due to the Company’s discontinuation of marketing referral expenses for promotions as of January 1, 2024.

General and Administrative Expenses

Various general and administrative expenses increased

General and administrative expenses increased

during the year ended March 31, 2025 compared to the previous year.

Meals and entertainment expenses increased to $0.4 million

for the year ended March 31, 2024, compared to $0.3 million for the year ended March 31, 2023, primarily due to increased

meal expenses for employees who worked overtime.

Professional fees increased to $1.0 million for the year ended March 31, 2024,

compared to $0.7 million for the year ended March 31, 2023, primarily attributable to the increase in audit fee, consulting

fee, and legal expenses associated with our initial public offering.

Payroll expenses increased to $1.1 million for the year

ended March 31, 2024 from $0.5 million for the year ended March 31, 2023 primarily due to additional employees hired in operation

and accounting departments.

Rent expenses increased to $0.2 million for the year ended March 31, 2024, compared to $0.1 million

for the prior year as a result of office space expansion in the year ended March 31, 2024.

Other Expenses, Net

Other expenses were $30,352 for the year ended March 31, 2024

and $11,524 for the year ended March 31, 2023.

The increase in other expenses was primarily due to a settlement payment of $43,701

related to an incident at one of our retail stores, partially offset by the Company’s receipt of the

New York State Seed Funding for small business of $15,202 and a one-time promotion bonus of $4,655 from an online sales platform we use

during the year ended March 31, 2024.

Professional fees increased to $2.0 million for the year ended

March 31, 2025, compared to $1.0 million for the year ended March 31, 2024, primarily attributable to the increase in audit fee,

consulting fee, legal fee and IR expenses associated with our initial public offering and ongoing reporting obligations.

expenses increased to $1.5 million for the year ended March 31, 2025 from $1.1 million for the year ended March 31, 2024 primarily

due to additional employees hired in operation and accounting departments.

Insurance expenses increased to $1.1 million for the

year ended March 31, 2025, compared to $0.2 million for the same period of prior year as a result of increased general insurance

of the stores and the purchase of directors and officers liability insurance after initial public offering in the year ended March 31,

Software development fee increased to $0.5 million for the year ended March 31, 2025, compared to $0.3 million for the same period

in prior year due to the increasing development fee of Fly E-Bike app and the increasing maintenance fee of Go Fly App.

There were settlement

payments of $1.0 million for the year ended March 31, 2025, in connection with the UL Litigation.

Income Tax Provisions

Provisions for income taxes were $1.2 million

for the year ended March 31, 2024, an increase of $0.4 million from $0.8 million for the year ended March 31, 2023.

This increase was due to our increased taxable income for the year ended March 31, 2024.

Net income was $1.9 million for the year ended March 31,

2024, an increase of $0.5 million, or 37.5%, from $1.4 million for the year ended March 31, 2023, which was mainly attributable

to the reasons discussed above.

The following table sets forth the components of

our EBITDA for the years ended March 31, 2024 and 2023:

Income taxes provision was $0.3 million for the

year ended March 31, 2025, a change from $1.2 million income tax provision for the year ended March 31, 2024.

This change was due

to our pre-tax loss for the year ended March 31, 2025.

Net Income (Loss)

Net loss was $5.3 million for the year ended

March 31, 2025, a change of $7.2 million, or 379.2%, from net income of $1.9 million for the year ended March 31, 2024, which was

mainly attributable to the reasons discussed above.

The following table sets forth the components

of our EBITDA for the years ended March 31, 2025 and 2024:

For the Year Ended March 31,

Net Income from Operations

(Loss) Income from Operations

$ (5,291,159 )

$ (7,186,381 )

Income Tax provision

Interest Expenses

$ (3,853,007 )

$ (7,357,568 )

Percentage of Revenue

Before interest expenses, income tax, depreciation, and amortization,

for the year ended March 31, 2024, our net income was $3.5 million, an increase of $1.1 million, compared to $2.4 million

for the year ended March 31, 2023, which was mainly attributable to the increase in sales described above.

The ratio of EBITDA to

revenue was 10.9% and 11.2% for the year ended March 31, 2024 and 2023, respectively.

Before interest expenses, income tax, depreciation,

and amortization, for the year ended March 31, 2025, our net loss was $3.9 million, a change of $7.4 million, compared to net income

of $3.5 million for the year ended March 31, 2024, which was mainly attributable to the decrease in revenue, increase in selling

expenses and general and administrative expenses described above.

The ratio of EBITDA to revenue was negative 15.2% and 10.9% for the

year ended March 31, 2025 and 2024, respectively.

Liquidity and Capital Resources

As of March 31, 2025, we had cash of $0.8 million.

We had working

capital of $0.34 million and $0.59 million as of March 31, 2024 and 2023, respectively.

We had net income of $1.9 million

and $1.4 million for the year ended March 31, 2024 and 2023, respectively.

We had funded our working capital and other capital

requirements in the past primarily by equity contributions from our stockholders, cash flow from operations, and bank loans.

to repay our current obligation will depend on the future realization of our current assets.

Management has considered the historical

experience, the economy, trends in the retail industry, the expected collectability of the accounts receivable and the realization of

the inventories as of March 31, 2024.

Our ability to continue to fund working capital and other capital requirements may be affected

by general economic, competitive and other factors, many of which are outside of our control.

On June 7, 2024, we sold 2,250,000 shares of common stock, at a price

of $4.00 per share in our IPO.

The gross proceeds of the offering were $9.0 million, prior to deducting the underwriting discounts, commissions

and offering expenses payable by us.

Net proceeds received by us from IPO were approximately $7.9 million.

On June 25, 2024, we sold an

additional 337,500 shares of common stock to the underwriters of our IPO for gross proceeds of $1.4 million upon full exercise of the

underwriters’ over-allotment option and received net proceeds of $1.2 million.

We believe our cash on hand will be sufficient to

meet our current and anticipated needs for general corporate purposes for at least the next 12 months.

We may, however, need additional

cash resources in the future if we experience changes in business conditions or other developments.

We may also need additional cash resources

in the future if we find and wish to pursue opportunities for investment, acquisition, capital expenditure or similar actions.

If we determine

that our cash requirements exceed the amount of cash we have on hand, we may seek to issue equity or equity linked securities or obtain

debt financing.

We had working capital of $1.3 million and $0.3 million as of March 31, 2025 and 2024, respectively.

We had net loss of $5.3 million

and net income of $1.9 million for the year ended March 31, 2025 and 2024, respectively.

During the year ended March 31, 2025, net cash

used in operating activities of the Company was approximately $10.1 million.

As of March 31, 2025, the Company had a current portion

of contractual obligation of approximately $8.9 million.

We have funded our working capital and other

capital requirements in the past primarily by equity contributions from our stockholders and net proceeds received from IPO and equity

financing, cash flow from operations, and bank loans.

Our ability to repay our current obligation will depend on the future realization

of our current assets.

Management has considered the historical experience, the economy, trends in the retail industry, the expected

collectability of the accounts receivable and the realization of the inventories as of March 31, 2025.

Our ability to continue to fund

working capital and other capital requirements may be affected by general economic, competitive and other factors, many of which are

outside of our control.

On June 7, 2024, we sold

450,000 shares of common stock, at a price of $20.00 per share in our IPO.

The gross proceeds of the IPO were $9.0 million, prior to deducting

the underwriting discounts, commissions and offering expenses payable by us.

Net proceeds received by us from IPO were approximately $7.9

On June 25, 2024, we sold an additional 67,500 shares of common stock to the underwriters of our IPO for gross proceeds of $1.4

million upon full exercise of the underwriters’ over-allotment option and received net proceeds of $1.2 million.

On June 4, 2025,

Company issued 5,719,111 shares of common stock, at a price of $1.2140 per share in its secondary public offering for gross proceeds of

the offering were $6.9 million, prior to deducting the placement agent’s fees and offering expenses payable by the Company.

On July 3, 2025, the Company

implemented a 1-for-5 reverse stock split of its issued and outstanding shares of common stock.

The reverse stock split reduced the number

of shares of common stock issued and outstanding from 24,587,500 to 4,917,500 as of March 31, 2025.

The par value per share

remained unchanged at $0.01.

As of March 31, 2025, the

Company had working capital of approximately $1.3 million and cash of approximately $0.8 million.

The main cash outflow for

the year ended March 31, 2025 was from net loss of $5.3 million, a decrease in tax payable of $1.5 million, an increase in inventories

of $2.5 million, a decrease in operating lease liabilities of $4.9 million, purchase of software from a related party of $0.9 million,

purchase of equipment of $1.6 million and an increase in prepayments and other receivables of $2.5 million.

As of March 31,

2025, the Company had a current portion of contractual obligation of approximately $8.9 million.

These factors raise substantial doubt

as to the Company’s ability to continue as a going concern.

For the next 12 months from the issuance date of this report, we plan

to alleviate the going concern risk through (i) equity financing to support the Company’s working capital;

(ii) other available

sources of financing (including debt) from banks and other financial institutions;

and (iii) financial support from the Company’s

related parties.

The issuance and sale of additional equity would result in further dilution to our stockholders.

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you that financing will be available in amounts or on terms acceptable to us, if at all.

Our accounts receivable represent primarily accounts receivable from

the distributors that purchased our EVs and other products.

As of March 31, 2024 and 2023, our accounts receivable, net of allowance

for credit losses, was $0.5 million and $0.5 million, respectively.

Our accounts receivable turnover period increased slightly

from 68 days in the year ended March 31, 2023 to 69 days in the year ended March 31, 2024.

Our accounts payable represent primarily accounts payable to suppliers

from whom we purchased accessories and components for our products.

As of March 31, 2024 and 2023, our accounts payable were $1.2 million

and $1.0 million, respectively.

Our accounts payable turnover period decreased to 25 days for the year ended March 31, 2024

from 49 days for the year ended March 31, 2023, which was primarily the result of the Company’s switch to a new vendor and the settlement

of one vendor’s balance during this year.

In the event that financing sources are not available,

or that we are unsuccessful in increasing our gross profit margin and reducing operating losses, we may be unable to implement our current

plans for expansion, repay debt obligations or respond to competitive pressures, any of which would have a material adverse effect on

our business, financial condition and results of operations and may materially adversely affect our ability to continue as a going concern.

The consolidated financial statements do not include any adjustments related to the recoverability and classification of recorded assets

or the amounts and classification of liabilities or any other adjustments that might be necessary should we be unable to continue as a

going concern.

Our accounts receivable represent primarily accounts

receivable from distributors that purchased our EVs and other products.

As of March 31, 2025 and 2024, our accounts receivable, net of

allowance for credit losses, was $0.5 million and $0.5 million, respectively.

Our accounts receivable turnover period increased

from 69 days in the year ended March 31, 2024 to 71 days in the year ended March 31, 2025, which was mainly attributable to the longer

payment terms to dealers.

Our accounts payable represent primarily accounts

payable to suppliers from whom we purchased accessories and components for our products.

As of March 31, 2025 and 2024, our accounts

payable were $1.3 million and $1.2 million, respectively.

Our accounts payable turnover period increased to 33 days for the year

ended March 31, 2025 from 25 days for the year ended March 31, 2024, which was primarily the result of longer payment cycles.

Our prepayments and other receivables primarily

represent prepayments to vendors and other service providers.

These prepayments and receivables increased by $3.1 million, from $0.6

million as of March 31, 2024, to $3.7 million as of March 31, 2025.

This significant increase is mainly due to the launch of Company’s

E-bike rental services, which required additional inventory.

As a result, during the year ended March 31, 2025, the Company made substantial

prepayments to vendors to secure inventory for the new services.

Our inventories primarily include our EVs, their

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respectively.

The increase in inventories was primarily due to our anticipation of future sales growth.

The increase in inventories was primarily due to our preparation for the new rental business.

Our inventory turnover days

decreased to 89 days in the year ended March 31, 2024, from 114 days in the year ended March 31, 2023, which was primarily due to our

enhanced supply chain management, allowing us to convert our inventory into sales more efficiently.

For the year ended March 31, 2024 and 2023, the interest expenses

on our outstanding loans amounted to $152,050 and $100,387, respectively.

See Note 8 to the Consolidated Financial Statements

included within this annual report for further information on details of our outstanding loans.

The following table summarizes our cash flow data for the years ended

March 31, 2024 and 2023:

increased to 143 days in the year ended March 31, 2025, from 89 days in the year ended March 31, 2024, which was primarily due to

strategic inventory buildup, allowing us to start new services.

As of March 31, 2025 and

2024, the total outstanding amount of loan principal was $7.4 million and $1.6 million, respectively.

For the year ended March 31, 2025

and 2024, the interest expenses on our outstanding loans amounted to $405,615 and $152,050, respectively.

See Note 8 to the Consolidated

Financial Statements included within this annual report for further information on details of our outstanding loans.

The following table summarizes our cash flow

data for the years ended March 31, 2025 and 2024:

For the Year Ended

Net Cash Provided by Operating Activities

Net Cash (Used in) Provided by Operating Activities

$ (10,059,466 )

Net Cash Used in Investing Activities

Net Cash Used in Financing Activities

Net Change in Cash

Net Cash Provided by (Used in) Financing Activities

Net changes in cash including cash classified within current assets held for sale

Operating Activities

Net cash used in operating

activities for the year ended March 31, 2025 was $10.1 million, which was due to net loss of $5.3 million, a decrease in tax

payable of $1.5 million, an increase in inventories of $2.7 million, a decrease in operating lease liabilities of $4.8 million, and

an increase in prepayments and other receivables of $2.7 million, partially offset by amortization of right-of-use assets of $5.1

million, an increase in accrued expenses and other payables of $0.5 million, and a decrease in accounts receivables-related parties of

$0.2 million.

Net cash provided by operating activities for

the year ended March 31, 2024 was $4.3 million, which was mainly comprised of net income of $1.9 million, amortization

of right-of-use assets of $2.3 million and inventories reserve of $0.5 million, an increase in account payable of $2.5 million,

an increase in tax payable of $0.6 million, and an increase of accrued expenses and other payables of $0.3 million, offset by an

increase in inventories of $2.0 million, and a decrease in operating lease liabilities of $1.9 million.

Net cash provided by operating activities for the year ended March 31,

2023 was $1.8 million, which was mainly comprised of net income of $1.4 million, deferred income tax expenses of $0.4 million,

amortization of right-of-use assets of $1.9 million, inventories reserve of $0.2 million, and a decrease in inventories of

$0.6 million, offset by an increase in account receivable of $0.5 million, an increase in prepayments of $0.6 million and a

decrease in operating lease liabilities of $1.7 million.

the year ended March 31, 2024 was $4.3 million, which was mainly comprised of net income of $1.9 million, amortization of right-of-use

assets of $2.3 million and inventories reserve of $0.5 million, an increase in account payable of $2.5 million, an increase in tax payable

of $0.6 million, and an increase of accrued expenses and other payables of $0.3 million, offset by an increase in inventories of $2.0

million, and a decrease in operating lease liabilities of $1.9 million.

Investing Activities

Net cash used in investing activities was $3.2 million for the

year ended March 31, 2024, which was due to purchase of software from a related party of $1.3 million, the purchase of equipment

of $1.3 million, advance to related parties of $0.3 million, a prepayment for purchase of property of $0.5 million and

the purchase of property rights of $0.03 million, offset by repayment from related parties of $0.1 million.

Net cash used in investing activities was $0.4

million for the year ended March 31, 2023, which was due to the purchase of equipment of $0.4 million.

Net cash used in investing

activities was $2.9 million for the year ended March 31, 2025, which was due to purchase of properties and equipment of $1.6

million, purchase of GO FLY App and computer hardware and software from a related party of $1.4 million, and the advance to a related

party of $0.5 million, and partially offset by the repayment from a related party of $0.7 million.

Net cash used in investing activities was $3.2 million for the year

ended March 31, 2024, which was due to purchase of software from a related party of $1.3 million, the purchase of equipment of $1.3 million,

advance to related parties of $0.3 million, a prepayment for purchase of property of $0.5 million and the purchase of property rights

of $0.03 million, offset by repayment from related parties of $0.1 million.

Financing Activities

Net cash used in financing activities was $0.05 million

for the year ended March 31, 2024, which consisted of deferred IPO cost of $0.2 million, repayments of loan payables of $0.6

million, repayments to related parties on other payables of $0.3 million and payments of related party loan of $0.2 million, offset by

borrowings from loan payable of $1.1 million and capital contributions from stockholders of $0.1 million.

Net cash used in financing activities was $1.4 million for the

year ended March 31, 2023, which consisted of repayments to related parties and loan payable of $2.8 million, deferred IPO cost

of $0.1 million, offset by borrowings from loan payable of $1.5 million.

Net cash provided by financing activities was

$12.5 million for the year ended March 31, 2025, which consisted of net proceeds from the IPO of $9.2 million, and loan proceeds

of $7.4 million, partially offset by repayments of loans of $3.7 million and payment of IPO costs of $0.3 million.

Net cash used in financing activities was $0.05 million for the year

ended March 31, 2024, which consisted of deferred IPO cost of $0.2 million, repayments of loan payables of $0.6 million, repayments to

former related parties on other payables of $0.3 million and payments of former related party loan of $0.2 million, offset by borrowings

from loan payable of $1.1 million and capital contributions from stockholders of $0.1 million.

Commitments and Contractual Obligations

The following table presents our material

contractual obligations as of March 31, 2024:

The following table presents

our material contractual obligations as of March 31, 2025:

Contractual Obligations

Operating Lease Obligations and Others

Purchase Commitment of ERP System

Purchase Commitment of Office

UL Litigation

Total Contractual Obligations

Off-Balance Sheet Arrangements

We have not entered into any transactions, agreements

or other contractual arrangements that would result in off-balance sheet liabilities.

We have not entered into

any transactions, agreements or other contractual arrangements that would result in off-balance sheet liabilities.

Quantitative and Qualitative Disclosures about

Foreign Exchange Risk

A substantial majority of all of our revenues

and expenses are denominated in U.S.

We do not believe that we currently have any significant direct foreign exchange risk

and have not used any derivative financial instruments to hedge exposure to such risk.

In addition, as our business and operation expand

in European and other overseas markets in the future, we may be exposed to increased foreign exchange risks for other currencies.

A substantial majority of

all of our revenues and expenses are denominated in U.S.

We do not believe that we currently have any significant direct

foreign exchange risk and have not used any derivative financial instruments to hedge exposure to such risk.

In addition, as our business

and operation expand in European and other overseas markets in the future, we may be exposed to increased foreign exchange risks for

other currencies.

Interest Rate Risk

Our exposure to interest rate risk primarily relates

to the interest expenses on our short-term and long-term bank borrowings.

Our short-term and long-term bank borrowing bears interests

at fixed rates.

We have not been exposed to, nor do we anticipate being exposed to, material risks due to changes in market interest rates.

Our exposure to interest

rate risk primarily relates to the interest expenses on our short-term and long-term bank borrowings.

Our short-term and long-term bank

borrowings bear interests at fixed rates.

We have not been exposed to, nor do we anticipate being exposed to, material risks due to changes

in market interest rates.

However, our future interest expenses may exceed expectations due to changes in market interest rates.

If we were to renew these short-term

and long-term bank borrowings, we might be subject to interest rate risk.

were to renew these short-term and long-term bank borrowings, we might be subject to interest rate risk.

Critical Accounting Estimates

An accounting estimate is considered critical if it requires to be

made based on assumptions about matters that are highly uncertain at the time such estimate is made, and if different accounting estimates

that reasonably could have been used, or changes in the accounting estimate that are reasonably likely to occur periodically, could materially

impact the consolidated financial statements.

We prepare our consolidated financial statements in conformity with

An accounting estimate is

considered critical if it requires to be made based on assumptions about matters that are highly uncertain at the time such estimate

is made, and if different accounting estimates that reasonably could have been used, or changes in the accounting estimate that are reasonably

likely to occur periodically, could materially impact the consolidated financial statements.

We prepare our consolidated

financial statements in conformity with U.S.

GAAP, which requires us to make estimates and assumptions.

We continually evaluate these estimates and assumptions based on the most

recently available information, our own historical experiences and various other assumptions that we believe to be reasonable under the

circumstances.

Since the use of estimates is an integral component of the financial reporting process, actual results could differ from

our expectations as a result of changes in our estimates.

Some of our accounting policies require a higher degree of judgment than others

in their application and require us to make significant accounting estimates.

When reading our consolidated financial statements,

you should consider our selection of critical accounting policies, the judgment and other uncertainties affecting the application of

such policies and the sensitivity of reported results to changes in conditions and assumptions.

Our critical accounting policies and

practices include the following:

(i) revenue recognition;

and (ii) income taxes.

See “ Note 2 — Summary of

Significant Accounting Policies ” to our consolidated financial statements for the disclosure of these accounting policies.

We believe the following accounting estimates involve the most significant judgments used in the preparation of our financial statements.

We continually evaluate these

estimates and assumptions based on the most recently available information, our own historical experiences and various other assumptions

that we believe to be reasonable under the circumstances.

Since the use of estimates is an integral component of the financial reporting

process, actual results could differ from our expectations as a result of changes in our estimates.

Some of our accounting policies require

a higher degree of judgment than others in their application and require us to make significant accounting estimates.

Estimated Allowance for Inventories

Our estimated allowance for the inventory obsolescence

reserves is based on our assessment of realization of inventory.

Adjustments are recorded to write down the cost of inventories to the

estimated net realizable value due to slow-moving merchandise and obsolescence, which is dependent upon factors such as inventory aging,

historical and forecasted consumer demand, and market conditions that impact pricing.

As of March 31, 2024 and 2023, we recorded

inventory allowance balance of $514,021 and $431,363, respectively.

Product Warranties

We provide a three-month warranty on our vehicles

and the battery pack.

We accrue warranty reserves at the time a vehicle is delivered to the customer.

Warranty reserves include our best

estimate of the projected cost to repair or to replace any items under warranty, based on actual warranty experience as it becomes available

and other known factors that may impact our evaluation of historical data.

We review our reserves regularly to ensure that our accruals

are adequate in meeting expected future warranty obligations, and we will adjust our estimates as needed.

Factors that could have an impact

on the warranty reserve include the following:

changes in manufacturing quality, shifts in product mix, changes in warranty coverage periods,

product recalls and changes in sales volume.

Warranty expense is recorded as a component of cost of revenues in the statement of operations.

The portion of the warranty provision which is expected to be incurred within three months from the balance sheet date will be classified

as current and classified as short-term liabilities.

The Company accrued $27,714 and $22,056 of warranty reserves under accrued expenses

and other payables as of March 31, 2024 and 2023, respectively.

We provide current income tax expenses in accordance

with the laws of the relevant taxing authorities.

As part of the process of preparing financial statements, we are required to estimate

our income taxes in each of the tax jurisdictions in which we operate, including New York State, New York City, New Jersey,

Texas, Florida, California, Washington, D.C.

We account for income taxes using the asset and

liability approach.

Under this method, deferred income taxes are recognized for tax consequences in future years based on differences

between the tax bases of assets and liabilities and their reported amounts in the financial statements at each year-end and tax loss carry

Deferred tax assets and liabilities are measured using enacted tax rates applicable for the differences that are expected to

A valuation allowance is recorded to reduce deferred

tax assets to the extent that we consider it is more likely than not that a deferred tax asset will not be realized in the foreseeable

As of March 31, 2024 and 2023, we did not record any valuation allowance deferred tax assets.

We record uncertain tax positions in accordance

with ASC 740 on the basis of a two-step process in which (1) we determines if the weight of available evidence indicates that

it is more likely than not that the tax position will be sustained on audit, including resolution of any related appeals or litigation

processes, and (2) measures the tax benefit as the largest amount that is more likely than not to be realized upon ultimate settlement.

An uncertain income tax provision will not be recognized if it has less than a 50 percent likelihood of being sustained.

We consider many factors when evaluating our tax positions and estimating

its tax benefits, which may require periodic adjustments, and which may not accurately forecast actual outcomes.

We will include interest

and fines arising from the underpayment of income taxes as a component of the provision for income taxes (if anticipated).

Penalties and

interest incurred related to underpayment of income tax are classified as income tax expense in the period incurred.

For the year ended

March 31, 2024, the Company accrued $60,487 income tax related penalty included in taxes payable in the consolidated balance sheets.

the year ended March 31, 2023, no penalties and interest incurred related to underpayment of income tax are classified as income tax expense

in the period incurred.

As of March 2024, and 2023, we did not have any significant unrecognized uncertain tax positions.

Our estimated allowance for

the inventory obsolescence reserves is based on our assessment of realization of inventory.

Adjustments are recorded to write down the

cost of inventories to the estimated net realizable value due to slow-moving merchandise and obsolescence, which is dependent upon factors

such as inventory aging, historical and forecasted consumer demand, and market conditions that impact pricing.

As of March 31, 2025 and

2024, we recorded inventory allowance balance of $1,107,569 and $514,021, respectively.

Quantitative and Qualitative Disclosures

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Financial Statements and Supplementary

The financial statements start on Page F-1.

Changes in and Disagreements with Accountants

on Accounting and Financial Disclosures

The information required

by this item appears beginning on page F-1 of this annual report and is incorporated herein by reference.

Changes in and Disagreements with

Accountants on Accounting and Financial Disclosures

Not applicable.

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-K

Item 7. Management’s Discussion and Analysis