1 — DESCRIPTION OF BUSINESS, ORGANIZATION AND BASIS OF PRESENTATION

Organization and principal activities

Fly-E Group, Inc. (the “Company” or “Fly-E Group”) was incorporated under the laws of the State of Delaware on November 1, 2022. The Company has no substantive operations other than holding all of the issued and outstanding shares of Fly E-Bike Inc. (“Fly E-Bike”) and Fly EV, Inc. (“Fly EV”). Fly E-Bike and Fly EV were incorporated under the laws of the State of Delaware on August 22, 2022 and November 1, 2022, respectively. Fly EV has no substantive operations. The Company, through its wholly owned subsidiaries, is principally engaged in designing, installing and selling smart electric bikes (“E-bikes”), electric motorcycles (“E-motorcycles”), electric scooters (“E-scooters”), and related accessories under the brand name of “Fly E-Bike.” The Company’s principal operations and geographic markets are mainly in the United States of America (the “U.S.”). During the year ended March 31, 2026, the Company closed 8 stores in U.S. During the fiscal year ended March 31, 2025, the Company closed four stores in the U.S. As of July 23, 2026, the Company currently operates a total of 4 retail stores in the U.S. During the year ended March 31, 2026, 24 retail stores in the U.S. were sold for streamlining the Company’s corporate structure and reducing complexity in financial reporting and operating costs. These 24 retail stores were operated through certain subsidiaries of the Company that were disposed pursuant to share transfer agreements, as discussed in Note 15 to the Consolidated Financial Statements in this Report. The Company offers rental services from selected locations. The Company also operates one online store, focusing on selling E-motorcycles, E-bikes, and E-scooters.

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

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

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

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

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

On September 18, 2025, the Company entered into a securities purchase agreement with third-party individuals to sell 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.

On July 3, 2025 and November 4, 2025, the Company implemented a 1-for-5 and 1-for-20 reverse stock split of its issued and outstanding shares of common stock, respectively. As a result, all share and per share information has been retroactively adjusted to reflect the reverse stock split for all periods presented. As of March 31, 2026, the Company had 1,632,386 shares of common stock issued and outstanding. The par value per share remained unchanged at $0.01, respectively.

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

The consolidated financial statements include the financial statements of the Company and each of the following subsidiaries as of March 31, 2026.

Liquidity and Going Concern

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

On June 4, 2025, the Company closed a public offering of (i) 285,956 shares of the common stock at the price of $24.28 per share and (ii) 571,912 warrants to purchase 571,912 shares of common stock, resulting in net proceeds to the Company of approximately $6.1 million after deducting placement agent’s fees and offering expenses. On September 18, 2025, the Company entered into a securities purchase agreement with third-party individuals offering of 687,500 shares of the common stock at the price of $16.0 per share for a total consideration of $11,000,000. During the 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. During the year ended March 31, 2026, the Company had net loss of approximately $9.3 million. 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. The Company defaulted on its repayment obligations under the Peapack-Gladstone Bank of approximately $4.9 million between August 2025 and November 2025. On November 7, 2025, the Company entered into forbearance and modification agreement with the bank for extension of repayment deadline to March 31, 2026. Subsequent to the execution of the forbearance agreement, the Company has received written notices from Peapack Private Bank asserting defaults and reserving the lender’s rights to pursue remedies under the applicable loan documents. 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 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. Management has determined there is substantial doubt about its ability to continue as a going concern. Management plans to alleviate the going concern risk through (i) equity financing to support the Company’s working capital; (ii) other available sources of financing (including debt) from banks and other financial institutions; and (iii) financial support from the Company’s related parties. There is no assurance that the Company will be successful in implementing the foregoing plans or that additional financing will be available to the Company on commercially reasonable terms, or at all. The Company’s inability to secure needed financing when required could require material changes to the Company’s business plans and could have a material adverse effect on the Company’s ability to continue as a going concern and results of operations. The consolidated financial statements have been prepared on a going concern basis, which contemplates the realization of assets and liquidation of liabilities in the normal course of business. The consolidated financial statements do not include any adjustments that might result from the outcome of such uncertainties.