Management's Discussion and Analysis of Financial Condition and Results of Operations

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".

Overview

We are an EV company that is principally engaged in designing, installing, selling and renting E-motorcycles, E-bikes, E-scooters and related accessories under the brand "Fly E-Bike." At Fly E-Bike, our commitment is to encourage people to incorporate eco-friendly transportation into their active lifestyles, ultimately contributing towards building a more environmentally friendly future.

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 July 23, 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.

We have a diversified product portfolio that is designed to satisfy the various demands of our customers and address different urban travel scenarios. Additionally, we aim to refresh our product offerings continuously to align with evolving market trends. As of July 23, 2026, we offered 27 E-motorcycle products, 37 E-bike products and 38 E-scooter products.

We also operate a rental program to meet the increasing market demand for safe, UL-certified e-bikes in compliance with New York State regulations. The rental service, now available in New York City, and Los Angeles via the Go Fly rental service mobile app and select Fly E-Bike stores, provides users with a flexible and affordable e-bike rental option.

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 March 31, 2026, 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.

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 year ended March 31, 2026, we assembled 2,714 E-motorcycles, 6,722 E-bikes and 1,830 E-scooters at the same facility.

Recent Developments

SEC Investigation

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.

Federal securities class action instituted on September 8, 2025

On September 8, 2025, a federal securities class action was filed in the United States District Court, Eastern District of New York, by plaintiff Dino Kurt, individually and on behalf of all others similarly situated, against defendants, the Company, chief executive officer (the "CEO") Zhou Ou, and former chief financial officer (the "CFO") Shiwen Feng (the "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 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.

Any potential loss associated with the action is not reasonably estimable at this early stage. The Company did not accrue any material loss contingencies in this respect as of March 31, 2026.

Shareholder derivative actions instituted on October 28, 2025 and November 17, 2025

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. The Complaint seeks $2,000,000 for each instance an allegedly counterfeit UL mark was used and asserts claims for federal trademark infringement and counterfeiting, unfair competition and false designations of the origin and false and misleading representations, common law unfair competition, common law unjust enrichment, and unlawful deceptive acts and practices.

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 March 31, 2026, the Company paid $1,000,000 to UL.

The Settlement Agreement fully resolves all pending litigation between UL and the Company, and each party fully releases the other party from any and all past or present claims, demands, causes of action, obligations, damages, liabilities, expenses, or compensation of whatever kind or nature, that were or could have been asserted in connection with the Company's sales of products with a UL Mark which were not tested and certified by UL.

2025 Reverse Stock Split

On March 10, 2025, the Company held a special meeting of stockholders. At the special meeting, the stockholders approved a proposal to amend the Company's amended and restated certificate of incorporation to effect a reverse stock split of the Company's issued and outstanding shares of common stock, par value $0.01 per share, by a ratio in the range of 1-for-2 to 1-for-15, with such ratio to be determined in the discretion of the board of directors of the Company and with such action to be effected at such time and date, if at all, as determined by the board of directors within one year after the conclusion of the special meeting.

On June 16, 2025, the board of directors approved a one-for-five (1:5) reverse stock split of the Company's issued and outstanding shares of common stock (the "2025 First Reverse Stock Split"). On July 2, 2025, the Company filed with the Secretary of State of the State of Delaware the Second Certificate of Amendment to its Certificate of Incorporation (the "Certificate of Amendment") to effect the 2025 First Reverse Stock Split. The 2025 First Reverse Stock Split became effective as of 5:00 p.m., Eastern Time, on July 3, 2025, and the Company's common stock began trading on the Nasdaq Stock Market on a split-adjusted basis on July 7, 2025.

After the 2025 First Reverse Stock Split, every five (5) shares of the Company's issued and outstanding common stock have been automatically converted into one share of common stock, without any change in the par value per share. In addition, (i) a proportionate adjustment has been made to the per share exercise price and the number of shares issuable upon the exercise of all outstanding warrants to purchase shares of common stock, and (ii) the number of shares reserved for issuance pursuant to the Company's stock incentive plan has been reduced proportionately. Any fraction of a share of common stock created as a result of the 2025 First Reverse Stock Split was rounded up to the nearest whole share. The Company's common stock continues to trade on the Nasdaq Capital Market under the symbol "FLYE."

On September 15, 2025, the Company planned to hold a special meeting of stockholders, but adjourned to October 13, 2025 in order to achieve a quorum (the "Special Meeting"). At the special meeting, the stockholder approved a proposal to amend the Company's amended and restated certificate of incorporation to effect a reverse stock split of the Company's issued and outstanding shares of common stock, par value $0.01 per share, , by a ratio in the range of 1-for-2 to 1-for-20, with such ratio to be determined in the discretion of the board of directors of the Company and with such action to be effected at such time and date, if at all, as determined by the board of directors within one year after the conclusion of the special meeting.

On October 13, 2025, the board of directors approved a one-for-twenty (1:20) reverse stock split of the Company's issued and outstanding shares of common stock (the "2025 Second Reverse Stock Split"). On October 23, 2025, the Company filed with the Secretary of State of the State of Delaware the Second Certificate of Amendment to its Certificate of Incorporation (the "Certificate of Amendment") to effect the 2025 Second Reverse Stock Split. The 2025 Second Reverse Stock Split became effective on November 4, 2025, and the Company's common stock began trading on the Nasdaq Stock Market on a split-adjusted basis on November 4, 2025.

After the 2025 Second Reverse Stock Split, every twenty (20) shares of the Company's issued and outstanding common stock have been automatically converted into one share of common stock, without any change in the par value per share. In addition, (i) a proportionate adjustment has been made to the per share exercise price and the number of shares issuable upon the exercise of all outstanding warrants to purchase shares of common stock, and (ii) the number of shares reserved for issuance pursuant to the Company's stock incentive plan has been reduced proportionately. Any fraction of a share of common stock created as a result of the 2025 Second Reverse Stock Split was rounded up to the nearest whole share. The Company's common stock continues to trade on the Nasdaq Capital Market under the symbol "FLYE."

Unless otherwise noted, the share and per share information in this report reflects the two 2025 Reverse Stock Split.

Registered Direct Offering and Private Placement Offering

On June 2, 2025, we closed our registered direct offering of an aggregate of (i) 285,956 shares of our common stock, par value $0.01 and (ii) 571,912 warrants (the "Warrants") to purchase 571,912 shares of common stock at a combined purchase price per share and accompanying Warrants of $24.28, resulting in net proceeds to us of $6.24 million after deducting placement agent fees and offering expenses. All of the shares (including shares underlying the Warrants) were registered under the Securities Act pursuant to a registration statement on Form S-1, as amended (File No. 333-286678), which was declared effective by the Securities and Exchange Commission on May 15, 2025. American Trust Investment Services, Inc. ("ATIS") acted as the exclusive placement agent for the offering. We paid ATIS aggregate commissions of $219,430 and incurred offering expenses of $178,625.

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. 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.

Disposal of Certain Subsidiaries

During the year ended March 31, 2026, 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. As part of this plan, as of March 31, 2026, the Company had sold an aggregate of 28 subsidiaries to third-party individuals in multiple transactions, for total cash consideration of approximately $2.9 million, of which approximately $0.1 million had been received. Between April 2025 and March 2026, the Company further sold 100% of its equity interests in 24 subsidiaries to third-party buyers for total cash consideration of approximately $2.3 million, with no contingent payments or adjustments. As of July 23, 2026, the Company had not received any remaining consideration under these transactions. (See Note - 15 - DISPOSAL OF SUBSIDIARIES in the accompanying consolidated financial statements for details).

Key Factors that Affect Operating Results

Our results of operations and financial condition are affected by the general factors driving the U.S.'s electric two-wheeled vehicles industry, including, among others, the U.S.'s overall economic growth, the increase in per capita disposable income, the expansion of urbanization, the growth in consumer spending and consumption upgrades, the competitive environment, governmental policies and initiatives towards electric two-wheeled vehicles, as well as the general factors affecting the electric two-wheeled vehicles industry in overseas markets. Unfavorable changes in any of these general industry conditions could negatively affect demand for our products and materially and adversely affect our results of operations.

While our business is influenced by these general factors, our results of operations are more directly affected by company specific factors, including the following major factors:

New Customers

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 July 23, 2026, we currently operate 4 retail stores in the U.S. During the year ended March 31, 2026, 23 retail stores in the U.S. and 1 retail store in Canada were sold to streamline the Company's corporate structure and reduce 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 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.

With respect to branding and marketing, we plan to raise brand awareness through both traditional and social media channels and connect with customers through physical touchpoints such as our retail stores and distributors. We believe that effective marketing can boost our brand awareness and contribute to increased sales. In addition, we intend to provide superior customer experience through our trained technicians who will provide after-sale maintenance and repair services at our retail stores. An inability to attract new customers would substantially impact our ability to grow revenue or improve our financial results.

Product Sales Price and Volume

For the year ended March 31, 2026, our net revenues decreased by 25.0% to $19.1 million, compared to $25.4 million for the same period in 2025, which was primarily driven by a decrease in total units sold and reductions in selling prices to reduce aged inventory for the year ended March 31, 2026.

We currently have a streamlined product portfolio consisting of three categories, with multiple models and specifications for each category. Our ability to increase the sales price and volume will depend on our ability to continually enhance our brand to attract customers, as well as our ability to successfully operate our retail stores and expand our sales network globally. However, our product sales price is influenced by various factors such as market demand and competitors' pricing, and although we continue working on product improvements and retail expansion, there can be no guarantee of sustained sales price increase or improved sales volume. If our prices remain stable, increasing sales volume would become important for continued revenue growth, and failure to do so would significantly impact our ability to grow revenue or improve our financial results.

Employees

Our payroll expenses were $2.5 million for the year ended March 31, 2026, compared to $4.7 million for the year ended March 31, 2025. During the year ended March 31, 2026, the Company closed 8 stores and sold 24 stores, and 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.

Vendor and Supply Management

During the year ended March 31, 2026, we worked with two principal vendors, Depcl Corp. and Xiamen Innolabs Technology Co., Ltd, each of which respectively supplied approximately 70.3% and 19.2% of the accessories and components used in all our products.

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.

Market Trends, Competition and Tariff

We operate in a rapidly growing EV market with a special focus on E-motorcycles, E-bikes and E-scooters. However, increased competition may pressure prices and margins, reducing sales volume, revenues, and sales margin for us. Additionally, marketing and advertising costs may rise as we differentiate ourselves and maintain our market position. Moreover, competitors may impact customer acquisition and retention, satisfaction and loyalty. While we believe we maintain competitive advantages in several areas, including brand, product design and quality, smart features, omnichannel retail model, customer satisfaction and loyalty, we must continuously innovate, invest in research and development and marketing to maintain our competitive edge and unique selling points. Recently, the U.S. government issued executive orders imposing tariffs on products from key international suppliers, citing national security and public health concerns. These tariffs are expected to impact a wide range of imported goods, including components used in e-bike and e-scooter manufacturing. While some agreements have temporarily delayed their implementation, ongoing trade tensions could lead to supply chain disruptions, increased costs, and pricing pressures within the industry. Tariffs on e-bikes and e-scooters or their components would likely increase prices for consumers, and create challenges for U.S. manufacturers and retailers. While there could be long-term opportunities for domestic production, the immediate impact would likely be negative for the growing e-bike and e-scooter market.

Regulatory Landscape

We operate in an industry that is subject to extensive environmental, safety and other laws and regulations, which include products safety and testing, as well as battery safety and disposal. These requirements create additional costs and possible production delay in connection with the testing and manufacturing of our products. We also benefit from environmental regulations in our target markets which include economic incentives to purchasers of EVs and tax credits for EV manufacturers. The Governor of New York State signed a legislative package in July 2024 aimed at raising awareness about the safe use of e-bikes and lithium-ion battery products, prohibiting the sale of non-compliant batteries, requiring safety protocols and training for first responders, mandating operating manuals for e-bike retailers, and improving accident reporting and registration processes for e-bikes and mopeds.

How to Assess Our Performance

In assessing performance, management considers a variety of performance and financial measures, including principal growth in net sales, gross profit, gross margin, selling, general and administrative expenses and EBITDA. The key measures that we use to evaluate the performance of our business are set forth below.

Net Sales

We generate revenue from sales of our EVs, their accessories and spare parts, and provision of repair services at our retail stores. Our net sales comprise gross sales net of discounts and return allowances. We do not record sales taxes as a component of retail revenues as we consider it a pass-through conduit for collecting and remitting sales taxes. Return allowances, which reduce net revenues, are estimated based on historical experience.

E-bikes, E-motorcycles and E-scooters sales. We generate a substantial majority of our revenues from sales of E-bikes, E-motorcycles and E-scooters directly to customers through our online store and retail stores, and to our distributors.

Accessories and spare parts sales. We also sell accessories and spare parts for our EVs, such as rear storage boxes and front baskets. In addition, we offer Fly E-Bike branded accessories and general merchandise, such as decorative car plates, key chains and apparel.

Service revenues. We also provide repair services at our retail stores for a fee. 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.

Cost of Sales

Cost of sales includes product costs, warehouse rent expenses, payroll costs, depreciation costs, inventory reserves, warranty costs, and logistic costs. The logistic costs incurred to receive products from our vendors are included in our inventory and recognized as cost of sales upon sale of products to our customers.

Gross Profit and Gross Margin

We calculate gross profit as net sales less cost of revenue. Gross margin represents gross profit as a percentage of net sales.

Selling, General and Administrative Expenses

Selling, general and administrative expenses primarily consist of retail operational expenses, salaries and benefits costs, marketing, advertising, and corporate overhead.

Marketing costs primarily consist of advertising and payroll and related expenses for personnel engaged in marketing and selling activities.

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.

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.

Non-GAAP Financial Measures

To supplement our financial information presented in accordance with the generally accepted accounting principles in the United States (the "U.S. GAAP"), management periodically uses certain "non-GAAP financial measures," as such term is defined under the rules of the SEC, to clarify and enhance understanding of past performance and prospects for the future. Generally, a non-GAAP financial measure is a numerical measure of a company's operating performance, financial position or cash flows that excludes or includes amounts that are included in or excluded from the most directly comparable measure calculated and presented in accordance with U.S. GAAP. For example, non-GAAP measures may exclude the impact of certain items such as acquisitions, divestitures, gains, losses and impairments, or items outside of management's control. Management believes that the following non-GAAP financial measure provides investors and analysts useful insight into our financial position and operating performance. Any non-GAAP measure provided should be viewed in addition to, and not as an alternative to, the most directly comparable measure determined in accordance with U.S. GAAP. Further, the calculation of these non-GAAP financial measures may differ from the calculation of similarly titled financial measures presented by other companies and therefore may not be comparable among companies.

We use EBITDA (earnings before interest, taxes, depreciation, and amortization) to evaluate our operating performance. We believe EBITDA provides additional insight into our underlying, ongoing operating performance and facilitates year-to-year comparisons by excluding the earnings impact of interest, tax, depreciation and amortization and that presenting EBITDA is more representative of our operational performance and may be more useful for investors.

We reconcile our non-GAAP financial measure to our net income, which is our most directly comparable financial measure calculated and presented in accordance with U.S. GAAP. EBITDA includes adjustments for provision for income taxes, as applicable, interest income and expense, depreciation, and amortization. EBITDA does not represent and should not be considered an alternative to net income as determined by U.S. GAAP, and our calculations thereof may not be comparable to those reported by other companies. We believe EBITDA is an important measure of operating performance and provides useful information to investors because it highlights trends in our business that may not otherwise be apparent when relying solely on U.S. GAAP measures and because it eliminates items that have less bearing on our operating performance. EBITDA, as presented herein, is a supplemental measure of our performance that is not required by, or presented in accordance with, U.S. GAAP. We use non-GAAP financial measures as supplements to our U.S. GAAP results in order to provide a more complete understanding of the factors and trends affecting our business. EBITDA is a measure of operating performance that is not defined by U.S. GAAP and should not be considered a substitute for net (loss) income as determined in accordance with U.S. GAAP.

EBITDA along with a reconciliation to net income is shown within the Results of Operations below.

Results of Operations for the Years Ended March 31, 2026 and 2025

The following table sets forth the components of our results of operations for the years ended March 31, 2026 and 2025:

		For the Years Ended March 31,
														Percentage
		2026				2025				Change				Change
Revenues, Net		$	19,063,357			$	25,427,163			$	(6,363,806	)			(25.0	)%
Cost of Revenues			14,404,283				14,976,266				(571,983	)			(3.8	)%
Gross Profit			4,659,074				10,450,897				(5,791,823	)			(55.4	)%
Operating Expenses
Selling Expenses			3,478,740				7,403,374				(3,924,634	)			(53.0	)%
General and Administrative Expenses			7,618,603				7,607,489				11,114				0.1	%
Total Operating Expenses			11,097,343				15,010,863				(3,913,520	)			(26.1	)%
Loss from Operations			(6,438,269	)			(4,559,966	)			(1,878,303	)			41.2	%
Other Expenses, Net			(684,775	)			10,588				(695,363	)			(6,567.5	)%
Interest Expense, Net			(1,806,085	)			(405,615	)			(1,400,470	)			345.3	%
Income Taxes Benefit			(328,679	)			(336,166	)			7,487				(2.2	)%
Net Loss		$	(9,257,808	)		$	(5,291,159	)		$	(3,966,649	)			75.0	%

Revenues

		For the Years Ended March 31,
														Percentage
		2026				2025				Change				Change
Sales - Retail		$	6,922,972			$	21,725,817			$	(14,802,844	)			(68.1	)%
Sales - Wholesale			11,560,343				3,529,479				8,030,863				227.5	%
Sales - Rental services			580,042				171,867				408,175				237.5	%
Total Net Revenues		$	19,063,357			$	25,427,163			$	(6,363,806	)			(25.0	)%

For the year ended March 31, 2026, our net revenues decreased by 25.0% to $19.1 million, compared to $25.4 million for the same period in 2025. The decrease in our net revenues was primarily driven by a decrease in sales volume of 16,664 units, from 58,765 units for the year ended March 31, 2025, to 42,101 units for the year ended March 31, 2026, and a decrease in selling prices in order to reduce aged inventory.

Our retail sales revenue decreased by $14.8 million, or 68.1%, from $21.7 million for the year ended March 31, 2025 to $6.9 million for the year ended March 31, 2026. Our wholesale revenue increased by $8.0 million, or 227.5%, from $3.5 million for the year ended March 31, 2025 to $11.6 million for the year ended March 31, 2026. The decrease in retail sales revenue was primarily attributable to softened consumer demand for E-bicycles and E-scooters, partly driven by safety concerns stemming from lithium-ion battery-related incidents in New York during the period, which prompted some customers to reconsider their purchases and explore alternative transportation options. In addition, the decline was partly due to the closure and disposal of certain retail stores during the year ended March 31, 2026. The increase in wholesale revenue was mainly driven by continued purchases from entities that were disposed of during the same period, as these stores continued to source products from us following the disposals.

Cost of Revenues

Cost of revenues decreased by 3.8%, from $15.0 million for the year ended March 31, 2025, to $14.4 million for the year ended March 31, 2026. The decrease was primarily attributable to the reduction in sales volume resulting from the decrease in the number of retail stores during the year, as discussed above.

Gross Margin The following table shows our gross profit and gross margin for the year ended March 31, 2025 and 2026:

		For the Years Ended March 31,
														Percentage
		2026				2025				Change				Change
Gross Profit		$	4,659,074			$	10,450,897			$	(5,791,823	)			(55.4	)%
Gross Margin			24.4	%			41.1	%

Gross profit for the years ended March 31, 2026 and 2025 was $4.7 million and $10.5 million, respectively. Gross margin was 24.4% and 41.1% for the years ended March 31, 2026 and 2025 respectively. The decrease in gross margin was primarily attributable to lower average selling prices of our EVs implemented to clear aged inventory and an increase in procurement costs driven by upstream price movements, as well as a shift in sales channel mix following the disposal of certain retail stores, which resulted in a higher proportion of wholesale sales and a lower proportion of retail sales - the latter of which typically generates higher margins. These negative factors were partially offset by increased rental services revenue with higher margins than our other businesses, though its contribution remained relatively small. As a result, gross margin decreased by 16.7 percentage points from 41.1% to 24.4% for the year ended March 31, 2026.

Total Operating Expenses

The following table sets forth the components of our total operating expenses for the years ended March 31, 2026 and 2025:

		For the Years Ended March 31,
														Percentage
		2026				2025				Change				Change
Selling Expenses		$	3,478,740			$	7,403,374			$	(3,924,634	)			(53.0	)%
General and Administrative Expenses			7,618,603				7,607,489				11,114				0.1	%
Total Operating Expenses		$	11,097,343			$	15,010,863			$	(3,913,520	)			(26.1	)%
Percentage of Revenue			58.2	%			59.0	%

Total operating expenses were $11.1 million for the year ended March 31, 2026, a decrease of $3.9 million, or 26.1%, compared to $15.0 million for the years ended March 31, 2025. The decrease in operating expenses was attributable to the combined effect of (i) reductions in payroll expenses, rent expenses, meals and entertainment expenses, and insurance expenses as a result of the reduction in retail stores and the downsizing of our business operations, partially offset by (ii) increases in warehouse maintenance costs, impairment loss on equipment, and inventory clearance losses, as discussed below.

Selling Expenses

Selling expenses primarily consist of payroll expenses, rent, utilities, and advertising expenses of retail stores. For the year ended March 31, 2026, selling expenses decreased significantly compared to the prior year, primarily due to the closures and dispositions of retail stores during the year, which reduced the scale of our operations and resulted in lower associated expenses. Payroll expenses were $1.7 million for the year ended March 31, 2026, compared to $3.3 million for the year ended March 31, 2025. Rent expenses were $1.1 million for the year ended March 31, 2026, compared to $2.9 million for the year ended March 31, 2025. Utilities expenses were $0.1 million for the year ended March 31, 2026, compared to $0.2 million for the year ended March 31, 2025. Advertising expenses were $36,604 for the year ended March 31, 2026, compared to $0.3 million for the year ended March 31, 2025.

General and Administrative Expenses

General and administrative expenses increased during the year ended March 31, 2026 compared to the prior year, primarily due to increases in inventory clearance losses, impairment loss on property and equipment, and repair and maintenance expenses, partially offset by decreases in payroll expenses, meals, entertainment and travel expenses, and insurance expenses. Inventory clearance losses increased to $1.9 million for the year ended March 31, 2026 from nil for the year ended March 31, 2025, primarily attributable to losses incurred from inventory clearance and count processes in connection with the closures and dispositions of retail stores; impairment loss on property and equipment increased to $0.6 million for the year ended March 31, 2026 from nil for the year ended March 31, 2025, primarily due to impairment charges recorded for assets that were idle or no longer expected to generate economic benefits. Payroll expenses decreased to $0.5 million for the year ended March 31, 2026 from $1.5 million for the year ended March 31, 2025, primarily due to headcount reductions in operations and accounting departments; meals, entertainment and travel expenses decreased to $0.3 million for the year ended March 31, 2026 from $0.5 million for the year ended March 31, 2025, primarily as a result of reduced business entertainment and travel activities following the workforce reduction; and insurance expenses decreased to $0.3 million for the year ended March 31, 2026 from $1.1 million for the year ended March 31, 2025, primarily due to lower general insurance coverage purchased for closed and disposed retail stores.

Other (Expenses)/ Income, net

Other expenses, net were $0.7 million for the year ended March 31, 2026, compared to other income, net of $10,588 for the year ended March 31, 2025. The change was primarily attributable to the net impact of losses and gains arising from the closure and disposition of retail stores during the year, with losses from store closures and asset disposals partially offset by gains on certain dispositions, resulting in a net expense.

Interest expenses, net

Interest expenses, net were $1.8 million for the year ended March 31, 2026, an increase of $1.4 million from $0.4 million for the year ended March 31, 2025. This increase was primarily attributable to interest expenses incurred on new borrowings from financial institutions to fund our business operations, as well as extension fees paid for certain loan renewals and the higher average annual interest rates following such renewals.

Income Tax Provisions

Income tax provision was $0.33 million for the year ended March 31, 2026, a change from $0.34 million income tax provision for the year ended March 31, 2025. This change was primarily due to our pre-tax loss for the year ended March 31, 2026.

Net Loss

Net loss was $9.3 million for the year ended March 31, 2026, an increase of $4.0 million, or 75.0%, from net loss of $5.3 million for the year ended March 31, 2025, which was mainly attributable to the reasons discussed above.

EBITDA

The following table sets forth the components of our EBITDA for the years ended March 31, 2026 and 2025:

		For the Years Ended March 31,
														Percentage
		2026				2025				Change				Change
Net Loss		$	(9,257,808	)		$	(5,291,159	)		$	(3,966,649	)			75.0	%
Income Tax Provision			328,679				336,166				(7,487	)			(2.2	)%
Depreciation			719,383				631,280				88,103				14.0	%
Interest Expenses			1,806,085				405,615				1,400,470				345.3	%
Amortization			110,149				65,091				45,058				69.2	%
EBITDA		$	(6,293,512	)		$	(3,853,007	)		$	(2,440,505	)			63.3	%
Percentage of Revenue			(33.0	)%			(15.2	)%							(17.8	)%

Before interest expenses, income tax, depreciation, and amortization, for the year ended March 31, 2026, our net loss was approximately $6.3 million, an increase of approximately $2.4 million, compared to net loss of $3.9 million for the year ended March 31, 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 33.0% and negative 15.2% for the years ended March 31, 2026 and 2025, respectively.

Liquidity and Capital Resources

As of March 31, 2026, we had cash of $0.3 million. We had working capital of $10.0 million and $1.3 million as of March 31, 2026 and 2025, respectively. We had net loss of $9.3 million and $5.3 million for the years ended March 31, 2026 and 2025, respectively. During the year ended March 31, 2026, net cash used in operating activities of the Company was approximately $13.8 million. As of March 31, 2026, 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.

We have funded our working capital and other capital requirements in the past primarily by equity contributions from our stockholders and net proceeds received from IPO and equity financing, cash flow from operations, and bank loans. Our ability to repay our current obligation will depend on the future realization of our current assets. Management has considered the historical experience, the economy, trends in the retail industry, the expected collectability of the accounts receivable and the realization of the inventories as of March 31, 2026. Our ability to continue to fund working capital and other capital requirements may be affected by general economic, competitive and other factors, many of which are outside of our control.

On June 4, 2025, the Company issued 285,956 shares of common stock, at a price of $24.28 per share in its follow-on public offering for gross proceeds of $6.9 million, prior to deducting the placement agent's fees and offering expenses payable by the Company.

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.

As of March 31, 2026, the Company had working capital of approximately $10.0 million and cash of approximately $0.3 million. The main cash outflow for the year ended March 31, 2026 was from net loss of $9.3 million, a decrease in accounts payable of $0.8 million, an increase in accounts receivable of $6.8 million, a decrease in inventory of $1.9 million, and a decrease in prepayments and other receivables of $0.9 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 Private 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 July 23, 2026, the Company is in ongoing negotiations with the bank for a renewal. 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 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.

Our accounts receivable represent primarily accounts receivable from distributors that purchased our EVs and other products. As of March 31, 2026 and 2025, our accounts receivable, net of allowance for credit losses, was $7.0 million and $0.5 million, respectively. Our accounts receivable turnover period increased from 71 days in the year ended March 31, 2025 to 72 days in the year ended March 31, 2026 which was mainly attributable to the relaxation of credit policies to customers.

Our accounts payable represent primarily accounts payable to suppliers from whom we purchased accessories and components for our products. As of March 31, 2026 and 2025, our accounts payable were $0.4 million and $1.3 million, respectively. Our accounts payable turnover period decreased to 29 days for the year ended March 31, 2026 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.

Our prepayments and other receivables primarily represent prepayments to vendors and other service providers. These prepayments and receivables increased by $3.3 million, from $3.7 million as of March 31, 2025, to $7.0 million as of March 31, 2026. This significant increase is mainly due to receivables arising from the disposal of certain subsidiaries.

Our inventories primarily include our EVs, their accessories and spare parts. As of March 31, 2026 and 2025, our inventories, net of allowance, were $2.3 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 decreased to 111 days in the year ended March 31, 2026, from 143 days in the year ended March 31, 2025, which was primarily due to optimized inventory management and enhanced operational efficiency.

As of March 31, 2026 and 2025, the total outstanding amount of loan principal was $6.0 million and $7.4 million, respectively. For the years ended March 31, 2026 and 2025, the interest expenses on our loans amounted to $1.8 million and $0.4 million, respectively. See Note 9 to the Consolidated Financial Statements included within this report for further information on details of our outstanding loans.

The following table summarizes our cash flow data for the years ended March 31, 2026 and 2025:

		For the Years Ended
		March 31,
		2026				2025
Net Cash Used in Operating Activities		$	(13,849,914	)		$	(10,059,466	)
Net Cash Used in Investing Activities			(2,485,792	)			(2,901,272	)
Net Cash Provided by Financing Activities			15,685,480				12,486,104
Net changes in cash including cash classified within current assets held for sale		$	(650,226	)		$	(474,634	)

Operating Activities

Net cash used in operating activities for the year ended March 31, 2026 was $13.8 million, which was due to net loss of $9.3 million, amortization of right-of-use assets of $1.9 million, impairment loss on property, and equipment of 0.6 million, depreciation expense of 0.7 million, amortization expense of 0.1 million, inventory reserve of 0.5 million, a decrease in inventories of $1.9 million, a decrease in prepayments and other receivables of $0.6 million, a decrease in accounts payable of $0.8 million, a decrease in accrued expenses and other payables of $0.5 million, and a decrease in operating lease liabilities of $1.7 million, partially offset by gain on disposal of subsidiaries of $1.6 million, an increase in accounts receivable of $6.8 million, and an increase in taxes payable of $0.1 million.

Net cash used in operating activities for the year ended March 31, 2025 was $10.1 million, which was due to net loss of $5.3 million, a decrease in tax payable of $1.5 million, an increase in inventories of $2.7 million, a decrease in operating lease liabilities of $4.8 million, and an increase in prepayments and other receivables of $2.7 million, partially offset by amortization of right-of-use assets of $5.1 million, an increase in accrued expenses and other payables of $0.5 million, and a decrease in accounts receivables-related parties of $0.2 million.

Investing Activities

Net cash used in investing activities was $2.5 million for the year ended March 31, 2026, which was due to prepayment for software development of $1.8 million, advance to a related party of $0.2 million, and cash released from disposal of entities of $0.4 million.

Net cash used in investing activities was $2.9 million for the year ended March 31, 2025, which was due to purchase of properties and equipment of $1.6 million, purchase of GO FLY App and computer hardware and software from a related party of $1.4 million, and the advance to a related party of $0.5 million, and partially offset by the repayment from a related party of $0.7 million.

Financing Activities

Net cash provided by financing activities was $15.7 million for the year ended March 31, 2026, which consisted of net proceeds from our follow-on public offering and private placement offering of $17.4 million, and loan proceeds of $2.0 million, partially offset by repayments of loans of $3.1 million and payment of public offering costs of $0.5 million.

Net cash provided by financing activities was $12.5 million for the year ended March 31, 2025, which consisted of net proceeds from the IPO of $9.2 million, and loan proceeds of $7.4 million, partially offset by repayments of loans of $3.7 million and payment of IPO costs of $0.3 million.

Commitments and Contractual Obligations

The following table presents our material contractual obligations as of March 31, 2026:

						Less than
Contractual Obligations		Total				1 year				1 - 2 years				3 - 5 years				Thereafter
Operating Lease Obligations and Others		$	4,809,665			$	1,507,340			$	1,663,771			$	1,638,554			$	-
Loan Payables			5,975,480				4,029,893				40,631				32,989				1,871,967
Total Contractual Obligations		$	10,785,145			$	5,537,233			$	1,704,402			$	1,671,543			$	1,871,967

Off-Balance Sheet Arrangements

We have not entered into any transactions, agreements or other contractual arrangements that would result in off-balance sheet liabilities.

Quantitative and Qualitative Disclosures about Market Risk

Foreign Exchange Risk

A substantial majority of all of our revenues and expenses are denominated in U.S. dollars. We do not believe that we currently have any significant direct foreign exchange risk and have not used any derivative financial instruments to hedge exposure to such risk. In addition, as our business and operation expand in European and other overseas markets in the future, we may be exposed to increased foreign exchange risks for other currencies.

Interest Rate Risk

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.

Critical Accounting Estimates

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 consolidated financial statements.

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.

Estimated Allowance for Inventory Obsolescence Reserve

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 March 31, 2026 and 2025, we recorded inventory reserves balance of $859,193 and $1,107,569, respectively.

Estimated Allowance for Expected Credit Losses

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 March 31, 2026 and 2025, we recorded allowance for expected credit losses of $217,479 and $116,746, respectively.