Fly-E Group, Inc.
For the period ended Jun 30, 2026. Filed Sep 1, 2026.
View on SEC.govAbout this filing
A company's report for each of its first three quarters. The financial statements are not audited. It shows how the business has moved since the last annual report, and what management says changed.
Jun 30, 2026 · Filed Sep 1, 2026
FLYE$2.35+4.9%Stored close · as of Nov 6, 2026
What changed in Management’s Discussion and Analysis?
Read the current filingPrevious report: 10-Q
Period ended 2025-12-31; filed 2026-04-21.
0001213900-26-046242
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of OperationsCurrent report: 10-Q
Period ended 2026-06-30; filed 2026-09-01.
0001213900-26-096305
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of OperationsThe baseline is this issuer’s latest earlier reporting period of the same form that was filed before the current report. A previous 10-Q is a different quarter, not a year-over-year comparison. Amendments are excluded.
Compared 158 previous paragraphs and 140 current paragraphs.
84 unchanged; 33 reworded; 22 added; 37 removed; 4 previous and 1 current paragraphs rearranged.
Tables are not compared: 12 previous and 7 current tables excluded. Dates, whitespace, punctuation and numbering changes are ignored; changes to financial figures remain significant.
A changed paragraph is not evidence that risk increased or decreased. An unchanged paragraph does not establish that risk stayed the same.
Added paragraphs (22)
Current report
SEC Investigation
Current report
On January 21, 2026, the Company was notified by the U.S. Securities and Exchange Commission (the “Commission”) that it has initiated an investigation involving the Company. The Company has not been provided with substantive details regarding the investigation, and is fully cooperating with the investigation.
Current report
Nasdaq Deficiency Notice
Current report
On September 1, 2026, the Company received a letter from the Listing Qualifications Department of The Nasdaq Stock Market LLC (“Nasdaq”) notifying the Company that it was not in compliance with Nasdaq Listing Rule 5250(c)(1), which requires timely filing of periodic reports with the Securities and Exchange Commission, due to the Company’s failure to timely file its Quarterly Report on Form 10-Q for the quarter ended June 30, 2026. The Company filed the Form 10-Q on September 2, 2026. As a result of this filing, the Company believes it has regained compliance with Nasdaq Listing Rule 5250(c)(1), and expects to receive written confirmation of compliance from Nasdaq. The Nasdaq deficiency notice has no immediate effect on the listing or trading of the Company’s common stock on the Nasdaq Capital Market.
Current report
As of June 30, 2025, the Company had disposed of an aggregate of 12 subsidiaries for total cash consideration of approximately $1.2 million, of which 4 subsidiaries were disposed of from January to March 2025 and 8 subsidiaries from April to June 2025. As of June 30, 2026, the Company had disposed of an aggregate of 28 subsidiaries for total cash consideration of approximately $2.9 million, and had collected approximately $1.0 million of the consideration for these transactions. (See Note - 14 — DISPOSAL OF SUBSIDIARIES in the accompanying consolidated financial statements for details).
Current report
For the three months ended June 30, 2026, our net revenues decreased by 48.4% to $2.7 million, compared to $5.3 million for the same period in 2025. This decrease was primarily attributable to a significant reduction in retail revenue due to the closure and sale of retail stores in prior periods, as well as market competition that pressured our product pricing, prompting us to adjust our product mix and promotional pricing strategies accordingly. The decline was partially offset by an increase in wholesale revenue, as the stores sold in prior periods continued to purchase from us as external wholesale customers. The decrease in rental services revenue was primarily due to the reduced scale of our rental operations following the closure and sale of retail stores in prior periods, which eliminated the economies of scale we had previously enjoyed.
Current report
During the three months ended June 30, 2026, as a result of the reduction in our retail store count and the corresponding scale-down of sales operations, we worked with one principal vendor, Depcl Corp., which supplied approximately 83.1% of the accessories and components used in all our products.
Current report
We expect that, in the foreseeable future, selling and marketing expenses will remain generally stable, primarily due to the fact that our retail store count has been streamlined and is not expected to undergo further changes; however, should we further expand our market presence, such expenses may rise accordingly.
Current report
For the three months ended June 30, 2026, our net revenues decreased by 48.4% to $2.7 million, compared to $5.3 million for the same period in 2025. The decrease in our net revenues was primarily driven by a decrease in retail revenue as a result of the reduction in our retail store count to four stores, and a decrease in sales volume of 2,890 units, from 10,448 units for the three months ended June 30, 2025, to 7,558 units for the three months ended June 30, 2026. This decline was partially offset by an increase in wholesale revenue, which was primarily attributable to wholesale demand resulting from our sales channel adjustments, albeit at lower wholesale prices. The decrease in rental services revenue was primarily due to the reduction in our retail store count..
Current report
Our retail sales revenue decreased by $3.2 million, or 84.3%, from $3.8 million for the three months ended June 30, 2025 to $0.6 million for the three months ended June 30, 2026. Our wholesale revenue increased by $0.7 million, or 46.9%, from $1.4 million for the three months ended June 30, 2025 to $2.1 million for the three months ended June 30, 2026. The decrease in retail sales revenue was primarily attributable to the reduction in our retail store count, as well as market competition, which prompted us to adjust our product mix and promotional pricing strategies. In addition, safety-related market attention arising from prior lithium-ion battery incidents in the New York area also had a certain impact on consumer demand during the period. The increase in wholesale revenue was mainly driven by continued purchases from stores that were sold in prior periods, which transitioned to wholesale customers and continued to source products from us.
Current report
Gross profit for the three months ended June 30, 2026 and 2025 was $0.3 million and $2.3 million, respectively. Gross margin was 10.9% and 42.4% for the three months ended June 30, 2026 and 2025 respectively. The decrease in gross margin was primarily attributable to a shift in sales channel mix, as the reduction in our retail store count led to a lower proportion of retail sales, with the stores previously operating as our retail locations transitioning to wholesale customers to whom we continue to sell on a wholesale basis, at prices that reflect standard wholesale market rates, which are inherently lower than retail price levels. At the same time, competitive pressure in our retail operations also had an impact on our product pricing, including price reductions to clear certain aged inventory, which further pressured our gross margin to a certain extent.
Current report
Total operating expenses were $3.8 million for the three months ended June 30, 2026, an increase of $0.07 million, or 1.9 %, compared to $3.8 million for the three months ended June 30, 2025. The net increase in operating expenses was primarily attributable to (i) an increase in expected credit losses, and (ii) increased development fees incurred in connection with iterative updates and enhancements to our ERP system and mobile applications, partially offset by (a) reductions in payroll expenses, rent expenses, insurance expenses, depreciation expenses, and other related expenses as a result of the reduction in retail stores and the downsizing of our business operations, and (b) a decrease in professional fees.
Current report
General and administrative expenses increased slightly to $3.4 million for the three months ended June 30, 2026, from $2.4 million for the three months ended June 30, 2025. The net increase was primarily attributable to increases in development fees and expected credit losses, partially offset by reductions in professional fees, payroll expenses, insurance expenses, and meals and entertainment and travel expenses. Professional fees decreased to $0.3 million for the three months ended June 30, 2026, from $1.5 million for the three months ended June 30, 2025, primarily due to the scale-down of our operations and the corresponding reduction in professional service needs. Payroll expenses decreased to $1,385 for the three months ended June 30, 2026, from $0.2 million for the three months ended June 30, 2025, primarily due to the reduction in related personnel costs following the reduction in retail stores. Insurance expenses decreased to $35,691 for the three months ended June 30, 2026, from $0.2 million for the three months ended June 30, 2025, primarily due to reduced insurance coverage following the reduction in retail stores. Meals and entertainment and travel expenses decreased to $12,623 for the three months ended June 30, 2026, from $0.1 million for the three months ended June 30, 2025, primarily as a result of reduced business activities following the scale-down of our operations. These reductions were partially offset by an increase in development fees, which rose to $1.8 million for the three months ended June 30, 2026, from $0.2 million for the three months ended June 30, 2025, primarily incurred in connection with the iterative updates and enhancements to our ERP system and mobile applications, which, being primarily for maintenance and enhancements, did not meet capitalization criteria and were expensed as incurred. Expected credit losses increased to $1.0 million for the three months ended June 30, 2026, from nil for the three months ended June 30, 2025, primarily due to expected credit losses recognized on prepayments and other receivables.
Current report
Other Expenses, net
Current report
Other expenses, net were $122,395 for the three months ended June 30, 2026, compared to other income, net of $7,898 for the three months ended June 30, 2025. The change was primarily attributable to losses from uncollectible receivables and cash shortages, partially offset by gains on disposal of certain right-of-use assets.
Current report
Interest expenses, net were $0.2 million for the three months ended June 30, 2026, a decrease of $0.3 million from $0.5 million for the three months ended June 30, 2025. The interest expenses were primarily attributable to interest on borrowings from financial institutions to fund our operations. The decrease was mainly due to a reduction in outstanding bank loan principal, partially offset by extension fees paid for certain loan renewals and higher average annual interest rates following such renewals.
Current report
Income Tax (Provision) /Benefit
Current report
Our prepayments and other receivables, net of allowance for expected credit, primarily represent prepayments to vendors and other service providers. These prepayments and receivables decreased by $1.8 million, from $7.0 million as of March 31, 2026, to $5.2 million as of June 30, 2026. This decrease was mainly attributable to (i) the settlement of prepayments to vendors upon completion of the related services or delivery of goods, and (ii) the collection of partial consideration from the disposal of subsidiaries in prior periods.
Current report
Net cash used in operating activities for the three months ended June 30, 2026 was $0.2 million, which was due to net loss of $3.9 million, adjusted for non-cash items, primarily consisting of amortization of right-of-use assets of $0.4 million, depreciation and amortization of $0.2 million, inventory reserve of 0.3 million, long-term prepayment for software development of $1.8 million, and expected credit losses of $1.0 million. as well as changes in working capital, including a decrease in prepayments and other receivables of $0.7 million, an increase in accounts payable of $0.7 million, an increase in accrued expenses and other payables of $0.4 million, a decrease in operating lease liabilities of $0.4 million, and an increase in taxes payable of $0.2 million, partially offset by an increase in accounts receivable of $1.6 million.
Current report
Net cash used in financing activities was $2,815 for the three months ended June 30, 2026, consisting solely of repayments of loan payables of $2,815.
Current report
Estimated Allowance for Expected Credit Losses
Current report
Our estimated allowance for expected credit losses is based on our assessment of collectability of accounts receivable. Adjustments are recorded to estimate expected credit losses over the contractual life of receivables under the current expected credit loss model, which is dependent upon factors such as aging schedule of receivables, migration rate of receivables, assessment of receivables due from specific identifiable counterparties that are considered at risk or uncollectible, current market conditions, as well as reasonable and supportable forecasts of future economic conditions. As of June 30, 2026 and March 31, 2026, we recorded allowance for expected credit losses of $1,267,917 and $217,479, respectively.
Removed paragraphs (37)
Previous report
For the three months ended December 31, 2025, our net revenues decreased by 53.3% to $2.6 million, compared to $5.7 million for the same period in 2024, which was primarily driven by a decrease in total units sold and reductions in selling prices to reduce aged inventory for the three months ended December 31, 2025.
Previous report
For the nine months ended December 31, 2025, our net revenues decreased by 41.7% to $11.9 million, compared to $20.4 million for the same period in 2024, which was primarily driven by a decrease in total units sold and reductions in selling prices to reduce aged inventory for the nine months ended December 31, 2025.
Previous report
During the three months ended December 31, 2025, we worked with two principal vendors, Depcl Corp. and Xiamen Innolabs Technology Co., Ltd, each of which respectively supplied approximately 76.2% and 5.1% of the accessories and components used in all our products. During the nine months ended December 31, 2025, we worked with two principal vendors, Depcl Corp. and Xiamen Innolabs Technology Co., Ltd, each of which respectively supplied approximately 70.2% and 6.9% of the accessories and components used in all our products.
Previous report
We expect that our selling and marketing expenses will decrease in the foreseeable future, as more retail stores are expected to be sold with reduced selling and marketing activities.
Previous report
For the three months ended December 31, 2025, our net revenues decreased by 53.3% to $2.6 million, compared to $5.7 million for the same period in 2024, which was primarily driven by decrease in quantity of EVs sold which dropped by 87% and as a result of reductions in selling prices to reduce aged inventory for the three months ended December 31, 2025.
Previous report
Our retail sales revenue decreased by $4.3 million, or 86.8%, from $4.9 million for the three months ended December 31, 2024 to $0.6 million for the three months ended December 31, 2025. Our wholesale revenue increased by $1.1 million, or 153.4%, from $0.7 million for the three months ended December 31, 2024 to $1.8 million for the three months ended December 31, 2025. The decrease in retail sales revenue is mainly due to recent lithium-battery accidents involving E-Bikes and E-Scooters. With an increasing number of lithium-battery explosion incidents in New York, customers are less inclined to purchase E-Bikes. Consequently, sales have declined as customers opt for oil-powered vehicles over electric vehicles. The decrease in retail sales also attributed in part to the closures and disposition of our retail stores during the three months ended December 31, 2025. The increase in wholesales revenue was driven primarily by revenue contribution from the dispositioned entities during the three months ended December 31, 2025. Although certain retail stores were sold, these stores continued to purchase products from the Company, which contributes an increase of wholesale revenue.
Previous report
Gross Margin
Previous report
Gross profit for the three months ended December 31, 2025 and 2024 was $1.1 million and $2.6 million, respectively. Gross margin was 39.6% and 45.1% for the three months ended December 31, 2025 and 2024, respectively. The decrease in gross margin was mainly due to a combined effect of decrease in quantity of EV sold, which dropped by 87% as a result of decrease in number of retail stores during the nine months ended December 31, 2025 and the increased revenues from rental business with higher margin than our other businesses. The rental business was launched in October 2024. Gross margin of rental business was 79.8% and $100.0% for the three months ended December 31, 2025 and 2024, respectively.
Previous report
Total operating expenses were $2.6 million for the three months ended December 31, 2025, a decrease of $0.9 million, or 25.6%, compared to $3.5 million for the three months ended December 31, 2024. The decrease in operating expenses was attributable to the combined effect of decrease in out payroll and rent expenses and increase in our depreciation expense, professional fees, and impairment loss on property and equipment, as more fully discussed below.
Previous report
Selling expenses primarily consist of payroll expenses, rent, and advertising expenses of retail stores. Total payroll expenses were $0.1 million for the three months ended December 31, 2025, compared to $0.9 million for the three months ended December 31, 2024. Rent was $0.3 million for the three months ended December 31, 2025, compared to $0.7 million for the three months ended December 31, 2024. Advertising expenses were $3,234 for the three months ended December 31, 2025, compared to $32,681 for the three months ended December 31, 2024. The decrease in these expenses was primarily due to the closures and dispositions of retail stores during this quarter.
Previous report
General and administrative expenses increased during the three months ended December 31, 2025 compared to the same period of previous year. Professional fees increased to $0.8 million for the three months ended December 31, 2025, compared to $0.4 million for the three months ended December 31, 2024, primarily attributable to the increase in legal fee associated with our litigations and ongoing reporting obligations. Payroll expenses decreased to $0.2 million for the three months ended December 31, 2025 from $0.4 million for the three months ended December 31, 2024 primarily due to decrease in headcount of office assistants. Depreciation expense decreased to $30,526 for the three months ended December 31, 2025, compared to $54,152 for the same period in prior year due to the closures and dispositions of retail stores. Impairment loss on property and equipment increase to $0.6 million for the three months ended December 31, 2025, compared to nil for the three months ended December 31, 2024,
Previous report
Interest expenses, net were $0.5 million for the three months ended December 31, 2025, an increase of $0.3 million from interest expenses, net of $0.2 million for the three months ended December 31, 2024. This increase was primarily because of an increase in loans payable with higher average annual interest rate to finance the business operation of the Company for the three months ended December 31, 2025.
Previous report
Income Tax Benefits
Previous report
Results of Operations for the Nine Months Ended December 31, 2025 and 2024
Previous report
The following table sets forth the components of our results of operations for the nine months ended December 31, 2025 and 2024:
Previous report
Revenues
Previous report
Our net revenues were $11.9 million for the nine months ended December 31, 2025, a decrease of 41.7%, from $20.4 million for the nine months ended December 31, 2024. The decrease in our net revenues was driven by a decrease in total units sold, which decreased by 15,447 units, from 41,925 units for the nine months ended December 31, 2024 to 26,478 units for the nine months ended December 31, 2025, and as a result of lowering the selling prices to reduce aged inventory. From the nine months ended December 31, 2024 to the nine months ended December 31, 2025, while the number of units sold of certain other types of products increased, the quantities of motorcycles and batteries sold, which normally contribute significantly to revenues, decreased by 641 units and 5,332 units, respectively, thereby resulting in an overall decrease in the total number of units sold.
Previous report
Our retail sales revenue decreased by $11.3 million, or 63.6%, from $17.7 million for the nine months ended December 31, 2024 to $6.4 million for the nine months ended December 31, 2025. Our wholesale revenue increased by $2.3 million, or 89.5%, from $2.6 million for the nine months ended December 31, 2024 to $5.0 million for the nine months ended December 31, 2025. The decrease in retail sales revenue is mainly due to decrease in number of retail stores during the nine months ended December 31, 2025. The increase in wholesales revenue was driven primarily by contributions from the disposed entities during the nine months ended December 31, 2025. Although certain retail stores were sold, these stores continued to purchase products from the Company, which contributed to the increase of wholesale revenue.
Previous report
Cost of Revenues
Previous report
Cost of revenues decreased by 35.7%, from $11.8 million for the nine months ended December 31, 2024, to $7.6 million for the nine months ended December 31, 2025. The decrease in cost of revenues was primarily attributable to a reduction in motorcycles and batteries sales volume, as discussed previously. These factors collectively contributed to the overall decrease in cost of revenues.
Previous report
Gross Margin
Previous report
Gross profit for the nine months ended December 31, 2025 and 2024 was $4.3 million and $8.6 million, respectively. Gross margin was 36.1% and 42.0% for the nine months ended December 31, 2025 and 2024, respectively. The decrease in gross margin was driven primarily by the decrease of the average sale price of our EVs for the nine months ended December 31, 2025 when compared with the nine months ended December 31, 2024, and increased revenues from rental business with higher margin than our other businesses.
Previous report
Total Operating Expenses
Previous report
Total operating expenses were $8.4 million for the nine months ended December 31, 2025, a decrease of $2.4 million, or 22.1%, compared to $10.8 million for the nine months ended December 31, 2024. The decrease in operating expenses was attributable to the decrease in our payroll expenses, rent expenses, meals and entertainment expenses, professional fees, and insurance expenses as we downsized our business as discussed below.
Previous report
Selling Expenses
Previous report
General and Administrative Expenses
Previous report
General and administrative expenses increased during the nine months ended December 31, 2025 compared to the previous year. Professional fees increased to $2.7 million for the nine months ended December 31, 2025, compared to $1.7 million for the nine months ended December 31, 2024, primarily attributable to the increase in audit fee, consulting fee, legal fee and IR expenses associated with litigations and ongoing reporting obligations. Payroll expenses decreased to $0.6 million for the nine months ended December 31, 2025 from $1.2 million for the nine months ended December 31, 2024 primarily due to employees terminated in operation and accounting departments. Insurance expenses decreased to $0.3 million for the nine months ended December 31, 2025, compared to $0.8 million for the same period of prior year as a result of less insurance policies purchased for closed stores during the nine months ended December 31, 2025. Impairment loss on property and equipment increase to $0.6 million for the nine months ended December 31, 2025, compared to nil for the nine months ended December 31, 2024.
Previous report
Interest expenses, net
Previous report
Interest expenses, net were $1.5 million for the nine months ended December 31, 2025, an increase of $1.3 million from interest expenses, net of $0.2 million for the nine months ended December 31, 2024. This increase was primarily because of an increase in loans payable with higher average annual interest rate to finance the business operation of the Company for the nine months ended December 31, 2025.
Previous report
Income Tax Benefit
Previous report
Income tax benefit was $160,077 for the nine months ended December 31, 2025, a decrease of $361,577 from income tax benefit of $521,654 for the nine months ended December 31, 2024. This decrease was primarily because of differences in the recognition of deferred tax assets and related valuation allowance for the nine months ended December 31, 2025.
Previous report
Net Loss
Previous report
Net loss was $5.7 million for the nine months ended December 31, 2025, an increase of $3.7 million, or 184.4%, from net loss of $2.0 million for the nine months ended December 31, 2024, which was mainly attributable to the reasons discussed above.
Previous report
EBITDA
Previous report
Before interest expenses, income tax, depreciation, and amortization, for the nine months ended December 31, 2025, our net loss was $3.7 million, an increase of $1.8 million, compared to net loss of $1.9 million for the nine months ended December 31, 2024, which was mainly attributable to the decrease in revenue, decrease in selling and increase in general and administrative expense described above. The ratio of EBITDA to revenue was negative 30.8% and 9.5% for the nine months ended December 31, 2025 and 2024, respectively.
Previous report
Our prepayments and other receivables primarily represent prepayments to vendors and other service providers. These prepayments and receivables increased by $7.2 million, from $3.7 million as of March 31, 2025, to $10.9 million as of December 31, 2025. This significant increase is mainly due to the launch of Company’s E-bike rental services, which required additional inventories. As a result, during the nine months ended December 31, 2025, the Company made substantial prepayments to vendors to secure inventory for the new services.
Previous report
Net cash used in operating activities for the nine months ended December 31, 2024 was $9.4 million, which was due to net loss of $2.0 million, a decrease in tax payable of $1.5 million, and a decrease in accrued expenses and other payables of $0.5 million, an increase in inventories of $4.0 million, a decrease in account payable of $0.1 million, a decrease in operating lease liabilities of $2.3 million, and an increase in prepayments and other receivables of $1.8 million, deferred income taxes benefits recorded for the period of $0.9 million, partially offset by amortization of right-of-use assets of $2.4 million, depreciation expenses of $0.3 million, inventory impairment loss of $0.7 million recorded for the period and a decrease in accounts receivables-related parties of $0.2 million.
Reworded paragraphs (33)
Previous wording
The following discussion of our financial condition and results of operations should be read in conjunction with the unaudited condensed consolidated financial statements and the notes thereto included in this quarterly report. The following discussion contains forward-looking statements. Actual results could differ materially from the results discussed in the forward-looking statements. See “Item 1A. Risk Factors” and “Cautionary Note Regarding Forward-Looking Statements”.
Current wording
The following discussion of our financial condition and results of operations should be read in conjunction with the financial statements and the notes thereto included in this annual report. The following discussion contains forward-looking statements. Actual results could differ materially from the results discussed in the forward-looking statements. See “Item 1A. Risk Factors” and “Cautionary Note Regarding Forward-Looking Statements”.
Previous wording
Fly E-Bike was established in 2018 with its first store opened in New York. Our business has grown rapidly until mid 2024. As of April 20, 2026, we have 6 retail stores in the U.S. The Company offers rental services from selected locations in New York, and Los Angeles. We also operate one online store at flyebike.com, focusing on selling E-motorcycles, E-bikes and E-scooters, serving customers in the United States.
Current wording
Fly E-Bike was established in 2018 with its first store opened in New York. Our business has grown rapidly until mid-2024. As of September 1, 2026, we have 4 retail stores in the U.S. The Company offers rental services from selected locations in New York, and Los Angeles. We also operate one online store at flyebike.com, focusing on selling E-motorcycles, E-bikes and E-scooters, serving customers in the United States.
Previous wording
We are currently in the process of developing a Fly E-Bike app, which is a management service mobile software for our EVs, enabling customers to purchase bikes, locate company stores, schedule bike repairs, and more. We aim to design an app that will bring users a comprehensive intelligent experience to create a safer and more satisfying riding life. The development of the app is still in its preliminary stage. We have launched a testing version of the app, which is currently unavailable to our customers. In December 2023, the Company engaged DF Technology US Inc (“DFT”) for certain technology services including the development of an enterprise resource planning system (“ERP system”), and in July 2024, the Company engaged DFT to develop a mobile phone application for its renal services, the GO FLY APP. The GO FLY APP is fully completed and delivered on September 9, 2024. The ERP system is fully completed and delivered on May 20, 2025. During the three months ended December 31, 2025, we engaged Phecda Technology (HK) Limited to enhance the ERP functions and develop app for Flyebike, Riding, Lease and Rental. These developments of the app are still in development stage.
Current wording
We are currently in the process of developing a Fly E-Bike app, which is a management service mobile software for our EVs, enabling customers to purchase bikes, locate company stores, schedule bike repairs, and more. We aim to design an app that will bring users a comprehensive intelligent experience to create a safer and more satisfying riding life. The development of the app is still in its preliminary stage. We have launched a testing version of the app, which is currently unavailable to our customers. In December 2023, the Company engaged DF Technology US Inc (“DFT”) for certain technology services including the development of an enterprise resource planning system (“ERP system”), and in July 2024, the Company engaged DFT to develop a mobile phone application for its renal services, the GO FLY APP. The GO FLY APP is fully completed and delivered on September 9, 2024. The ERP system is fully completed and delivered on May 20, 2025. For the year ended June 30, 2026, we engaged Phecda Technology (HK) Limited to enhance the ERP functions and develop app for Flyebike, Riding, Lease and Rental. All enhancements and app developments were finalized and delivered as of June 30, 2026. We intend to continue investing in future feature enhancements and iterative releases to support the platform’s long-term evolution, subject to our ongoing assessment of business needs and resource allocation.
Previous wording
We source a significant portion of our vehicle components from China and the United States, and then assemble them into our vehicles in a facility located in Maspeth and New York. For the three months ended December 31, 2025, we produced 459 E-motorcycles, 306 E-bikes and 124 E-scooters at the same facility. For the nine months ended December 31, 2025, we produced 3,573 E-motorcycles, 5,089 E-bikes and 1,404 E-scooters at the same facility.
Current wording
We source a significant portion of our vehicle components from China and the United States, and then assemble them into our vehicles in a facility located in Maspeth and New York. For the three months ended June 30, 2026, we assembled 400 E-motorcycles, 961 E-bikes and 207 E-scooters at the same facility.
Previous wording
On May 21, 2025, Company, along with its certain subsidiaries and certain individuals, and UL entered into a settlement and release agreement (the “Settlement Agreement”) on mutually acceptable settlement terms. Pursuant to the Settlement Agreement, the Company and the other defendants agreed to pay UL an aggregate amount of $1,000,000 before November 30, 2025, and entered into a Consent Judgment and Permanent Injunction pursuant to which the Company and the other defendants agreed not to offer for sale, sell, or distribute products with UL Marks that were not tested and certified by UL. During the nine months ended December 31, 2025, the Company paid $1,000,000 to UL.
Current wording
On May 21, 2025, Company, along with its certain subsidiaries and certain individuals, and UL entered into a settlement and release agreement (the “Settlement Agreement”) on mutually acceptable settlement terms. Pursuant to the Settlement Agreement, the Company and the other defendants agreed to pay UL an aggregate amount of $1,000,000 before November 30, 2025, and entered into a Consent Judgment and Permanent Injunction pursuant to which the Company and the other defendants agreed not to offer for sale, sell, or distribute products with UL Marks that were not tested and certified by UL. During the year ended June 30, 2026, the Company paid $1,000,000 to UL.
Previous wording
On September 18, 2025, the Company entered into a securities purchase agreement with third-party individuals offering of (i) 687,500 shares of the common stock at the price of $16.0 per share for a total consideration of $11,000,000. During the nine months ended December 31, 2025, the Company received net proceeds of $10,996,558 from the investors. The disclosure that the closing of this transaction occurred on September 30, 2025, in the Form 8-K filed with the SEC was incorrect and is hereby corrected.
Current wording
On September 18, 2025, the Company entered into a securities purchase agreement with third-party individuals offering of (i) 687,500 shares of the common stock at the price of $16.0 per share for a total consideration of $11,000,000. During the year ended June 30, 2026, the Company received net proceeds of $10,996,558 from the investors. The disclosure that the closing of this transaction occurred on September 30, 2025, in the Form 8-K filed with the SEC was incorrect and is hereby corrected.
Previous wording
During the nine months ended December 31, 2025, the Company disposed several subsidiaries as part of a disposal plan aimed at simplifying its legal and operational structure and improving administrative efficiency. The divestitures were not intended to be a strategic withdrawal from any specific geographic region or industry, but rather a measure to streamline the Company’s corporate structure and reduce complexity in financial reporting. Between April and December 2025, the Company sold 19 subsidiaries to third-party individuals in multiple transactions, for an aggregated cash consideration of approximately $0.9 million. 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 in the accompanying unaudited condensed consolidated financial statements for details).
Current wording
As part of a disposal plan aimed at simplifying its legal and operational structure and improving administrative efficiency, from December 2024 to December 2025, the management of the Company successively approved the sale of 100% of the Company’s equity interests in 28 subsidiaries to third-party individuals through multiple transactions, for total cash consideration of approximately $2.9 million. The divestitures were not intended to be a strategic withdrawal from any specific geographic region or industry, but rather to streamline the Company’s corporate structure and reduce complexity in financial reporting.
Previous wording
Our growth will depend on our ability to achieve sales targets, including our ability to attract new customers, which in turn depends in part on our ability to execute our retail strategy and produce effective marketing initiatives to expand our brand perception with prospective customers. As of April 20, 2026, we currently operate 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. We offer rental services from selected locations. We also operate one online store, focusing on selling E-motorcycles, E-bikes, and E-scooters and selling our product in the United States. It is critical for us to successfully manage production ramp-up and quality control to deliver to customers in adequate volume and quality.
Current wording
Our growth will depend on our ability to achieve sales targets, including our ability to attract new customers, which in turn depends in part on our ability to execute our retail strategy and produce effective marketing initiatives to expand our brand perception with prospective customers. As of September 1, 2026, we currently operate 4 retail stores in the U.S. During the three months ended June 30, 2026, we did not sell or close any retail stores. We offer rental services from selected locations. We also operate one online store, focusing on selling E-motorcycles, E-bikes, and E-scooters in the United States. It is critical for us to successfully manage production ramp-up and quality control to deliver to customers in adequate volume and quality.
Previous wording
Our payroll expenses were $0.4 million for the three months ended December 31, 2025, compared to $1.3 million for the three months ended December 31, 2024. Our payroll expenses were $1.9 million for the nine months ended December 31, 2025, compared to $3.6 million for the nine months ended December 31, 2024. As 8 stores were sold and 1 store was closed during the three months ended June 30, 2025, 9 stores were sold and 1 store was closed during the three months ended September 30, 2025 and 2 stores were sold during the three months ended December 31, 2025, respectively, and the Company is planning to sell more stores in the subsequent quarter we expect a decrease in payroll expenses in the next quarter due to reduced demand for store sales staff. Each of our retail stores has a minimum of two employees, and additional office employees will be hired to support retail stores in customer service and marketing. In addition, to maintain excellent customer service in our retail stores, each store will have at least one trained repair professional. Effective management of payroll expenses remains crucial to our ability to grow revenue and enhance our financial results, especially as we navigate a reduced workforce.
Current wording
Our payroll expenses were $185,865 for the three months ended June 30, 2026, compared to $1.0 million for the three months ended June 30, 2025. This decrease was primarily due to the significant reduction in our retail store count, which decreased from 36 stores to 4 stores as of March 31, 2026, and remained unchanged as of June 30, 2026. We expect our store count to remain stable in the near term and do not anticipate any significant fluctuations in payroll expenses in the next quarter. Each of our retail stores has a minimum of two employees, and additional office employees will be hired to support retail stores in customer service and marketing. In addition, to maintain excellent customer service in our retail stores, each store will have at least one trained repair professional. Effective management of payroll expenses remains crucial to our ability to grow revenue and enhance our financial results, especially as we navigate a reduced workforce.
Previous wording
We have implemented a centralized vendor management system that streamlines purchasing, enhances our negotiating power and maintains strong vendor relationships. We believe this approach delivers cost savings, improved risk management and increased negotiating power, ultimately benefiting our operating results. Changes in costs related to our major vendors can significantly affect our financial condition and operating results.
Current wording
We have implemented a centralized vendor management system that streamlines purchasing, enhances our negotiating power and maintains strong vendor relationships. We believe this approach delivers cost savings, improved risk management and increased negotiating power, ultimately benefiting our operating results. The principal vendor supplies the majority of procurement needs, and we also source from other vendors for the remaining portion. Changes in costs related to our major vendors can significantly affect our financial condition and operating results.
Previous wording
General and administrative expenses primarily consist of costs for corporate functions, including payroll and related expenses, facilities and equipment expenses, such as depreciation and amortization expense and rent, and professional fees. We expect that our general and administrative will decrease in the foreseeable future, as more retail stores are expected to be sold with reduced general and administrative activities.
Current wording
General and administrative expenses primarily consist of costs for corporate functions, including payroll and related expenses, facilities and equipment expenses, such as depreciation and amortization expense and rent, and professional fees. We expect that, in the foreseeable future, general and administrative expenses will remain generally stable, primarily as a result of our streamlined retail store count, which is not expected to undergo further changes; however, should we further expand our market presence in the future, general and administrative activities may increase, and such expenses will rise accordingly.
Previous wording
Cost of revenues decreased by 48.6%, from $3.1 million for the three months ended December 31, 2024, to $1.6 million for the three months ended December 31, 2025. The decrease in cost of revenues was primarily attributable to a reduction in sales volume, as discussed above.
Current wording
Cost of revenues decreased by 20.2%, from $3.1 million for the three months ended June 30, 2025, to $2.4 million for the three months ended June 30, 2026. The decrease was primarily attributable to a significant decline in retail sales volume resulting from the reduction in retail stores, which led to a decrease in overall sales volume and a corresponding reduction in cost of revenues, as discussed above.
Previous wording
The following table shows our gross profit and gross margin for the three months ended December 31, 2025 and 2024:
Current wording
Gross Margin The following table shows our gross profit and gross margin for the three months ended June 30, 2026 and 2025:
Previous wording
Selling expenses primarily consist of payroll expenses, rent, utilities expenses, and advertising expenses of retail stores. Total payroll expenses were $1.4 million for the nine months ended December 31, 2025, compared to $2.5 million for the nine months ended December 31, 2024. Rent expenses were $1.1 million for the nine months ended December 31, 2025, compared to $2.2 million for the nine months ended December 31, 2024. Utilities expenses were $0.1 million for the nine months ended December 31, 2025, compared to $0.2 million for the nine months ended December 31, 2024. Advertising expenses were $36,104 for the nine months ended December 31, 2025, compared to $0.2 million for the nine months ended December 31, 2024 The decrease in these expenses was primarily due to the closures and dispositions of retail stores in the nine months ended December 31, 2025.
Current wording
Selling expenses primarily consist of payroll expenses, rent, utilities, insurance, and depreciation and amortization of retail stores. For the three months ended June 30, 2026, selling expenses decreased significantly compared to the prior year, primarily due to the reduction in retail stores and the downsizing of our operations. Payroll expenses were $0.2 million for the three months ended June 30, 2026, compared to $0.6 million for the three months ended June 30, 2025. Rent expenses were $0.1 million for the three months ended June 30, 2026, compared to $0.4 million for the three months ended June 30, 2025. Utilities expenses were $9,116 for the three months ended June 30, 2026, compared to $40,560 for the three months ended June 30, 2025. Depreciation and amortization expenses were $41,405 for the three months ended June 30, 2026, compared to $67,561 for the three months ended June 30, 2025. These reductions were partially offset by a slight increase in insurance expenses, which amounted to $0.1 million for the three months ended June 30, 2026, compared to $83,533 for the three months ended June 30, 2025.
Previous wording
Income taxes benefits was $149,830 for the three months ended December 31, 2025, decreased from income tax benefit of $428,164 for the three months ended December 31, 2024. Although the Company incurred pre-tax losses in both periods, the change was primarily because of differences in the recognition of deferred tax assets and related valuation allowance.
Current wording
Income tax provision was $0.09 million for the three months ended June 30, 2026, compared to income tax benefit of $0.05 million for the three months ended June 30, 2025. This change was primarily attributable to the recognition of Delaware franchise tax in the current period, while the prior-year benefit was primarily due to differences in the recognition of deferred tax assets and related valuation allowances.
Previous wording
Net loss was $1.9 million for the three months ended December 31, 2025, an increase of $1.2 million, or 181.0%, from net loss of $0.7 million for the three months ended December 31, 2024, which was mainly attributable to the reasons discussed above.
Current wording
Net loss was $3.9 million for the three months ended June 30, 2026, an increase of $1.9 million, or 96.1%, from net loss of $2.0 million for the three months ended June 30, 2025, which was mainly attributable to the reasons discussed above.
Previous wording
Before interest expenses, income tax, depreciation, and amortization, for the three months ended December 31, 2025, our net loss was approximately $1.4 million, an increase of approximately $0.6 million, compared to net loss of $0.8 million for the three months ended December 31, 2024, which was mainly attributable to the decrease in revenue and selling expenses and increase in general and administrative expenses described above. The ratio of EBITDA to revenue was negative 53.6% and negative 14.3% for the three months ended December 31, 2025 and 2024, respectively.
Current wording
Before interest expenses, income tax, depreciation, and amortization, for the three months ended June 30, 2026, our net loss was approximately $3.4 million, an increase of approximately $1.2 million, compared to net loss of $2.2 million for the three months ended June 30, 2025, which was mainly attributable to the decrease in revenue and selling expenses and increase in general and administrative expenses described above. The ratio of EBITDA to revenue was negative 126.3% and negative 23.9% for the three months ended June 30, 2026 and 2025, respectively.
Previous wording
As of December 31, 2025, we had cash of $0.3 million. We had working capital of $13.4 million and $1.3 million as of December 31, 2025 and March 31, 2025, respectively. We had net loss of $5.7 million and $2.0 million for the nine months ended December 31, 2025 and 2024, respectively. 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.
Current wording
As of June 30, 2026, we had cash of $60,281. We had working capital of $8.1 million and $10.0 million as of June 30, 2026 and March 31, 2025, respectively. We had net loss of $3.9 million and $2.0 million for the three months ended June 30, 2026 and 2025, respectively. During the three months ended June 30, 2026, net cash used in operating activities of the Company was approximately $190,160. As of June 30, 2026, the Company had a current portion of contractual obligation of approximately $5.4 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 $1.4 million.
Previous wording
On September 18, 2025, the Company entered into a securities purchase agreement with third-party individuals offering of (i) 687,500 shares of the common stock at the price of $16.0 per share for a total consideration of $11,000,000. During the nine months ended December 31, 2025, the Company received net proceeds of $10,996,558 from the investors.
Current wording
On September 18, 2025, the Company entered into a securities purchase agreement with third-party individuals offering of (i) 687,500 shares of the common stock at the price of $16.0 per share for a total consideration of $11,000,000. During the year ended March 31, 2026, the Company received net proceeds of $10,996,558 from the investors.
Previous wording
As of December 31, 2025, the Company had working capital of approximately $13.4 million and cash of approximately $0.3 million. The main cash outflow for the nine months ended December 31, 2025 was from net loss of $5.7 million, a decrease in accounts payable of $0.9 million, an increase in accounts receivable of $1.2 million, an increase in inventory of $1.0 million, and an increase in prepayments and other receivables of $6.4 million. The Company became default of repayment for loan with Peapack-Gladstone Bank since August 31, 2025. For the nine months ended December 31, 2025, the Company paid $582,307 on interest of the line of credit without further penalty. During the three months ended December 31, 2025, the Company paid $1,000,000, $172,693 and $117,921 on principal, interest and forbearance fee of the loan, respectively. The Company entered into forbearance and modification agreement with the bank on November 7, 2025 for extension of repayment deadline with interest rate of 12.875% to March 31, 2026. Subsequent to the execution of the forbearance agreement, the Company has received written notices from Peapack Private Bank asserting defaults and reserving the lender’s rights to pursue remedies under the applicable loan documents. These factors raise substantial doubt as to the Company’s ability to continue as a going concern. For the next 12 months from the issuance date of this report, we plan to alleviate the going concern risk through (i) equity financing to support the Company’s working capital; (ii) other available sources of financing (including debt) from banks and other financial institutions; and (iii) financial support from the Company’s related parties. The issuance and sale of additional equity would result in further dilution to our stockholders. The incurrence of indebtedness would result in increased fixed obligations and could result in operating covenants that would restrict our operations. We cannot assure you that financing will be available in amounts or on terms acceptable to us, if at all. In the event that financing sources are not available, or that we are unsuccessful in increasing our gross profit margin and reducing operating losses, we may be unable to implement our current plans for expansion, repay debt obligations or respond to competitive pressures, any of which would have a material adverse effect on our business, financial condition and results of operations and may materially adversely affect our ability to continue as a going concern. The unaudited condensed consolidated financial statements do not include any adjustments related to the recoverability and classification of recorded assets or the amounts and classification of liabilities or any other adjustments that might be necessary should we be unable to continue as a going concern.
Current wording
As of June 30, 2026, the Company had working capital of approximately $8.1 million and cash of approximately $60,281. The main cash outflow for the three months ended June 30, 2026 was from net loss of $3.9 million, an increase in accounts payable of $0.7 million, an increase in accounts receivable of $1.6 million, a decrease in inventory of $0.06 million, and a decrease in prepayments and other receivables of $0.7 million. The Company became default of repayment for loan with Peapack-Gladstone Bank since August 31, 2025. During the year ended March 31, 2026, the Company paid $1,000,000, $669,725 and $117,921 on principal, interest and forbearance fee of the loan, respectively. The Company entered into forbearance and modification agreement with the bank on November 7, 2025 for extension of repayment deadline with interest rate of 12.875% to March 31, 2026. Subsequent to the execution of the forbearance agreement, the Company has received written notices from Peapack-Gladstone Bank asserting defaults and reserving the lender’s rights to pursue remedies under the applicable loan documents. The Company entered into a forbearance and modification agreement with the bank on May 28, 2026, extending the repayment deadline to June 30, 2026, at an interest rate of 12.875%, and the agreement requires the Company to pay $123,877 in interest and a $4,000 forbearance fee in respect of the loan. As of September 1, 2026, the June 30, 2026 repayment deadline has passed and the Company remains in default under the credit facility. The Company is in ongoing negotiations with the bank for a renewal or further extension; however, there can be no assurance that such negotiations will be successful or that the bank will not exercise its remedies under the loan documents. These factors raise substantial doubt as to the Company’s ability to continue as a going concern. For the next 12 months from the issuance date of this report, we plan to alleviate the going concern risk through (i) equity financing to support the Company’s working capital; (ii) other available sources of financing (including debt) from banks and other financial institutions; and (iii) financial support from the Company’s related parties. The issuance and sale of additional equity would result in further dilution to our stockholders. The incurrence of indebtedness would result in increased fixed obligations and could result in operating covenants that would restrict our operations. We cannot assure you that financing will be available in amounts or on terms acceptable to us, if at all. In the event that financing sources are not available, or that we are unsuccessful in increasing our gross profit margin and reducing operating losses, we may be unable to implement our current plans for expansion, repay debt obligations or respond to competitive pressures, any of which would have a material adverse effect on our business, financial condition and results of operations and may materially adversely affec…
Excerpt shortened here; the source contains the full paragraph.
Previous wording
Our accounts receivable represent primarily accounts receivable from distributors that purchased our EVs and other products. As of December 31, 2025 and March 31, 2025, our accounts receivable, net of allowance for credit losses, was $1.6 million and $0.5 million, respectively. Our accounts receivable turnover period decreased from 71 days in the year ended March 31, 2025 to 60 days in the nine months ended December 31, 2025 which was mainly attributable to the implementing stricter credit policies to customers.
Current wording
Our accounts receivable represent primarily accounts receivable from distributors that purchased our EVs and other products. As of June 30, 2026 and March 31, 2026, our accounts receivable, net of allowance for expected credit losses, were $8.6 million and $7.0 million, respectively. Our accounts receivable turnover period increased from 72 days in the year ended March 31, 2026 to 256 days in the quarter ended June 30, 2026, which was mainly attributable to the relaxation of credit policies to customers.
Previous wording
Our accounts payable represent primarily accounts payable to suppliers from whom we purchased accessories and components for our products. As of December 31, 2025 and March 31, 2025, our accounts payable were $0.3 million and $1.3 million, respectively. Our accounts payable turnover period decreased to 12 days for the nine months ended December 31, 2025 from 33 days for the year ended March 31, 2025, which was primarily due to the Company’s accelerated payments to certain suppliers. The company pay invoices more promptly to ensure continued favorable terms and reliable service.
Current wording
Our accounts payable represent primarily accounts payable to suppliers from whom we purchased accessories and components for our products. As of June 30, 2026 and March 31, 2026, our accounts payable were $1.1 million and $0.4 million, respectively. Our accounts payable turnover period decreased to 28 days for the quarter ended June 30, 2026 from 29 days for the year ended March 31, 2026, which was primarily due to the Company’s accelerated payments to certain suppliers. The company pays invoices more promptly to ensure continued favorable terms and reliable service.
Previous wording
Our inventories primarily include our EVs, their accessories and spare parts. As of December 31, 2025 and March 31, 2025, our inventories, net of allowance, were $5.1 million and $6.4 million, respectively. The decrease in inventories was primarily due to those inventories held by stores classified as assets held for sale. Our inventory turnover days increased to 183 days in the nine months ended December 31, 2025, from 143 days in the year ended March 31, 2025, which was primarily due to strategic inventory buildup, allowing us to start new services.
Current wording
Our inventories primarily include our EVs, their accessories and spare parts. As of June 30, 2026 and March 31, 2026, our inventories, net of allowance, were $2.0 million and $2.3 million, respectively. Our inventory turnover days decreased to 80 days in the quarter ended June 30, 2026, from 111 days in the year ended March 31, 2026, which was primarily due to optimized inventory management and enhanced operational efficiency.
Previous wording
As of December 31, 2025 and March 31, 2025, the total outstanding amount of loan principal was $6.1 million and $7.4 million, respectively. For the nine months ended December 31, 2025 and 2024, the interest expenses on our loans amounted to $1.5 million and $0.2 million, respectively. See Note 8 to the Unaudited Condensed Consolidated Financial Statements included within this quarterly report for further information on details of our outstanding loans.
Current wording
As of June 30, 2026 and March 31, 2025, the total outstanding amount of loan principal was $5.9 million and $6.0 million, respectively. For the three months ended June 30, 2026 and 2025, the interest expenses on our loans amounted to $191,417 and $546,234, respectively. See Note 9 to the Consolidated Financial Statements included within this report for further information on details of our outstanding loans.
Previous wording
The following table summarizes our cash flow data for the nine months ended December 31, 2025 and 2024:
Current wording
The following table summarizes our cash flow data for the three months ended June 30, 2026 and 2025:
Previous wording
Net cash used in operating activities for the nine months ended December 31, 2025 was $14.0 million, which was due to net loss of $5.7 million, a decrease in accounts payable of $0.9 million, a decrease of accrued expenses and other payables of $0.8 million, an increase in accounts receivable of $1.2 million, an increase in inventory of $1.0 million, an increase in prepayments and other receivables of $6.4 million, and decrease in operating lease liabilities of $4.1 million partially offset by amortization of right-of-use assets of $4.1 million, depreciation expenses of $0.6 million, impairment loss on property and equipment of $0.6 million and inventories impairment loss of $0.6 million provided during the nine months ended December 31, 2025.
Current wording
Net cash used in operating activities for the three months ended June 30, 2025 was $5.3 million, which was due to net loss of $2.0 million, an increase in accounts receivable of $0.6 million, a decrease in accounts payable of $0.9 million, a decrease in operating lease liabilities of $0.8 million, a decrease in accrued expenses and other payables of $0.3 million, and an increase in prepayments and other receivables of $2.0 million, partially offset by amortization of right-of-use assets of $0.8 million, depreciation expenses of $0.2 million, and additional inventories reserve of $0.2 million provided during the quarter.
Previous wording
Net cash used in investing activities was $2.8 million for the nine months ended December 31, 2024, which was due to purchase of properties and equipment of $1.6 million, purchase of GO FLY App from a related party of $0.5 million, prepayment made for purchasing of software from a related party of $0.9 million, advance to a related party of $0.5 million, and partially offset by the repayment from a related party of $0.7 million.
Current wording
Net cash used in investing activities was $11,980 for the three months ended June 30, 2026, which was due to purchases of properties and equipment of $2,205 and advances to a related party of $9,775.
Previous wording
Net cash used in investing activities was $2.3 million for the nine months ended December 31, 2025, which was due to prepayment for software development of $1.8 million, purchase of equipment of $0.1 million, advance to a related party of $0.2 million, and cash released from disposal of entities of $0.2 million.
Current wording
Net cash used in investing activities was $0.4 million for the three months ended June 30, 2025, which was due to purchase of properties and equipment of $0.1 million, advance to a related party of $0.2 million, and cash released from disposal of entities of $0.1 million.
Previous wording
Net cash provided by financing activities was $15.7 million for the nine months ended December 31, 2025, which consisted of net proceeds from our follow-on public offering and private placement offering of $17.4 million, and loan proceeds of $1.9 million, partially offset by repayments of loans of $3.1 million and payment of public offering costs of $0.5 million.
Current wording
Net cash provided by financing activities was $7.1 million for the three months ended June 30, 2025, which consisted of net proceeds from our follow-on public offering of $6.4 million, and loan proceeds of $1.9 million, partially offset by repayments of loans of $0.6 million and payment of public offering costs of $0.5 million.
Previous wording
Our exposure to interest rate risk primarily relates to the interest expenses on our short-term and long-term loan payables. Our short-term and long-term loan payables bear interests at fixed rates. We have not been exposed to, nor do we anticipate being exposed to, material risks due to changes in market interest rates. However, our future interest expenses may exceed expectations due to changes in market interest rates. If we were to renew these short-term and long-term loan payables, we might be subject to interest rate risk.
Current wording
Our exposure to interest rate risk primarily relates to the interest expenses on our short-term and long-term loan payables. Our short-term and long-term loan payables bear interest at fixed rates. We have not been exposed to, nor do we anticipate being exposed to, material risks due to changes in market interest rates. However, our future interest expenses may exceed expectations due to changes in market interest rates. If we were to renew these short-term and long-term loan payables, we might be subject to interest rate risk.
Previous wording
An accounting estimate is considered critical if it requires to be made based on assumptions about matters that are highly uncertain at the time such estimate is made, and if different accounting estimates that reasonably could have been used, or changes in the accounting estimate that are reasonably likely to occur periodically, could materially impact the unaudited condensed consolidated financial statements.
Current wording
An accounting estimate is considered critical if it requires assumptions to be made based on assumptions about matters that are highly uncertain at the time such estimate is made, and if different accounting estimates that reasonably could have been used, or changes in the accounting estimate that are reasonably likely to occur periodically, could materially impact the consolidated financial statements.
Previous wording
We prepare our unaudited condensed consolidated financial statements in conformity with U.S. GAAP, which requires us to make estimates and assumptions. We continually evaluate these estimates and assumptions based on the most recently available information, our own historical experiences and various other assumptions that we believe to be reasonable under the circumstances. Since the use of estimates is an integral component of the financial reporting process, actual results could differ from our expectations as a result of changes in our estimates. Some of our accounting policies require a higher degree of judgment than others in their application and require us to make significant accounting estimates.
Current wording
We prepare our consolidated financial statements in conformity with U.S. GAAP, which requires us to make estimates and assumptions. We continually evaluate these estimates and assumptions based on the most recently available information, our own historical experiences and various other assumptions that we believe to be reasonable under the circumstances. Since the use of estimates is an integral component of the financial reporting process, actual results could differ from our expectations as a result of changes in our estimates. Some of our accounting policies require a higher degree of judgment than others in their application and require us to make significant accounting estimates.
Previous wording
Our estimated allowance for the inventory obsolescence reserves is based on our assessment of realization of inventory. Adjustments are recorded to write down the cost of inventories to the estimated net realizable value due to slow-moving merchandise and obsolescence, which is dependent upon factors such as inventory aging, historical and forecasted consumer demand, and market conditions that impact pricing. As of December 31, 2025 and March 31, 2025, we recorded inventory reserves balance of $1,004,511 and $1,107,569, respectively.
Current wording
Our estimated allowance for the inventory obsolescence reserves is based on our assessment of realization of inventory. Adjustments are recorded to write down the cost of inventories to the estimated net realizable value due to slow-moving merchandise and obsolescence, which is dependent upon factors such as inventory aging, historical and forecasted consumer demand, and market conditions that impact pricing. As of June 30, 2026 and March 31, 2026, we recorded inventory reserves balance of $1,003,931 and $859,193, respectively.
Rearranged current paragraphs (1)
Current report — wording carried from elsewhere
On May 22, 2026, the lead plaintiff in the Class Action filed an Amended Complaint. The Company’s response to the Amended Complaint is due August 14, 2026. Given the preliminary stage of the lawsuit and the inherent uncertainties of litigation, the Company cannot determine with certainty the outcome of the Class Action at this time.
Rearranged previous paragraphs (4)
Previous report — wording carried elsewhere
The following table shows our gross profit and gross margin for the nine months ended December 31, 2025 and 2024:
Previous report — wording carried elsewhere
The following table sets forth the components of our total operating expenses for the nine months ended December 31, 2025 and 2024:
Previous report — wording carried elsewhere
The following table sets forth the components of our EBITDA for the nine months ended December 31, 2025 and 2024:
Previous report — wording carried elsewhere
Net cash provided by financing activities was $12.2 million for the nine months ended December 31, 2024, which consisted of net proceeds of the IPO of $9.2 million, and loan proceeds of $7.1 million, partially offset by repayments of loans of $3.6 million and payment of IPO costs of $0.3 million.