Fly-E Group, Inc. 10-K

Item 9A. Controls and Procedures Evaluation of Disclosure Controls and Procedures We maintain disclosure controls and procedures, as defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act. Disclosure controls and procedures include, without limitation, controls and procedures designed to ensure that information required to be disclosed by us in the reports that we file or submit under the Exchange Act is accumulated and communicated to our management, including our principal executive officer and our principal financial officer, as appropriate, to allow timely decisions regarding required disclosure. Our management, with the participation of our Chief Executive Officer and Chief Financial Officer, have evaluated the effectiveness of our disclosure controls and procedures as of March 31, 2025. Based on the evaluation of our disclosure controls and procedures, our Chief Executive Officer and Chief Financial Officer concluded that our disclosure controls and procedures were not effective as of March 31, 2025 due to the material weaknesses in financial reporting as described below. Management’s Annual Report on Internal Control over Financial Reporting In our 10-K for the year ended March 31, 2025, we identified material weaknesses in our internal control over financial reporting. The material weaknesses that have been identified in internal control over financial reporting included our lack of (i) sufficient financial reporting and accounting personnel with appropriate knowledge of generally accepted accounting principles in the United States of America (the “U.S. GAAP”) and SEC reporting requirements to properly address complex U.S. GAAP accounting issues and to prepare and review our consolidated financial statements and related disclosures to fulfill U.S. GAAP and SEC financial reporting requirements, (ii) formal internal control policies and internal independent supervision functions to establish formal risk assessment process and internal control framework, and (iii) sufficient controls designed and implemented in IT environment and IT general control activities, which are mainly associated with areas of logical access management, change management, computer operation, service organization management as well as cyber security management. To remediate the material weaknesses, we have engaged a third party consultant to perform internal review and assist us to set up more reliable internal control processes. The consultant commenced work in February 2025. We have begun organizing regular training programs for our accounting personnel, with a focus on U.S. GAAP and SEC reporting requirements, in order to improve the competence and awareness of our finance team. In addition, we plan to enhance our IT infrastructure by outsourcing our IT department to a provider to manage PC operations and system monitoring. Furthermore, we are developing and plan to implement an enterprise resource planning system to streamline sales, inventory, financial reporting, and order management. We will devote resources to remediate these material weaknesses as we grow and such resources required for implementing proper internal controls for financial reporting are available. 43 We have performed testing to evaluate the operating effectiveness of these remediation measures. Based on the results of our testing, we concluded that these material weaknesses had not been fully remediated as of March 31, 2025. Accordingly, we continue to consider these material weaknesses to be ongoing as of that date. As of March 31, 2025, we believe that our internal controls over financial reporting were not effective in providing reasonable assurance regarding the reliability of our financial reporting due to the material weaknesses identified above. This annual report on Form 10-K does not include an attestation report of our registered public accounting firm. Changes in Internal Control over Financial Reporting Other than the additional controls added to the revenue process, there was no change in our internal control over financial reporting that occurred during the fourth quarter of March 31, 2025 that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting. Our disclosure controls and procedures and internal control over financial reporting are designed to provide reasonable assurance of achieving the desired control objectives. Our management recognizes that any control system, no matter how well designed and operated, is based upon certain judgments and assumptions and cannot provide absolute assurance that its objectives will be met. In addition, the design of disclosure controls and procedures must reflect the fact that there are resource constraints and that management is required to apply judgment in evaluating the benefits of possible controls and procedures relative to their costs. Similarly, an evaluation of controls cannot provide absolute assurance that misstatements due to error or fraud will not occur or that all control issues and instances of fraud, if any, have been detected. Item 9B. Other Information We have adopted an insider trading policy. Our insider trading policy is filed as an exhibit to this annual report and is incorporated herein by reference. Item 9C. Disclosure Regarding Foreign Jurisdiction that Prevent Inspections. Not applicable. 44 Part III Item 10. Directors, Executive Officers and Corporate Governance Executive Officers and Directors Set forth below is certain information with respect to our directors and executive officers: Name Age Position Zhou Ou 36 Chairman of the Board and Chief Executive Officer Shiwen Feng 29 Director and Chief Financial Officer 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 Set forth below is biographical information about each of the individuals named in the table above: Zhou Ou, Founder, Chairman of the Board and Chief Executive Officer. Mr. Ou founded Fly E-Bike in 2018 and has since served as our Chairman of the Board and Chief Executive Officer (“CEO”). Before founding Fly E-Bike, Mr. Ou operated a motorcycle repair business for over eight years, and previously held a managerial position at a food delivery company. We believe that Mr. Ou’s prior experience in the motorcycle industry and his understanding of the delivery industry, combined with his tenure at our company, qualifies him to serve as our Chairman of the Board. Shiwen Feng, Director and Chief Financial Officer. Ms. Feng has served as our Chief Financial Officer and a director since November 2024. Ms. Feng is an experienced financial professional with a background in corporate finance, corporate tax management, and project oversight. From October 2021 to October 2024, Ms. Feng served as the manager at PJMG LLC, a consulting services company, where she was responsible for overseeing financial planning, managing corporate structuring, and ensuring compliance with financial regulations. Prior to that, from September 2019 to July 2021, Ms. Feng worked at DGLG Accounting & Tax LLC, an accounting and financial consulting company, first as a staff member assisting with corporate formations, tax compliance, and payroll management, and later as a manager, focusing on financial reporting, monthly bookkeeping, and corporate tax filings. She earned her Master’s degree in Accounting from the Frank G. Zarb School of Business at Hofstra University in 2020 and her Bachelor’s degree in Accounting from Henan University in China in 2019. Ms. Feng was selected to serve as a member of our board of directors because of her experience in the financial services industry. Rui Feng, Chief Operating Officer. Mr. Feng joined us as a retail store manager in 2018 and was responsible for overseeing our supply chain, implementing effective customer strategies, and ensuring legal compliance. He has served as our Chief Operating Officer since December 2022. Prior to joining us, Mr. Feng owned and operated a restaurant for four years, which provided him with valuable experience in managing a business. Ke Zhang, Chief Human Resource Officer. Mr. Zhang has served as our Chief Human Resource Officer since December 2022. Mr. Zhang previously served as our director and resigned from this position on September 1, 2023. He joined us as a retail store manager in 2018, where he was responsible for overseeing various HR functions, including recruiting, employee training and development and managing our benefits system. Bin Wang, Director. Mr. Wang has served as a director since June 2024. Mr. Wang has over 30 years of management experience in the financial industry. He currently serves as the Managing Director of Eon Capital International Ltd, a Hong Kong corporate advisory service company. He has also been a member of the board of directors of Maison Solutions Inc., a Nasdaq-listed company, since 2023. Previously, from 2018 to 2020, Mr. Wang was the Chairman and CEO of Alberton Acquisition Corp., a Nasdaq-listed company. From 2010 to 2012, he served as Independent Board Director in Sky Digital Stores Corp. (OTC: SKYC), participating in the company’s public listing process. From 2007 to 2018, Mr. Wang provided corporate advisory services to dozens of corporate clients in the US and Asia. Mr. Wang began his financial career at Chemical Bank in 1994 when he served as a commercial banking manager for the bank’s Asian market. From 1996 to 2000, he served as Vice President and Team Leader of Chase International Financial Services, to promote the bank’s business in Asia-Pacific region. After Chase merged with JPMorgan in 2000, Mr. Wang continued to work at JPMorgan Chase until late 2006, playing a wide range of management roles in the development and growth of international business. Mr. Wang graduated from Northwestern Polytechnic University in 1980, obtained his Master of Science degree in Mechanical Engineering from Xi’an Jiaotong University in 1983, and earned his Master of Arts degree in economics from Illinois State University in 1992. Mr. Wang was selected to serve as a member of our board of directors because of his extensive senior-level management experience in the financial services industry and his profound knowledge of our business and the industry as a whole. 45 Lun Feng, Director. Mr. Feng has served as a director since June 2024. Since August 2015, Mr. Feng has held the position of executive director at Si Fang Yu Feng Investment Co., Ltd., a Chinese investment management company. From June 2009 to June 2021, he served as the chairman of the board of directors at Beijing Wan Tong Li Ti Zhi Cheng Investment Co., Ltd., a Chinese investment management company. Additionally, Mr. Feng currently serves as an independent director at three public companies listed on the Shanghai Stock Exchange and Shenzhen Stock Exchange. These companies include Bank of Xi’an Co., Ltd., Shanghai Xinnanyang Only Education and Technology Co., Ltd., and Bona Film Group Co., Ltd. Mr. Feng received his bachelor’s degree in political economy from Northwest University (China) in 1982. Mr. Feng was selected to serve as a member of our board of directors because of his extensive senior-level management experience of public companies, his board experience and his extensive knowledge of our business and industry. Zanfeng Zhang, Director. Mr. Zhang has served as a director since August 2024. Mr. Zhang has over 25 years of experience in finance and investment management. Since November 2017, he has served as Managing Director at IDG Capital, an investment and asset management company, where he oversees post-investment management and risk control. From August 2014 to July 2017, Mr. Zhang co-founded and served as the Chief Financial Officer of Beijing Jiufang Rugao Information Technology Co., Ltd., an internet startup providing community-based online-to-offline (O2O) life services and a fresh produce B2C (business-to-consumer) platform, where he oversaw financing activities. Prior to that, he co-founded and served as Chief Operating Officer of Beijing Panteng Technology Co., Ltd., a smart hardware startup, from September 2013 to August 2014, where he secured early-stage funding and led its market expansion. Earlier in his career, Mr. Zhang held senior financial roles at Ruijing Hengtong (Beijing) Investment Consulting Co., Ltd. from July 2008 to August 2013, and at Peugeot China Co., Ltd. from June 2003 to July 2008. Mr. Zhang holds a Master’s degree in Business Management from Paris 1 Panthéon-Sorbonne University and a Bachelor’s degree in Accounting from East China Jiaotong University. Mr. Zhang was selected to serve on the Board due to his extensive expertise in finance and investment management. Information about the Board of Directors Our board of directors oversees our business and affairs and monitors the performance of management. In accordance with corporate governance principles, the board does not involve itself in day-to-day operations. The directors keep themselves informed through discussions with our CEO and other key executives, by reading the reports and other materials that we send them, and by participating in board and committee meetings. Directors hold office until their successors have been elected and qualified or until he or she resigns or have been removed or disqualified. Our board of directors are divided into three classes of directors, with the classes as nearly equal in number as possible, and with the directors serving three-year terms. The term of office of the Class I director, consisting of Lun Feng, will expire at our 2025 annual meeting of stockholders. The term of office of the Class II directors, consisting of Zanfeng Zhang and Bin Wang, will expire at our 2026 annual meeting of stockholders. The term of office of the Class III directors, consisting of Zhou Ou and Shiwen Feng, will expire at our 2027 annual meeting of stockholders. As a result, approximately one-third of our board of directors will be elected each year. The classification of directors will have the effect of making it more difficult for stockholders to change the composition of our board of directors. Our amended and restated bylaws also provide that, subject to any rights of holders of preferred stock to elect additional directors under specified circumstances, the number of directors will be fixed exclusively pursuant to a resolution adopted by our board of directors. Committees of the Board of Directors We have established an Audit Committee, a Compensation Committee and a Nominating and Corporate Governance Committee. We have adopted a charter for each of the three committees. Each committee’s members and functions are described below. Audit Committee. Our Audit Committee consists of three independent directors. The members of the Audit Committee are Bin Wang, Lun Feng and Zanfeng Zhang, with Mr. Wang serving as the committee chair. The Audit Committee consists exclusively of directors who are financially literate. Mr. Wang is considered an “audit committee financial expert” as defined by the SEC’s rules and regulations. 46 The Audit Committee responsibilities include: ● overseeing the compensation and work of and performance by our independent auditor and any other registered public accounting firm performing audit, review or attestation services for us; ● engaging, retaining and terminating our independent auditor and determining the terms thereof; ● assessing the qualifications, performance and independence of the independent auditor; ● evaluating whether the provision of permitted non-audit services is compatible with maintaining the auditor’s independence; ● reviewing and discussing the audit results, including any comments and recommendations of the independent auditor and the responses of management to such recommendations; ● reviewing and discussing the annual and quarterly financial statements with management and the independent auditor; ● producing a committee report for inclusion in applicable SEC filings; ● reviewing the adequacy and effectiveness of internal controls and procedures; ● establishing procedures regarding the receipt, retention and treatment of complaints received regarding the accounting, internal accounting controls, or auditing matters and conducting or authorizing investigations into any matters within the scope of the responsibility of the Audit Committee; and ● reviewing transactions with related persons for potential conflict of interest situations. Compensation Committee. Our Compensation Committee consists of three independent directors. The members of the Compensation Committee are Lun Feng, Bin Wang and Zanfeng Zhang, with Mr. Feng serving as the committee chair. The committee has primary responsibility for: ● reviewing and recommending all elements and amounts of compensation for each executive officer, including any performance goals applicable to those executive officers; ● reviewing and recommending for approval the adoption, any amendment and termination of all cash and equity-based incentive compensation plans; ● once required by applicable law, causing to be prepared a committee report for inclusion in applicable SEC filings; ● approving any employment agreements, severance agreements or change of control agreements that are entered into with the CEO and certain executive officers; and ● reviewing and recommending the level and form of non-employee director compensation and benefits. 47 Nominating and Governance Committee. The Nominating and Governance Committee consists of three independent directors. The members of the Nominating and Governance Committee are Zanfeng Zhang, Bin Wang and Lun Feng, with Mr. Zhang serving as the committee chair. The Nominating and Governance Committee’s responsibilities include: ● recommending persons for election as directors by the stockholders; ● recommending persons for appointment as directors to the extent necessary to fill any vacancies or newly created directorships; ● reviewing annually the skills and characteristics required of directors and each incumbent director’s continued service on the board; ● reviewing any stockholder proposals and nominations for directors; ● advising the board of directors on the appropriate structure and operations of the board and its committees; ● reviewing and recommending standing board committee assignments; ● developing and recommending to the board Corporate Governance Guidelines, a Code of Business Conduct and Ethics and other corporate governance policies and programs and reviewing such guidelines, code and any other policies and programs at least annually; ● making recommendations to the board as to determinations of director independence; and ● making recommendations to the board regarding corporate governance based upon developments, trends, and best practices. The Nominating and Governance Committee will consider stockholder recommendations for candidates for the board of directors. Involvement in Certain Legal Proceedings None of our directors and executive officers have been involved in any of the following events during the past ten years: ● any bankruptcy petition filed by or against such person or any business of which such person was a general partner or executive officer either at the time of the bankruptcy or within two years prior to that time; ● any conviction in a criminal proceeding or being subject to a pending criminal proceeding (excluding traffic violations and other minor offenses); ● being subject to any order, judgment, or decree, not subsequently reversed, suspended or vacated, of any court of competent jurisdiction, permanently or temporarily enjoining him from or otherwise limiting his involvement in any type of business, securities or banking activities or to be associated with any person practicing in banking or securities activities; ● being found by a court of competent jurisdiction in a civil action, the SEC or the Commodity Futures Trading Commission to have violated a federal or state securities or commodities law, and the judgment has not been reversed, suspended, or vacated; ● being subject of, or a party to, any federal or state judicial or administrative order, judgment decree, or finding, not subsequently reversed, suspended or vacated, relating to an alleged violation of any federal or state securities or commodities law or regulation, any law or regulation respecting financial institutions or insurance companies, or any law or regulation prohibiting mail or wire fraud or fraud in connection with any business entity; or ● being subject of or party to any sanction or order, not subsequently reversed, suspended, or vacated, of any self-regulatory organization, any registered entity or any equivalent exchange, association, entity or organization that has disciplinary authority over its members or persons associated with a member. 48 Code of Business Conduct and Ethics We have adopted a written code of business conduct and ethics that applies to our directors, officers and employees, including our principal executive officer, principal financial officer, principal accounting officer or controller, or persons performing similar functions. A copy of the code is made available in the Corporate Governance section of our website, which is located at flyebike.com. Our stockholders are also able to review these documents by accessing our public filings at the SEC’s website at www.sec.gov . If we make any substantive amendments to, or grant any waivers from, the code of business conduct and ethics for any officer or director, we will disclose the nature of such amendment or waiver on our website or in a current report on Form 8-K filed with the SEC. Trading Policies On May 3, 2024, we adopted insider trading policies and procedures governing the purchase, sale, and/or other dispositions of our securities by directors, officers and employees, which are reasonably designed to promote compliance with insider trading laws, rules and regulations, and applicable Nasdaq listing standards (the “Insider Trading Policy”). Clawback Policy Our board of directors has adopted a clawback policy that covers our executive officers, who are defined as our chief executive officer, president, chief financial officer, principal accounting officer (or the controller, if no such accounting officer exists), any vice-president in charge of a significant principal business unit, division, or function (such as sales, administration, or finance), and any other officer or person who performs a policy-making function. This clawback policy pertains to incentive-based compensation, which includes any compensation that is granted, earned, or vested wholly or in part based on the achievement of a financial reporting measure. It mandates the recovery of such compensation from an executive officer in cases where we must prepare an accounting restatement due to material noncompliance with U.S. financial reporting requirements under the securities laws. This includes any necessary restatement to correct an error in previously issued financial statements that is material to those statements, or that would result in a material misstatement if the error were corrected in the current period or left uncorrected. The Compensation Committee will make determinations regarding “materiality” for the purposes of this policy. The incentive-based compensation eligible for recovery under this policy includes compensation received during the three completed fiscal years immediately preceding the date we are required to prepare an accounting restatement, as outlined above. This applies provided that the individual served as an executive officer at any time during the performance period relevant to the incentive-based compensation. Delinquent Section 16(a) Reports Section 16(a) of the Exchange Act requires the Company’s officers, directors and persons who beneficially own more than ten percent of its common stock to file reports of ownership and changes in ownership with the SEC. These reporting persons are also required to furnish the Company with copies of all Section 16(a) forms they file. Based solely on our review of such forms furnished to us, we believe that the applicable reporting requirements of Section 16(a) have been satisfied. Item 11. Executive Compensation The following table shows the compensation awarded to or earned during the years ended March 31, 2025 and 2024 by our chief executive officer. Other than as listed below, we did not have any officers that received more than $100,000 in compensation during the years ended March 31, 2025 and 2024. The person listed in the following table is referred to herein as the “named executive officer.” Name and principal position Year Salary Bonus Stock Awards Option Awards All Other Compensation Total ($) Zhou Ou 2025 $ 100,000 — — — — $ 100,000 Chief Executive Officer 2024 $ 100,000 — — — — $ 100,000 49 Narrative Disclosure to Summary Compensation Table Zhou Ou, Chief Executive Officer Mr. Ou has entered into an employment agreement with one of our subsidiaries, FLYEBIKE Inc, dated April 1, 2023. Under the agreement, Mr. Zhou Ou serves as the Chief Executive Officer of the Company and receives a monthly base salary of $8,333. He is also entitled to reimbursement for authorized and reasonable business expenses. The agreement allows for at-will termination by either party. If Mr. Ou’s employment is terminated due to death or disability, he or his estate will receive salary and benefits through the termination date. The Company may terminate the agreement for cause, releasing it from all further obligations except for accrued salary and benefits through the termination date. “Cause” includes failure or neglect by Mr. Ou to perform duties, disobedience to orders, misconduct such as misappropriation of funds, personal profit from Company transactions, misrepresentation, legal violations, acts involving moral turpitude or unethical conduct, disloyalty including aiding a competitor, failure to devote full-time efforts to the Company, not working exclusively for the Company, non-cooperation in investigations, breaches of the employment agreement or the Company rules, and any other act of misconduct or omission. The agreement includes covenants for non-disclosure, non-solicitation, and non-competition. For two years post-termination, Mr. Ou agrees not to solicit the Company’s customers or engage in competing business activities within New York State. In order to support our operations and allocate more resources towards our development, Mr. Ou received compensation at the level of a store manager for the years ended March 31, 2025 and 2024. Shiwen Feng, Chief Financial Officer Mr. Feng has entered into an employment agreement with the Company, dated November 7, 2024. Under the agreement, Ms. Feng serves as the Chief Financial Officer of the Company and receives a monthly base salary of $ $6,667. She will also be entitled to reimbursement for authorized and reasonable expenses. The agreement allows for at-will termination by either party, provided, however, a minimum of two weeks’ advance written notice is required in the event of resignation by Ms. Feng. If Ms. Feng’s employment is terminated due to death or disability, she or her estate will receive salary and benefits through the termination date. The Company may terminate the agreement for cause, releasing it from all further obligations except for accrued salary and benefits through the termination date. “Cause” includes failure or neglect by Ms. Feng to perform duties, disobedience to orders, misconduct such as misappropriation of funds, personal profit from Company transactions, misrepresentation, legal violations, acts involving moral turpitude or unethical conduct, disloyalty including aiding a competitor, failure to devote full-time efforts to the Company, not working exclusively for the Company, non-cooperation in investigations, breaches of the employment agreement or the Company rules, and any other act of misconduct or omission. The agreement includes covenants for non-disclosure, non-solicitation, and non-competition. For two years post-termination, Ms. Feng agrees not to solicit the Company’s customers or engage in competing business activities within New York State. Ms. Feng will not receive any additional compensation as a director in addition to her compensation as the Chief Financial Officer of the Company. Outstanding Option Awards As of March 31, 2025, there were no option or stock awards outstanding. Employee Benefit Plans 2024 Plan On May 3, 2024, our Board approved the Fly-E Group Inc. 2024 Omnibus Incentive Plan, subject to stockholder approval. On February 10, 2025, our Board approved Amendment No. 1 of the plan (“Amendment No. 1”) to increase the number of shares available for grant under the plan and add a provision providing for an automatic increase to the plan’s share reserve every year, commencing on April 1, 2026, and continuing on the first day of each of the Company’s fiscal years through the tenth anniversary of the plan’s effective date (the 2024 Omnibus Incentive Plan, as amended by Amendment No. 1, the “2024 Plan”). On March 10, 2025, the Company’s stockholders approved and adopted the 2024 Plan. The following is a summary of the material terms of the 2024 Plan. Plan Administration The 2024 Plan will be administered by our Compensation Committee. Our board of directors will retain the authority under the 2024 Plan to exercise any or all of the powers and authorities related to the administration and implementation of the 2024 Plan. 50 Award Eligibility Awards under the 2024 Plan may be made to our or any of our affiliates’ employees, officers and directors, as well as to consultants and advisors currently providing services to us or any of our affiliates at the time of such award. As of the date of this annual report, the Company engages approximately 55 employees, four (4) officers, five (5) directors, and five (5) consultants and advisers. Shares Subject to the 2024 Plan Subject to adjustment in accordance with the terms of the 2024 Plan, the number of shares of our common stock available for issuance under the 2024 Plan is the sum of (A) 740,000, plus (B) an increase commencing on April 1, 2026, and continuing annually on each anniversary thereof until the tenth anniversary of the plan effective date, equal to the lesser of (i) 8% of the total number of all classes of the Company’s common stock outstanding on the last day of the immediately preceding fiscal year and (ii) such smaller number of shares as determined by the Board or the Committee (the “Share Limit”). Reversion of Shares If any shares covered by an award are not purchased or are forfeited or expire, or if any award otherwise terminates without delivery of any shares subject to the award or is settled in cash in lieu of shares, then the number of shares counted against the Share Limit with respect to such award will, to the extent of any such forfeiture, termination, expiration or settlement, again be available for issuance under the 2024 Plan. Awards The 2024 Plan provides for the grant of awards of stock options, stock appreciation rights (“SARs”), restricted stock, restricted stock units, deferred stock units, unrestricted stock, dividend equivalent rights, and other equity-based awards. Stock Options Stock options granted under the 2024 Plan may be nonqualified stock options or incentive stock options within the meaning of Section 422 of the Internal Revenue Code of 1986, as amended (the “Code”). Each option will become vested and exercisable at such times and under such conditions as our Compensation Committee may approve consistent with the terms of the 2024 Plan. No option may be exercisable more than ten years after the option grant date. Our Compensation Committee may include in the option agreement provisions specifying the period during which an option may be exercised following termination of the grantee’s service. The exercise price per share of our common stock for each option granted under the 2024 Plan may not be less than 100%, or 110% in the case of an incentive stock option granted to a stockholder who owns more than ten percent of our voting stock, of the fair market value of a share of our common stock on the option grant date, except in the case of an option granted upon assumption of, or in substitution for, outstanding awards previously granted under a compensatory plan by a business entity acquired or to be acquired by us or an affiliate of ours or with which we or an affiliate has combined or will combine. Payment of the exercise price for shares purchased pursuant to the exercise of an option may be made in such forms as are approved by our Compensation Committee. These forms may include, in our Compensation Committee’s discretion, cash, cash equivalents, shares of our common stock and net issuance. 51 Restricted Stock, Restricted Stock Units, and Deferred Stock Units Restricted stock is an award of our common stock on which vesting restrictions are imposed that subject such shares of our common stock to a substantial risk of forfeiture, as defined in Section 83 of the Code. A restricted stock unit is an award that represents a conditional right to receive shares of our common stock in the future and that may be made subject to the same types of restrictions and risk of forfeiture as restricted stock. A deferred stock unit is a restricted stock unit that may be settled at some point in the future at a time or times consistent with the requirements of Section 409A of the Code. Stock Appreciation Rights A SAR is a right to receive upon exercise, in the form of common stock, cash or a combination of common stock and cash, the excess of the fair market value of one share of common stock on the exercise date over the grant price of the SAR. SARs may be granted in conjunction with all or a part of any option or other award granted under the 2024 Plan, or without regard to any option or other award. Upon exercise of a SAR, the holder will be entitled to receive, in the specified form of consideration, the excess of the fair market value of one share of our common stock on the exercise date over the exercise price of the SAR, as determined by our Compensation Committee. The exercise price of a SAR may not be less than the fair market value of a share of our common stock on the grant date. Dividend Equivalent Rights Dividend equivalent rights entitle the grantee to receive cash, shares of our common stock, or a combination of both equal to the amount of that the grantee would have received had the grantee held a specified number of shares of our common stock during the period. Dividend equivalent rights may be granted independently or in connection with the grant of any equity-based award, except that no dividend equivalent right may be granted in connection with, or related to an option or SAR. Other Equity-Based Awards Our Compensation Committee may grant other types of equity-based or equity-related awards in such amounts and subject to such terms and conditions as our Compensation Committee may determine, including unrestricted stock and dividend equivalent rights which are described in more detail in the 2024 Plan. Changes to Capital Structure In the event of a merger, reorganization, recapitalization, reclassification, stock split, reverse stock split, spin-off combination of shares, exchange of shares, stock dividend or other distribution payable in capital stock, or other increase or decrease in such shares effected without the receipt of consideration by us, then the number and kind of shares for which grants of options and other awards may be made under the 2024 Plan may be adjusted proportionately and accordingly by our Compensation Committee. Change of Control Except as otherwise provided in the applicable award agreement, upon the occurrence of a change of control of our Company in which outstanding awards are not being assumed or continued, all outstanding shares of restricted stock, restricted stock units, deferred stock units, dividend equivalent rights and performance-based awards will be deemed to have vested and any underlying shares of our common stock will be deemed delivered immediately before the change of control; and either or both of the following actions shall be taken: (i) at our Compensation Committee’s discretion, all options and SARs will become exercisable fifteen days before the change of control (with any exercise of an option or SAR during such fifteen day period to be contingent upon the consummation of the change of control) and terminate upon the change of control to the extent not exercised; and/or (ii) at our Compensation Committee’s discretion, all options, SARs, shares of restricted stock, restricted stock units, deferred stock units, dividend equivalent rights and/or performance-based awards will be canceled and cashed out in connection with the change of control. Other equity-based awards will be governed by the terms of the applicable award agreement. 52 If we experience a change of control in which outstanding awards that are not exercised prior to the change of control will be assumed or continued by the surviving entity, then, except as otherwise provided in the applicable award agreement, in another agreement with the grantee, or as otherwise set forth in writing, upon the occurrence of the change of control, the 2024 Plan and the awards granted under the 2024 Plan will continue in the manner and under the terms so provided in the event of the change of control to the extent that provision is made in writing in connection with such change of control for the assumption or continuation of such awards, or for the substitution for such awards with new awards, with appropriate adjustments as to the number of shares (disregarding any consideration that is not common stock) and exercise prices of options and SARs. Plan Amendment and Termination The Compensation Committee may adopt, amend and rescind rules relating to the administration of the 2024 Plan, and our board of directors may amend, suspend, or terminate the 2024 Plan at any time; provided, that, no such amendment or termination will be made that materially and adversely impairs the rights of any participant with respect to any award granted under the 2024 Plan without the participant’s consent, other than amendments that are necessary to permit the granting of awards in compliance with applicable laws. The 2024 Plan will automatically terminate the day before the tenth (10 th ) anniversary of the Plan Effective Date, unless earlier terminated by our board of directors or in accordance with the terms of the 2024 Plan. New Plan Benefits All awards to be made under the 2024 Plan are discretionary, subject to the terms of the 2024 Plan. The benefits and amounts that will be received or allocated under the 2024 Plan are generally not determinable at this time. Director Compensation The following table sets forth information as to the compensation paid to our directors in the year ended March 31, 2025: Name Cash Compensation Stock Awards Total Bin Wang 37,500 - 37,500 Lun Feng 50,000 - - Zanfeng Zhang 7,500 - 7,500 Zhou Ou (1) - - - Shiwen Feng (3) $ - - $ - (1) Mr. Ou does not receive any additional compensation as a director in addition to his compensation disclosed in the Summary Compensation Table. (2) Ms. Feng receives $6,667 per month for serving as Chief Financial Officer of the Company. Ms. Feng does not receive any additional compensation as a director. 53 Director Agreements Each of the Company’s independent directors, Bin Wang, Lun Feng and Zanfeng Zhang, has entered into an Independent Director Agreement (each, an “Independent Director Agreement”). Under the Independent Director Agreement between us and each of our independent directors, Mr. Zhang is entitled to an annual cash fee of $30,000, Mr. Wang and Mr. Feng each is entitled to an annual cash fee of $50,000. We will also reimburse each independent director for pre-approved reasonable business-related expenses incurred in good faith in connection with the performance of the director’s duties for us. As also required under each Independent Director Agreement, we have separately entered into a standard indemnification agreement with each of our directors, the term of which began on the date of the director’s appointment. Item 12. Security Ownership of Certain Beneficial Owner and Management and Related Stockholder Matters The following table sets forth information with respect to the beneficial ownership of our common stock as of July 15, 2025 by: ● each person known to us to beneficially own 5% or more of our common stock; ● each director; ● each of our executive officers; and ● all officers and directors as a group. All information with respect to beneficial ownership has been furnished by the respective 5% or more stockholders, directors or executive officers, as the case may be. Each person is deemed to own beneficially shares of common stock that are issuable upon exercise of options, warrants or upon conversion of convertible securities if they are exercisable or convertible within 60 days of July 15, 2025. Except as otherwise indicated each person has the sole power to vote and dispose of all shares of common stock listed opposite his or her name. Unless otherwise noted, the mailing address of each listed beneficial owner is c/o Fly-E Group, Inc., 136-40 39 th Avenue, Flushing, NY 11354. Name and address of beneficial owner Shares beneficially owned Percentage owned Executive Officers and Directors Zhou Ou 1,540,000 8.5 % Shiwen Feng - Rui Feng 352,000 1.9 % Ke Zhang 1,474,000 8.1 % Bin Wang - Lun Feng - Zanfeng Zhang - Directors and Officers as a group (seven persons) 3,366,000 18.7 % Securities Authorized for Issuance Under Equity Compensation Plans We have adopted the 2024 Plan in order to grant equity-based and other incentive awards to our officers, employees, directors, consultants and advisers. There are 740,000 shares of common stock reserved for future issuance under the 2024 Plan. We have not issued any grants or awards under the 2024 Plan. 54 Item 13. Certain Relationships and Related Transactions, and Director Independence In addition to the compensation arrangements in the section titled “Executive Compensation,” except as set forth below, during our last two fiscal years, we have not entered into any material transactions or series of transactions that would be considered material in which any director or executive officer or beneficial owner of 5% or more of any class of our capital stock, or any immediate family member of any of the preceding persons, had a direct or indirect material interest: From April 1, 2023 to March 31, 2025, our Chairman and CEO, Mr. Ou, provided financial support to the Company by advancing funds and making various payments on behalf of the Company totaling $3,274,924. These amounts payable to Mr. Ou are unsecured, bear no interest and do not have a maturity date. From April 1, 2023 to March 31, 2025, the Company repaid a total of $1,207,404 to Mr. Ou, including repayment of amounts owed to Mr. Ou prior to April 1, 2022. From April 1, 2023 to March 31, 2025, the Company transferred $2,263,630 of the payable balance along with a cash contribution of $136,370 from Mr. Ou as capital contribution. As of March 31, 2025 and 2024, the remaining balance of these payables was nil and $92,229, respectively. From August 9, 2024 to September 17, 2024, the Company advanced $477,771 to Mr. Ou, Chairman and CEO of the Company, for personal use. This advance is unsecured, bears no interest and does not have a maturity date. As of March 31, 2025, the advance was paid back in full. From April 1, 2023 to March 31, 2025, Mr. Rui Feng, our Chief Operating Officer, advanced a total of $8,711 to the subsidiaries of the Company to support their business operations. These amounts payable to Mr. Feng are unsecured, bear no interest and do not have a maturity date. From April 1, 2023 to March 31, 2025, the Company repaid $8,711 to Mr. Feng. As of March 31, 2025, the Company has paid off all amounts owed to Mr. Feng. From April 1, 2023 to March 31, 2025, Mr. Ke Zhang, our Chief Human Resource Officer, advanced an aggregate of $52,802 to the subsidiaries of the Company to support their business operations. These amounts payable to Mr. Zhang are unsecured, bear no interest and do not have a maturity date. From April 1, 2023 to March 31, 2025, the Company repaid $52,802 to Mr. Zhang. As of March 31, 2025, the Company has paid off all amounts owed to Mr. Zhang. On March 6, 2021, the Company and DGLG Accounting and Tax LLC (“DGLG”) entered into an engagement letter, wherein the Company engaged DGLG as a consultant to assist the Company in its IPO planning, financing and tax services. Mr. Guo is a partner at DGLG. In December 2022, the Company hired Mr. Guo as its former CFO. Under the terms of the engagement agreement with DGLG, the Company has agreed to compensate DGLG for consulting services based on an hourly fee arrangement. For the years ended March 31, 2025 and 2024, DGLG’s consulting fees were $225,000 and $100,000, respectively. For the years ended March 31, 2025 and 2024, the Company paid DGLG a total of $61,050 and $123,000, respectively, for tax services. As of March 31, 2025, the Company did not owe any amount to DGLG. On April 1, 2023, the Company agreed to retain the services of PJMG LLC (“PJMG”), a company in which Mr. Guo, the Company’s former CFO who resigned on November 6, 2024, holds over 50% of the equity interests as a consultant following the completion of its IPO. PJMG was engaged to provide compliance consulting services related to accounting, finance, and management, as well as to oversee market planning and development, follow-on fundraising, and investor relationship management from June 2024 to May 2025. The service fee is $45,000 for the first month and from the second month the fees are $15,000 per month. To secure these services, the Company prepaid a total of $120,000 to PJMG as of March 31, 2025. During the year ended March 31, 2025, the Company paid PJMG a total of $372,047 for consulting services. $312,047 was expensed as consulting expenses during the year ended March 31, 2025. Fly E Bike SRL, a company formed under the laws of the Dominican Republic and in which Mr. Ou holds over 50% of the equity interests, is a distributor for the Company. During the years ended March 31, 2025 and 2024, Fly E Bike SRL purchased certain EV products from the Company in the amount of $42,010 and $326,914, respectively. As of March 31, 2025 and 2024, the Company had accounts receivable from Fly E Bike SRL in the amounts of $37,465 and $326,914, respectively. In addition, during the year ended March 31, 2025, the Company advanced a total of $143,455 to Fly E Bike SRL. Such advance is unsecured, bears no interest and does not have a maturity date. As of July 15, 2025, the advance was paid back in full. In December 2023, the Company engaged DF Technology US Inc (“DFT”) for certain technology services. Mr. Guo, the Company’s former CFO, owns over 50% of the equity interest in DFT. As of March 31, 2025 and March 31, 2024, the accumulative payments to DFT for development of the ERP system were $2,500,000 and $1,554,000, respectively. 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 and 2024, construction in progress was nil and $275,000, respectively, and primarily relating to the cost incurred to develop the software by DFT. As of March 31, 2025 and March 31, 2024, the Company had a prepayment of nil and $1,279,000, respectively, to DFT. In July 2024, the Company engaged DFT, a former related party, to develop a new APP, GO FLY APP, for the rental business. The total contract price for the GO FLY APP is $500,000, and the GO FLY APP was delivered on September 5, 2024. Director Independence We believe that each of our directors, Messrs. Wang, Feng, and Zhang, is an independent director under the Nasdaq listing rules. 55 Related Party Transaction Policy Our Company has adopted a written Audit Committee Charter, which contains the procedures used to identify, review, approve and disclose, if necessary, any transaction in which (i) the Company is a participant and (ii) a related person has or will have a direct or indirect material interest. Once a related party transaction in which the aggregate amount involved will or may be expected to exceed the lesser of $120,000 or 1% of the Company’s total assets at year-end for the last two completed fiscal years if the Company qualifies as a smaller reporting company in any calendar year has been identified, the Audit Committee or the full board must review the transaction for approval or ratification. In determining whether to approve or ratify a related party transaction, the Audit Committee or the full board shall consider all relevant facts and circumstances, including the following factors: (i) the materiality and character of the related person’s direct or indirect interest; (ii) the commercial reasonableness of the terms; (iii) any Company contractual obligations; (iv) the benefit or perceived benefit, or lack thereof, to the Company; (v) the opportunity cost of alternate transactions; and (vi) the actual or apparent conflict of interest of the related person. Any director who has a direct or indirect material interest in the proposed related person transaction may be present during initial presentation of the related person transaction to the Audit Committee or the board, but should not participate in the Audit Committee or the board action regarding whether to approve or ratify the transaction. If, however, a proposed transaction arises in which all directors are deemed to have a direct or indirect material interest in the transaction, the interested directors may participate in the consideration and approval of the proposed transaction, and the Company may enter into any such related person transaction that is approved in accordance with the provisions of the Delaware General Corporation Law. Item 14. Principal Accounting Fees and Services The following table sets forth the fees billed by Marcum Asia CPAs LLP (“Marcum Asia”), our registered independent public accounting firm, for 2025 and 2024 for the categories of services indicated. Year Ended March 31, 2025 2024 Audit fees (1) $ 608,727 $ 552,065 Tax Fees - - All Other Fees - - Total All Fees $ 608,727 $ 552,065 (1) Audit fees consist of fees related to professional services rendered in connection with the audit of our annual financial statements, review of our quarterly financial statements and review of our registration statement on Form S-1 relating to our initial public offering. Our policy is to pre-approve all audit and permissible non-audit services performed by the independent accountants. These services may include audit services, audit-related services, tax services and other services. The pre-approval is made by the audit committee of the board of directors. Our board approved all services that our independent accountants provided to us prior to our IPO. Following the completion of our IPO, such services were reviewed and approved by the Audit Committee. 56 Part IV Item 15. Exhibits, Financial Statement Schedules (a) The following documents are filed as part of this report: (1) Financial Statements: Page Report of Independent Registered Public Accounting Firm (PCAOB ID:5395) F-2 Consolidated Balance Sheets as of March 31, 2025 and 2024 F-3 Consolidated Statements of Operations and Comprehensive (Loss) Income for the Years Ended March 31, 2025 and 2024 F-4 Consolidated Statements of Changes in Stockholders’ Equity for the Years Ended March 31, 2025 and 2024 F-5 Consolidated Statements of Cash Flows for the Years Ended March 31, 2025 and 2024 F-6 Notes to Consolidated Financial Statements F-7 (2) Financial Statement Schedules: All financial statement schedules are omitted because they are not applicable or the amounts are immaterial and not required, or the required information is presented in the financial statements and notes thereto beginning on page F-1. (3) Exhibits We hereby file as part of this report the exhibits listed in the attached Exhibit Index. Exhibits which are incorporated herein by reference can be inspected on the SEC website at www.sec.gov. Item 16. Form 10-K Summary Not Applicable. 57 EXHIBIT INDEX Exhibit number Description 1.1 Underwriting Agreement, dated as of June 5, 2024, by and between the Company and The Benchmark Company, LLC (incorporated by reference to Exhibit 1.1 to Form 8-K filed on June 7, 2024) 3.1 Amended and Restated Certificate of Incorporation, as amended (incorporated by reference to Exhibit 3.1 to Form 8-K filed on June 7, 2024) 3.2 Certificate of Amendment of Amended and Restated Certificate of Incorporation (incorporated by reference to Exhibit 3.1 to Form 8-K filed on March 14, 2025) 3.3 The Second Certificate of Amendment of Amended and Restated Certificate of Incorporation (incorporated by reference to Exhibit 3.1 to Form 8-K filed on July 2, 2025) 3.4 Amended and Restated Bylaws (incorporated by reference to Exhibit 3.2 to the Company’s registration statement on Form S-1 (File No. 333-276830) filed on April 22, 2024 and incorporated herein by reference. 4.1* Description of Securities of the Registrant 4.2 Form of Underwriter’s Warrant, dated June 7, 2024 (incorporated by reference to Exhibit 4.1 to Form 8-K filed on June 7, 2024) 4.3 Form of Warrant (incorporated by reference to Exhibit 4.1 to Form 8-K filed on June 5, 2025) 10.1 Employment agreement dated April 1, 2023 by and between FLYEBIKE Inc and Zhou Ou. (incorporated by reference to Exhibit 10.1 to the Company’s Annual Report on Form 10-K filed on June 28, 2024)† 10.2 Employment Agreement dated November 7, 2024 by and between the Company and Shiwen Feng. (incorporated by reference to Exhibit 10.1 to Form 8-K filed on November 8, 2024)† 10.3 Fly-E Group, Inc. 2024 Omnibus Incentive Plan (incorporated by reference to Appendix A to the Company’s Proxy Statement on Schedule 14A filed on February 21, 2025)† 10.4 Form of the Independent Director’s Agreement of Fly-E Group, Inc. (incorporated by reference to Exhibit 10.4 to the Company’s Annual Report on Form 10-K filed on June 28, 2024) 10.5 Form of Indemnification Agreement (incorporated by reference to Exhibit 10.5 to the Company’s Annual Report on Form 10-K filed on June 28, 2024) 10.6 Engagement Letter dated March 6, 2021, by and between the Company and DGLG Accounting and Tax LLC. (incorporated by reference to Exhibit 10.6 to the Company’s Annual Report on Form 10-K filed on June 28, 2024) 10.7 # Contract Agreement for the Development of POS and ERP System dated December 13, 2023 between the Company and DF Technology US Inc. (incorporated by reference to Exhibit 10.7 to the Company’s Annual Report on Form 10-K filed on June 28, 2024) 10.8 Placement Agency Agreement, dated April 22, 2025, by and between the Company and American Trust Investment Services, Inc., as amended (incorporated by reference to Exhibit 1.1 to the Company’s registration statement on Form S-1 (File No. 333-286678) filed on April 22, 2025 and incorporated herein by reference. 10.9* Joint Amendment to Placement Agency Agreement and Engagement Letter, dated May 13, 2025, by and between the Company and American Trust Investment Services, Inc. 10.10 Form of Securities Purchase Agreement (incorporated by reference to Exhibit 10.1 to Form 8-K filed on June 5, 2025) 10.11 # Loan and Security Agreement dated as of August 5, 2024, by and among the Company, Fly-E-Bike Inc., Fly EV, Inc. and Peapack-Gladstone Bank (incorporated by reference to Exhibit 10.1 to the Company’s Quarterly Report on Form 10-Q filed on August 16, 2024) 10.12 # Contract Agreement dated as of July 5, 2024, by and between the registrant and DF Technology US Inc (incorporated by reference to Exhibit 10.2 to the Company’s Quarterly Report on Form 10-Q filed on August 16, 2024) 10.13 Letter Agreement dated as of April 1, 2023, by and between the Company and PJMG LLC (incorporated by reference to Exhibit 10.3 to the Company’s Quarterly Report on Form 10-Q filed on August 16, 2024) 14.1 Code of Ethics (incorporated by reference to Exhibit 14.1 to the Company’s Annual Report on Form 10-K filed on June 28, 2024) 19.1 Insider Trading Policy (incorporated by reference to Exhibit 19.1 to the Company’s Annual Report on Form 10-K filed on June 28, 2024) 21.1* List of Subsidiaries. 31.1* Certification of Principal Executive Officer Pursuant to Securities Exchange Act Rules 13a-14(a) and 15(d)-14(a), as adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 31.2* Certification of Principal Financial Officer Pursuant to Securities Exchange Act Rules 13a-14(a) and 15(d)-14(a), as adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 32.1** Certification of Principal Executive Officer Pursuant to 18 U.S.C. Section 1350, as adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. 32.2** Certification of Principal Financial Officer Pursuant to 18 U.S.C. Section 1350, as adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. 97.1 Clawback policy (incorporated by reference to Exhibit 97.1 to the Company’s Annual Report on Form 10-K filed on June 28, 2024) 101.INS* Inline XBRL Instance Document. 101.SCH* Inline XBRL Taxonomy Extension Schema Document. 101.CAL* Inline XBRL Taxonomy Extension Calculation Linkbase Document. 101.DEF* Inline XBRL Taxonomy Extension Definition Linkbase Document. 101.LAB* Inline XBRL Taxonomy Extension Label Linkbase Document. 101.PRE* Inline XBRL Taxonomy Extension Presentation Linkbase Document. 104* Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101) * Filed herewith. ** Furnished herewith † Compensatory plan or arrangement. # The exhibits and schedules to this Exhibit have been omitted pursuant to Item 601(a)(5) of Regulation S-K. The registrant hereby agrees to furnish a copy of any omitted schedules to the Commission upon request. 58 SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this annual report to be signed on its behalf by the undersigned thereunto duly authorized. Date: July 15, 2025 FLY-E GROUP, INC. By: /s/ Zhou Ou Name: Zhou Ou Title: Chief Executive Officer (Principal Executive Officer) Pursuant to the requirements of the Securities Exchange Act of 1934, this annual report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated. Signature Title Date /s/ Zhou Ou Chief Executive Officer (Principal Executive Officer) and Director July 15, 2025 Zhou Ou /s/ Shiwen Feng Chief Financial Officer (Principal Accounting and Financial Officer) and Director July 15, 2025 Shiwen Feng /s/ Bin Wang Director July 15, 2025 Bin Wang /s/ Lun Feng Director July 15, 2025 Lun Feng /s/ Zanfeng Zhang Director July 15, 2025 Zanfeng Zhang 59 FLY-E GROUP, INC. INDEX TO CONSOLIDATED FINANCIAL STATEMENTS Page Report of Independent Registered Public Accounting Firm (PCAOB ID: 5395 ) F-2 Consolidated Balance Sheets as of March 31, 2025 and 2024 F-3 Consolidated Statements of Operations and Comprehensive (Loss) Income for the Years Ended March 31, 2025 and 2024 F-4 Consolidated Statements of Changes in Stockholders’ Equity for the Years Ended March 31, 2025 and 2024 F-5 Consolidated Statements of Cash Flows for the Years Ended March 31, 2025 and 2024 F-6 Notes to Consolidated Financial Statements F-7 F- 1 Report of Independent Registered Public Accounting Firm To the Shareholders and Board of Directors of Fly-E Group, Inc. Opinion on the Financial Statements We have audited the accompanying consolidated balance sheets of Fly-E Group, Inc. (the “Company”) as of March 31, 2025 and 2024, the related consolidated statements of operations and comprehensive (loss) income, changes in stockholders’ equity and cash flows for each of the years in the two-year period ended March 31, 2025, and the related notes (collectively referred to as the “financial statements”). In our opinion, the financial statements present fairly, in all material respects, the financial position of the Company as of March 31, 2025 and 2024, and the results of its operations and its cash flows for each of the years in the two-year period ended March 31, 2025, in conformity with accounting principles generally accepted in the United States of America. Explanatory Paragraph – Going Concern The accompanying financial statements have been prepared assuming that the Company will continue as a going concern. As more fully described in Note 1, the Company has incurred significant losses and significant cash outflows from operating and investing activities, and needs to raise additional funds to meet its obligations and sustain its operations. These conditions raise substantial doubt about the Company’s ability to continue as a going concern. Management’s plans in regard to these matters are also described in Note 1. The financial statements do not include any adjustments that might result from the outcome of this uncertainty. Basis for Opinion These financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on the Company’s financial statements based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (“PCAOB”) and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB. We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audits to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. As part of our audits we are required to obtain an understanding of internal control over financial reporting but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting. Accordingly, we express no such opinion. Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audits provide a reasonable basis for our opinion. /s/ Marcum Asia CPAs LLP Marcum Asia CPAs LLP We have served as the Company’s auditor since 2022 (such date takes into account the acquisition of certain assets of Friedman LLP by Marcum Asia CPAs LLP effective September 1, 2022). New York, New York July 15, 2025 NEW YORK OFFICE ● 7 Penn Plaza ● Suite 830 ● New York, New York ● 10001 Phone 646.442.4845 ● Fax 646.349.5200 ● www.marcumasia.com F- 2 CONSOLIDATED FINANCIAL STATEMENTS FLY-E GROUP, INC. CONSOLIDATED BALANCE SHEETS (Expressed in U.S. dollars, except for the number of shares) March 31, 2025 March 31, 2024 ASSETS Current Assets Cash $ 840,102 $ 1,403,514 Accounts receivable 466,187 212,804 Accounts receivable, net – related parties 37,465 326,914 Inventories, net 6,397,274 5,364,060 Prepayments and other receivables 3,676,986 588,660 Prepayments and other receivables – related parties 120,000 240,256 Assets held for sale 2,462,502 — Total Current Assets 14,000,516 8,136,208 Property and equipment, net 7,287,213 1,755,022 Security deposits 728,450 781,581 Deferred IPO costs — 502,198 Deferred tax assets, net 94,983 35,199 Operating lease right-of-use assets 10,933,068 16,000,742 Intangible assets, net 525,865 36,384 Long-term prepayment for property — 450,000 Long-term prepayment for software development– related parties 136,580 1,279,000 Total Assets $ 33,706,675 $ 28,976,334 LIABILITIES AND STOCKHOLDERS’ EQUITY Current Liabilities Accounts payable $ 1,272,305 $ 1,180,796 Short-term loan payables 5,191,058 — Current portion of long-term loan payables 100,835 1,213,242 Accrued expenses and other payables 1,366,968 925,389 Other payables – related parties — 92,229 Operating lease liabilities – current 2,617,762 2,852,744 Taxes payable — 1,530,416 Liabilities held for sale 2,152,447 — 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 Commitment and Contingencies Stockholders’ Equity Preferred stock, $ 0.01 par value, 10,000,000 shares authorized and nil outstanding as of March 31, 2025 March 31, 2024* — — Common stock, $ 0.01 par value, 300,000,000 shares authorized and 4,917,500 shares outstanding as of March 31, 2025 and 100,000,000 shares authorized and 4,400,000 shares outstanding as of March 31, 2024* 49,175 44,000 Additional paid-in capital 10,940,724 2,576,000 Shares subscription receivable ( 219,998 ) ( 219,998 ) (Accumulated deficit) Retained Earnings ( 895,510 ) 4,395,649 Accumulated other comprehensive loss ( 41,059 ) ( 13,829 ) Total FLY-E Group, Inc. Stockholders’ Equity 9,833,332 6,781,822 Total Liabilities and Stockholders’ Equity $ 33,706,675 $ 28,976,334 * Shares and per share data are presented on a retroactive basis to reflect the 1-for-110,000 stock split completed on April 2, 2024 and the 1-for-5 reverse stock split completed on July 3, 2025. The accompanying notes are an integral part of these consolidated financial statements. F- 3 FLY-E GROUP, INC. CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE (LOSS) INCOME (Expressed in U.S. dollars, except for the number of shares) For the Years Ended March 31, 2025 2024 Revenues $ 25,427,163 $ 32,205,666 Cost of Revenues 14,976,266 19,099,120 Gross Profit 10,450,897 13,106,546 Operating Expenses 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 Other Income (Expenses), net 10,588 ( 30,352 ) Interest Expenses, net ( 405,615 ) ( 152,050 ) Income (Loss) Before Income Taxes ( 4,954,993 ) 3,078,155 Income Tax Expense ( 336,166 ) ( 1,182,933 ) Net Income (Loss) $ ( 5,291,159 ) $ 1,895,222 Other Comprehensive Income (Loss) Foreign currency translation adjustment ( 27,230 ) ( 13,829 ) Total Comprehensive Income (Loss) $ ( 5,318,389 ) $ 1,881,393 Earnings (Losses) per Share* $ ( 1.10 ) $ 0.43 Weighted Average Number of Common Stock – Basic and Diluted* 4,821,010 4,400,000 * Shares and per share data are presented on a retroactive basis to reflect the 1-for-110,000 stock split completed on April 2, 2024 and the 1-for-5 reverse stock split completed on July 3, 2025. The accompanying notes are an integral part of these consolidated financial statements. F- 4 FLY-E GROUP, INC. CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITY (Expressed in U.S. dollars, except for the number of shares) Preferred Stock Common Stock Additional Paid-in Shares Subscription Accumulated Other (Accumulated deficit) Retained Total Stockholders’ Shares* Amount Shares* Amount Capital Receivables Comprehensive Earnings Equity Balance at March 31, 2023 — $ — 4,400,000 $ 44,000 $ 176,000 $ ( 219,998 ) $ — $ 2,500,427 $ 2,500,429 Net Income — — — — — — — 1,895,222 1,895,222 Capital Contribution — — — — 2,400,000 — — — 2,400,000 Foreign currency translation adjustment — — — — — — ( 13,829 ) — ( 13,829 ) Balance at March 31, 2024 — $ — 4,400,000 $ 44,000 2,576,000 ( 219,998 ) $ ( 13,829 ) $ 4,395,649 $ 6,781,822 Net loss — — — — — — — ( 5,291,159 ) ( 5,291,159 ) Issuance of common stock upon initial public offering, net — — 517,500 5,175 8,364,724 — — — 8,369,899 Foreign currency translation adjustment — — — — — — ( 27,230 ) — ( 27,230 ) Balance at March 31, 2025 — $ — 4,917,500 $ 49,175 $ 10,940,724 $ ( 219,998 ) $ ( 41,059 ) $ ( 895,510 ) $ 9,833,332 * Shares and per share data are presented on a retroactive basis to reflect the 1-for-110,000 stock split completed on April 2, 2024 and the 1-for-5 reverse stock split completed on July 3, 2025. The accompanying notes are an integral part of these consolidated financial statements. F- 5 FLY-E GROUP, INC. CONSOLIDATED STATEMENTS OF CASH FLOWS (Expressed in U.S. dollars, except for the number of shares) For the Years Ended March 31, 2025 2024 Cash flows from operating activities Net (loss) income $ ( 5,291,159 ) $ 1,895,222 Adjustments to reconcile net (loss) income to net cash (used in) provided by operating activities: Loss on disposal of property and equipment 108,593 46,084 (Gain) Loss on termination of operating lease ( 111,564 ) 5,957 (Gain) Loss on disposal of subsidiaries ( 84,302 ) — Credit loss for accounts receivable 116,746 — Depreciation expense 631,280 272,708 Amortization expense 65,091 1,648 Deferred income taxes (benefits) expenses ( 64,829 ) 176,093 Amortization of operating lease right-of-use assets 5,084,535 2,277,910 Inventories reserve 870,589 456,209 Changes in operating assets and liabilities: Accounts receivable ( 329,029 ) 176,273 Accounts receivable – related parties 248,349 ( 190,349 ) Inventories ( 2,736,241 ) ( 1,981,515 ) Prepayments and other receivables ( 2,677,904 ) 194,160 Prepayments for operation services to related parties ( 60,000 ) ( 60,000 ) Security deposits ( 84,605 ) ( 422,240 ) Accounts payable 91,509 2,489,025 Accrued expenses and other payables 460,364 334,726 Operating lease liabilities ( 4,771,518 ) ( 1,933,760 ) Taxes payable ( 1,525,371 ) 570,769 Net cash (used in) provided by operating activities ( 10,059,466 ) 4,308,920 Cash flows from investing activities Purchases of properties and equipment ( 1,634,174 ) ( 1,253,555 ) Purchase of software and hardware from a related party ( 1,392,580 ) ( 1,279,000 ) Cash held at disposal entities ( 54,774 ) — Repayment from a related party 660,256 111,500 Advance to a related party ( 480,000 ) ( 291,756 ) Prepayments for property — ( 450,000 ) Payments of property rights — ( 38,032 ) Net cash used in investing activities ( 2,901,272 ) ( 3,200,843 ) Cash flows from financing activities Borrowing from loan payables 7,367,795 1,095,000 Repayments of loan payables ( 3,661,559 ) ( 639,367 ) Repayments on other payables - related parties ( 92,229 ) ( 290,252 ) Payments of related party loan — ( 150,000 ) Capital Contributions from Stockholders — 136,370 Payments of IPO cost ( 282,403 ) ( 201,379 ) Net proceeds from issuance of common stock - IPO 9,154,500 — Net cash provided by (used in) financing activities 12,486,104 ( 49,628 ) Net changes in cash including cash classified within current assets held for sale ( 474,634 ) 1,058,449 Effect of exchange rate changes on cash ( 27,230 ) ( 13,829 ) Less: net decrease in cash classified within current assets held for sale ( 61,548 ) — Cash at beginning of the year 1,403,514 358,894 Cash at the end of the year $ 840,102 $ 1,403,514 Supplemental disclosure of cash flow information Cash paid for interest expense $ 405,615 $ 152,050 Cash paid for income taxes $ 1,957,867 $ 435,881 Supplemental disclosure of non-cash investing and financing activities Settlement of accounts payable by related parties $ — $ 50,000 Settlement of accounts payable by capital contribution $ — $ 2,263,630 Purchase of vehicle funded by loan $ 224,638 $ 34,974 Purchase of office funded by loan $ 1,800,000 $ — Purchase software and office by using previous prepayments $ 1,729,000 $ — Purchase property rights by using previous prepayments $ 54,572 — Properties used for rental services $ 193,964 — Unpaid deferred IPO cost $ — $ 225,000 Deferred IPO cost recognized as additional paid-in capital $ 502,198 $ — Uncollected proceeds from disposal of subsidiaries $ 635,193 $ — Termination of operating lease right-of-use assets and operating lease liabilities $ ( 2,473,686 ) $ ( 2,814,235 ) Right-of-use assets obtained in exchange for operating lease liabilities $ 2,490,547 $ 10,771,688 The accompanying notes are an integral part of these consolidated financial statements. F- 6 FLY-E GROUP, INC. Notes to Consolidated Financial Statements 1 — DESCRIPTION OF BUSINESS, ORGANIZATION AND BASIS OF PRESENTATION Organization and principal activities Fly-E Group, Inc. (the “Company” or “Fly-E Group”) was incorporated under the laws of the State of Delaware on November 1, 2022. The Company has no substantive operations other than holding all of the issued and outstanding shares of Fly E-Bike Inc. (“Fly E-Bike”) and Fly EV, Inc. (“Fly EV”). Fly E-Bike and Fly EV were incorporated under the laws of the State of Delaware on August 22, 2022 and November 1, 2022, respectively. Fly EV has no substantive operations. The Company, through its wholly owned subsidiaries, is principally engaged in designing, installing and selling smart electric bikes (“E-bikes”), electric motorcycles (“E-motorcycles”), electric scooters (“E-scooters”), and related accessories under the brand name of “Fly E-Bike.” The Company’s principal operations and geographic markets are mainly in the United States of America (the “U.S.”). During the year ended March 31, 2025, the Company closed four stores in the U.S. As of July 15, 2025, the Company has opened a total of 20 retail stores, including 19 retail stores in the U.S and one retail store in Canada. The Company offers rental services from selected locations. The Company also operates one online store, focusing on selling E-motorcycles, E-bikes, and E-scooters. The Company plans to open another online store focusing on selling gas bikes in the future. The Company’s business was initially operated under CTATE INC. (“Ctate”), a corporation formed under the laws of the State of New York in 2018. Before merging with Fly E-Bike, Ctate owned 27 companies, each of which operated a Fly E-Bike store. On September 12, 2022, Ctate and Fly E-Bike, which was a wholly-owned subsidiary of Ctate, entered into an Agreement and Plan of Merger, pursuant to which Ctate merged into and with Fly E-Bike, with Fly E-Bike being the surviving corporation (the “Merger”). As a result of the Merger, the original shareholders of Ctate became the stockholders of Fly E-Bike and subsequently effectively controlled the combined entity. On December 21, 2022, Fly-E Group and Fly E-Bike entered into a Share Exchange Agreement, pursuant to which Fly-E Group acquired all of the issued and outstanding shares of Fly E-Bike by issuing its shares to the stockholders of Fly E-Bike on a one-for-one basis (the “Share Exchange”). As a result of the Share Exchange, Fly E-Bike became a wholly owned subsidiary of Fly-E Group. As a result of the Merger and the Share Exchange, Fly E-Bike and its subsidiaries are under common control of Fly-E Group, resulting in the consolidation of Fly E-Bike and its subsidiaries, which was accounted as a reorganization of entities under common control at carrying value. The consolidated financial statements are prepared on the basis as if the reorganization became effective as of the beginning of the first period presented in the consolidated financial statements of Fly-E Group. On June 7, 2024, the Company issued 450,000 shares of common stock, at a price of $ 20.00 per share in its initial public offering (“IPO”). The gross proceeds of the offering were $ 9.0 million, prior to deducting the underwriting discounts, commissions and offering expenses payable by the Company. In addition, the Company granted the underwriters a 30-day option to purchase an additional 67,500 shares of common stock at the initial public offering price, less underwriting discounts and commissions, to cover over-allotments. On June 25, 2024, the Company issued an additional 67,500 shares of common stock to the underwriters of its IPO for gross proceeds of $ 1.4 million upon full exercise of the underwriters’ over-allotment option. Net proceeds received by the Company from its initial public offering, including the exercise of the over-allotment option, were approximately $ 9.2 million. The Company also issued to The Benchmark Company, LLC (“Benchmark”), the representative of the underwriters warrants to purchase 25,875 shares. On June 4, 2025, the Company issued 5,719,111 shares of common stock, at a price of $ 1.2140 per share in its second public offering. The gross proceeds of the offering were $ 6.9 million, prior to deducting the placement agent’s fees and offering expenses payable by the Company. Each share of common stock was sold together with two warrants, with each warrant to purchase one share of common stock. Each warrant is exercisable immediately with an exercise price equal to 120 % of the offering price ($ 1.4565 per share) and expires on the fifth anniversary of the issuance date, subject to certain adjustments. On July 3, 2025, the Company implemented a 1-for-5 reverse stock split of its issued and outstanding shares of common stock. As a result, all share and per share information has been retroactively adjusted to reflect the reverse stock split for all periods presented. The reverse stock split reduced the number of shares of common stock issued and outstanding from 24,587,500 to 4,917,500 as of March 31, 2025. The par value per share remained unchanged at $ 0.01 . The reverse stock split was accounted for retrospectively in the accompanying consolidated financial statements and notes for all periods presented. All references to the number of shares of common stock, including per share amounts, have been adjusted to reflect the reverse stock split. F- 7 The consolidated financial statements include the financial statements of the Company and each of the following subsidiaries as of March 31, 2025. Name Background Ownership FLY-E GROUP, INC. ● A Delaware corporation ● Incorporated on November 1, 2022 ● A holding company Parent Company FLY EV, INC. ● A Delaware corporation ● Incorporated on November 1, 2022 ● A holding Company 100% owned by Fly-E Group, Inc. FLY E-BIKE, INC. ● A Delaware Company ● Incorporated on August 22, 2022 ● A holding Company 100% owned by Fly-E Group, Inc. UNIVERSE KING CORP ● A New York corporation ● Incorporated on November 19, 2018 ● A retail store 100% owned by Fly E-Bike, Inc. UFOTS CORP. ● A New York corporation ● Incorporated on May 2, 2019 ● A retail store 100% owned by Fly E-Bike, Inc. TKPGO CORP. ● A New York corporation ● Incorporated on July 3, 2018 ● A retail store 100% owned by Fly E-Bike, Inc. FLYFLS INC ● A New York corporation ● Incorporated on October 13, 2020 ● A retail store and corporate office 100% owned by Fly E-Bike, Inc. FLY37 INC ● A New York corporation ● Incorporated on October 14, 2020 ● No operation 100% owned by Fly E-Bike, Inc. FIYET INC ● A New York corporation ● Incorporated on November 12, 2020 ● A retail store 100% owned by Fly E-Bike, Inc. FLYAM INC ● A New York corporation ● Incorporated on February 19, 2021 ● A retail store 100% owned by Fly E-Bike, Inc. OFLYO INC ● A New York corporation ● Incorporated on March 29, 2021 ● A retail store 100% owned by Fly E-Bike, Inc. F- 8 FLYEBIKE INC ● A New York corporation ● Incorporated on March 30, 2021 ● A retail store 100% owned by Fly E-Bike, Inc. FLYCLB INC ● A New York corporation ● Incorporated on April 15, 2021 ● A retail store 100% owned by Fly E-Bike, Inc. FLYEBIKE NJ INC ● A New Jersey corporation ● Incorporated on June 8, 2021 ● No operation 100% owned by Fly E-Bike, Inc. FLYEBIKEMIAMI INC ● A Florida corporation ● Incorporated on June 30, 2021 ● No operation 100% owned by Fly E-Bike, Inc. GOFLY INC ● A Texas corporation ● Incorporated on July 23, 2021 ● No operation 100% owned by Fly E-Bike, Inc. FLYTRON INC. ● A New York corporation ● Incorporated on November 9, 2021 ● A retail store 100% owned by Fly E-Bike, Inc. FLYCYCLE INC. ● A New York corporation ● Incorporated on January 10, 2022 ● A retail store 100% owned by Fly E-Bike, Inc. FLYNJ2 INC. ● A New Jersey corporation ● Incorporated on February 10, 2022 ● A retail store 100% owned by Fly E-Bike, Inc. FLYCORONA INC. ● A New York corporation ● Incorporated on March 9, 2022 ● A retail store 100% owned by Fly E-Bike, Inc. MEEBIKE ● A New York corporation ● Incorporated on March 25, 2022 ● A retail store 100% owned by Fly E-Bike, Inc. FLY E BIKE NJ3, INC ● A New Jersey corporation ● Incorporated on July 18, 2022 ● A retail store 100% owned by Fly E-Bike, Inc. FLY E-BIKE SAN ANTONIO INC ● A Texas corporation ● Incorporated on January 1, 2023 ● No operation 100% owned by Fly E-Bike, Inc. FLYEBIKE WORLD INC. ● A New York corporation ● Incorporated on February 27, 2023 ● A retail store 100% owned by Fly E-Bike, Inc. FLY DELIVERY INC. ● A New York corporation ● Incorporated on March 2, 2023 ● A delivery store 100% owned by Fly E-Bike, Inc. F- 9 FLYEBIKE MIAMI2 INC. ● A Florida corporation ● Incorporated on April 13, 2023 ● A retail store 100% owned by Fly E-Bike, Inc. FLYDC INC. ● A Washington, DC corporation ● Incorporated on May 31, 2023 ● A retail store 100% owned by Fly E-Bike, Inc. FLYJH8509 INC. ● A New York corporation ● Incorporated on August 30, 2023 ● A retail store 100% owned by Fly E-Bike, Inc. FLYBX2381 INC. ● A New York corporation ● Incorporated on August 30, 2023 ● A retail store 100% owned by Fly E-Bike, Inc. FLYNJ4 INC. ● A New York corporation ● Incorporated on October 4, 2023 ● A retail store 100% owned by Fly E-Bike, Inc. FLYTORONTO Corp. ● A Toronto corporation ● Incorporated on October 18, 2023 ● A retail store 100% owned by Fly E-Bike, Inc. FLYLA INC. ● A California corporation ● Incorporated on December 1, 2023 ● A retail and rental store 100% owned by Fly E-Bike, Inc. FWMOTOR INC. ● A New York corporation ● Incorporated on April 3, 2024 ● A retail store 100% owned by Fly E-Bike, Inc. DCMOTOR INC. ● A Maryland corporation ● Incorporated on April 9, 2024 ● A retail store 100% owned by Fly E-Bike, Inc. AOFL LLC ● A New York corporation ● Incorporated on June 25, 2024 ● A holding company 100% owned by Fly E-Bike, Inc. GOBIKE INC ● A New York corporation ● Incorporated on July 16, 2024 ● A rental store 100% owned by Fly E-Bike, Inc. FLYEBIKE BOSTON INC. ● A Massachusetts corporation ● Incorporated on September 1, 2024 ● A retail store 100% owned by Fly E-Bike, Inc. FLYNJ1 INC ● A Massachusetts corporation ● Incorporated on January 29, 2025 ● A retail store 100% owned by Fly E-Bike, Inc. F- 10 Liquidity and Going Concern In assessing the Company’s liquidity, the Company monitors and analyzes its cash on-hand and its operating and capital expenditure commitments. The Company’s liquidity needs are to meet its working capital requirements, operating expenses and capital expenditure obligations. Debt financing from financial institutions and equity financings have been utilized to finance the working capital requirements of the Company. On June 7, 2024, the Company closed the IPO of 450,000 shares of the common stock at the price of $ 20.00 per share, resulting in net proceeds to the Company of $ 7.9 million after deducting underwriting discounts and commissions and offering expenses. On June 25, 2024, the Company sold an additional 67,500 shares of common stock to the underwriters of the IPO for gross proceeds of $ 1.4 million upon full exercise of the underwriters’ over-allotment option and received net proceeds of approximately $ 1.2 million. As of March 31, 2025, the Company had working capital of approximately $ 1.3 million and cash of approximately $ 0.8 million. During the year ended March 31, 2025, the Company had net loss of approximately $ 5.3 million. 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. On June 4, 2025, the Company closed a public offering of (i) 5,719,111 shares of the common stock at the price of $ 1.2140 per share and (ii) 11,438,222 warrants to purchase 11,438,222 shares of common stock, resulting in net proceeds to the Company of $ 6.1 million after deducting placement agent’s fees and offering expenses. Management has determined there is substantial doubt about its ability to continue as a going concern. Management plans to alleviate the going concern risk through (i) equity financing to support the Company’s working capital; (ii) other available sources of financing (including debt) from banks and other financial institutions; and (iii) financial support from the Company’s related parties. There is no assurance that the Company will be successful in implementing the foregoing plans or that additional financing will be available to the Company on commercially reasonable terms, or at all. The Company’s inability to secure needed financing when required could require material changes to the Company’s business plans and could have a material adverse effect on the Company’s ability to continue as a going concern and results of operations. The consolidated financial statements have been prepared on a going concern basis, which contemplates the realization of assets and liquidation of liabilities in the normal course of business. The consolidated financial statements do not include any adjustments that might result from the outcome of such uncertainties. 2 — SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (a) Basis of Presentation The accompanying consolidated financial statements of the Company have been prepared in accordance with accounting principles generally accepted in the U.S. (the “U.S. GAAP”) and regulations of the Securities Exchange Commission (the “SEC”). (b) Principles of Consolidation The consolidated financial statements include the financial statements of the Company and its subsidiaries over which the Company exercises control and, when applicable, entities for which the Company has a controlling financial interest. All transactions and balances among the Company and its subsidiaries have been eliminated upon consolidation. (c) Segment Information The Company’s chief operating decision-makers (“CODM”) (i.e., chief executive officer and his direct reports) review financial information presented on a consolidated basis, accompanied by disaggregated information about revenues by different revenues streams for purposes of allocating resources and evaluating financial performance. The Company and its subsidiaries offer E-bikes, E-motorcycles, E-scooters and other items and services in its stores. The Company’s retail operating divisions are geographically based, have similar economic characteristics and similar expected long-term financial performance. Because substantially all of the Company’s long-lived assets and revenues are located in and derived from the U.S., geographical segments are not presented. The Company’s operating segments are reported in one reportable segment. There are no segment managers who are held accountable for operations, operating results and plans for levels or components below the consolidated unit level. Based on qualitative and quantitative criteria established by Accounting Standards Codification (“ASC”) 280, “Segment Reporting”, the Company considers itself to be operating within one reportable segment. The Company has concluded that consolidated net (loss) income is the measure of segment profitability. The CODM assesses performance for the Company, monitors budget versus actual results, and determines how to allocate resources based on consolidated net (loss) income as reported in the consolidated statements of operations and other comprehensive (loss) income. There are no other expense categories regularly provided to the CODM that are not already included in the primary financial statements herein. F- 11 (d) Use of Estimates In the application of the Company’s accounting policies, management is required to make judgments, estimates and assumptions about the carrying amounts of assets and liabilities that are not readily apparent from other sources. The estimates and associated assumptions are based on historical experience and other factors that are considered relevant. Significant accounting estimates include allowance for inventories. Changes in facts and circumstances may result in revised estimates. Actual results could differ from those estimates, and as such, differences may be material to the consolidated financial statements. (e) Commitments and Contingencies In the normal course of business, the Company is subject to loss contingencies, such as legal proceedings and claims arising out of its business, which cover a wide range of matters, including, among others, government investigations, shareholder lawsuits, and non-income tax matters. An accrual for a loss contingency is recognized when it is probable that a liability has been incurred and the amount of loss can be reasonably estimated. If a potential material loss contingency is not probable but is reasonably possible, or is probable but cannot be estimated, then the nature of the contingent liability, together with an estimate of the range of possible loss if determinable and material, is disclosed. (f) Cash Cash consists of cash on hand and cash deposited with banks. The Company’s cash is maintained at financial institutions in the U.S. Deposits in these financial institutions may, from time to time, exceed the Federal Deposit Insurance Corporation’s (the “FDIC”) federally insured limit, which is $ 250,000 . The Company has not incurred any losses in the past for amount over the FDIC limits. As of March 31, 2025 and March 31, 2024, nil and nil deposited with banks was uninsured, respectively. (g) Accounts Receivable Accounts receivable includes trade account due from customers. Accounts receivable is recorded at the invoiced amount less an allowance for any credit loss and does not bear interest, which is due after 30 to 90 days, depending on the credit term with the customers. Accounts receivable which is deemed to be uncollectible is charged off against the allowance after all means of collection have been exhausted and the potential for recovery is considered remote. The Company adopt the current expected credit loss model (“CECL model”) to estimate the expected credit losses, which is determined by multiplying the probability of default. In determining the probability of default, the Company mainly considers factors such as aging schedule of receivables, migration rate of receivables, assessment of receivables due from specific identifiable counterparties that are considered at risk or uncollectible, current market conditions, as well as reasonable and supportable forecasts of future economic conditions. As of March 31, 2025, the Company accrued credit losses of $ 116,746 , consisting of $ 41,100 related to accounts receivable from a related party customer and $ 75,646 related to accounts receivable from a third party customer. As of March 31, 2024, no credit losses were recognized. (h) Inventories, Net Inventories, consisting of products available for sale, are stated at the lower of cost or net realizable value using the first-in-first-out method. Adjustments to the carrying value are recorded for estimated obsolescence or excess inventory equal to the difference between the cost of inventory and the estimated net realizable value based upon assumptions about future demand and market conditions. Inventory cost consists of the direct cost of merchandise including freight. For the years ended March 31, 2025 and 2024, the impairment loss was $870,589 and $456,209 , respectively. (i) Prepayments and Other Receivables Prepayments and other receivables are mainly prepayments to vendors, prepaid expenses paid to service providers, prepaid taxes, advances to employees, and other deposits. Management regularly reviews the aging of such balances and changes in payment and realization trends and records allowances when management believes that the collection of amounts due is at risk. Accounts considered uncollectable are written off against allowances after exhaustive efforts at collection are made. As of March 31, 2025 and 2024, no allowance against prepayments and other receivables was recorded. F- 12 (j) Property and Equipment, Net Property and equipment are stated at cost less accumulated depreciation and any recorded impairment. The estimated useful lives are as follows: Machinery and equipment 5 years Furniture and fixtures 5 years Leasehold improvements 3 – 10 years (shorter of lease term or useful lives) Motor vehicles 5 years Buildings 30 years Properties used for lease 2 years Computer hardware and software 10 years Depreciation on property and equipment is calculated on the straight-line method over the estimated useful lives of the assets. The cost and related accumulated depreciation of assets sold or otherwise retired are eliminated from the accounts and any gain or loss is included in the consolidated statements of operations. Expenditures for maintenance and repairs are charged to earnings as incurred, while additions, renewals, and betterments, which are expected to extend the useful life of assets, are capitalized. The Company also re-evaluates the periods of depreciation to determine whether subsequent events and circumstances warrant revised estimates of useful lives. Construction in progress Direct costs that are related to the construction of property, equipment and software and incurred in connection with bringing the assets to their intended use are capitalized as construction in progress. Construction in progress is transferred to specific property, equipment and software items and the depreciation of these assets commences when the assets are ready for their intended use. In December 2023, the Company engaged DF Technology US Inc (“DFT”), a former related party which ceased to be the related party on November 6, 2024, for certain technology services, such as enterprise resource planning system (“ERP system”). During the fiscal year of 2025, the Company reclassified $ 2,310,000 from construction in process to computer hardware and software and started for depreciation. As of March 31, 2025 and 2024, construction in progress was nil and $ 275,000 , respectively, and primarily relating to the cost incurred to develop the software by DFT. (k) Intangible Assets Intangible asset is stated at cost less accumulated amortization and amortized in a method which reflects the pattern in which the economic benefits of the intangible asset are expected to be consumed or otherwise used up. The balance of intangible asset represents internal use software and property rights. The software is acquired externally tailored to the Company’s requirements. The Company capitalizes the costs associated with design, development, acquisition and maintenance of its acquired intangible assets and amortizes these assets over their remaining useful lives on a straight-line basis. Any further payments made to maintain or develop these assets would be capitalized and amortized over the balance of the useful life for the assets. The estimated useful life and amortization method are reviewed at the end of each reporting period, with the effect of any changes in the estimate being accounted for on a prospective basis. The estimated useful lives of intangibles assets are as follows: Property rights 5 - 20 years Software 5 years F- 13 (l) Impairment of Long-lived Assets At the end of each reporting period, the Company reviews the carrying amounts of its property and equipment, intangible assets subject to depreciation and amortization, and right-of-use assets, to determine whether there is any indication that the carrying value of an asset may not be recoverable. The Company assesses the recoverability of the assets based on the undiscounted future cash flows the assets are expected to generate and recognize an impairment loss when estimated undiscounted future cash flows expected to result from the use of the asset plus net proceeds expected from disposition of the asset, if any, are less than the carrying value of the asset. If an impairment is identified, the Company will reduce the carrying amount of the asset to its estimated fair value based on a discounted cash flows approach or, when available and appropriate, to comparable market values. As of March 31, 2025 and 2024, no impairment of long-lived assets was recognized. (m) Deferred IPO Costs The Company complies with the requirements of FASB ASC Topic 340-10-S99-1, “Other Assets and Deferred Costs — SEC Materials” (“ASC 340-10-S99”) and SEC Staff Accounting Bulletin Topic 5A, “Expenses of Offering”. Deferred IPO costs consist of underwriting, legal, accounting and other professional expenses incurred through the balance sheet date that are directly related to the initial public offering of the Company and that will be charged to additional paid in capital upon the completion of the offering. Total deferred offering cost of $ 502,198 as of March 31, 2024 was charged to additional paid-in capital upon IPO. (n) Fair Value Measurements Fair value is defined as the price that would be received for an asset, or paid to transfer a liability, in an orderly transaction between market participants at the measurement date. Valuation techniques maximize the use of observable inputs and minimize the use of unobservable inputs. When determining the fair value measurements for assets and liabilities, the Company considers the principal or most advantageous market in which it would transact and consider assumptions that market participants would use when pricing the asset or liability. The following summarizes the three levels of input required to measure fair value, of which the first two are considered observable and the third is considered unobservable: Level-1 — Observable inputs that reflect quoted prices (unadjusted) for identical assets or liabilities in active markets. Level-2 — Include other inputs that are directly or indirectly observable in the marketplace. Level-3 — Unobservable inputs which are supported by little or no market activity. The fair value for certain assets and liabilities such as cash, accounts receivable, other receivables, prepayments and other current assets, short-term loans, accounts payable, contract liabilities, accrued expenses and other payables, and tax payables have been determined to approximately carrying amounts due to the short maturities of these instruments. The Company believes that its long-term loan to a third party approximates the fair value based on current yields for debt instruments with similar terms. The Company and its subsidiaries did not have any non-financial assets or liabilities that are measured at fair value on a recurring basis as of March 31, 2025 and 2024. (o) Revenue Recognition Product revenue The Company follows the revenue accounting requirements of Accounting Standards Codification (“ASC”) Topic 606, Revenue from Contracts with Customers. The core principle underlying the revenue recognition of this ASC allows the Company to recognize revenue that represents the transfer of products and services to customers in an amount that reflects the consideration to which the Company expects to be entitled in such exchange. This will require the Company to identify contractual performance obligations and determine whether revenue should be recognized at a point in time or over time, based on when control of products and services transfers to a customer. To achieve that core principle, the Company applies a five-step model to recognize revenue from customer contracts. The five-step model requires that the Company (i) identify the contract with the customer, (ii) identify the performance obligations in the contract, (iii) determine the transaction price, including variable consideration to the extent that it is probable that a significant future reversal will not occur, (iv) allocate the transaction price to the respective performance obligations in the contract, and (v) recognize revenue when (or as) the Company satisfies the performance obligation. F- 14 The Company generates substantially all its revenues from sales of products such as smart E-bikes, E-motorcycles, E-scooters and accessories to the retail and wholesale customers through its wholly owned subsidiaries stores. In accordance with ASC 606, the Company’s performance obligations are satisfied upon the control of products being passed to the customer, which is the point in time that the customers are able to direct the use of and obtain substantially all of the economic benefit of the products or services. The transfer of control typically occurs at a point in time based on consideration of when the customer has an obligation to pay for the products, and physical possession of, legal title to, and the risks and rewards of ownership of the products have been transferred, and the customer has accepted the products. Revenue is recognized net of estimates of variable consideration, including product returns, customer discounts and allowance. which occurs at the point of sale, or the services have been rendered. Historically, the Company has not experienced any significant returns nor provided significant customer discounts. The Company offers an assurance-type warranty to its customers. An assurance-type warranty guarantees that the product will perform as promised and is not a performance obligation. This type of warranty promises to repair or replace a delivered good or service if it does not perform as expected. Since an assurance-type warranty guarantees the functionality of a product, the warranty is not accounted for as a separate performance obligation, and thus no transaction price is allocated to it. Rather, to account for an assurance-type warranty the vendor should estimate and accrue a warranty liability when the promised good or service is delivered to the customer (see ASC 460-10). Since the contract price and term are fixed and enforceable, and an assurance-type warranty guarantees the functionality of a product, and the warranty is not accounted for as a separate performance obligation, no transaction price is allocated to it. The Company recognizes sales in full at the point in time when the products are delivered or accepted by the customers, in accordance with the acceptance term specified in the contract. The Company records estimated future warranty costs under ASC 460. Such estimated costs for warranties are estimated at the time of delivery and these warranties are not service warranties separately sold by the Company. Generally, the estimated claim rates of warranty are based on actual warranty experience or the Company’s best estimate. The Company accrued $ 20,131 and $ 27,714 of warranty reserves under accrued expenses and other payables as of March 31, 2025 and 2024, respectively. The Company has no contract assets and contract liabilities balances as of March 31, 2025 and 2024, respectively. Rental Revenue The Company operates rental business primarily from the Go Fly rental mobile app and selected Fly E-Bike stores that provide users with a flexible and affordable e-bike rental option. The Company offers rental services through its subsidiaries, GOBIKE INC, FLYLA INC, and FLYTORONTO CORP. All the products available for rent are owned by the Company. The Company leases products to customers, and as a result, the Company considers itself to be the accounting lessor, as applicable, in these arrangements in accordance with ASC 842. Rental business operating costs include refunded products repair fee and other operating costs, as applicable. Due to the short-term nature of the rental business, the Company classifies these rentals operating leases. Revenue generated from the rental services is recognized over the rental period, which is typically one day, one week or more. Disaggregated information of revenues by business lines are as follows: For the years Ended March 31, 2025 2024 Product revenues - retail (ASC 606) $ 21,725,817 $ 26,389,720 Product revenues - wholesale (ASC 606) 3,529,479 5,815,946 Revenues - rental services (ASC 842) 171,867 — Net revenues $ 25,427,163 $ 32,205,666 (p) Selling Expenses Selling expenses mainly consist of advertising costs, and payroll and related expenses for personnel engaged in selling and marketing activities. Advertising expenses, which consist primarily of online and offline advertisements, are expenses when the services are received. The advertising expenses were $ 273,816 and $ 64,423 for the years ended March 31, 2025 and 2024, respectively. F- 15 (q) Research and Development Expenses Research and development expenses include salaries for the Company’s research and development personnel, as well as related development expenses paid to the third-party development team. The Company recognizes internal use software acquired and internally developed in accordance with ASC 350-40 “Software—internal use software”. The Company expenses all costs that are incurred in connection with the planning and implementation phases of development, and costs that are associated with maintenance of the existing software for internal use. Certain costs associated with developing internal-use software are capitalized when such costs are incurred within the application development stage of software development. As a result, the Company expensed the development costs of the Fly E-Bike app as they incurred. For the years ended March 31, 2025 and 2024, development costs amounted to $ 549,368 and $ 292,724 , respectively, which were recorded under general and administrative expenses. (r) Income Taxes Current income taxes are provided based on net income/(loss) for financial reporting purposes and adjusted for income and expense items which are not assessable or deductible for income tax purposes, in accordance with the regulations of the relevant tax jurisdictions. Deferred taxes are accounted for using the asset and liability method in respect of temporary differences arising from differences between the carrying amount of assets and liabilities in the consolidated financial statements and the corresponding tax basis used in the computation of assessable tax profit. In principle, deferred tax liabilities are recognized for all taxable temporary differences. Deferred tax assets (the “DTAs”) are recognized to the extent that it is probable that taxable profit will be available against which deductible temporary differences can be utilized. Deferred tax is calculated using tax rates that are expected to apply to the period when the asset is realized, or the liability is settled. Deferred tax is charged or credited in the income statement, except when it is related to items credited or charged directly to equity, in which case the deferred tax is also dealt with in equity. DTAs are reduced by a valuation allowance when, in the opinion of management, it is more likely than not that some portion or all the DTAs will not be realized. Current income taxes are provided for in accordance with the laws of the relevant taxing authorities. An uncertain tax position is recognized as a benefit only if it is “more likely than not” that the tax position would be sustained in a tax examination, with a tax examination being presumed to occur. The amount recognized is the largest amount of tax benefit that is greater than 50 % likely of being realized on examination. For tax positions not meeting the “more likely than not” test, no tax benefit is recorded. Penalties and interest incurred related to underpayment of income tax are classified as income tax expense in the period incurred. The tax returns filed in 2018 to 2024 are subject to examination by any appropriate tax authorities. For the years ended March 31, 2025 and 2024, the Company accrued $ 30,301 and $ 60,487 income tax related penalty included in current income taxes expenses, respectively. (s) Leases The Company accounts for leases in accordance with ASC 842. The Company leases premises for offices, warehouses, and retail stores under non-cancellable operating leases, and the Company leases its products to customers under non-cancellable operating leases. Lessor The Company’s lease arrangements include products rentals to customers. The lease term is from one hour to one month. Due to the short-term nature of these arrangements, the Company classifies these leases as operating leases. The Company does not separate lease and non-lease components, such as insurance or roadside assistance provided to the lessee, in its lessor lease arrangements. Lease payments are primarily fixed and are recognized as revenue in the period over which the lease arrangement occurs. Taxes or other fees assessed by governmental authorities that are both imposed on and concurrent with each lease revenue-producing transaction and collected by the Company from the lessee are excluded from the consideration in its lease arrangements. The Company mitigates residual value risk of its leased assets by performing regular maintenance and repairs, as necessary, and through periodic reviews of asset depreciation rates based on the Company’s ongoing assessment of present and estimated future market conditions. F- 16 Lessee The Company recognizes right-of-use assets and lease liabilities for all leases at the commencement date of a lease, except for short-term leases and low-value asset leases accounted for applying a recognition exemption where lease payments are recognized as expenses on a straight-line basis over the lease terms. Leases with an initial term of 12 months or less are short-term leases and not recognized as operating lease right-of-use assets and operating lease liabilities on the consolidated balance sheets. The Company recognizes lease expense for short-term leases on a straight-line basis over the lease term. Right-of-use assets are initially measured at cost, which comprises the initial measurement of lease liabilities adjusted for lease payments made at or before the commencement date, plus any initial direct costs incurred and an estimate of costs needed to restore the underlying assets, and less any lease incentives received. Right-of-use assets are subsequently measured at cost less accumulated depreciation and impairment losses and adjusted for any remeasurement of the lease liabilities. Right-of-use assets are presented on a separate line in the consolidated balance sheets. Right-of-use assets are depreciated using the straight-line method from the commencement dates to the earlier of the end of the useful lives of the right-of-use assets or the end of the lease terms. Lease liabilities are initially measured at the present value of the lease payments, which comprise fixed payments, in-substance fixed payments, variable lease payments which depend on an index or a rate. The lease payments are discounted using the interest rate implicit in a lease if that rate can be readily determined. If that rate cannot be readily determined, the Company uses the lessee’s incremental borrowing rate. Subsequently, lease liabilities are measured at amortized cost using the effective interest method, with interest expense recognized over the lease terms. When there is a change in a lease term or a change in future lease payments resulting from a change in an index or a rate used to determine those payments, the Company remeasures the lease liabilities with a corresponding adjustment to the right-of-use-assets. However, if the carrying amount of the right-of-use assets is reduced to zero , any remaining amount of the remeasurement is recognized in profit or loss. Lease liabilities are presented on a separate line in the consolidated balance sheets. Variable lease payments that do not depend on an index or a rate are recognized as expenses in the periods in which they are incurred. (t) Concentration Risk Concentration of customers and suppliers No customers individually represented greater than 10% of total net revenues of the Company for the years ended March 31, 2025 and 2024. For the year ended March 31, 2025, the Company’s top two suppliers represented 42 % and 32 % of total purchases of the Company, respectively. For the year ended March 31, 2024, the Company’s top three suppliers represented 36 %, 21 %, and 13 % of total purchases of the Company, respectively. As of March 31, 2025, two suppliers accounted for 63 % and 25 % of accounts payable balance, respectively. As of March 31, 2024, three suppliers accounted for 31 %, 26 %, and 23 % of accounts payable balance, respectively. Concentration of credit risk Financial instruments that are potentially subject to credit risk consist principally of accounts receivable. The Company believes the concentration of credit risk in its account receivable is substantially mitigated by its ongoing credit evaluation process and relatively short collection terms. The Company does not generally require collateral from customers. The Company evaluates the need for an allowance for doubtful accounts based upon factors surrounding the credit risk of specific customers, historical trends, and other information. Historically, the Company did not have any bad debt on its account receivable. Financial instruments that potentially expose the Company to concentrations of credit risk consist principally of cash and cash equivalents, term deposits, restricted cash, short-term investments, and accounts receivable, net. The Company’s investment policy requires cash and cash equivalents, term deposits, restricted cash, and short-term investments to be placed with high-quality financial institutions and to limit the amount of credit risk from any one issuer. The Company regularly evaluates the credit standing of the counterparties or financial institutions. F- 17 (u) Related Parties A related party is generally defined as (i) any person and or their immediate family hold 10% or more of the Company’s securities (ii) the Company’s management and/or their immediate family, (iii) someone that directly or indirectly controls, is controlled by or is under common control with the Company, or (iv) anyone who can significantly influence the financial and operating decisions of the Company. A transaction is considered to be a related party transaction when there is a transfer of resources or obligations between related parties. Related parties may be individuals or corporate entities. Transactions involving related parties cannot be presumed to be carried out on an arm’s length basis, as the requisite conditions of competitive, free market dealings may not exist. Representations about transactions with related parties, if made, shall not imply that the related party transactions were consummated on terms equivalent to those that prevail in arm’s length transactions unless such representations can be substantiated. (v) Earnings (Loss) Per Share The Company computes earnings per share (“EPS”) in accordance with ASC 260, “Earnings per Share”. ASC 260 requires companies to present basic and diluted EPS. Basic EPS is measured as net income divided by the weighted average common stock outstanding for the period. Diluted EPS takes into account the potential dilution that could occur if securities or other contracts to issue ordinary shares were exercised and converted into ordinary shares. Potential shares of common stock that have an anti-dilutive effect (i.e., those that increase income per share or decrease loss per share) are excluded from the calculation of diluted EPS. For the year ended March 31, 2025, the Company had potential shares of common stock issuable upon the exercise of the Representative’s Warrants (as defined below). As the Company incurred losses for the year ended March 31, 2025, inclusion of these potential shares of common stock would have reduced the net loss per share. Therefore, these potential shares were excluded from the calculation of diluted net loss per share. For the year ended March 31, 2024, there were no dilutive shares. (w) Foreign Currencies Translation Transactions denominated in currencies other than the functional currency are translated into the functional currency at the exchange rates prevailing at the dates of the transaction. Monetary assets and liabilities denominated in currencies other than the functional currency are translated into the functional currency using the applicable exchange rates at the balance sheet dates. The resulting exchange differences are recorded in the statement of operations. The reporting currency of the Company is United States Dollar ($). The Company’s subsidiary in Canada maintains its books and records in its local currency, Canadian dollar (CAD), which is the functional currency for this subsidiary as it is the primary currency of the economic environment in which this entity operates. In general, for consolidation purposes, assets and liabilities of subsidiaries whose functional currency is not United States Dollar are translated into United States Dollar in accordance with ASC Topic 830-30, “Translation of Financial Statement”, using the exchange rate on the balance sheet date. Revenues and expenses are translated at average rates prevailing during the period. The gains and losses resulting from translation of financial statements of foreign subsidiaries are recorded as a separate component of accumulated other comprehensive income within the statement of stockholders’ equity. (x) Representative’s Warrants Upon the closing of the IPO in June 2024, the Company issued to Benchmark underwriters warrants (the “Representative’s Warrants”) to purchase 25,875 shares of common stock which warrants are also exercisable on a cashless basis. The Company accounts for these warrants as either equity-classified or liability-classified instruments based on an assessment of the warrant’s specific terms and applicable authoritative guidance in Financial Accounting Standards Board (“FASB”) Accounting Standards Codification ASC 480, Distinguishing Liabilities from Equity and ASC 815, Derivatives and Hedging. The Company accounts for its warrants as equity that meet all of the criteria (i) require physical settlement or net-share settlement or (ii) give the Company a choice of net-cash settlement or settlement in its own shares (physical settlement or net-share settlement), the warrants are required to be recorded as a component of additional paid-in capital at the time of issuance and subsequent changes in fair value are not recognized as long as the warrants continue to be classified as equity. (y) Held for Sale The Company classifies assets and liabilities to be sold (disposal group) as held for sale in the period when all of the applicable criteria are met, including: (i) management commits to a plan to sell, (ii) the disposal group is available to sell in its present condition, (iii) there is an active program to locate a buyer, (iv) the disposal group is being actively marketed at a reasonable price in relation to its fair value, (v) significant changes to the plan to sell are unlikely, and (vi) the sale of the disposal group is generally probable of being completed within one year. Management performs an assessment at least quarterly or when events or changes in business circumstances indicate that a change in classification may be necessary. F- 18 Assets and liabilities held for sale are presented separately within the consolidated balance sheets with any adjustments necessary to measure the disposal group at the lower of its carrying value or fair value less costs to sell. For each period the disposal group remains classified as held for sale, its recoverability is reassessed, and any necessary adjustments are made to its carrying value. The Company does not report the results of operations of a business as discontinued operations as the disposal is not a strategic shift that will have a major effect on its operations and financial results. (z) Newly adopted accounting pronouncements In November 2023, the FASB issued ASU 2023-07, “Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures.” This guidance requires a public entity to disclose for each reportable segment, on an interim and annual basis, the significant expense categories and amounts that are regularly provided to the chief operating decision-maker (“CODM”) and included in each reported measure of a segment’s profit or loss. Additionally, it requires a public entity to disclose the title and position of the individual or the name of the group or committee identified as the CODM. This guidance is effective for fiscal years beginning after December 15, 2023, and interim periods within fiscal years beginning after December 15, 2024. Early adoption is permitted, and the guidance should be applied retrospectively to all periods presented in the financial statements, unless it is impracticable. The Company adopted the ASU for the fiscal year ending March 31, 2025 and applied retrospectively to all prior periods presented. The adoption of this ASU had no material impact on reportable segments identified and had no effect on the Company’s financial position, results of operations, or cash flows. (aa) Recent accounting pronouncements not yet adopted The Company considers the applicability and impact of all accounting standards updates (“ASUs”). Management periodically reviews new accounting standards that are issued. Under the Jumpstart Our Business Startups Act of 2012, as amended (the “JOBS Act”), the Company meets the definition of an emerging growth company and has elected the extended transition period for complying with new or revised accounting standards, which delays the adoption of these accounting standards until they would apply to private companies. In December 2023, the FASB issued ASU 2023-09, “Income Taxes (Topic 740): Improvements to Income Tax Disclosures.” This guidance requires a public entity to disclose in their rate reconciliation table additional categories of information about federal, state and foreign income taxes and to provide more details about the reconciling items in some categories if the items meet a quantitative threshold. The guidance also requires all entities to disclose annually income taxes paid (net of refunds received) disaggregated by federal (national), state and foreign taxes and to disaggregate the information by jurisdiction based on a quantitative threshold. This guidance is effective for annual periods beginning after December 15, 2024. Early adoption is permitted, and this guidance should be applied prospectively but there is the option to apply it retrospectively. The Company is currently evaluating the impact of this guidance on its consolidated financial statements. In November 2024, the FASB issued ASU 2024-03, “Income Statement – Reporting Comprehensive Income - Expense Disaggregation Disclosures (Subtopic 220-40): Disaggregation of Income Statement Expenses, requiring public business entities to disclose additional information about specific expense categories in the notes to the financial statements at interim and annual reporting periods, including purchases of inventory, employee compensation, depreciation, and intangible asset amortization.” The provisions of this update are effective for annual periods beginning after December 15, 2026, and interim reporting periods beginning after December 15, 2027, using either a prospective or retrospective approach. The Company is currently evaluating the impact of this guidance on its consolidated financial statements. 3 — INVENTORIES, NET Inventories, net consisted of the following: March 31, 2025 March 31, 2024 Batteries $ 2,084,890 $ 1,009,228 Electric Vehicles 3,070,224 2,634,643 Tires 482,364 687,927 Accessories 1,867,365 1,546,283 Inventories 7,504,843 5,878,081 Inventory reserves ( 1,107,569 ) ( 514,021 ) Inventories, net $ 6,397,274 $ 5,364,060 Movements of inventory reserves are as follows: March 31, 2025 March 31, 2024 Beginning balance $ 514,021 $ 431,363 Addition 870,589 456,209 Write off ( 277,041 ) ( 373,551 ) Ending Balance $ 1,107,569 $ 514,021 As of March 31, 2025 and 2024, the inventory allowance balance was $ 1,107,569 and $ 514,021 , respectively. For the years ended March 31, 2025 and 2024, the impairment loss was $ 870,589 and $ 456,209 , respectively. F- 19 4 — PREPAYMENTS AND OTHER RECEIVABLES Prepayments and other current assets as of March 31, 2025 and 2024 consisted of the following: March 31, 2025 March 31, 2024 Prepaid rent $ 157,683 $ 179,792 Prepayments to vendors (i) 2,353,105 143,018 Prepaid iCloud Server — 1,747 Prepaid insurance 214,111 237,207 Prepayments to other service providers 269,693 26,896 Prepaid income tax 18,127 — Other receivable from third parties (ii) 664,267 — Total Prepayment and Other Receivables $ 3,676,986 $ 588,660 (i) As of March 31, 2025 and 2024, the prepayments to vendors were $ 2.4 million and $ 0.1 million , respectively. The increase in prepayments to vendors was primarily due to the Company’s anticipation of growth in future sales and rental services. The Company plans to purchase more E-vehicles and related accessories from oversea and U.S. vendors to support the expansion in retail and rental markets. These prepayments to vendors are expected to be settled by the end of October 2025. (ii) On December 17, 2024, the management team approved a plan to sell 100 % of its equity interests in subsidiaries FLYMHT INC, FLY14 CORP, EDISONEBIKE INC, and FLY6AVE INC to third-party individuals (the “Buyers”). On January 1, 2025, the Company entered into share transfer agreements with the Buyers for total cash consideration of $ 635,193 . The full consideration should be settled in cash at closing date, which was January 1, 2025. As of March 31, 2025, the Company did not any receive consideration (See Note - 14 — DISPOSAL OF SUBSIDIARIES). As of March 31, 2025, the Company had other receivables of $ 29,074 from a third-party individual. 5 — PROPERTY AND EQUIPMENT, NET Property and equipment as of March 31, 2025 and 2024 consisted of the following: March 31, 2025 March 31, 2024 Furniture & Fixtures $ 400,080 $ 400,558 Machinery & Equipment 230,015 212,317 Automobile 669,902 306,607 Leasehold improvements 683,595 976,870 Building (ii) 3,663,215 — Computer hardware and software (i) 2,310,000 — Construction in progress-Software — 275,000 Properties for rental business (iii) 193,963 — Property and Equipment 8,150,770 2,171,352 Less: Accumulated depreciation ( 863,557 ) ( 416,330 ) Property and Equipment, net $ 7,287,213 $ 1,755,022 For the years ended March 31, 2025 and 2024, the depreciation expenses were $ 631,280 and $ 272,708 , respectively. (i) In December 2023, the Company engaged DFT, a former related party, for certain technology services, such as ERP system. The total contract price for the ERP system is $ 2,500,000 . The ERP system is fully completed and delivered on May 20, 2025. As of March 31, 2025 and 2024, the accumulative payments to DFT for development of the ERP system were $ 2,446,580 and $ 1,554,000 , respectively. 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 and 2024, construction in progress was nil and $ 275,000 , respectively, and primarily relating to the cost incurred to develop the software by DFT. As of March 31, 2025 and 2024, the Company had a prepayment of $ 136,580 and $ 1,279,000 , respectively, to DFT (see Note 13 – Long-term prepayment for software development – related parties, net). (ii) On August 12, 2024, the Company entered into a purchase agreement with He’s Realty Holdings LLC (the “Seller”), a third party, to purchase an office property. The final purchase price of the property was $ 3,594,000 and closing cost was $ 69,215 . The Company paid $ 628,211 in cash to the Seller, withdrew $ 1,235,004 from its line of credit with Peapack-Gladstone Bank, and financed the remaining $ 1,800,000 . On August 13, 2024, the Company’s subsidiary, AOFL LLC, obtained a one-year short-term loan of $ 1,800,000 from He’s Realty Holdings LLC with an annual interest rate of 6.5 %. The principal amount shall be paid to He’s Realty Holdings LLC in one or more installments on or before August 11, 2025, and during the one-year borrowing period, AOFL LLC needs to pay interest of $ 9,750 to He’s Realty Holdings LLC on a monthly basis. The collateral provided was the office purchased by AOFL LLC. The loan was paid off in full on November 29, 2024. (iii) In October 2024, the Company started to offer rental services through its subsidiaries, GOBIKE INC, in New York, FLYLA INC, in Log Angeles, and FLYTORONTO CORP, in Toronto. The rental term is from one hour to one month. In New York, the Company offers a single model of E-Bike for rent, FLY 11 PRO GOFLY as of the date of this report. In Log Angeles, the Company offers 31 types of E-Bikes and E-scooters for rent, including FLY AIR2, FLY TANK, and FLY 11 PRO. In Toronto, the Company offers three types of E-Bikes for rent, FLY 7, FLY 11, and FLY 11 PRO. F- 20 6 — INTANGIBLE ASSETS, NET Intangible assets as of March 31, 2025 and 2024 consisted of the following: March 31, 2025 March 31, 2024 Property rights $ 92,604 $ 38,032 GO FLY App 500,000 — Total Intangible assets 592,604 38,032 Less: Accumulated Amortization ( 66,739 ) ( 1,648 ) Intangible assets, net $ 525,865 $ 36,384 For the years ended March 31, 2025 and 2024, the amortization expenses were $ 65,091 and $ 1,648 , respectively. In July 2024, the Company engaged DFT, a former related party, to develop a new APP, GO FLY APP, for the rental business. The total contract price for the GO FLY APP is $ 500,000 , and the GO FLY APP was delivered on September 5, 2024. 7 — ACCRUED EXPENSES AND OTHER PAYABLES March 31, 2025 March 31, 2024 Accrued payroll $ 62,068 $ 121,120 Advances from customers 28,144 25,099 Advances from IGH Holding Inc 49,000 49,000 Accrued warranty 20,131 27,714 Payroll tax and sales tax payable 113,601 245,226 Accrued store expenses 58,044 21,975 Accrued IPO offering cost — 225,000 Accrued freight in cost 35,980 107,255 Accrued UL penalty (i) 1,000,000 — Accrued professional fee — 103,000 Accrued Expenses and Other Current Liabilities $ 1,366,968 $ 925,389 (i) See Note 12 — Commitments and contingencies F- 21 8 — LOAN PAYABLE A summary of the Company’s loans is listed as follows: Lender Due Date March 31, 2025 March 31, 2024 Chase Bank (i) October 25, 2027 — 176,366 Chase Bank (ii) January 12, 2028 301 56,580 Chase Bank (vii) September 28, 2028 — 221,197 Leaf Capital Funding, LLC (iii) September 30, 2027 34,620 46,856 Sinoelite Corp (iv) April 3, 2024 — 100,000 Automobile Loan – Honda (v) June 25, 2027 20,353 28,833 Bank of Hope (vi) September 15, 2024 — 391,227 Bank of Hope (vi) September 22, 2024 — 400,000 Bank of Hope (vi) December 12, 2024 — 205,000 Milea Truck Sales of Queens Inc. (viii) August 22, 2027 106,093 — Milea Truck Sales of Queens Inc. (viii) July 26, 2027 76,779 — Peapack-Gladstone Bank (ix) August 31, 2025 4,936,058 — Veiocity Commercial Capital, LLC (x) December 1, 2054 1,927,729 — AOWINV LLC (xi) December 1, 2054 255,000 — Total loan payables 7,356,933 1,626,059 Short-term loan payables ( 5,191,058 ) — Current portion of long-term loan payables ( 100,835 ) ( 1,213,242 ) Long-term loan payables $ 2,065,040 $ 412,817 (i) On October 25, 2022, the Company’s subsidiary, Universe King Corp. obtained a five-year long-term loan of $ 230,000 from JPMorgan Chase Bank, N.A. with an annual interest rate of 10.35 %. Mr. Ke Zhang, the Company’s Chief Human Resource Officer, provided a guarantee on this loan. To secure payment and performance of the liabilities, Universe King Corp. pledged to JPMorgan Chase Bank, N.A., a continuing security interest in all of its right, title and interest in all of its properties, whether now owned or hereinafter acquired and whether now existing or hereafter arising. On August 9, 2024, the Company paid off this loan in full. (ii) On January 12, 2023, the Company’s subsidiary, Arfy Corp. obtained a five-year long-term loan of $ 70,000 from JPMorgan Chase Bank, N.A. with an annual interest rate of 9.8 %. Mr. Tong Chen, an original stockholder of the Company, provided a guarantee on this loan. To secure payment and performance of the liabilities, Arfy Corp. pledged to JPMorgan Chase Bank, N.A., a continuing security interest in all of its right, title and interest in all of its properties, whether now owned or hereinafter acquired and whether now existing or hereafter arising. On August 9, 2024, the Company paid $ 52,069 and as of March 31, 2025, the outstanding balance is $ 301 . (iii) On August 24, 2022, Universe King Corp. obtained a five-year long-term loan of $ 63,674 from Leaf Capital Funding, LLC with an annual interest rate of 7.0 %. The collateral provided included the Fuso trucks, whether now owned or hereafter acquired by Universe King Corp., and together with all accessories, accessions, attachments thereto, and all other substitutions, renewals, replacements and improvements and all proceeds of the foregoing. As of March 31, 2025, the outstanding balance is $ 34,620 . From April 1 to July 15, 2025, the Company paid $ 3,785 on principal and interest of the loan. (iv) On January 3, 2023, Fly E-Bike, Inc. obtained a one-year and three-month long-term loan of $ 100,000 from Sinoelite Corp with no interest. On April 25, 2024, the Company paid off this loan in full. (v) On June 12, 2023, Flyebikemiami Inc obtained a four-year long-term loan of $ 34,974 from AutoNation Honda Miami Lakes with an annual interest rate of 3.98 %. The collateral provided was the Honda vehicle purchased by Flyebikemiami Inc. As of March 31, 2025, the outstanding balance is $ 20,353 . From April 1 to July 15, 2025, the Company paid $ 2,368 on principal and interest of the loan. F- 22 (vi) On September 20, 2023, Fly-E Group, Inc obtained a line of credit of $ 1,000,000 from Bank of Hope with a floating annual interest rate, currently at 8.5 %. On the same date, the Company withdrew $ 391,226 from Bank of Hope to pay off the loan balance with Flushing Bank as of September 15, 2023. On September 22, 2023 and December 12, 2023, the Company withdrew $ 400,000 and $ 205,000 , respectively, from Bank of Hope to support its business operations. Mr. Zhou Ou, the Company’s Chief Executive Officer, and Mr. Ke Zhang, the Company’s Chief Human Resource Officer, provided a guarantee on this loan. To secure payment and performance of the liabilities, Fly-E Group pledged to Bank of Hope the following items: inventory, chattel paper, accounts, equipment, and general intangibles of first 29 incorporated subsidiaries of the Company. On August 9, 2024, the Company paid off this loan in full. (vii) On October 2, 2023, the Company’s subsidiary, Fly14 Corp. obtained a five-year long-term loan of $ 240,000 from JPMorgan Chase Bank, N.A. with an annual interest rate of 10.40 %. To secure payment and performance of the liabilities, Fly14 Corp. pledged to JPMorgan Chase Bank, N.A., a continuing security interest in all of its rights, title and interest in all of its properties, whether now owned or hereinafter acquired and whether now existing or hereafter arising. On August 9, 2024, the Company paid off this loan in full. (viii) On August 22, 2024, Fly E-Bike, Inc. obtained a three-year long-term loan of $ 128,132 from Milea Truck Sales of Queens Inc. with an annual interest rate of 9.90 %. The collateral provided was the FTR 2025 vehicle purchased by Fly E-Bike, Inc. As of March 31, 2025, the outstanding balance is $ 106,093 . From April 1 to July 15, 2025, the Company paid $ 12,385 on principal and interest of the loan. On July 26, 2024, Fly E-Bike, Inc. obtained a three-year long-term loan of $ 96,506 from Milea Truck Sales of Queens Inc. with an annual interest rate of 7.03 %. The collateral provided was the NRR-CAB 2025 vehicle purchased by Fly E-Bike, Inc. As of March 31, 2025, the outstanding balance is $ 76,779 . From April 1 to July 15, 2025, the Company paid $ 8,943 on principal and interest of the loan. (ix) On August 5, 2024, Fly-E Group, Inc obtained a line of credit of $ 5 million from Peapack-Gladstone Bank with a floating annual interest rate and the current annual interest rate is 8.8 %. On August 5, 2024, the Company withdrew from this line of credit to pay off the outstanding principal and interest of loans from Bank of Hope in total of $ 996,476 and the loan from JPMorgan Chase Bank, N.A obtained by Fly14 Corp in total of $ 208,601 . On August 6, 2024, the Company withdrew in total $ 214,905 from this line of credit to pay off the outstanding principal and interest of loans from JPMorgan Chase Bank, N.A. From August 7, 2024 to August 19, 2024, the Company withdrew $ 3,490,000 from the line of credit. Mr. Zhou Ou, the Company’s Chief Executive Officer, and Mr. Ke Zhang, the Company’s Chief Human Resource Officer, provided a guarantee on this loan. To secure payment and performance of the liabilities, Fly-E Group granted Peapack-Gladstone Bank a continuing lien on and security interest in all assets of the Company, including accounts, chattel paper, documents, instruments, inventory, general intangibles, equipment, fixtures, deposit accounts, goods, letter-of-credit rights, supporting obligations, investment property, commercial tort claims, property in the Lender’s possession, additions, and proceeds of first 39 incorporated subsidiaries of the Company. From January 1 to February 19, 2025, the Company paid $ 102,492 on interest of the line of credit. (x) On November 27, 2024, the Company’s subsidiary, AOFL LLC (the “borrower”) obtained four thirty-year long-term loans of $ 525,000 , $ 560,000 , $ 595,000 , and $ 420,000 , respectively, from Veiocity Commercial Capital, LLC (the “lender”) with an annual interest rate of 11.24 %. The lender charged a total of $ 170,933 loan settlement fees for closing the loan which included attorney fee, escrow fee, origination fee, and so on. The Company amortized the $ 170,933 over the loan term. To secure payment and performance of the liabilities, AOFL LLC pledged to Veiocity Commercial Capital, LLC a continuing lien on and security interest in any and all deposits or other sums at any time credited by or due from lender to the borrower and any cash, securities, instruments or other property of the borrower in the possession of lender. From April 1 to July 15, 2025, the Company paid $ 61,142 on principal and interest of the loan. On August 13, 2024, the Company’s subsidiary, AOFL LLC, obtained a one-year short-term loan of $ 1,800,000 from He’s Realty Holdings LLC with an annual interest rate of 6.5 %. The principal amount shall be paid to He’s Realty Holdings LLC in one or more installments on or before August 11, 2025, and during the one-year borrowing period, AOFL LLC only needs to pay interest of $ 9,750 to He’s Realty Holdings LLC on a monthly basis. The collateral provided was the office purchased by AOFL LLC. The loan was paid off in full on November 29, 2024. (xi) On February 10, 2023, Fly E-Bike, Inc. obtained a five-month short-term loan of $ 255,000 from AOWINV LLC with no interest. On June 10, 2025, the Company paid off this loan in full. For the years ended March 31, 2025 and 2024, the total interest expenses on the Company’s outstanding loans amounted to $ 405,615 and $ 152,050 , respectively. The weighted average interest rate on short-term borrowings outstanding as of March 31, 2025 and 2024 was 13.1 % and nil , respectively. F- 23 9 — STOCKHOLDER’S EQUITY Prior to the effectiveness of the 2024 Stock Split and 2025 Reverse Stock Split discussed below, the Company was authorized to issue 400 shares of common stock having a par value of $ 0.01 per share and 40 shares of preferred stock having a par value of $ 0.01 per share. There were 200 shares of common stock were issued and outstanding prior to the effectiveness of the stock splits. 2024 Stock Split On March 27, 2024, the Company’s board of directors approved a 1-for-110,000 stock split of the Company’s capital stock. The stock split became effective on April 2, 2024. The par value of the Company’s common stock remained unchanged at $ 0.01 per share, and the number of authorized shares of the Company’s capital stock was increased from 440 to 48,400,000 , with the number of authorized shares of common stock and preferred stock being increased from 400 to 44,000,000 and from 40 to 4,400,000 , respectively. On June 7, 2024, the Company amended and restated the certificate of incorporation to authorize the Company to issue up to 110,000,000 shares. The par value of the Company’s common stock remained unchanged at $ 0.01 per share, and the number of authorized shares of the Company’s capital stock increased to 110,000,000 , with the number of authorized shares of common stock and preferred stock being increased 100,000,000 and 10,000,000 , respectively. On March 10, 2025, the Company amended and restated the certificate of incorporation to authorize the Company to increase the authorized shares of common stock of the Company from 100,000,000 shares to 300,000,000 shares. The par value of the Company’s common stock remained unchanged at $ 0.01 per share. On June 7, 2024, the Company completed its initial public offering and issued 450,000 shares of common stock, at a price of $ 20.00 per share. The gross proceeds of the offering were $ 9.0 million, prior to deducting the underwriting discounts, commissions and offering expenses payable by the Company. In addition, the Company granted the underwriters a 30-day option to purchase an additional 67,500 shares of common stock at the initial public offering price, less underwriting discounts and commissions, to cover over-allotments. On June 25, 2024, the Company issued an additional 67,500 shares of common stock to the underwriters for gross proceeds of $ 1.4 million upon full exercise of the underwriters’ over-allotment option. Net proceeds received by the Company from the initial public offering, including the exercise of over-allotment option, were approximately $ 9.2 million. 2025 Reverse Stock Split On July 3, 2025, the Company implemented a 1-for-5 reverse stock split of its issued and outstanding shares of common stock. The 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 . The reverse stock split was accounted for retrospectively in the accompanying consolidated financial statements and notes for all periods presented. All references to the number of shares of common stock, including per share amounts, have been adjusted to reflect the reverse stock split. Upon the closing of IPO offering in June 2024, the Company issued to Benchmark the representative of the underwriters warrants to purchase 25,875 shares of common stock. The Representative’s Warrants have an exercise price equal to $ 20.00 per share and are exercisable until the date on June 7, 2029, after the date of commencement on December 7, 2024. The Representative’s Warrants are also exercisable on a cashless basis. As the Representative’s Warrants are considered indexed to the Company’s own stock and meet the criteria for equity classification according to ASC:815-40, the Representative’s Warrants are classified as equity. None of the Representative’s Warrants were exercised as of March 31, 2025. The fair value of the warrant, using the Black-Scholes Model on the date of issuance was $ 274,472 . The key inputs into the Black-Scholes Model variables were as follows at measurement date: June 7, 2024 Stock price $ 20.00 Risk-free interest rate 4.46 % Volatility 56.52 % Exercise price $ 20.00 Dividend yield $ — The stock price and exercise prices stated herein have been retroactively adjusted to reflect the reverse stock split that occurred in July 2025. F- 24 The following table summarizes the Company’s activities and status of the Representative’s Warrants: Number of Warrant Weighted Average Exercise Price Weighted Average Remaining Term (Years) Outstanding as of March 31, 2024 — — — Issued 25,875 $ 20.00 4.2 Exercised — — — Forfeited or expired — — — Outstanding as of March 31, 2025 25,875 $ 20.00 4.2 The number of shares and warrants, as well as the exercise prices stated herein, have been retroactively adjusted to reflect the reverse stock split that occurred in July 2025. As of March 31, 2025 and 2024, the subscription receivable represents the unpaid capital contribution of $ 219,998 by the stockholders. During the year ended March 31, 2024, Mr. Ou paid certain vendors of the Company to settle certain accounts payable balance on behalf the Company. On June 30, 2023, the Company transferred $ 2.26 million, a portion of the accounts payable balance, along with a cash contribution of $ 0.14 million from Mr. Zhou Ou as capital contribution (see Note 13). On June 30, 2023, a total of $ 2.4 million were transferred and recorded as capital contribution (see Note 13). 10 — INCOME TAX (a) Income Tax Expense The company conduct business both domestically and internationally and, as a result, the parent company and most of its subsidiaries file a consolidated income tax return in U.S. federal, U.S. states and U.S. Cities, and one of the subsidiaries files a foreign income tax return in certain foreign jurisdictions. The Company will file a consolidated annual U.S. federal tax return for tax year ending March 31, 2025, as well as combined tax returns for New Jersey, New York State, Florida, Texas, California, District of Columbia, Massachusetts, Maryland, and New York City. Most subsidiaries of the Company were incorporated in the State of New York and are subject to the U.S. federal corporate income taxes with a tax rate of 21.0 %. The State of New York levies a corporate income tax rate of 8.45 % on state-level earnings. In addition, a sum of fixed dollar minimum taxes is imposed on the taxable group members, in accordance with their gross receipts within the State of New York. The City of New York levies a 6.50 % city corporate income tax, along with a sum of fixed dollar minimum taxes, applied to taxable group members based on their gross receipts within the city. Five of the Company’s subsidiaries are located in New Jersey, which imposes a state income tax rate of 9.0 %. Two of the Company’s subsidiaries is located in Florida, which imposes a state income tax rate of 5.5 %. Two subsidiaries of the Company are located in Texas, which imposes a state income tax rate of 0.75 % on the appointed state revenue. One of the Company’s subsidiaries is located in California, which imposes a state income tax rate of 8.84 %. One of the Company’s subsidiaries is located in District of Columbia, which imposes a state income tax rate of 8.25 %. One of the Company’s subsidiaries is located in Massachusetts, which imposes a state income tax rate of 8.25 %. One of the Company’s subsidiaries is located in Maryland, which imposes a state income tax rate of 8.00 %. The Company’s wholly owned foreign subsidiary in Canada will file a Canadian federal tax return for tax year ending March 31, 2025, as well as Ontario state tax return. It is subject to the Canadian federal corporate income taxes with a tax rate of 15.0 % and Ontario state corporate income taxes with a tax rate of 11.5 %. Income tax on unappropriated earnings is accrued during the period the earnings arise and adjusted to the extent that distributions are approved by the stockholders in the following year. Income tax expense for the years ended March 31, 2025 and 2024 amounted to $ 0.34 million and $ 1.18 million, respectively. Significant components of the provision for income taxes are as follows: For the years ended March 31, 2025 2024 Current Federal $ 94,113 $ 474,445 State 183,598 297,885 City 123,284 234,510 Deferred Federal ( 4,000 ) 158,300 State 1,000 36,300 City ( 2,000 ) 21,500 Foreign ( 59,829 ) ( 40,007 ) Total $ 336,166 $ 1,182,933 F- 25 The provision for income taxes is based on the following pretax income (loss): For the years ended March 31, 2025 2024 U.S. $ ( 4,690,634 ) $ 3,275,797 Canada ( 264,359 ) ( 197,642 ) Total $ ( 4,954,993 ) $ 3,078,155 For the years ended March 31, 2025, the total pre-tax loss was $ 4.9 million, which included $ 4.7 million pre-tax loss in the U.S. and $ 0.2 million pre-tax loss in Canada. For the year ended March 31, 2024, the total pre-tax income was $ 3.1 million, which included $ 3.3 million pre-tax income in U.S. and $ 0.2 million pre-tax loss in Canada. The following table reconciles to the Company’s effective tax rate: For the years ended March 31, 2025 2024 Pre-tax book (loss) income $ ( 4,954,993 ) $ 3,078,155 Federal Statutory rate 21.0 % 21.0 % State income tax rate, net of federal income tax benefit 4.6 % 7.9 % City income tax rate, net of federal income tax benefit 5.5 % 5.0 % Foreign statutory rate 0.4 % — Permanent differences ( 1.2 )% 5.2 % Valuation allowance of deferred tax assets ( 34.6 )% — Return to project adjustment ( 2.5 )% ( 0.8 )% Total ( 6.8 )% 38.3 % Penalties and interest incurred related to underpayment of income tax are classified as income tax expenses in the period incurred. For the years ended March 31, 2025 and 2024, the Company accrued $ 30,301 and $ 60,487 income tax related penalty included in current income taxes expenses, respectively. United States Income tax expense for the year ended March 31, 2025 and 2024 amounted to $ 0.40 million and $ 1.22 million, respectively. Significant components of the provision for income taxes are as follows: For the Years Ended March 31, 2025 2024 Current Federal $ 94,113 $ 474,445 State 183,598 297,885 City 123,284 234,510 Deferred Federal ( 4,000 ) 158,300 State 1,000 36,300 City ( 2,000 ) 21,500 Total $ 395,995 $ 1,222,940 F- 26 Canada Fly Toronto Corp, a subsidiary of the Company, was formed under the laws of Canada and conducts its business primarily in Canada. Income tax benefit for the year ended March 31, 2025 and 2024 amounted to $ 59,829 and 40,007 , respectively. Significant components of the provision for income taxes are as follows: For the Years Ended March 31, 2025 2024 Current Federal $ — $ — State — — City — — Deferred Federal ( 33,866 ) ( 22,845 ) State ( 25,963 ) ( 17,515 ) City — 353 Total $ ( 59,829 ) $ ( 40,007 ) (b) Deferred Tax Assets (Liabilities) Net DTAs as of March 31, 2025 and 2024 amounted to $ 94,983 and $ 35,199 , respectively. Significant components of DTAs (DTLs), net are as follows: As of March 31, 2025 As of March 31, 2024 Net operating loss carry forwards $ 1,506,378 $ 40,332 Inventory reserve 410,000 186,000 Operating right-of-use liability 4,837,000 5,810,000 Amortization difference 10,000 — Total deferred tax assets (DTAs) 6,763,378 6,036,332 Valuation allowance ( 1,714,000 ) — Deferred tax assets, net of valuation allowance $ 5,049,378 $ 6,036,332 Accumulated depreciation ( 460,395 ) ( 482,133 ) Operating lease right-of-use assets ( 4,494,000 ) ( 5,519,000 ) Total deferred tax liabilities (DTLs) ( 4,954,395 ) ( 6,001,133 ) Deferred tax assets, net $ 94,983 $ 35,199 Deferred tax assets (liabilities) – U.S., net $ — $ ( 5,000 ) Deferred tax assets – Canada, net $ 94,983 40,199 As of March 31, 2025 and 2024, the Company had approximately $ 5.0 million and $ 6.0 million, respectively, in the DTAs, which respectively included approximately $ 1.5 million and $ 40,332 related to net operating loss carryforwards that can be used to offset taxable income in future periods, $ 4.8 million and $ 5.8 million related to lease liability, and $ 0.4 million and $ 0.2 million related to inventory allowance. As of March 31, 2025 and 2024, the Company had approximately $ 5.0 million and $ 6.0 million, respectively, which included $ 0.5 million and $ 0.5 million, respectively, in the DTLs that related to accumulated depreciation and $ 4.5 million and $ 5.5 million related to ROU assets. F- 27 Deferred tax assets and liabilities are recognized for the estimated future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases, and operating loss and tax credit carryforwards. As of March 31, 2025 and 2024, the Company recorded approximately $ 94,983 and $ 40,199 , respectively, in the net DTAs. The tax losses in Canada can be carried forward for twenty years to offset future taxable profit. The tax losses of entities in Canada will begin to expire in 2044, if not utilized. As of March 31, 2025, management considered it more likely than not that the Company will have sufficient taxable income in the future that will allow the Company to realize these net DTAs. As a result of the Tax Cuts and Jobs Act (TCJA), US NOLs arising after December 31, 2017, may be carried forward indefinitely and can offset only up to 80 % of taxable income in any future year. Based upon the Company’s recent taxable loss history, the Company performed an analysis and determined that it was necessary to establish a valuation allowance of $1,714,000 with respect to its net deferred income tax assets as of and for the fiscal year ended March 31, 2025. Uncertain Tax Positions The Company evaluates each uncertain tax position (including the potential application of interest and penalties) based on the technical merits, and measures the unrecognized benefits associated with the tax positions. As of March 31, 2025 and 2024, the Company did not have any significant unrecognized uncertain tax positions. 11 — LEASES The Company adopted Topic 842 for all periods presented. At the inception of a contract, the Company determines if the arrangement is, or contains, a lease. The leases of the Company mainly consisted of offices, retail stores, and warehouses. The Company’s operating right-of-use (“ROU”) assets and lease liabilities were as follows: March 31, 2025 March 31, 2024 Operating ROU: ROU assets $ 10,933,068 $ 16,000,742 Total operating ROU assets $ 10,933,068 $ 16,000,742 March 31, 2025 March 31, 2024 Operating lease obligations: Current operating lease liabilities $ 2,617,762 $ 2,852,744 Non-current operating lease liabilities 9,106,928 13,986,879 Total lease liabilities $ 11,724,690 $ 16,839,623 The Company had 36 and 38 leases as of March 31, 2025 and 2024, respectively. The weighted average lease term, discount rates, and remaining lease terms for the operating leases as of March 31, 2025 were as follows: Remaining lease term and discount rate: Weighted average discount rate 7.2 % Weighted average remaining lease term (years) 4.67 years The weighted average lease term, discount rates, and remaining lease terms for the operating leases as of March 31, 2024 were as follows: Remaining lease term and discount rate: Weighted average discount rate 6.4 % Weighted average remaining lease term (years) 5.51 years The Company leases its offices, warehouse, and retail stores under non-cancellable operating lease agreements. During the year ended March 31, 2025, lease expenses were $ 4.3 million, including $ 1.4 million in cost of goods-occupancy cost, $ 2.9 million in rent expense included in selling expense, and $ 62,527 in rent expense in general and administrative expense. During the year ended March 31, 2024, lease expenses were $ 3.3 million, including $ 0.7 million in cost of goods-occupancy cost, $ 2.4 million in rent expense in selling expense, and $ 0.2 million in rent expense in general and administrative expense. F- 28 For the year ended March 31, 2025, the Company terminated 12 leases. As of March 31, 2025, future minimum lease liabilities, all under office and facilities non-cancellable operating lease agreements, were as follows: As of March 31 Operating Lease Liabilities 2025 $ 3,355,040 2026 3,293,360 2027 2,914,613 2028 2,421,343 2029 700,849 Thereafter 1,126,233 Total lease payments 13,811,438 Less: interest ( 2,086,748 ) Present value of lease liabilities $ 11,724,690 12 — COMMITMENTS AND CONTINGENCIES Commitments The Company has not entered any off-balance sheet financial guarantees or other off-balance sheet commitments to guarantee the payment obligations of any third parties. The Company has not entered any derivative contracts that are indexed to its shares and classified as shareholder’s equity or that are not reflected in its consolidated financial statements. Furthermore, the Company does not have any retained or contingent interest in assets transferred to an unconsolidated entity that serves as credit, liquidity or market risk support to such entity. The Company does not have any variable interest in any unconsolidated entity that provides financing, liquidity, market risk or credit support to itself or engages in leasing, hedging or product development services with itself. Contingencies Legal From time to time, the Company is a party to certain legal proceedings, as well as certain asserted and unasserted claims. Amounts accrued, as well as the total amount of reasonably possible losses with respect to such matters, individually and in the aggregate, are not deemed to be material to the consolidated financial statements. The Company’s products and other production facilities as well as the packaging, storage, distribution, advertising and labeling of its products, are subject to extensive legal and regulatory requirements. For example, pursuant to the DMV registration requirement, the Company must satisfy the DMV Registration requirements and conduct required testing for all of its products sold in U.S. Loss of or failure to renew or obtain necessary permits, licenses, registrations, or certificates could prevent the Company from legally selling its products in the U.S. If the Company were found to be in violation of applicable laws and regulations, it could be subject to administrative punishment, including fines, injunctions, recalls or asset seizures, as well as potential criminal sanctions, any of which could have a material adverse effect on its business, financial condition, results of operations and prospects. As of the date hereof, the Company believes it is in compliance with the relevant regulations in the U.S. UL Litigation On or about March 12, 2025, UL LLC (“UL”) filed a complaint against the Company, along with the Company’s certain subsidiaries and certain individuals, in the Eastern District of New York (the “Complaint”). The Complaint alleges that the Company improperly used UL’s trademark by claiming certain products were certified by UL. On May 21, 2025, the Company and UL LLC (“UL”) entered into a settlement and release agreement (the “Settlement Agreement”) on mutually acceptable settlement terms. Pursuant to the Settlement Agreement, the Company agreed to pay UL an aggregate amount of $ 1,000,000 before November 30, 2025 (Refer to Note 7 — Accrued Expenses and other payables). From May 28 to July 15, 2025, the Company paid $ 350,000 to UL. Inflation Inflationary factors, such as increases in personnel and overhead costs, could impair the Company’s operating results. Although the Company does not believe that inflation has had a material impact on the Company’s financial position or results of operations to date, a high rate of inflation in the future may have an adverse effect on the Company’s ability to maintain current levels of gross margin and operating expenses as a percentage of sales revenue if the revenues do not increase with such increased costs. F- 29 13 — RELATED PARTY TRANSACTIONS (A) Related party balances Accounts receivable, net — related parties Name of Related Party Relationship Nature March 31, 2025 March 31, 2024 Fly E Bike SRL Zhou Ou (CEO), owns over 50% equity interest of this entity Accounts receivable $ 78,565 $ 326,914 Accounts receivable – related parties 78,565 326,914 Less: Allowance for credit loss 41,100 — Accounts receivable, net - related parties $ 37,465 $ 326,914 During the year ended March 31, 2025, the Company received $ 290,359 from Fly E Bike SRL. The Company accrued $ 41,100 credit losses during the year ended March 31, 2025. Prepayments and other receivables — related parties Name of Related Party Relationship Nature March 31, 2025 March 31, 2024 Fly E Bike SRL Zhou Ou (CEO), owns over 50% equity interest of this entity Other receivables $ — $ 180,256 PJMG LLC Ruifeng Guo (former CFO who resigned on November 6, 2024), owns over 50% equity interest of this entity Prepayments 120,000 60,000 Prepayments and other receivables – related parties $ 120,000 $ 240,256 During the year ended March 31, 2025, the Company advanced nil to Fly E Bike SRL, a distributor the Company works with and in which Mr. Ou holds over 50 % of the equity interest. This advance is unsecured, bears no interest and does not have a maturity date. On June 12, 2024, the Company received $ 180,256 from Fly E Bike SRL. On April 1, 2023, the Company agreed to retain the services of PJMG, a company in which Mr. Guo, the Company’s former CFO who resigned on November 6, 2024, holds over 50 % of the equity interests as a consultant following the completion of its IPO. PJMG was engaged to provide compliance consulting services related to accounting, finance, and management, as well as to oversee market planning and development, follow-on fundraising, and investor relationship management from June 2024 to May 2025. The service fee is $ 45,000 for the first month and from the second month the fees will be $ 15,000 per month. To secure these services, the Company prepaid a total of $ 120,000 to PJMG as of March 31, 2025. From August 9, 2024 to September 17, 2024, the Company advanced $ 480,000 to Mr. Ou, Chairman and CEO of the Company, for personal use. This advance is unsecured, bears no interest and does not have a maturity date. As of March 31, 2025, the advance was paid back in full. Long-term prepayment for software development – related parties, net Name of Related Party Relationship Nature March 31, 2025 March 31, 2024 DF Technology US Inc Ruifeng Guo (former CFO who resigned on November 6, 2024), owns over 50% equity interest of this entity Long-term prepayment for software development $ 136,580 $ 1,279,000 Long-term prepayment for software development — related parties, net $ 136,580 $ 1,279,000 In December 2023, the Company engaged DFT for development of certain technology services. Mr. Guo, the Company’s former CFO who resigned on November 6, 2024, owns over 50 % of the equity interest in DFT. As of March 31, 2025 and 2024, the Company paid $ 136,580 and $ 1,279,000 to DFT as prepayment for software development, respectively. 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 and 2024, construction in progress was nil and $ 275,000 , respectively (see Note 5 – Property and Equipment). F- 30 Other payables — related parties Name of Related Party Relationship Nature March 31, 2025 (i) March 31, 2024 (i) Zhou Ou Chairman, CEO of the Company Other payable $ — $ 92,229 Other Payables-related parties $ — $ 92,229 (i) Represents the remaining balance of the advance provided by the related party to the Company’s subsidiaries for the purpose of supporting their business operations. All of the above payables are unsecured, non-interest bearing, and due on demand. The Company paid a total of $ 92,229 and $ 290,252 to Mr. Zhou Ou during the years ended March 31, 2025 and 2024, respectively. (B) Related party transactions Revenues — related parties For the Years Ended March 31 Name of Related Party Relationship Nature 2025 2024 Fly E Bike SRL Zhou Ou (CEO), owns over 50% equity interest of this entity Product sales $ 42,010 $ 326,914 Revenues — related parties $ 42,010 $ 326,914 During the years ended March 31, 2025 and 2024, Fly E Bike SRL, a distributor the Company works with and in which Mr. Ou holds over 50 % of the equity interest, purchased certain EV products from the Company in the amount of $ 42,010 and $ 326,914 , respectively. Purchase of Intangible Assets — related parties Name of Related Party Relationship Nature March 31, 2025 March 31, 2024 DF Technology US Inc Ruifeng Guo (former CFO who resigned on November 6, 2024), owns over 50% equity interest of this entity Purchase of Software $ 500,000 $ — Purchase of Intangible Assets — related parties $ 500,000 $ — In December 2023, the Company engaged DFT for development of certain technology services. Mr. Guo, the Company’s former CFO who resigned on November 6, 2024, owns over 50 % of the equity interest in DFT. In July 2024, the Company engaged DFT for development of a new APP, GO FLY APP, for the rental business. The total contract price for the GO FLY APP is $ 500,000 , and the GO FLY APP was delivered on September 5, 2024. (C) Other Related Party Transactions On March 6, 2021, the Company and DGLG entered into an engagement letter, pursuant to which the Company engaged DGLG as a consultant to assist the Company in its IPO planning, financing and tax services. Mr. Guo, the Company’s former CFO who resigned on November 6, 2024, is a partner at DGLG. Under the terms of the engagement agreement with DGLG, the Company has agreed to compensate DGLG for consulting services based on an hourly fee arrangement. DGLG’s consulting fees were $ 225,000 and $ 100,000 for the years ended March 31, 2025 and 2024, respectively. In addition, during the year ended March 31, 2025 and 2024, the Company paid DGLG a total of $ 61,050 and $ 123,000 for tax services, including sales tax services, payroll tax services, and income tax services, rendered by DGLG, respectively. On April 1, 2023, the Company agreed to retain the services of PJMG, a company in which Mr. Guo, the Company’s former CFO who resigned on November 6, 2024, holds over 50 % of the equity interests as a consultant following the completion of its IPO. To secure these services, the Company prepaid a total of $ 120,000 to PJMG as of March 31, 2025. During the year ended March 31, 2025, the Company paid PJMG a total of $ 372,047 for consulting services. $ 312,047 was expensed as consulting expenses during the year ended March 31, 2025. F- 31 14 — DISPOSAL OF SUBSIDIARIES During the year ended March 31, 2025, the Company committed to the disposal of certain subsidiaries. The decision was driven by two primary factors: (1) to simplify the Company’s legal and operational structure, and (2) to create a more streamlined and transparent organizational structure, thereby reducing the complexity of consolidation across auditing, finance, and tax reporting. These subsidiaries were not part of a strategic exit from the New York region or the retail industry. Rather, the disposal was intended to enhance administrative efficiency and align the Company’s structure with its long-term operational goals. In December, 2024, the Company decided to proceed with the disposal plan and sell 100 % of its equity interests in subsidiaries FLYMHT INC, FLY14 CORP, EDISONEBIKE INC, and FLY6AVE INC to third-party individuals (the “Buyers”). On January 1, 2025, the Company entered into share transfer agreements with the Buyers. Pursuant to the terms of the agreements, the Company agreed to sell, transfer, and assign all its rights, title, and interests in the shares of the subsidiaries to the Buyers, free and clear of all liens and encumbrances. The Buyers agreed to purchase the shares for total cash consideration of $ 635,193 . There were no contingent payments, earn-outs, or post-closing adjustments specified in the agreements. There was $ 84,302 gain from this disposal. As of March 31, 2025, the Company did not receive any consideration from the third parties. In June, 2025, the Company received $ 103,000 from the Buyers. On March 11, 2025, the management team approved to sell 100 % of its equity interests in subsidiaries FLYEBIKE BROOKLYN INC, FLYMHT659 INC, and FLYBX745 INC to third-party individuals (the “Buyers”). On April 1, 2025, the Company entered into share transfer agreements with the Buyers. Pursuant to the terms of the agreements, the Company agreed to sell, transfer, and assign all its rights, title, and interests in the shares of the subsidiaries to the Buyers, free and clear of all liens and encumbrances. The Buyers agreed to purchase the shares for total cash consideration of $ 310,055 . There were no contingent payments, earn-outs, or post-closing adjustments specified in the agreements. In June 2025, the Company received $ 30,000 from the Buyers. The disposal of these subsidiaries were not considered discontinued operations under ASC 205-20, as their disposal did not represent a strategic shift that had a major effect on the Company’s operations and financial results. As of March 31, 2025, the Company had classified the assets and liabilities of the subsidiaries that were sold on April, 1, 2025 as held for sale in accordance with ASC 360-10. The classification criteria were met when the management committed to a plan to sell. Summarized Held for Sale Financial Information A summary of the carrying amounts of major classes of assets and liabilities, which are included in assets and liabilities held for sale in the consolidated balance sheet, is as follows: March 31, 2025 ASSETS Cash $ 61,548 Inventories, net 195,192 Prepayments and other receivables 22,096 Property and equipment, net 154,876 Security deposits 73,025 Operating lease right-of-use assets 1,955,765 Assets held for sale $ 2,462,502 LIABILITIES Accrued expenses and other payables 25,498 Operating lease liabilities – current 319,874 Operating lease liabilities – non-current 1,807,075 Liabilities held for sale 2,152,447 There was no gain or loss on the sale of subsidiaries: Total consideration determined: $ 310,055 Net assets disposed excluded intercompany other payables: $ 310,055 Gain on disposal: $ nil F- 32 15 — SUBSEQUENT EVENTS The Company has evaluated subsequent events after March 31, 2025, up through July 15, 2025 , the date at which the consolidated financial statements were issued. Except for the events mentioned below, the Company did not identify any subsequent events with material financial impact on the Company’s consolidated financial statements. On April 1, 2025, the Company sold three subsidiaries: FLYEBIKE BROOKLYN INC, FLYMHT659 INC, and FLYBX745 INC to third-party individuals (Refer to Note - 14 — Disposal of Subsidiaries). On April 29, 2025, the Company obtained a short-term loan of $ 1,575,000 from Agile Capital Funding, LLC, which requires weekly repayments of $ 70,000 . From April 29 to July 15, 2025, the Company paid $ 372,500 on principal and interest of the loan. On May 1, 2025, the Company sold three subsidiaries: ARFY CORP., FLY GC INC., and ESEBIKE INC to third-party individuals. The consideration determined was $ 156,517 . As of July 15, 2025, the Company did not receive any consideration from the third-party individuals. On June 1, 2025, the Company sold two subsidiaries: UFOTS CORP and FLYCORONA INC to third-party individuals. The consideration determined was $ 60,207 . As of July 15, 2025, the Company did not receive any consideration from the third-party individuals. On June 4, 2025, the Company issued 5,719,111 shares of common stock, at a price of $ 1.2140 per share in its second public offering. The gross proceeds of the offering were $ 6.9 million, prior to deducting the placement agent’s fees and offering expenses payable by the Company. Each share of common stock was sold together with two warrants, with each warrant to purchase one share of common stock. Each warrant is exercisable immediately with an exercise price equal to 120 % of the offering price ($ 1.4565 per share) and expires on the fifth anniversary of the issuance date, subject to certain adjustments. On June 10, 2025, the Company paid off the short-term loan of $ 255,000 from AOWINV LLC. On June 23, 2025, a total of 19 subsidiaries of the Company obtained short-term loans from Strip Inc. with an aggregate principal amount of $ 379,900 . The loan terms vary across subsidiaries, with repayment periods ranging from 42 weeks to 12 months. Repayment schedules differ by agreement and include both weekly and monthly installment options. The stated annual interest rates range from 12.0 % to 22.8 %. On July 1, 2025, the Company sold three subsidiaries: OFLYO INC, FLYCYCLE INC, and FLYBX2381 INC to third-party individuals. The consideration determined was $ 106,647 . As of July 15, 2025, the Company did not receive any consideration from the third-party individuals. On July 3, 2025, the Company implemented a 1-for-5 reverse stock split of its common stock. The reverse stock split reduced the number of shares of common stock issued and outstanding from 53,183,053 to approximately 10,636,611 as of July 3, 2025. The par value per share remained unchanged at $ 0.01 . From June 24, 2025 to July 9, 2025, certain holders of the Company’s outstanding warrants exercised their rights to acquire common stock. The exercises were completed on a cashless basis pursuant to the terms of the warrant agreements, resulting in the issuance of 7,419,477 shares of common stock. The exercises did not generate any cash proceeds to the Company. All share numbers for warrant exercises prior to the reverse stock split have been retroactively adjusted to reflect the 1-for-5 reverse stock split. F- 33