Fly-E Group Inc

Previous wording

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 August 15, 2024, we have 40 stores, including 39 retail stores in the U.S. and one retail store in Canada. We offer rental services from selected locations. We also operate one online store at flyebike.com, focusing on selling E-motorcycles, E-bikes and E-scooters, serving customers in the United States. In addition, we plan to open a second online store focusing on selling gas bikes in the future. We plan to expand our presence in the United States and extend our business into South America and Europe in the future.

Current wording

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 November 14, 2024, we have 37 stores, including 36 retail stores in the U.S and one retail store in Canada. The Company offers rental services from selected locations. We also operate one online store at flyebike.com, focusing on selling E-motorcycles, E-bikes and E-scooters, serving customers in the United States. In addition, we plan to open a second online store focusing on selling gas bikes in the future. We plan to expand our presence in the United States and extend our business into South America and Europe in the future.

Previous wording

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 August 15, 2024, we offered 21 E-motorcycle products, 21 E-bike products and 34 E-scooter products.

Current wording

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 November 14, 2024, we offered 24 E-motorcycle products, 28 E-bike products and 35 E-scooter products.

Previous wording

We are currently in the process of developing a Fly E-Bike app, which is a management service mobile software for our EVs. We aim to design an app that will bring users a comprehensive intelligent experience to create a safer and more satisfying riding life. 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 2024, the Company engaged DFT to develop a mobile phone application for its renal services, the GO FLY APP. As of June 30, 2024, the Company paid $2,054,000 to DFT as prepayment for software development.

Current wording

We are currently in the process of developing a Fly E-Bike app, which is a management service mobile software for our EVs, enabling customers to purchase bikes, locate company stores, schedule bike repairs, and more. We aim to design an app that will bring users a comprehensive intelligent experience to create a safer and more satisfying riding life. The development of the app is still in its preliminary stage. We have launched a testing version of the app, which is currently unavailable to our customers. In December 2023, the Company engaged DF Technology US Inc (“DFT”) for certain technology services, for the development of the enterprise resource planning system (“ERP system”), and in July 2024, the Company engaged DFT to develop a mobile phone application for its renal services, the GO FLY APP. The total contract price for the GO FLY APP is $500,000, and the GO FLY APP was delivered and launched in the rental business on September 5, 2024. As of September 30, 2024, the Company paid $1,055,980 to DFT as prepayment for software development.

Previous wording

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 three months ended June 30, 2023, we produced 1,904 E-motorcycles, 2,058 E-bikes and 385 E-scooters at this facility. For the three months ended June 30, 2024, we produced 1,968 E-motorcycles, 1,513 E-bikes and 524 E-scooters at the same facility.

Current wording

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 three months ended September 30, 2024, we produced 1,146 E-motorcycles, 3,270 E-bikes and 756 E-scooters at this facility. For the six months ended September 30, 2024, we produced 3,114 E-motorcycles, 4,783 E-bikes and 1,280 E-scooters at the same facility.

Previous wording

On June 7, 2024, we sold 2,250,000 shares of common stock, at a price of $4.00 per share in our IPO. The gross proceeds of the offering were $9.0 million, prior to deducting the underwriting discounts, commissions and offering expenses payable by the Company. In addition, we granted the underwriters a 30-day option to purchase an additional 337,500 shares of common stock at the initial public offering price, less underwriting discounts and commissions, to cover over-allotments. On June 25, 2024, we sold an additional 337,500 shares of common stock to the underwriters of our IPO for gross proceeds of $1.4 million upon full exercise of the underwriters’ over-allotment option. Net proceeds received by us from our initial public offering, including the exercise of the over-allotment option, were approximately $9.2 million. We also issued to The Benchmark Company, LLC, the representative of the underwriters, and its designees warrants to purchase 129,375 shares.

Current wording

On June 7, 2024, we sold 2,250,000 shares of common stock, at a price of $4.00 per share in our IPO. The gross proceeds of the offering were $9.0 million, prior to deducting the underwriting discounts, commissions and offering expenses payable by the Company. In addition, we granted the underwriters a 30-day option to purchase an additional 337,500 shares of common stock at the initial public offering price, less underwriting discounts and commissions, to cover over-allotments. On June 25, 2024, we sold an additional 337,500 shares of common stock to the underwriters of our IPO for gross proceeds of $1.4 million upon full exercise of the underwriters’ over-allotment option. Net proceeds received by us from our initial public offering, including the exercise of the over-allotment option, were approximately $9.2 million. We also issued to The Benchmark Company, LLC, the representative of the underwriters warrants to purchase 129,375 shares.

Previous wording

The Company launched a new rental program to meet the increasing market demand for safe, UL-certified e-bikes in compliance with New York State regulations. The rental service is now available in New York City in select Fly E-Bike stores, offering users with a flexible and affordable e-bike rental option featuring the Fly-E Fly-11 Pro model. The Company is currently developing the GO FLY app, a mobile application designed for its rental services. As part of FLY-E’s growth strategy, the Company plans to expand the rental service to Miami, Toronto, and Los Angeles shortly.

Current wording

The Company launched a new rental program to meet the increasing market demand for safe, UL-certified e-bikes in compliance with New York State regulations in October 2024. The rental service, available in New York City 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 featuring the Fly-E Fly-11 Pro model. As part of FLY-E’s growth strategy, the Company plans to expand the rental service to Miami, Toronto, and Los Angeles shortly.

Previous wording

Our growth will depend on our ability to achieve sales targets, including our ability to attract new customers, which in turn depends in part on our ability to execute on our retail strategy and produce effective marketing initiatives to expand our brand perception with prospective customers. As of August 15, 2024, we have 40 stores, including 39 retail stores in the U.S and one retail store in Canada. We offer rental services from selected locations. We also operate one online store, focusing on selling E-motorcycles, E-bikes, and E-scooters and selling our product in the United States. It is critical for us to successfully manage production ramp-up and quality control to deliver to customers in adequate volume and quality.

Current wording

Our growth will depend on our ability to achieve sales targets, including our ability to attract new customers, which in turn depends in part on our ability to execute on our retail strategy and produce effective marketing initiatives to expand our brand perception with prospective customers. As of November 14, 2024, we have 37 stores, including 36 retail stores in the U.S and one retail store in Canada. We offer rental services from selected locations. We also operate one online store, focusing on selling E-motorcycles, E-bikes, and E-scooters and selling our product in the United States. It is critical for us to successfully manage production ramp-up and quality control to deliver to customers in adequate volume and quality.

Previous wording

For the three months ended June 30, 2024, our net revenues increased by 0.4% to $7.9 million, compared to $7.8 million for the same period in 2023, which was primarily driven by sales from new stores and higher average sales price. In particular, the average sales price per EV increased by $46 or 4.6%, from $1,007 in the three months ended June 30, 2023 to $1,053 in the three months ended June 30, 2024.

Current wording

For the three months ended September 30, 2024, our net revenues decreased by 22.1% to $6.8 million, compared to $8.8 million for the same period in 2023, which was primarily driven by a decrease in total units sold, which dropped by 5,850 units, from 20,906 units for the three months ended September 30, 2023, to 15,056 units for the three months ended September 30, 2024.

Previous wording

Our payroll expenses were $1.0 million for the three months ended June 30, 2024, compared to $0.6 million for the three months ended June 30, 2023. As our business expands, we expect increased payroll expenses due to hiring more employees for our retail stores and corporate office. Each of our retail stores has a minimum of two employees, and additional office employees will be hired to support retail stores in customer service and marketing. In addition, to maintain excellent customer service in our retail stores, each store will have at least one trained repair professional, further contributing to the increase in payroll expenses. An inability to effectively manage payroll expenses while expanding the business would significantly impact our ability to grow revenue or improve our financial results.

Current wording

Our payroll expenses were $1.3 million for the three months ended September 30, 2024, compared to $0.6 million for the three months ended September 30, 2023. Our payroll expenses were $2.3 million for the six months ended September 30, 2024, compared to $1.2 million for the six months ended September 30, 2023. As our business expands, we expect increased payroll expenses due to hiring of more employees for our retail stores and corporate office. Each of our retail stores has a minimum of two employees, and additional office employees will be hired to support retail stores in customer service and marketing. In addition, to maintain excellent customer service in our retail stores, each store will have at least one trained repair professional, further contributing to the increase in payroll expenses. An inability to effectively manage payroll expenses while expanding the business would significantly impact our ability to grow revenue or improve our financial results.

Previous wording

During the three months ended June 30, 2024, we worked with three principal vendors, Depcl Corp.(previously known as Fly Wing E-Bike Inc.), Xiamen Innolabs Technology Co., Ltd. and Wuxi Chiao International Trade Co., Ltd., each of which respectively supplied approximately 40.6%, 37.6% and 7.0% of the accessories and components used in all our products for the three months ended June 30, 2024.

Current wording

During the three months ended September 30, 2024, we worked with three principal vendors, Xiamen Innolabs Technology Co., Ltd, Depcl Corp. (previously known as Fly Wing E-Bike Inc.), and Anhui Ineo International Trading Co., each of which respectively supplied approximately 48.9%, 19.7%, and 17.1% of the accessories and components used in all our products for the three months ended September 30, 2024. During the six months ended September 30, 2024, we worked with three principal vendors, Xiamen Innolabs Technology Co., Ltd, Depcl Corp., and Anhui Ineo International Trading Co., each of which respectively supplied approximately 43.6%, 29.5%, and 10.8% of the accessories and components used in all our products for the six months ended September 30, 2024.

Previous wording

Our retail sales revenue increased by $0.7 million, or 11.4%, from $6.2 million for the three months ended June 30, 2023 to $6.9 million for the three months ended June 30, 2024. Our wholesale revenue decreased by $0.7 million, or 40.1%, from $1.7 million for the three months ended June 30, 2023 to $1.0 million for the three months ended June 30, 2024.The increase in retail sales revenue is mainly due to the addition of seven new retail stores from June 2023 to June 2024. The decrease in wholesales revenue was driven primarily by the decrease in purchase from the top two customers who closed their stores.

Current wording

Our retail sales revenue decreased by $0.8 million, or 12.5%, from $6.8 million for the three months ended September 30, 2023 to $5.9 million for the three months ended September 30, 2024. Our wholesale revenue decreased by $1.1 million, or 54.8%, from $2.0 million for the three months ended September 30, 2023 to $0.9 million for the three months ended September 30, 2024. 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, the management believes that sales have declined as customers opt for oil-powered vehicles over electric vehicles. The decrease in wholesales revenue was driven primarily by the decrease in orders from the top two customers who closed their retail stores in December 2023.

Previous wording

Selling expenses primarily consist of payroll expenses, rent, utilities expenses, and advertising expenses of retail stores. Total payroll expenses were $0.6 million for the three months ended June 30, 2024, compared to $0.4 million for the three months ended June 30, 2023. Rent expenses were $0.7 million for the three months ended June 30, 2024, compared to $0.5 million for the three months ended June 30, 2023. Utilities expenses were $45,825 for the three months ended June 30, 2024, compared to $28,383 for the three months ended June 30, 2023. Advertising expenses were $68,519 for the three months ended June 30, 2024, compared to $11,727 for the three months ended June 30, 2023. The increase in these expenses was primarily due to the increase in the number of new stores and new employees hired for these new stores in the three months ended June 30, 2024.

Current wording

Selling expenses primarily consist of payroll expenses, rent, utilities expenses, and advertising expenses of retail stores. Total payroll expenses were $0.9 million for the three months ended September 30, 2024, compared to $0.4 million for the three months ended September 30, 2023. Rent expenses were $0.8 million for the three months ended September 30, 2024, compared to $0.6 million for the three months ended September 30, 2023. Advertising expenses were $0.1 million for the three months ended September 30, 2024, compared to $14,339 for the three months ended September 30, 2023. The increase in these expenses was primarily due to the increased number of new employees hired for repair and maintenance business operation in the three months ended September 30, 2024.

Previous wording

Provision for income taxes were $72,445 for the three months ended June 30, 2024, a change of $0.2 million from $0.3 million income tax provision for the three months ended June 30, 2023. This decrease was due to our decreased taxable income for the three months ended June 30, 2024.

Current wording

Income taxes benefits were $0.2 million for the three months ended September 30, 2024, a change from $0.4 million income tax provision for the three months ended September 30, 2023. This change was due to our decreased taxable income for the three months ended September 30, 2024.

Previous wording

Net loss was $0.2 million for the three months ended June 30, 2024, a change of $0.6 million, or 140.8%, from net income of $0.4 million for the three months ended June 30, 2023, which was mainly attributable to the reasons discussed above.

Current wording

Net loss was $1.1 million for the three months ended September 30, 2024, a change of $1.9 million, or 253.1%, from net income of $0.7 million for the three months ended September 30, 2023, which was mainly attributable to the reasons discussed above.

Previous wording

Before interest expenses, income tax, depreciation, and amortization, for the three months ended June 30, 2024, our net income was $57,021, a change of $0.8 million, compared to net income of $0.8 million for the three months ended June 30, 2023, which was mainly attributable to the increase in selling and general and administrative expense described above. The ratio of EBITDA to revenue was 0.7% and 10.5% for the three months ended June 30, 2024 and 2023, respectively.

Current wording

Before interest expenses, income tax, depreciation, and amortization, for the three months ended September 30, 2024, our net loss was $1.2 million, a change of $2.45 million, compared to net income of $1.3 million for the three months ended September 30, 2023, which was mainly attributable to the decrease in revenue, increase in selling and general and administrative expense described above. The ratio of EBITDA to revenue was negative 17.5% and 14.3% for the three months ended September 30, 2024 and 2023, respectively.

Previous wording

Cost of revenues decreased by 6.8%, from $5.1 million for the three months ended June 30, 2023, to $4.8 million for the three months ended June 30, 2024. The decrease in cost of revenues was primarily attributable to more favorable pricing we obtained from our suppliers, especially for the price of batteries. The unit cost for battery decreased by 56%, from $157.0 in the three months ended June 30, 2023, to $69.0 in the three months ended June 30, 2024.

Current wording

Cost of revenues decreased by 14.1%, from $10.1 million for the six months ended September 30, 2023, to $8.7 million for the six months ended September 30, 2024. 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 battery sales volume, as discussed previously. These factors collectively contributed to the overall decrease in cost of revenues. The unit cost for battery decreased by 36%, from $117 in the six months ended September 30, 2023, to $75 in the six months ended September 30, 2024.

Previous wording

Gross profit for the three months ended June 30, 2024 and 2023 was $3.1 million and $2.7 million, respectively. Gross margin was 39.4% and 34.7% for the three months ended June 30, 2024 and 2023, respectively. The change was driven primarily by the increase of the average sale price of our EVs by $46 or 4.6%, from $1,007 in the three months ended June 30, 2023 to $1,053 in the three months ended June 30, 2024 and the decrease of the unit cost for battery by 56%, from $91.0 in the three months ended June 30, 2023, to $69.0 in the three months ended June 30, 2024

Current wording

Gross profit for the six months ended September 30, 2024 and 2023 was $6.0 million and $6.5 million, respectively. Gross margin was 40.9% and 39.0% for the six months ended September 30, 2024 and 2023, respectively. The increase in gross margin was driven primarily by the increase of the average sale price of our EVs by $68 or 7.0%, from $980 in the six months ended September 30, 2023 to $1,048 in the six months ended September 30, 2024, and the decrease of the unit cost for battery by 36%, from $117 in the six months ended September 30, 2023, to $75 in the six months ended September 30, 2024.

Previous wording

Total operating expenses were $3.1 million for the three months ended June 30, 2024, an increase of $1.2 million, or 60.9%, compared to $2.0 million for the three months ended June 30, 2023. The increase in operating expenses was attributable to the increase in our payroll expenses, rent expenses, meals and entertainment expenses, professional fees, and development expenses as we expanded our business as more fully discussed the below.

Current wording

Total operating expenses were $7.3 million for the six months ended September 30, 2024, an increase of $2.6 million, or 57.2%, compared to $4.6 million for the six months ended September 30, 2023. The increase in operating expenses was attributable to the increase in our payroll expenses, rent expenses, meals and entertainment expenses, professional fees, and development expenses as we expanded our business as discussed below.

Previous wording

Various general and administrative expenses increased during the three months ended June 30, 2024 compared to the previous year. Meals and entertainment expenses increased to $139,561 for the three months ended June 30, 2024, compared to $116,577 for the three months ended June 30, 2023, primarily due to increased meal expenses for employees who worked overtime. Professional fees increased to $0.4 million for the three months ended June 30, 2024, compared to $0.2 million for the three months ended June 30, 2023, primarily attributable to the increase in audit fee, consulting fee, and IR expenses associated with our initial public offering. Payroll expenses increased to $0.4 million for the three months ended June 30, 2024 from $0.2 million for the three months ended June 30, 2023 primarily due to additional employees hired in operation and accounting departments. Rent expenses increased to $0.1 million for the three months ended June 30, 2024, compared to $$0.1 million for the same quarter of prior year as a result of office space expansion in the three months ended June 30, 2024. Development fee increased to $0.1 million for the three months ended June 30, 2024, compared to $nil for the prior quarterly as a result of maintenance for Fly E-Bike app during the three months ended June 30, 2024.

Current wording

General and administrative expenses increased during the six months ended September 30, 2024 compared to the previous year. Professional fees increased to $1.3 million for the six months ended September 30, 2024, compared to $0.5 million for the six months ended September 30, 2023, 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. Payroll expenses increased to $0.8 million for the six months ended September 30, 2024 from $0.4 million for the six months ended September 30, 2023 primarily due to additional employees hired in operation and accounting departments. Insurance expenses increased to $0.5 million for the six months ended September 30, 2024, compared to $0.1 million for the same period of prior year as a result of purchase of directors and officers liability insurance after initial public offering in the six months ended September 30, 2024. Software development fee increased to $0.3 million for the six months ended September 30, 2024, compared to $0.1 million for the same period in prior year as a result of maintenance for Fly E-Bike app during the six months ended September 30, 2024.

Previous wording

As of June 30, 2024, we had cash of $4.5 million. We had working capital of $7.7 million and $0.3 million as of June 30, 2024 and March 31, 2024, respectively. We had net loss of $0.2 million and net income of $0.4 million for the three months ended June 30, 2024 and 2023, respectively.

Current wording

As of September 30, 2024, we had cash of $1.3 million. We had working capital of $2.3 million and $0.3 million as of September 30, 2024 and March 31, 2024, respectively. We had net loss of $1.3 million and net income of $1.2 million for the six months ended September 30, 2024 and 2023, respectively. During the six months ended September 30, 2024, net cash used in operating activities of the Company was approximately $9.4 million. As of September 30, 2024, the Company had a current portion of contractual obligation of approximately $9.6 million.

Previous wording

On June 7, 2024, we sold 2,250,000 shares of common stock, at a price of $4.00 per share in our IPO. The gross proceeds of the offering were $9.0 million, prior to deducting the underwriting discounts, commissions and offering expenses payable by us. Net proceeds received by us from IPO were approximately $7.9 million. On June 25, 2024, we sold an additional 337,500 shares of common stock to the underwriters of our IPO for gross proceeds of $1.4 million upon full exercise of the underwriters’ over-allotment option and received net proceeds of $1.2 million. We believe our cash on hand will be sufficient to meet our current and anticipated needs for general corporate purposes for at least the next 12 months. We may, however, need additional cash resources in the future if we experience changes in business conditions or other developments. We may also need additional cash resources in the future if we find and wish to pursue opportunities for investment, acquisition, capital expenditure or similar actions. If we determine that our cash requirements exceed the amount of cash we have on hand, we may seek to issue equity or equity linked securities or obtain debt financing. 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.

Current wording

On June 7, 2024, we sold 2,250,000 shares of common stock, at a price of $4.00 per share in our IPO. The gross proceeds of the offering were $9.0 million, prior to deducting the underwriting discounts, commissions and offering expenses payable by us. Net proceeds received by us from IPO were approximately $7.9 million. On June 25, 2024, we sold an additional 337,500 shares of common stock to the underwriters of our IPO for gross proceeds of $1.4 million upon full exercise of the underwriters’ over-allotment option and received net proceeds of $1.2 million. The main cash outflow for the six months ended September 30, 2024 was from net loss of $1.3 million, a decrease in tax payable of $1.5 million, an increase in inventories of $3.6 million, a decrease in operating lease liabilities of $1.5 million, purchase of software from a related party of $0.8 million, and an increase in prepayments and other receivables of $1.8 million. These factors raise substantial doubt as to the Group’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 unaudited condensed 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.

Previous wording

Our accounts receivable represent primarily accounts receivable from the distributors that purchased our EVs and other products. As of June 30, 2024 and March 31, 2024, our accounts receivable, net of allowance for credit losses, was $0.4 million and $0.2 million, respectively. Our accounts receivable turnover period decreased from 69 days in the year ended March 31, 2024 to 59 days in three months ended June 30, 2024, which was mainly attributable to a stricter credit policy implemented towards our U.S. distributors.

Current wording

Our accounts receivable represent primarily accounts receivable from distributors that purchased our EVs and other products. As of September 30, 2024 and March 31, 2024, our accounts receivable, net of allowance for credit losses, was $0.4 million and $0.2 million, respectively. Our accounts receivable turnover period decreased from 69 days in the year ended March 31, 2024 to 63 days in six months ended September 30, 2024, which was mainly attributable to a stricter credit policy implemented towards our U.S. distributors.

Previous wording

Our accounts payable represent primarily accounts payable to suppliers from whom we purchased accessories and components for our products. As of June 30, 2024 and March 31, 2024, our accounts payable were $0.4 million and $1.2 million, respectively. Our accounts payable turnover period decreased to 14 days for the three months ended June 30, 2024 from 25 days for the year ended March 31, 2024, which was primarily the result of the Company’s switch to a new vendor and the settlement of one vendor’s balance during this period.

Current wording

Our accounts payable represent primarily accounts payable to suppliers from whom we purchased accessories and components for our products. As of September 30, 2024 and March 31, 2024, our accounts payable were $0.4 million and $1.2 million, respectively. Our accounts payable turnover period decreased to 16 days for the six months ended September 30, 2024 from 25 days for the year ended March 31, 2024, which was primarily the result of the Company’s switch to a new vendor and the settlement of one vendor’s balance during this period.

Previous wording

Our prepayments and other receivables primarily represent prepayments to vendors and other service providers. These prepayments and receivables increased by $2.1 million, from $0.6 million as of March 31, 2024, to $2.7 million as of June 30, 2024. This significant increase is mainly due to the Company’s plans to launch E-bike rental services starting in September 2024, which will require additional inventory. As a result, during the three months ended June 30, 2024, the Company made substantial prepayments to vendors to secure inventory for the upcoming quarter.

Current wording

Our prepayments and other receivables primarily represent prepayments to vendors and other service providers. These prepayments and receivables increased by $1.8 million, from $0.6 million as of March 31, 2024, to $2.4 million as of September 30, 2024. 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 six months ended September 30, 2024, the Company made substantial prepayments to vendors to secure inventory for the upcoming quarter.

Previous wording

Our inventories primarily include our EVs, their accessories and spare parts. As of June 30, 2024 and March 31, 2024, our inventories, net of allowance, were $6.1 million and $5.4 million, respectively. The increase in inventories was primarily due to our anticipation of future sales growth. Our inventory turnover days increased to 109 days in the three months ended June 30, 2024, from 89 days in the year ended March 31, 2024, which was primarily due to strategic inventory buildup, allowing us to open new stores and start new services.

Current wording

Our inventories primarily include our EVs, their accessories and spare parts. As of September 30, 2024 and March 31, 2024, our inventories, net of allowance, were $8.5 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 147 days in the six months ended September 30, 2024, from 125 days in the year ended March 31, 2024, which was primarily due to strategic inventory buildup, allowing us to start new services.

Previous wording

For the three months ended June 30, 2024 and 2023, the interest expenses on our outstanding loans amounted to $68,082 and $32,623, respectively. See Note 8 to the Unaudited Condensed Consolidated Financial Statements included within this quarterly report for further information on details of our outstanding loans.

Current wording

As of September 30, 2024 and March 31, 2024, the total outstanding amount of loan principal was $7.0 million and $1.6 million, respectively. For the three months ended September 30, 2024 and 2023, the interest expenses on our outstanding loans amounted to $23,795 and $17,969, respectively. For the six months ended September 30, 2024 and 2023, the interest expenses on our outstanding loans amounted to $91,877 and $50,592, respectively. See Note 8 to the Unaudited Condensed Consolidated Financial Statements included within this quarterly report for further information on details of our outstanding loans.

Previous wording

The following table summarizes our cash flow data for the three months ended June 30, 2024 and 2023:

Current wording

The following table summarizes our cash flow data for the six months ended September 30, 2024 and 2023:

Previous wording

Net cash used in operating activities for the three months ended June 30, 2024 was $4.5 million, which was due to net loss of $0.2 million, a decrease in tax payable of $0.4 million, and a decrease in accrued expenses and other payables of $0.5 million, an increase in inventories of $0.9 million, a decrease in account payable of $0.8 million, a decrease in operating lease liabilities of $0.6 million, an increase in prepayments for operation services to related parties of $0.2 million and an increase in prepayments and other receivables of $2.1 million, partially offset by amortization of right-of-use assets of $0.8 million and a decrease in accounts receivables-related parties of $0.3 million.

Current wording

Net cash used in operating activities for the six months ended September 30, 2024 was $9.4 million, which was due to net loss of $1.3 million, a decrease in tax payable of $1.5 million, and a decrease in accrued expenses and other payables of $0.4 million, an increase in inventories of $3.6 million, a decrease in account payable of $0.8 million, a decrease in operating lease liabilities of $1.5 million, and an increase in prepayments and other receivables of $1.8 million, partially offset by amortization of right-of-use assets of $1.7 million and a decrease in accounts receivables-related parties of $0.2 million.

Previous wording

Net cash provided by operating activities for the three months ended June 30, 2023 was $0.8 million, which was mainly comprised of net income of $0.4 million, an increase in accounts payable of $1.7 million, a noncash item of amortization of right-of-use assets of $0.5 million, offset by noncash item of an increase in inventories of $1.4 million and a decrease in operating lease liabilities of $0.5 million.

Current wording

Net cash provided by operating activities for the six months ended September 30, 2023 was $1.6 million, which was mainly comprised of net income of $1.2 million, an increase in accounts payable of $1.8 million, a noncash item of amortization of right-of-use assets of $1.2 million, offset by an increase in inventories of $1.7 million and a decrease in operating lease liabilities of $1.1 million.

Previous wording

Net cash used in investing activities was $1.1 million for the three months ended June 30, 2024, which was due to purchase of software from a related party of $0.8 million, prepayments for property of $0.1 million, and the purchase of equipment of $0.4 million, partially offset by the repayment from a related party of $0.2 million.

Current wording

Net cash used in investing activities was $2.8 million for the six months ended September 30, 2024, which was due to purchase of GO FLY App from a related party of $0.5 million, purchase of software from a related party of $0.8 million, the advance to a related party of $0.5 million, and partially offset by the repayment from a related party of $0.5 million.

Previous wording

Net cash used in investing activities was $0.4 million for the three months ended June 30, 2023, which was due to the purchase of equipment of $0.4 million.

Current wording

Net cash used in investing activities was $0.5 million for the six months ended September 30, 2023, which was due to the purchase of equipment of $0.5 million.* *

Previous wording

Net cash provided by financing activities was $8.7 million for the three months ended June 30, 2024, which consisted of net proceeds of the IPO of $9.2 million, and borrowings from loan payable of $0.2 million, partially offset by repayments of loan payables of $0.4 million and payment of IPO costs of $0.3 million.

Current wording

Net cash provided by financing activities was $12.1 million for the six months ended September 30, 2024, which consisted of net proceeds of the IPO of $9.2 million, and loan proceeds of $3.7 million, partially offset by repayments of loans of $0.4 million and payment of IPO costs of $0.3 million.

Previous wording

Net cash used in financing activities was $0.1 million for the three months ended June 30, 2023, which consisted of capital contributions from stockholders of $0.5 million, partially offset by repayments on loan payable of $0.3 million, advanced payments to related parties of $0.1 million and repayments to related parties of $0.2 million.

Current wording

Net cash used in financing activities was $0.3 million for the six months ended September 30, 2023, which consisted of deferred IPO cost of $0.1 million, repayments of loans of $0.3 million, repayments of other payables of related party of $0.2 million, and payments of related-party loan of $0.1 million, offset by loan proceeds of $0.4 million.

Previous wording

Our exposure to interest rate risk primarily relates to the interest expenses on our short-term and long-term bank borrowings. Our short-term and long-term bank borrowing bears interests at fixed rates. We have not been exposed to, nor do we anticipate being exposed to, material risks due to changes in market interest rates. However, our future interest expenses may exceed expectations due to changes in market interest rates. If we were to renew these short-term and long-term bank borrowings, we might be subject to interest rate risk.

Current wording

Our exposure to interest rate risk primarily relates to the interest expenses on our short-term and long-term bank borrowings. Our short-term and long-term bank borrowings bear interests at fixed rates. We have not been exposed to, nor do we anticipate being exposed to, material risks due to changes in market interest rates. However, our future interest expenses may exceed expectations due to changes in market interest rates. If we were to renew these short-term and long-term bank borrowings, we might be subject to interest rate risk.

Previous wording

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 June 30, 2024 and March 31, 2024, we recorded inventory allowance balance of $558,163 and $514,021, respectively.

Current wording

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 September 30, 2024 and March 31, 2024, we recorded inventory allowance balance of $622,623 and $514,021, respectively.

Previous wording

We provide a three-month warranty on our vehicles and the battery pack. We accrue warranty reserves at the time a vehicle is delivered to the customer. Warranty reserves include our best estimate of the projected cost to repair or to replace any items under warranty, based on actual warranty experience as it becomes available and other known factors that may impact our evaluation of historical data. We review our reserves regularly to ensure that our accruals are adequate in meeting expected future warranty obligations, and we will adjust our estimates as needed. Factors that could have an impact on the warranty reserve include the following: changes in manufacturing quality, shifts in product mix, changes in warranty coverage periods, product recalls and changes in sales volume. Warranty expense is recorded as a component of cost of revenues in the statement of operations. The portion of the warranty provision which is expected to be incurred within three months from the balance sheet date will be classified as current and classified as short-term liabilities. The Company accrued $16,452 and $27,714 of warranty reserves under accrued expenses and other payables as of June 30, 2024 and March 31, 2024, respectively.

Current wording

We provide a three-month warranty on our vehicles and the battery pack. We accrue warranty reserves at the time a vehicle is delivered to the customer. Warranty reserves include our best estimate of the projected cost to repair or to replace any items under warranty, based on actual warranty experience as it becomes available and other known factors that may impact our evaluation of historical data. We review our reserves regularly to ensure that our accruals are adequate in meeting expected future warranty obligations, and we will adjust our estimates as needed. Factors that could have an impact on the warranty reserve include the following: changes in manufacturing quality, shifts in product mix, changes in warranty coverage periods, product recalls and changes in sales volume. Warranty expense is recorded as a component of cost of revenues in the statement of operations. The portion of the warranty provision which is expected to be incurred within three months from the balance sheet date will be classified as current and classified as short-term liabilities. The Company accrued $31,036 and $27,714 of warranty reserves under accrued expenses and other payables as of September 30, 2024 and March 31, 2024, respectively.

Previous wording

We consider many factors when evaluating our tax positions and estimating its tax benefits, which may require periodic adjustments, and which may not accurately forecast actual outcomes. We will include interest and fines arising from the underpayment of income taxes as a component of the provision for income taxes (if anticipated). Penalties and interest incurred related to underpayment of income tax are classified as income tax expense in the period incurred. For the three months ended June 30, 2024, the Company accrued $60,076 income tax related penalty included in taxes payable in the unaudited condensed consolidated balance sheets. For the three months ended June 30, 2023, $43,172 accrued related to underpayment of income tax are classified as income tax expense in the period incurred. As of June30, 2024 and March 31, 2024, we did not have any significant unrecognized uncertain tax positions.

Current wording

We consider many factors when evaluating our tax positions and estimating its tax benefits, which may require periodic adjustments, and which may not accurately forecast actual outcomes. We will include interest and fines arising from the underpayment of income taxes as a component of the provision for income taxes (if anticipated). Penalties and interest incurred related to underpayment of income tax are classified as income tax expense in the period incurred. For the six months ended September 30, 2024, the Company accrued $98,322 income tax related penalty included in taxes payable in the unaudited condensed consolidated balance sheets. For the six months ended September 30, 2023, $73,817 accrued related to underpayment of income tax are classified as income tax expense in the period incurred. As of September 30, 2024 and March 31, 2024, we did not have any significant unrecognized uncertain tax positions.