UNITED STATES

 SECURITIES AND EXCHANGE COMMISSION

 Washington, D.C. 20549

 FORM 10-K

 (Mark One)

ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

 For the fiscal year ended March 31, 2025

 OR

TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

 For the transition period from___________ to___________

 Commission file number 001-42122

 Fly-E Group, Inc.

 (Exact name of registrant as specified in its charter)

 Delaware

 92-0981080

 (State or other jurisdiction of

 (I.R.S. Employer

 incorporation or organization)

 Identification No.)

 136-40 39th Avenue, Suite 202
 Flushing, New York

 11354

 (Address of principal executive offices)

 (Zip Code)

 (929) 410-2770

 (Registrant's telephone number, including area code)

 Securities registered pursuant to Section 12(b)
of the Act:

 Title of each class

 Trading Symbol(s)

 Name of each exchange on which registered

 Common Stock, par value $0.01 per share

 FLYE

 The Nasdaq Stock Market LLC

 Securities registered pursuant to section 12(g)
of the Act: None

 Indicate by check mark if the registrant is a
well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes No

 Indicate by check mark if the registrant is not
required to file reports pursuant to Section 13 or Section 15(d) of the Act. Yes No

(1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months
(or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements
for the past 90 days. Yes No

has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§ 232.405
of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes
 No

is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company.
See the definitions of "large accelerated filer," "accelerated filer," "smaller reporting company,"
and "emerging growth company" in Rule 12b-2 of the Exchange Act.

 Large accelerated filer

 Accelerated filer

 Non-accelerated filer

 Smaller reporting company

 Emerging growth company

 If an emerging growth company, indicate by check
mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting
standards provided pursuant to Section 13(a) of the Exchange Act.

has filed a report on and attestation to its management's assessment of the effectiveness of its internal control over financial
reporting under Section 404(b) of the Sarbanes-Oxley Act (15 U.S.C. 7262(b)) by the registered public accounting firm that prepared or
issued its audit report.

 If securities are registered pursuant to Section
12(b) of the Act, indicate by check mark whether the financial statements of the registrant included in the filing reflect the correction
of an error to previously issued financial statements.

 Indicate by check mark whether any of those error
corrections are restatements that required a recovery analysis of incentive-based compensation received by any of the registrant's
executive officers during the relevant recovery period pursuant to §240.10D-1(b).

is a shell company (as defined in Rule 12b-2 of the Act). Yes
No

 The aggregate market value of the voting and non-voting common stock
of Fly-E Group, Inc. held by non-affiliates was approximately $ 4.73 million based upon the closing price per share of $3.05 on September
30, 2024.

 APPLICABLE ONLY TO REGISTRANTS INVOLVED IN BANKRUPTCY

 PROCEEDINGS DURING THE PRECEDING FIVE YEARS:

has filed all documents and reports required to be filed by Section 12, 13 or 15(d) of the Securities Exchange Act of 1934 subsequent
to the distribution of securities under a plan confirmed by a court. Yes
No

 (APPLICABLE ONLY TO CORPORATE REGISTRANTS)

 As of July 15, 2025, there were 18,096,873 shares of common stock
of the registrant issued and outstanding.

 DOCUMENTS INCORPORATED BY REFERENCE

 List hereunder the following documents if incorporated
by reference and the Part of the Form 10-K (e.g., Part I, Part II, etc.) into which the document is incorporated: (1) Any annual report
to security holders; (2) Any proxy or information statement; and (3) Any annual report filed pursuant to Rule 424(b) or (c) under the
Securities Act of 1933. The listed documents should be clearly described for identification purposes (e.g., annual report to security
holders for fiscal year ended December 24, 1980). None.

 Page

 Cautionary Note Regarding Forward-Looking Statements

 ii

 Item 1. Business

 Item 1A. Risk Factors

 Item 1B. Unresolved Staff Comments

 Item 1C. Cybersecurity

 Item 2. Properties

 Item 3. Legal Proceedings

 Item 4. Mine Safety Disclosures

 Item 5. Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities

 Item 6. [Reserved]

 Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations

 Item 7A. Quantitative and Qualitative Disclosures About Market Risk

 Item 8. Financial Statements and Supplementary Data

 Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosures

 Item 9A. Controls and Procedures

 Item 9B. Other Information

 Item 9C. Disclosure Regarding Foreign Jurisdiction that Prevent Inspections.

 Item 10. Directors, Executive Officers and Corporate Governance

 Item 11. Executive Compensation

 Item 12. Security Ownership of Certain Beneficial Owner and Management and Related Stockholder Matters

 Item 13. Certain Relationships and Related Transactions, and Director Independence

 Item 14. Principal Accounting Fees and Services

 Item 15. Exhibits, Financial Statement Schedules

 Item 16. Form 10-K Summary

 Signatures

 i

 CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS

 This annual report, including, without limitation,
statements under the heading "Management's Discussion and Analysis of Financial Condition and Results of Operations,"
includes forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended (the "Securities
Act") and Section 21E of the Securities Exchange Act of 1934, as amended (the "Exchange Act"). These forward-looking
statements can be identified by the use of forward-looking terminology, including the words "believes," "estimates,"
"anticipates," "expects," "intends," "plans," "may," "will," "potential,"
"projects," "predicts," "continue," or "should," or, in each case, their negative or other
variations or comparable terminology. These statements are based on management's current expectations, but actual results may differ
materially due to various factors, including, but not limited to:

 our ability to obtain additional funding to market our vehicles
and develop new products;

 our ability to produce our vehicles with sufficient volume
and quality to satisfy customers;

 the inability of our principal vendors to deliver the necessary
components for our vehicles at prices and volumes acceptable to us;

 our principal vendors failing to perform quality control
on our products;

 the inability to obtain sufficient intellectual property
protection for our brand and technologies;

 our vehicles failing to perform as expected;

 our facing product warranty claims or product recalls;

 our facing adverse determinations in significant product
liability claims;

 customers not adopting electric vehicles;

 the development of alternative technology that adversely
affects our business;

 our ability to regain and maintain compliance with the continued
listing standards of the Nasdaq;

 the changes or developments with respect to domestic and
international customs, tariffs, and trade policies, corresponding or retaliatory actions by other countries and related uncertainties;

 increased government regulation of our industry; and

 tariffs and currency exchange rates.

 The forward-looking statements contained in this
annual report are based on our current expectations and beliefs concerning future developments and their potential effects on us. Future
developments affecting us may not be those that we have anticipated. These forward-looking statements involve a number of risks, uncertainties
(some of which are beyond our control) and other assumptions that may cause actual results or performance to be materially different from
those expressed or implied by these forward-looking statements. Should one or more of these risks or uncertainties materialize, or should
any of our assumptions prove incorrect, actual results may vary in material respects from those projected in these forward-looking statements.
We caution you that forward-looking statements are not guarantees of future performance and that our actual results of operations, financial
condition and liquidity, and developments in the industry in which we operate may differ materially from those made in or suggested by
the forward-looking statements contained in this annual report. We undertake no obligation to update or revise any forward-looking statements,
whether as a result of new information, future events or otherwise, except as may be required under applicable securities laws.

 ii

 Item 1. Business

 Overview

 Fly-E Group, Inc. ("Fly-E
Group," and collectively with its subsidiaries, the "Company," "we" or similar terminology), is an electric
vehicle ("EV") company that is principally engaged in designing, installing and selling smart electric motorcycles ("E-motorcycles"),
electric bikes ("E-bikes"), electric scooters ("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.

 Our first store was established
in 2018 in New York. Our business has grown rapidly since then and we believe we are now one of the leading providers of E-bikes
for food delivery workers in New York City. As of July 15, 2025, we have 20 stores, including 19 retail stores in the U.S and
one retail store in Canada. The Company offers rental services from selected locations in New York, Toronto, 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.
In addition, we plan to open a second online store focusing on selling gas bikes in the future. In addition, we plan to extend our business
into South America and Europe.

 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 15, 2025, we offered 27 E-motorcycle
products, 36 E-bike products and 38 E-scooter products.

 We build our smart E-bikes
based on advanced and innovative technologies, including smart technologies, powertrain and battery technologies and automotive inspired
functionalities. Adhering to our user-centric philosophy in product design, we collect user feedback and product performance data to develop
new products or functionalities to satisfy unmet demand. All our products are designed to embody themes of style, freedom and technology.
Some of our E-bikes are specifically designed for food delivery workers and are featured with longer battery life and stable backseat
for holding a basket. In addition, we designed an easy battery swap system for these E-bikes, allowing food delivery workers to easily
replace a fully charged battery at any of our stores within a minute.

 Our net revenues were approximately
$25.4 million for the year ended March 31, 2025, consisting of retail sales revenue of approximately $21.7 million, wholesale
revenue of approximately $3.5 million, and rental services revenue of $171,867. Our net revenues were approximately $32.2 million
for the year ended March 31, 2024, consisting of retail sales revenue of approximately $26.4 million and wholesale revenue of
$5.8 million.

 Recent Developments

 2024 Stock Split

 In April 2024, we effected
a stock split of our authorized and all issued and outstanding shares of our common stock and preferred stock at a split ratio of 1-for-110,000,
where the par value of the Company's common stock remained unchanged at $0.01 per share, and number of authorized shares of the
Company's capital stock was increased from 440 to 48,400,000, with the number of authorized shares of common stock and preferred
stock being increased from 400 to 44,000,000 and from 40 to 4,400,000, respectively. The issued and outstanding common stock and preferred
stock increased at a split ratio of 1-for-110,000.

 IPO

 On June 7, 2024, we
consummated our initial public officering (the "IPO") and sold 450,000 shares of common stock, at a price of $20.00 per
share. The gross proceeds of the offering were $9.0 million, prior to deducting the underwriting discounts, commissions and offering
expenses payable by the Company. In addition, we granted the underwriters a 30-day option to purchase an additional 67,500 shares
of common stock at the initial public offering price, less underwriting discounts and commissions, to cover over-allotments. On June 25,
2024, we sold an additional 67,500 shares of common stock to the underwriters of our IPO for gross proceeds of $1.4 million
upon full exercise of the underwriters' over-allotment option. Net proceeds received by us from our initial public offering, including
the exercise of the over-allotment option, were approximately $9.2 million. We also issued to The Benchmark Company, LLC (the "IPO
Representative"), the representative of the IPO underwriters warrants to purchase 25,875 shares. None of such warrants were
exercised as of the date of this annual report.

 Loan and Security Agreement

 On August 5, 2024, the
Company, Fly E-Bike, Inc. ("Fly E-Bike"), a Delaware corporation, and Fly EV, Inc. (collectively with the Company and Fly
E-Bike, the "Borrower") entered into a loan and security agreement (the "Loan Agreement") with Peapack-Gladstone
Bank (the "Lender"). Pursuant to the Loan Agreement, the Lender made available to the Borrower a $5 million revolving
credit facility (the "Revolving Credit"), which the Borrower will use periodically for operating needs and to help facilitate
acquisitions. The Loan Agreement has a one-year term. The principal balance of the loan under the Revolving Credit bears interest at a
per annum rate equal to the term SOFR plus a spread of 3.50%, with a floor of 5.50%. The Borrower will make interest-only payments quarterly,
starting on November 1, 2024. The entire amount of outstanding principal and interest is due on August 31, 2025.

 As security for the payment
of the loan, the Borrower granted the Lender a continuing lien on and security interest in all assets of the Borrower, including accounts,
chattel paper, documents, instruments, inventory, general intangibles, equipment, fixtures, deposit accounts, goods, letter-of-credit
rights, supporting obligations, investment property, commercial tort claims, property in the Lender's possession, additions, and
proceeds. The Borrower paid a non-refundable revolving credit closing fee of $20,000 at closing, agreed to pay an unused line fee of 0.25%
quarterly, and a late charge of 5% on any payments not made within five days of the due date. Upon an event of default, the Lender
may terminate the Revolving Credit, declare the Borrower's obligations immediately due and payable, and exercise rights under the
UCC and other applicable laws, including taking possession of the collateral and selling it.

 Rental Program

 We launched a rental program
to meet the increasing market demand for safe, UL-certified e-bikes in compliance with New York State regulations in October 2024.
The rental service, now available in New York City, Toronto, 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. As part of our growth strategy, we plan to expand
the rental service to Miami in the near term.

 Trade-in Program

 In January 2025, the New York
City Department of Transportation ("NYC DOT") launched a $2 million trade-in program, allowing eligible food delivery workers
to replace their unsafe e-bikes, e-mobility devices, and batteries with high-quality versions. Our Fly-11 PRO was chosen as the official
model of NYC DOT and participates in this program. From January 2025 to June 2025, we participated in this program and
completed the delivery of Fly-11 Pro models to our retail partner participating in the program.

 Increase in Authorized Shares

 In March 2025, we amended
our amended and restated certificate of incorporation to increase the authorized shares of common stock from 100,000,000 shares to
300,000,000 shares.

 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. From May 28 to July 15, 2025, the Company paid $350,000 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 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 Reverse Stock
Split. The 2025 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 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 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." The new CUSIP number for common stock following
the 2025 Reverse Stock Split is 343927208.

 Unless otherwise noted,
the share and per share information in this annual report reflects the 2024 Stock Split and the 2025 Reverse Stock Split.

 Registered Direct Offering

 On June 2, 2025, we closed
our registered direct offering of an aggregate of (i) 5,719,111 shares of our common stock, par value $0.01 and (ii) 11,438,222 warrants
(the "Warrants") to purchase 11,438,222 shares of common stock at a combined purchase price per share and accompanying
Warrants of $1.2140, 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.

 Disposal of Certain Subsidiaries

 During the year ended March
31, 2025 and from April to July 2025, the Company disposed several subsidiaries as part of an 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 December 2024 and July 2025, the Company sold 15 subsidiaries to third-party individuals in multiple transactions,
for an aggregated cash consideration of approximately $1.3 million, of which $133,000 has been collected as of July 15, 2025. See
" Note 14— Disposal of Subsidiaries and Note 15-Subsequent Events " in the accompanying consolidated financial
statements for details.

 Our History and Corporate Structure

 We initially started our business
in 2018 as Ctate Inc. ("Ctate"), a New York corporation. Our business has experienced rapid growth since then and we
opened multiple retail stores within a short period of time. In the interest of efficient management, each retail store was managed by
a separate company wholly owned by Ctate.

 Fly E-Bike, Inc. ("Fly
E-Bike"), a Delaware corporation, was a wholly owned subsidiary of Ctate incorporated on August 22, 2022. On September 12,
2022, Ctate and Fly E-Bike 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.

 Fly-E Group, a Delaware corporation,
was incorporated on November 1, 2022. On December 21, 2022, Fly E-Bike, the stockholders of Fly E-Bike and Fly-E Group 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. Fly-E Group has no substantive operations other than holding all of the issued
and outstanding shares of Fly E-Bike and Fly EV, Inc. Our business is primarily conducted through Fly E-Bike and its subsidiaries. Fly
EV. Inc. is a Delaware corporation incorporated on November 1, 2022 and currently has no substantive operations.

 Our Industry

 E-motorcycles, E-bikes and
E-scooters are the two-wheelers that run on electric energy that is converted into mechanical energy rather than running on fuel. They
are chargeable and eco-friendly automotive solutions. E-motorcycles and E-bikes are built with solid metal and fiber frames that are combined
with mechanical and electronic components. An E-scooter is a plug-in EV powered by electric power. These scooters offer additional advantages
such as agility, flexibility, versatility and ease of maneuver in high traffic congestion areas.

 The EV industry has been experiencing
significant growth and innovation in recent years. With the advancement of technology and the increasing demand for environmentally
friendly transportation options, E-bikes, E-motorcycles and E-scooters have become popular choices for commuting, leisure and sports.
As the demand for sustainable transportation options continues to grow, the EV industry is poised for further growth and development.

 Some of the major trends driving
the growth of the EV industry include the increasing demand for sustainable transportation options, advancements in battery and motor
technology, and the growing popularity of E-bike sharing services. Government incentives and regulations, such as tax credits and subsidies
for the purchase of EVs, are also driving the growth of the industry.

 The Asia-Pacific region is
the largest market for the electric two-wheelers due to the growing awareness about the benefits of electric vehicles, rising personal
disposable income, growing demand for affordable electric vehicles for short-distance commuting and increasing adoption of smart technologies.
We believe that North America is expected to experience significant growth in the future due to growing government initiatives to raise
awareness of such products among individuals.

 City bikes and city E-bikes
are popular in big cities in the United States, such as New York City, Miami and Dallas. There is also a growing popularity
of E-scooters as an increasing number of EV merchants are launching their businesses in these cities.

 The growth of the EV industry
is further accelerated by the rise in small package deliveries in big cities. New York City is a major commercial hub and the largest
metropolitan area in the United States. As a result, the volume of small package deliveries in New York City is remarkably high,
and it has continued to grow over the years. With the rise of E-commerce and online shopping, more and more people in New York
City are relying on package deliveries for their everyday needs, leading to a significant increase in small package delivery volume. The
COVID-19 pandemic has further accelerated this trend as more people have turned to online shopping.

 The high volume of package
deliveries in New York City has led to concerns about traffic congestion and delivery vehicle emissions, which the city is working
to address through initiatives such as congestion pricing and EV incentives. For short-distance deliveries within urban areas, E-bike
delivery can be a more efficient and environmentally friendly option compared to truck delivery. E-bikes can navigate through congested
city streets, often taking shorter routes that trucks cannot access, and deliver packages quickly without contributing to traffic congestion
or air pollution. Additionally, E-bikes are often cheaper to operate and maintain than trucks. We expect that other large densely populated
cities in the United States, such as Miami and Dallas, face similar challenges and will continue to adopt the use of E-bikes, E-motorcycles,
and E-scooters to meet their delivery needs.

 Our Strengths

 Early Entry into the
Market: We entered the EV market early and were able to seize the market opportunities to experience rapid
growth. We started our business in 2018 and were able to leverage the potential created by the thriving E-commerce industry. Additionally,
the COVID-19 lockdown further amplified the demand for online food and essential item deliveries, creating a favorable environment for
the expansion and utilization of EVs, particularly E-bikes, which further accelerated our business growth.

 Brand Reputation: We
have a strong brand reputation for consistent delivery of high-quality EV products and excellent customer service. Our brand and retail
stores have become reliable business partners for most food delivery workers, especially in New York City. As a result, they have
come to recognize our name and trust our services, establishing a loyal customer base for us.

 Innovative Products and
Services: We continue to offer innovative, differentiated products and services that help set us apart
from our competitors. Since 2018, we have launched over 67 new products and introduced new versions to our existing products with upgrades
to design, motor and battery technology. Additionally, we are developing the Fly E-Bike app, which will be used by customers to better
manage and enjoy their riding experience. We are also developing the Fly E-Bike Care, an extended warranty program that will provide value-added
options for our customers in the near future.

 Our Strategies

 Our plan to grow our business
using the following key strategies:

 Enhance our position
as a leader in urban mobility: We believe we are one of the leading providers of urban mobility solutions
for New York City, particularly for food and package delivery workers. We intend to leverage this first mover advantage to continue
to solidify our market leadership, by enhancing our brand, continuing to innovate, growing our product and service portfolio and expanding
our sales network.

 Improve brand recognition: We
will maintain our commitment to providing exceptional customer service as a means of further enhancing our brand. We will provide an enhanced
shopping experience by effectively managing and upgrading our retail stores. In addition, we plan to open more flagship stores in high-traffic
retail locations in New York City and other major cities in the United States to further elevate the quality of our brand messaging.
Furthermore, we plan to increase our offerings of accessories, such as introducing more style options to our branded apparel, to further
strengthen our customers' connection to Fly E-Bike. We also intend to collaborate with other lifestyle brands across different industries
to further promote our brand image.

 Continue our innovation: We
will persist in advancing our product line by incorporating cutting-edge design, optimizing user experience and delivering optimal performance.
We are developing our Fly E-Bike app, which we plan to include functions to improve the communication between our customers and our products.
Additionally, we plan to launch Fly E-Bike Care in the near future, a service designed to function as an insurance policy and provide
customers with continuous maintenance services beyond the manufacturer and battery warranty period.

 Expand our sales network: We
plan to expand our sales network internationally. We intend to enter selected overseas markets that offer identified growth opportunities
and favorable government policies, such as South America and Europe. As of July 15, 2025, we operate one store in Canada and 19 retail
stores in the United States, spanning across the states of New York, Massachusetts, Maryland, Florida, Washington D.C., California
and New Jersey. 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. In addition, we plan to open a second online store focusing on selling gas bikes in the future.

 Diversify our service
offerings: We are planning to broaden our business by leveraging our existing retail stores as logistics
hubs for small package delivery. We are currently trying to seek business partners, assemble a delivery team and develop an app for the
delivery business.

 Our Products

 We offer a diverse product
portfolio that satisfies various demands of our customers and addresses different urban travel scenarios. Following market trends and
technological updates, we continuously develop and add new products into our portfolio to meet our customers' needs. We also regularly
introduce upgrades and refreshes to our existing models.

 E-motorcycles

 Our E-motorcycle category consists
of 27 different products, which include a range of E-moped, E-motorcycle and E-tricycle.

 E-moped

 (Fly-7)

 (Fly-10)

 (Fly-Pro)

 Our E-moped product line is
one of our most popular, featuring a range of eight different models. Our E-mopeds can run an average of 20-70 miles on a single
charge, with a top speed of 20-38 miles per hour. Additionally, our E-mopeds are capable of holding a payload of 185-400 pounds.
Each E-moped offer several standard features, including a remote key fob, alarm system, lockable under-seat storage, front and rear suspension,
and a complete lighting package. Some models also offer a USB phone charging port for added convenience. These features make them an ideal
choice for delivery workers.

 All of our E-mopeds feature
a low seat height and large tires, providing excellent stability at all speeds and on all surfaces. Moreover, their electric drivetrain
requires no clutch or gears, making them easy to operate for almost anyone.

 E-motorcycle

 (RZ)

 (FTC)

 (DY-VNM SL)

 We also offer E-motorcycles
that are designed for urban commuting and city riding, offering a range of 25-80 miles on a single charge and a top speed of 30-59
miles per hour. They have a payload capacity of 160-400 pounds and feature a powerful electric motor with multiple riding modes to
choose from. Additionally, our E-motorcycles are equipped with advanced safety features, including anti-lock brakes and a high-performance
suspension system, ensuring optimal handling and rider safety.

 E-tricycle

 (Fly-Tricycle)

 The Fly-Tricycle is an electric
three-wheel vehicle that offers three seats. The interior of this vehicle is crafted with high-quality automotive-grade materials, ensuring
long-lasting durability. This vehicle can run a range of 43-62 miles on a single charge, with a top speed of 30 miles per hour. Additionally,
the Fly-Tricycle is capable of holding a payload of 1,239 pounds.

 E-bikes

 We currently offer 36 different
E-bike products, which include a range of City E-bike, foldable E-bike and standard E-bike.

 City E-bike

 (City E-Bike)

 Our City E-Bike has a range
of 15-20 miles on a single charge and a maximum speed of 20 miles per hour. It has a payload capacity of 200 pounds and an under-seat
storage area.

 Foldable E-bike

 (Dolphin E-Bike)

 (Air-2)

 Our foldable E-bikes, including
the Dolphin E-Bike and the Air-2, are versatile and convenient for folding. They are capable of running 20-25 miles on a single charge
with a top speed of 23 miles per hour. In addition, our foldable E-bikes have a payload capacity of 250 pounds. They are compact, portable
and easy to store, making them a good choice for people who are conscious of space limitations, such as those who live in small apartments
in big cities.

 Standard E-bike

 (Sword Fish E-Bike)

 (Rhino)

 Our standard E-bikes are designed
to be lightweight and come in a variety of different outlook designs, with multiple speed options to choose from. They offer a range of 20-60
miles on a single charge, with a top speed range of 15-32 miles per hour, and have a payload capacity of 180-250 pounds.

 E-scooters

 Our E-scooter segment currently
offers 38 different products, which include the Insurgent E-Scooter, Flytron, H-Max and H-1 models.

 (Insurgent E-Scooter)

 (Flytron)

 (H-Max)

 (H-1)

 Our E-scooters offer a range
of 15-45 miles on a single charge and a top speed range of 15-40 miles per hour. They are also capable of holding a weight range
of 250-330 pounds. Additionally, our smart E-scooters are equipped with hydraulic disc brakes made from special alloys. The brake
discs are slotted to extend the life of the system. The hardware of the brakes is complemented by the electronic braking system, which
provides for intelligent braking and recycling kinetic energy. Certain of our models also employ the combined braking system, which splits
braking force between the front and rear discs to shorten the braking distance at higher speeds.

 Accessories and spare parts

 We offer a comprehensive line
of Fly E-Bike branded accessories and spare parts. We also sell traditional bikes.

 For accessories, we offer riding
gear, such as raincoats, gloves and knee pads, and accessories that can be installed on our products to enhance their functionality, such
as storage baskets and tail boxes, smart phone holders, backrests and locks, among others. We also sell branded apparel.

 In addition, we provide performance
upgrades, including high-performance upgrade components for wheels, shock absorbers, brake calipers and carbon fiber body panels, among
others.

 Fly E-Bike App

 We are currently developing
the Fly E-Bike app, which is a management service mobile software for our EVs. 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. Once development is completed, the app
is expected to include functions such as GPS, navigation, battery and tire pressure management, online shopping, and anti-theft features.

 After Sales Services

 Our EVs are primarily serviced
through our retail stores, which provide repair, maintenance and bodywork services. Our regular maintenance services include exterior
check, mechanical structure service, motor system check, electrification service, battery maintenance service, tire pressure check and
cleaning services. We also provide other value-added services through our retail stores, including GPS add-on and installation, and theft
reporting.

 Warranty Policy

 Manufacturer Warranty

 We offer a three-month limited
manufacturer's warranty on all models of our E-bikes, E-motorcycles and E-scooters. The warranty period starts on the day the
product is delivered to the customer. This warranty only covers limited factory defects and minor cosmetic damages. It does not cover
misuse or broken parts caused by the user or by any other events.

 Battery Warranty

 We also offer a three-month
warranty on battery for any manufacturer defect in material or workmanship. If a battery becomes faulty within the specified warranty
period, we will replace it free of charge.

 Fly E-Bike Care

 We plan to launch our value-added
Fly E-Bike Care program in the near future, which will function as an insurance policy to provide customers with continuous maintenance
services beyond the warranty period mentioned above. This program will be designed to offer a wider range of coverage than the manufacturer
and battery warranties, including accidental damages caused by customers. Additionally, we intend to add a "Fly E-Bike Care"
feature to our app, which will send maintenance reminders to users based on their driving behavior and mileage.

 Manufacturing and Assembly

 We source substantially all
of our vehicle components from China and the United States. For the years ended March 31, 2025 and 2024, over 50% and 50%
of the parts were sourced from China, respectively. For the year ended March 31, 2025 and 2024, we sourced over 40% and over 40%
of our vehicle components from the United States, respectively. Although we rely on certain principal vendors in China and the United States
for most of our components, we believe there are multiple sources for each of our critical components.

 To ensure a secure and reliable
supply chain, we have implemented a centralized vendor management system that consolidates all vendor management activities under a centralized
team. This approach enables us to streamline our purchasing process, enhance our negotiating power and maintain better relationships with
our vendors.

 We are currently working with
two principal vendors, Xiamen Innolabs Technology Co., Ltd. ("XFT") and Depcl Corp. (previously known as Fly Wing E-Bike Inc.),
each of which respectively supplied approximately 42% and 32% of our accessories and components during the year ended March 31, 2025.
During the year ended March 31, 2024, our top three principal vendors included Depcl Corp, XFT, and Anhui Ineo International Trading
Co., Ltd., each of which respectively supplied approximately 36%, 21% and 13% accessories and components. Our principal vendors are responsible
for sourcing all the parts used in our vehicles from various suppliers, and they also oversee the quality control process. We maintain
close relationships with our principal vendors to ensure that we have access to high-quality accessories and components for our EVs at
competitive prices and receive reliable and timely deliveries. We work closely with them to improve our supply chain efficiency and reduce
costs.

 Our centralized vendor management
system also helps us to manage risk more effectively by identifying potential risks and developing strategies to mitigate them. Rather
than dealing with the original suppliers, we monitor the performance of our principal vendors, which enables us to quickly identify and
address any problems and manage the supply resources more efficiently. Our system ensures each critical product component is supported
by at least three vendors, thereby minimizing the risk of supply chain disruptions. This approach helps us to reduce the risk of supply
chain disruptions, which can have a significant impact on our business operations.

 After importing the accessories
and components, we assemble them into our vehicles in a leased facility located in Maspeth, New York. For the year ended March 31,
2025, we produced 4,595 E-motorcycles, 5,974 E-bikes and 1,557 E-scooters. For the year ended March 31, 2024, we produced 8,390
E-motorcycles, 7,638 E-bikes and 3,171 E-scooters.

 Quality Control

 We believe that the quality
of our products is crucial to our continued growth. We place great emphasis on quality control and have implemented stringent monitoring
and quality control systems to manage our operations.

 For the parts sourced from
China, we rely on our one of our principal vendors in China, XFT, to monitor the factories responsible for manufacturing these parts used
in our vehicles. Its duties include the following:

 Factory check: XFT
is responsible for confirming the size, production capacity and certification qualifications of a factory, confirming whether the equipment
required for the production line is complete and whether the testing equipment is complete, checking the factory's quality assurance
process and other quality control procedures.

 Proofing: After
the samples that meet the requirements are confirmed by XFT and us, they will be sealed as golden samples, and mass production is required
to follow the golden sample standard.

 Mass production: Before
the start of mass production, the factory is required to develop and review standard operating procedures and quality assurance standards
that are acceptable to XFT and us. XFT will closely follow the production process, ensuring that strict quality control measures are implemented
at every stage of production. After the mass production starts, XFT will perform the first article inspection to confirm whether the mass
production meets the required standards.

 Inspection: After
mass production, in addition to requiring the factory to submit a quality control report, XFT will send its own quality control personnel
to conduct random inspections on the products according to the corresponding standards of acceptable quality level.

 We also source certain parts
used in our vehicles from the United States. For these parts, our U.S. principal vendors and our quality control team perform
quality control procedures similar to those discussed above for our China-sourced parts. This includes ensuring that the parts meet our
quality standards and specifications, as well as conducting regular factory audits and inspections to identify any potential issues, and
ensure ongoing compliance with our requirements.

 We have not experienced any
significant product recall, refunds or other quality control outbreak since we commenced operations.

 Sales and Marketing

 We have established an omnichannel
retail model network to sell our products and provide services to our customers. We currently operate 20 retail stores and work with 85
distributors in the United States to sell our products. In addition, we have our own online store where we promote and sell our products.
Our Fly E-Bike app, which is under development, can also become a venue where we can advertise our products. We also leverage our omnichannel
retail network to deliver maintenance and repair services at our retail stores and to collect data for business insights.

 We focus on promoting awareness
of our brand as a lifestyle brand with high-quality smart E-bikes, E-motorcycles and E-scooters. Our brand and products are marketed to
retail customers through digital and experiential activities as well as through more traditional promotional and advertising activities.
We aim to engage in cost-effective marketing activities by taking advantage of social media and to build an online and offline ecosystem
of users that will promote awareness of our brand.

 One key component of our strategy
is to expand our presence on social media platforms. We currently have accounts on Facebook, Instagram, TikTok, Xiaohongshu (Rednote),
and WeChat, on which we frequently post guides, videos and tutorials that educate people on how to use and maintain E-bikes, E-scooters
and E-motorcycles, as well as benefits of E-mobility.

 In terms of offline marketing,
we prioritize in-store promotions and targeted advertising. This includes offering discounts and special deals in our retail stores, as
well as using targeted advertising to reach potential customers who are likely to be interested in our products. We also place ads in
local newspapers and magazines and distribute flyers on the streets to promote the opening of new stores. Additionally, our products have
gained significant visibility among food delivery workers in New York City, who make up the majority of our customer base. The increasing
trend of people ordering food delivery, particularly during and after the COVID-19 lockdown, has contributed to the widespread visibility
of our products in the cities.

 Our Distribution Channels

 Retail Distribution Network

 Our sales are conducted through
both retail stores and distributors.

 Out of our 20 retail stores
in the United States, nine are situated in New York, while four are in New Jersey, two in Florida, one in Maryland, one in Massachusetts,
one in California and one in Washington, D.C. We also operate one retail store in Canada. Our retail stores adopt a consistent design
and layout and provide a consistent shopping experience. We closely monitor the sales performance, service level and activities within
our retail stores. We will continue to collect store operation data such as consumer traffic flow and traffic flow sources, test drive
frequencies and sales conversion rate. This information helps us adjust store-specific retailing and marketing strategies, thereby increasing
per store sales.

 In terms of our distributors,
most of them are located in the United States. Our distributors purchase products from us at a wholesale price, and are responsible
for the logistics, warehousing and distribution to other retail stores. We do not charge any initial fees or continuing fees to our distributors.
The majority of our distributors make full payments upfront for their orders, which helps us improve cash flow management.

 We intend to expand our overseas
market and are currently working with one distributor in the Dominican Republic.

 Online Distribution Network

 All of our products can be
purchased on our website, flyebike.com. In addition, we plan to open a second online store focusing on selling gas bikes in the future.

 We have adopted an online to
offline model that enables us to seamlessly integrate the online and offline networks to provide a cohesive and consistent experience
to our customers. The online platform acts as a conduit for influencing customers and directing sales to our retail stores. Our customers
can conveniently place orders online and pick up their products at our retail stores.

 Our Customers

 We acquire customers through
multiple channels, including (i) referrals from our existing customers, (ii) our distributors, and (iii) our marketing
and promotional activities. Due to our strong brand image, loyal customer base and evolving product portfolio, we believe there are significant
growth opportunities across these channels. No customers account for more than 10% of our revenues for the years ended March 31,
2025 and 2024. The majority of our customers are food delivery workers in New York City. This group constitutes approximately 72%
and 70% of our customer base for the year ended March 31, 2025 and 2024, respectively.

 Environmental Matters

 We are subject to federal,
state and local environmental laws and regulations that impose limitations on the discharge of pollutants into the environment and establish
standards for the handling, generation, emission, release, discharge, treatment, storage and disposal of certain materials, substances
and wastes and the remediation of environmental contaminants (collectively, "Environmental Laws"). In the ordinary course
of our assembling processes, we may use materials or generate waste that are subject to these Environmental Laws.

 We endeavor to adhere to all
applicable Environmental Laws and act as necessary to comply with these laws. We maintain an environmental and safety program at our facilities.
The environmental and safety program includes obtaining environmental permits as required, capturing and appropriately disposing of any
waste by-products, tracking hazardous waste generation and disposal, air emissions, safety situations, material safety data sheet management,
storm water management and recycling, and auditing and reporting on its compliance.

 Intellectual Property

 We currently hold one trademark
in the United States, which covers our logo. We also hold four trademarks in China, which cover the names "FLY E-BIKE",
"FLY EBIKE", "FLYEBIKE" and our logo. Additionally, we have two trademarks in the Dominican Republic covering
the name "FLY E-BIKE" and our logo, and one trademark in Panama covering the name "FLY E-BIKE". All these trademarks
are effective from 2022 to 2033.

 Other than the trademarks mentioned
above, we do not own any patents, copyrights or other intellectual property registrations in the United States. We plan to seek further
intellectual property registrations in the United States in the future. We currently also seek to protect our trade secrets and other
proprietary information through common law copyright and trademark principles.

 Competition

 There are numerous companies
that sell E-bikes, E-motorcycles and E-scooters in the United States and even more globally. The markets for EVs are highly competitive
based on a number of factors, including innovation, performance, price, technology, product features, styling, fit and finish, brand recognition,
quality and distribution. We believe our ability to compete successfully in these markets depends on our ability to capitalize on our
competitive strengths and build brand recognition.

 Many companies, which have
greater financial and marketing resources than us, make electric two-wheelers, including Trek Bicycle Corporation, Specialized Bicycle
Components, Inc., Specialized Bicycle Components, Inc. and Rad Power Bikes Inc. While we believe we are well positioned in this competitive
market, there is no assurance that our vehicles will be successful in the respective markets in which they compete. See " Item
1A. Risk Factors — Risks Related to the Company's Business, Operations, and Industry — The markets in
which we operate are in their infancy and highly competitive, and we may not be successful in competing in this industry."

 Regulation

 We are subject to a wide variety
of laws and regulations in the United States. These laws and regulations govern various items directly or indirectly related to our
business, such as labor and employment, anti-discrimination, product liability, vehicle defects, vehicle maintenance and repairs, personal
injury, rider text messaging, service payments, consumer protection, taxation, privacy, data security, intellectual property, competition,
terms of service, mobile application accessibility, insurance, money transmittal, and environmental, health and safety. They are often
complex and subject to varying interpretations, in many cases due to their lack of specificity. As a result, their application in practice
may change or develop over time through judicial decisions or as new guidance or interpretations are provided by regulatory and governing
bodies, such as federal, state, and local administrative agencies.

 The micromobility industry
is relatively nascent and rapidly evolving. New laws and regulations continue to be adopted, implemented, interpreted and iterated upon
in response to our growing industry and associated technology. As we expand our business into new markets or introduce new offerings into
existing markets, regulatory bodies or courts may claim that (i) we are subject to additional requirements or (ii) we are prohibited
from conducting our business in certain jurisdictions.

 Our products may also be subject
to various environmental, health, and safety regulations, including, but not limited to, those regarding product safety and waste management.
For example, we are subject to environmental laws and regulations regarding the handling and disposal of hazardous substances and solid
wastes, including electronic wastes and batteries. These laws regulate the generation, storage, treatment, transportation and disposal
of solid and hazardous waste, and may impose strict, joint and several liability for the investigation and remediation of areas where
hazardous substances may have been released or disposed. For instance, the Comprehensive Environmental Response, Compensation and Liability
Act of 1980, as amended ("CERCLA") and comparable state laws impose liability, without regard to fault or the legality
of the original conduct, on certain classes of persons that contributed to the release of a hazardous substance into the environment.
These persons include current and prior owners or operators of the site where the release of the hazardous substance occurred as well
as companies that disposed or arranged for the disposal of hazardous substances found at the site. Under CERCLA, these persons may be
subject to joint and several strict liability for the costs of cleaning up the hazardous substances that have been released into the environment,
for damages to natural resources, and for the costs of certain health studies. CERCLA also authorizes the Environmental Protection Agency
("EPA") and, in some instances, third parties to act in response to threats to the public health or the environment and seek
to recover costs incurred from the responsible classes of persons. In the course of ordinary operations, we, through third parties and
contractors, may handle hazardous substances within the meaning of CERCLA and similar state statutes and, as a result, may be jointly
and severally liable for all or part of the costs required to clean up sites at which these hazardous substances have been released into
the environment.

 We may also be subject to the
Resource Conservation and Recovery Act ("RCRA") and comparable state statutes for the generation, storage, or disposal of
solid wastes, which may include hazardous wastes. RCRA regulates both solid and hazardous wastes, but, in particular, imposes strict requirements
on the generation, storage, treatment, transportation and disposal of hazardous wastes. In addition, federal and state laws may require
or otherwise regulate the reuse and recycling of batteries, including lead-acid and lithium-ion batteries, used in our products.

 Certain of our products are
also regulated by the U.S. Consumer Product Safety Commission ("CPSC") pursuant to various federal laws. CPSC can require
the manufacturer of products containing a safety defect to recall or repurchase such products and may also impose fines or penalties on
the manufacturer. Similar laws exist in some states, cities, and other countries in which we sell our products. In 2025, the CPSC proposed
regulations concerning lithium-ion battery safety in micromobility devices. While the rulemaking was later withdrawn, this development
indicates a continued focus on the safety and thermal integrity of battery systems used in electric bikes and scooters, and may result
in future mandatory standards. In April 2025, the House of Representatives passed H.R. 973, the "Setting Consumer Standards for
Lithium-Ion Batteries Act." If passed by the Senate, the act would give the CPSC 180 days to promulgate micromobility regulations.

 Additionally, in January 2025,
the National Park Service (NPS) issued a proposed rule to restrict the operation of powered micromobility devices within federal parks
to designated routes and signed zones. If finalized, this rule may limit where our vehicles can operate and require updated operational
compliance within park-adjacent jurisdictions.

 Certain of our products are
also regulated by the National Highway Traffic Safety Administration ("NHTSA") pursuant to various federal laws and regulations.
NHTSA can require the manufacturer of motor vehicles or motor vehicle equipment containing a safety defect to recall or repurchase such
products and may also impose fines or penalties on the manufacturer. Certain of our products are also regulated by EPA, and the California
Air Resources Board ("CARB") for products sold in California. EPA and CARB can require the manufacturer to recall or repurchase
vehicles that are uncertified or that contain an emission-related defect and may also impose fines or penalties on the manufacturer.

 In addition, some of our products
may be subject to local laws and regulations. For instance, in March 2023, the New York City Council amended its administrative
code to require that all powered bicycles, powered mobility devices including electric scooters, and storage batteries for such mobility
devices distributed, sold, leased, rented, or offered for sale, lease, or rental in New York City must be certified as compliant
with the applicable Underwriter Laboratories (UL) standard, which is a widely recognized standard for safety in electrical products in
the United States. The law became effective in September 2023. In 2024 and 2025, New York City and New York State introduced
additional laws and enforcement mechanisms addressing the safety of micromobility devices. These include operating manual requirements,
mandatory in-store safety disclosures, increased FDNY enforcement authority, and penalties for sales of uncertified or modified batteries.
New York City also launched a sidewalk battery charging cabinet program in spring 2025 and is considering legislation that would require
registration and license plates for e-bikes and e-scooters.

 Additionally, because we receive,
use, transmit, disclose, and store personally identifiable information and other data relating to users on our platform, we are subject
to numerous local, municipal, state, federal, and international laws and regulations that address privacy, data protection, and the collection,
storing, sharing, use, transfer, disclosure, and protection of certain types of data. Such regulations include the Controlling the Assault
of Non-Solicited Pornography and Marketing Act, the Telephone Consumer Protection Act of 1991, the U.S. Federal Health
Insurance Portability and Accountability Act of 1996 and Section 5(a) of the Federal Trade Commission Act of 1914.

 We sell and distribute our
vehicles internationally through international distributors. As such, we will be subject to the local laws of each jurisdiction in which
we sell our vehicles. These regulations may result in increased costs and expenses, which may materially and adversely affect our business,
results of operations or financial condition.

 Employees

 As of July 15, 2025, we had
64 employees, consisting of 35 full-time employees and 29 part-time employees.

 Our employees are not represented
by a labor organization or covered by a collective bargaining agreement. We believe that we maintain a good working relationship with
our employees and to date, we have not experienced any significant labor disputes.

 Item 1A. Risk Factors

 An investment in our common stock involves
a high degree of risk. You should carefully consider the risks and uncertainties described below, together with all of the other information
in this annual report, including "Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations"
and our consolidated financial statements and related notes before making a decision to invest in our common stock. Our business, operating
results, financial condition, or prospects could be materially and adversely affected by any of these risks and uncertainties. If any
of these risks actually occurs, the trading price of our common stock could decline and you might lose all or part of your investment.
Our business, operating results, financial performance, or prospects could also be harmed by risks and uncertainties not currently known
to us or that we currently do not believe are material.

 Summary of Risk Factors

 Risks Related to the Company's Business,
Operations, and Industry

 We may not meet our growing production and delivery plans, which could harm our business.

 We rely heavily on a few key vendors in China for vehicle components.

 Trade tensions, especially between the U.S. and China, may negatively impact our operations.

 We depend on third parties for quality control on China-sourced parts.

 Our ability to produce vehicles at scale and with consistent quality is unproven.

 Supply chain changes may increase costs and hurt our financial performance.

 Rising material costs or shortages, including from global conflicts, could disrupt production.

 Our vehicles may not meet customer expectations.

 Growth depends on consumer adoption of electric vehicles (EVs).

 We operate in a complex and evolving regulatory environment.

 We may struggle to control operational costs effectively.

 Weak brand recognition may impact customer acceptance and sales.

 Our limited operating history makes it hard to predict future performance.

 There is substantial doubt about our ability to continue as a going concern.

 Material weaknesses exist in our internal controls over financial reporting.

 We face intense competition in a young and fast-evolving market.

 Product liability claims could significantly harm our financial position.

 We rely on key executives; their loss could impact operations.

 Our management lacks experience running a public company.

 We may face costly and time-consuming intellectual property disputes.

 Inadequate protection of IP could lead to litigation and brand damage.

 Cybersecurity threats could compromise our systems and data.

 We may fail to develop new products or improve existing ones to meet demand.

 Limited experience with vehicle servicing may harm customer satisfaction.

 Warranty claims or recalls could have a major financial impact.

 Aftermarket modifications may impair vehicle performance and harm our reputation.

 Risks Related to Our Securities

 A stable and active market for our stock may not develop or be maintained.

 Stock price may be highly volatile and unpredictable.

 Directors and officers hold significant control, limiting shareholder influence.

 Public company status increases compliance costs.

 Lack of analyst coverage or negative analyst opinions may reduce stock value.

 "Emerging growth company" status may deter investors due to reduced disclosures.

 As a "smaller reporting company," we may provide less public information.

 Future issuance of preferred stock could deter takeovers and affect stock value.

 We do not expect to pay cash dividends in the near future.

 Future stock sales may dilute ownership and lower the stock price.

 Directors and executive officers' 18.7% control may block beneficial actions for shareholders.

 Delaware laws and corporate bylaws may hinder mergers or takeovers.

 Public company compliance diverts management focus from core operations.

 We may fail to meet Nasdaq listing requirements.

 FINRA rules may restrict buying/selling of our stock.

 Warrant holders have no stockholder rights until conversion.

 Lack of analyst reports or negative changes in coverage could harm our stock.

 Risks Related to the Company's Business,
Operations, and Industry

 We may be unable to meet our growing production
plans and delivery plans, any of which could harm our business and prospects.

 In order to meet the demand
of our products in domestic and overseas markets, we plan to open more stores overseas while focusing on developing more wholesale domestic
customers. Our plans call for achieving and sustaining increases in vehicles production and deliveries. Our ability to achieve these plans
will depend upon a number of factors, including our suppliers' ability to support our needs and our ability to utilize our current
assembling capacity, achieve the planned production yield and further increase capacity as planned while maintaining our desired quality
levels and optimize design and production changes. If we are unable to realize our plans, our brand, business, prospects, financial condition
and operating results could be materially damaged.

 We are dependent on a limited number of
principal vendors in China for a significant portion of our vehicle components, and the inability of these vendors to deliver necessary
components of our products according to our schedule and at prices, quality levels and volumes acceptable to us, or our inability to efficiently
manage these components, could have a material adverse effect on our financial condition and operating results.

 We source a significant portion
of our vehicle components from China and then assemble these parts into our products in the United States. We rely on a limited number
of principal vendors who help us source and supply parts used in our vehicles from various suppliers in China. We currently do not maintain
long-term contracts with our suppliers and vendors. While we believe our contract management processes are strong, we nevertheless could
experience difficulties.

 If our principal vendors decide
to terminate their partnership with us, experience sourcing failures, or otherwise become unable to provide us with the necessary components
in sufficient quantities, in a timely manner, and on acceptable terms, we may have to delay the production and sale of our products or
find an alternative vendor. Any significant unanticipated demand would require us to procure additional components in a short amount of
time. While we believe that we will be able to secure additional or alternate sources of supply for most of our components in a relatively
short time frame, there is no assurance that we will be able to do so or develop our own replacements for certain highly customized components
of our products.

 In addition, if we encounter
unexpected difficulties with our principal vendors, and if we are unable to fill these needs from other vendors in a timely manner, we
could experience production delays and potential loss of access to important technology and parts for producing, servicing and supporting
our vehicles. The loss of any vendors or the disruption in the supply of components from these vendors could lead to design changes and
delays in product deliveries to our customers, which could hurt our relationships with our customers and result in negative publicity,
damage to our brand and a material and adverse effect on our business, prospects, financial condition and operating results.

 The current tensions in international trade
policies and rising political tensions, particularly between the United States and China, may adversely impact our business and operating
results.

 We source a significant portion
of our vehicle components from China. The application of sanctions, trade restrictions or tariffs by the U.S. or other countries
may adversely impact the industry supply chain. The U.S. government has implemented policies restricting international trade and
investment, such as tariffs, export controls, economic or trade sanctions, and foreign investment filing and approval requirements. These
actions may materially and adversely affect international trade, global financial markets, and the stability of the global economic condition.
In the past, the U.S. government has imposed higher tariffs on certain products imported from China to penalize China for what it
characterizes as unfair trade practices. China has responded by imposing higher tariffs on certain products imported from the United States.

 In particular, in April 2025
the United States announced an across-the-board 10% tariff on all countries and individualized higher tariffs on certain countries, including
China. A great deal of uncertainty surrounds the state of tariffs and other trade measures worldwide. While the current U.S. administration
has been actively focused on trade, the exact implementation, amount, scope and nature of these tariffs remains unclear. It also remains
unclear how other countries will respond to the United States' trade proposals and actions.

 As of now, high reciprocal
tariffs are in effect between China and the United States and the United States has announced, but temporarily paused the effective date
of, tariffs on goods imported from many other countries, including Mexico, Canada, Taiwan and the European Union. Significant trade partners
such as Mexico, Canada and the European Union have announced retaliatory tariffs. Further, while the United States has exempted certain
technology products such as semiconductors and electronics from the reciprocal tariffs announced on April 2, 2025 such that our products
are not subject to the announced tariffs, it has also initiated Section 232 investigations on such products, possibly leading to the imposition
of specific tariffs on these products or on products that incorporate them.

 We cannot predict what additional
actions, if any, may be taken with respect to tariffs or trade relations between the United States and China, what products may be
subject to such actions, or what actions may be taken by the China in retaliation. The adoption and expansion of trade restrictions, the
occurrence of a trade war, or other governmental action related to tariffs, trade agreements or related policies have the potential to
adversely impact our supply chain and access to equipment, our costs and our product margins. The additional tariffs imposed on components
or equipment that we source from China will increase our costs and could have an adverse impact on our operating results and financial
conditions in future periods.

 We rely on third parties for quality control
on the parts sourced from China.

 We rely on one of our principal
vendors in China to monitor the factories manufacturing the parts sourced from China for use in our vehicles. We have limited control
over the ability of third-party manufacturers to maintain adequate quality control, quality assurance and qualified personnel. If our
principal vendor fails to perform its duties, including proper inspections on sample products before mass production, the third-party
manufacturers may fail to manufacture our product components according to our schedule and requirements or at all. The quality of our
products is crucial to our continued growth. If our principal vendor fails to perform its supervising and inspecting duties properly,
our final products could have quality issues, which could result in product recall, return of products and potential lawsuits against
us if our products cause any injuries or damages due to the quality issues. Any occurrence of the foregoing could hurt our relationship
with our customers and result in negative publicity, damage to our brand and a material and adverse effect on our business, prospects,
financial condition and operating results.

 Our success will depend on our ability to
economically produce our vehicles at scale, and our ability to produce vehicles of sufficient quality and appeal to customers on schedule
and at scale is unproven.

 Our business success will depend
in large part on our ability to economically produce, market and sell our vehicles at sufficient capacity to meet the demands of our customers.
We will need to scale our production capacity in order to successfully implement our growth strategy.

 We currently have one facility
in which we assemble all of our products in Maspeth, New York. We have no experience in large-scale production of our vehicles, and
we do not know whether we will be able to develop efficient, automated, low-cost production capabilities and processes, such that we will
be able to meet the quality, price and production standards, as well as the production volumes, required to successfully market our vehicles
and meet our business objectives and customer needs. Any failure to develop and scale our production capability and processes could have
a material adverse effect on our business, prospects, financial condition and operating results.

 Changes in our supply chain may result in
increased cost. If we are unsuccessful in our efforts to control and reduce supplier costs and manage inventory at optimal levels, our
operating results will suffer.

 As we plan to continue expanding
our business, we expect to include more products and their components in our inventory, which will make it more challenging for us to
manage our inventory effectively and will put more pressure on our warehousing system. Maintaining excessive inventory levels beyond customer
demand can lead to higher inventory carrying costs. High inventory levels may also require us to commit substantial capital resources,
preventing us from using that capital for other important purposes. On the other hand, if we underestimate customer demand or encounter
delays from our vendors in supplying vehicle components promptly, we may face inventory shortages.

 This could potentially compel
us to procure vehicle components at higher costs, leading to a backorder situation or unfulfilled customer orders, which could lead to
potential cancellations or loss of customers to competitors and negatively impact our brand image and reputation.

 There is no assurance that
our suppliers will ultimately be able to meet our cost, quality and volume needs, or do so on a timely basis. Furthermore, as the volume
of our sales increases, we will need to accurately forecast, purchase and warehouse components at much higher volumes than we have experience
with. If we are unable to accurately match the timing and quantities of component purchases to our actual needs, or successfully implement
automation, inventory management and other systems to accommodate the increased complexity in our supply chain, we may incur unexpected
production disruption, or storage, transportation and write-off costs. Any of the above could have a material adverse effect on our business,
prospects, financial condition and operating results.

 Increases in costs, disruption of supply,
or shortage of materials used to manufacture the component parts used in our vehicles, including potential risks stemming from the conflict
between Russia and Ukraine, could harm our business.

 We may experience increases
in the cost or a sustained interruption in the supply or shortage of materials. Any such increase, supply interruption or shortage could
materially and negatively impact our business, prospects, financial condition and operating results. The prices for these materials fluctuate,
and their available supply may be unstable, depending on market conditions and global demand for these materials, including as a result
of increased production of similar products by our competitors, and could adversely affect our business and operating results. These risks
include:

 an increase in the cost, or decrease in the available supply,
of materials used in the battery packs;

 tariffs on the materials we source in China; and

 fluctuations in the value of the Chinese Renminbi against
the U.S. dollar as our purchases for the components of our products are denominated in Chinese Renminbi.

 Disruption in our supply chain
and rising prices of raw materials as a result of the conflict between Russia and Ukraine may also negatively impact our businesses. In
February 2022, Russian military forces launched a military action in Ukraine. The ongoing military action between Russia and Ukraine,
sanctions and other measures imposed against Russia, Belarus, the Crimea Region of Ukraine, the so-called Donetsk People's Republic
and the so-called Luhansk People's Republic by the U.S. and other countries and bodies around the world, as well as the existing
and potential further responses from Russia or other countries to such sanctions, tensions and military actions, has in the past and in
the future could continue to adversely affect the global economy and financial markets and could adversely affect our business, prospects,
financial condition and operating results. Additional potential sanctions and penalties have also been proposed and/or threatened. Although
our operations have not experienced a material adverse impact on supply chain or other aspects of our business from the ongoing conflict
between Russia and Ukraine, during times of war and other major conflicts, we and the third parties upon which we rely may be vulnerable
to a heightened risk of these attacks that could materially disrupt our operations, supply chain, and ability to produce, sell and distribute
our products. We cannot predict the progress or outcome of the conflict in Ukraine or its impacts in Ukraine, Russia or Belarus as the
conflict, and any resulting government reactions, are rapidly developing and beyond our control. The extent and duration of the military
action, sanctions and resulting market disruptions could be significant, could result in increases in commodity, freight, logistics and
input costs and could potentially have substantial impact on the global economy and our business for an unknown period of time.

 Substantial increases in the
prices for our materials or prices charged to us would increase our operating costs, and could reduce our margins if we cannot recoup
the increased costs through increased prices. Any attempts to increase prices in response to increased material costs could result in
cancellations of vehicle orders and therefore materially and adversely affect our brand, business, prospects, financial condition and
operating results.

 Our vehicles may not perform in line with
customer expectations.

 Our vehicles may not perform
in line with customers' expectations. For example, our vehicles may not have the durability or longevity of other vehicles in the
market, and may not be as easy and convenient to repair as other vehicles on the market. Any product defects or any other failure of our
vehicles to perform as expected could harm our reputation and result in adverse publicity, lost revenue, delivery delays, product recalls,
product liability claims, harm to our brand and reputation, and significant warranty and other expenses, and could have a material adverse
impact on our business, prospects, financial condition and operating results.

 In addition, the range of our
vehicles on a single charge declines principally as a function of usage, time and charging patterns as well as other factors. For example,
a customer's use of his or her electric vehicle as well as the frequency with which he or she charges the battery can result in
additional deterioration of the battery's ability to hold a charge. Furthermore, our vehicles may contain defects in design and
manufacture that may cause them not to perform as expected or that may require repair. If any of our vehicles fail to perform as expected,
we may need to delay deliveries, initiate product recalls and provide servicing or updates under warranty at our expenses, which could
materially and adversely affect our brand, business, prospects, financial condition and operating results.

 Our future growth is dependent on the demand
for, and upon consumers' willingness to adopt electric vehicles.

 Demand for our products depends
to a large extent on general, economic, political and social conditions in a given market and the introduction of new electric vehicles
and technologies. As our business grows, economic conditions and trends will impact our business, prospects and operating results as well.

 Demand for our electric vehicles
may also be affected by factors directly impacting the price or the cost of purchasing and operating electric vehicles such as sales and
financing incentives, prices of raw materials, parts and components and governmental regulations, including tariffs, import regulation
and other taxes. Volatility in demand may lead to lower vehicle unit sales, which may result in further downward price pressure and adversely
affect our business, prospects, financial condition and operating results.

 In addition, the demand for
our vehicles and services will highly depend upon the adoption by consumers of new energy vehicles in general and electric vehicles in
particular. The market for new energy vehicles is still rapidly evolving, characterized by rapidly changing technologies, price and other
competition, evolving government regulation and industry standards and changing consumer demands and behaviors.

 Other factors that may influence
the adoption of new energy vehicles, and specifically electric vehicles, include:

 perceptions about electric vehicle quality, safety, design,
performance and cost, especially if adverse events or accidents occur that are linked to the quality or safety of electric vehicles,
whether or not such vehicles are produced by us or other companies;

 perceptions about vehicle safety in general;

 the limited range over which electric vehicles may be driven
on a single battery charge and the speed at which batteries can be recharged;

 the decline of an electric vehicle's range resulting
from deterioration over time in the battery's ability to hold a charge;

 the availability of service for electric vehicles;

 the environmental consciousness of consumers;

 the availability of tax and other governmental incentives
to purchase and operate electric vehicles or future regulation requiring increased use of nonpolluting vehicles; and

 macroeconomic factors.

 Any of the factors described
above may cause current or potential customers not to purchase our electric vehicles and use our services. If the market for electric
vehicles does not develop as we expect or develops more slowly than we expect, our business, prospects, financial condition and operating
results will be affected.

 The electric mobility industry is subject
to rapidly changing and often complex regulatory environments.

 The electric mobility
industry is subject to rapidly changing and often complex regulatory environments at local, state, national, and international
levels. Evolving regulations related to safety standards, emissions, licensing, and operational requirements can have a substantial
impact on our business operations and profitability. Compliance with these changing regulations may necessitate costly modifications
to our products, business processes, or market strategies, which could lead to increased expenses and delays in product development
and market entry. Failure to navigate and adhere to evolving regulations adequately could result in legal and financial liabilities,
damage to our reputation, and potential market restrictions. Furthermore, inconsistency in regulations between different
jurisdictions may create challenges in maintaining uniform business practices and product offerings, increasing our exposure to
regulatory risks. Furthermore, a significant portion of our customer base comprises food delivery workers, and if leading food
delivery platforms like Uber Eats and DoorDash impose new requirements on the type of electric vehicles they allow, non-compliance
on our part could result in the loss of these customers. While we believe we are presently in compliance with applicable laws and
regulations in our operating regions, there can be no assurance that we can always promptly adapt to the rapidly changing regulatory
environment. If we fail to effectively adjust to the changing regulatory landscape and comply with applicable laws and regulations
in our operating regions, our business, prospects, financial condition and operating results would be materially and adversely
affected.

 We may be unable to adequately control the
costs associated with our operations.

 We expect to incur significant
costs which will impact our profitability, including research and development expenses as we roll out new models and improve existing
models, raw material procurement costs and selling and distribution expenses as we build our brand and market our vehicles. Our ability
to remain profitable in the future will not only depend on our ability to successfully market our vehicles and other products and services
but also to control our costs. If we are unable to cost efficiently design, manufacture, market, sell and distribute and service our vehicles
and services, our business, prospects, financial condition and operating results would be materially and adversely affected.

 We may not succeed in establishing, maintaining
and strengthening our brand, which could materially and adversely affect customer acceptance of our products, which could in turn materially
affect our business, results of operations or financial condition.

 Our business and prospects
heavily depend on our ability to develop, maintain and strengthen the Fly E-Bike brand. If we are unable to establish, maintain and strengthen
our brand, we may lose the opportunity to build and maintain a critical mass of customers. Our ability to develop, maintain and strengthen
our brand will depend heavily on the success of our marketing efforts. Failure to develop and maintain a strong brand could materially
and adversely affect customer acceptance of our vehicles, could result in suppliers and other third parties being less likely to invest
time and resources in developing business relationships with us, and could materially adversely affect our business, prospects, financial
condition and operating results.

 We have a relatively short operating history,
which makes it difficult to evaluate our future prospects, forecast financial results, and assess the risks and challenges we may face.

 Our business is relatively
new and rapidly evolving. We first launched our business in 2018 and have a limited operating history. We have encountered in the past,
and will encounter in the future, risks and uncertainties frequently experienced by growing companies with limited operating histories
in rapidly changing industries. Risks and challenges we have faced or expect to face as a result of our relatively limited operating history
and evolving business model include our ability to:

 make operating decisions and evaluate our future prospects
and the risks and challenges we may encounter;

 forecast our revenue and budget for and manage our expenses;

 attract new customers and retain existing customers in a
cost-effective manner;

 comply with existing and new or modified laws and regulations
applicable to our business;

 manage our business assets and expenses;

 plan for and manage capital expenditures for our current
and future offerings and manage our supply chain and supplier relationships related to our current and future offerings;

 anticipate and respond to macroeconomic changes and changes
in the markets in which we operate;

 maintain and enhance the value of our reputation and brand;

 effectively manage our growth and business operations;

 successfully expand our geographic reach;

 hire, integrate and retain talented people at all levels
of our organization; and

 successfully develop new features, offerings and services
to enhance the experience of customers.

 If our assumptions regarding
these risks and uncertainties, which we use to plan and operate our business, are incorrect or change, or if we do not address these risks
successfully, our results of operations could differ materially from our expectations and our business, prospects, financial condition
and operating results could be adversely affected.

 There is substantial doubt about our ability
to continue as a going concern.

 We believe there is substantial
doubt about our ability to continue as a going concern as of the date of this annual report. The going concern may be included in our
future reports and could materially limit our ability to raise additional funds through the issuance of new debt or equity securities
or otherwise.

 As of March 31, 2025, we had
cash of $0.8 million. We had working capital of $1.3 million and $0.3 million as of March 31, 2025 and March 31, 2024,
respectively. We had net loss of $5.3 million and net income of $1.9 million for the year ended March 31, 2025 and 2024, respectively.
During the year ended March 31, 2025, net cash used in operating activities of the Company was approximately $10.1 million. As of
March 31, 2025, we had a current portion of contractual obligation of approximately $8.9 million. 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.
There is no assurance that we will be successful in implementing the foregoing plans or that additional financing will be available to
us on commercially reasonable terms, or at all. Our inability to secure needed financing when required could require material changes
to our business plans and could have a material adverse effect on our ability to continue as a going concern and results of operations.

 We identified material weaknesses in our
internal control over financial reporting. If we are unable to remediate these material weaknesses, or identify additional material weaknesses
in the future or otherwise fail to maintain an effective system of internal controls, we may not be able to accurately or timely report
our financial condition or results of operations, which may adversely affect our business and stock price.

 In connection with the preparation
and audit of our consolidated financial statements for the year ended March 31, 2025, we identified material weaknesses in our internal
control over financial reporting. A material weakness is a deficiency, or combination of deficiencies, in internal control over financial
reporting such that there is a reasonable possibility that a material misstatement of our annual or interim consolidated financial statements
will not be prevented or detected on a timely basis. The material weaknesses that have been identified included our lack of (i) sufficient
financial reporting and accounting personnel with appropriate knowledge of generally accepted accounting principles in the United States
of America (the "U.S. GAAP") and SEC reporting requirements to properly address complex U.S. GAAP accounting issues
and to prepare and review our consolidated financial statements and related disclosures to fulfill U.S. GAAP and SEC financial reporting
requirements, (ii) formal internal control policies and internal independent supervision functions to establish formal risk assessment
process and internal control framework, and (iii) sufficient controls designed and implemented in IT environment and IT general control
activities, which are mainly associated with areas of logical access management, change management, computer operation, service organization
management as well as cyber security management.

 In
response to the material weaknesses identified for the year ended March 31, 2025, we are in the process of implementing a number
of measures to address the material weaknesses identified, including but not limited to (i) hiring additional qualified accounting
and financial personnel with appropriate knowledge and experience in U.S. GAAP accounting and SEC reporting; (ii) organizing
regular training for our accounting staff, especially training related to U.S. GAAP and SEC reporting requirements; and (iii) regularly
conducting checks on the IT software we utilize to ensure its proper functionality, and arranging training sessions for our IT staff.
We also plan to adopt additional measures to improve our internal control over financial reporting, including, among others, creating
a U.S. GAAP accounting policies and procedures manual, which will be maintained, reviewed and updated, on a regular basis, to the
latest U.S. GAAP accounting standards, strengthening corporate governance as well as general control over our information technology.
While we believe these efforts, once completed, will remediate the material weaknesses, we may not be able to complete our evaluation,
testing or any required remediation in a timely fashion, or at all. We cannot assure you that the measures we have taken to date and
may take in the future, will be sufficient to remediate the control deficiencies that led to our material weaknesses in internal control
over financial reporting, to prevent the identification of significant deficiencies in the future or that they will prevent or avoid
potential future material weaknesses. The effectiveness of our internal control over financial reporting is subject to various inherent
limitations, including cost limitations, judgments used in decision making, assumptions about the likelihood of future events, the possibility
of human error and the risk of fraud. If we are unable to remediate the material weaknesses, our ability to record, process and report
financial information accurately, and to prepare financial statements within the time periods required of public companies could be adversely
affected which, in turn, may adversely affect our reputation and business and the market price of our common stock. In addition, any
such failures could result in litigation or regulatory actions by the SEC or other regulatory authorities, loss of investor confidence,
delisting of our securities and harm our reputation and financial condition, or diversion of financial and management resources from
the operation of our business.

 The markets in which we operate are in their
infancy and highly competitive, and we may not be successful in competing in this industry.

 The market of electric two-wheel
vehicles is in its infancy, and we expect it will become more competitive in the future. There is no assurance that our vehicles will
be successful in the respective markets in which they compete. A significant and growing number of established and new companies, as well
as other companies, have entered or are reported to have plans to enter the electric vehicle market. Most of our current and potential
competitors have significantly greater financial, technical, manufacturing, marketing, sales networks and other resources than we do and
may be able to devote greater resources to the design, development, manufacturing, distribution, promotion, sale and support of their
products. Increased competition could result in lower vehicles sales, price reductions, revenue shortfalls, loss of customers and loss
of market share, which could harm our business, prospects, financial condition and operating results.

 An adverse determination in any significant
product liability claim against us could materially adversely affect our business, results of operations or financial condition.

 The development, production,
marketing, sale and usage of our vehicles will expose us to significant risks associated with product liability claims. As a provider
of consumer products, we are, from time to time, subject to civil litigation regarding those products, including in publicly-available
court filings. Our business is vulnerable to product liability claims, and we may face inherent risk of exposure to claims in the event
our vehicles do not perform or are claimed to not have performed as expected. If our products are defective, malfunction or are used incorrectly
by our customers, it may result in bodily injury, property damage or other injury, including death, which could give rise to product liability
claims against us. For example, our certain EVs use lithium-ion batteries, which, if not appropriately managed and controlled, can rapidly
release energy by venting smoke and flames that can ignite nearby materials. Furthermore, there is some risk of electrocution if individuals
who attempt to repair battery packs do not follow applicable maintenance and repair protocols. Any such damage or injury would likely
lead to product liability claims against us and potentially a safety recall. Any losses that we may suffer from any liability claims and
the effect that any product liability litigation may have upon the brand image, reputation and marketability of our products could have
a material adverse impact on our business, results of operations or financial condition. No assurance can be given that material product
liability claims will not be made in the future against us, or that claims will not arise in the future in excess or outside of our insurance
coverage and contractual indemnities with suppliers and manufacturers. We may not be able to obtain adequate product liability insurance
for our existing or new products or the cost of doing so may be prohibitive. Adverse determinations of material product liability claims
made against us could also harm our reputation and cause us to lose customers and could have a material adverse effect on our business,
prospects, financial condition and operating results.

 We are dependent upon our executives for
their services and any interruption in their ability to provide their services could cause us to cease operations.

 The loss of the services of
any member of our management team, including our CEO, could have a material adverse effect on us. We do not maintain any key man life
insurance on our executives, including our CEO. The loss of the services of any of our executive management could impair our ability
to execute our business plan and growth strategy, as we may not be able to find suitable individuals to replace such personnel on a timely
basis or without incurring increased costs, or at all. Our future success will also depend on our ability to attract, retain and motivate
other highly skilled employees. Competition for personnel in our industry is intense. We may not be able to retain our key employees or
attract, assimilate or retain other highly qualified employees in the future. If we do not succeed in attracting new personnel or retaining
and motivating our current personnel, our business, prospects, financial condition and operating results will be adversely affected.

 Our management team does not have any experience
in operating a publicly traded company.

 While our management team has
a wide breadth of business experience, none of our executive officers have held an executive position at a publicly traded company. Given
the onerous compliance requirements to which public companies are subject, there is a chance our executive officers will fail to perform
at a level expected of public company officers. In such an event, the Company's share price could be adversely affected. The management
team's limited experience in dealing with the increasingly complex laws pertaining to public companies could be a significant disadvantage
in that it is likely that an increasing amount of their time may be devoted to these activities which will result in less time being devoted
to the management and growth of the company. We may not have adequate personnel with the appropriate level of knowledge, experience and
training in the accounting policies, practices or internal control over financial reporting required of public companies in the United States.
In addition, the development and implementation of the standards and controls necessary for us to achieve the level of accounting standards
required of a public company in the United States may require costs greater than expected. It is possible that we will be required
to expand our employee base and hire additional employees to support our operations as a public company which will increase our operating
costs in future periods.

 We may need to defend ourselves against
patent or trademark infringement claims, which may be time-consuming and would cause us to incur substantial costs.

 Companies, organizations or
individuals, including our competitors, may hold or obtain patents, trademarks or other proprietary rights that would prevent, limit or
interfere with our ability to make, use, develop, sell or market our vehicles, which could make it more difficult for us to operate our
business. From time to time, we receive communications from holders of patents or trademarks regarding their proprietary rights, including
in publicly available court filings. Companies holding patents or other intellectual property rights may bring suits alleging infringement
of such rights or otherwise assert their rights. If we are determined to have infringed upon a third party's intellectual property
rights, we may be required to do one or more of the following:

 cease selling, incorporating certain components into, or
using vehicles or offering goods or services that incorporate or use the challenged intellectual property;

 pay substantial damages;

 seek a license from the holder of the infringed intellectual
property right, which license may not be available on reasonable terms or at all;

 redesign our vehicles or other goods or services; or

 establish and maintain alternative branding for our products
and services.

 In the event of a successful
claim of infringement against us and our failure or inability to obtain a license to the infringed technology or other intellectual property
right, our business, prospects, operating results and financial condition could be materially and adversely affected. In addition, any
litigation or claims, whether or not valid, could result in substantial costs, negative publicity and diversion of resources and management
attention.

 If we are unable to adequately establish,
maintain, protect and enforce our intellectual property and proprietary rights, our reputation may be harmed, we may be subject to litigation,
and our business may be adversely affected.

 Our future success and competitive
position depend on our ability to establish, maintain, protect and enforce our intellectual property and proprietary rights. We currently
hold one trademark in the United States. Other than that, we do not own any issued patents, copyright nor other intellectual property
registrations in the United States. We also seek to protect our trade secrets and other proprietary information through common law
copyright and trademark principles, but these actions may be inadequate. The steps we have taken and will take may not prevent unauthorized
use, reverse engineering or misappropriation of our technologies and we may be unable to detect any of the foregoing. Our lack of intellectual
property protection in the United States may restrict our ability to protect our technologies and processes from competition. Defending
and enforcing our intellectual property rights may result in litigation, which can be costly and divert management attention and resources.
We plan to apply for patents, additional trademarks and other intellectual property registrations in the United States in the future
to protect our brand and technologies. However, the intellectual property application process is complex and can be time-consuming. Even
after investing significant resources in preparing and filing an application, there is no guarantee that it will be granted. If our efforts
to protect our technologies and intellectual property are inadequate, the value of our brand and other intangible assets may be diminished
and competitors may be able to mimic our cloud services. Any of these events could have a material adverse effect on our business, prospects,
financial condition and operating results.

 Improper activities by third parties, exploitation
of encryption technology, new data-hacking tools and discoveries and other events or developments may result in future intrusions into
or compromise of our networks and technology systems.

 Our systems, website, data
(wherever stored), software or networks and those of third-party suppliers and service providers, are vulnerable to security breaches,
including unauthorized access, computer viruses or other malicious code and other cyber threats that could have a security impact. We,
our third-party suppliers and service providers may not be able to anticipate evolving techniques used to effect security breaches (which
change frequently and may not be known until launched), or prevent attacks by hackers, including phishing or other cyber-attacks, or prevent
breaches due to employee error or malfeasance, in a timely manner or at all. Cyber-attacks have become far more prevalent in the past
few years, potentially leading to the theft or manipulation of confidential and proprietary information or loss of access to, or
destruction of, data on our or third-party systems, as well as interruptions or malfunctions in our or third parties' operations.
If a breach occurs within the supply chain, disjointed or delayed response efforts can exacerbate the impact, prolong recovery time, and
increase potential damage to our operations and reputation. In addition, at present, there are no existing contractual agreements delineating
cybersecurity responsibilities between our company and our suppliers or service providers. This absence of clear terms poses a risk wherein
disputes regarding liability and accountability in the event of a security breach may emerge. Such disputes could potentially result in
legal complexities, financial losses, and impeded incident resolution within our supply chain.

 We have taken and are taking
steps to monitor and enhance the security of our information technology systems. Furthermore, our board of directors schedules periodic
discussions with management regarding significant risk exposures, including risks related to data privacy and cybersecurity, and assists
in taking steps to mitigate the risk of cyberattacks on us. However, the techniques used by cyber criminals change frequently and often
cannot be recognized until launched against a target; accordingly, we may not be able to anticipate these frequently changing techniques,
implement adequate preventive measures for all of them or remediate any unauthorized access on a timely basis. All preventive measures,
as well as additional measures that may be required to comply with rapidly evolving security standards and protocols imposed by law, regulation,
industry standards or contractual obligations, may cause us to incur substantial expenses. Any unauthorized access into our customers'
sensitive information, data belonging to us or our vendors or employee data, even if we are compliant with industry security standards,
could put us at a competitive disadvantage, result in deterioration of our customers', vendors' and employees' confidence
in us and subject us to investigations, required notifications, potential litigation, liability, fines and penalties and consent decrees,
resulting in a possible material adverse impact on our brand, business, prospects, financial condition and operating results.

 We may be unable to improve our existing
products and develop and market new products that respond to customer needs and preferences and achieve market acceptance.

 We may not be able to compete
as effectively with our competitors, and ultimately satisfy the needs and preferences of our customers unless we can successfully enhance
existing products, develop new innovative products and distinguish our products from our competitors' products through innovation
and design. Product development requires significant financial, technological and other resources. There can be no assurance that we will
be able to incur a level of investment in research and development that will be sufficient to successfully make us competitive in product
innovation and design. In addition, even if we are able to successfully enhance existing products and develop new products, there is no
guarantee that the markets for our existing products and new products will progress as anticipated. If any of the markets in which our
existing products compete do not develop as expected, our business, prospects, financial condition and operating results could be materially
adversely affected.

 We have limited experience servicing our
vehicles, and if we are unable to address the service requirements of our customers, our business could be materially and adversely affected.

 We have limited experience
servicing or repairing our vehicles. Servicing electric vehicles is different than servicing traditional vehicles and requires specialized
skills, including training and servicing techniques for electric vehicles. If we are unable to successfully address the servicing requirements
of our customers or establish a market perception that we maintain high-quality support, our reputation could be harmed, we may be subject
to claims from our customers, and our business, prospects, financial condition and operating results may be materially and adversely affected.

 Significant product repair and/or replacement
due to product warranty claims or product recalls could have a material adverse impact on our business, results of operations or financial
condition.

 We provide a three-month warranty
against defects for our EVs and three-month warranty on the battery. Our warranty will generally require us to repair or replace defective
products during such warranty periods at no cost to the consumer. We will record provisions based on an estimate of product warranty claims,
but there is the possibility that actual claims may exceed these provisions and therefore negatively impact our results of operations
or financial condition.

 In addition, we may in the
future be required to make product recalls or could be held liable in the event that some of our products do not meet safety standards
or statutory requirements on product safety, even if the defects related to any such recall or liability are not covered by our limited
warranty. The repair and replacement costs that we could incur in connection with a recall could have a material adverse effect on our
business, results of operations or financial condition. Product recalls could also harm our reputation and cause us to lose customers,
particularly if recalls cause consumers to question the safety or reliability of our products, which could have a material adverse effect
on our business, prospects, financial condition and operating results.

 If our vehicle owners customize our vehicles
or change the charging infrastructure with aftermarket products, the vehicle may not operate properly, which may create negative publicity
and could harm our business.

 Electric vehicle enthusiasts
may seek to "hack" our vehicles to modify their performance, which could compromise vehicle safety systems. Also, customers
may customize their vehicles with after-market parts that can compromise driver safety. We do not test, nor do we endorse, such changes
or products. In addition, the use of improper external cabling or unsafe charging outlets can expose our customers to injury from high
voltage electricity. Such unauthorized modifications could reduce the safety of our vehicles and any injuries resulting from such modifications
could result in adverse publicity which would negatively affect our brand and harm our business, prospects, financial condition and operating
results.

 Risks Related to Our Securities

 An active, liquid and orderly trading market
for our common stock may not develop or be maintained, and our stock price may be volatile.

 We cannot predict the nature
of the market for our common stock, and we cannot assure you that an active, liquid or orderly trading market for our common stock will
be maintained. To the extent that an active market does not develop, you may have difficulty in selling any shares of our common stock.
If there is no active, liquid or orderly market for our common stock, the reported bid and asked price at the time you seek to purchase
or sell shares may not reflect the price at which you could either buy or sell shares of our common stock.

 Our directors and executive officers will
continue to exercise significant control over us, which will limit your ability to influence corporate matters and could delay or prevent
a change in corporate control.

 The existing holdings of our directors and executive officers is in
the aggregate, approximately 18.7% of our outstanding common stock as of the date of this annual report. As a result, these stockholders
may be able to influence our management and affairs and control the outcome of matters submitted to our stockholders for approval, including
the election of directors and any sale, merger, consolidation, or sale of all or substantially all of our assets. The concentration of
voting power among one or more of these stockholders may have an adverse effect on the price of our common stock.

 In addition, this concentration
of ownership might adversely affect the market price of our common stock by: (1) delaying, deferring or preventing a change of control
of our company; (2) impeding a merger, consolidation, takeover or other business combination involving our company; or (3) discouraging
a potential acquirer from making a tender offer or otherwise attempting to obtain control of our company.

 The price of our common stock may be volatile
and fluctuate substantially and rapidly, which could result in the loss of a significant part of your investment.

 The market price of our
common stock may fluctuate substantially and rapidly and may be higher or lower than the public offering price. The stock market, in
general, and the market for smaller companies such as ours, in particular, have experienced extreme price and volume fluctuations. Such
volatility, including any stock-run up, may be unrelated or disproportionate to the actual or expected operating performance and financial
condition or prospects of those companies, making it difficult for the investors to assess the rapidly changing value of our common stock.
These fluctuations may be even more pronounced in the trading market for our common stock shortly following the listing of our common
stock on Nasdaq as a result of the limited public float available following the IPO. The market price for our common stock may be
influenced by many factors, including:

 limited trading
 volume;

 our success in
 commercializing our products;

 developments with
 respect to competitive products or technologies;

 developments or
 disputes concerning patent applications, issued patents or other intellectual property or
 proprietary rights;

 the recruitment
 or departure of key personnel;

 actual or anticipated
 changes in estimates as to financial results, commercialization timelines or recommendations
 by securities analysts;

 variations in
 our financial results or the financial results of companies that are perceived to be similar
 to us;

 sales of common
 stock by us, our executive officers, directors or principal stockholders or others;

 general economic,
 industry and market conditions, such as the impact of the COVID-19 pandemic on our industry;

 the publication
 of unfavorable research reports and updates thereto by financial analysts; and

 the other factors
 described in this "Risk Factors" section.

 In the past, many companies
that have experienced volatility in the market price of their stock have been subject to securities class action litigation. We may be
the target of this type of litigation in the future. Securities litigation against us could result in substantial costs and divert our
management's attention from other business concerns, which could seriously harm our business.

 We incur increased costs as a result of
being a publicly traded company.

 As a company with publicly traded securities,
we incur additional legal, accounting and other expenses not presently incurred. In addition, the Sarbanes-Oxley Act of 2002, the Dodd-Frank
Wall Street Reform and Consumer Protection Act of 2010, as well as rules promulgated by the SEC and the national securities exchange
on which we list, requires us to adopt corporate governance practices applicable to U.S. public companies. These rules and regulations
will increase our legal and financial compliance costs.

 If securities or industry analysts do not
publish research or reports about us, or if they adversely change their recommendations regarding our common stock, then our stock price
and trading volume could decline.

 The trading market for our common stock will
be influenced by the research and reports that industry or securities analysts publish about us, our industry and our market. If no analyst
elects to cover us and publish research or reports about us, the market for our common stock could be severely limited and our stock
price could be adversely affected. As a small-cap company, we are more likely than our larger competitors to lack coverage from securities
analysts. In addition, even if we receive analyst coverage, if one or more analysts ceases coverage of us or fails to regularly publish
reports on us, we could lose visibility in the financial markets, which in turn could cause our stock price or trading volume to decline.
If one or more analysts who elect to cover us issue negative reports or adversely change their recommendations regarding our common stock,
our stock price could decline.

 We are an "emerging growth company"
and we cannot be certain if the reduced disclosure requirements applicable to "emerging growth companies" will make our common
stock less attractive to investors.

 We are an "emerging
growth company," as defined in the federal securities laws, and we may take advantage of certain exemptions and relief from various
reporting requirements that are applicable to other public companies that are not "emerging growth companies." In particular,
while we are an "emerging growth company", (1) we will not be required to comply with the auditor attestation requirements
of Section 404(b) of the Sarbanes-Oxley Act, (2) we will be exempt from any rules that may be adopted by the PCAOB requiring
mandatory audit firm rotations or a supplement to the auditor's report on financial statements, (3) we will be subject to
reduced disclosure obligations regarding executive compensation in our periodic reports and proxy statements and (4) we will not
be required to hold nonbinding advisory votes on executive compensation or stockholder approval of any golden parachute payments not
previously approved. We will take advantage of these exemptions. In addition, an emerging growth company may take advantage of the extended
transition period provided in Section 7(a)(2)(B) of the Securities Act of 1933, as amended (the "Securities
Act") for complying with new or revised accounting standards, meaning that the company can delay the adoption of certain accounting
standards until those standards would otherwise apply to private companies. We have elected to avail ourselves of this exemption from
new or revised accounting standards and, therefore, we will not be subject to the same new or revised accounting standards as other public
companies that are not emerging growth companies.

 We may remain an "emerging
growth company" until the fiscal year-end following the fifth anniversary of the completion of this initial public offering, though
we may cease to be an "emerging growth company" earlier under certain circumstances, including (1) if we become a large
accelerated filer, (2) if our gross revenue exceeds $1.235 billion in any fiscal year, or (3) if we issue more than $1.0 billion
in non-convertible notes in any three year period. We cannot assure you that we will be able to take advantage of all of the benefits
of the available to emerging growth companies.

 We are a "smaller reporting company"
and, even if we no longer qualify as an emerging growth company, we may still be subject to reduced reporting requirements.

 We are a "smaller
reporting company" as defined in the Securities Exchange Act of 1934, as amended. Smaller reporting companies may
choose to present only the two most recent fiscal years of audited financial statements in their annual reports on Form 10-K
and have reduced disclosure obligations regarding executive compensation and, if a smaller reporting company has less than $100 million
in annual revenue, it would not be required to obtain an attestation report on internal control over financial reporting issued by its
independent registered public accounting firm. We will remain a smaller reporting company until the last day of any fiscal year
for so long as either: (i) the market value of our shares of common stock held by non-affiliates does not equal or exceed $250 million
measured on the last business day of our second fiscal quarter; or (ii) our annual revenues is less than $100 million
during the most recently completed fiscal year and the market value of our common stock held by non-affiliates is less than $700 million
measured on the last business day of our second fiscal quarter. To the extent we take advantage of such reduced disclosure obligations,
it may make the comparison of our financial statements with other public companies difficult or impossible.

 We may issue shares of preferred stock
in the future, which could make it difficult for another company to acquire us or could otherwise adversely affect holders of our common
stock, which could depress the price of our common stock.

 Our certificate of incorporation
authorizes us to issue one or more series of preferred stock. Our board of directors will have the authority to determine the preferences,
limitations and relative rights of the shares of preferred stock and to fix the number of shares constituting any series and the designation
of such series, without any further vote or action by our stockholders. Our preferred stock could be issued with voting, liquidation,
dividend and other rights superior to the rights of our common stock. The potential issuance of preferred stock may delay or prevent
a change in control of us, discouraging bids for our common stock at a premium to the market price, and materially adversely affect the
market price and the voting and other rights of the holders of our common stock.

 We have never declared or paid any cash
dividends or distributions on our capital stock. We do not anticipate paying any cash dividends on our common stock in the foreseeable
future.

 We have never declared or
paid any cash dividends or distributions on our capital stock. We currently intend to retain our future earnings, if any, to support
operations and to finance expansion and therefore we do not anticipate paying any cash dividends on our common stock in the foreseeable
future.

 The declaration, payment
and amount of any future dividends will be made at the discretion of the board of directors, and will depend upon, among other things,
the results of our operations, cash flows and financial condition, operating and capital requirements, and other factors as the board
of directors considers relevant. There is no assurance that future dividends will be paid, and, if dividends are paid, there is no assurance
with respect to the amount of any such dividend. As a result, investors will be reliant upon capital appreciation for any returns on
their investment in the shares of our common stock.

 Future sales of our common stock in the
public market could reduce our stock price, and any additional capital raised by us through the sale of equity or convertible securities
may dilute your ownership in us.

 As of July 15, 2025, there
are 3,432,000shares of restricted common stock, which constitute approximately 32.3% of our outstanding common stock, may be eligible
for sale pursuant to Rule 144 at various times, subject to limitations provided by Rule 144 and lock-up agreements which our stockholders,
including our directors and officers, who hold 3,366,000shares have signed lock-ups for period of 180 days from the closing of the registered
direct offering, which expires on December 1, 2025, release from the lock-up restriction at the discretion of the placement agent for
the registered direct offering. If placement agent for the registered direct offering waives or releases parties to the lock-up, the
market price for our common stock could be adversely impacted.

 We intend to file a registration
statement with the SEC on Form S-8 providing for the registration of shares of our common stock issued or reserved for issuance
under our equity incentive plan or pursuant to stock options. Subject to the satisfaction of vesting conditions and the expiration of
lock-up agreements, shares registered under the registration statement on Form S-8 will be available for resale immediately in the
public market without restriction other than those restrictions imposed on sales by affiliates pursuant to Rule 144.

 We cannot predict the size
of future issuances of our common stock or securities convertible into common stock or the effect, if any, that future issuances and
sales of shares of our common stock will have on the market price of our common stock. Sales of substantial amounts of our common stock
(including shares issued in connection with any acquisition we may make), or the perception that such sales, including sales by our existing
stockholders pursuant to Rule 144, could occur, may adversely affect prevailing market prices of our common stock.

 Because our directors and executive officers
own or have the right to vote approximately 18.7% of our outstanding common stock, they may be able to elect all directors, approve
all matters requiring stockholder approval and block any action which may be beneficial to stockholders.

 As of July 15, 2025, our
directors and executive officers beneficially own approximately 18.7% of our outstanding common stock. Our bylaws provide that a majority
of the aggregate voting power of the stock issued and outstanding and entitled to vote constitutes a quorum for a meeting of stockholders.
As a result, they may have the ability to elect all of our directors and to approve actions requiring stockholder approval as well as
to prevent any action from being taken which they oppose even if such action would benefit stockholders.

 Delaware law and provisions in our amended
and restated certificate of incorporation and bylaws could make a merger, tender offer or proxy contest difficult, thereby depressing
the trading price of our common stock.

 Our amended and restated
certificate of incorporation (as amended) and bylaws contain provisions that could depress the trading price of our common stock by acting
to discourage, delay or prevent a change of control of us or changes in its management that the stockholders may deem advantageous. These
provisions include the following:

 establish a classified
 board of directors so that not all members of our board of directors are elected at one time;

 permit the board
 of directors to establish the number of directors and fill any vacancies and newly-created
 directorships;

 provide that directors
 may only be removed for cause;

 require super-majority
 voting to amend some provisions in our bylaws;

 prohibit stockholder
 action by written consent, which requires all stockholder actions to be taken at a meeting
 of the stockholders;

 provide that the
 board of directors is expressly authorized to amend or repeal our bylaws;

 restrict the forum
 for certain litigation against the Company to Delaware; and

 establish advance
 notice requirements for nominations for election to our board of directors or for proposing
 matters that can be acted upon by stockholders at annual stockholder meetings.

 Any provision of our amended
and restated certificate of incorporation (as amended) or bylaws or Delaware law that has the effect of delaying or deterring a change
in control could limit the opportunity for our stockholders to receive a premium for their shares of our common stock, and could also
affect the price that some investors are willing to pay for our common stock.

 Our management is required to devote a
substantial amount of time to comply with public company regulations.

 As a public company, we
incur significant legal, accounting and other expenses that we did not incur as a private company. The Sarbanes-Oxley Act, the Dodd-Frank
Wall Street Reform and Consumer Protection Act as well as rules implemented by the SEC and Nasdaq, impose various requirements on public
companies, including those related to corporate governance practices. Our management and other personnel will need to devote a substantial
amount of time to these requirements. Certain members of our management do not have significant experience in addressing these requirements.
Moreover, these rules and regulations will increase our legal and financial compliance costs and will make some activities more time-consuming
and costly.

 Among other things, our
management is responsible for establishing and maintaining adequate internal control over financial reporting as defined in Rules 13a-15(f) and
15d-15(f) under the Securities Exchange Act of 1934, as amended, or the Exchange Act. Our compliance with these
requirements will require that it incur substantial accounting and related expenses and expend significant management efforts. We will
need to hire additional accounting and financial staff to comply with public company regulations. The costs of hiring such staff may
be material and there can be no assurance that such staff will be immediately available to us.

 Moreover, because we have
identified deficiencies in our internal control over financial reporting that are deemed to be material weaknesses, investors could lose
confidence in the accuracy and completeness of our financial reports, the market price of our common stock could decline and we could
be subject to sanctions or investigations by Nasdaq, the SEC or other regulatory authorities.

 There can be no assurance that we will
be able to comply with the continued listing standards of Nasdaq.

 Our eligibility for listing
on Nasdaq depends on our ability to comply with Nasdaq's continued listing requirements. On October 2, 2024, we received written
notice from Nasdaq indicating that the bid price for our common stock for the last 31 consecutive business days, had closed below
the minimum $1.00 per share and, as a result, we are not in compliance with the $1.00 minimum bid price requirement for the continued
listing on Nasdaq, as set forth in Nasdaq Listing Rule 5550(a)(2).

 In accordance with Nasdaq
Listing Rule 5810(c)(3)(A), we have a period of 180 calendar days, or until March 31, 2025, to regain compliance with
the minimum bid price requirement. To regain compliance, the closing bid price of our common stock must meet or exceed $1.00 per share
for a minimum of 10 consecutive business days during this 180 day period. On April 2, 2025, Nasdaq notified us that, although
the Company has not regained compliance with the minimum bid price requirement, the Company is eligible to receive an additional 180
calendar day period or until September 29, 2025, to regain compliance with the minimum bid price requirement, pursuant to Nasdaq
Listing Rule 5810(c)(3)(A). We will monitor the closing bid price of our common stock and may, if appropriate, consider implementing
available options, including, but not limited to, implementing a reverse share split of our common stock, to regain compliance with the
minimum bid price requirement under the Nasdaq Listing Rules. On June 16, 2025, our board of directors approved a one-for-five (1:5)
reverse stock split of our issued and outstanding shares of common stock. On July 3, 2025, we filed with the Secretary of State of the
State of Delaware a Certificate of Amendment to our Certificate of Incorporation to effect the 2025 Reverse Stock Split. The 2025 Reverse
Stock Split became effective on July 3, 2025, and our common stock began trading on a split-adjusted basis on Nasdaq on July 7, 2025.
However, there can be no assurance that we will be able to regain such compliance.

 If Nasdaq delists our common
stock from trading on its exchange, we and our stockholders could face significant material adverse consequences including:

 limited availability
 of market quotations for our securities;

 a determination
 that our common stock is a "penny stock," which will require brokers trading
 in our common stock to adhere to more stringent rules, possibly resulting in a reduced level
 of trading activity in the secondary trading market for our common stock;

 a limited amount
 of analyst coverage; and

 decreased ability
 to issue additional securities or obtain additional financing in the future.

 FINRA sales practice requirements may limit
a stockholder's ability to buy and sell our common stock.

 The Financial Industry Regulatory
Authority ("FINRA") has adopted rules that require that in recommending an investment to a customer, a broker-dealer must
have reasonable grounds for believing that the investment is suitable for that customer. Prior to recommending speculative low-priced
securities to their non-institutional customers, broker-dealers must make reasonable efforts to obtain information about the customer's
financial status, tax status, investment objectives and other information. Under interpretations of these rules, the FINRA believes that
there is a high probability that speculative low-priced securities will not be suitable for at least some customers. The FINRA requirements
make it more difficult for broker-dealers to recommend that their customers buy our common stock, which may have the effect of reducing
the level of trading activity in our common stock. As a result, fewer broker-dealers may be willing to make a market in our common stock,
reducing a stockholder's ability to resell shares of our common stock.

 Holders of the Warrants will have no rights
as a common stockholder until they acquire our common stock.

 Until holders of the Warrants
acquire shares of our common stock upon exercise of the Warrants, the holders will have no rights with respect to shares of our common
stock issuable upon exercise of the Warrants. Upon exercise of the Warrants, the holder will be entitled to exercise the rights of a
common stockholder as to the security exercised only as to matters for which the record date occurs after the exercise.

 If securities or industry analysts do not
publish or cease publishing research or reports about us, our business or our market, or if they change their recommendations regarding
our securities adversely, our stock price and trading volume could decline.

 The trading market for our
common stock is influenced by the research and reports that industry or securities analysts may publish about us, our business, our market
or our competitors. If any of the analysts who may cover us change their recommendation regarding our common stock adversely, or provide
more favorable relative recommendations about our competitors, our stock price would likely decline. If any analyst who may cover us
were to cease coverage of our company or fail to regularly publish reports on us, we could lose visibility in the financial markets,
which in turn could cause our stock price or trading volume to decline.

 Item 1B. Unresolved Staff Comments

 Item 1C. Cybersecurity

 Our company diligently monitors
cybersecurity risks, conducting annual reviews at senior management levels and, when necessary, with the Audit Committee to update the
board of directors. Currently, we believe there are no significant cybersecurity threats that pose a material risk to our business strategy,
operations, or financial condition.

 To safeguard data confidentiality,
 integrity, and accessibility, we have established processes for assessing, identifying, and managing cybersecurity risks. We plan to
create a technology officer role with specialized security expertise to oversee information security ("IT") and implement comprehensive
risk management procedures. These measures are expected to include response plans, regular system tests, third-party reviews, incident
simulations, and ongoing refinement of policies and procedures to mitigate risks.

 Our primary strategy for
mitigating cyber risks involves storing sensitive data with trusted third-party providers who meet stringent audit and security standards.
We collaborate with third-party vendors who comply with various industry standards such as SOC.

 We intend to engage a third-party
service provider to monitor our network and provide prevention, detection, correlation, investigation, and response to any security incidents,
promptly notifying management of any potential issues. We maintain backup data to facilitate recovery in the event of data loss or a
disaster.

 Item 2. Properties

 Our corporate and executive
offices that we own are located in 136-40 39 th Avenue, Suite 202, Flushing, NY 11354, encumbered by debt. In addition, we
lease a warehouse in Maspeth, New York, where we assemble all of our vehicles. The warehouse, which is approximately 52,264 square feet,
is under one lease that is due to expire on April 30, 2029, at a current annual rent of approximately $1.2 million.

 We believe our facilities
are sufficient to meet our needs in the near term, as we expand our operations, we may require additional space in which to assemble
our vehicles and we do not have any commitments for such space. All of our retail stores are leased. For the year ended March 31, 2025
and 2024, we paid an aggregate of $2.9 million and $2.4 million, respectively, for the spaces used for retail stores.

 Item 3. Legal Proceedings

 We may be subject to legal
proceedings, investigations and claims incidental to the conduct of our business from time to time. As a provider of consumer products,
we are, from time to time, subject to civil litigation regarding those products and intellectual property rights of third parties, including
in publicly-available court filings. We are not currently a party to, nor are we aware of, any legal proceedings, investigations or claims
which, in the opinion of our management, are likely to have a material adverse effect on our business, financial condition or results
of operations.

 Item 4. Mine Safety Disclosures

 Item 5. Market for Registrant's Common
Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities

 Market Information

 Our common stock commenced
trading on the Nasdaq Capital Market on June 6, 2024 under the symbol "FLYE".

 Stockholders

 As of July 15, 2025, we
had 26 stockholders of record.

 Transfer Agent

 VStock Transfer, LLC, 18
Lafayette Place, Woodmere, New York 11598, is the transfer agent for our common stock.

 Dividends

 We have never declared or
paid any cash or other dividends or distributions on our capital stock. We currently intend to retain earnings, if any, to finance the
growth and development of our business. We do not expect to pay any cash dividends on our common stock in the foreseeable future. Payment
of future dividends, if any, will be at the discretion of our board of directors and will depend on our financial condition, results
of operations, capital requirements, restrictions contained in any financing instruments, provisions of applicable law and other factors
the board deems relevant.

 Item 6. [Reserved]

 Item 7. 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 and selling 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 since then and we are now one of the leading providers of E-bikes for food
delivery workers in New York City. As of July 15, 2025, we have 20 stores, including
19 retail stores in the U.S and one retail store in Canada. The Company offers rental services from selected locations in New York,
Toronto, 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. In addition, we plan to open a second online store focusing on selling gas bikes in the future.
We plan extend our business into South America and Europe in the future.

 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 15, 2025,
we offered 27 E-motorcycle products, 36 E-bike products and 38 E-scooter products.

 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, for the development of the 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 total contract price
for the GO FLY APP is $500,000, and the GO FLY APP was delivered and launched in the rental business on September 5, 2024. The total
contract price for the ERP system is $2,500,000. The ERP system is fully completed and delivered on May 20, 2025. During the fiscal year
of 2025, the Company started to use part of the ERP system which was valued at $2,310,000 and treated that part as computer hardware
and software and started for depreciation. As of March 31, 2025, the Company paid $136,580 to DFT as prepayment for software development.

 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, New York.
For the year ended March 31, 2025, we produced 4,595 E-motorcycles, 5,974 E-bikes and 1,557 E-scooters at the same facility.

 Recent Developments

 See " Item 1. Business
— Recent Developments."

 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 15, 2025, we have 20
stores, including 19 retail stores in the U.S and one retail store in Canada. 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.

 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, 2025, our net revenues
decreased by 21.0% to $25.4 million, compared to $32.2 million for the same period in 2024, which was primarily driven by a decrease
in total units sold, which dropped by 10,846 units, from 69,611 units for the year ended March 31, 2024, to 58,765 units for the year
ended March 31, 2025. The decrease in volume 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 volume also attributed in part
to the closures and disposition of our retail stores during the year ended March 31, 2025. The average sales price per EV increased by
$29, from $960 in the year ended March 31, 2024 to $989 in the year ended March 31, 2025. These improvements were driven by product upgrades
and enhanced sales channels in the market.

 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 both domestically and 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 $4.7 million for
the year ended March 31, 2025, compared to $2.9 million for the year ended March 31, 2024. As four stores were closed and four others
were sold during the year ended March 31, 2025, and an additional six stores were sold subsequently, we expect a decrease in payroll
expenses in the next fiscal year 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, 2025, we worked
with two principal vendors, Xiamen Innolabs Technology Co., Ltd and Depcl Corp., each of which respectively supplied approximately 41.9%
and 32.3% of the accessories and components used in all our products for the year ended March 31, 2025.

 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. Additionally, in
January 2025, the New York City Department of Transportation launched a $2 million trade-in program, allowing eligible food delivery
workers to replace their unsafe e-bikes, e-mobility devices, and batteries with certified, high-quality versions. Our Fly-11 PRO was
chosen for the official model of DOT and participates in this program. From January 2025 to June 2025, we participated in this
program and completed the delivery of Fly-11 Pro models to our retail partner participating in the program. While we expect relevant
regulations to provide a tailwind to our growth, it is possible for other regulations to result in margin pressures.

 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 continue to increase in the foreseeable future, as we plan to further expand our sales network and retail channels, and engage in
more selling and marketing activities to enhance our brand and attract more purchases from new and existing customers.

 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 increase in the foreseeable
future, as we hire additional personnel and incur additional expenses related to the anticipated growth of our business and our operation
as a public company after the completion of our initial public offering.

 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, 2025 and 2024

 The following table sets forth the components
of our results of operations for the years ended March 31, 2025 and 2024:

 2025

 2024

 Revenues, Net

 $
 25,427,163

 $
 32,205,666

 $
 (6,778,503
)

 (21.0
)%

 Cost of Revenues

 14,976,266

 19,099,120

 (4,122,854
)

 (21.6
)%

 Gross Profit

 10,450,897

 13,106,546

 (2,655,649
)

 (20.3
)%

 Operating Expenses

 Selling Expenses

 7,403,374

 5,914,786

 1,488,588

 25.2
 %

 General and Administrative Expenses

 7,607,489

 3,931,203

 3,676,286

 93.5
 %

 Total Operating Expenses

 15,010,863

 9,845,989

 5,164,874

 52.5
 %

 (Loss) Income from Operations

 (4,559,966
)

 3,260,557

 (7,820,523
)

 (239.9
)%

 Other Income (Expenses), Net

 10,588

 (30,352
)

 40,940

 (134.9
)%

 Interest Expenses, Net

 (405,615
)

 (152,050
)

 (253,565
)

 166.8
 %

 Income Taxes Expense

 (336,166
)

 (1,182,933
)

 846,767

 (71.6
)%

 Net (Loss) Income

 $
 (5,291,159
)

 $

 $
 (7,186,381
)

 (379.2
)%

 Revenues

 2025

 2024

 Sales-Retail

 $
 21,725,817

 $
 26,389,720

 $
 (4,663,903
)

 (17.7
)%

 Sales-Wholesale

 $
 3,529,479

 $
 5,815,946

 $
 (2,286,467
)

 (39.3
)%

 Sales-Rental services

 171,867

 —

 171,867

 100.0
 %

 Total Net Revenues

 $
 25,427,163

 $
 32,205,666

 $
 (6,778,503
)

 (21.0
)%

 Our net revenues were $25.4 million for
the year ended March 31, 2025, a decrease of 21.0%, from $32.2 million for the year ended March 31, 2024. The decrease in our net
revenues was primarily driven by a decrease in sales volume by 10,846 units, from 69,611 units for the year ended March 31, 2024, to
58,765 units for the year ended March 31, 2025.

 Our retail sales revenue decreased by $4.7 million,
or 17.7%, from $26.4 million for the year ended March 31, 2024 to $21.7 million for the year ended March 31, 2025. Our wholesale
revenue decreased by $2.3 million, or 39.3%, from $5.8 million for the year ended March 31, 2024 to $3.5 million for the year
ended March 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 year ended March 31, 2025. The decrease in wholesales revenue was
driven primarily by the closure of stores by the top two customers who closed their stores in December 2023 due to lack of profitability.

 Cost of Revenues

 Cost of revenues decreased by 21.6%, from $19.1 million for the
year ended March 31, 2024, to $15.0 million for the year ended March 31, 2025. The decrease in cost of revenues was primarily attributable
to more favorable pricing obtained from our suppliers, particularly for batteries, as well as a reduction in sales volume, as discussed
previously. These factors collectively contributed to the overall decrease in cost of revenues. The unit cost for battery decreased by
11%, from $112 in the year ended March 31, 2024, to $99 in the year ended March 31, 2025.

 Gross Margin

 The following table shows our gross profit and gross margin for the
years ended March 31, 2025 and 2024:

 2025

 2024

 Gross Profit

 $
 10,450,897

 13,106,546

 (2,655,649
)

 (20.3
)%

 Gross Margin

 41.1
 %

 40.7
 %

 Gross profit for the years ended March 31, 2025
and 2024 was $10.5 million and $13.1 million, respectively. Gross margin was 41.1% and 40.7% for the year ended March 31, 2025 and
2024, respectively. The gross margin remained at the same level for the two periods.

 Total Operating Expenses

 The following table sets forth the components
of our total operating expenses for the years ended March 31, 2025 and 2024:

 2025

 2024

 Selling Expenses

 $
 7,403,374

 5,914,786

 1,488,588

 25.2
 %

 General and Administrative Expenses

 7,607,489

 3,931,203

 3,676,286

 93.5
 %

 Total Operating Expenses

 $
 15,010,863

 9,845,989

 5,164,874

 52.5
 %

 Percentage of Revenue

 59.0
 %

 30.6
 %

 Total operating expenses were $15.0 million for
the year ended March 31, 2025, an increase of $5.2 million, or 52.5%, compared to $9.8 million for the year ended March 31,
2024. The increase in operating expenses was attributable to the increase in our payroll expenses, rent, professional fees, product and
software development expenses and settlement payments, as more fully discussed below.

 Selling Expenses

 Selling expenses primarily consist of payroll
expenses, rent, and advertising expenses of retail stores. Total payroll expenses were $3.3 million for the year ended March 31, 2025,
compared to $1.6 million for the year ended March 31, 2024. Rent was $2.9 million for the year ended March 31, 2025, compared to
$2.4 million for the year ended March 31, 2024. Advertising expenses were $0.3 million for the year ended March 31, 2025, compared
to $64,423 for the year ended March 31, 2024. The increase in payroll expenses was primarily due to the increased number of new employees
hired for business operations in the first three quarters of the year ended March 31, 2025, despite a reduction in headcounts in the
last quarter resulting from closures and dispositions of retail stores. The increase in rental expense was primarily due to the expansion
of retail stores to support the Company's business growth and operational needs. The rise in advertising expense was mainly driven
by intensified marketing campaigns and promotional activities aimed at enhancing brand visibility. Total commission expenses were $9,980
for the year ended March 31, 2025, compared to $1.1 million for the year ended March 31, 2024. The decrease in the commission expenses
was primarily due to the Company's discontinuation of marketing referral expenses for promotions as of January 1, 2024.

 General and Administrative Expenses

 General and administrative expenses increased
during the year ended March 31, 2025 compared to the previous year. Professional fees increased to $2.0 million for the year ended
March 31, 2025, compared to $1.0 million for the year ended March 31, 2024, primarily attributable to the increase in audit fee,
consulting fee, legal fee and IR expenses associated with our initial public offering and ongoing reporting obligations. Payroll
expenses increased to $1.5 million for the year ended March 31, 2025 from $1.1 million for the year ended March 31, 2024 primarily
due to additional employees hired in operation and accounting departments. Insurance expenses increased to $1.1 million for the
year ended March 31, 2025, compared to $0.2 million for the same period of prior year as a result of increased general insurance
of the stores and the purchase of directors and officers liability insurance after initial public offering in the year ended March 31,
2025. Software development fee increased to $0.5 million for the year ended March 31, 2025, compared to $0.3 million for the same period
in prior year due to the increasing development fee of Fly E-Bike app and the increasing maintenance fee of Go Fly App. There were settlement
payments of $1.0 million for the year ended March 31, 2025, in connection with the UL Litigation.

 Income Tax Provisions

 Income taxes provision was $0.3 million for the
year ended March 31, 2025, a change from $1.2 million income tax provision for the year ended March 31, 2024. This change was due
to our pre-tax loss for the year ended March 31, 2025.

 Net Income (Loss)

 Net loss was $5.3 million for the year ended
March 31, 2025, a change of $7.2 million, or 379.2%, from net income of $1.9 million for the year ended March 31, 2024, 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, 2025 and 2024:

 2025

 2024

 (Loss) Income from Operations

 $
 (5,291,159
)

 $

 $
 (7,186,381
)

 (379.2
)%

 Income Tax provision

 336,166

 1,182,933

 (846,767
)

 (71.6
)%

 Depreciation

 631,280

 272,708

 358,572

 131.5
 %

 Interest Expenses

 405,615

 152,050

 253,565

 166.8
 %

 Amortization

 65,091

 1,648

 63,443

 3849.7
 %

 EBITDA

 $
 (3,853,007
)

 $
 3,504,561

 $
 (7,357,568
)

 (209.9
)%

 Percentage of Revenue

 (15.2
)%

 10.9
 %

 (26.1
)%

 Before interest expenses, income tax, depreciation,
and amortization, for the year ended March 31, 2025, our net loss was $3.9 million, a change of $7.4 million, compared to net income
of $3.5 million for the year ended March 31, 2024, which was mainly attributable to the decrease in revenue, increase in selling
expenses and general and administrative expenses described above. The ratio of EBITDA to revenue was negative 15.2% and 10.9% for the
year ended March 31, 2025 and 2024, respectively.

 Liquidity and Capital Resources

 As of March 31, 2025, we had cash of $0.8 million.
We had working capital of $1.3 million and $0.3 million as of March 31, 2025 and 2024, respectively. We had net loss of $5.3 million
and net income of $1.9 million for the year ended March 31, 2025 and 2024, respectively. During the year ended March 31, 2025, net cash
used in operating activities of the Company was approximately $10.1 million. As of March 31, 2025, the Company had a current portion
of contractual obligation of approximately $8.9 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, 2025. 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 7, 2024, we sold
450,000 shares of common stock, at a price of $20.00 per share in our IPO. The gross proceeds of the IPO were $9.0 million, prior to deducting
the underwriting discounts, commissions and offering expenses payable by us. Net proceeds received by us from IPO were approximately $7.9
million. On June 25, 2024, we sold an additional 67,500 shares of common stock to the underwriters of our IPO for gross proceeds of $1.4
million upon full exercise of the underwriters' over-allotment option and received net proceeds of $1.2 million. On June 4, 2025,
Company issued 5,719,111 shares of common stock, at a price of $1.2140 per share in its secondary public offering for gross proceeds of
the offering were $6.9 million, prior to deducting the placement agent's fees and offering expenses payable by the Company.

 On July 3, 2025, the Company
implemented a 1-for-5 reverse stock split of its issued and outstanding shares of common stock. The reverse stock split reduced the number
of shares of common stock issued and outstanding from 24,587,500 to 4,917,500 as of March 31, 2025. The par value per share
remained unchanged at $0.01.

 As of March 31, 2025, the
Company had working capital of approximately $1.3 million and cash of approximately $0.8 million. The main cash outflow for
the year ended March 31, 2025 was from net loss of $5.3 million, a decrease in tax payable of $1.5 million, an increase in inventories
of $2.5 million, a decrease in operating lease liabilities of $4.9 million, purchase of software from a related party of $0.9 million,
purchase of equipment of $1.6 million and an increase in prepayments and other receivables of $2.5 million. As of March 31,
2025, the Company had a current portion of contractual obligation of approximately $8.9 million. 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, 2025 and 2024, our accounts receivable, net of
allowance for credit losses, was $0.5 million and $0.5 million, respectively. Our accounts receivable turnover period increased
from 69 days in the year ended March 31, 2024 to 71 days in the year ended March 31, 2025, which was mainly attributable to the longer
payment terms to dealers.

 Our accounts payable represent primarily accounts
payable to suppliers from whom we purchased accessories and components for our products. As of March 31, 2025 and 2024, our accounts
payable were $1.3 million and $1.2 million, respectively. Our accounts payable turnover period increased to 33 days for the year
ended March 31, 2025 from 25 days for the year ended March 31, 2024, which was primarily the result of longer payment cycles.

 Our prepayments and other receivables primarily
represent prepayments to vendors and other service providers. These prepayments and receivables increased by $3.1 million, from $0.6
million as of March 31, 2024, to $3.7 million as of March 31, 2025. This significant increase is mainly due to the launch of Company's
E-bike rental services, which required additional inventory. As a result, during the year ended March 31, 2025, the Company made substantial
prepayments to vendors to secure inventory for the new services.

 Our inventories primarily include our EVs, their
accessories and spare parts. As of March 31, 2025 and 2024, our inventories, net of allowance, were $6.4 million and $5.4 million,
respectively. The increase in inventories was primarily due to our preparation for the new rental business. Our inventory turnover days
increased to 143 days in the year ended March 31, 2025, from 89 days in the year ended March 31, 2024, which was primarily due to
strategic inventory buildup, allowing us to start new services.

 As of March 31, 2025 and
2024, the total outstanding amount of loan principal was $7.4 million and $1.6 million, respectively. For the year ended March 31, 2025
and 2024, the interest expenses on our outstanding loans amounted to $405,615 and $152,050, respectively. See Note 8 to the Consolidated
Financial Statements included within this annual report for further information on details of our outstanding loans.

 The following table summarizes our cash flow
data for the years ended March 31, 2025 and 2024:

 For the Year Ended

 2025

 2024

 Net Cash (Used in) Provided by Operating Activities

 $
 (10,059,466
)

 $
 4,308,920

 Net Cash Used in Investing Activities

 (2,901,272
)

 (3,200,843
)

 Net Cash Provided by (Used in) Financing Activities

 12,486,104

 (49,628
)

 Net changes in cash including cash classified within current assets held for sale

 $
 (474,634
)

 $
 1,058,449

 Operating Activities

 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.

 Net cash provided by operating activities for
the year ended March 31, 2024 was $4.3 million, which was mainly comprised of net income of $1.9 million, amortization of right-of-use
assets of $2.3 million and inventories reserve of $0.5 million, an increase in account payable of $2.5 million, an increase in tax payable
of $0.6 million, and an increase of accrued expenses and other payables of $0.3 million, offset by an increase in inventories of $2.0
million, and a decrease in operating lease liabilities of $1.9 million.

 Investing Activities

 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.

 Net cash used in investing activities was $3.2 million for the year
ended March 31, 2024, which was due to purchase of software from a related party of $1.3 million, the purchase of equipment of $1.3 million,
advance to related parties of $0.3 million, a prepayment for purchase of property of $0.5 million and the purchase of property rights
of $0.03 million, offset by repayment from related parties of $0.1 million.

 Financing Activities

 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.

 Net cash used in financing activities was $0.05 million for the year
ended March 31, 2024, which consisted of deferred IPO cost of $0.2 million, repayments of loan payables of $0.6 million, repayments to
former related parties on other payables of $0.3 million and payments of former related party loan of $0.2 million, offset by borrowings
from loan payable of $1.1 million and capital contributions from stockholders of $0.1 million.

 Commitments and Contractual Obligations

 The following table presents
our material contractual obligations as of March 31, 2025:

 Contractual Obligations

 Total

 Less than
 1 year

 1 – 2 years

 3 – 5 years

 Thereafter

 Operating Lease Obligations and Others

 $
 11,724,690

 2,617,762

 5,290,390

 2,842,381

 974,157

 Loan Payable

 7,356,936

 5,291,893

 160,004

 20,515

 1,884,524

 UL Litigation

 1,000,000

 1,000,000

 —

 —

 —

 Total Contractual Obligations

 $
 20,081,626

 8,909,655

 5,450,394

 2,862,896

 2,858,681

 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 bank borrowings. Our short-term and long-term bank
borrowings 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 bank borrowings, 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 Inventories

 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, 2025 and
2024, we recorded inventory allowance balance of $1,107,569 and $514,021, respectively.

 Item 7A. Quantitative and Qualitative Disclosures
About Market Risk

 Item 8. Financial Statements and Supplementary
Data

 The information required
by this item appears beginning on page F-1 of this annual report and is incorporated herein by reference.

 Item 9. Changes in and Disagreements with
Accountants on Accounting and Financial Disclosures

 Item 9A. Controls and Procedures

 Evaluation
of Disclosure Controls and Procedures

 We
maintain disclosure controls and procedures, as defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act. Disclosure controls
and procedures include, without limitation, controls and procedures designed to ensure that information required to be disclosed by us
in the reports that we file or submit under the Exchange Act is accumulated and communicated to our management, including our principal
executive officer and our principal financial officer, as appropriate, to allow timely decisions regarding required disclosure.

 Our
management, with the participation of our Chief Executive Officer and Chief Financial Officer, have evaluated the effectiveness of our
disclosure controls and procedures as of March 31, 2025. Based on the evaluation of our disclosure controls and procedures, our Chief
Executive Officer and Chief Financial Officer concluded that our disclosure controls and procedures were not effective as of March 31,
2025 due to the material weaknesses in financial reporting as described below.

 Management's
Annual Report on Internal Control over Financial Reporting

 In
our 10-K for the year ended March 31, 2025, we identified material weaknesses in our internal control over financial reporting. The material
weaknesses that have been identified in internal control over financial reporting included our lack of (i) sufficient financial reporting
and accounting personnel with appropriate knowledge of generally accepted accounting principles in the United States of America (the
"U.S. GAAP") and SEC reporting requirements to properly address complex U.S. GAAP accounting issues and to prepare and review
our consolidated financial statements and related disclosures to fulfill U.S. GAAP and SEC financial reporting requirements, (ii) formal
internal control policies and internal independent supervision functions to establish formal risk assessment process and internal control
framework, and (iii) sufficient controls designed and implemented in IT environment and IT general control activities, which are mainly
associated with areas of logical access management, change management, computer operation, service organization management as well as
cyber security management. To remediate the material weaknesses, we have engaged a third party consultant to perform internal review
and assist us to set up more reliable internal control processes. The consultant commenced work in February 2025. We have begun organizing
regular training programs for our accounting personnel, with a focus on U.S. GAAP and SEC reporting requirements, in order to improve
the competence and awareness of our finance team. In addition, we plan to enhance our IT infrastructure by outsourcing our IT department
to a provider to manage PC operations and system monitoring. Furthermore, we are developing and plan to implement an enterprise resource
planning system to streamline sales, inventory, financial reporting, and order management. We will devote resources to remediate these
material weaknesses as we grow and such resources required for implementing proper internal controls for financial reporting are available.

 We
have performed testing to evaluate the operating effectiveness of these remediation measures. Based on the results of our testing, we
concluded that these material weaknesses had not been fully remediated as of March 31, 2025. Accordingly, we continue to consider these
material weaknesses to be ongoing as of that date.

 As
of March 31, 2025, we believe that our internal controls over financial reporting were not effective in providing reasonable assurance
regarding the reliability of our financial reporting due to the material weaknesses identified above.

 This annual report on Form
10-K does not include an attestation report of our registered public accounting firm.

 Changes in Internal Control over Financial
Reporting

 Other than the additional
controls added to the revenue process, there was no change in our internal control over financial reporting that occurred during the
fourth quarter of March 31, 2025 that has materially affected, or is reasonably likely to materially affect, our internal control over
financial reporting.

 Our disclosure controls and
procedures and internal control over financial reporting are designed to provide reasonable assurance of achieving the desired control
objectives. Our management recognizes that any control system, no matter how well designed and operated, is based upon certain judgments
and assumptions and cannot provide absolute assurance that its objectives will be met. In addition, the design of disclosure controls
and procedures must reflect the fact that there are resource constraints and that management is required to apply judgment in evaluating
the benefits of possible controls and procedures relative to their costs. Similarly, an evaluation of controls cannot provide absolute
assurance that misstatements due to error or fraud will not occur or that all control issues and instances of fraud, if any, have been
detected.

 Item 9B. Other Information

 We have adopted an insider
trading policy. Our insider trading policy is filed as an exhibit to this annual report and is
incorporated herein by reference.

 Item 9C. Disclosure Regarding Foreign Jurisdiction
that Prevent Inspections.

 Item 10. Directors, Executive Officers and
Corporate Governance

 Executive Officers and Directors

 Set forth below is certain information with respect
to our directors and executive officers:

 Name

 Age

 Position

 Chairman of the Board and Chief Executive Officer

 Shiwen Feng

 Director and Chief Financial Officer

 Rui Feng

 Chief Operating Officer

 Ke Zhang

 Chief Human Resource Officer

 Bin Wang

 Lun Feng

 Zanfeng Zhang

 Set forth below is biographical information about
each of the individuals named in the table above:

 Zhou Ou, Founder, Chairman of the Board
and Chief Executive Officer. Mr. Ou founded Fly E-Bike in 2018 and has since served as our Chairman of the Board and Chief
Executive Officer ("CEO"). Before founding Fly E-Bike, Mr. Ou operated a motorcycle repair business for over eight years,
and previously held a managerial position at a food delivery company. We believe that Mr. Ou's prior experience in the motorcycle
industry and his understanding of the delivery industry, combined with his tenure at our company, qualifies him to serve as our Chairman
of the Board.

 Shiwen Feng, Director and Chief Financial
Officer. Ms. Feng has served as our Chief Financial Officer and a director since November 2024. Ms. Feng is an experienced
financial professional with a background in corporate finance, corporate tax management, and project oversight. From October 2021
to October 2024, Ms. Feng served as the manager at PJMG LLC, a consulting services company, where she was responsible for overseeing
financial planning, managing corporate structuring, and ensuring compliance with financial regulations. Prior to that, from September 2019
to July 2021, Ms. Feng worked at DGLG Accounting & Tax LLC, an accounting and financial consulting company, first as a
staff member assisting with corporate formations, tax compliance, and payroll management, and later as a manager, focusing on financial
reporting, monthly bookkeeping, and corporate tax filings. She earned her Master's degree in Accounting from the Frank G. Zarb
School of Business at Hofstra University in 2020 and her Bachelor's degree in Accounting from Henan University in China in 2019.
Ms. Feng was selected to serve as a member of our board of directors because of her experience in the financial services industry.

 Rui Feng, Chief Operating Officer. Mr. Feng
joined us as a retail store manager in 2018 and was responsible for overseeing our supply chain, implementing effective customer strategies,
and ensuring legal compliance. He has served as our Chief Operating Officer since December 2022. Prior to joining us, Mr. Feng
owned and operated a restaurant for four years, which provided him with valuable experience in managing a business.

 Ke Zhang, Chief Human Resource Officer.
 Mr. Zhang has served as our Chief Human Resource Officer since December 2022. Mr. Zhang previously served as our
director and resigned from this position on September 1, 2023. He joined us as a retail store manager in 2018, where he was responsible
for overseeing various HR functions, including recruiting, employee training and development and managing our benefits system.

 Bin Wang, Director. Mr. Wang
has served as a director since June 2024. Mr. Wang has over 30 years of management experience in the financial industry.
He currently serves as the Managing Director of Eon Capital International Ltd, a Hong Kong corporate advisory service company. He
has also been a member of the board of directors of Maison Solutions Inc., a Nasdaq-listed company, since 2023. Previously, from 2018
to 2020, Mr. Wang was the Chairman and CEO of Alberton Acquisition Corp., a Nasdaq-listed company. From 2010 to 2012, he served
as Independent Board Director in Sky Digital Stores Corp. (OTC: SKYC), participating in the company's public listing process.
From 2007 to 2018, Mr. Wang provided corporate advisory services to dozens of corporate clients in the US and Asia. Mr. Wang
began his financial career at Chemical Bank in 1994 when he served as a commercial banking manager for the bank's Asian market.
From 1996 to 2000, he served as Vice President and Team Leader of Chase International Financial Services, to promote the bank's
business in Asia-Pacific region. After Chase merged with JPMorgan in 2000, Mr. Wang continued to work at JPMorgan Chase until late
2006, playing a wide range of management roles in the development and growth of international business. Mr. Wang graduated from
Northwestern Polytechnic University in 1980, obtained his Master of Science degree in Mechanical Engineering from Xi'an Jiaotong
University in 1983, and earned his Master of Arts degree in economics from Illinois State University in 1992. Mr. Wang was selected
to serve as a member of our board of directors because of his extensive senior-level management experience in the financial services
industry and his profound knowledge of our business and the industry as a whole.

 Lun Feng, Director. Mr. Feng
has served as a director since June 2024. Since August 2015, Mr. Feng has held the position of executive director at Si
Fang Yu Feng Investment Co., Ltd., a Chinese investment management company. From June 2009 to June 2021, he served as the chairman
of the board of directors at Beijing Wan Tong Li Ti Zhi Cheng Investment Co., Ltd., a Chinese investment management company. Additionally,
Mr. Feng currently serves as an independent director at three public companies listed on the Shanghai Stock Exchange and Shenzhen
Stock Exchange. These companies include Bank of Xi'an Co., Ltd., Shanghai Xinnanyang Only Education and Technology Co., Ltd., and
Bona Film Group Co., Ltd. Mr. Feng received his bachelor's degree in political economy from Northwest University (China) in
1982. Mr. Feng was selected to serve as a member of our board of directors because of his extensive senior-level management experience
of public companies, his board experience and his extensive knowledge of our business and industry.

 Zanfeng Zhang, Director. Mr. Zhang
has served as a director since August 2024. Mr. Zhang has over 25 years of experience in finance and investment management.
Since November 2017, he has served as Managing Director at IDG Capital, an investment and asset management company, where he oversees
post-investment management and risk control. From August 2014 to July 2017, Mr. Zhang co-founded and served as the Chief
Financial Officer of Beijing Jiufang Rugao Information Technology Co., Ltd., an internet startup providing community-based online-to-offline
(O2O) life services and a fresh produce B2C (business-to-consumer) platform, where he oversaw financing activities. Prior to that, he
co-founded and served as Chief Operating Officer of Beijing Panteng Technology Co., Ltd., a smart hardware startup, from September 2013
to August 2014, where he secured early-stage funding and led its market expansion. Earlier in his career, Mr. Zhang held senior
financial roles at Ruijing Hengtong (Beijing) Investment Consulting Co., Ltd. from July 2008 to August 2013, and at Peugeot
China Co., Ltd. from June 2003 to July 2008. Mr. Zhang holds a Master's degree in Business Management from Paris
1 Panth on-Sorbonne University and a Bachelor's degree in Accounting from East China Jiaotong University. Mr. Zhang
was selected to serve on the Board due to his extensive expertise in finance and investment management.

 Information about the Board of
Directors

 Our board of directors oversees
our business and affairs and monitors the performance of management. In accordance with corporate governance principles, the board does
not involve itself in day-to-day operations. The directors keep themselves informed through discussions with our CEO and other key
executives, by reading the reports and other materials that we send them, and by participating in board and committee meetings. Directors
hold office until their successors have been elected and qualified or until he or she resigns or have been removed or disqualified.

 Our board of directors are
divided into three classes of directors, with the classes as nearly equal in number as possible, and with the directors serving three-year
terms. The term of office of the Class I director, consisting of Lun Feng, will expire at our 2025 annual meeting of stockholders. The
term of office of the Class II directors, consisting of Zanfeng Zhang and Bin Wang, will expire at our 2026 annual meeting of stockholders.
The term of office of the Class III directors, consisting of Zhou Ou and Shiwen Feng, will expire at our 2027 annual meeting of stockholders.
As a result, approximately one-third of our board of directors will be elected each year. The classification of directors will have the
effect of making it more difficult for stockholders to change the composition of our board of directors. Our amended and restated
bylaws also provide that, subject to any rights of holders of preferred stock to elect additional directors under specified circumstances,
the number of directors will be fixed exclusively pursuant to a resolution adopted by our board of directors.

 Committees of the Board of Directors

 We have established an Audit
Committee, a Compensation Committee and a Nominating and Corporate Governance Committee. We have adopted a charter for each of the three
committees. Each committee's members and functions are described below.

 Audit Committee. Our Audit Committee
consists of three independent directors. The members of the Audit Committee are Bin Wang, Lun Feng and Zanfeng Zhang, with Mr. Wang
serving as the committee chair. The Audit Committee consists exclusively of directors who are financially literate. Mr. Wang is
considered an "audit committee financial expert" as defined by the SEC's rules and regulations.

 The Audit Committee responsibilities
include:

 overseeing the compensation and work of and performance by
our independent auditor and any other registered public accounting firm performing audit, review or attestation services for us;

 engaging, retaining and terminating our independent auditor
and determining the terms thereof;

 assessing the qualifications, performance and independence
of the independent auditor;

 evaluating whether the provision of permitted non-audit services
is compatible with maintaining the auditor's independence;

 reviewing and discussing the audit results, including any
comments and recommendations of the independent auditor and the responses of management to such recommendations;

 reviewing and discussing the annual and quarterly financial
statements with management and the independent auditor;

 producing a committee report for inclusion in applicable
SEC filings;

 reviewing the adequacy and effectiveness of internal controls
and procedures;

 establishing procedures regarding the receipt, retention
and treatment of complaints received regarding the accounting, internal accounting controls, or auditing matters and conducting or authorizing
investigations into any matters within the scope of the responsibility of the Audit Committee; and

 reviewing transactions with related persons for potential
conflict of interest situations.

 Compensation Committee. Our Compensation
Committee consists of three independent directors. The members of the Compensation Committee are Lun Feng, Bin Wang and Zanfeng Zhang,
with Mr. Feng serving as the committee chair. The committee has primary responsibility for:

 reviewing and recommending all elements and amounts of compensation
for each executive officer, including any performance goals applicable to those executive officers;

 reviewing and recommending for approval the adoption, any
amendment and termination of all cash and equity-based incentive compensation plans;

 once required by applicable law, causing to be prepared a
committee report for inclusion in applicable SEC filings;

 approving any employment agreements, severance agreements
or change of control agreements that are entered into with the CEO and certain executive officers; and

 reviewing and recommending the level and form of non-employee
director compensation and benefits.

 Nominating and Governance Committee. The
Nominating and Governance Committee consists of three independent directors. The members of the Nominating and Governance Committee are
Zanfeng Zhang, Bin Wang and Lun Feng, with Mr. Zhang serving as the committee chair. The Nominating and Governance Committee's
responsibilities include:

 recommending persons for election as directors by the stockholders;

 recommending persons for appointment as directors to the
extent necessary to fill any vacancies or newly created directorships;

 reviewing annually the skills and characteristics required
of directors and each incumbent director's continued service on the board;

 reviewing any stockholder proposals and nominations for directors;

 advising the board of directors on the appropriate structure
and operations of the board and its committees;

 reviewing and recommending standing board committee assignments;

 developing and recommending to the board Corporate Governance
Guidelines, a Code of Business Conduct and Ethics and other corporate governance policies and programs and reviewing such guidelines,
code and any other policies and programs at least annually;

 making recommendations to the board as to determinations
of director independence; and

 making recommendations to the board regarding corporate governance
based upon developments, trends, and best practices.

 The Nominating and Governance
Committee will consider stockholder recommendations for candidates for the board of directors.

 Involvement in Certain Legal Proceedings

 None of our directors and
executive officers have been involved in any of the following events during the past ten years:

 any bankruptcy petition filed by or against such person or any business
 of which such person was a general partner or executive officer either at the time of the bankruptcy or within two years prior to
 that time;

 any conviction in a criminal proceeding or being subject to a pending
 criminal proceeding (excluding traffic violations and other minor offenses);

 being subject to any order, judgment, or decree, not subsequently reversed,
 suspended or vacated, of any court of competent jurisdiction, permanently or temporarily enjoining him from or otherwise limiting
 his involvement in any type of business, securities or banking activities or to be associated with any person practicing in banking
 or securities activities;

 being found by a court of competent jurisdiction in a civil action,
 the SEC or the Commodity Futures Trading Commission to have violated a federal or state securities or commodities law, and the judgment
 has not been reversed, suspended, or vacated;

 being subject of, or a party to, any federal or state judicial or administrative
 order, judgment decree, or finding, not subsequently reversed, suspended or vacated, relating to an alleged violation of any federal
 or state securities or commodities law or regulation, any law or regulation respecting financial institutions or insurance companies,
 or any law or regulation prohibiting mail or wire fraud or fraud in connection with any business entity; or

 being subject of or party to any sanction or order, not subsequently
 reversed, suspended, or vacated, of any self-regulatory organization, any registered entity or any equivalent exchange, association,
 entity or organization that has disciplinary authority over its members or persons associated with a member.

 Code of Business Conduct and Ethics

 We have adopted a written
code of business conduct and ethics that applies to our directors, officers and employees, including our principal executive officer,
principal financial officer, principal accounting officer or controller, or persons performing similar functions. A copy of the code
is made available in the Corporate Governance section of our website, which is located at flyebike.com. Our stockholders are also able
to review these documents by accessing our public filings at the SEC's website at www.sec.gov. If we make any substantive
amendments to, or grant any waivers from, the code of business conduct and ethics for any officer or director, we will disclose the nature
of such amendment or waiver on our website or in a current report on Form 8-K filed with the SEC.

 Trading Policies

 On
May 3, 2024, we adopted insider trading policies and procedures governing the purchase, sale, and/or other dispositions of our securities
by directors, officers and employees, which are reasonably designed to promote compliance with insider trading laws, rules and regulations,
and applicable Nasdaq listing standards (the "Insider Trading Policy").

 Clawback Policy

 Our board of
directors has adopted a clawback policy that covers our executive officers, who are defined as our chief executive officer, president,
chief financial officer, principal accounting officer (or the controller, if no such accounting officer exists), any vice-president in
charge of a significant principal business unit, division, or function (such as sales, administration, or finance), and any other officer
or person who performs a policy-making function.

 This clawback
policy pertains to incentive-based compensation, which includes any compensation that is granted, earned, or vested wholly or in part
based on the achievement of a financial reporting measure. It mandates the recovery of such compensation from an executive officer in
cases where we must prepare an accounting restatement due to material noncompliance with U.S. financial reporting requirements under
the securities laws. This includes any necessary restatement to correct an error in previously issued financial statements that is material
to those statements, or that would result in a material misstatement if the error were corrected in the current period or left uncorrected.

 The Compensation
Committee will make determinations regarding "materiality" for the purposes of this policy.

 The incentive-based compensation
eligible for recovery under this policy includes compensation received during the three completed fiscal years immediately preceding
the date we are required to prepare an accounting restatement, as outlined above. This applies provided that the individual served as
an executive officer at any time during the performance period relevant to the incentive-based compensation.

 Delinquent Section 16(a) Reports

 Section 16(a) of the Exchange
Act requires the Company's officers, directors and persons who beneficially own more than ten percent of its common stock to file
reports of ownership and changes in ownership with the SEC. These reporting persons are also required to furnish the Company with copies
of all Section 16(a) forms they file. Based solely on our review of such forms furnished to us, we believe that the applicable reporting
requirements of Section 16(a) have been satisfied.

 Item 11. Executive Compensation

 The
following table shows the compensation awarded to or earned during the years ended March 31, 2025 and 2024 by our chief executive
officer. Other than as listed below, we did not have any officers that received more than $100,000 in compensation during the years
ended March 31, 2025 and 2024. The person listed in the following table is referred to herein as the "named executive officer."

 Name and principal position

 Year

 Salary

 Bonus

 Stock
 Awards

 Option Awards

 All Other
 Compensation

 Total
 ($)

 2025

 $

 —

 —

 —

 —

 $

 Chief Executive Officer

 2024

 $

 —

 —

 —

 —

 $

 Narrative
Disclosure to Summary Compensation Table

 Zhou Ou, Chief Executive Officer

 Mr. Ou has entered
into an employment agreement with one of our subsidiaries, FLYEBIKE Inc, dated April 1, 2023. Under the agreement, Mr. Zhou
Ou serves as the Chief Executive Officer of the Company and receives a monthly base salary of $8,333. He is also entitled to reimbursement
for authorized and reasonable business expenses. The agreement allows for at-will termination by either party. If Mr. Ou's
employment is terminated due to death or disability, he or his estate will receive salary and benefits through the termination date.
The Company may terminate the agreement for cause, releasing it from all further obligations except for accrued salary and benefits through
the termination date. "Cause" includes failure or neglect by Mr. Ou to perform duties, disobedience to orders, misconduct
such as misappropriation of funds, personal profit from Company transactions, misrepresentation, legal violations, acts involving moral
turpitude or unethical conduct, disloyalty including aiding a competitor, failure to devote full-time efforts to the Company, not working
exclusively for the Company, non-cooperation in investigations, breaches of the employment agreement or the Company rules, and any other
act of misconduct or omission. The agreement includes covenants for non-disclosure, non-solicitation, and non-competition. For two years
post-termination, Mr. Ou agrees not to solicit the Company's customers or engage in competing business activities within New York
State.

 In order to support our
operations and allocate more resources towards our development, Mr. Ou received compensation at the level of a store manager for
the years ended March 31, 2025 and 2024.

 Shiwen Feng, Chief Financial Officer

 Mr. Feng has
entered into an employment agreement with the Company, dated November 7, 2024. Under the agreement, Ms. Feng serves as the
Chief Financial Officer of the Company and receives a monthly base salary of $ $6,667. She will also be entitled to reimbursement
for authorized and reasonable expenses. The agreement allows for at-will termination by either party, provided, however, a minimum
of two weeks' advance written notice is required in the event of resignation by Ms. Feng. If Ms. Feng's employment
is terminated due to death or disability, she or her estate will receive salary and benefits through the termination date. The
Company may terminate the agreement for cause, releasing it from all further obligations except for accrued salary and benefits
through the termination date. "Cause" includes failure or neglect by Ms. Feng to perform duties, disobedience to orders,
misconduct such as misappropriation of funds, personal profit from Company transactions, misrepresentation, legal violations, acts
involving moral turpitude or unethical conduct, disloyalty including aiding a competitor, failure to devote full-time efforts to the
Company, not working exclusively for the Company, non-cooperation in investigations, breaches of the employment agreement or the
Company rules, and any other act of misconduct or omission. The agreement includes covenants for non-disclosure, non-solicitation,
and non-competition. For two years post-termination, Ms. Feng agrees not to solicit the Company's customers or engage in
competing business activities within New York State. Ms. Feng will not receive any additional compensation as a director in
addition to her compensation as the Chief Financial Officer of the Company.

 Outstanding Option Awards

 As of March 31, 2025,
there were no option or stock awards outstanding.

 Employee Benefit Plans

 2024 Plan

 On May 3, 2024, our
Board approved the Fly-E Group Inc. 2024 Omnibus Incentive Plan, subject to stockholder approval. On February 10, 2025, our
Board approved Amendment No. 1 of the plan ("Amendment No. 1") to increase the number of shares available for grant under
the plan and add a provision providing for an automatic increase to the plan's share reserve every year, commencing on April 1,
2026, and continuing on the first day of each of the Company's fiscal years through the tenth anniversary of the plan's effective
date (the 2024 Omnibus Incentive Plan, as amended by Amendment No. 1, the "2024 Plan"). On March 10, 2025, the
Company's stockholders approved and adopted the 2024 Plan.

 The following is a summary of the material terms
of the 2024 Plan.

 Plan Administration

 The 2024 Plan will be administered
by our Compensation Committee. Our board of directors will retain the authority under the 2024 Plan to exercise any or all of the powers
and authorities related to the administration and implementation of the 2024 Plan.

 Award Eligibility

 Awards under the 2024 Plan
may be made to our or any of our affiliates' employees, officers and directors, as well as to consultants and advisors currently
providing services to us or any of our affiliates at the time of such award. As of the date of this annual report, the Company engages
approximately 55 employees, four (4) officers, five (5) directors, and five (5) consultants and advisers.

 Shares Subject to the 2024 Plan

 Subject to adjustment in
accordance with the terms of the 2024 Plan, the number of shares of our common stock available for issuance under the 2024 Plan is the
sum of (A) 740,000, plus (B) an increase commencing on April 1, 2026, and continuing annually on each anniversary thereof until
the tenth anniversary of the plan effective date, equal to the lesser of (i) 8% of the total number of all classes of the Company's
common stock outstanding on the last day of the immediately preceding fiscal year and (ii) such smaller number of shares as determined
by the Board or the Committee (the "Share Limit").

 Reversion of Shares

 If any shares covered by
an award are not purchased or are forfeited or expire, or if any award otherwise terminates without delivery of any shares subject to
the award or is settled in cash in lieu of shares, then the number of shares counted against the Share Limit with respect to such award
will, to the extent of any such forfeiture, termination, expiration or settlement, again be available for issuance under the 2024 Plan.

 Awards

 The 2024 Plan provides for
the grant of awards of stock options, stock appreciation rights ("SARs"), restricted stock, restricted stock units, deferred
stock units, unrestricted stock, dividend equivalent rights, and other equity-based awards.

 Stock Options

 Stock options granted under
the 2024 Plan may be nonqualified stock options or incentive stock options within the meaning of Section 422 of the Internal Revenue
Code of 1986, as amended (the "Code"). Each option will become vested and exercisable at such times and under such conditions
as our Compensation Committee may approve consistent with the terms of the 2024 Plan. No option may be exercisable more than ten years
after the option grant date. Our Compensation Committee may include in the option agreement provisions specifying the period during which
an option may be exercised following termination of the grantee's service.

 The exercise price per share
of our common stock for each option granted under the 2024 Plan may not be less than 100%, or 110% in the case of an incentive stock
option granted to a stockholder who owns more than ten percent of our voting stock, of the fair market value of a share of our common
stock on the option grant date, except in the case of an option granted upon assumption of, or in substitution for, outstanding awards
previously granted under a compensatory plan by a business entity acquired or to be acquired by us or an affiliate of ours or with which
we or an affiliate has combined or will combine. Payment of the exercise price for shares purchased pursuant to the exercise of an option
may be made in such forms as are approved by our Compensation Committee. These forms may include, in our Compensation Committee's
discretion, cash, cash equivalents, shares of our common stock and net issuance.

 Restricted Stock, Restricted Stock
Units, and Deferred Stock Units

 Restricted stock is an award
of our common stock on which vesting restrictions are imposed that subject such shares of our common stock to a substantial risk of forfeiture,
as defined in Section 83 of the Code. A restricted stock unit is an award that represents a conditional right to receive shares
of our common stock in the future and that may be made subject to the same types of restrictions and risk of forfeiture as restricted
stock. A deferred stock unit is a restricted stock unit that may be settled at some point in the future at a time or times consistent
with the requirements of Section 409A of the Code.

 Stock Appreciation Rights

 A SAR is a right to receive
upon exercise, in the form of common stock, cash or a combination of common stock and cash, the excess of the fair market value of one
share of common stock on the exercise date over the grant price of the SAR. SARs may be granted in conjunction with all or a part
of any option or other award granted under the 2024 Plan, or without regard to any option or other award. Upon exercise of a SAR, the
holder will be entitled to receive, in the specified form of consideration, the excess of the fair market value of one share of our common
stock on the exercise date over the exercise price of the SAR, as determined by our Compensation Committee. The exercise price of a SAR
may not be less than the fair market value of a share of our common stock on the grant date.

 Dividend Equivalent Rights

 Dividend equivalent rights
entitle the grantee to receive cash, shares of our common stock, or a combination of both equal to the amount of that the grantee would
have received had the grantee held a specified number of shares of our common stock during the period. Dividend equivalent rights may
be granted independently or in connection with the grant of any equity-based award, except that no dividend equivalent right may
be granted in connection with, or related to an option or SAR.

 Other Equity-Based Awards

 Our Compensation Committee
may grant other types of equity-based or equity-related awards in such amounts and subject to such terms and conditions as
our Compensation Committee may determine, including unrestricted stock and dividend equivalent rights which are described in more detail
in the 2024 Plan.

 Changes to Capital Structure

 In the event of a merger,
reorganization, recapitalization, reclassification, stock split, reverse stock split, spin-off combination of shares, exchange of
shares, stock dividend or other distribution payable in capital stock, or other increase or decrease in such shares effected without
the receipt of consideration by us, then the number and kind of shares for which grants of options and other awards may be made under
the 2024 Plan may be adjusted proportionately and accordingly by our Compensation Committee.

 Change of Control

 Except as otherwise provided
in the applicable award agreement, upon the occurrence of a change of control of our Company in which outstanding awards are not being
assumed or continued, all outstanding shares of restricted stock, restricted stock units, deferred stock units, dividend equivalent rights
and performance-based awards will be deemed to have vested and any underlying shares of our common stock will be deemed delivered
immediately before the change of control; and either or both of the following actions shall be taken: (i) at our Compensation Committee's
discretion, all options and SARs will become exercisable fifteen days before the change of control (with any exercise of an option
or SAR during such fifteen day period to be contingent upon the consummation of the change of control) and terminate upon the change
of control to the extent not exercised; and/or (ii) at our Compensation Committee's discretion, all options, SARs, shares
of restricted stock, restricted stock units, deferred stock units, dividend equivalent rights and/or performance-based awards will
be canceled and cashed out in connection with the change of control. Other equity-based awards will be governed by the terms of
the applicable award agreement.

 If we experience a change of
control in which outstanding awards that are not exercised prior to the change of control will be assumed or continued by the surviving
entity, then, except as otherwise provided in the applicable award agreement, in another agreement with the grantee, or as otherwise set
forth in writing, upon the occurrence of the change of control, the 2024 Plan and the awards granted under the 2024 Plan will continue
in the manner and under the terms so provided in the event of the change of control to the extent that provision is made in writing in
connection with such change of control for the assumption or continuation of such awards, or for the substitution for such awards with
new awards, with appropriate adjustments as to the number of shares (disregarding any consideration that is not common stock) and exercise
prices of options and SARs.

 Plan Amendment and Termination

 The Compensation Committee
may adopt, amend and rescind rules relating to the administration of the 2024 Plan, and our board of directors may amend, suspend, or
terminate the 2024 Plan at any time; provided, that, no such amendment or termination will be made that materially and adversely impairs
the rights of any participant with respect to any award granted under the 2024 Plan without the participant's consent, other than
amendments that are necessary to permit the granting of awards in compliance with applicable laws. The 2024 Plan will automatically terminate
the day before the tenth (10 th) anniversary of the Plan Effective Date, unless earlier terminated by our board of directors
or in accordance with the terms of the 2024 Plan.

 New Plan Benefits

 All awards to be made under
the 2024 Plan are discretionary, subject to the terms of the 2024 Plan. The benefits and amounts that will be received or allocated under
the 2024 Plan are generally not determinable at this time.

 Director Compensation

 The following table sets forth information as
to the compensation paid to our directors in the year ended March 31, 2025:

 Name

 Cash
 Compensation

 Stock
 Awards

 Total

 Bin Wang

 37,500

 -

 37,500

 Lun Feng

 50,000

 -

 -

 Zanfeng Zhang

 7,500

 -

 7,500

 Zhou Ou (1)

 -

 -

 -

 Shiwen Feng (3)

 $
 -

 -

 $
 -

 (1)

 Mr. Ou does not receive any additional compensation as a director in addition to his compensation disclosed in the Summary Compensation Table.

 (2)

 Ms. Feng receives $6,667 per month for serving as Chief Financial Officer of the Company. Ms. Feng does not receive any additional compensation as a director.

 Director Agreements

 Each of the Company's
independent directors, Bin Wang, Lun Feng and Zanfeng Zhang, has entered into an Independent Director Agreement (each, an "Independent
Director Agreement"). Under the Independent Director Agreement between us and each of our independent directors, Mr. Zhang
is entitled to an annual cash fee of $30,000, Mr. Wang and Mr. Feng each is entitled to an annual cash fee of $50,000.

 We will also reimburse each
independent director for pre-approved reasonable business-related expenses incurred in good faith in connection with the performance of
the director's duties for us. As also required under each Independent Director Agreement, we have separately entered into a standard
indemnification agreement with each of our directors, the term of which began on the date of the director's appointment.

 Item 12. Security Ownership of Certain Beneficial
Owner and Management and Related Stockholder Matters

 The following table sets forth
information with respect to the beneficial ownership of our common stock as of July 15, 2025 by:

 each person known to us to beneficially own 5% or more of our common stock;

 each director;

 each of our executive officers; and

 all officers and directors as a group.

 All information with respect
to beneficial ownership has been furnished by the respective 5% or more stockholders, directors or executive officers, as the case may
be. Each person is deemed to own beneficially shares of common stock that are issuable upon exercise of options, warrants or upon conversion
of convertible securities if they are exercisable or convertible within 60 days of July 15, 2025. Except as otherwise indicated each person
has the sole power to vote and dispose of all shares of common stock listed opposite his or her name. Unless otherwise noted, the mailing
address of each listed beneficial owner is c/o Fly-E Group, Inc., 136-40 39 th Avenue, Flushing, NY 11354.

 Name and address of beneficial owner

 Shares

beneficially

owned

owned

 Executive Officers and Directors

 1,540,000

 8.5

 %

 Shiwen Feng

 -

 Rui Feng

 352,000

 1.9

 %

 Ke Zhang

 1,474,000

 8.1

 %

 Bin Wang

 -

 Lun Feng

 -

 Zanfeng Zhang

 -

 Directors and Officers as a group (seven persons)

 3,366,000

 18.7

 %

 Securities Authorized for Issuance Under Equity
Compensation Plans

 We have adopted the 2024 Plan
in order to grant equity-based and other incentive awards to our officers, employees, directors, consultants and advisers. There are 740,000
shares of common stock reserved for future issuance under the 2024 Plan. We have not issued any grants or awards under the 2024 Plan.

 Item 13. Certain Relationships and Related
Transactions, and Director Independence

 In addition to the compensation
arrangements in the section titled "Executive Compensation," except as set forth below, during our last two fiscal years,
we have not entered into any material transactions or series of transactions that would be considered material in which any director or
executive officer or beneficial owner of 5% or more of any class of our capital stock, or any immediate family member of any of the preceding
persons, had a direct or indirect material interest:

 From April 1, 2023 to
March 31, 2025, our Chairman and CEO, Mr. Ou, provided financial support to the Company by advancing funds and making various payments
on behalf of the Company totaling $3,274,924. These amounts payable to Mr. Ou are unsecured, bear no interest and do not have a maturity
date. From April 1, 2023 to March 31, 2025, the Company repaid a total of $1,207,404 to Mr. Ou, including repayment of amounts
owed to Mr. Ou prior to April 1, 2022. From April 1, 2023 to March 31, 2025, the Company transferred $2,263,630 of the
payable balance along with a cash contribution of $136,370 from Mr. Ou as capital contribution. As of March 31, 2025 and 2024, the
remaining balance of these payables was nil and $92,229, respectively. From August 9, 2024 to September 17, 2024, the Company
advanced $477,771 to Mr. Ou, Chairman and CEO of the Company, for personal use. This advance is unsecured, bears no interest and
does not have a maturity date. As of March 31, 2025, the advance was paid back in full.

 From April 1, 2023 to
March 31, 2025, Mr. Rui Feng, our Chief Operating Officer, advanced a total of $8,711 to the subsidiaries of the Company to support
their business operations. These amounts payable to Mr. Feng are unsecured, bear no interest and do not have a maturity date. From
April 1, 2023 to March 31, 2025, the Company repaid $8,711 to Mr. Feng. As of March 31, 2025, the Company has paid off all amounts
owed to Mr. Feng.

 From April 1, 2023 to
March 31, 2025, Mr. Ke Zhang, our Chief Human Resource Officer, advanced an aggregate of $52,802 to the subsidiaries of the Company
to support their business operations. These amounts payable to Mr. Zhang are unsecured, bear no interest and do not have a maturity
date. From April 1, 2023 to March 31, 2025, the Company repaid $52,802 to Mr. Zhang. As of March 31, 2025, the Company has paid
off all amounts owed to Mr. Zhang.

 On March 6, 2021, the
Company and DGLG Accounting and Tax LLC ("DGLG") entered into an engagement letter, wherein the Company engaged DGLG as a
consultant to assist the Company in its IPO planning, financing and tax services. Mr. Guo is a partner at DGLG. In December 2022,
the Company hired Mr. Guo as its former CFO. Under the terms of the engagement agreement with DGLG, the Company has agreed to
compensate DGLG for consulting services based on an hourly fee arrangement. For the years ended March 31, 2025 and 2024, DGLG's
consulting fees were $225,000 and $100,000, respectively. For the years ended March 31, 2025 and 2024, the Company paid DGLG
a total of $61,050 and $123,000, respectively, for tax services. As of March 31, 2025, the Company did not owe any amount to DGLG.

 On April 1, 2023, the
Company agreed to retain the services of PJMG LLC ("PJMG"), a company in which Mr. Guo, the Company's former CFO
who resigned on November 6, 2024, holds over 50% of the equity interests as a consultant following the completion of its IPO. PJMG
was engaged to provide compliance consulting services related to accounting, finance, and management, as well as to oversee market planning
and development, follow-on fundraising, and investor relationship management from June 2024 to May 2025. The service fee is
$45,000 for the first month and from the second month the fees are $15,000 per month. To secure these services, the Company prepaid a
total of $120,000 to PJMG as of March 31, 2025. During the year ended March 31, 2025, the Company paid PJMG a total of $372,047 for consulting
services. $312,047 was expensed as consulting expenses during the year ended March 31, 2025.

 Fly E Bike SRL, a company formed
under the laws of the Dominican Republic and in which Mr. Ou holds over 50% of the equity interests, is a distributor for the Company.
During the years ended March 31, 2025 and 2024, Fly E Bike SRL purchased certain EV products from the Company in the amount
of $42,010 and $326,914, respectively. As of March 31, 2025 and 2024, the Company had accounts receivable from Fly E Bike SRL in
the amounts of $37,465 and $326,914, respectively. In addition, during the year ended March 31, 2025, the Company advanced a total
of $143,455 to Fly E Bike SRL. Such advance is unsecured, bears no interest and does not have a maturity date. As of July 15, 2025,
the advance was paid back in full.

 In December 2023, the
Company engaged DF Technology US Inc ("DFT") for certain technology services. Mr. Guo, the Company's former CFO,
owns over 50% of the equity interest in DFT. As of March 31, 2025 and March 31, 2024, the accumulative payments to DFT for development
of the ERP system were $2,500,000 and $1,554,000, respectively. During the fiscal year of 2025, the Company started to use part of the
ERP system which was valued at $2,310,000 and treated that part as computer hardware and software and started for depreciation. As of
March 31, 2025 and 2024, construction in progress was nil and $275,000, respectively, and primarily relating to the cost incurred to develop
the software by DFT. As of March 31, 2025 and March 31, 2024, the Company had a prepayment of nil and $1,279,000, respectively,
to DFT. In July 2024, the Company engaged DFT, a former related party, to develop a new APP, GO FLY APP, for the rental business. The
total contract price for the GO FLY APP is $500,000, and the GO FLY APP was delivered on September 5, 2024.

 Director Independence

 We believe that
each of our directors, Messrs. Wang, Feng, and Zhang, is an independent director under the Nasdaq listing rules.

 Related Party Transaction Policy

 Our Company has adopted a
written Audit Committee Charter, which contains the procedures used to identify, review, approve and disclose, if necessary, any transaction
in which (i) the Company is a participant and (ii) a related person has or will have a direct or indirect material interest.

 Once a related party transaction
in which the aggregate amount involved will or may be expected to exceed the lesser of $120,000 or 1% of the Company's total assets
at year-end for the last two completed fiscal years if the Company qualifies as a smaller reporting company in any calendar year has been
identified, the Audit Committee or the full board must review the transaction for approval or ratification. In determining whether to
approve or ratify a related party transaction, the Audit Committee or the full board shall consider all relevant facts and circumstances,
including the following factors: (i) the materiality and character of the related person's direct or indirect interest; (ii) the
commercial reasonableness of the terms; (iii) any Company contractual obligations; (iv) the benefit or perceived benefit, or lack thereof,
to the Company; (v) the opportunity cost of alternate transactions; and (vi) the actual or apparent conflict of interest of the related
person.

 Any director who has a direct
or indirect material interest in the proposed related person transaction may be present during initial presentation of the related person
transaction to the Audit Committee or the board, but should not participate in the Audit Committee or the board action regarding whether
to approve or ratify the transaction. If, however, a proposed transaction arises in which all directors are deemed to have a direct or
indirect material interest in the transaction, the interested directors may participate in the consideration and approval of the proposed
transaction, and the Company may enter into any such related person transaction that is approved in accordance with the provisions of
the Delaware General Corporation Law.

 Item 14. Principal Accounting Fees and Services

 The following table sets forth
the fees billed by Marcum Asia CPAs LLP ("Marcum Asia"), our registered independent public accounting firm, for 2025 and 2024
for the categories of services indicated.

 Year Ended March 31,

 2025

 2024

 Audit fees (1)

 $
 608,727

 $
 552,065

 Tax Fees

 -

 -

 All Other Fees

 -

 -

 Total All Fees

 $
 608,727

 $
 552,065

 (1)
 Audit fees consist of fees related to professional services rendered in connection with the audit of our
annual financial statements, review of our quarterly financial statements and review of our registration statement on Form S-1 relating
to our initial public offering.

 Our policy is to pre-approve
all audit and permissible non-audit services performed by the independent accountants. These services may include audit services, audit-related
services, tax services and other services. The pre-approval is made by the audit committee of the board of directors. Our board approved
all services that our independent accountants provided to us prior to our IPO. Following the completion of our IPO, such services were
reviewed and approved by the Audit Committee.

 Item 15. Exhibits, Financial Statement Schedules

 (a) The following documents
are filed as part of this report:

 (1) Financial Statements:

 Page

 Report of Independent Registered Public Accounting Firm (PCAOB ID:5395)

 Consolidated Balance Sheets as of March 31, 2025 and 2024

 Consolidated Statements of Operations and Comprehensive (Loss) Income for the Years Ended March 31, 2025 and 2024

 Consolidated Statements of Changes in Stockholders' Equity for the Years Ended March 31, 2025 and 2024

 Consolidated Statements of Cash Flows for the Years Ended March 31, 2025 and 2024

 Notes to Consolidated Financial Statements

 (2) Financial Statement Schedules:

 All financial statement schedules are omitted
because they are not applicable or the amounts are immaterial and not required, or the required information is presented in the financial
statements and notes thereto beginning on page F-1.

 (3) Exhibits

 We hereby file as part of this report the exhibits
listed in the attached Exhibit Index. Exhibits which are incorporated herein by reference can be inspected on the SEC website at www.sec.gov.

 Item 16. Form 10-K Summary

 Not Applicable.

 EXHIBIT INDEX

 Exhibit

number

 Description

 1.1

 Underwriting Agreement, dated as of June 5, 2024, by and between the Company and The Benchmark Company, LLC (incorporated by reference to Exhibit 1.1 to Form 8-K filed on June 7, 2024)

 3.1

 Amended and Restated Certificate of Incorporation, as amended (incorporated by reference to Exhibit 3.1 to Form 8-K filed on June 7, 2024)

 3.2

 Certificate of Amendment of Amended and Restated Certificate of Incorporation (incorporated by reference to Exhibit 3.1 to Form 8-K filed on March 14, 2025)

 3.3

 The Second Certificate of Amendment of Amended and Restated Certificate of Incorporation (incorporated by reference to Exhibit 3.1 to Form 8-K filed on July 2, 2025)

 3.4

 Amended and Restated Bylaws (incorporated by reference to Exhibit 3.2 to the Company's registration statement on Form S-1 (File No. 333-276830) filed on April 22, 2024 and incorporated herein by reference.

 4.1*

 Description of Securities of the Registrant

 4.2

 Form of Underwriter's Warrant, dated June 7, 2024 (incorporated by reference to Exhibit 4.1 to Form 8-K filed on June 7, 2024)

 4.3

 Form of Warrant (incorporated by reference to Exhibit 4.1 to Form 8-K filed on June 5, 2025)

 10.1

 Employment agreement dated April 1, 2023 by and between FLYEBIKE Inc and Zhou Ou. (incorporated by reference to Exhibit 10.1 to the Company's Annual Report on Form 10-K filed on June 28, 2024)

 10.2

 Employment Agreement dated November 7, 2024 by and between the Company and Shiwen Feng. (incorporated by reference to Exhibit 10.1 to Form 8-K filed on November 8, 2024)

 10.3

 Fly-E Group, Inc. 2024 Omnibus Incentive Plan (incorporated by reference to Appendix A to the Company's Proxy Statement on Schedule 14A filed on February 21, 2025)

 10.4

 Form of the Independent Director's Agreement of Fly-E Group, Inc. (incorporated by reference to Exhibit 10.4 to the Company's Annual Report on Form 10-K filed on June 28, 2024)

 10.5

 Form of Indemnification Agreement (incorporated by reference to Exhibit 10.5 to the Company's Annual Report on Form 10-K filed on June 28, 2024)

 10.6

 Engagement Letter dated March 6, 2021, by and between the Company and DGLG Accounting and Tax LLC. (incorporated by reference to Exhibit 10.6 to the Company's Annual Report on Form 10-K filed on June 28, 2024)

 10.7 #

 Contract Agreement for the Development of POS and ERP System dated December 13, 2023 between the Company and DF Technology US Inc. (incorporated by reference to Exhibit 10.7 to the Company's Annual Report on Form 10-K filed on June 28, 2024)

 10.8

 Placement Agency Agreement, dated April 22, 2025, by and between the Company and American Trust Investment Services, Inc., as amended (incorporated by reference to Exhibit 1.1 to the Company's registration statement on Form S-1 (File No. 333-286678) filed on April 22, 2025 and incorporated herein by reference.

 10.9*

 Joint Amendment to Placement Agency Agreement and Engagement Letter, dated May 13, 2025, by and between the Company and American Trust Investment Services, Inc.

 10.10

 Form of Securities Purchase Agreement (incorporated by reference to Exhibit 10.1 to Form 8-K filed on June 5, 2025)

 10.11 #

 Loan and Security Agreement dated as of August 5, 2024, by and among the Company, Fly-E-Bike Inc., Fly EV, Inc. and Peapack-Gladstone Bank (incorporated by reference to Exhibit 10.1 to the Company's Quarterly Report on Form 10-Q filed on August 16, 2024)

 10.12 #

 Contract Agreement dated as of July 5, 2024, by and between the registrant and DF Technology US Inc (incorporated by reference to Exhibit 10.2 to the Company's Quarterly Report on Form 10-Q filed on August 16, 2024)

 10.13

 Letter
 Agreement dated as of April 1, 2023, by and between the Company and PJMG LLC (incorporated by reference to Exhibit 10.3 to the
 Company's Quarterly Report on Form 10-Q filed on August 16, 2024)

 14.1

 Code of Ethics (incorporated by reference to Exhibit 14.1 to the Company's Annual Report on Form 10-K filed on June 28, 2024)

 19.1

 Insider Trading Policy (incorporated by reference to Exhibit 19.1 to the Company's Annual Report on Form 10-K filed on June 28, 2024)

 21.1*

 List of Subsidiaries.

 31.1*

 Certification of Principal Executive Officer Pursuant to Securities Exchange Act Rules 13a-14(a) and 15(d)-14(a), as adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002

 31.2*

 Certification of Principal Financial Officer Pursuant to Securities Exchange Act Rules 13a-14(a) and 15(d)-14(a), as adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002

 32.1**

 Certification of Principal Executive Officer Pursuant to 18 U.S.C. Section 1350, as adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

 32.2**

 Certification of Principal Financial Officer Pursuant to 18 U.S.C. Section 1350, as adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

 97.1

 Clawback policy (incorporated by reference to Exhibit 97.1 to the Company's Annual Report on Form 10-K filed on June 28, 2024)

 101.INS*

 101.SCH*

 101.CAL*

 101.DEF*

 101.LAB*

 101.PRE*

 104*

 *

 Filed herewith.

 **

 Furnished herewith

 Compensatory plan or arrangement.

 #

 The exhibits and schedules to this Exhibit have been omitted pursuant to Item 601(a)(5) of Regulation S-K. The registrant hereby agrees to furnish a copy of any omitted schedules to the Commission upon request.

 SIGNATURES

 Pursuant to the requirements of the Securities
Exchange Act of 1934, the Registrant has duly caused this annual report to be signed on its behalf by the undersigned thereunto duly authorized.

 Date: July 15, 2025

 By:

 /s/ Zhou Ou

 Name:

 Title:

 Chief Executive Officer

 (Principal Executive Officer)

 Pursuant to the requirements of the Securities
Exchange Act of 1934, this annual report has been signed below by the following persons on behalf of the registrant and in the capacities
and on the dates indicated.

 Signature

 Title

 Date

 /s/ Zhou Ou

 Chief Executive Officer (Principal Executive Officer) and Director

 /s/ Shiwen Feng

 Chief Financial Officer (Principal Accounting and Financial Officer) and Director

 Shiwen Feng

 /s/ Bin Wang

 Bin Wang

 /s/ Lun Feng

 Lun Feng

 /s/ Zanfeng Zhang

 Zanfeng Zhang

 INDEX TO CONSOLIDATED FINANCIAL STATEMENTS

 Page

 Report of Independent Registered Public Accounting Firm (PCAOB ID: 5395)

 Consolidated Balance Sheets as of March 31, 2025 and 2024

 Consolidated Statements of Operations and Comprehensive (Loss) Income for the Years Ended March 31, 2025 and 2024

 Consolidated Statements of Changes in Stockholders' Equity for the Years Ended March 31, 2025 and 2024

 Consolidated Statements of Cash Flows for the Years Ended March 31, 2025 and 2024

 Notes to Consolidated Financial Statements

 F- 1

 Report
of Independent Registered Public Accounting Firm

 To the Shareholders and Board of Directors of

 Fly-E Group, Inc.

 Opinion on the Financial Statements

 We have audited the accompanying consolidated
balance sheets of Fly-E Group, Inc. (the "Company") as of March 31, 2025 and 2024, the related consolidated statements of
operations and comprehensive (loss) income, changes in stockholders' equity and cash flows for each of the years in the two-year
period ended March 31, 2025, and the related notes (collectively referred to as the "financial statements"). In our opinion,
the financial statements present fairly, in all material respects, the financial position of the Company as of March 31, 2025 and 2024,
and the results of its operations and its cash flows for each of the years in the two-year period ended March 31, 2025, in conformity
with accounting principles generally accepted in the United States of America.

 Explanatory Paragraph – Going Concern

 The accompanying financial statements have been
prepared assuming that the Company will continue as a going concern. As more fully described in Note 1, the Company has incurred significant
losses and significant cash outflows from operating and investing activities, and needs to raise additional funds to meet its obligations
and sustain its operations. These conditions raise substantial doubt about the Company's ability to continue as a going concern. Management's
plans in regard to these matters are also described in Note 1. The financial statements do not include any adjustments that might result
from the outcome of this uncertainty.

 Basis for Opinion

 These financial statements are the responsibility
of the Company's management. Our responsibility is to express an opinion on the Company's financial statements based on our audits. We
are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) ("PCAOB") and are
required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and
regulations of the Securities and Exchange Commission and the PCAOB.

 We conducted our audits in accordance with the
standards of the PCAOB. Those standards require that we plan and perform the audits to obtain reasonable assurance about whether the financial
statements are free of material misstatement, whether due to error or fraud. The Company is not required to have, nor were we engaged
to perform, an audit of its internal control over financial reporting. As part of our audits we are required to obtain an understanding
of internal control over financial reporting but not for the purpose of expressing an opinion on the effectiveness of the Company's internal
control over financial reporting. Accordingly, we express no such opinion.

 Our audits included performing procedures to assess
the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond
to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements.
Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating
the overall presentation of the financial statements. We believe that our audits provide a reasonable basis for our opinion.

 /s/ Marcum Asia CPAs LLP

 Marcum Asia CPAs LLP

 We have served as the Company's auditor since 2022 (such date
takes into account the acquisition of certain assets of Friedman LLP by Marcum Asia CPAs LLP effective September 1, 2022).

 New York, New York

 NEW YORK OFFICE 7 Penn Plaza Suite
830 New York, New York 10001

 Phone 646.442.4845 Fax 646.349.5200
www.marcumasia.com

 F- 2

 CONSOLIDATED FINANCIAL STATEMENTS

 CONSOLIDATED BALANCE SHEETS

 (Expressed in U.S. dollars, except for the
number of shares)

 2025

 2024

 ASSETS

 Current Assets

 Cash

 $
 840,102

 $
 1,403,514

 Accounts receivable

 466,187

 212,804

 Accounts receivable, net – related parties

 37,465

 Inventories, net

 6,397,274

 5,364,060

 Prepayments and other receivables

 3,676,986

 588,660

 Prepayments and other receivables – related parties

 120,000

 240,256

 Assets held for sale

 2,462,502

 —

 Total Current Assets

 14,000,516

 8,136,208

 Property and equipment, net

 7,287,213

 1,755,022

 Security deposits

 728,450

 781,581

 Deferred IPO costs

 —

 502,198

 Deferred tax assets, net

 94,983

 35,199

 Operating lease right-of-use assets

 10,933,068

 16,000,742

 Intangible assets, net

 525,865

 36,384

 Long-term prepayment for property

 —

 450,000

 Long-term prepayment for software development– related parties

 136,580

 1,279,000

 Total Assets

 $
 33,706,675

 $
 28,976,334

 LIABILITIES AND STOCKHOLDERS' EQUITY

 Current Liabilities

 Accounts payable

 $
 1,272,305

 $
 1,180,796

 Short-term loan payables

 5,191,058

 —

 Current portion of long-term loan payables

 100,835

 1,213,242

 Accrued expenses and other payables

 1,366,968

 925,389

 Other payables – related parties

 —

 92,229

 Operating lease liabilities – current

 2,617,762

 2,852,744

 Taxes payable

 —

 1,530,416

 Liabilities held for sale

 2,152,447

 —

 Total Current Liabilities

 12,701,375

 7,794,816

 Long-term loan payables

 2,065,040

 412,817

 Operating lease liabilities – non-current

 9,106,928

 13,986,879

 Total Liabilities

 23,873,343

 22,194,512

 Commitment and Contingencies

 Stockholders' Equity

 Preferred stock, $ 0.01 par value, 10,000,000 shares authorized and nil outstanding as of March 31, 2025 March 31, 2024*

 —

 —

 Common stock, $ 0.01 par value, 300,000,000 shares authorized and 4,917,500 shares outstanding as of March 31, 2025 and 100,000,000 shares authorized and 4,400,000 shares outstanding as of March 31, 2024*

 49,175

 44,000

 Additional paid-in capital

 10,940,724

 2,576,000

 Shares subscription receivable

)

)

 (Accumulated deficit) Retained Earnings

 ( 895,510
)

 4,395,649

 Accumulated other comprehensive loss

 ( 41,059
)

)

 Total FLY-E Group, Inc. Stockholders' Equity

 9,833,332

 6,781,822

 Total Liabilities and Stockholders' Equity

 $
 33,706,675

 $
 28,976,334

 *
 Shares and per share data are presented on a retroactive basis to reflect
the 1-for-110,000 stock split completed on April 2, 2024 and the 1-for-5 reverse stock split completed on July 3, 2025.

 The accompanying notes are an integral part of
these consolidated financial statements.

 F- 3

 CONSOLIDATED STATEMENTS OF OPERATIONS AND

 COMPREHENSIVE (LOSS) INCOME

 (Expressed in U.S. dollars, except for the
number of shares)

 For the Years Ended

 2025

 2024

 Revenues

 $
 25,427,163

 $
 32,205,666

 Cost of Revenues

 14,976,266

 19,099,120

 Gross Profit

 10,450,897

 13,106,546

 Operating Expenses

 Selling Expenses

 7,403,374

 5,914,786

 General and Administrative Expenses

 7,607,489

 3,931,203

 Total Operating Expenses

 15,010,863

 9,845,989

 Income (Loss) from Operations

 ( 4,559,966
)

 3,260,557

 Other Income (Expenses), net

 10,588

 ( 30,352
)

 Interest Expenses, net

 ( 405,615
)

 ( 152,050
)

 Income (Loss) Before Income Taxes

 ( 4,954,993
)

 3,078,155

 Income Tax Expense

 ( 336,166
)

 ( 1,182,933
)

 Net Income (Loss)

 $
 ( 5,291,159
)

 $

 Other Comprehensive Income (Loss)

 Foreign currency translation adjustment

 ( 27,230
)

)

 Total Comprehensive Income (Loss)

 $
 ( 5,318,389
)

 $
 1,881,393

 Earnings (Losses) per Share*

 $
 ( 1.10
)

 $
 0.43

 Weighted Average Number of Common Stock

 – Basic and Diluted*

 4,821,010

 4,400,000

 *
 Shares and per share data are presented on a retroactive basis to reflect
the 1-for-110,000 stock split completed on April 2, 2024 and the 1-for-5 reverse stock split completed on July 3, 2025.

 The accompanying notes are an integral part of
these consolidated financial statements.

 F- 4

 CONSOLIDATED STATEMENTS OF CHANGES IN

 STOCKHOLDERS' EQUITY

 (Expressed in U.S. dollars, except for the
number of shares)

 Preferred Stock

 Common Stock

 Additional
 Paid-in

 Shares
 Subscription

 Accumulated
 Other

 (Accumulated

deficit)

 Retained

 Total
 Stockholders'

 Shares*

 Amount

 Shares*

 Amount

 Capital

 Receivables

 Comprehensive

 Earnings

 Equity

 Balance at March 31, 2023

 —

 $
 —

 4,400,000

 $
 44,000

 $
 176,000

 $
)

 $
 —

 $
 2,500,427

 $
 2,500,429

 Net Income

 —

 —

 —

 —

 —

 —

 —

 Capital Contribution

 —

 —

 —

 —

 2,400,000

 —

 —

 —

 2,400,000

 Foreign currency translation adjustment

 —

 —

 —

 —

 —

 —

)

 —

)

 Balance at March 31, 2024

 —

 $
 —

 4,400,000

 $
 44,000

 2,576,000

)

 $
)

 $
 4,395,649

 $
 6,781,822

 Net loss

 —

 —

 —

 —

 —

 —

 —

 ( 5,291,159
)

 ( 5,291,159
)

 Issuance of common stock upon initial public offering, net

 —

 —

 517,500

 5,175

 8,364,724

 —

 —

 —

 8,369,899

 Foreign currency translation adjustment

 —

 —

 —

 —

 —

 —

 ( 27,230
)

 —

 ( 27,230
)

 Balance at March
 31, 2025

 —

 $
 —

 4,917,500

 $
 49,175

 $
 10,940,724

 $
)

 $
 ( 41,059
)

 $
 ( 895,510
)

 $
 9,833,332

 *
 Shares and per share data are presented on a retroactive basis to reflect
the 1-for-110,000 stock split completed on April 2, 2024 and the 1-for-5 reverse stock split completed on July 3, 2025.

 The accompanying notes are an integral part of
these consolidated financial statements.

 F- 5

 CONSOLIDATED STATEMENTS OF CASH FLOWS

 (Expressed in U.S. dollars, except for the
number of shares)

 For the
 Years Ended

 2025

 2024

 Cash flows from operating
 activities

 Net (loss)
 income

 $
 ( 5,291,159
)

 $

 Adjustments
 to reconcile net (loss) income to net cash (used in) provided by operating activities:

 Loss on disposal of property
 and equipment

 108,593

 46,084

 (Gain) Loss on termination
 of operating lease

 ( 111,564
)

 5,957

 (Gain) Loss on disposal
 of subsidiaries

 ( 84,302
)

 —

 Credit loss for accounts
 receivable

 116,746

 —

 Depreciation expense

 631,280

 272,708

 Amortization expense

 65,091

 1,648

 Deferred income taxes (benefits)
 expenses

 ( 64,829
)

 176,093

 Amortization of operating
 lease right-of-use assets

 5,084,535

 2,277,910

 Inventories reserve

 870,589

 456,209

 Changes in operating assets
 and liabilities:

 Accounts receivable

 ( 329,029
)

 176,273

 Accounts receivable – related
 parties

 248,349

 ( 190,349
)

 Inventories

 ( 2,736,241
)

 ( 1,981,515
)

 Prepayments and other receivables

 ( 2,677,904
)

 194,160

 Prepayments for operation
 services to related parties

 ( 60,000
)

 ( 60,000
)

 Security deposits

 ( 84,605
)

 ( 422,240
)

 Accounts payable

 91,509

 2,489,025

 Accrued expenses and other
 payables

 460,364

 334,726

 Operating lease liabilities

 ( 4,771,518
)

 ( 1,933,760
)

 Taxes
 payable

 ( 1,525,371
)

 570,769

 Net
 cash (used in) provided by operating activities

 ( 10,059,466
)

 4,308,920

 Cash flows from investing
 activities

 Purchases of properties
 and equipment

 ( 1,634,174
)

 ( 1,253,555
)

 Purchase of software and
 hardware from a related party

 ( 1,392,580
)

 ( 1,279,000
)

 Cash held at disposal entities

 ( 54,774
)

 —

 Repayment from a related
 party

 660,256

 111,500

 Advance to a related party

 ( 480,000
)

 ( 291,756
)

 Prepayments for property

 —

 ( 450,000
)

 Payments
 of property rights

 —

 ( 38,032
)

 Net
 cash used in investing activities

 ( 2,901,272
)

 ( 3,200,843
)

 Cash flows from financing
 activities

 Borrowing from loan payables

 7,367,795

 1,095,000

 Repayments of loan payables

 ( 3,661,559
)

 ( 639,367
)

 Repayments on other payables
 - related parties

 ( 92,229
)

 ( 290,252
)

 Payments of related party
 loan

 —

 ( 150,000
)

 Capital Contributions from
 Stockholders

 —

 136,370

 Payments of IPO cost

 ( 282,403
)

 ( 201,379
)

 Net
 proceeds from issuance of common stock - IPO

 9,154,500

 —

 Net
 cash provided by (used in) financing activities

 12,486,104

 ( 49,628
)

 Net changes in cash including
 cash classified within current assets held for sale

 ( 474,634
)

 1,058,449

 Effect of exchange rate
 changes on cash

 ( 27,230
)

)

 Less: net decrease in cash
 classified within current assets held for sale

 ( 61,548
)

 —

 Cash
 at beginning of the year

 1,403,514

 358,894

 Cash
 at the end of the year

 $
 840,102

 $
 1,403,514

 Supplemental disclosure
 of cash flow information

 Cash
 paid for interest expense

 $
 405,615

 $
 152,050

 Cash
 paid for income taxes

 $
 1,957,867

 $
 435,881

 Supplemental disclosure
 of non-cash investing and financing activities

 Settlement of accounts
 payable by related parties

 $
 —

 $
 50,000

 Settlement of accounts
 payable by capital contribution

 $
 —

 $
 2,263,630

 Purchase of vehicle funded
 by loan

 $
 224,638

 $
 34,974

 Purchase of office funded
 by loan

 $
 1,800,000

 $
 —

 Purchase software and office
 by using previous prepayments

 $
 1,729,000

 $
 —

 Purchase property rights
 by using previous prepayments

 $
 54,572

 —

 Properties used for rental
 services

 $
 193,964

 —

 Unpaid deferred IPO cost

 $
 —

 $
 225,000

 Deferred IPO cost recognized
 as additional paid-in capital

 $
 502,198

 $
 —

 Uncollected proceeds from
 disposal of subsidiaries

 $
 635,193

 $
 —

 Termination of operating
 lease right-of-use assets and operating lease liabilities

 $
 ( 2,473,686
)

 $
 ( 2,814,235
)

 Right-of-use assets obtained
 in exchange for operating lease liabilities

 $
 2,490,547

 $
 10,771,688

 The accompanying notes are an integral part of
these consolidated financial statements.

 F- 6

 Notes to Consolidated Financial Statements

 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, 2025, the Company closed four stores in the U.S. As of July 15, 2025, the Company has opened a total of 20 retail stores, including
19 retail stores in the U.S and one retail store in Canada. 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 plans to open another
online store focusing on selling gas bikes in the future.

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

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

 As a result of the Merger and the Share Exchange,
Fly E-Bike and its subsidiaries are under common control of Fly-E Group, resulting in the consolidation of Fly E-Bike and its subsidiaries,
which was accounted as a reorganization of entities under common control at carrying value. The 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 450,000 shares
of common stock, at a price of $ 20.00 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 67,500 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 67,500
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 25,875 shares.

 On June 4, 2025, the Company issued 5,719,111
shares of common stock, at a price of $ 1.2140 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 ($ 1.4565 per share) and expires on the fifth anniversary of the issuance date, subject to certain
adjustments.

 On July 3, 2025, the Company implemented a 1-for-5
reverse stock split of its issued and outstanding shares of common stock. As a result, all share and per share information has been retroactively
adjusted to reflect the reverse stock split for all periods presented. The reverse stock split reduced the number of shares of common
stock issued and outstanding from 24,587,500 to 4,917,500 as of March 31, 2025. The par value per share remained unchanged at $ 0.01.

 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.

 F- 7

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

 Name

 Background

 Ownership

 A Delaware corporation
 Incorporated on November 1, 2022
 A holding company

 Parent Company

 FLY EV, INC.

 A Delaware corporation
 Incorporated on November 1, 2022
 A holding Company

 100% owned by Fly-E Group, Inc.

 FLY E-BIKE, INC.

 A Delaware Company
 Incorporated on August 22, 2022
 A holding Company

 100% owned by Fly-E Group, Inc.

 UNIVERSE KING CORP

 Incorporated on November 19, 2018

 UFOTS CORP.

 Incorporated on May 2, 2019

 TKPGO CORP.

 Incorporated on July 3, 2018

 FLYFLS INC

 Incorporated on October 13, 2020
 A retail store and corporate office

 FLY37 INC

 Incorporated on October 14, 2020

 FIYET INC

 Incorporated on November 12, 2020

 FLYAM INC

 Incorporated on February 19, 2021

 OFLYO INC

 Incorporated on March 29, 2021

 F- 8

 FLYEBIKE INC

 Incorporated on March 30, 2021

 FLYCLB INC

 Incorporated on April 15, 2021

 FLYEBIKE NJ INC

 A New Jersey corporation
 Incorporated on June 8, 2021

 FLYEBIKEMIAMI INC

 A Florida corporation
 Incorporated on June 30, 2021

 GOFLY INC

 A Texas corporation
 Incorporated on July 23, 2021

 FLYTRON INC.

 Incorporated on November 9, 2021

 FLYCYCLE INC.

 Incorporated on January 10, 2022

 FLYNJ2 INC.

 A New Jersey corporation
 Incorporated on February 10, 2022

 FLYCORONA INC.

 Incorporated on March 9, 2022

 MEEBIKE

 Incorporated on March 25, 2022

 FLY E BIKE NJ3, INC

 A New Jersey corporation
 Incorporated on July 18, 2022

 FLY E-BIKE SAN ANTONIO INC

 A Texas corporation
 Incorporated on January 1, 2023

 FLYEBIKE WORLD INC.

 Incorporated on February 27, 2023

 FLY DELIVERY INC.

 Incorporated on March 2, 2023
 A delivery store

 F- 9

 FLYEBIKE MIAMI2 INC.

 A Florida corporation
 Incorporated on April 13, 2023

 FLYDC INC.

 A Washington, DC corporation
 Incorporated on May 31, 2023

 FLYJH8509 INC.

 Incorporated on August 30, 2023

 FLYBX2381 INC.

 Incorporated on August 30, 2023

 FLYNJ4 INC.

 Incorporated on October 4, 2023

 FLYTORONTO Corp.

 A Toronto corporation
 Incorporated on October 18, 2023

 FLYLA INC.

 A California corporation
 Incorporated on December 1, 2023
 A retail and rental store

 FWMOTOR INC.

 Incorporated on April 3, 2024

 DCMOTOR INC.

 A Maryland corporation
 Incorporated on April 9, 2024

 AOFL LLC

 Incorporated on June 25, 2024
 A holding company

 GOBIKE INC

 Incorporated on July 16, 2024
 A rental store

 FLYEBIKE BOSTON INC.

 A Massachusetts corporation
 Incorporated on September 1, 2024

 FLYNJ1 INC

 A Massachusetts corporation
 Incorporated on January 29, 2025

 F- 10

 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 7, 2024, the Company closed the IPO of
 450,000 shares of the common stock at the price of $ 20.00 per share, resulting in net proceeds to the Company of $ 7.9 million after deducting
underwriting discounts and commissions and offering expenses. On June 25, 2024, the Company sold an additional 67,500 shares of common
stock to the underwriters of the IPO for gross proceeds of $ 1.4 million upon full exercise of the underwriters' over-allotment option
and received net proceeds of approximately $ 1.2 million.

 As of March 31, 2025, the Company had working capital of approximately
$ 1.3 million and cash of approximately $ 0.8 million. During the year ended March 31, 2025, the Company had net loss of approximately
$ 5.3 million. During the year ended March 31, 2025, net cash used in operating activities of the Company was approximately $ 10.1 million.
As of March 31, 2025, the Company had a current portion of contractual obligation of approximately $ 8.9 million. On June 4, 2025, the
Company closed a public offering of (i) 5,719,111 shares of the common stock at the price of $ 1.2140 per share and (ii) 11,438,222 warrants
to purchase 11,438,222 shares of common stock, resulting in net proceeds to the Company of $ 6.1 million after deducting placement agent's
fees and offering expenses. 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.

 2 — SUMMARY OF SIGNIFICANT ACCOUNTING
POLICIES

 (a) Basis of Presentation

 The accompanying consolidated financial statements
of the Company have been prepared in accordance with accounting principles generally accepted in the U.S. (the "U.S. GAAP")
and regulations of the Securities Exchange Commission (the "SEC").

 (b) Principles of Consolidation

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

 (c) Segment Information

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

 F- 11

 (d) Use of Estimates

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

 (e) Commitments and Contingencies

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

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

 (f) Cash

 Cash consists of cash on hand and cash deposited
with banks. The Company's cash is maintained at financial institutions in the U.S. Deposits in these financial institutions
may, from time to time, exceed the Federal Deposit Insurance Corporation's (the "FDIC") federally insured limit, which
is $ 250,000. The Company has not incurred any losses in the past for amount over the FDIC limits. As of March 31, 2025 and March 31,
2024, nil and nil deposited with banks was uninsured, respectively.

 (g) Accounts Receivable

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

 The Company adopt the current expected credit
loss model ("CECL model") to estimate the expected credit losses, which is determined by multiplying the probability of default.
In determining the probability of default, the Company mainly considers factors such as aging schedule of receivables, migration rate
of receivables, assessment of receivables due from specific identifiable counterparties that are considered at risk or uncollectible,
current market conditions, as well as reasonable and supportable forecasts of future economic conditions.

 As of March 31, 2025, the Company accrued credit
losses of $ 116,746, consisting of $ 41,100 related to accounts receivable from a related party customer and $ 75,646 related to accounts
receivable from a third party customer. As of March 31, 2024, no credit losses were recognized.

 (h) Inventories, Net

 Inventories, consisting of products available
for sale, are stated at the lower of cost or net realizable value using the first-in-first-out method. Adjustments to the carrying value
are recorded for estimated obsolescence or excess inventory equal to the difference between the cost of inventory and the estimated net
realizable value based upon assumptions about future demand and market conditions. Inventory cost consists of the direct cost of merchandise
including freight. For the years ended March 31, 2025 and 2024, the impairment loss was $870,589 and $456,209, respectively.

 (i) Prepayments and Other Receivables

 Prepayments and other receivables are mainly prepayments
to vendors, prepaid expenses paid to service providers, prepaid taxes, advances to employees, and other deposits. Management regularly
reviews the aging of such balances and changes in payment and realization trends and records allowances when management believes that
the collection of amounts due is at risk. Accounts considered uncollectable are written off against allowances after exhaustive efforts
at collection are made. As of March 31, 2025 and 2024, no allowance against prepayments and other receivables was recorded.

 F- 12

 (j) Property and Equipment, Net

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

 The estimated useful lives are as follows:

 Machinery and equipment

 5 years

 Furniture and fixtures

 5 years

 Leasehold improvements

 3 – 10 years (shorter of lease term or useful lives)

 Motor vehicles

 5 years

 Buildings

 30 years

 Properties used for lease

 2 years

 Computer hardware and software

 10 years

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

 Construction in progress

 Direct costs that are related to the construction
of property, equipment and software and incurred in connection with bringing the assets to their intended use are capitalized as construction
in progress. Construction in progress is transferred to specific property, equipment and software items and the depreciation of these
assets commences when the assets are ready for their intended use. In December 2023, the Company engaged DF Technology US Inc ("DFT"),
a former related party which ceased to be the related party on November 6, 2024, for certain technology services, such as enterprise resource
planning system ("ERP system"). During the fiscal year of 2025, the Company reclassified $ 2,310,000 from construction in process
to computer hardware and software and started for depreciation. As of March 31, 2025 and 2024, construction in progress was nil and
$ 275,000, respectively, and primarily relating to the cost incurred to develop the software by DFT.

 (k) Intangible Assets

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

 The estimated useful lives of intangibles assets
are as follows:

 Property rights

 5 - 20 years

 Software

 5 years

 F- 13

 (l) Impairment of Long-lived Assets

 At the end of each reporting period, the Company
reviews the carrying amounts of its property and equipment, intangible assets subject to depreciation and amortization, and right-of-use
assets, to determine whether there is any indication that the carrying value of an asset may not be recoverable. The Company assesses
the recoverability of the assets based on the undiscounted future cash flows the assets are expected to generate and recognize an impairment
loss when estimated undiscounted future cash flows expected to result from the use of the asset plus net proceeds expected from disposition
of the asset, if any, are less than the carrying value of the asset. If an impairment is identified, the Company will reduce the carrying
amount of the asset to its estimated fair value based on a discounted cash flows approach or, when available and appropriate, to comparable
market values. As of March 31, 2025 and 2024, no impairment of long-lived assets was recognized.

 (m) Deferred IPO Costs

 The Company complies with the requirements of
FASB ASC Topic 340-10-S99-1, "Other Assets and Deferred Costs — SEC Materials" ("ASC 340-10-S99")
and SEC Staff Accounting Bulletin Topic 5A, "Expenses of Offering". Deferred IPO costs consist of underwriting, legal,
accounting and other professional expenses incurred through the balance sheet date that are directly related to the initial public offering
of the Company and that will be charged to additional paid in capital upon the completion of the offering. Total deferred offering
cost of $ 502,198 as of March 31, 2024 was charged to additional paid-in capital upon IPO.

 (n) Fair Value Measurements

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

 Level-1

 —

 Observable inputs that reflect quoted prices (unadjusted) for identical assets or liabilities in active markets.

 Level-2

 —

 Include other inputs that are directly or indirectly observable in the marketplace.

 Level-3

 —

 Unobservable inputs which are supported by little or no market activity.

 The fair value for certain assets and liabilities
such as cash, accounts receivable, other receivables, prepayments and other current assets, short-term loans, accounts payable, contract
liabilities, accrued expenses and other payables, and tax payables have been determined to approximately carrying amounts due to the short
maturities of these instruments. The Company believes that its long-term loan to a third party approximates the fair value based on current
yields for debt instruments with similar terms. The Company and its subsidiaries did not have any non-financial assets or liabilities
that are measured at fair value on a recurring basis as of March 31, 2025 and 2024.

 (o) Revenue Recognition

 Product revenue

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

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

 F- 14

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

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

 Since the contract price and term are fixed and
enforceable, and an assurance-type warranty guarantees the functionality of a product, and the warranty is not accounted for as a separate
performance obligation, no transaction price is allocated to it. The Company recognizes sales in full at the point in time when the products
are delivered or accepted by the customers, in accordance with the acceptance term specified in the contract. The Company records estimated
future warranty costs under ASC 460. Such estimated costs for warranties are estimated at the time of delivery and these warranties
are not service warranties separately sold by the Company. Generally, the estimated claim rates of warranty are based on actual warranty
experience or the Company's best estimate. The Company accrued $ 20,131 and $ 27,714 of warranty reserves under accrued expenses and
other payables as of March 31, 2025 and 2024, respectively. The Company has no contract assets and contract liabilities balances as of
March 31, 2025 and 2024, respectively.

 Rental Revenue

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

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

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

 Disaggregated information of revenues by business
lines are as follows:

 For the years Ended

 2025

 2024

 Product revenues - retail (ASC 606)

 $
 21,725,817

 $
 26,389,720

 Product revenues - wholesale (ASC 606)

 3,529,479

 5,815,946

 Revenues - rental services (ASC 842)

 171,867

 —

 Net revenues

 $
 25,427,163

 $
 32,205,666

 (p) Selling Expenses

 Selling expenses mainly consist of advertising
costs, and payroll and related expenses for personnel engaged in selling and marketing activities. Advertising expenses, which consist
primarily of online and offline advertisements, are expenses when the services are received. The advertising expenses were $ 273,816 and
$ 64,423 for the years ended March 31, 2025 and 2024, respectively.

 F- 15

 (q) Research and Development Expenses

 Research and development expenses include salaries
for the Company's research and development personnel, as well as related development expenses paid to the third-party development
team. The Company recognizes internal use software acquired and internally developed in accordance with ASC 350-40 "Software—internal
use software". The Company expenses all costs that are incurred in connection with the planning and implementation phases of development,
and costs that are associated with maintenance of the existing software for internal use. Certain costs associated with developing internal-use
software are capitalized when such costs are incurred within the application development stage of software development. As a result, the
Company expensed the development costs of the Fly E-Bike app as they incurred. For the years ended March 31, 2025 and 2024, development
costs amounted to $ 549,368 and $ 292,724, respectively, which were recorded under general and administrative expenses.

 (r) Income Taxes

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

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

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

 An uncertain tax position is recognized as a benefit
only if it is "more likely than not" that the tax position would be sustained in a tax examination, with a tax examination
being presumed to occur. The amount recognized is the largest amount of tax benefit that is greater than 50 % likely of being realized
on examination. For tax positions not meeting the "more likely than not" test, no tax benefit is recorded. Penalties and interest
incurred related to underpayment of income tax are classified as income tax expense in the period incurred. The tax returns filed in 2018
to 2024 are subject to examination by any appropriate tax authorities. For the years ended March 31, 2025 and 2024, the Company accrued
$ 30,301 and $ 60,487 income tax related penalty included in current income taxes expenses, respectively.

 (s) Leases

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

 Lessor

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

 F- 16

 Lessee

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

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

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

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

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

 (t) Concentration Risk

 Concentration of customers and suppliers

 No customers individually represented greater
than 10% of total net revenues of the Company for the years ended March 31, 2025 and 2024.

 For the year ended March 31, 2025, the Company's
top two suppliers represented 42 % and 32 % of total purchases of the Company, respectively. For the year ended March 31, 2024, the Company's
top three suppliers represented 36 %, 21 %, and 13 % of total purchases of the Company, respectively. As of March 31, 2025, two suppliers
accounted for 63 % and 25 % of accounts payable balance, respectively. As of March 31, 2024, three suppliers accounted for 31 %, 26 %,
and 23 % of accounts payable balance, respectively.

 Concentration of credit risk

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

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

 F- 17

 (u) Related Parties

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

 (v) Earnings (Loss) Per Share

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

 For the year ended March 31, 2025, the Company
had potential shares of common stock issuable upon the exercise of the Representative's Warrants (as defined below). As the Company
incurred losses for the year ended March 31, 2025, inclusion of these potential shares of common stock would have reduced the net loss
per share. Therefore, these potential shares were excluded from the calculation of diluted net loss per share. For the year ended
March 31, 2024, there were no dilutive shares.

 (w) Foreign Currencies Translation

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

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

 (x) Representative's Warrants

 Upon the closing of the IPO in June 2024, the
Company issued to Benchmark underwriters warrants (the "Representative's Warrants") to purchase 25,875 shares
of common stock which warrants are also exercisable on a cashless basis. The Company accounts for these warrants as either equity-classified
or liability-classified instruments based on an assessment of the warrant's specific terms and applicable authoritative guidance
in Financial Accounting Standards Board ("FASB") Accounting Standards Codification ASC 480, Distinguishing Liabilities from
Equity and ASC 815, Derivatives and Hedging. The Company accounts for its warrants as equity that meet all of the criteria (i) require
physical settlement or net-share settlement or (ii) give the Company a choice of net-cash settlement or settlement in its own shares (physical
settlement or net-share settlement), the warrants are required to be recorded as a component of additional paid-in capital at the time
of issuance and subsequent changes in fair value are not recognized as long as the warrants continue to be classified as equity.

 (y) Held for Sale

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

 F- 18

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

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

 (z) Newly adopted accounting pronouncements

 In November 2023, the FASB issued ASU
2023-07, "Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures." This guidance requires a
public entity to disclose for each reportable segment, on an interim and annual basis, the significant expense categories and
amounts that are regularly provided to the chief operating decision-maker ("CODM") and included in each reported measure
of a segment's profit or loss. Additionally, it requires a public entity to disclose the title and position of the individual
or the name of the group or committee identified as the CODM. This guidance is effective for fiscal years beginning after December
15, 2023, and interim periods within fiscal years beginning after December 15, 2024. Early adoption is permitted, and the guidance
should be applied retrospectively to all periods presented in the financial statements, unless it is impracticable. The Company
adopted the ASU for the fiscal year ending March 31, 2025 and applied retrospectively to all prior periods presented. The adoption
of this ASU had no material impact on reportable segments identified and had no effect on the Company's financial position,
results of operations, or cash flows.

 (aa) Recent accounting pronouncements not yet
adopted

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

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

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

 3 — INVENTORIES, NET

 Inventories, net consisted of the following:

 2025

 2024

 Batteries

 $
 2,084,890

 $
 1,009,228

 Electric Vehicles

 3,070,224

 2,634,643

 Tires

 482,364

 687,927

 Accessories

 1,867,365

 1,546,283

 Inventories

 7,504,843

 5,878,081

 Inventory reserves

 ( 1,107,569
)

 ( 514,021
)

 Inventories, net

 $
 6,397,274

 $
 5,364,060

 Movements of inventory reserves are as follows:

 2025

 2024

 Beginning balance

 $
 514,021

 $
 431,363

 Addition

 870,589

 456,209

 Write off

 ( 277,041
)

 ( 373,551
)

 Ending Balance

 $
 1,107,569

 $
 514,021

 As of March 31, 2025 and 2024, the inventory allowance
balance was $ 1,107,569 and $ 514,021, respectively. For the years ended March 31, 2025 and 2024, the impairment loss was $ 870,589 and $ 456,209,
respectively.

 F- 19

 4 — PREPAYMENTS AND OTHER RECEIVABLES

 Prepayments and other current assets as of March
31, 2025 and 2024 consisted of the following:

 2025

 2024

 Prepaid rent

 $
 157,683

 $
 179,792

 Prepayments to vendors (i)

 2,353,105

 143,018

 Prepaid iCloud Server

 —

 1,747

 Prepaid insurance

 214,111

 237,207

 Prepayments to other service providers

 269,693

 26,896

 Prepaid income tax

 18,127

 —

 Other receivable from third parties (ii)

 664,267

 —

 Total Prepayment and Other Receivables

 $
 3,676,986

 $
 588,660

 (i)
 As of March 31, 2025 and 2024, the prepayments to vendors were $ 2.4 million and $ 0.1 million, respectively. The increase in prepayments to vendors was primarily due to the Company's anticipation of growth in future sales and rental services. The Company plans to purchase more E-vehicles and related accessories from oversea and U.S. vendors to support the expansion in retail and rental markets. These prepayments to vendors are expected to be settled by the end of October 2025.

 (ii)
 On December 17, 2024, the management team approved a plan to sell 100 % of its equity interests in subsidiaries FLYMHT INC, FLY14 CORP, EDISONEBIKE INC, and FLY6AVE INC to third-party individuals (the "Buyers"). On January 1, 2025, the Company entered into share transfer agreements with the Buyers for total cash consideration of $ 635,193. The full consideration should be settled in cash at closing date, which was January 1, 2025. As of March 31, 2025, the Company did not any receive consideration (See Note - 14 — DISPOSAL OF SUBSIDIARIES). As of March 31, 2025, the Company had other receivables of $ 29,074 from a third-party individual.

 5 — PROPERTY AND EQUIPMENT, NET

 Property and equipment as of March 31, 2025 and
2024 consisted of the following:

 2025

 2024

 Furniture & Fixtures

 $
 400,080

 $
 400,558

 Machinery & Equipment

 230,015

 212,317

 Automobile

 669,902

 306,607

 Leasehold improvements

 683,595

 976,870

 Building (ii)

 3,663,215

 —

 Computer hardware and software (i)

 2,310,000

 —

 Construction in progress-Software

 —

 275,000

 Properties for rental business (iii)

 193,963

 —

 Property and Equipment

 8,150,770

 2,171,352

 Less: Accumulated depreciation

 ( 863,557
)

 ( 416,330
)

 Property and Equipment, net

 $
 7,287,213

 $
 1,755,022

 For the years ended March 31, 2025 and 2024, the
depreciation expenses were $ 631,280 and $ 272,708, respectively.

 (i)
 In December 2023, the Company engaged DFT, a former related party, for certain technology services, such as ERP system. The total contract price for the ERP system is $ 2,500,000. The ERP system is fully completed and delivered on May 20, 2025. As of March 31, 2025 and 2024, the accumulative payments to DFT for development of the ERP system were $ 2,446,580 and $ 1,554,000, respectively. During the fiscal year of 2025, the Company started to use part of the ERP system which was valued at $ 2,310,000 and treated that part as computer hardware and software and started for depreciation. As of March 31, 2025 and 2024, construction in progress was nil and $ 275,000, respectively, and primarily relating to the cost incurred to develop the software by DFT. As of March 31, 2025 and 2024, the Company had a prepayment of $ 136,580 and $ 1,279,000, respectively, to DFT (see Note 13 – Long-term prepayment for software development – related parties, net).

 (ii)
 On August 12, 2024, the
Company entered into a purchase agreement with He's Realty Holdings LLC (the "Seller"), a third party, to purchase
an office property. The final purchase price of the property was $ 3,594,000 and closing cost was $ 69,215. The Company paid $ 628,211 in
cash to the Seller, withdrew $ 1,235,004 from its line of credit with Peapack-Gladstone Bank, and financed the remaining $ 1,800,000. On
August 13, 2024, the Company's subsidiary, AOFL LLC, obtained a one-year short-term loan of $ 1,800,000 from He's Realty Holdings
LLC with an annual interest rate of 6.5 %. The principal amount shall be paid to He's Realty Holdings LLC in one or more installments
on or before August 11, 2025, and during the one-year borrowing period, AOFL LLC needs to pay interest of $ 9,750 to He's Realty
Holdings LLC on a monthly basis. The collateral provided was the office purchased by AOFL LLC. The loan was paid off in full on November
29, 2024.

 (iii)
 In October 2024, the Company started to offer rental services through its subsidiaries, GOBIKE INC, in New York, FLYLA INC, in Log Angeles, and FLYTORONTO CORP, in Toronto. The rental term is from one hour to one month. In New York, the Company offers a single model of E-Bike for rent, FLY 11 PRO GOFLY as of the date of this report. In Log Angeles, the Company offers 31 types of E-Bikes and E-scooters for rent, including FLY AIR2, FLY TANK, and FLY 11 PRO. In Toronto, the Company offers three types of E-Bikes for rent, FLY 7, FLY 11, and FLY 11 PRO.

 F- 20

 6 — INTANGIBLE ASSETS, NET

 Intangible assets as of March 31, 2025 and 2024
consisted of the following:

 2025

 2024

 Property rights

 $
 92,604

 $
 38,032

 GO FLY App

 500,000

 —

 Total Intangible assets

 592,604

 38,032

 Less: Accumulated Amortization

 ( 66,739
)

 ( 1,648
)

 Intangible assets, net

 $
 525,865

 $
 36,384

 For the years ended March 31, 2025 and 2024, the
amortization expenses were $ 65,091 and $ 1,648, respectively.

 In July 2024, the Company engaged DFT, a former
related party, to develop a new APP, GO FLY APP, for the rental business. The total contract price for the GO FLY APP is $ 500,000, and
the GO FLY APP was delivered on September 5, 2024.

 7 — ACCRUED EXPENSES AND OTHER PAYABLES

 2025

 2024

 Accrued payroll

 $
 62,068

 $
 121,120

 Advances from customers

 28,144

 25,099

 Advances from IGH Holding Inc

 49,000

 49,000

 Accrued warranty

 20,131

 27,714

 Payroll tax and sales tax payable

 113,601

 245,226

 Accrued store expenses

 58,044

 21,975

 Accrued IPO offering cost

 —

 225,000

 Accrued freight in cost

 35,980

 107,255

 Accrued UL penalty (i)

 1,000,000

 —

 Accrued professional fee

 —

 103,000

 Accrued Expenses and Other Current Liabilities

 $
 1,366,968

 $
 925,389

 (i)
 See Note 12 — Commitments and contingencies

 F- 21

 8 — LOAN PAYABLE

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

 Lender

 Due Date

 2025

 2024

 Chase Bank (i)

 October 25, 2027

 —

 176,366

 Chase Bank (ii)

 January 12, 2028

 56,580

 Chase Bank (vii)

 September 28, 2028

 —

 221,197

 Leaf Capital Funding, LLC (iii)

 September 30, 2027

 34,620

 46,856

 Sinoelite Corp (iv)

 April 3, 2024

 —

 Automobile Loan – Honda (v)

 June 25, 2027

 20,353

 28,833

 Bank of Hope (vi)

 September 15, 2024

 —

 391,227

 Bank of Hope (vi)

 September 22, 2024

 —

 400,000

 Bank of Hope (vi)

 December 12, 2024

 —

 205,000

 Milea Truck Sales of Queens Inc. (viii)

 August 22, 2027

 106,093

 —

 Milea Truck Sales of Queens Inc. (viii)

 July 26, 2027

 76,779

 —

 Peapack-Gladstone Bank (ix)

 August 31, 2025

 4,936,058

 —

 Veiocity Commercial Capital, LLC (x)

 December 1, 2054

 1,927,729

 —

 AOWINV LLC (xi)

 December 1, 2054

 255,000

 —

 Total loan payables

 7,356,933

 1,626,059

 Short-term loan payables

 ( 5,191,058
)

 —

 Current portion of long-term loan payables

 ( 100,835
)

 ( 1,213,242
)

 Long-term loan payables

 $
 2,065,040

 $
 412,817

 (i)
 On October 25, 2022, the Company's subsidiary, Universe
King Corp. obtained a five-year long-term loan of $ 230,000 from JPMorgan Chase Bank, N.A. with an annual interest rate of 10.35 %. Mr. Ke
Zhang, the Company's Chief Human Resource Officer, provided a guarantee on this loan. To secure payment and performance of the liabilities,
Universe King Corp. pledged to JPMorgan Chase Bank, N.A., a continuing security interest in all of its right, title and interest in all
of its properties, whether now owned or hereinafter acquired and whether now existing or hereafter arising. On August 9, 2024, the Company
paid off this loan in full.

 (ii)
 On January 12, 2023, the Company's subsidiary, Arfy Corp.
obtained a five-year long-term loan of $ 70,000 from JPMorgan Chase Bank, N.A. with an annual interest rate of 9.8 %. Mr. Tong Chen,
an original stockholder of the Company, provided a guarantee on this loan. To secure payment and performance of the liabilities, Arfy
Corp. pledged to JPMorgan Chase Bank, N.A., a continuing security interest in all of its right, title and interest in all of its properties,
whether now owned or hereinafter acquired and whether now existing or hereafter arising. On August 9, 2024, the Company paid $ 52,069 and
as of March 31, 2025, the outstanding balance is $ 301.

 (iii)
 On August 24, 2022, Universe King Corp. obtained a five-year long-term
loan of $ 63,674 from Leaf Capital Funding, LLC with an annual interest rate of 7.0 %. The collateral provided included the Fuso trucks,
whether now owned or hereafter acquired by Universe King Corp., and together with all accessories, accessions, attachments thereto, and
all other substitutions, renewals, replacements and improvements and all proceeds of the foregoing. As of March 31, 2025, the outstanding
balance is $ 34,620. From April 1 to July 15, 2025, the Company paid $ 3,785 on principal and interest of the loan.

 (iv)
 On January 3, 2023, Fly E-Bike, Inc. obtained a one-year and three-month long-term loan of $ 100,000 from Sinoelite Corp with no interest. On April 25, 2024, the Company paid off this loan in full.

 (v)
 On June 12, 2023, Flyebikemiami Inc obtained a four-year long-term loan of $ 34,974 from AutoNation Honda Miami Lakes with an annual interest rate of 3.98 %. The collateral provided was the Honda vehicle purchased by Flyebikemiami Inc. As of March 31, 2025, the outstanding balance is $ 20,353. From April 1 to July 15, 2025, the Company paid $ 2,368 on principal and interest of the loan.

 F- 22

 (vi)
 On September 20, 2023, Fly-E Group, Inc obtained a line of credit of $ 1,000,000 from Bank of Hope with a floating annual interest rate, currently at 8.5 %. On the same date, the Company withdrew $ 391,226 from Bank of Hope to pay off the loan balance with Flushing Bank as of September 15, 2023. On September 22, 2023 and December 12, 2023, the Company withdrew $ 400,000 and $ 205,000, respectively, from Bank of Hope to support its business operations. Mr. Zhou Ou, the Company's Chief Executive Officer, and Mr. Ke Zhang, the Company's Chief Human Resource Officer, provided a guarantee on this loan. To secure payment and performance of the liabilities, Fly-E Group pledged to Bank of Hope the following items: inventory, chattel paper, accounts, equipment, and general intangibles of first 29 incorporated subsidiaries of the Company. On August 9, 2024, the Company paid off this loan in full.

 (vii)
 On October 2, 2023, the Company's subsidiary, Fly14 Corp. obtained a five-year long-term loan of $ 240,000 from JPMorgan Chase Bank, N.A. with an annual interest rate of 10.40 %. To secure payment and performance of the liabilities, Fly14 Corp. pledged to JPMorgan Chase Bank, N.A., a continuing security interest in all of its rights, title and interest in all of its properties, whether now owned or hereinafter acquired and whether now existing or hereafter arising. On August 9, 2024, the Company paid off this loan in full.

 (viii)
 On August 22, 2024, Fly E-Bike, Inc. obtained a three-year long-term loan of $ 128,132 from Milea Truck Sales of Queens Inc. with an annual interest rate of 9.90 %. The collateral provided was the FTR 2025 vehicle purchased by Fly E-Bike, Inc. As of March 31, 2025, the outstanding balance is $ 106,093. From April 1 to July 15, 2025, the Company paid $ 12,385 on principal and interest of the loan.

 On July 26, 2024, Fly E-Bike, Inc. obtained a three-year long-term loan of $ 96,506 from Milea Truck Sales of Queens Inc. with an annual interest rate of 7.03 %. The collateral provided was the NRR-CAB 2025 vehicle purchased by Fly E-Bike, Inc. As of March 31, 2025, the outstanding balance is $ 76,779. From April 1 to July 15, 2025, the Company paid $ 8,943 on principal and interest of the loan.

 (ix)
 On August 5, 2024, Fly-E Group, Inc obtained a line of credit of $ 5 million from Peapack-Gladstone Bank with a floating annual interest rate and the current annual interest rate is 8.8 %. On August 5, 2024, the Company withdrew from this line of credit to pay off the outstanding principal and interest of loans from Bank of Hope in total of $ 996,476 and the loan from JPMorgan Chase Bank, N.A obtained by Fly14 Corp in total of $ 208,601. On August 6, 2024, the Company withdrew in total $ 214,905 from this line of credit to pay off the outstanding principal and interest of loans from JPMorgan Chase Bank, N.A. From August 7, 2024 to August 19, 2024, the Company withdrew $ 3,490,000 from the line of credit. Mr. Zhou Ou, the Company's Chief Executive Officer, and Mr. Ke Zhang, the Company's Chief Human Resource Officer, provided a guarantee on this loan. To secure payment and performance of the liabilities, Fly-E Group granted Peapack-Gladstone Bank a continuing lien on and security interest in all assets of the Company, including accounts, chattel paper, documents, instruments, inventory, general intangibles, equipment, fixtures, deposit accounts, goods, letter-of-credit rights, supporting obligations, investment property, commercial tort claims, property in the Lender's possession, additions, and proceeds of first 39 incorporated subsidiaries of the Company. From January 1 to February 19, 2025, the Company paid $ 102,492 on interest of the line of credit.

 (x)
 On November 27, 2024, the Company's subsidiary, AOFL LLC (the "borrower") obtained four thirty-year long-term loans of $ 525,000, $ 560,000, $ 595,000, and $ 420,000, respectively, from Veiocity Commercial Capital, LLC (the "lender") with an annual interest rate of 11.24 %. The lender charged a total of $ 170,933 loan settlement fees for closing the loan which included attorney fee, escrow fee, origination fee, and so on. The Company amortized the $ 170,933 over the loan term. To secure payment and performance of the liabilities, AOFL LLC pledged to Veiocity Commercial Capital, LLC a continuing lien on and security interest in any and all deposits or other sums at any time credited by or due from lender to the borrower and any cash, securities, instruments or other property of the borrower in the possession of lender. From April 1 to July 15, 2025, the Company paid $ 61,142 on principal and interest of the loan.

 On August 13, 2024, the Company's subsidiary, AOFL LLC, obtained a one-year short-term loan of $ 1,800,000 from He's Realty Holdings LLC with an annual interest rate of 6.5 %. The principal amount shall be paid to He's Realty Holdings LLC in one or more installments on or before August 11, 2025, and during the one-year borrowing period, AOFL LLC only needs to pay interest of $ 9,750 to He's Realty Holdings LLC on a monthly basis. The collateral provided was the office purchased by AOFL LLC. The loan was paid off in full on November 29, 2024.

 (xi)
 On February 10, 2023, Fly E-Bike, Inc. obtained a five-month short-term loan of $ 255,000 from AOWINV LLC with no interest. On June 10, 2025, the Company paid off this loan in full.

 For the years ended
March 31, 2025 and 2024, the total interest expenses on the Company's outstanding loans amounted to $ 405,615 and $ 152,050,
respectively. The weighted average interest rate on short-term borrowings outstanding as of March 31, 2025 and 2024 was 13.1 % and
 nil, respectively.

 F- 23

 9 — STOCKHOLDER'S EQUITY

 Prior to the effectiveness of the 2024 Stock Split and 2025 Reverse
Stock Split discussed below, the Company was authorized to issue 400 shares of common stock having a par value of $ 0.01 per share and
 40 shares of preferred stock having a par value of $ 0.01 per share. There were 200 shares of common stock were issued and outstanding
prior to the effectiveness of the stock splits.

 2024 Stock Split

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

 On June 7, 2024, the Company completed its initial
public offering and issued 450,000 shares of common stock, at a price of $ 20.00 per share. The gross proceeds of the offering were $ 9.0
million, prior to deducting the underwriting discounts, commissions and offering expenses payable by the Company. In addition, the Company
granted the underwriters a 30-day option to purchase an additional 67,500 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 67,500 shares
of common stock to the underwriters for gross proceeds of $ 1.4 million upon full exercise of the underwriters' over-allotment option.
Net proceeds received by the Company from the initial public offering, including the exercise of over-allotment option, were approximately
$ 9.2 million.

 2025 Reverse Stock Split

 On July 3, 2025, the Company implemented a 1-for-5
reverse stock split of its issued and outstanding shares of common stock. The reverse stock split reduced the number of shares of common
stock issued and outstanding from 24,587,500 to 4,917,500 as of March 31, 2025. The par value per share remained unchanged at $ 0.01.

 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.

 Upon the closing of IPO offering in June 2024,
the Company issued to Benchmark the representative of the underwriters warrants to purchase 25,875 shares of common stock. The Representative's
Warrants have an exercise price equal to $ 20.00 per share and are exercisable until the date on June 7, 2029, after the date of commencement
on December 7, 2024. The Representative's Warrants are also exercisable on a cashless basis. As the Representative's Warrants
are considered indexed to the Company's own stock and meet the criteria for equity classification according to ASC:815-40, the Representative's
Warrants are classified as equity. None of the Representative's Warrants were exercised as of March 31, 2025.

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

 June 7,
 2024

 Stock price

 $
 20.00

 Risk-free interest rate

 4.46
 %

 Volatility

 56.52
 %

 Exercise price

 $
 20.00

 Dividend yield

 $
 —

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

 F- 24

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

 Number of
 Warrant

 Weighted
 Average
 Exercise Price

 Weighted
 Average
 Remaining Term
 (Years)

 Outstanding as of March 31, 2024

 —

 —

 —

 Issued

 25,875

 $
 20.00

 4.2

 Exercised

 —

 —

 —

 Forfeited or expired

 —

 —

 —

 Outstanding as of March 31, 2025

 25,875

 $
 20.00

 4.2

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

 As of March 31, 2025 and 2024, the subscription
receivable represents the unpaid capital contribution of $ 219,998 by the stockholders.

 During the year ended March 31, 2024, Mr. Ou
paid certain vendors of the Company to settle certain accounts payable balance on behalf the Company. On June 30, 2023, the Company transferred
$ 2.26 million, a portion of the accounts payable balance, along with a cash contribution of $ 0.14 million from Mr. Zhou
Ou as capital contribution (see Note 13). On June 30, 2023, a total of $ 2.4 million were transferred and recorded as capital
contribution (see Note 13).

 10 — INCOME TAX

 (a) Income Tax Expense

 The company conduct business both domestically
and internationally and, as a result, the parent company and most of its subsidiaries file a consolidated income tax return in U.S. federal,
U.S. states and U.S. Cities, and one of the subsidiaries files a foreign income tax return in certain foreign jurisdictions.

 The Company will file a consolidated annual U.S.
federal tax return for tax year ending March 31, 2025, as well as combined tax returns for New Jersey, New York State, Florida, Texas,
California, District of Columbia, Massachusetts, Maryland, and New York City. Most subsidiaries of the Company were incorporated in the
State of New York and are subject to the U.S. federal corporate income taxes with a tax rate of 21.0 %. The State of New York levies a
corporate income tax rate of 8.45 % on state-level earnings. In addition, a sum of fixed dollar minimum taxes is imposed on the taxable
group members, in accordance with their gross receipts within the State of New York. The City of New York levies a 6.50 % city corporate
income tax, along with a sum of fixed dollar minimum taxes, applied to taxable group members based on their gross receipts within the
city. Five of the Company's subsidiaries are located in New Jersey, which imposes a state income tax rate of 9.0 %. Two of the Company's
subsidiaries is located in Florida, which imposes a state income tax rate of 5.5 %. Two subsidiaries of the Company are located in Texas,
which imposes a state income tax rate of 0.75 % on the appointed state revenue. One of the Company's subsidiaries is located in California,
which imposes a state income tax rate of 8.84 %. One of the Company's subsidiaries is located in District of Columbia, which imposes
a state income tax rate of 8.25 %. One of the Company's subsidiaries is located in Massachusetts, which imposes a state income tax
rate of 8.25 %. One of the Company's subsidiaries is located in Maryland, which imposes a state income tax rate of 8.00 %.

 The Company's wholly owned foreign subsidiary
in Canada will file a Canadian federal tax return for tax year ending March 31, 2025, as well as Ontario state tax return. It is subject
to the Canadian federal corporate income taxes with a tax rate of 15.0 % and Ontario state corporate income taxes with a tax rate of 11.5 %.

 Income tax on unappropriated earnings is accrued
during the period the earnings arise and adjusted to the extent that distributions are approved by the stockholders in the following year.

 Income tax expense for the years ended March 31,
2025 and 2024 amounted to $ 0.34 million and $ 1.18 million, respectively. Significant components of the provision for income
taxes are as follows:

 For the years ended

 2025

 2024

 Current

 $
 94,113

 $
 474,445

 State

 183,598

 297,885

 City

 123,284

 234,510

 Deferred

 ( 4,000
)

 158,300

 State

 1,000

 36,300

 City

 ( 2,000
)

 21,500

 Foreign

 ( 59,829
)

 ( 40,007
)

 Total

 $
 336,166

 $
 1,182,933

 F- 25

 The provision for income taxes is based on the
following pretax income (loss):

 For the years ended

 2025

 2024

 U.S.

 $
 ( 4,690,634
)

 $
 3,275,797

 Canada

 ( 264,359
)

 ( 197,642
)

 Total

 $
 ( 4,954,993
)

 $
 3,078,155

 For the years ended March 31, 2025, the total
pre-tax loss was $ 4.9 million, which included $ 4.7 million pre-tax loss in the U.S. and $ 0.2 million pre-tax loss in Canada. For the year
ended March 31, 2024, the total pre-tax income was $ 3.1 million, which included $ 3.3 million pre-tax income in U.S. and $ 0.2 million pre-tax
loss in Canada.

 The following table reconciles to the Company's
effective tax rate:

 For the years ended

 2025

 2024

 Pre-tax book (loss) income

 $
 ( 4,954,993
)

 $
 3,078,155

 Federal Statutory rate

 21.0
 %

 21.0
 %

 State income tax rate, net of federal income tax benefit

 4.6
 %

 7.9
 %

 City income tax rate, net of federal income tax benefit

 5.5
 %

 5.0
 %

 Foreign statutory rate

 0.4
 %

 —

 Permanent differences

 ( 1.2
)%

 5.2
 %

 Valuation allowance of deferred tax assets

 ( 34.6
)%

 —

 Return to project adjustment

 ( 2.5
)%

 ( 0.8
)%

 Total

 ( 6.8
)%

 38.3
 %

 Penalties and interest incurred related to underpayment
of income tax are classified as income tax expenses in the period incurred. For the years ended March 31, 2025 and 2024, the Company accrued
$ 30,301 and $ 60,487 income tax related penalty included in current income taxes expenses, respectively.

 United States

 Income tax expense for the year ended March 31,
2025 and 2024 amounted to $ 0.40 million and $ 1.22 million, respectively.

 Significant components of the provision for income
taxes are as follows:

 For the Years Ended

 2025

 2024

 Current

 $
 94,113

 $
 474,445

 State

 183,598

 297,885

 City

 123,284

 234,510

 Deferred

 ( 4,000
)

 158,300

 State

 1,000

 36,300

 City

 ( 2,000
)

 21,500

 Total

 $
 395,995

 $
 1,222,940

 F- 26

 Canada

 Fly Toronto Corp, a subsidiary of the Company,
was formed under the laws of Canada and conducts its business primarily in Canada.

 Income tax benefit for the year ended March 31,
2025 and 2024 amounted to $ 59,829 and 40,007, respectively. Significant components of the provision for income taxes are as follows:

 For the Years Ended

 2025

 2024

 Current

 $
 —

 $
 —

 State

 —

 —

 City

 —

 —

 Deferred

 ( 33,866
)

 ( 22,845
)

 State

 ( 25,963
)

 ( 17,515
)

 City

 —

 Total

 $
 ( 59,829
)

 $
 ( 40,007
)

 (b) Deferred Tax Assets (Liabilities)

 Net DTAs as of March 31, 2025 and 2024 amounted
to $ 94,983 and $ 35,199, respectively. Significant components of DTAs (DTLs), net are as follows:

 As of
 2025

 As of
 2024

 Net operating loss carry forwards

 $
 1,506,378

 $
 40,332

 Inventory reserve

 410,000

 186,000

 Operating right-of-use liability

 4,837,000

 5,810,000

 Amortization difference

 10,000

 —

 Total deferred tax assets (DTAs)

 6,763,378

 6,036,332

 Valuation allowance

 ( 1,714,000
)

 —

 Deferred tax assets, net of valuation allowance

 $
 5,049,378

 $
 6,036,332

 Accumulated depreciation

 ( 460,395
)

 ( 482,133
)

 Operating lease right-of-use assets

 ( 4,494,000
)

 ( 5,519,000
)

 Total deferred tax liabilities (DTLs)

 ( 4,954,395
)

 ( 6,001,133
)

 Deferred tax assets, net

 $
 94,983

 $
 35,199

 Deferred tax assets (liabilities) – U.S., net

 $
 —

 $
 ( 5,000
)

 Deferred tax assets – Canada, net

 $
 94,983

 40,199

 As of March 31, 2025 and 2024, the Company
had approximately $ 5.0 million and $ 6.0 million, respectively, in the DTAs, which respectively included approximately $ 1.5 million and
$ 40,332 related to net operating loss carryforwards that can be used to offset taxable income in future periods, $ 4.8 million and
$ 5.8 million related to lease liability, and $ 0.4 million and $ 0.2 million related to inventory allowance.

 As of March 31, 2025 and 2024, the Company
had approximately $ 5.0 million and $ 6.0 million, respectively, which included $ 0.5 million and $ 0.5 million, respectively, in
the DTLs that related to accumulated depreciation and $ 4.5 million and $ 5.5 million related to ROU assets.

 F- 27

 Deferred tax assets and liabilities are recognized
for the estimated future tax consequences attributable to differences between the financial statement carrying amounts of existing assets
and liabilities and their respective tax bases, and operating loss and tax credit carryforwards. As of March 31, 2025 and 2024, the
Company recorded approximately $ 94,983 and $ 40,199, respectively, in the net DTAs. The tax losses in Canada can be carried forward for
 twenty years to offset future taxable profit. The tax losses of entities in Canada will begin to expire in 2044, if not utilized.
As of March 31, 2025, management considered it more likely than not that the Company will have sufficient taxable income in the future
that will allow the Company to realize these net DTAs.

 As a result of the Tax Cuts and Jobs Act (TCJA),
US NOLs arising after December 31, 2017, may be carried forward indefinitely and can offset only up to 80 % of taxable income in any future
year. Based upon the Company's recent taxable loss history, the Company performed an analysis and determined that it was necessary
to establish a valuation allowance of $1,714,000 with respect to its net deferred income tax assets as of and for the fiscal year ended
March 31, 2025.

 Uncertain Tax Positions

 The Company evaluates each uncertain tax position
(including the potential application of interest and penalties) based on the technical merits, and measures the unrecognized benefits
associated with the tax positions. As of March 31, 2025 and 2024, the Company did not have any significant unrecognized uncertain
tax positions.

 11 — LEASES

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

 The Company's operating right-of-use ("ROU")
assets and lease liabilities were as follows:

 2025

 2024

 Operating ROU:

 ROU assets

 $
 10,933,068

 $
 16,000,742

 Total operating ROU assets

 $
 10,933,068

 $
 16,000,742

 2025

 2024

 Operating lease obligations:

 Current operating lease liabilities

 $
 2,617,762

 $
 2,852,744

 Non-current operating lease liabilities

 9,106,928

 13,986,879

 Total lease liabilities

 $
 11,724,690

 $
 16,839,623

 The Company had 36 and 38 leases as of March 31,
2025 and 2024, respectively.

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

 Remaining lease term and discount rate:

 Weighted average discount rate

 7.2
 %

 Weighted average remaining lease term (years)

 4.67 years

 The weighted average lease term, discount rates,
and remaining lease terms for the operating leases as of March 31, 2024 were as follows:

 Remaining lease term and discount rate:

 Weighted average discount rate

 6.4
 %

 Weighted average remaining lease term (years)

 5.51 years

 The Company leases its offices, warehouse, and
retail stores under non-cancellable operating lease agreements. During the year ended March 31, 2025, lease expenses were $ 4.3 million,
including $ 1.4 million in cost of goods-occupancy cost, $ 2.9 million in rent expense included in selling expense, and $ 62,527
in rent expense in general and administrative expense. During the year ended March 31, 2024, lease expenses were $ 3.3 million, including
$ 0.7 million in cost of goods-occupancy cost, $ 2.4 million in rent expense in selling expense, and $ 0.2 million in rent
expense in general and administrative expense.

 F- 28

 For the year ended March 31, 2025, the Company
terminated 12 leases.

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

 As of March 31

 Operating Lease
 Liabilities

 2025

 $
 3,355,040

 2026

 3,293,360

 2027

 2,914,613

 2028

 2,421,343

 2029

 700,849

 Thereafter

 1,126,233

 Total lease payments

 13,811,438

 Less: interest

 ( 2,086,748
)

 Present value of lease liabilities

 $
 11,724,690

 12 — COMMITMENTS AND CONTINGENCIES

 Commitments

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

 Contingencies

 Legal

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

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

 UL Litigation

 On or about March 12, 2025, UL LLC ("UL")
filed a complaint against the Company, along with the Company's certain subsidiaries and certain individuals, in the Eastern District
of New York (the "Complaint"). The Complaint alleges that the Company improperly used UL's trademark by claiming certain
products were certified by UL. On May 21, 2025, the Company and UL LLC ("UL") entered into a settlement and release agreement
(the "Settlement Agreement") on mutually acceptable settlement terms. Pursuant to the Settlement Agreement, the Company agreed
to pay UL an aggregate amount of $ 1,000,000 before November 30, 2025 (Refer to Note 7 — Accrued Expenses and other payables).
From May 28 to July 15, 2025, the Company paid $ 350,000 to UL.

 Inflation

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

 F- 29

 13 — RELATED PARTY TRANSACTIONS

 (A) Related party balances

 Accounts receivable, net — related
parties

 2025

 2024

 Fly E Bike SRL

 Zhou Ou (CEO), owns over 50% equity interest of this entity

 Accounts receivable

 $
 78,565

 $

 Accounts receivable – related parties

 78,565

 Less: Allowance for credit loss

 41,100

 —

 Accounts receivable, net - related parties

 $
 37,465

 $

 During the year ended March 31, 2025, the Company
received $ 290,359 from Fly E Bike SRL. The Company accrued $ 41,100 credit losses during the year ended March 31, 2025.

 Prepayments and other receivables — related
parties

 2025

 2024

 Fly E Bike SRL

 Zhou Ou (CEO), owns over 50% equity interest of this entity

 Other receivables

 $
 —

 $
 180,256

 PJMG LLC

 Ruifeng Guo (former CFO who resigned on November 6, 2024), owns over 50% equity interest of this entity

 Prepayments

 120,000

 60,000

 Prepayments and other receivables – related parties

 $
 120,000

 $
 240,256

 During the year ended March 31, 2025, the Company
advanced nil to Fly E Bike SRL, a distributor the Company works with and in which Mr. Ou holds over 50 % of the equity interest. This advance
is unsecured, bears no interest and does not have a maturity date. On June 12, 2024, the Company received $ 180,256 from Fly E Bike SRL.
On April 1, 2023, the Company agreed to retain the services of PJMG, a company in which Mr. Guo, the Company's former CFO who resigned
on November 6, 2024, holds over 50 % of the equity interests as a consultant following the completion of its IPO. PJMG was engaged to provide
compliance consulting services related to accounting, finance, and management, as well as to oversee market planning and development,
follow-on fundraising, and investor relationship management from June 2024 to May 2025. The service fee is $ 45,000 for the first month
and from the second month the fees will be $ 15,000 per month. To secure these services, the Company prepaid a total of $ 120,000 to PJMG
as of March 31, 2025. From August 9, 2024 to September 17, 2024, the Company advanced $ 480,000 to Mr. Ou, Chairman and CEO of the Company,
for personal use. This advance is unsecured, bears no interest and does not have a maturity date. As of March 31, 2025, the advance was
paid back in full.

 Long-term prepayment for software development
– related parties, net

 2025

 2024

 DF Technology US Inc

 Ruifeng Guo (former CFO who resigned on November 6, 2024), owns over 50% equity interest of this entity

 Long-term prepayment for software development

 $
 136,580

 $
 1,279,000

 Long-term prepayment for software development — related parties, net

 $
 136,580

 $
 1,279,000

 In December 2023, the Company engaged DFT
for development of certain technology services. Mr. Guo, the Company's former CFO who resigned on November 6, 2024, owns over
 50 % of the equity interest in DFT. As of March 31, 2025 and 2024, the Company paid $ 136,580 and $ 1,279,000 to DFT as prepayment for
software development, respectively. During the fiscal year of 2025, the Company started to use part of the ERP system which was valued
at $ 2,310,000 and treated that part as computer hardware and software and started for depreciation. As of March 31, 2025 and 2024, construction
in progress was nil and $ 275,000, respectively (see Note 5 – Property and Equipment).

 F- 30

 Other payables — related parties

 2025 (i)

 March 31, 2024 (i)

 Chairman, CEO of the Company

 Other payable

 $
 —

 $
 92,229

 Other Payables-related parties

 $
 —

 $
 92,229

 (i)
 Represents the remaining balance
of the advance provided by the related party to the Company's subsidiaries for the purpose of supporting their business operations.

 All of the above payables are unsecured, non-interest
bearing, and due on demand. The Company paid a total of $ 92,229 and $ 290,252 to Mr. Zhou Ou during the years ended March 31, 2025 and
2024, respectively.

 (B) Related party transactions

 Revenues — related parties

 For the Years Ended
 March 31

 2025

 2024

 Fly E Bike SRL

 Zhou Ou (CEO), owns over 50% equity interest of this entity

 Product sales

 $
 42,010

 $

 Revenues — related parties

 $
 42,010

 $

 During the years ended March 31, 2025 and 2024,
Fly E Bike SRL, a distributor the Company works with and in which Mr. Ou holds over 50 % of the equity interest, purchased certain
EV products from the Company in the amount of $ 42,010 and $ 326,914, respectively.

 Purchase of Intangible Assets — related
parties

2025

 March 31, 2024

 DF Technology US Inc

 Ruifeng Guo (former CFO who resigned on November 6, 2024), owns over 50% equity interest of this entity

 Purchase of Software

 $
 500,000

 $
 —

 Purchase of Intangible Assets — related parties

 $
 500,000

 $
 —

 In December 2023, the Company engaged DFT
for development of certain technology services. Mr. Guo, the Company's former CFO who resigned on November 6, 2024, owns over
 50 % of the equity interest in DFT. In July 2024, the Company engaged DFT for development of a new APP, GO FLY APP, for the rental
business. The total contract price for the GO FLY APP is $ 500,000, and the GO FLY APP was delivered on September 5, 2024.

 (C) Other Related Party Transactions

 On March 6, 2021, the Company and DGLG entered
into an engagement letter, pursuant to which the Company engaged DGLG as a consultant to assist the Company in its IPO planning, financing
and tax services. Mr. Guo, the Company's former CFO who resigned on November 6, 2024, is a partner at DGLG. Under
the terms of the engagement agreement with DGLG, the Company has agreed to compensate DGLG for consulting services based on an hourly
fee arrangement. DGLG's consulting fees were $ 225,000 and $ 100,000 for the years ended March 31, 2025 and 2024, respectively. In
addition, during the year ended March 31, 2025 and 2024, the Company paid DGLG a total of $ 61,050 and $ 123,000 for tax services, including
sales tax services, payroll tax services, and income tax services, rendered by DGLG, respectively.

 On April 1, 2023, the Company agreed to retain
the services of PJMG, a company in which Mr. Guo, the Company's former CFO who resigned on November 6, 2024, holds over 50 % of the
equity interests as a consultant following the completion of its IPO. To secure these services, the Company prepaid a total of $ 120,000
to PJMG as of March 31, 2025. During the year ended March 31, 2025, the Company paid PJMG a total of $ 372,047 for consulting services.
$ 312,047 was expensed as consulting expenses during the year ended March 31, 2025.

 F- 31

 14 — DISPOSAL OF SUBSIDIARIES

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

 In December, 2024, the Company decided to
proceed with the disposal plan and sell 100 % of its equity interests in subsidiaries FLYMHT INC, FLY14 CORP, EDISONEBIKE INC, and
FLY6AVE INC to third-party individuals (the "Buyers"). On January 1, 2025, the Company entered into share transfer
agreements with the Buyers. Pursuant to the terms of the agreements, the Company agreed to sell, transfer, and assign all its
rights, title, and interests in the shares of the subsidiaries to the Buyers, free and clear of all liens and encumbrances. The
Buyers agreed to purchase the shares for total cash consideration of $ 635,193. There were no contingent payments, earn-outs, or
post-closing adjustments specified in the agreements. There was $ 84,302 gain from this disposal. As of March 31, 2025, the Company
did not receive any consideration from the third parties. In June, 2025, the Company received $ 103,000 from the Buyers.

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

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

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

 Summarized Held for Sale Financial Information

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

 2025

 ASSETS

 Cash

 $
 61,548

 Inventories, net

 195,192

 Prepayments and other receivables

 22,096

 Property and equipment, net

 154,876

 Security deposits

 73,025

 Operating lease right-of-use assets

 1,955,765

 Assets held for sale

 $
 2,462,502

 LIABILITIES

 Accrued expenses and other payables

 25,498

 Operating lease liabilities – current

 319,874

 Operating lease liabilities – non-current

 1,807,075

 Liabilities held for sale

 2,152,447

 There was no gain or loss on the sale of subsidiaries:

 Total consideration determined: $ 310,055

 Net assets disposed excluded intercompany other
payables: $ 310,055

 Gain on disposal: $ nil

 F- 32

 15 — SUBSEQUENT EVENTS

 The Company has evaluated subsequent events after
March 31, 2025, up through July 15, 2025, the date at which the consolidated financial statements
were issued. Except for the events mentioned below, the Company did not identify any subsequent events with material financial impact
on the Company's consolidated financial statements.

 On April 1, 2025, the Company sold three subsidiaries:
FLYEBIKE BROOKLYN INC, FLYMHT659 INC, and FLYBX745 INC to third-party individuals (Refer to Note - 14 — Disposal of Subsidiaries).

 On April 29, 2025, the Company obtained a short-term
loan of $ 1,575,000 from Agile Capital Funding, LLC, which requires weekly repayments of $ 70,000. From April 29 to July 15, 2025, the Company
paid $ 372,500 on principal and interest of the loan.

 On May 1, 2025, the Company sold three subsidiaries:
ARFY CORP., FLY GC INC., and ESEBIKE INC to third-party individuals. The consideration determined was $ 156,517. As of July 15, 2025, the Company did not receive any consideration from the third-party
individuals.

 On June 1, 2025, the Company sold two subsidiaries:
UFOTS CORP and FLYCORONA INC to third-party individuals. The consideration determined was $ 60,207. As of July 15, 2025, the Company did not receive any consideration from the third-party
individuals.

 On June 4, 2025, the Company issued 5,719,111
shares of common stock, at a price of $ 1.2140 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 ($ 1.4565 per share) and expires on the fifth anniversary of the issuance date, subject to certain
adjustments.

 On June 10, 2025, the Company paid off the short-term
loan of $ 255,000 from AOWINV LLC.

 On June 23, 2025, a total of 19 subsidiaries of
the Company obtained short-term loans from Strip Inc. with an aggregate principal amount of $ 379,900. The loan terms vary across subsidiaries,
with repayment periods ranging from 42 weeks to 12 months. Repayment schedules differ by agreement and include both weekly and monthly
installment options. The stated annual interest rates range from 12.0 % to 22.8 %.

 On July 1, 2025, the Company sold three subsidiaries:
OFLYO INC, FLYCYCLE INC, and FLYBX2381 INC to third-party individuals. The consideration determined was $ 106,647. As of July 15, 2025,
the Company did not receive any consideration from the third-party individuals.

 On July 3, 2025, the Company implemented a 1-for-5
reverse stock split of its common stock. The reverse stock split reduced the number of shares of common stock issued and outstanding from
 53,183,053 to approximately 10,636,611 as of July 3, 2025. The par value per share remained unchanged at $ 0.01.

 From June 24, 2025 to July 9, 2025, certain holders of the Company's outstanding warrants exercised their
rights to acquire common stock. The exercises were completed on a cashless basis pursuant to the terms of the warrant agreements, resulting
in the issuance of 7,419,477 shares of common stock. The exercises did not generate any cash proceeds to the Company. All share numbers
for warrant exercises prior to the reverse stock split have been retroactively adjusted to reflect the 1-for-5 reverse stock split.

 F- 33

 On November 27, 2024, the Company's subsidiary, AOFL LLC (the "borrower") obtained four thirty-year long-term loans of $525,000, $560,000, $595,000, and $420,000, respectively, from Veiocity Commercial Capital, LLC (the "lender") with an annual interest rate of 11.24%. The lender charged a total of $170,933 loan settlement fees for closing the loan which included attorney fee, escrow fee, origination fee, and so on. The Company amortized the $170,933 over the loan term. To secure payment and performance of the liabilities, AOFL LLC pledged to Veiocity Commercial Capital, LLC a continuing lien on and security interest in any and all deposits or other sums at any time credited by or due from lender to the borrower and any cash, securities, instruments or other property of the borrower in the possession of lender. From April 1 to July 15, 2025, the Company paid $61,142 on principal and interest of the loan.
On August 13, 2024, the Company's subsidiary, AOFL LLC, obtained a one-year short-term loan of $1,800,000 from He's Realty Holdings LLC with an annual interest rate of 6.5%. The principal amount shall be paid to He's Realty Holdings LLC in one or more installments on or before August 11, 2025, and during the one-year borrowing period, AOFL LLC only needs to pay interest of $9,750 to He's Realty Holdings LLC on a monthly basis. The collateral provided was the office purchased by AOFL LLC. The loan was paid off in full on November 29, 2024.
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