Fly-E Group, Inc.

Item 1. Legal Proceedings.

From time to time, we may be subject to legal proceedings arising in the ordinary course of business. Regardless of the outcome of any existing or future litigation, litigation can have an adverse impact on us because of defense and settlement costs, diversion of management resources, and other factors.

Federal securities class action instituted on September 8, 2025

On September 8, 2025, a federal securities class action was filed in the United States District Court, Eastern District of New York, by plaintiff Dino Kurt, individually and on behalf of all others similarly situated, against defendants, the Company, chief executive officer (the "CEO") Zhou Ou, and former chief financial officer (the "CFO") Shiwen Feng. The complaint alleges violations of Sections 10(b) and 20(a) of the Exchange Act and Rule 10b-5 during the class period spanning from July 15, 2025, to August 14, 2025. The plaintiff claims that defendants provided materially false and misleading positive statements about revenue growth, brand reputation, and business expansion, while concealing or minimizing material adverse facts concerning the safety of the Company’s lithium battery and inadequate forecasting processes, which were already taking a material toll on E-vehicle (the "EV") sales revenue. The plaintiff alleged when the Company filed a form NT 10-Q on August 14, 2025, which disclosed a 32% decrease in net revenues primarily driven by a decline in total units sold, attributed by the Company to "recent lithium-battery accidents involving E-Bikes and E-Scooters"; the price of Company’s common stock declined dramatically by about 87% in a single day, resulting in economic loss for the plaintiff and the class.

The relief sought includes determining that the action may be maintained as a class action, requiring defendants to pay damages sustained by the plaintiff and the class, and awarding pre-judgment and post-judgment interest, along with reasonable attorneys’ fees, expert fees, and other costs, with the monetary damages sought being certified to be in excess of $150,000.00.

Shareholder derivative action instituted on November 17, 2025

An action titled Kishan Shah, derivatively on behalf of FLY-E GROUP, INC. v. Zhou Ou, et al., was instituted on November 17, 2025 and is pending in the United States District Court, Eastern District of New York.

The principal parties include plaintiff Kishan Shah, representing the Company (the nominal defendant), against Individual defendants Zhou Ou, the Company's CEO and Chairman, Shiwen Feng, the Company's former CFO and director, Lun Feng, Bin Wang, and Zanfeng Zhang, former directors of the Company.

The factual basis centers on the individual defendants' knowing or reckless breaches of fiduciary duties concerning Lithium Battery Misconduct (as defined below) during the relevant period of July 15, 2025, through August 14, 2025. Plaintiff alleges that defendants consistently represented that the Company’s EVs were safe, but concealed that the lithium batteries used in their products lacked required New York City safety certification, were substandard quality, and posed a significant safety hazard, having resulted in multiple deadly fires in the greater New York City area (the "Lithium Battery Misconduct"). The plaintiff alleged that when the Company filed a Form NT 10-Q on August 14, 2025, disclosing a 32% decline in net revenue due primarily to consumer apprehension stemming from an "increasing number of lithium-battery explosion incidents in New York," causing the Company’s stock price to plummet approximately 87.1%. As a result of the alleged misconduct, the plaintiff claims that the Company has incurred and will continue to incur significant damages, including substantial legal fees and costs associated with the class action and related internal investigations, and many other expenditures.

The relief sought, on behalf of the Company, includes a declaration that the individual defendants breached their fiduciary duties, an award of damages against the individual defendants (jointly and severally), restitution and disgorgement of profits from the individual defendants, and court orders directing the Company to implement improved corporate governance and internal control procedures to prevent future damaging events.

Shareholder derivative action instituted on October 28, 2025

Due to the similar factual basis, on October 28, 2025, another shareholder derivative action, Martin Flynn, derivatively on behalf of FLY-E GROUP, INC. v. Zhou (Andy) Ou, et al., was instituted in the United States District Court, Eastern District of New York.

The principal parties are Plaintiff Martin Flynn, derivatively acting on behalf of the nominal defendant, the Company, against individual defendants who served as directors and officers, including Zhou Ou, the CEO and chairman of the board, Shiwen Feng, the former CFO, Bin Wang, Lun Feng, and Zanfeng Zhang, the former directors.

The action alleges that during the relevant time period (July 15, 2025, to August 14, 2025), these defendants breached their fiduciary duties and engaged in gross mismanagement by making materially false and misleading statements and omissions, specifically concerning the safety of the Company’s lithium battery. Although defendants provided overwhelmingly positive statements regarding growth and brand reputation, they concealed or failed to disclose the true impact of "recent lithium-battery accidents involving E-Bikes and E-Scooters" on sales revenues. The complaint alleged, when the Company filed a form NT 10-Q on August 14, 2025 disclosing a 32% decrease in net revenues attributed to a decline in units sold due to an "increasing number of lithium battery explosion incidents in New York," which caused the Company’s stock price to drop approximately 87%. The misconduct resulted in substantial harm to the Company, including costs incurred for defending the separate Securities Class Action. The relief sought, on behalf of the Company, includes a declaration that the action may be maintained as a derivative action, an award of damages sustained by the Company, restitution and disgorgement of profits from the Individual Defendants, and the granting of appropriate equitable relief, such as the institution of appropriate corporate governance measures.