Fly-E Group, Inc.

1 — DESCRIPTION OF BUSINESS, ORGANIZATION AND BASIS OF PRESENTATION

Organization and principal activities

Fly-E Group, Inc. (the “Company” or “Fly-E Group”) was incorporated under the laws of the State of Delaware on November 1, 2022. The Company has no substantive operations other than holding all of the issued and outstanding shares of Fly E-Bike Inc. (“Fly E-Bike”) and Fly EV, Inc. (“Fly EV”). Fly E-Bike and Fly EV were incorporated under the laws of the State of Delaware on August 22, 2022 and November 1, 2022, respectively. Fly EV has no substantive operations. The Company, through its wholly owned subsidiaries, is principally engaged in designing, installing and selling smart electric bikes (“E-bikes”), electric motorcycles (“E-motorcycles”), electric scooters (“E-scooters”), and related accessories under the brand name of “Fly E-Bike.” The Company’s principal operations and geographic markets are mainly in the United States of America (the “U.S.”). During the nine months ended December 31, 2025, the Company closed one store in U.S. During the fiscal year ended March 31, 2025, the Company closed four stores in the U.S. As of April 20, 2026, the Company currently operates a total of 6 retail stores in the U.S. During the three months ended December 31, 2025, 2 retail stores in the U.S. were sold for streamlining the Company’s corporate structure and reducing complexity in financial reporting and operating costs. These 2 retail stores were operated through certain subsidiaries of the Company that were disposed pursuant to share transfer agreements dated December 19, 2025, as discussed in Note 14 to the Unaudited Condensed Consolidated Financial Statements in this Report. The Company offers rental services from selected locations. The Company also operates one online store, focusing on selling E-motorcycles, E-bikes, and E-scooters.

The Company’s business was initially operated under CTATE INC. (“Ctate”), a corporation formed under the laws of the State of New York in 2018. Before merging with Fly E-Bike, Ctate owned 27 companies, each of which operated a Fly E-Bike store. On September 12, 2022, Ctate and Fly E-Bike, which was a wholly-owned subsidiary of Ctate, entered into an Agreement and Plan of Merger, pursuant to which Ctate merged into and with Fly E-Bike, with Fly E-Bike being the surviving corporation (the “Merger”). As a result of the Merger, the original shareholders of Ctate became the stockholders of Fly E-Bike and subsequently effectively controlled the combined entity.

On December 21, 2022, Fly-E Group and Fly E-Bike entered into a Share Exchange Agreement, pursuant to which Fly-E Group acquired all of the issued and outstanding shares of Fly E-Bike by issuing its shares to the stockholders of Fly E-Bike on a one-for-one basis (the “Share Exchange”). As a result of the Share Exchange, Fly E-Bike became a wholly owned subsidiary of Fly-E Group.

As a result of the Merger and the Share Exchange, Fly E-Bike and its subsidiaries are under common control of Fly-E Group, resulting in the consolidation of Fly E-Bike and its subsidiaries, which was accounted as a reorganization of entities under common control at carrying value. The unaudited condensed consolidated financial statements are prepared on the basis as if the reorganization became effective as of the beginning of the first period presented in the unaudited condensed consolidated financial statements of Fly-E Group.

On June 7, 2024, the Company issued 22,500 shares of common stock, at a price of $400.00 per share in its initial public offering (“IPO”). The gross proceeds of the offering were $9.0 million, prior to deducting the underwriting discounts, commissions and offering expenses payable by the Company. In addition, the Company granted the underwriters a 30-day option to purchase an additional 3,375 shares of common stock at the initial public offering price, less underwriting discounts and commissions, to cover over-allotments. On June 25, 2024, the Company issued an additional 3,375 shares of common stock to the underwriters of its IPO for gross proceeds of $1.4 million upon full exercise of the underwriters’ over-allotment option. Net proceeds received by the Company from its initial public offering, including the exercise of the over-allotment option, were approximately $9.2 million. The Company also issued to The Benchmark Company, LLC (“Benchmark”), the representative of the underwriters warrants to purchase 1,294 shares.

On June 4, 2025, the Company issued 285,956 shares of common stock, at a price of $24.28 per share in its second public offering. The gross proceeds of the offering were $6.9 million, prior to deducting the placement agent’s fees and offering expenses payable by the Company. Each share of common stock was sold together with two warrants, with each warrant to purchase one share of common stock. Each warrant is exercisable immediately with an exercise price equal to 120% of the offering price ($29.13 per share) and expires on the fifth anniversary of the issuance date, subject to certain adjustments.

On September 18, 2025, the Company entered into a securities purchase agreement with third-party individuals offering 687,500 shares of the common stock at the price of $16.0 per share for a total consideration of $11,000,000. During the nine months ended December 31, 2025, the Company received net proceeds of $10,996,558 from the investors.

On July 3, 2025 and November 4, 2025, the Company implemented a 1-for-5 and 1-for-20 reverse stock split of its issued and outstanding shares of common stock, respectively. As a result, all share and per share information has been retroactively adjusted to reflect the reverse stock split for all periods presented. As of December 31, 2025, the Company had 1,632,386 shares of common stock issued and outstanding. The par value per share remained unchanged at $0.01, respectively.

The reverse stock split was accounted for retrospectively in the accompanying unaudited condensed consolidated financial statements and notes for all periods presented. All references to the number of shares of common stock, including per share amounts, have been adjusted to reflect the reverse stock split.

The unaudited condensed consolidated financial statements include the financial statements of the Company and each of the following subsidiaries as of December 31, 2025.

Liquidity and Going Concern

In assessing the Company’s liquidity, the Company monitors and analyzes its cash on-hand and its operating and capital expenditure commitments. The Company’s liquidity needs are to meet its working capital requirements, operating expenses and capital expenditure obligations. Debt financing from financial institutions and equity financings have been utilized to finance the working capital requirements of the Company.

On June 4, 2025, the Company closed a public offering of (i)285,956 shares of the common stock at the price of $24.28 per share and (ii)571,912 warrants to purchase 571,912 shares of common stock, resulting in net proceeds to the Company of approximately $6.1 million after deducting placement agent’s fees and offering expenses. On September 18, 2025, the Company entered into a securities purchase agreement with third-party individuals offering of 687,500 shares of the common stock at the price of $16.0 per share for a total consideration of $11,000,000. During the nine months ended December 31, 2025, the Company received net proceeds of $10,996,558 from the investors. As of December 31, 2025, the Company had working capital of approximately $13.4 million and cash of approximately $0.3 million. During the nine months ended December 31, 2025, the Company had net loss of approximately $5.7 million. During the nine months ended December 31, 2025, net cash used in operating activities of the Company was approximately $14.0 million. As of December 31, 2025, the Company had a current portion of contractual obligation of approximately $5.5 million, including short-term loan payables of approximately $3.9 million, current portion of long-term loan payables of approximately $0.1 million and current portion of operating lease liabilities of approximately $1.5 million. The Company became default of repayment of loan with Peapack-Gladstone Bank of approximately $4.9 million between August 2025 and November 2025. For the nine months ended December 31, 2025, the Company paid $582,307 on interest of the line of credit. On November 7, 2025, the Company entered into forbearance and modification agreement with the bank for extension of repayment deadline to March 31, 2026. Subsequent to the execution of the forbearance agreement, the Company has received written notices from Peapack Private Bank asserting defaults and reserving the lender’s rights to pursue remedies under the applicable loan documents. Management has determined there is substantial doubt about its ability to continue as a going concern. Management plans to alleviate the going concern risk through (i) equity financing to support the Company’s working capital; (ii) other available sources of financing (including debt) from banks and other financial institutions; and (iii) financial support from the Company’s related parties. There is no assurance that the Company will be successful in implementing the foregoing plans or that additional financing will be available to the Company on commercially reasonable terms, or at all. The Company’s inability to secure needed financing when required could require material changes to the Company’s business plans and could have a material adverse effect on the Company’s ability to continue as a going concern and results of operations. The unaudited condensed consolidated financial statements have been prepared on a going concern basis, which contemplates the realization of assets and liquidation of liabilities in the normal course of business. The unaudited condensed consolidated financial statements do not include any adjustments that might result from the outcome of such uncertainties.

2 — SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

(a) Basis of Presentation

The accompanying unaudited condensed consolidated financial statements of the Company have been prepared in accordance with accounting principles generally accepted in the U.S. (the “U.S. GAAP”) and regulations of the Securities Exchange Commission (the “SEC”). The accompanying unaudited condensed consolidated financial statements contemplate the realization of assets and the satisfaction of liabilities in the normal course of business. The realization of assets and the satisfaction of liabilities in the normal course of business are dependent on, among other things, the Company’s ability to operate profitably, to generate cash flows from operations, and its ability to attract investors and to borrow funds on reasonable economic terms. The results of operations for the three and nine months ended December 31, 2025 are not necessarily indicative of results to be expected for any other interim period or for the full fiscal year ending March 31, 2026. Accordingly, these statements should be read in conjunction with the Company’s audited consolidated financial statements and note thereto as of and for the years ended March 31, 2025 and 2024.

(b) Principles of Consolidation

The unaudited condensed consolidated financial statements include the financial statements of the Company and its subsidiaries over which the Company exercises control and, when applicable, entities for which the Company has a controlling financial interest. All transactions and balances among the Company and its subsidiaries have been eliminated upon consolidation.

(c) Segment Information

The Company adopted ASU No. 2023-07 (“ASU 2023-07”), Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures for the year ended March 31, 2025 and applied it retrospectively for the prior period presented. The Company’s chief operating decision-makers (“CODM”) (i.e., chief executive officer and his direct reports) review financial information presented on a consolidated basis, accompanied by disaggregated information about revenues by different revenues streams for purposes of allocating resources and evaluating financial performance. The Company and its subsidiaries offer E-bikes, E-motorcycles, E-scooters and other items and services in its stores. The Company’s retail operating divisions are geographically based, have similar economic characteristics and similar expected long-term financial performance. Because substantially all of the Company’s long-lived assets and revenues are located in and derived from the U.S., geographical segments are not presented. The Company’s operating segments are reported in one reportable segment. There are no segment managers who are held accountable for operations, operating results and plans for levels or components below the consolidated unit level. Based on qualitative and quantitative criteria established by Accounting Standards Codification (“ASC”) 280, “Segment Reporting”, the Company considers itself to be operating withinone reportable segment. The Company has concluded that consolidated net loss is the measure of segment profitability. The CODM assesses performance for the Company, monitors budget versus actual results, and determines how to allocate resources based on consolidated net loss as reported in the consolidated statements of operations and other comprehensive loss. There are no other expense categories regularly provided to the CODM that are not already included in the primary financial statements herein.

(d) Use of Estimates

In the application of the Company’s accounting policies, management is required to make judgments, estimates and assumptions about the carrying amounts of assets and liabilities that are not readily apparent from other sources. The estimates and associated assumptions are based on historical experience and other factors that are considered relevant. Significant accounting estimates include allowance for inventories. Changes in facts and circumstances may result in revised estimates. Actual results could differ from those estimates, and as such, differences may be material to the unaudited condensed consolidated financial statements.

(e) Commitments and Contingencies

In the normal course of business, the Company is subject to loss contingencies, such as legal proceedings and claims arising out of its business, which cover a wide range of matters, including, among others, government investigations, shareholder lawsuits, and non-income tax matters.

An accrual for a loss contingency is recognized when it is probable that a liability has been incurred and the amount of loss can be reasonably estimated. If a potential material loss contingency is not probable but is reasonably possible, or is probable but cannot be estimated, then the nature of the contingent liability, together with an estimate of the range of possible loss if determinable and material, is disclosed.

(f) Cash

Cash consists of cash on hand and cash deposited with banks. The Company’s cash is maintained at financial institutions in the U.S. Deposits in these financial institutions may, from time to time, exceed the Federal Deposit Insurance Corporation’s (the “FDIC”) federally insured limit, which is $250,000. The Company has not incurred any losses in the past for amount over the FDIC limits. As of December 31, 2025 and March 31, 2025, $889,806 andnil deposited with banks was uninsured, respectively.

(g) Accounts Receivable, Net

Accounts receivable includes trade account due from customers. Accounts receivable is recorded at the invoiced amount less an allowance for any credit loss and does not bear interest, which is due after 30 to 90 days, depending on the credit term with the customers. Accounts receivable which is deemed to be uncollectible is charged off against the allowance after all means of collection have been exhausted and the potential for recovery is considered remote.

The Company adopt the current expected credit loss model (“CECL model”) to estimate the expected credit losses, which is determined by multiplying the probability of default. In determining the probability of default, the Company mainly considers factors such as aging schedule of receivables, migration rate of receivables, assessment of receivables due from specific identifiable counterparties that are considered at risk or uncollectible, current market conditions, as well as reasonable and supportable forecasts of future economic conditions. As of December 31, 2025 and March 31, 2025, the Company provided allowance for expected credit losses of $194,139 and $116,746, consisting of $41,100 and $41,100 related to accounts receivable from a related party customer and $153,039 and $75,646 related to accounts receivable from third-party customers, respectively.

(h) Inventories, Net

Inventories, consisting of products available for sale, are stated at the lower of cost or net realizable value using the first-in-first-out method. Adjustments to the carrying value are recorded for estimated obsolescence or excess inventory equal to the difference between the cost of inventory and the estimated net realizable value based upon assumptions about future demand and market conditions. Inventory cost consists of the direct cost of merchandise including freight. For the three months ended December 31, 2025 and 2024, impairment loss was $60,497 and $347,333, respectively. For the nine months ended December 31, 2025 and 2024, impairment loss was $630,254 and $678,157, respectively.

(i) Prepayments and Other Receivables

Prepayments and other receivables are mainly prepayments to vendors, prepaid expenses paid to service providers, prepaid taxes, advances to employees, and other deposits. Management regularly reviews the aging of such balances and changes in payment and realization trends and records allowances when management believes that the collection of amounts due is at risk. Accounts considered uncollectable are written off against allowances after exhaustive efforts at collection are made. As of December 31, 2025 and March 31, 2025, no allowance for credit losses provided against prepayments and other receivables was recorded.

(j) Property and Equipment, Net

Property and equipment are stated at cost less accumulated depreciation and any recorded impairment.

The estimated useful lives are as follows:

Depreciation on property and equipment is calculated on the straight-line method over the estimated useful lives of the assets. The cost and related accumulated depreciation of assets sold or otherwise retired are eliminated from the accounts and any gain or loss is included in the unaudited condensed consolidated statements of operations and comprehensive loss. Expenditures for maintenance and repairs are charged to earnings as incurred, while additions, renewals, and betterments, which are expected to extend the useful life of assets, are capitalized. The Company also re-evaluates the periods of depreciation to determine whether subsequent events and circumstances warrant revised estimates of useful lives.

(k) Intangible Assets

Intangible asset is stated at cost less accumulated amortization and amortized in a method which reflects the pattern in which the economic benefits of the intangible asset are expected to be consumed or otherwise used up. The balance of intangible asset represents internal use software and property rights. The software is acquired externally tailored to the Company’s requirements. The Company capitalizes the costs associated with design, development, acquisition and maintenance of its acquired intangible assets and amortizes these assets over their remaining useful lives on a straight-line basis. Any further payments made to maintain or develop these assets would be capitalized and amortized over the balance of the useful life for the assets. The estimated useful life and amortization method are reviewed at the end of each reporting period, with the effect of any changes in the estimate being accounted for on a prospective basis.

The estimated useful lives of intangibles assets are as follows:

(l) Impairment of Long-lived Assets

At the end of each reporting period, the Company reviews the carrying amounts of its property and equipment, intangible assets and right-of-use assets subject to depreciation or amortization, to determine whether there is any indication that the carrying value of an asset may not be recoverable. The Company assesses the recoverability of the assets based on the undiscounted future cash flows the assets are expected to generate and recognize an impairment loss when estimated undiscounted future cash flows expected to result from the use of the asset plus net proceeds expected from disposition of the asset, if any, are less than the carrying value of the asset. If an impairment is identified, the Company will reduce the carrying amount of the asset to its estimated fair value based on a discounted cash flows approach or, when available and appropriate, to comparable market values. For the three months ended December 31, 2025 and 2024, the Company recognized an impairment loss of $558,063 andnil against the property and equipment, respectively. For the nine months ended December 31, 2025 and 2024, the Company recognized an impairment loss of $558,063 andnil against the property and equipment, respectively.

(m) Fair Value Measurements

Fair value is defined as the price that would be received for an asset, or paid to transfer a liability, in an orderly transaction between market participants at the measurement date. Valuation techniques maximize the use of observable inputs and minimize the use of unobservable inputs. When determining the fair value measurements for assets and liabilities, the Company considers the principal or most advantageous market in which it would transact and consider assumptions that market participants would use when pricing the asset or liability. The following summarizes the three levels of input required to measure fair value, of which the first two are considered observable and the third is considered unobservable:

The fair value for certain assets and liabilities such as cash, accounts receivable, other receivables, prepayments and other current assets, short-term loan payables, accounts payable, accrued expenses and other payables, operating lease liabilities – current, and tax payables have been determined to approximately carrying amounts due to the short maturities of these instruments. The Company and its subsidiaries did not have any non-financial assets or liabilities that are measured at fair value on a recurring basis as of December 31, 2025 and March 31, 2025.

(n) Revenue Recognition Product revenue

The Company follows the revenue accounting requirements of Accounting Standards Codification (“ASC”) Topic 606, Revenue from Contracts with Customers. The core principle underlying the revenue recognition of this ASC allows the Company to recognize revenue that represents the transfer of products and services to customers in an amount that reflects the consideration to which the Company expects to be entitled in such exchange. This will require the Company to identify contractual performance obligations and determine whether revenue should be recognized at a point in time or over time, based on when control of products and services transfers to a customer.

To achieve that core principle, the Company applies a five-step model to recognize revenue from customer contracts. The five-step model requires that the Company (i) identify the contract with the customer, (ii) identify the performance obligations in the contract, (iii) determine the transaction price, including variable consideration to the extent that it is probable that a significant future reversal will not occur, (iv) allocate the transaction price to the respective performance obligations in the contract, and (v) recognize revenue when (or as) the Company satisfies the performance obligation.

The Company generates substantially all its revenues from sales of products such as smart E-bikes, E-motorcycles, E-scooters and accessories to the retail and wholesale customers through its wholly owned subsidiaries stores. In accordance with ASC 606, the Company’s performance obligations are satisfied upon the control of products being passed to the customer, which is the point in time that the customers are able to direct the use of and obtain substantially all of the economic benefit of the products or services. The transfer of control typically occurs at a point in time based on consideration of when the customer has an obligation to pay for the products, and physical possession of, legal title to, and the risks and rewards of ownership of the products have been transferred, and the customer has accepted the products. Revenue is recognized net of estimates of variable consideration, including product returns, customer discounts and allowance. which occurs at the point of sale, or the services have been rendered. Historically, the Company has not experienced any significant returns nor provided significant customer discounts.

The Company offers an assurance-type warranty to its customers. An assurance-type warranty guarantees that the product will perform as promised and is not a performance obligation. This type of warranty promises to repair or replace a delivered good or service if it does not perform as expected. Since an assurance-type warranty guarantees the functionality of a product, the warranty is not accounted for as a separate performance obligation, and thus no transaction price is allocated to it. Rather, to account for an assurance-type warranty the vendor should estimate and accrue a warranty liability when the promised good or service is delivered to the customer (see ASC 460-10).

Since the contract price and term are fixed and enforceable, and an assurance-type warranty guarantees the functionality of a product, and the warranty is not accounted for as a separate performance obligation, no transaction price is allocated to it. The Company recognizes sales in full at the point in time when the products are delivered or accepted by the customers, in accordance with the acceptance term specified in the contract. The Company records estimated future warranty costs under ASC 460. Such estimated costs for warranties are estimated at the time of delivery and these warranties are not service warranties separately sold by the Company. Generally, the estimated claim rates of warranty are based on actual warranty experience or the Company’s best estimate. The Company accrued $48,442 and $20,131 of warranty reserves under accrued expenses and other payables as of December 31, 2025 and March 31, 2025, respectively. The Company has no contract assets and contract liabilities balances as of December 31, 2025 and March 31, 2025, respectively.

Rental Revenue

The Company operates rental business primarily from the Go Fly rental mobile app and selected Fly E-Bike stores that provide users with a flexible and affordable e-bike rental option.

The Company offers rental services through its subsidiaries, GOBIKE INC, FLYLA INC, and FLYTORONTO CORP. All the products available for rent are owned by the Company. The Company leases products to customers, and as a result, the Company considers itself to be the accounting lessor, as applicable, in these arrangements in accordance with ASC 842. Rental business operating costs include refunded products repair fee and other operating costs, as applicable.

Due to the short-term nature of the rental business, the Company classifies these rentals operating leases. Revenue generated from the rental services is recognized over the rental period, which is typically one day, one week or more.

Disaggregated information of revenues by business lines are as follows:

(o) Selling Expenses

Selling expenses mainly consist of advertising costs, and payroll and related expenses for personnel engaged in selling and marketing activities. Advertising expenses, which consist primarily of online and offline advertisements, are expenses when the services are received. The advertising expenses were $3,234 and $32,681 for the three months ended December 31, 2025 and 2024, respectively. The advertising expenses were $36,104 and $230,742 for the nine months ended December 31, 2025 and 2024, respectively.

(p) Research and Development Expenses

Research and development expenses include salaries for the Company’s research and development personnel, as well as related development expenses paid to the third-party development team. The Company recognizes internal use software acquired and internally developed in accordance with ASC 350-40 “Software—internal use software”. The Company expenses all costs that are incurred in connection with the planning and implementation phases of development, and costs that are associated with maintenance of the existing software for internal use. Certain costs associated with developing internal-use software are capitalized when such costs are incurred within the application development stage of software development. As a result, the Company expensed the development costs of the Fly E-Bike app as they incurred. For the three months ended December 31, 2025 and 2024, development costs amounted to $142,076 and $125,312, respectively, which were included in general and administrative expenses. For the nine months ended December 31, 2025 and 2024, development costs amounted to $412,270 and $434,760, respectively, which were included in general and administrative expenses.

(q) Income Taxes

Current income taxes are provided based on net income/(loss) for financial reporting purposes and adjusted for income and expense items which are not assessable or deductible for income tax purposes, in accordance with the regulations of the relevant tax jurisdictions.

Deferred taxes are accounted for using the asset and liability method in respect of temporary differences arising from differences between the carrying amount of assets and liabilities in the unaudited condensed consolidated financial statements and the corresponding tax basis used in the computation of assessable tax profit. In principle, deferred tax liabilities are recognized for all taxable temporary differences. Deferred tax assets (the “DTAs”) are recognized to the extent that it is probable that taxable profit will be available against which deductible temporary differences can be utilized.

Deferred tax is calculated using tax rates that are expected to apply to the period when the asset is realized, or the liability is settled. Deferred tax is charged or credited in the income statement, except when it is related to items credited or charged directly to equity, in which case the deferred tax is also dealt with in equity. DTAs are reduced by a valuation allowance when, in the opinion of management, it is more likely than not that some portion or all the DTAs will not be realized. Current income taxes are provided in accordance with the laws of the relevant taxing authorities.

An uncertain tax position is recognized as a benefit only if it is “more likely than not” that the tax position would be sustained in a tax examination, with a tax examination being presumed to occur. The amount recognized is the largest amount of tax benefit that is greater than 50% likely of being realized on examination. For tax positions not meeting the “more likely than not” test, no tax benefit is recorded. Penalties and interest incurred related to underpayment of income tax are classified as income tax expense in the period incurred. The tax returns filed in 2018 to 2024 are subject to examination by any appropriate tax authorities. For the three months ended December 31, 2025 and 2024, the Company accruednil andnil income tax related penalty included in current income taxes expenses, respectively. For the nine months ended December 31, 2025 and 2024, the Company accruednil andnil income tax related penalty included in current income taxes expenses, respectively.

(r) Leases

The Company accounts for leases in accordance with ASC 842. The Company leases premises for offices, warehouses, and retail stores under non-cancellable operating leases, and the Company leases its products to customers under non-cancellable operating leases.

Lessor

The Company’s lease arrangements include products rentals to customers. The lease term is from one hour to one month. Due to the short-term nature of these arrangements, the Company classifies these leases as operating leases. The Company does not separate lease and non-lease components, such as insurance or roadside assistance provided to the lessee, in its lessor lease arrangements. Lease payments are primarily fixed and are recognized as revenue in the period over which the lease arrangement occurs. Taxes or other fees assessed by governmental authorities that are both imposed on and concurrent with each lease revenue-producing transaction and collected by the Company from the lessee are excluded from the consideration in its lease arrangements. The Company mitigates residual value risk of its leased assets by performing regular maintenance and repairs, as necessary, and through periodic reviews of asset depreciation rates based on the Company’s ongoing assessment of present and estimated future market conditions.

Lessee

The Company recognizes right-of-use assets and lease liabilities for all leases at the commencement date of a lease, except for short-term leases and low-value asset leases accounted for applying a recognition exemption where lease payments are recognized as expenses on a straight-line basis over the lease terms. Leases with an initial term of 12 months or less are short-term leases and not recognized as operating lease right-of-use assets and operating lease liabilities on the consolidated balance sheets. The Company recognizes lease expense for short-term leases on a straight-line basis over the lease term.

Right-of-use assets are initially measured at cost, which comprises the initial measurement of lease liabilities adjusted for lease payments made at or before the commencement date, plus any initial direct costs incurred and an estimate of costs needed to restore the underlying assets, and less any lease incentives received. Right-of-use assets are subsequently measured at cost less accumulated depreciation and impairment losses and adjusted for any remeasurement of the lease liabilities. Right-of-use assets are presented on a separate line in the consolidated balance sheets.

Right-of-use assets are depreciated using the straight-line method from the commencement dates to the earlier of the end of the useful lives of the right-of-use assets or the end of the lease terms.

Lease liabilities are initially measured at the present value of the lease payments, which comprise fixed payments, in-substance fixed payments, variable lease payments which depend on an index or a rate. The lease payments are discounted using the interest rate implicit in a lease if that rate can be readily determined. If that rate cannot be readily determined, the Company uses the lessee’s incremental borrowing rate. Subsequently, lease liabilities are measured at amortized cost using the effective interest method, with interest expense recognized over the lease terms. When there is a change in a lease term or a change in future lease payments resulting from a change in an index or a rate used to determine those payments, the Company remeasures the lease liabilities with a corresponding adjustment to the right-of-use-assets. However, if the carrying amount of the right-of-use assets is reduced tozero, any remaining amount of the remeasurement is recognized in profit or loss. Lease liabilities are presented on a separate line in the consolidated balance sheets.

Variable lease payments that do not depend on an index or a rate are recognized as expenses in the periods in which they are incurred.

(s) Concentration Risk

Concentration of customers and suppliers

No customers individually represented greater than 10% of total net revenues of the Company for the three and nine months ended December 31, 2025 and 2024, respectively. As of December 31, 2025, one customer accounted for approximately 10.1% of accounts receivable balances. As of March 31, 2025, three customers accounted for approximately 24.0%,13.1% and 11.7% of accounts receivable balances, respectively.

For the three months ended December 31, 2025, the Company’s largest supplier represented approximately 76.2% of total purchases of the Company. For the three months ended December 31, 2024, the Company’s largest suppliers represented 50% of total purchases of the Company, respectively. For the nine months ended December 31, 2025, the Company’s largest supplier represented approximately 70.2% of total purchases of the Company. For the nine months ended December 31, 2024, the Company’s top three suppliers represented 45%,29%, and 10% of total purchases of the Company, respectively. As of December 31, 2025, three suppliers accounted for approximately 40%,22%, and 17% of accounts payable balance, respectively. As of March 31, 2025, two suppliers accounted for approximately 63% and 25% of accounts payable balance, respectively.

Concentration of credit risk

Financial instruments that are potentially subject to credit risk consist principally of accounts receivable. The Company believes the concentration of credit risk in its account receivable is substantially mitigated by its ongoing credit evaluation process and relatively short collection terms. The Company does not generally require collateral from customers. The Company evaluates the need for an allowance for doubtful accounts based upon factors surrounding the credit risk of specific customers, historical trends, and other information. Historically, the Company did not have any bad debt on its account receivable.

Financial instruments that potentially expose the Company to concentrations of credit risk consist principally of cash and cash equivalents, term deposits, restricted cash, short-term investments, and accounts receivable, net. The Company’s investment policy requires cash and cash equivalents, term deposits, restricted cash, and short-term investments to be placed with high-quality financial institutions and to limit the amount of credit risk from any one issuer. The Company regularly evaluates the credit standing of the counterparties or financial institutions.

(t) Related Parties

A related party is generally defined as (i) any person and or their immediate family hold 10% or more of the Company’s securities (ii) the Company’s management and/or their immediate family, (iii) someone that directly or indirectly controls, is controlled by or is under common control with the Company, or (iv) anyone who can significantly influence the financial and operating decisions of the Company. A transaction is considered to be a related party transaction when there is a transfer of resources or obligations between related parties. Related parties may be individuals or corporate entities. Transactions involving related parties cannot be presumed to be carried out on an arm’s length basis, as the requisite conditions of competitive, free market dealings may not exist. Representations about transactions with related parties, if made, shall not imply that the related party transactions were consummated on terms equivalent to those that prevail in arm’s length transactions unless such representations can be substantiated.

(u) Earnings (Loss) Per Share

The Company computes earnings per share (“EPS”) in accordance with ASC 260, “Earnings per Share”. ASC 260 requires companies to present basic and diluted EPS. Basic EPS is measured as net income divided by the weighted average common stock outstanding for the period. Diluted EPS takes into account the potential dilution that could occur if securities or other contracts to issue ordinary shares were exercised and converted into ordinary shares. Potential shares of common stock that have an anti-dilutive effect (i.e., those that increase income per share or decrease loss per share) are excluded from the calculation of diluted EPS.

For the three and nine months ended December 31, 2025 and 2024, the Company had 1,294 and 1,294 potential shares of common stock issuable upon the exercise of the Representative’s Warrants and 2025 Warrants (as defined below), respectively. As the Company incurred losses for the three and nine months ended December 31, 2025 and 2024, inclusion of these potential shares of common stock would have reduced the net loss per share. Therefore, these potential shares were excluded from the calculation of diluted net loss per share.

(v) Foreign Currencies Translation

Transactions denominated in currencies other than the functional currency are translated into the functional currency at the exchange rates prevailing at the dates of the transaction. Monetary assets and liabilities denominated in currencies other than the functional currency are translated into the functional currency using the applicable exchange rates at the balance sheet dates. The resulting exchange differences are recorded in the statement of operations. The reporting currency of the Company is United States Dollar ($). The Company’s subsidiary in Canada maintains its books and records in its local currency, Canadian dollar (CAD), which is the functional currency for this subsidiary as it is the primary currency of the economic environment in which this entity operates.

In general, for consolidation purposes, assets and liabilities of subsidiaries whose functional currency is not United States Dollar are translated into United States Dollar in accordance with ASC Topic 830-30, “Translation of Financial Statement”, using the exchange rate on the balance sheet date. Revenues and expenses are translated at average rates prevailing during the period. The gains and losses resulting from translation of financial statements of foreign subsidiaries are recorded as a separate component of accumulated other comprehensive income within the statement of stockholders’ equity.

(w) Representative’s Warrants

Upon the closing of the IPO in June 2024, the Company issued to Benchmark underwriters warrants (the “Representative’s Warrants”) to purchase 1,294 shares of common stock which warrants are also exercisable on a cashless basis. The Company accounts for these warrants as either equity-classified or liability-classified instruments based on an assessment of the warrant’s specific terms and applicable authoritative guidance in Financial Accounting Standards Board (“FASB”) Accounting Standards Codification ASC 480, Distinguishing Liabilities from Equity and ASC 815, Derivatives and Hedging. The Company accounts for its warrants as equity that meet all of the criteria (i) require physical settlement or net-share settlement or (ii) give the Company a choice of net-cash settlement or settlement in its own shares (physical settlement or net-share settlement), the warrants are required to be recorded as a component of additional paid-in capital at the time of issuance and subsequent changes in fair value are not recognized as long as the warrants continue to be classified as equity.

(x) Warrants

On June 4, 2025, the Company closed its public offering and issued 571,912 warrants (“2025 Warrants”) to purchase common stock at an exercise price equal to $29.13. The 2025 Warrants are also exercisable on a cashless basis. The Company accounts for warrants as either equity-classified or liability-classified instruments based on an assessment of the warrant’s specific terms and applicable authoritative guidance in FASB Accounting Standards Codification ASC 480, Distinguishing Liabilities from Equity and ASC 815, Derivatives and Hedging. The assessment considers whether the warrants are freestanding financial instruments pursuant to ASC 480, meet the definition of a liability pursuant to ASC 480, and whether the warrants meet all of the requirements for equity classification under ASC 815, including whether the warrants are indexed to the Company’s own shares and whether the warrant holders could potentially require “net cash settlement” in a circumstance outside of the Company’s control, among other conditions for equity classification. This assessment, which requires the use of professional judgment, is conducted at the time of warrant issuance and as of each subsequent quarterly period end date while the warrants are outstanding. During the nine months ended December 31, 2025, all holders of the Company’s 2025 Warrants exercised their rights to acquire common stock. The exercises were completed on a cashless basis pursuant to the terms of the warrant agreements. The exercises did not generate any cash proceeds to the Company. All share numbers for warrant exercises prior to the reverse stock split have been retroactively adjusted to reflect the 1-for-5 reverse stock split and 1-for-20 reverse stock split. During the nine months ended December 31, 2025,571,912 of the 2025 Warrants were exercised on a cashless basis pursuant to the terms of the warrant agreements, resulting in the issuance of 410,982 shares of common stock.

The Company accounts for its warrants as equity that meet all of the criteria (i) require physical settlement or net-share settlement or (ii) give the Company a choice of net-cash settlement or settlement in its own shares (physical settlement or net-share settlement), the warrants are required to be recorded as a component of additional paid-in capital at the time of issuance and subsequent changes in fair value are not recognized as long as the warrants continue to be classified as equity.

(y) Held for Sale

The Company classifies assets and liabilities to be sold (disposal group) as held for sale in the period when all of the applicable criteria are met, including: (i) management commits to a plan to sell, (ii) the disposal group is available to sell in its present condition, (iii) there is an active program to locate a buyer, (iv) the disposal group is being actively marketed at a reasonable price in relation to its fair value, (v) significant changes to the plan to sell are unlikely, and (vi) the sale of the disposal group is generally probable of being completed within one year. Management performs an assessment at least quarterly or when events or changes in business circumstances indicate that a change in classification may be necessary.

Assets and liabilities held for sale are presented separately within the consolidated balance sheets with any adjustments necessary to measure the disposal group at the lower of its carrying value or fair value less costs to sell. For each period the disposal group remains classified as held for sale, its recoverability is reassessed, and any necessary adjustments are made to its carrying value.

The Company does not report the results of operations of a business as discontinued operations as the disposal is not a strategic shift that will have a major effect on its operations and financial results.

(z) Recent accounting pronouncements not yet adopted

The Company considers the applicability and impact of all accounting standards updates (“ASUs”). Management periodically reviews new accounting standards that are issued. Under the Jumpstart Our Business Startups Act of 2012, as amended (the “JOBS Act”), the Company meets the definition of an emerging growth company and has elected the extended transition period for complying with new or revised accounting standards, which delays the adoption of these accounting standards until they would apply to private companies.

In December 2023, the FASB issued ASU 2023-09, “Income Taxes (Topic 740): Improvements to Income Tax Disclosures.” This guidance requires a public entity to disclose in their rate reconciliation table additional categories of information about federal, state and foreign income taxes and to provide more details about the reconciling items in some categories if the items meet a quantitative threshold. The guidance also requires all entities to disclose annually income taxes paid (net of refunds received) disaggregated by federal (national), state and foreign taxes and to disaggregate the information by jurisdiction based on a quantitative threshold. This guidance is effective for annual periods beginning after December 15, 2024. Early adoption is permitted, and this guidance should be applied prospectively but there is the option to apply it retrospectively. The Company is currently evaluating the impact of this guidance on its unaudited condensed consolidated financial statements.

In November 2024, the FASB issued ASU 2024-03, “Income Statement – Reporting Comprehensive Income - Expense Disaggregation Disclosures (Subtopic 220-40): Disaggregation of Income Statement Expenses, requiring public business entities to disclose additional information about specific expense categories in the notes to the financial statements at interim and annual reporting periods, including purchases of inventory, employee compensation, depreciation, and intangible asset amortization.” The provisions of this update are effective for annual periods beginning after December 15, 2026, and interim reporting periods beginning after December 15, 2027, using either a prospective or retrospective approach. The Company is currently evaluating the impact of this guidance on its unaudited condensed consolidated financial statements.

3 — ACCOUNTS RECEIVABLE, NET

Accounts receivable, net consisted of the following:

Movements of allowance for expected credit losses are as follows:

As of December 31, 2025 and March 31, 2025, the Company provided allowance for expected credit losses of $153,039 and $75,646 related to accounts receivable from a third-party customer, respectively.

4 — INVENTORIES, NET

Inventories, net consisted of the following:

Movements of inventory reserves are as follows:

As of December 31, 2025 and March 31, 2025, the inventory reserves balance was $1,004,511 and $1,107,569 respectively. For the three months ended December 31, 2025 and 2024, the impairment loss was $60,497 and $347,333, respectively. For the nine months ended December 31, 2025 and 2024, and impairment loss was $630,254 and $678,157, respectively.

5 — PREPAYMENTS AND OTHER RECEIVABLES

Prepayments and other receivables as of December 31, 2025 and March 31, 2025 consisted of the following:

On April 1, 2025, the Company entered into share transfer agreements for the sale of 100% of its equity interests in subsidiaries – FLYEBIKE BROOKLYN INC, FLYMHT659 INC, and FLYBX745 INC – to third-party buyers for a total cash consideration of $310,055, with no contingent payments or adjustments. In June 2025, the Company received $30,000 from the buyers. As of December 31, 2025, the remaining consideration due from such buyers was $280,055 (See Note - 14 — DISPOSAL OF SUBSIDIARIES).

On May 1, 2025, the Company entered into share transfer agreements for the sale of 100% of its equity interests in subsidiaries – ARFY CORP., FLY GC INC., and ESEBIKE INC – to third-party buyers for a total cash consideration of $156,517, with no contingent payments or adjustments. In June 2025, the Company received $55,000 from the buyers. As of December 31, 2025, the remaining consideration due from such buyers was $101,517 (See Note - 14 — DISPOSAL OF SUBSIDIARIES).

On June 1, 2025, the Company entered into share transfer agreements for the sale of 100% of its equity interests in subsidiaries – UFOTS CORP and FLYCORONA INC – to third-party buyers for a total cash consideration of $60,207, with no contingent payments or adjustments. In June 2025, the Company received $27,000 from the buyers. As of December 31, 2025, the remaining consideration due from such buyers was $33,207 (See Note - 14 — DISPOSAL OF SUBSIDIARIES).

On July 1, 2025, the Company entered into share transfer agreements for the sale of 100% of its equity interests in subsidiaries –OFLYO INC, FLYCYCLE INC and FLYBX2381 INC– to third-party buyers for a total cash consideration of $57,991, $71,301 and $106,647 respectively, with no contingent payments or adjustments. As of December 31, 2025, the remaining consideration due from such buyers was $57,991, $71,301 and $106,647, respectively, (See Note - 14 — DISPOSAL OF SUBSIDIARIES).

On August 1, 2025, the Company entered into share transfer agreements for the sale of 100% of its equity interests in subsidiaries –FLYAM INC, FLYTRON INC and MEEBIKE – to third-party buyers for a total cash consideration of $36,879, $19,959 and $39,289, respectively, with no contingent payments or adjustments. As of December 31, 2025, the remaining consideration due from such buyers was $36,879, $19,959 and $39,289, respectively, (See Note - 14 — DISPOSAL OF SUBSIDIARIES).

On September 1, 2025, the Company entered into share transfer agreements for the sale of 100% of its equity interests in subsidiaries –TKPGO CORP, FIYET INC and FLYCLB INC – to third-party buyers for a total cash consideration of $1,707, $1 and $1, respectively, with no contingent payments or adjustments. As of December 31, 2025, the remaining consideration due from such buyers was $1,709 (See Note - 14 — DISPOSAL OF SUBSIDIARIES).

On December 19, 2025, the Company entered into share transfer agreements for the sale of 100% of its equity interests in subsidiaries – DCMOTOR INC and FLYNJ1 INC to third-party buyers for a total cash consideration of $1 and $1, respectively, with no contingent payments or adjustments. As of December 31, 2025, the remaining consideration due from such buyers was $2 (See Note - 14 — DISPOSAL OF SUBSIDIARIES).

6 — PROPERTY AND EQUIPMENT, NET

Property and equipment as of December 31, 2025 and March 31, 2025 consisted of the following:

For the three months ended December 31, 2025 and 2024, the depreciation expenses were $165,341 and $124,588 and the impairment loss were $558,063 andnil, respectively. For the nine months ended December 31, 2025 and 2024, the depreciation expenses were $582,599 and $310,910, respectively. For the three and nine months ended December 31, 2025, the Company recognized an impairment loss of $558,063 against the property and equipment, respectively. For the three and nine months ended December 31, 2024, no impairment loss was recorded against the property and equipment.

7 — INTANGIBLE ASSETS, NET

Intangible assets as of December 31, 2025 and March 31, 2025 consisted of the following:

For the three months ended December 31, 2025 and 2024, the amortization expenses were $28,345 and $21,985, respectively. For the nine months ended December 31, 2025 and 2024, the amortization expenses were $83,106 and $30,831, respectively.

8 — ACCRUED EXPENSES AND OTHER PAYABLES

9 — LOAN PAYABLES

A summary of the Company’s loans is listed as follows:

For the three months ended December 31, 2025 and 2024, the total interest expenses on the Company’s outstanding loans amounted to $460,359 and $155,673, respectively. For the nine months ended December 31, 2025 and 2024, the total interest expenses on the Company’s loans amounted to $1,546,130 and $247,550, respectively. The weighted average annual interest rate on borrowings outstanding as of December 31, 2025 and March 31, 2025 was 9.6% and 13.1%, respectively.

10 — STOCKHOLDERS’ EQUITY

Prior to the effectiveness of the stock splits discussed below, the Company was authorized to issue 400 shares of common stock having a par value of $0.01 per share and 40 shares of preferred stock having a par value of $0.01 per share. There were 200 shares of common stock were issued and outstanding prior to the effectiveness of the stock splits.

2024 Stock Split

On March 27, 2024, the Company’s board of directors approved a 1-for-110,000 stock split of the Company’s capital stock. The stock split became effective on April 2, 2024. The par value of the Company’s common stock remained unchanged at $0.01 per share, and the number of authorized shares of the Company’s capital stock was increased from 440 to 48,400,000, with the number of authorized shares of common stock and preferred stock being increased from 400 to 44,000,000 and from 40 to 4,400,000, respectively. On June 7, 2024, the Company amended and restated the certificate of incorporation to authorize the Company to issue up to 110,000,000 shares. The par value of the Company’s common stock remained unchanged at $0.01 per share, and the number of authorized shares of the Company’s capital stock increased to 110,000,000, with the number of authorized shares of common stock and preferred stock being increased 100,000,000 and 10,000,000, respectively. On March 10, 2025, the Company amended and restated the certificate of incorporation to authorize the Company to increase the authorized shares of common stock of the Company from 100,000,000 shares to 300,000,000 shares. The par value of the Company’s common stock remained unchanged at $0.01 per share.

On June 7, 2024, the Company completed its initial public offering (the “IPO”) and issued 22,500 shares of common stock, at a price of $400.00 per share. The gross proceeds of the offering were $9.0 million, prior to deducting the underwriting discounts, commissions and offering expenses payable by the Company. In addition, the Company granted the underwriters a 30-day option to purchase an additional 3,375 shares of common stock at the initial public offering price, less underwriting discounts and commissions, to cover over-allotments. On June 25, 2024, the Company issued an additional 3,375 shares of common stock to the underwriters for gross proceeds of $1.4 million upon full exercise of the underwriters’ over-allotment option. Net proceeds received by the Company from the initial public offering, including the exercise of over-allotment option, were approximately $9.2 million. On September 18, 2025, the Company entered into a securities purchase agreement with third-party individuals offering of 687,500 shares of the common stock at the price of $16.0 per share for a total consideration of $11,000,000. The Company partially received net proceeds of $3,400,000 from the investors in September 2025, and received the remaining net proceeds of $7,596,558 in October and November 2025.

2025 Reverse Stock Split

On July 3, 2025, the Company implemented a 1-for-5 reverse stock split of its issued and outstanding shares of common stock. The par value per share remained unchanged at $0.01.

On November 4, 2025, the Company implemented a 1-for-20 reverse stock split of its issued and outstanding shares of common stock. The par value per share remained unchanged at $0.01.

The reverse stock splits were accounted for retrospectively in the accompanying unaudited condensed consolidated financial statements and notes for all periods presented. All references to the number of shares of common stock, including per share amounts, have been adjusted to reflect the reverse stock split. As of December 31, 2025 and March 31, 2025, the number of issued and outstanding shares of common stock was 1,632,386 and 245,875, respectively.

Representative’s Warrants

Upon the closing of IPO in June 2024, the Company issued to Benchmark, the representative of the underwriters, warrants to purchase 1,294 shares of common stock. The Representative’s Warrants have an exercise price equal to $400.00 per share and are exercisable until the date on June 7, 2029, after the date of commencement on December 7, 2024. The Representative’s Warrants are also exercisable on a cashless basis. As the Representative’s Warrants are considered indexed to the Company’s own stock and meet the criteria for equity classification according to ASC:815-40, the Representative’s Warrants are classified as equity. None of the Representative’s Warrants were exercised as of December 31, 2025.

The fair value of the warrant, using the Black-Scholes Model on the date of issuance was $274,472. The key inputs into the Black-Scholes Model variables were as follows at measurement date:

The stock price and exercise prices stated herein have been retroactively adjusted to reflect the reverse stock split that occurred in July 2025 and November 2025.

Registered Direct Offering Warrants

On June 4, 2025, the Company closed its public offering of 285,956 shares of common stock and 571,912 warrants (“2025 Warrants”) to purchase common stock (including shares of common stock underlying warrants) at a public offering price of $24.28. Each share of common stock was sold together with two 2025 Warrants, with each 2025 Warrants to purchase one share of common stock. Each 2025 Warrants is exercisable immediately upon issuance, have an exercise price equal to $29.13 which is 120% of the offering price and will expire five years from the date of issuance. Each 2025 Warrant is exercisable for one share of common stock, subject to adjustment in the event of stock dividends, stock splits, stock combinations, reclassifications, reorganizations or similar events affecting the Company’s common stock. A holder may not exercise any portion of a 2025 Warrant to the extent that the holder, together with its affiliates and any other person or entity acting as a group, would own more than 4.99% of the Company’s outstanding shares of common stock after exercise, as such ownership percentage is determined in accordance with the terms of the 2025 Warrants, except that upon notice from the holder to the Company, the holder may waive such limitation up to a percentage, not in excess of 9.99%. The 2025 Warrants are also exercisable on a cashless basis. The 2025 Warrants are classified as equity as they are indexed to the Company’s own stock and meet the criteria for equity classification according to ASC:815-40. All the 2025 Warrants were exercised as of December 31, 2025.

The fair value of the 2025 Warrant, using the Black-Scholes Model on the date of issuance was $21,296,598. The key inputs into the Black-Scholes Model variables were as follows at measurement date:

The stock price and exercise prices stated herein have been retroactively adjusted to reflect the reverse stock split that occurred in July 2025 and November 2025.

The following table summarizes the Company’s activities and status of the Representative’s Warrants and 2025 Warrants:

The number of shares and warrants, as well as the exercise prices stated herein, have been retroactively adjusted to reflect the reverse stock split that occurred in July 2025 and November 2025.

During the nine months ended December 31, 2025, all holders of the Company’s 2025 Warrants exercised their rights to acquire common stock. The exercises were completed on a cashless basis pursuant to the terms of the warrant agreements. The exercises did not generate any cash proceeds to the Company. All share numbers for warrant exercises prior to the reverse stock split have been retroactively adjusted to reflect the 1-for-5 reverse stock split and the 1-for-20 reverse stock split. During the nine months ended December 31, 2025,571,912 of the 2025 Warrants were exercised on a cashless basis pursuant to the terms of the warrant agreements, resulting in the issuance of 410,982 shares of common stock.

Subscription Receivable

As of December 31, 2025 and March 31, 2025, the subscription receivable represents the unpaid capital contribution of $219,998 by the stockholders. On September 18, 2025, the Company entered into a securities purchase agreement with third-party individuals offering of 687,500 shares of the common stock at the price of $16.0 per share for a total consideration of $11,000,000. The Company partially received net proceeds of $3,400,000 from the investors in September 2025, and received the remaining net proceeds of $7,596,558 in October and November 2025.

11 — LEASES

The Company adopted Topic 842 for all periods presented. At the inception of a contract, the Company determines if the arrangement is, or contains, a lease. The leases of the Company mainly consisted of offices, retail stores, and warehouses.

The Company’s operating right-of-use (“ROU”) assets and lease liabilities were as follows:

The Company had 9 and 36 leases as of December 31, 2025 and March 31, 2025, respectively.

The weighted average lease term, discount rates, and remaining lease terms for the operating leases as of December 31, 2025 were as follows:

Remaining lease term and discount rate:

The weighted average lease term, discount rates, and remaining lease terms for the operating leases as of March 31, 2025 were as follows:

Remaining lease term and discount rate:

The Company leases its offices, warehouse, and retail stores under non-cancellable operating lease agreements. During the three months ended December 31, 2025, lease expenses were approximately $0.7 million, including approximately $0.4 million in cost of revenues and approximately $0.3 million in selling expense andnil in general and administrative expense. During the three months ended December 31, 2024, lease expenses were approximately $1.02 million, including approximately $0.36 million in cost of revenues, approximately $0.67 million in selling expense, andnil in general and administrative expense.

Lease expenses were approximately $2.2 million for the nine months ended December 31, 2025, including approximately $1.1 million in cost of revenues, approximately $1.1 million in selling expense, andnil in general and administrative expense. Lease expenses for the nine months ended December 31, 2024 were approximately $3.26 million, including approximately $1.00 million in cost of revenues, approximately $2.16 million in selling expense, and approximately $0.09 million in general and administrative expense.

For the three months ended December 31, 2025, the Company terminated 2 leases. For the nine months ended December 31, 2025, the Company terminated 12 leases.

As of December 31, 2025, future minimum lease liabilities, all under office and facilities non-cancellable operating lease agreements, were as follows:

12 — COMMITMENTS AND CONTINGENCIES

Commitments

The Company has not entered any off-balance sheet financial guarantees or other off-balance sheet commitments to guarantee the payment obligations of any third parties. The Company has not entered any derivative contracts that are indexed to its shares and classified as shareholder’s equity or that are not reflected in its unaudited condensed consolidated financial statements. Furthermore, the Company does not have any retained or contingent interest in assets transferred to an unconsolidated entity that serves as credit, liquidity or market risk support to such entity. The Company does not have any variable interest in any unconsolidated entity that provides financing, liquidity, market risk or credit support to itself or engages in leasing, hedging or product development services with itself.

Contingencies

Legal

From time to time, the Company is a party to certain legal proceedings, as well as certain asserted and unasserted claims. Amounts accrued, as well as the total amount of reasonably possible losses with respect to such matters, individually and in the aggregate, are not deemed to be material to the unaudited condensed consolidated financial statements.

The Company’s products and other production facilities as well as the packaging, storage, distribution, advertising and labeling of its products, are subject to extensive legal and regulatory requirements. For example, pursuant to the DMV registration requirement, the Company must satisfy the DMV Registration requirements and conduct required testing for all of its products sold in U.S. Loss of or failure to renew or obtain necessary permits, licenses, registrations, or certificates could prevent the Company from legally selling its products in the U.S. If the Company were found to be in violation of applicable laws and regulations, it could be subject to administrative punishment, including fines, injunctions, recalls or asset seizures, as well as potential criminal sanctions, any of which could have a material adverse effect on its business, financial condition, results of operations and prospects. As of the date hereof, the Company believes it is in compliance with the relevant regulations in the U.S.

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

On October 28, 2025, a shareholder derivative lawsuit was filed purportedly on behalf of the Company, as nominal defendant, against certain of its current and former directors and officers in the United States Court for the Eastern District of New York, captioned Flynn v. Ou et al, No. 1:25-cv-06036 (E.D.N.Y.) (the “Flynn Action”). The complaint filed in the Flynn Action alleges claims for alleged breach of fiduciary duties and gross mismanagement, among others. On November 17, 2025, an additional putative shareholder derivative lawsuit was filed purportedly on behalf of the Company, as nominal defendant, against certain of its current and former directors and officers in the United States Court for the Eastern District of New York, captioned Shah v. Ou et al, No. 1:25-cv-06372 (E.D.N.Y.) (the “Shah Action”). The complaint filed in the Shah Action alleges claims for alleged breach of fiduciary duty, unjust enrichment, waste of corporate assets, gross mismanagement, abuse of control, among others.

The Flynn Action and Shah Action are based on the same alleged facts and circumstances as the Class Action and seek damages from the current and former directors and officers and an order directing the Company and current and former directors and officers to take actions to reform and improve corporate governance and internal procedures. On December 9, 2025, the Court consolidated the Flynn Action and Shah Action into a single consolidated action captioned In re Fly-E Group, Inc. Stockholder Derivative Litigation, No. 1:25-cv-06036 (E.D.N.Y.) (the “Consolidated Derivative Action”), and appointed co-lead counsel. The current and former director and officer defendants dispute the allegations in the complaints and intend to vigorously defend against all claims. Given the preliminary stage of the lawsuit and the inherent uncertainties of litigation, we cannot determine with certainty the outcome of the Consolidated Derivative Action at this time.

UL Litigation

On or about March 12, 2025, UL LLC (“UL”) filed a complaint against the Company, along with the Company’s certain subsidiaries and certain individuals, in the Eastern District of New York (the “Complaint”). The Complaint alleges that the Company improperly used UL’s trademark by claiming certain products were certified by UL. On May 21, 2025, the Company and UL entered into a settlement and release agreement (the “Settlement Agreement”) on mutually acceptable settlement terms. Pursuant to the Settlement Agreement, the Company agreed to pay UL an aggregate amount of $1,000,000 before November 30, 2025 (Refer to Note 8 — Accrued Expenses and other payables). During the nine months ended December 31, 2025, the Company paid $1,000,000 to UL.

Inflation

Inflationary factors, such as increases in personnel and overhead costs, could impair the Company’s operating results. Although the Company does not believe that inflation has had a material impact on the Company’s financial position or results of operations to date, a high rate of inflation in the future may have an adverse effect on the Company’s ability to maintain current levels of gross margin and operating expenses as a percentage of sales revenue if the revenues do not increase with such increased costs.

13 — RELATED PARTY TRANSACTIONS

(A) Related party balances

Accounts receivable, net — a related party

During the nine months ended December 31, 2025, the Company received $5,435 from Fly E Bike SRL.

Prepayments and other receivables — related parties

During the nine months ended December 31, 2025, the Company advanced $161,560 to Fly E Bike SRL, a distributor the Company works with and in which Mr. Ou holds over 50% of the equity interest. The amount is unsecured, non-interest bearing and repayable on demand.

On April 1, 2023, the Company agreed to retain the services of PJMG, a company in which Mr. Guo, the Company’s former CFO who resigned on November 6, 2024, holds over 50% of the equity interests as a consultant following the completion of its IPO. PJMG was engaged to provide compliance consulting services related to accounting, finance, and management, as well as to oversee market planning and development, follow-on fundraising, and investor relationship management originally from June 2024 to May 2025, further extended to September 2025. The service fee is $45,000 for the first month and from the second month the fees will be $15,000 per month. PJMG was terminated after the services were completed on December 31, 2025. The prepayment of $120,000 was recognized as expenses in the nine months ended December 31, 2025.

Long-term prepayment for software development – a related party

In December 2023, the Company engaged DFT for development of certain technology services. Mr. Guo, the Company’s former CFO who resigned on November 6, 2024, owns over 50% of the equity interest in DFT. As of December 31, 2025 and March 31, 2025, the Company paidnil and $136,580 to DFT as prepayment for software development, respectively. The total contract price for the ERP system is $2,500,000, and the ERP system was delivered on May 20, 2025. (see Note 5 – Property and Equipment).

Accrued expenses and other payables – a related party

During the nine months ended December 31, 2025, the Company’s former CEO advanced $225 to the Company for payments of operating expenses. The amount is unsecured, non-interest bearing and repayable on demand.

(B) Related party transactions

Revenues — a related party

During the three months ended December 31, 2025 and 2024, the Company had no transactions with Fly E Bike SRL, a distributor the Company works with and in which Mr. Ou holds over 50% of the equity interest. During the nine months ended December 31, 2025 and 2024, Fly E Bike SRL, purchased certain EV products from the Company in the amount ofnil and $47,785, respectively.

(C) Other Related Party Transactions

On March 6, 2021, the Company and DGLG entered into an engagement letter, pursuant to which the Company engaged DGLG as a consultant to assist the Company in its IPO planning, financing and tax services. Mr. Guo, the Company’s former CFO who resigned on November 6, 2024, is a partner at DGLG. Under the terms of the engagement agreement with DGLG, the Company has agreed to compensate DGLG for consulting services based on an hourly fee arrangement. DGLG’s consulting fees werenil andnil for the three months ended December 31, 2025 and 2024, respectively, andnil and $225,000 for the nine months ended December 31, 2025 and 2024, respectively. In addition, during the three months and nine months ended December 31, 2025 the Company paid DGLG a total ofnil and $170,775 for tax services, including sales tax services, payroll tax services, and income tax services, rendered by DGLG, respectively. During the three and nine months ended December 31, 2024, the Company paid DGLG a total of $9,000 and $37,400 for tax services, including sales tax services, payroll tax services, and income tax services, rendered by DGLG, respectively.

On April 1, 2023, the Company agreed to retain the services of PJMG, a company in which Mr. Guo, the Company’s former CFO who resigned on November 6, 2024, holds over 50% of the equity interests as a consultant following the completion of its IPO. To secure these services, the Company prepaid a total of $120,000 to PJMG as of March 31, 2025, and 75,000 was expensed as consulting expenses during the three months ended December 31, 2025, and $120,000 was expensed as consulting expenses during the nine months ended December 31, 2025. $105,000 was expensed as consulting expenses during the three months ended December 31, 2024. $165,000 was expensed as consulting expenses during the nine months ended December 31, 2024. During the three and nine months ended December 31, 2024, the Company paid PJMG a total of $nil and $232,547 for consulting services, respectively.

14 — DISPOSAL OF SUBSIDIARIES

During the three and nine months ended December 31, 2025, the Company committed to the disposal of certain subsidiaries. The decision was driven by two primary factors: (1) to simplify the Company’s legal and operational structure, and (2) to create a more streamlined and transparent organizational structure, thereby reducing the complexity of consolidation across auditing, finance, and tax reporting. These subsidiaries were not part of a strategic exit from the New York region or the retail industry. Rather, the disposal was intended to enhance administrative efficiency and align the Company’s structure with its long-term operational goals.

In December 2024, the Company decided to proceed with the disposal plan and sell 100% of its equity interests in subsidiaries FLYMHT INC, FLY14 CORP, EDISONEBIKE INC, and FLY6AVE INC to third-party individuals (the “Buyers”). On January 1, 2025, the Company entered into share transfer agreements with the Buyers. Pursuant to the terms of the agreements, the Company agreed to sell, transfer, and assign all its rights, title, and interests in the shares of the subsidiaries to the Buyers, free and clear of all liens and encumbrances. The Buyers agreed to purchase the shares for total cash consideration of $635,193. There were no contingent payments, earn-outs, or post-closing adjustments specified in the agreements. There was $84,302 gain from this disposal. During the nine months ended December 31, 2025, the Company received $103,000 from the Buyers.

On March 11, 2025, the management team approved to sell 100% of its equity interests in subsidiaries FLYEBIKE BROOKLYN INC, FLYMHT659 INC, and FLYBX745 INC to third-party individuals (the “Buyers”). On April 1, 2025, the Company entered into share transfer agreements with the Buyers. Pursuant to the terms of the agreements, the Company agreed to sell, transfer, and assign all its rights, title, and interests in the shares of the subsidiaries to the Buyers, free and clear of all liens and encumbrances. The Buyers agreed to purchase the shares for total cash consideration of $310,055. There were no contingent payments, earn-outs, or post-closing adjustments specified in the agreements. During the nine months ended December 31, 2025, the Company received $30,000 from the Buyers. There was no gain or loss on the sale of subsidiaries.

On April 2, 2025, the management team approved to sell 100% of its equity interests in subsidiaries ARFY CORP., FLY GC INC., and ESEBIKE INC to third-party individuals (the “Buyers”). On May 1, 2025, the Company entered into share transfer agreements with the Buyers. Pursuant to the terms of the agreements, the Company agreed to sell, transfer, and assign all its rights, title, and interests in the shares of the subsidiaries to the Buyers, free and clear of all liens and encumbrances. The Buyers agreed to purchase the shares for total cash consideration of $156,517. There were no contingent payments, earn-outs, or post-closing adjustments specified in the agreements. During the nine months ended December 31, 2025, the Company received $55,000 from the Buyers. There was no gain or loss on the sale of subsidiaries.

On May 6, 2025, the management team approved to sell 100% of its equity interests in subsidiaries UFOTS CORP and FLYCORONA INC to third-party individuals (the “Buyers”). On June 1, 2025, the Company entered into share transfer agreements with the Buyers. Pursuant to the terms of the agreements, the Company agreed to sell, transfer, and assign all its rights, title, and interests in the shares of the subsidiaries to the Buyers, free and clear of all liens and encumbrances. The Buyers agreed to purchase the shares for total cash consideration of $60,207. There were no contingent payments, earn-outs, or post-closing adjustments specified in the agreements. During the nine months ended December 31, 2025, the Company received $27,000 from the Buyers. There was no gain or loss on the sale of subsidiaries.

On June 17, 2025, the management team approved to sell 100% of its equity interests in subsidiaries OFLYO INC, FLYCYCLE INC, and FLYBX2381 INC to third-party individuals (the “Buyers”). On July 1, 2025, the Company entered into share transfer agreements with the Buyers. Pursuant to the terms of the agreements, the Company agreed to sell, transfer, and assign all its rights, title, and interests in the shares of the subsidiaries to the Buyers, free and clear of all liens and encumbrances. The Buyers agreed to purchase the shares for total cash consideration of $235,939. There were no contingent payments, earn-outs, or post-closing adjustments specified in the agreements.

On July 18, 2025, the management team approved to sell 100% of its equity interests in subsidiaries MEEBIKE, FIYTRON INC and FLYAM INC to third-party individuals (the “Buyers”). On August 1, 2025, the Company entered into share transfer agreements with the Buyers. Pursuant to the terms of the agreements, the Company agreed to sell, transfer, and assign all its rights, title, and interests in the shares of the subsidiaries to the Buyers, free and clear of all liens and encumbrances. The Buyers agreed to purchase the shares for total cash consideration of $96,327 There were no contingent payments, earn-outs, or post-closing adjustments specified in the agreements.

On August 19, 2025, the management team approved to sell 100% of its equity interests in subsidiaries TKPGO CORP., FIYET INC and FLYCLB INC to third-party individuals (the “Buyers”). On September 1, 2025, the Company entered into share transfer agreements with the Buyers. Pursuant to the terms of the agreements, the Company agreed to sell, transfer, and assign all its rights, title, and interests in the shares of the subsidiaries to the Buyers, free and clear of all liens and encumbrances. The Buyers agreed to purchase the shares for total cash consideration of $1,709. There were no contingent payments, earn-outs, or post-closing adjustments specified in the agreements.

On December 19, 2025, the management team approved to sell 100% of its equity interests in subsidiaries DCMOTOR INC and FLYNJ1 INC to third-party individuals (the “Buyers”). On December 19, 2025, the Company entered into share transfer agreements with the Buyers. Pursuant to the terms of the agreements, the Company agreed to sell, transfer, and assign all its rights, title, and interests in the shares of the subsidiaries to the Buyers, free and clear of all liens and encumbrances. The Buyers agreed to purchase the shares for total cash consideration of $1 and $1. There were no contingent payments, earn-outs, or post-closing adjustments specified in the agreements.

On December 21, 2025, the management team approved to sell 100% of its equity interests in subsidiaries FLYFLS INC, FLYNJ2 INC., FLYE BIKE NJ3, INC, FLYNJ4 INC. and FLYTORONTO CORP to third-party individuals (the “Buyers”). On January 1, 2026, the Company entered into share transfer agreements with the Buyers. Pursuant to the terms of the agreements, the Company agreed to sell, transfer, and assign all its rights, title, and interests in the shares of the subsidiaries to the Buyers, free and clear of all liens and encumbrances. The Buyers agreed to purchase the shares for total cash consideration of $1,424,024. There were no contingent payments, earn-outs, or post-closing adjustments specified in the agreements.

There was gain on the sale of subsidiaries ofnil and $64,452 for the three and nine months ended December 31, 2025, respectively.

The disposal of these subsidiaries were not considered discontinued operations under ASC 205-20, as their disposal did not represent a strategic shift that had a major effect on the Company’s operations and financial results.

As of December 31, 2025, the Company had classified the assets and liabilities of the subsidiaries that were sold on January 1, 2026 as held for sale in accordance with ASC 360-10. The classification criteria were met when the management committed to a plan to sell.

Summarized Held for Sale Financial Information

A summary of the carrying amounts of major classes of assets and liabilities, which are included in assets and liabilities held for sale in the consolidated balance sheet, is as follows:

There was no gain or loss on the sale of subsidiaries on January 1, 2026:

Total consideration determined: $1,424,024

Net assets disposed excluded intercompany other receivables: $1,424,024

15 — SUBSEQUENT EVENTS

On January 1, 2026, the Company entered into share transfer agreements for the sale of 100% of its equity interests in subsidiaries – FLYFLS INC, FLYNJ2 INC., FLYE BIKE NJ3, INC, FLYNJ4 INC. and FLYTORONTO CORP. – to third-party buyers for a total cash consideration of $69,420, $68,627, $511,353, $146,473 and $628,151, respectively, with no contingent payments or adjustments. As of April 20, 2026, the Company did not receive any consideration from the third-party individuals. (See Note - 14 — DISPOSAL OF SUBSIDIARIES).