What changed in this filing

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Item 7. Management’s Discussion and Analysis

2026-07-23 compared with 2025-07-15 · 652 added, 425 removed, 168 unchanged (87% of the section changed)

Management’s Discussion and

Analysis of Financial Condition and Results of Operations

The following discussion of our financial condition

and results of operations should be read in conjunction with the financial statements and the notes thereto included in this annual report.

Management’s Discussion and Analysis

of Financial Condition and Results of Operations

The following discussion

of our financial condition and results of operations should be read in conjunction with the financial statements and the notes thereto

included in this annual report.

The following discussion contains forward-looking statements.

Actual results could differ materially from the results discussed in the

forward-looking statements.

Actual results could differ materially from

the results discussed in the forward-looking statements.

See “ Item 1A.

Risk Factors” and “Cautionary Note Regarding Forward-Looking Statements ”.

Risk Factors” and “Cautionary Note Regarding

Forward-Looking Statements ”.

We are an EV company that is principally engaged

in designing, installing and selling E-motorcycles, E-bikes, E-scooters and related accessories under the brand “Fly E-Bike.”

in designing, installing, selling and renting E-motorcycles, E-bikes, E-scooters and related accessories under the brand “Fly E-Bike.”

At Fly E-Bike, our commitment is to encourage people to incorporate eco-friendly transportation into their active lifestyles, ultimately

contributing towards building a more environmentally friendly future.

Fly E-Bike was established in 2018 with its first

store opened in New York.

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

delivery workers in New York City.

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

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

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

Toronto, and Los Angeles.

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

serving customers in the United States.

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

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

We have a diversified product portfolio that

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

Additionally, we aim to refresh

our product offerings continuously to align with evolving market trends.

As of July 15, 2025 ,

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

Fly E-Bike was

established in 2018 with its first store opened in New York.

Our business has grown rapidly until mid-2024.

As of July 23, 2026, we

have 4 retail stores in the U.S.

The Company offers rental services from selected locations in New York, and Los Angeles.

operate one online store at flyebike.com, focusing on selling E-motorcycles, E-bikes and E-scooters, serving customers in the United

We have a diversified product portfolio that is designed to satisfy

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

Additionally, we aim to refresh our product offerings

continuously to align with evolving market trends.

As of July 23, 2026, we offered 27 E-motorcycle products, 37 E-bike products and 38

E-scooter products.

We also operate a rental program to meet the increasing

market demand for safe, UL-certified e-bikes in compliance with New York State regulations.

The rental service, now available in New York

City, and Los Angeles via the Go Fly rental service mobile app and select Fly E-Bike stores, provides users with a flexible and affordable

e-bike rental option.

We are currently in the process of developing

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

We have launched a testing version of

the app, which is currently unavailable to our customers.

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

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

We have launched a testing version of the

app, which is currently unavailable to our customers.

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

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

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

The total contract price

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

contract price for the ERP system is $2,500,000.

The GO FLY APP is fully completed

and delivered on September 9, 2024.

The ERP system is fully completed and delivered on May 20, 2025.

During the fiscal year

of 2025, the Company started to use part of the ERP system which was valued at $2,310,000 and treated that part as computer hardware

and software and started for depreciation.

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

We source a significant portion of our vehicle

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

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

Recent Developments

See “ Item 1.

For the year ended March 31, 2026,

we engaged Phecda Technology (HK) Limited to enhance the ERP functions and develop app for Flyebike, Riding, Lease and Rental.

These developments

of the app are still in development stage.

We source a significant portion of our vehicle components from China

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

For the year ended March

31, 2026, we assembled 2,714 E-motorcycles, 6,722 E-bikes and 1,830 E-scooters at the same facility.

Recent Developments

SEC Investigation

On January 21, 2026, the

Company was notified by the U.S.

Securities and Exchange Commission (the “Commission”) that it has initiated an investigation

involving the Company.

The Company has not been provided with substantive details regarding the investigation, and is fully cooperating

with the investigation.

Federal securities class action instituted on September 8,

On September 8, 2025, a federal securities class

action was filed in the United States District Court, Eastern District of New York, by plaintiff Dino Kurt, individually and on behalf

of all others similarly situated, against defendants, the Company, chief executive officer (the “CEO”) Zhou Ou, and former

chief financial officer (the “CFO”) Shiwen Feng (the “Class Action”).

The complaint alleges violations of Sections

10(b) and 20(a) of the Exchange Act and Rule 10b-5 during the class period spanning from July 15, 2025, to August 14, 2025.

The plaintiff

claims that defendants provided materially false and misleading positive statements about revenue growth, brand reputation, and business

expansion, while concealing or minimizing material adverse facts concerning the safety of the Company’s lithium battery and inadequate

forecasting processes, which were already taking a material toll on E-vehicle (the “EV”) sales revenue.

The plaintiff alleged

when the Company filed a form NT 10-Q on August 14, 2025, which disclosed a 32% decrease in net revenues primarily driven by a decline

in total units sold, attributed by the Company to “recent lithium-battery accidents involving E-Bikes and E-Scooters”;

price of Company’s common stock declined dramatically by about 87% in a single day, resulting in economic loss for the plaintiff

and the class.

The relief sought includes determining that the

action may be maintained as a class action, requiring defendants to pay damages sustained by the plaintiff and the class, and awarding

pre-judgment and post-judgment interest, along with reasonable attorneys’ fees, expert fees, and other costs, with the monetary

damages sought being certified to be in excess of $150,000.

On May 22, 2026, the lead

plaintiff in the Class Action filed an Amended Complaint.

The Company's response to the Amended Complaint is due August 14, 2026.

the preliminary stage of the lawsuit and the inherent uncertainties of litigation, the Company cannot determine with certainty the outcome

of the Class Action at this time.

Any potential loss associated with the action

is not reasonably estimable at this early stage.

The Company did not accrue any material loss contingencies in this respect as of March

Shareholder derivative actions instituted on October 28, 2025

and November 17, 2025

On October 28, 2025, a shareholder derivative

lawsuit was filed purportedly on behalf of the Company, as nominal defendant, against certain of its current and former directors and

officers in the United States Court for the Eastern District of New York, captioned Flynn v.

Ou et al, No.

1:25-cv-06036 (E.D.N.Y.) (the

“Flynn Action”).

The complaint filed in the Flynn Action alleges claims for alleged breach of fiduciary duties and gross mismanagement,

among others.

On November 17, 2025, an additional putative shareholder derivative lawsuit was filed purportedly on behalf of the Company,

as nominal defendant, against certain of its current and former directors and officers in the United States Court for the Eastern District

of New York, captioned Shah v.

Ou et al, No.

1:25-cv-06372 (E.D.N.Y.) (the “Shah Action”).

The complaint filed in the Shah

Action alleges claims for alleged breach of fiduciary duty, unjust enrichment, waste of corporate assets, gross mismanagement, abuse of

control, among others.

The Flynn Action and Shah Action are based on

the same alleged facts and circumstances as the Class Action and seek damages from the current and former directors and officers and an

order directing the Company and current and former directors and officers to take actions to reform and improve corporate governance and

internal procedures.

On December 9, 2025, the Court consolidated the Flynn Action and Shah Action into a single consolidated action captioned

In re Fly-E Group, Inc.

Stockholder Derivative Litigation, No.

1:25-cv-06036 (E.D.N.Y.) (the “Consolidated Derivative Action”),

and appointed co-lead counsel.

The current and former director and officer defendants dispute the allegations in the complaints and intend

to vigorously defend against all claims.

Given the preliminary stage of the lawsuit and the inherent uncertainties of litigation, we cannot

determine with certainty the outcome of the Consolidated Derivative Action at this time.

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.

The Complaint seeks $2,000,000 for each instance an allegedly counterfeit UL mark was used and asserts

claims for federal trademark infringement and counterfeiting, unfair competition and false designations of the origin and false and misleading

representations, common law unfair competition, common law unjust enrichment, and unlawful deceptive acts and practices.

On May 21, 2025, Company, along with its certain

subsidiaries and certain individuals, and UL entered into a settlement and release agreement (the “Settlement Agreement”)

on mutually acceptable settlement terms.

Pursuant to the Settlement Agreement, the Company and the other defendants agreed to pay UL an

aggregate amount of $1,000,000 before November 30, 2025, and entered into a Consent Judgment and Permanent Injunction pursuant to which

the Company and the other defendants agreed not to offer for sale, sell, or distribute products with UL Marks that were not tested and

certified by UL.

During the year ended March 31, 2026, the Company paid $1,000,000 to UL.

The Settlement Agreement fully resolves all pending

litigation between UL and the Company, and each party fully releases the other party from any and all past or present claims, demands,

causes of action, obligations, damages, liabilities, expenses, or compensation of whatever kind or nature, that were or could have been

asserted in connection with the Company’s sales of products with a UL Mark which were not tested and certified by UL.

2025 Reverse Stock Split

On March 10, 2025, the Company held a special

meeting of stockholders.

At the special meeting, the stockholders approved a proposal to amend the Company’s amended and restated

certificate of incorporation to effect a reverse stock split of the Company’s issued and outstanding shares of common stock, par

value $0.01 per share, by a ratio in the range of 1-for-2 to 1-for-15, with such ratio to be determined in the discretion of the board

of directors of the Company and with such action to be effected at such time and date, if at all, as determined by the board of directors

within one year after the conclusion of the special meeting.

On June 16, 2025, the board of directors approved

a one-for-five (1:5) reverse stock split of the Company’s issued and outstanding shares of common stock (the “2025 First Reverse

Stock Split”).

On July 2, 2025, the Company filed with the Secretary of State of the State of Delaware the Second Certificate of

Amendment to its Certificate of Incorporation (the “Certificate of Amendment”) to effect the 2025 First Reverse Stock Split.

The 2025 First Reverse Stock Split became effective as of 5:00 p.m., Eastern Time, on July 3, 2025, and the Company’s common stock

began trading on the Nasdaq Stock Market on a split-adjusted basis on July 7, 2025.

After the 2025 First Reverse Stock Split, every

five (5) shares of the Company’s issued and outstanding common stock have been automatically converted into one share of common

stock, without any change in the par value per share.

In addition, (i) a proportionate adjustment has been made to the per share exercise

price and the number of shares issuable upon the exercise of all outstanding warrants to purchase shares of common stock, and (ii) the

number of shares reserved for issuance pursuant to the Company’s stock incentive plan has been reduced proportionately.

of a share of common stock created as a result of the 2025 First Reverse Stock Split was rounded up to the nearest whole share.

The Company’s

common stock continues to trade on the Nasdaq Capital Market under the symbol “FLYE.”

On September 15, 2025, the Company planned to

hold a special meeting of stockholders, but adjourned to October 13, 2025 in order to achieve a quorum (the “Special Meeting”).

At the special meeting, the stockholder approved a proposal to amend the Company’s amended and restated certificate of incorporation

to effect a reverse stock split of the Company’s issued and outstanding shares of common stock, par value $0.01 per share, , by

a ratio in the range of 1-for-2 to 1-for-20, with such ratio to be determined in the discretion of the board of directors of the Company

and with such action to be effected at such time and date, if at all, as determined by the board of directors within one year after the

conclusion of the special meeting.

On October 13, 2025, the board of directors approved

a one-for-twenty (1:20) reverse stock split of the Company’s issued and outstanding shares of common stock (the “2025 Second

Reverse Stock Split”).

On October 23, 2025, the Company filed with the Secretary of State of the State of Delaware the Second Certificate

of Amendment to its Certificate of Incorporation (the “Certificate of Amendment”) to effect the 2025 Second Reverse Stock

The 2025 Second Reverse Stock Split became effective on November 4, 2025, and the Company’s common stock began trading on

the Nasdaq Stock Market on a split-adjusted basis on November 4, 2025.

After the 2025 Second Reverse Stock Split, every

twenty (20) shares of the Company’s issued and outstanding common stock have been automatically converted into one share of common

stock, without any change in the par value per share.

In addition, (i) a proportionate adjustment has been made to the per share exercise

price and the number of shares issuable upon the exercise of all outstanding warrants to purchase shares of common stock, and (ii) the

number of shares reserved for issuance pursuant to the Company’s stock incentive plan has been reduced proportionately.

of a share of common stock created as a result of the 2025 Second Reverse Stock Split was rounded up to the nearest whole share.

The Company’s

common stock continues to trade on the Nasdaq Capital Market under the symbol “FLYE.”

Unless otherwise noted, the share and per share

information in this report reflects the two 2025 Reverse Stock Split.

Registered Direct Offering and Private Placement Offering

On June 2, 2025, we closed our registered direct

offering of an aggregate of (i) 285,956 shares of our common stock, par value $0.01 and (ii) 571,912 warrants (the “Warrants”)

to purchase 571,912 shares of common stock at a combined purchase price per share and accompanying Warrants of $24.28, resulting in net

proceeds to us of $6.24 million after deducting placement agent fees and offering expenses.

All of the shares (including shares underlying

the Warrants) were registered under the Securities Act pursuant to a registration statement on Form S-1, as amended (File No.

which was declared effective by the Securities and Exchange Commission on May 15, 2025.

American Trust Investment Services, Inc.

acted as the exclusive placement agent for the offering.

We paid ATIS aggregate commissions of $219,430 and incurred offering expenses

On September 18, 2025, the Company entered into

a securities purchase agreement with third-party individuals offering of (i) 687,500 shares of the common stock at the price of $16.0

per share for a total consideration of $11,000,000.

During the year ended March 31, 2026, the Company received net proceeds of $10,996,558

from the investors.

The disclosure that the closing of this transaction occurred on September 30, 2025, in the Form 8-K filed with the

SEC was incorrect and is hereby corrected.

Disposal of Certain Subsidiaries

During the year ended March 31, 2026, the Company

disposed several subsidiaries as part of a disposal plan aimed at simplifying its legal and operational structure and improving administrative

The divestitures were not intended to be a strategic withdrawal from any specific geographic region or industry, but rather

a measure to streamline the Company’s corporate structure and reduce complexity in financial reporting.

As part of this plan, as

of March 31, 2026, the Company had sold an aggregate of 28 subsidiaries to third-party individuals in multiple transactions, for total

cash consideration of approximately $2.9 million, of which approximately $0.1 million had been received.

Between April 2025 and March

2026, the Company further sold 100% of its equity interests in 24 subsidiaries to third-party buyers for total cash consideration of approximately

$2.3 million, with no contingent payments or adjustments.

As of July 23, 2026, the Company had not received any remaining consideration

under these transactions.

(See Note - 15 — DISPOSAL OF SUBSIDIARIES in the accompanying consolidated financial statements for details).

Key Factors that Affect Operating Results

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New Customers

Our growth will depend on our ability to achieve

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

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

As of July 15, 2025, we have 20

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

Our growth will depend on

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

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

of July 23, 2026, we currently operate 4 retail stores in the U.S.

During the year ended March 31, 2026, 23 retail stores in the U.S.

and 1 retail store in Canada were sold to streamline the Company’s corporate structure and reduce complexity in financial reporting

and operating costs.

We offer rental services from selected locations.

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

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

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

E-bikes, and E-scooters in the United States.

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

to customers in adequate volume and quality.

With respect to branding and marketing, we plan

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as our retail stores and distributors.

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

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

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

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For the year ended March 31, 2026, our net revenues

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

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

ended March 31, 2025.

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

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

Consequently,

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

The decrease in volume also attributed in part

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

The average sales price per EV increased by

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

These improvements were driven by product upgrades

and enhanced sales channels in the market.

decreased by 25.0% to $19.1 million, compared to $25.4 million for the same period in 2025, which was primarily driven by a decrease in

total units sold and reductions in selling prices to reduce aged inventory for the year ended March 31, 2026.

We currently have a streamlined product portfolio

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

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

However, our product sales price is influenced by various

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

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

If our prices remain stable, increasing sales volume

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

our financial results.

Our payroll expenses were $4.7 million for

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

As four stores were closed and four others

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

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

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

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

In addition, to maintain excellent

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

Effective management of payroll

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

our retail stores and expand our sales network globally.

However, our product sales price is influenced by various factors such as market

demand and competitors’ pricing, and although we continue working on product improvements and retail expansion, there can be no

guarantee of sustained sales price increase or improved sales volume.

If our prices remain stable, increasing sales volume would become

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

Our payroll expenses were $2.5 million for the

year ended March 31, 2026, compared to $4.7 million for the year ended March 31, 2025.

During the year ended March 31, 2026, the Company

closed 8 stores and sold 24 stores, and we expect a decrease in payroll expenses in the next quarter due to reduced demand for store sales

Each of our retail stores has a minimum of two employees, and additional office employees will be hired to support retail stores

in customer service and marketing.

In addition, to maintain excellent customer service in our retail stores, each store will have at least

one trained repair professional.

Effective management of payroll expenses remains crucial to our ability to grow revenue and enhance our

financial results, especially as we navigate a reduced workforce.

Vendor and Supply Management

During the year ended March 31, 2025, we worked

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

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

During the year ended March

31, 2026, we worked with two principal vendors, Depcl Corp.

and Xiamen Innolabs Technology Co., Ltd, each of which respectively supplied

approximately 70.3% and 19.2% of the accessories and components used in all our products.

We have implemented a centralized vendor management

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

While we believe

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

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

our competitive edge and unique selling points.

While we believe we

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

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

edge and unique selling points.

Recently, the U.S.

government issued executive orders imposing tariffs on products from

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

These tariffs are expected to impact a wide range of

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

While some agreements have temporarily delayed their

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

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

manufacturers

and retailers.

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

the growing e-bike and e-scooter market.

government issued executive orders imposing tariffs on products from key international

suppliers, citing national security and public health concerns.

These tariffs are expected to impact a wide range of imported goods, including

components used in e-bike and e-scooter manufacturing.

While some agreements have temporarily delayed their implementation, ongoing trade

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

Tariffs on e-bikes and e-scooters

or their components would likely increase prices for consumers, and create challenges for U.S.

manufacturers and retailers.

could be long-term opportunities for domestic production, the immediate impact would likely be negative for the growing e-bike and e-scooter

Regulatory Landscape

We operate in an

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

testing, as well as battery safety and disposal.

These requirements create additional costs and possible production delay in

connection with the testing and manufacturing of our products.

We also benefit from environmental regulations in our target markets

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

The Governor of New York State signed a

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

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

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

Additionally, in

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

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

Our Fly-11 PRO was

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

From January 2025 to June 2025, we participated in this

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

While we expect relevant

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

We operate in an industry that is subject to extensive

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

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

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

for EV manufacturers.

The Governor of New York State signed a legislative package in July 2024 aimed at raising awareness about the safe

use of e-bikes and lithium-ion battery products, prohibiting the sale of non-compliant batteries, requiring safety protocols and training

for first responders, mandating operating manuals for e-bike retailers, and improving accident reporting and registration processes for

e-bikes and mopeds.

How to Assess Our Performance

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

We generate a

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

and retail stores, and to our distributors.

We generate a substantial majority of our revenues from sales of E-bikes, E-motorcycles and E-scooters directly to customers through

our online store and retail stores, and to our distributors.

Accessories and spare parts sales.

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

In addition, we offer Fly E-Bike branded

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

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

In addition, we offer Fly E-Bike branded accessories

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

Service revenues.

We also provide

repair services at our retail stores for a fee.

The Company operates rental business primarily from the Go Fly rental mobile app and

selected Fly E-Bike stores that provide users with a flexible and affordable e-bike rental option.

We also provide repair

services at our retail stores for a fee.

The Company operates rental business primarily from the Go Fly rental mobile app and selected

Fly E-Bike stores that provide users with a flexible and affordable e-bike rental option.

Cost of Sales

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Selling, General and Administrative Expenses

Selling, general and administrative expenses

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

Selling, general and administrative expenses primarily

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

Marketing costs primarily consist of advertising

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We expect that our selling and marketing expenses

will continue to increase in the foreseeable future, as we plan to further expand our sales network and retail channels, and engage in

more selling and marketing activities to enhance our brand and attract more purchases from new and existing customers.

will decrease in the foreseeable future, as more retail stores are expected to be sold with reduced selling and marketing activities.

General and administrative expenses primarily

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and amortization expense and rent, and professional fees.

We expect that our general and administrative will increase in the foreseeable

future, as we hire additional personnel and incur additional expenses related to the anticipated growth of our business and our operation

as a public company after the completion of our initial public offering.

We expect that our general and administrative will decrease in the foreseeable

future, as more retail stores are expected to be sold with reduced general and administrative activities.

Non-GAAP Financial Measures

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in accordance with the generally accepted accounting principles in the United States (the “U.S.

GAAP”), management

periodically uses certain “non-GAAP financial measures,” as such term is defined under the rules of the SEC, to clarify and

enhance understanding of past performance and prospects for the future.

Generally, a non-GAAP financial measure is a numerical measure

of a company’s operating performance, financial position or cash flows that excludes or includes amounts that are included in or

excluded from the most directly comparable measure calculated and presented in accordance with U.S.

For example, non-GAAP

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

of management’s control.

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

insight into our financial position and operating performance.

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

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

Further, the calculation

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

and therefore may not be comparable among companies.

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

amortization) to evaluate our operating performance.

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

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

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

GAAP”), management periodically

uses certain “non-GAAP financial measures,” as such term is defined under the rules of the SEC, to clarify and enhance understanding

of past performance and prospects for the future.

Generally, a non-GAAP financial measure is a numerical measure of a company’s

operating performance, financial position or cash flows that excludes or includes amounts that are included in or excluded from the most

directly comparable measure calculated and presented in accordance with U.S.

For example, non-GAAP measures may exclude the impact

of certain items such as acquisitions, divestitures, gains, losses and impairments, or items outside of management’s control.

believes that the following non-GAAP financial measure provides investors and analysts useful insight into our financial position and

operating performance.

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

comparable measure determined in accordance with U.S.

Further, the calculation of these non-GAAP financial measures may differ from

the calculation of similarly titled financial measures presented by other companies and therefore may not be comparable among companies.

We use EBITDA (earnings before interest, taxes,

depreciation, and amortization) to evaluate our operating performance.

We believe EBITDA provides additional insight into our underlying,

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

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

We reconcile our non-GAAP financial measure to

7 unchanged sentences

GAAP measures and because it eliminates items that have less bearing on our operating performance.

EBITDA, as presented herein,

is a supplemental measure of our performance that is not required by, or presented in accordance with, U.S.

We use non-GAAP

financial measures as supplements to our U.S.

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

trends affecting our business.

EBITDA, as presented herein, is

a supplemental measure of our performance that is not required by, or presented in accordance with, U.S.

We use non-GAAP financial

measures as supplements to our U.S.

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

our business.

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

GAAP and should not be considered

a substitute for net (loss) income as determined in accordance with U.S.

EBITDA along with a reconciliation to net income

is shown within the Results of Operations below.

Results of Operations for the Years Ended

March 31, 2025 and 2024

GAAP and should not be considered a substitute

for net (loss) income as determined in accordance with U.S.

EBITDA along with a reconciliation to net income is shown within the

Results of Operations below.

Results of Operations for the Years Ended March 31, 2026 and 2025

The following table sets forth the components

of our results of operations for the years ended March 31, 2026 and 2025:

For the Year Ended March 31,

For the Years Ended March 31,

Revenues, Net

5 unchanged sentences

Total Operating Expenses

(Loss) Income from Operations

Other Income (Expenses), Net

Interest Expenses, Net

Income Taxes Expense

Net (Loss) Income

Loss from Operations

Other Expenses, Net

Interest Expense, Net

Income Taxes Benefit

$ (9,257,808 )

$ (5,291,159 )

For the Year Ended March 31,

$ (3,966,649 )

Sales-Wholesale

For the Years Ended March 31,

Sales - Retail

$ (14,802,844 )

Sales - Wholesale

Sales - Rental services

1 unchanged sentence

$ (6,363,806 )

Our net revenues were $25.4 million for

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

The decrease in our net

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

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

For the year ended March 31, 2026, our net revenues decreased by 25.0%

to $19.1 million, compared to $25.4 million for the same period in 2025.

The decrease in our net revenues was primarily driven by a decrease

in sales volume of 16,664 units, from 58,765 units for the year ended March 31, 2025, to 42,101 units for the year ended March 31, 2026,

and a decrease in selling prices in order to reduce aged inventory.

Our retail sales revenue decreased by $14.8 million,

or 68.1%, from $21.7 million for the year ended March 31, 2025 to $6.9 million for the year ended March 31, 2026.

Our wholesale

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

ended March 31, 2025.

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

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

Consequently,

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

The decrease in retail sales also attributed in

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

The decrease in wholesales revenue was

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

Our wholesale revenue

increased by $8.0 million, or 227.5%, from $3.5 million for the year ended March 31, 2025 to $11.6 million for the year ended March 31,

The decrease in retail sales revenue was primarily attributable to softened consumer demand for E-bicycles and E-scooters, partly

driven by safety concerns stemming from lithium-ion battery-related incidents in New York during the period, which prompted some customers

to reconsider their purchases and explore alternative transportation options.

In addition, the decline was partly due to the closure and

disposal of certain retail stores during the year ended March 31, 2026.

The increase in wholesale revenue was mainly driven by continued

purchases from entities that were disposed of during the same period, as these stores continued to source products from us following the

Cost of Revenues

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

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

The decrease in cost of revenues was primarily attributable

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

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

The unit cost for battery decreased by

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

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

years ended March 31, 2025 and 2024:

For the Year Ended March 31,

Gross profit for the years ended March 31, 2025

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

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

2024, respectively.

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

Cost of revenues decreased by 3.8%, from $15.0 million for the year

ended March 31, 2025, to $14.4 million for the year ended March 31, 2026.

The decrease was primarily attributable to the reduction in

sales volume resulting from the decrease in the number of retail stores during the year, as discussed above.

Gross Margin The following table shows

our gross profit and gross margin for the year ended March 31, 2025 and 2026:

For the Years Ended March 31,

$ (5,791,823 )

Gross profit for the years ended March 31, 2026 and 2025 was $4.7 million

and $10.5 million, respectively.

Gross margin was 24.4% and 41.1% for the years ended March 31, 2026 and 2025 respectively.

in gross margin was primarily attributable to lower average selling prices of our EVs implemented to clear aged inventory and an increase

in procurement costs driven by upstream price movements, as well as a shift in sales channel mix following the disposal of certain retail

stores, which resulted in a higher proportion of wholesale sales and a lower proportion of retail sales — the latter of which typically

generates higher margins.

These negative factors were partially offset by increased rental services revenue with higher margins than our

other businesses, though its contribution remained relatively small.

As a result, gross margin decreased by 16.7 percentage points from

41.1% to 24.4% for the year ended March 31, 2026.

Total Operating Expenses

1 unchanged sentence

of our total operating expenses for the years ended March 31, 2026 and 2025:

For the Year Ended March 31,

For the Years Ended March 31,

Selling Expenses

$ (3,924,634 )

General and Administrative Expenses

Total Operating Expenses

$ (3,913,520 )

Percentage of Revenue

Total operating expenses were $15.0 million for

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

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

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

Total operating expenses were $11.1 million for the year ended March

31, 2026, a decrease of $3.9 million, or 26.1%, compared to $15.0 million for the years ended March 31, 2025.

The decrease in operating

expenses was attributable to the combined effect of (i) reductions in payroll expenses, rent expenses, meals and entertainment expenses,

and insurance expenses as a result of the reduction in retail stores and the downsizing of our business operations, partially offset by

(ii) increases in warehouse maintenance costs, impairment loss on equipment, and inventory clearance losses, as discussed below.

Selling Expenses

Selling expenses primarily consist of payroll

expenses, rent, and advertising expenses of retail stores.

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

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

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

expenses, rent, utilities, and advertising expenses of retail stores.

For the year ended March 31, 2026, selling expenses decreased significantly

compared to the prior year, primarily due to the closures and dispositions of retail stores during the year, which reduced the scale of

our operations and resulted in lower associated expenses.

Payroll expenses were $1.7 million for the year ended March 31, 2026, compared

to $3.3 million for the year ended March 31, 2025.

Rent expenses were $1.1 million for the year ended March 31, 2026, compared to $2.9

million for the year ended March 31, 2025.

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

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

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

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

last quarter resulting from closures and dispositions of retail stores.

The increase in rental expense was primarily due to the expansion

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

The rise in advertising expense was mainly driven

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

Total commission expenses were $9,980

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

The decrease in the commission expenses

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

Utilities expenses were $0.1 million for the year ended March 31, 2026, compared to $0.2 million

for the year ended March 31, 2025.

Advertising expenses were $36,604 for the year ended March 31, 2026, compared to $0.3 million for the

year ended March 31, 2025.

General and Administrative Expenses

General and administrative expenses increased

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

Professional fees increased to $2.0 million for the year ended

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

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

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

due to additional employees hired in operation and accounting departments.

Insurance expenses increased to $1.1 million for the

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

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

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

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

There were settlement

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

General and administrative expenses increased during the year ended

March 31, 2026 compared to the prior year, primarily due to increases in inventory clearance losses, impairment loss on property and equipment,

and repair and maintenance expenses, partially offset by decreases in payroll expenses, meals, entertainment and travel expenses, and

insurance expenses.

Inventory clearance losses increased to $1.9 million for the year ended March 31, 2026 from nil for the year ended

March 31, 2025, primarily attributable to losses incurred from inventory clearance and count processes in connection with the closures

and dispositions of retail stores;

impairment loss on property and equipment increased to $0.6 million for the year ended March 31, 2026

from nil for the year ended March 31, 2025, primarily due to impairment charges recorded for assets that were idle or no longer expected

to generate economic benefits.

Payroll expenses decreased to $0.5 million for the year ended March 31, 2026 from $1.5 million for the

year ended March 31, 2025, primarily due to headcount reductions in operations and accounting departments;

meals, entertainment and travel

expenses decreased to $0.3 million for the year ended March 31, 2026 from $0.5 million for the year ended March 31, 2025, primarily as

a result of reduced business entertainment and travel activities following the workforce reduction;

and insurance expenses decreased to

$0.3 million for the year ended March 31, 2026 from $1.1 million for the year ended March 31, 2025, primarily due to lower general insurance

coverage purchased for closed and disposed retail stores.

Other (Expenses)/ Income, net

Other expenses, net were $0.7 million for the year ended March 31,

2026, compared to other income, net of $10,588 for the year ended March 31, 2025.

The change was primarily attributable to the net impact

of losses and gains arising from the closure and disposition of retail stores during the year, with losses from store closures and asset

disposals partially offset by gains on certain dispositions, resulting in a net expense.

Interest expenses, net

Interest expenses, net were $1.8 million for the

year ended March 31, 2026, an increase of $1.4 million from $0.4 million for the year ended March 31, 2025.

This increase was primarily

attributable to interest expenses incurred on new borrowings from financial institutions to fund our business operations, as well as extension

fees paid for certain loan renewals and the higher average annual interest rates following such renewals.

Income Tax Provisions

Income taxes provision was $0.3 million for the

Income tax provision was $0.33 million for the

year ended March 31, 2026, a change from $0.34 million income tax provision for the year ended March 31, 2025.

This change was due

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

Net Income (Loss)

Net loss was $5.3 million for the year ended

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

mainly attributable to the reasons discussed above.

The following table sets forth the components

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

For the Year Ended March 31,

(Loss) Income from Operations

This change was primarily

due to our pre-tax loss for the year ended March 31, 2026.

Net loss was $9.3 million for the year ended March 31, 2026, an increase

of $4.0 million, or 75.0%, from net loss of $5.3 million for the year ended March 31, 2025, which was mainly attributable to the reasons

discussed above.

The following table sets forth the components of our EBITDA for the

years ended March 31, 2026 and 2025:

For the Years Ended March 31,

$ (9,257,808 )

$ (5,291,159 )

$ (3,966,649 )

Income Tax Provision

2 unchanged sentences

$ (3,853,007 )

$ (2,440,505 )

Percentage of Revenue

Before interest expenses, income tax, depreciation,

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

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

expenses and general and administrative expenses described above.

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

year ended March 31, 2025 and 2024, respectively.

Before interest expenses,

income tax, depreciation, and amortization, for the year ended March 31, 2026, our net loss was approximately $6.3 million, an increase

of approximately $2.4 million, compared to net loss of $3.9 million for the year ended March 31, 2025, which was mainly attributable to

the decrease in revenue and selling expenses and increase in general and administrative expenses described above.

The ratio of EBITDA

to revenue was negative 33.0% and negative 15.2% for the years ended March 31, 2026 and 2025, respectively.

Liquidity and Capital Resources

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

As of March 31, 2026, we

had cash of $0.3 million.

We had working capital of $10.0 million and $1.3 million as of March 31, 2026 and 2025, respectively.

We had net loss of $5.3 million

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

During the year ended March 31, 2025, net cash

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

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

of contractual obligation of approximately $8.9 million.

We have funded our working capital and other

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

financing, cash flow from operations, and bank loans.

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

of our current assets.

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

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

Our ability to continue to fund

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

outside of our control.

On June 7, 2024, we sold

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

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

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

Net proceeds received by us from IPO were approximately $7.9

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

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

On June 4, 2025,

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

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

On July 3, 2025, the Company

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

The reverse stock split reduced the number

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

The par value per share

remained unchanged at $0.01.

As of March 31, 2025, the

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

The main cash outflow for

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

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

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

As of March 31,

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

These factors raise substantial doubt

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

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

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

(ii) other available

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

and (iii) financial support from the Company’s

related parties.

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

The incurrence of indebtedness

would result in increased fixed obligations and could result in operating covenants that would restrict our operations.

We cannot assure

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

In the event that financing sources are not available,

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

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

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

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

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

going concern.

net loss of $9.3 million and $5.3 million for the years ended March 31, 2026 and 2025, respectively.

During the year ended March 31, 2026,

net cash used in operating activities of the Company was approximately $13.8 million.

As of March 31, 2026, the Company had a current

portion of contractual obligation of approximately $5.5 million, including short-term loan payables of approximately $3.9 million, current

portion of long-term loan payables of approximately $0.1 million, and current portion of operating lease liabilities of approximately

$1.5 million.

We have funded our working capital and other capital

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

cash flow from operations, and bank loans.

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

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

the accounts receivable and the realization of the inventories as of March 31, 2026.

Our ability to continue to fund working capital and

other capital requirements may be affected by general economic, competitive and other factors, many of which are outside of our control.

On June 4, 2025, the Company issued 285,956 shares

of common stock, at a price of $24.28 per share in its follow-on public offering for gross proceeds of $6.9 million, prior to deducting

the placement agent’s fees and offering expenses payable by the Company.

On September 18, 2025, the Company entered into

a securities purchase agreement with third-party individuals offering of (i) 687,500 shares of the common stock at the price of $16.0

per share for a total consideration of $11,000,000.

During the year ended March 31, 2026, the Company received net proceeds of $10,996,558

from the investors.

As of March 31, 2026, the Company had working capital of approximately

$10.0 million and cash of approximately $0.3 million.

The main cash outflow for the year ended March 31, 2026 was from net loss of $9.3

million, a decrease in accounts payable of $0.8 million, an increase in accounts receivable of $6.8 million, a decrease in inventory of

$1.9 million, and a decrease in prepayments and other receivables of $0.9 million.

The Company became default of repayment for loan with

Peapack-Gladstone Bank since August 31, 2025.

During the year ended March 31, 2026, the Company paid $1,000,000, $669,725 and $117,921 on

principal, interest and forbearance fee of the loan, respectively.

The Company entered into forbearance and modification agreement with

the bank on November 7, 2025 for extension of repayment deadline with interest rate of 12.875% to March 31, 2026.

Subsequent to the execution

of the forbearance agreement, the Company has received written notices from Peapack Private Bank asserting defaults and reserving the

lender’s rights to pursue remedies under the applicable loan documents.

The Company entered into a forbearance and modification

agreement with the bank on May 28, 2026, extending the repayment deadline to June 30, 2026, at an interest rate of 12.875%, and the agreement

requires the Company to pay $123,877 in interest and a $4,000 forbearance fee in respect of the loan.

As of July 23, 2026, the Company

is in ongoing negotiations with the bank for a renewal.

These factors raise substantial doubt as to the Company’s ability to continue

as a going concern.

For the next 12 months from the issuance date of this report, we plan to alleviate the going concern risk through

(i) equity financing to support the Company’s working capital;

(ii) other available sources of financing (including debt) from banks

and other financial institutions;

and (iii) financial support from the Company’s related parties.

The issuance and sale of additional

equity would result in further dilution to our stockholders.

The incurrence of indebtedness would result in increased fixed obligations

and could result in operating covenants that would restrict our operations.

We cannot assure you that financing will be available in amounts

or on terms acceptable to us, if at all.

In the event that financing sources are not available, or that we are unsuccessful in increasing

our gross profit margin and reducing operating losses, we may be unable to implement our current plans for expansion, repay debt obligations

or respond to competitive pressures, any of which would have a material adverse effect on our business, financial condition and results

of operations and may materially adversely affect our ability to continue as a going concern.

The consolidated financial statements do

not include any adjustments related to the recoverability and classification of recorded assets or the amounts and classification of liabilities

or any other adjustments that might be necessary should we be unable to continue as a going concern.

Our accounts receivable represent primarily accounts

2 unchanged sentences

allowance for credit losses, was $7.0 million and $0.5 million, respectively.

Our accounts receivable turnover period increased

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

payment terms to dealers.

Our accounts receivable turnover period increased from 71

days in the year ended March 31, 2025 to 72 days in the year ended March 31, 2026 which was mainly attributable to the relaxation of

credit policies to customers.

Our accounts payable represent primarily accounts

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

As of March 31, 2025 and 2024, our accounts

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

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

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

As of March 31, 2026 and 2025, our accounts payable

were $0.4 million and $1.3 million, respectively.

Our accounts payable turnover period decreased to 29 days for the year ended March 31,

2026 from 33 days for the year ended March 31, 2025, which was primarily due to the Company’s accelerated payments to certain suppliers.

The company pay invoices more promptly to ensure continued favorable terms and reliable service.

Our prepayments and other receivables primarily

represent prepayments to vendors and other service providers.

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

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

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

E-bike rental services, which required additional inventory.

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

prepayments to vendors to secure inventory for the new services.

Our inventories primarily include our EVs, their

accessories and spare parts.

As of March 31, 2025 and 2024, our inventories, net of allowance, were $6.4 million and $5.4 million,

respectively.

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

Our inventory turnover days

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

strategic inventory buildup, allowing us to start new services.

As of March 31, 2025 and

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

For the year ended March 31, 2025

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

See Note 8 to the Consolidated

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

The following table summarizes our cash flow

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

For the Year Ended

Net Cash (Used in) Provided by Operating Activities

These prepayments and receivables increased by $3.3 million, from $3.7 million

as of March 31, 2025, to $7.0 million as of March 31, 2026.

This significant increase is mainly due to receivables arising from the disposal of certain subsidiaries.

Our inventories primarily include our EVs, their accessories and spare

As of March 31, 2026 and 2025, our inventories, net of allowance, were $2.3 million and $6.4 million, respectively.

in inventories was primarily due to those inventories held by stores classified as assets held for sale.

Our inventory turnover days decreased

to 111 days in the year ended March 31, 2026, from 143 days in the year ended March 31, 2025, which was primarily due to optimized inventory

management and enhanced operational efficiency.

As of March 31, 2026 and 2025, the total outstanding

amount of loan principal was $6.0 million and $7.4 million, respectively.

For the years ended March 31, 2026 and 2025, the interest expenses

on our loans amounted to $1.8 million and $0.4 million, respectively.

See Note 9 to the Consolidated Financial Statements included within

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

The following table summarizes our cash flow data

for the years ended March 31, 2026 and 2025:

For the Years Ended

Net Cash Used in Operating Activities

$ (13,849,914 )

$ (10,059,466 )

Net Cash Used in Investing Activities

Net Cash Provided by (Used in) Financing Activities

Net Cash Provided by Financing Activities

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

1 unchanged sentence

Net cash used in operating

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

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

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

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

$0.2 million.

Net cash provided by operating activities for

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

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

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

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

activities for the year ended March 31, 2026 was $13.8 million, which was due to net loss of $9.3 million, amortization of right-of-use

assets of $1.9 million, impairment loss on property, and equipment of 0.6 million, depreciation expense of 0.7 million, amortization expense

of 0.1 million, inventory reserve of 0.5 million, a decrease in inventories of $1.9 million, a decrease in prepayments and other receivables

of $0.6 million, a decrease in accounts payable of $0.8 million, a decrease in accrued expenses and other payables of $0.5 million, and

a decrease in operating lease liabilities of $1.7 million, partially offset by gain on disposal of subsidiaries of $1.6 million, an increase

in accounts receivable of $6.8 million, and an increase in taxes payable of $0.1 million.

Net cash used in operating activities for the

year ended March 31, 2025 was $10.1 million, which was due to net loss of $5.3 million, a decrease in tax payable of $1.5 million, an

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

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

and other payables of $0.5 million, and a decrease in accounts receivables-related parties of $0.2 million.

Investing Activities

Net cash used in investing

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

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

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

Net cash used in investing activities was $2.5 million for the year

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

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

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

ended March 31, 2026, which was due to prepayment for software development of $1.8 million, advance to a related party of $0.2 million,

and cash released from disposal of entities of $0.4 million.

Net cash used in investing activities was $2.9

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

and computer hardware and software from a related party of $1.4 million, and the advance to a related party of $0.5 million, and partially

offset by the repayment from a related party of $0.7 million.

Financing Activities

Net cash provided by financing activities was $15.7 million for the

year ended March 31, 2026, which consisted of net proceeds from our follow-on public offering and private placement offering of $17.4

million, and loan proceeds of $2.0 million, partially offset by repayments of loans of $3.1 million and payment of public offering costs

of $0.5 million.

Net cash provided by financing activities was

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

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

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

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

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

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

$12.5 million for the year ended March 31, 2025, which consisted of net proceeds from the IPO of $9.2 million, and loan proceeds of $7.4

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

Commitments and Contractual Obligations

The following table presents

our material contractual obligations as of March 31, 2025:

The following table presents our material contractual obligations as

of March 31, 2026:

Contractual Obligations

Operating Lease Obligations and Others

UL Litigation

Loan Payables

Total Contractual Obligations

Off-Balance Sheet Arrangements

We have not entered into

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

Quantitative and Qualitative Disclosures about

We have not entered into any transactions, agreements

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

Quantitative and Qualitative Disclosures about Market Risk

Foreign Exchange Risk

A substantial majority of

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

We do not believe that we currently have any significant direct

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

In addition, as our business

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

other currencies.

A substantial majority of all of our revenues

and expenses are denominated in U.S.

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

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

In addition, as our business and operation expand in

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

Interest Rate Risk

Our exposure to interest

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

Our short-term and long-term bank

borrowings bear interests at fixed rates.

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

in market interest rates.

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

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

Our exposure to interest rate risk primarily relates

to the interest expenses on our short-term and long-term loan payables.

Our short-term and long-term loan payables bear interest at fixed

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

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

If we were to renew these short-term and

long-term loan payables, we might be subject to interest rate risk.

Critical Accounting Estimates

An accounting estimate is

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

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

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

We prepare our consolidated

financial statements in conformity with U.S.

An accounting estimate is considered critical

if it requires to be made based on assumptions about matters that are highly uncertain at the time such estimate is made, and if different

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

could materially impact the consolidated financial statements.

We prepare our consolidated financial statements

in conformity with U.S.

GAAP, which requires us to make estimates and assumptions.

We continually evaluate these

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

that we believe to be reasonable under the circumstances.

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

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

Some of our accounting policies require

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

Estimated Allowance for Inventories

Our estimated allowance for

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

Adjustments are recorded to write down the

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

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

As of March 31, 2025 and

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

We continually evaluate these estimates and assumptions

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

under the circumstances.

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

differ from our expectations as a result of changes in our estimates.

Some of our accounting policies require a higher degree of judgment

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

Estimated Allowance for Inventory Obsolescence Reserve

Our estimated allowance for the inventory obsolescence reserves is

based on our assessment of realization of inventory.

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

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

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

As of March 31, 2026 and 2025, we recorded inventory reserves

balance of $859,193 and $1,107,569, respectively.

Estimated Allowance for Expected Credit Losses

Our estimated allowance for expected credit losses

is based on our assessment of collectability of accounts receivable.

Adjustments are recorded to estimate expected credit losses over

the contractual life of receivables under the current expected credit loss model, which is dependent upon 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.

of March 31, 2026 and 2025, we recorded allowance for expected credit losses of $217,479 and $116,746, respectively.

Quantitative and Qualitative Disclosures About Market Risk.

Not applicable to smaller reporting companies.

Controls and Procedures.

Evaluation of Disclosure Controls and Procedures

Disclosure controls and procedures are controls

and other procedures designed to ensure that information required to be disclosed in our reports filed or submitted under the Exchange

Act is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms.

Disclosure controls

and procedures include, without limitation, controls and procedures designed to ensure that information required to be disclosed in our

reports filed or submitted under the Exchange Act is accumulated and communicated to our Chief Executive Officer and Chief Financial Officer

(together, the “Certifying Officers”), to allow timely decisions regarding required disclosure.

Under the supervision and with the participation

of our management, including our Certifying Officers, we carried out an evaluation of the effectiveness of the design and operation of

our disclosure controls and procedures as defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act.

Based on the foregoing, our

Certifying Officers concluded that our disclosure controls and procedures were not effective as of the end of the period covered by this

Report due to the material weakness identified below.

Management’s Annual Report on Internal

Control over Financial Reporting

A material weakness is a deficiency, or a combination

of deficiencies, in internal control over financial reporting, such that there is a reasonable possibility that a material misstatement

of our annual or interim financial statements will not be prevented or detected on a timely basis.

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.

SEC reporting requirements to properly address complex U.S.

GAAP accounting issues and to prepare and review our unaudited condensed 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.

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, 2026.

Accordingly, we continue to consider these material weaknesses to be ongoing

as of that date.

As of March 31, 2026, 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.

We do not expect that our disclosure controls

and procedures will prevent all errors and all instances of fraud.

Disclosure controls and procedures, no matter how well conceived and

operated, can provide only reasonable, not absolute, assurance that the objectives of the disclosure controls and procedures are met.

Further, the design of disclosure controls and procedures must reflect the fact that there are resource constraints, and the benefits

must be considered relative to their costs.

Because of the inherent limitations in all disclosure controls and procedures, no evaluation

of disclosure controls and procedures can provide absolute assurance that we have detected all our control deficiencies and instances

of fraud, if any.

The design of disclosure controls and procedures also is based partly on certain assumptions about the likelihood of

future events, and there can be no assurance that any design will succeed in achieving its stated goals under all potential future conditions.

Changes in Internal Control over Financial

There was no change in our internal control over

financial reporting that occurred during the period covered by this Report that has materially affected, or is reasonably likely to materially

affect, our internal control over financial reporting.

Quantitative and Qualitative Disclosures

1 unchanged sentence

Not applicable.

Financial Statements and Supplementary

The information required

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

Changes in and Disagreements with

Accountants on Accounting and Financial Disclosures

Not applicable.

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

What changed 10-K

Item 7. Management’s Discussion and Analysis