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 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.

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 February 19, 2025, we have 36 stores, including 35 retail stores in the U.S and one retail store in Canada. The Company offers rental services from selected locations in New York 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 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 November 14, 2024, we offered 24 E-motorcycle products, 28 E-bike products and 35 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 February 19, 2025, we offered 25 E-motorcycle products, 28 E-bike products and 37 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, 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.

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 December 31, 2024, the Company paid $536,580 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 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.

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 December 31, 2024, we produced 728 E-motorcycles, 930 E-bikes and 200 E-scooters at this facility. For the nine months ended December 31, 2024, we produced 3,842 E-motorcycles, 5,713 E-bikes and 1,480 E-scooters at the same facility.

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 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.

Current wording

The Company launched a 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, 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. As part of FLY-E’s growth strategy, the Company plans to expand the rental service to Miami and Toronto 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 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.

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 February 19, 2025, we have 36 stores, including 35 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 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.

Current wording

For the three months ended December 31, 2024, our net revenues decreased by 23.6% to $5.7 million, compared to $7.4 million for the same period in 2023, which was primarily driven by a decrease in total units sold, which dropped by 3,511 units, from 13,500 units for the three months ended December 31, 2023, to 9,989 units for the three months ended December 31, 2024.

Previous wording

For the six months ended September 30, 2024, our net revenues decreased by 11.5% to $14.7 million, compared to $16.6 million for the same period in 2023, which was primarily driven by a decrease in total units sold, which dropped by 4,067 units, from 36,003 units for the six months ended September 30, 2023, to 31,936 units for the six months ended September 30, 2024.

Current wording

For the nine months ended December 31, 2024, our net revenues decreased by 15.2% to $20.4 million, compared to $24.0 million for the same period in 2023, which was primarily driven by a decrease in total units sold, which dropped by 7,578 units, from 49,503 units for the nine months ended December 31, 2023, to 41,925 units for the nine months ended December 31, 2024.

Previous 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.

Current wording

Our payroll expenses were $1.3 million for the three months ended December 31, 2024, compared to $0.7 million for the three months ended December 31, 2023. Our payroll expenses were $3.6 million for the nine months ended December 31, 2024, compared to $1.9 million for the nine months ended December 31, 2023. As four stores were closed during the nine months ended December 31, 2024, we expect a decrease in payroll expenses due to the demand for store sales staff has decreased. 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.

Previous 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.

Current wording

During the three months ended December 31, 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 49.6%, 25.4%, and 7.0% of the accessories and components used in all our products for the three months ended December 31, 2024. During the nine months ended December 31, 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 44.8%, 28.7%, and 10.0% of the accessories and components used in all our products for the nine months ended December 31, 2024.

Previous wording

We operate in a rapidly growing EV market with a special focus on E-motorcycles, E-bikes and E-scooters. However, increased competition may pressure prices and margins, reducing sales volume, revenues, and sales margin for us. Additionally, marketing and advertising costs may rise as we differentiate ourselves and maintain our market position. 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.

Current wording

We operate in a rapidly growing EV market with a special focus on E-motorcycles, E-bikes and E-scooters. However, increased competition may pressure prices and margins, reducing sales volume, revenues, and sales margin for us. Additionally, marketing and advertising costs may rise as we differentiate ourselves and maintain our market position. 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. 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 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 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 market.

Previous wording

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 July 2024, the New York City Department of Transportation announced that it anticipated to launch a $2 million trade-in program in early 2025, allowing eligible food delivery workers to replace their unsafe e-bikes, e-mobility devices, and batteries with certified, high-quality versions. While we expect relevant regulations to provide a tailwind to our growth, it is possible for other regulations to result in margin pressures.

Current wording

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. The first batch of delivery workers is expected to complete enrollment on February 17, 2025. The company has also been actively cooperating with the government to provide information and promote the model. While we expect relevant regulations to provide a tailwind to our growth, it is possible for other regulations to result in margin pressures.

Previous wording

Our net revenues were $6.8 million for the three months ended September 30, 2024, a decrease of 22.1%, from $8.8 million for the three months ended September 30, 2023. The decrease in our net revenues was primarily due to the decrease in sales volume 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.

Current wording

Our net revenues were $5.7 million for the three months ended December 31, 2024, a decrease of 23.6%, from $7.4 million for the three months ended December 31, 2023. The decrease in our net revenues was primarily due to the decrease in sales volume by 3,511 units, from 13,500 units sold for the three months ended December 31, 2023, to 9,989 units sold for the three months ended December 31, 2024.

Previous 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.

Current wording

Our retail sales revenue decreased by $1.4 million, or 21.9%, from $6.3 million for the three months ended December 31, 2023 to $4.9 million for the three months ended December 31, 2024. Our wholesale revenue decreased by $0.4 million, or 37.1%, from $1.1million for the three months ended December 31, 2023 to $0.7 million for the three months ended December 31, 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

Cost of revenues decreased by 21.6%, from $5.0 million for the three months ended September 30, 2023, to $3.9 million for the three months ended September 30, 2024. The decrease in cost of revenues was primarily attributable to a reduction in units sold, which declined by 5,850 units, from 20,906 units sold for the three months ended September 30, 2023, to 15,056 units sold for the three months ended September 30, 2024.

Current wording

Cost of revenues decreased by 30.0%, from $4.5 million for the three months ended December 31, 2023, to $3.1 million for the three months ended December 31, 2024. The decrease in cost of revenues was primarily attributable to a reduction in units sold, which declined by 3,511 units, from 13,500 units sold for the three months ended December 31, 2023, to 9,989 units sold for the three months ended December 31, 2024.

Previous 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.

Current wording

Gross profit for the three months ended December 31, 2024 and 2023 was $2.6 million and $3.0 million, respectively. Gross margin was 45.1% and 39.0% for the three months ended December 31, 2024 and 2023, respectively. The increase in gross margin was driven primarily by the increase of the average sale price of the batteries by 20.0%, from $197 in the nine months ended December 31, 2023 to $236 in the nine months ended December 31, 2024, and the increase of the unit cost for battery by only 12%, from $141 in the nine months ended December 31, 2023, to $158 in the nine months ended December 31, 2024.

Previous wording

Total operating expenses were $4.1 million for the three months ended September 30, 2024, an increase of $1.5 million, or 54.7%, compared to $2.7 million for the three months ended September 30, 2023. The increase in operating expenses was attributable to the increase in our payroll expenses, rent expenses, advertising expenses, professional fees, and insurance expenses as we expanded our business as discussed below.

Current wording

Total operating expenses were $3.7 million for the three months ended December 31, 2024, an increase of $0.7 million, or 26.0%, compared to $2.8 million for the three months ended December 31, 2023. The increase in operating expenses was attributable to the increase in our payroll expenses, rent expenses, advertising expenses, professional fees, and insurance expenses as we expanded our business as discussed below.

Previous 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.

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 December 31, 2024, compared to $0.5 million for the three months ended December 31, 2023. Rent expenses were $0.7 million for the three months ended December 31, 2024, compared to $0.7 million for the three months ended December 31, 2023. Advertising expenses were $32,681 for the three months ended December 31, 2024, compared to $6,629 for the three months ended December 31, 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 December 31, 2024. Total commission expenses were nil for the three months ended December 31, 2024, compared to $0.6 million for the three months ended December 31, 2023. 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.

Previous wording

Various general and administrative expenses increased during the three months ended September 30, 2024 compared to the same period of previous year. Professional fees increased to $0.9 million for the three months ended September 30, 2024, compared to $0.3 million for the three months ended September 30, 2023, primarily attributable to the increase in audit fee, consulting fee, legal fee and IR expenses associated with ongoing reporting obligations. Payroll expenses increased to $0.4 million for the three months ended September 30, 2024 from $0.2 million for the three months ended September 30, 2023 primarily due to additional employees hired in operation departments. Insurance expenses increased to $0.3 million for the three months ended September 30, 2024, compared to $24,570 for the same quarter of prior year as a result of purchase of the directors and officers liability insurance after initial public offering in the three months ended September 30, 2024.

Current wording

Various general and administrative expenses increased during the three months ended December 31, 2024 compared to the same period of the previous year. Professional fees increased to $0.4 million for the three months ended December 31, 2024, compared to $0.3 million for the three months ended December 31, 2023, primarily attributable to the increase in audit fee, consulting fee, legal fee and IR expenses associated with ongoing reporting obligations. Payroll expenses increased to $0.4 million for the three months ended December 31, 2024 from $0.2 million for the three months ended December 31, 2023 primarily due to additional employees hired in operation departments. Insurance expenses increased to $0.3 million for the three months ended December 31, 2024, compared to $35,050 for the same quarter of prior year as a result of purchase of the directors and officers liability insurance after initial public offering in the three months ended December 31, 2024. The development fee increased to $0.1 million for the three months ended December 31, 2024 from nil for the three months ended December 31, 2023. The increase in development fee was primarily due to the increasing development fee of Fly E-Bike app and the increasing maintenance fee of Go Fly App.

Previous 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.

Current wording

Income taxes benefits were $428,164 for the three months ended December 31, 2024, a change from $87,718 income tax provision for the three months ended December 31, 2023. This change was due to our negative pre-tax income for the three months ended December 31, 2024. We recognized a deferred tax asset which can be used to reduce taxes in future periods when the Company is profitable.

Previous 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.

Current wording

Net loss was $684,487 for the three months ended December 31, 2024, a change of $705,376, or 3376.8%, from net income of $20,889 for the three months ended December 31, 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 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.

Current wording

Before interest expenses, income tax, depreciation, and amortization, for the three months ended December 31, 2024, our net loss was $0.8 million, a change of $1.0 million, compared to net income of $0.2 millionfor the three months ended December 31, 2023, which was mainly attributable to the decrease in the cost of revenue, increase in selling and general and administrative expense described above. The ratio of EBITDA to revenue was negative 14.2% and 2.1% for the three months ended December 31, 2024 and 2023, respectively.

Previous wording

Our net revenues were $14.7 million for the six months ended September 30, 2024, a decrease of 11.5%, from $16.6 million for the six months ended September 30, 2023. The decrease in our net revenues was driven primarily by a decrease in total units sold, which decreased by 4,067 units, from 36,003 units for the six months ended September 30, 2023 to 31,936 units for the six months ended September 30, 2024. For the six months ended September 30, 2023 and for the six months ended September 30, 2024, the quantity of E-bikes and batteries sold decreased by 2,963 and 2,624, respectively.

Current wording

Our net revenues were $20.4 million for the nine months ended December 31, 2024, a decrease of 15.2%, from $24.0 million for the nine months ended December 31, 2023. The decrease in our net revenues was driven primarily by a decrease in total units sold, which decreased by 7,578 units, from 49,503 units for the nine months ended December 31, 2023 to 41,925 units for the nine months ended December 31, 2024.

Previous wording

Our retail sales revenue decreased by $0.1 million, or 1.1%, from $12.9 million for the six months ended September 30, 2023 to $12.8 million for the six months ended September 30, 2024. Our wholesale revenue decreased by $1.8 million, or 48.1%, from $3.7 million for the six months ended September 30, 2023 to $1.9 million for the six 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, sales have declined as customers opt for oil-powered vehicles over electric vehicles. 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.

Current wording

Our retail sales revenue decreased by $1.5 million, or 7.9%, from $19.2 million for the nine months ended December 31, 2023 to $17.7 million for the nine months ended December 31, 2024. Our wholesale revenue decreased by $2.2 million, or 45.5%, from $4.8 million for the nine months ended December 31, 2023 to $2.6 million for the nine months ended December 31, 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, sales have declined as customers opt for oil-powered vehicles over electric vehicles. 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.

Previous 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.

Current wording

Cost of revenues decreased by 19.0%, from $14.6 million for the nine months ended December 31, 2023, to $11.8 million for the nine months ended December 31, 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 25%, from $121 in the nine months ended December 31, 2023, to $91 in the nine months ended December 31, 2024.

Previous wording

The following table shows our gross profit and gross margin for the six months ended September 30, 2024 and 2023:

Current wording

The following table shows our gross profit and gross margin for the nine months ended December 31, 2024 and 2023:

Previous wording

The following table sets forth the components of our total operating expenses for the six months ended September 30, 2024 and 2023:

Current wording

The following table sets forth the components of our total operating expenses for the nine months ended December 31, 2024 and 2023:

Previous 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.

Current wording

Total operating expenses were $10.9 million for the nine months ended December 31, 2024, an increase of $3.4 million, or 45.5%, compared to $7.4 million for the nine months ended December 31, 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

Selling expenses primarily consist of payroll expenses, rent, utilities expenses, and advertising expenses of retail stores. Total payroll expenses were $1.5 million for the six months ended September 30, 2024, compared to $0.8 million for the six months ended September 30, 2023. Rent expenses were $1.5 million for the six months ended September 30, 2024, compared to $1.1 million for the six months ended September 30, 2023. Utilities expenses were $119,252 for the six months ended September 30, 2024, compared to $68,863 for the six months ended September 30, 2023. Advertising expenses were $0.2 million for the six months ended September 30, 2024, compared to $26,066 for the six months ended September 30, 2023. The increase in these expenses was primarily due to the increased number of new employees hired for business operating in the six months ended September 30, 2024.

Current wording

Selling expenses primarily consist of payroll expenses, rent, utilities expenses, and advertising expenses of retail stores. Total payroll expenses were $2.5 million for the nine months ended December 31, 2024, compared to $1.3 million for the nine months ended December 31, 2023. Rent expenses were $2.2 million for the nine months ended December 31, 2024, compared to $1.7 million for the nine months ended December 31, 2023. Utilities expenses were $0.2 million for the nine months ended December 31, 2024, compared to $0.1 million for the nine months ended December 31, 2023. Advertising expenses were $0.2 million for the nine months ended December 31, 2024, compared to $32,695 for the nine months ended December 31, 2023. The increase in these expenses was primarily due to the increased number of new employees hired for business operations in the nine months ended December 31, 2024. Total commission expenses were $9,980 for the nine months ended December 31, 2024, compared to $1.1 million for the nine months ended December 31, 2023. 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.

Previous 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.

Current wording

General and administrative expenses increased during the nine months ended December 31, 2024 compared to the previous year. Professional fees increased to $1.7 million for the nine months ended December 31, 2024, compared to $0.7 million for the nine months ended December 31, 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 $1.2 million for the nine months ended December 31, 2024 from $0.7 million for the nine months ended December 31, 2023 primarily due to additional employees hired in operation and accounting departments. Insurance expenses increased to $0.8 million for the nine months ended December 31, 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 nine months ended December 31, 2024. Software development fee increased to $0.4 million for the nine months ended December 31, 2024, compared to $0.1 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.

Previous wording

Income taxes benefits were $93,490 for the six months ended September 30, 2024, a change from $0.6 million income tax provision for the six months ended September 30, 2023. This change was due to our decreased taxable income for the six months ended September 30, 2024.

Current wording

Income taxes benefits were $0.5 million for the nine months ended December 31, 2024, a change from $0.7 million income tax provision for the nine months ended December 31, 2023. This change was due to our negative pre-tax income for the three months ended December 31, 2024. We recognized a deferred tax asset which can be used to reduce taxes in future periods when the Company is profitable.

Previous wording

Net loss was $1.3 million for the six months ended September 30, 2024, a change of $2.5 million, or 211.4%, from net income of $1.2 million for the six months ended September 30, 2023, which was mainly attributable to the reasons discussed above.

Current wording

Net loss was $2.0 million for the nine months ended December 31, 2024, a change of $3.2 million, or 266.1%, from net income of $1.2 million for the nine months ended December 31, 2023, which was mainly attributable to the reasons discussed above.

Previous wording

The following table sets forth the components of our EBITDA for the six months ended September 30, 2024 and 2023:

Current wording

The following table sets forth the components of our EBITDA for the nine months ended December 31, 2024 and 2023:

Previous wording

Before interest expenses, income tax, depreciation, and amortization, for the six months ended September 30, 2024, our net loss was $1.1 million, a change of $3.2 million, compared to net income of $2.1 million for the six 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 7.7% and 12.5% for the six months ended September 30, 2024 and 2023, respectively.

Current wording

Before interest expenses, income tax, depreciation, and amortization, for the nine months ended December 31, 2024, our net loss was $1.9 million, a change of $4.2 million, compared to net income of $2.2 million for the nine months ended December 31, 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 9.5% and 9.3% for the nine months ended December 31, 2024 and 2023, respectively.

Previous 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.

Current wording

As of December 31, 2024, we had cash of $1.4 million. We had working capital of $3.0 million and $0.3 million as of December 31, 2024 and March 31, 2024, respectively. We had net loss of $2.0 million and net income of $1.2 million for the nine months ended December 31, 2024 and 2023, respectively. During the nine months ended December 31, 2024, net cash used in operating activities of the Company was approximately $9.4 million. As of December 31, 2024, the Company had a current portion of contractual obligation of approximately $8.2 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. 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.

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 nine months ended December 31, 2024 was from net loss of $1.2 million, a decrease in tax payable of $1.5 million, an increase in inventories of $5.3 million, a decrease in operating lease liabilities of $2.9 million, purchase of software from a related party of $0.9 million, and an increase in prepayments and other receivables of $1.8 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 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 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.

Current wording

Our accounts receivable represent primarily accounts receivable from distributors that purchased our EVs and other products. As of December 31, 2024 and March 31, 2024, our accounts receivable, net of allowance for credit losses, was $0.3 million and $0.2 million, respectively. Our accounts receivable turnover period decreased from 69 days in the year ended March 31, 2024 to 62 days in nine months ended December 31, 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 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.

Current wording

Our accounts payable represent primarily accounts payable to suppliers from whom we purchased accessories and components for our products. As of December 31, 2024 and March 31, 2024, our accounts payable were $1.3 million and $1.2 million, respectively. Our accounts payable turnover period increased to 31 days for the nine months ended December 31, 2024 from 25 days for the year ended March 31, 2024, which was primarily the result of the Company increased its purchase volume during the nine months ended December 31, 2024 without a corresponding acceleration in payment cycles.

Previous 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.

Current wording

Our prepayments and other receivables primarily represent prepayments to vendors and other service providers. These prepayments and receivables increased by $1.6 million, from $0.6 million as of March 31, 2024, to $2.2 million as of December 31, 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 nine months ended December 31, 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 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.

Current wording

Our inventories primarily include our EVs, their accessories and spare parts. As of December 31, 2024 and March 31, 2024, our inventories, net of allowance, were $10.0 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 183 days in the nine months ended December 31, 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.