NASDAQ: FLYE

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
$19.1 million for the year ended March 31, 2026, consisting of retail sales revenue of approximately $6.9 million, wholesale revenue
of $11.6 million, and rental services revenue of $0.6 million. 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.

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.

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IPO

On June 7, 2024, we consummated our initial public officering
(the “IPO”) and sold 22,500 shares of common stock, at a price of $400.00 per share. The gross proceeds of the offering
were $9.0 million, prior to deducting the underwriting discounts, commissions and offering expenses payable by the Company. In addition,
we granted the underwriters a 30-day option to purchase an additional 3,375 shares of common stock at the initial public offering
price, less underwriting discounts and commissions, to cover over-allotments. On June 25, 2024, we sold an additional 3,375 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 1,294 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, 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.

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.

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On May 21, 2025, Company,
along with its certain subsidiaries and certain individuals, and UL entered into a settlement and release agreement (the “Settlement
Agreement”) on mutually acceptable settlement terms. Pursuant to the Settlement Agreement, the Company and the other defendants
agreed to pay UL an aggregate amount of $1,000,000 before November 30, 2025, and entered into a Consent Judgment and Permanent Injunction
pursuant to which the Company and the other defendants agreed not to offer for sale, sell, or distribute products with UL Marks that were
not tested and certified by UL. During the one year ended March 31, 2026, the Company paid $1,000,000 to UL.

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

2025 Reverse Stock Split

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

On June 16, 2025, the board
of directors approved a one-for-five (1:5) reverse stock split of the Company’s issued and outstanding shares of common stock (the
“2025 First Reverse Stock Split”). On July 2, 2025, the Company filed with the Secretary of State of the State of Delaware
the Second Certificate of Amendment to its Certificate of Incorporation (the “Certificate of Amendment”) to effect the 2025
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 First Reverse
Stock Split, every five (5) shares of the Company’s issued and outstanding common stock have been automatically converted into one
share of common stock, without any change in the par value per share. In addition, (i) a proportionate adjustment has been made to the
per share exercise price and the number of shares issuable upon the exercise of all outstanding warrants to purchase shares of common
stock, and (ii) the number of shares reserved for issuance pursuant to the Company’s stock incentive plan has been reduced proportionately.
Any fraction of a share of common stock created as a result of the 2025 First Reverse Stock Split was rounded up to the nearest whole
share. The Company’s common stock continues to trade on the Nasdaq Capital Market under the symbol “FLYE.”

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

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

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After the 2025 Second Reverse
Stock Split, every twenty (20) shares of the Company’s issued and outstanding common stock have been automatically converted into
one share of common stock, without any change in the par value per share. In addition, (i) a proportionate adjustment has been made to
the per share exercise price and the number of shares issuable upon the exercise of all outstanding warrants to purchase shares of common
stock, and (ii) the number of shares reserved for issuance pursuant to the Company’s stock incentive plan has been reduced proportionately.
Any fraction of a share of common stock created as a result of the 2025 Second Reverse Stock Split was rounded up to the nearest whole
share. The Company’s common stock continues to trade on the Nasdaq Capital Market under the symbol “FLYE.” The new CUSIP
number for common stock following the 2025 Reverse Stock Split is 343927307.

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

Federal securities class action instituted on September 8, 2025

On September 8, 2025, a federal
securities class action was filed in the United States District Court, Eastern District of New York, by plaintiff Dino Kurt, individually
and on behalf of all others similarly situated, against defendants, the Company, chief executive officer (the “CEO”) Zhou
Ou, and former chief financial officer (the “CFO”) Shiwen Feng (the “Class Action”). The complaint alleges violations
of Sections 10(b) and 20(a) of the Exchange Act and Rule 10b-5 during the class period spanning from July 15, 2025, to August 14, 2025.
The plaintiff claims that defendants provided materially false and misleading positive statements about revenue growth, brand reputation,
and business expansion, while concealing or minimizing material adverse facts concerning the safety of the Company’s lithium battery
and inadequate forecasting processes, which were already taking a material toll on E-vehicle (the “EV”) sales revenue. The
plaintiff alleged when the Company filed a form NT 10-Q on August 14, 2025, which disclosed a 32% decrease in net revenues primarily driven
by a decline in total units sold, attributed by the Company to “recent lithium-battery accidents involving E-Bikes and E-Scooters”;
the price of Company’s common stock declined dramatically by about 87% in a single day, resulting in economic loss for the plaintiff
and the class.

The relief sought includes
determining that the action may be maintained as a class action, requiring defendants to pay damages sustained by the plaintiff and the
class, and awarding pre-judgment and post-judgment interest, along with reasonable attorneys’ fees, expert fees, and other costs,
with the monetary damages sought being certified to be in excess of $150,000.

On May 22, 2026, the lead
plaintiff in the Class Action filed an Amended Complaint. The Company's response to the Amended Complaint is due August 14, 2026. Given
the preliminary stage of the lawsuit and the inherent uncertainties of litigation, the Company cannot determine with certainty the outcome
of the Class Action at this time.

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

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

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

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

Registered Direct Offering

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

On September 18, 2025, the
Company entered into a securities purchase agreement with third-party individuals offering of (i) 687,500 shares of the common stock at
the price of $16.0 per share for a total consideration of $11,000,000. During the year ended March 31, 2026, the Company received
net proceeds of $10,996,558 from the investors.

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Disposal of Certain Subsidiaries

During the year ended March
31, 2026 and from April to July 2026, the Company disposed several subsidiaries as part of a disposal plan aimed at simplifying its legal
and operational structure and improving administrative efficiency. The divestitures were not intended to be a strategic withdrawal from
any specific geographic region or industry, but rather a measure to streamline the Company’s corporate structure and reduce complexity
in financial reporting. As part of this plan, as of March 31, 2026, the Company had sold an aggregate of 28 subsidiaries to third-party
individuals in multiple transactions, for total cash consideration of approximately $2.9 million, of which approximately $0.1 million
had been received. Between April 2025 and March 2026, the Company further sold 100% of its equity interests in 24 subsidiaries to third-party
buyers for total cash consideration of approximately $2.3 million, with no contingent payments or adjustments. As of July 23, 2026, the
Company had not received any remaining consideration under these transactions. See “Note 14— Disposal of Subsidiaries
and Note 15 – Subsequent Events” in the accompanying consolidated financial statements for details.

Nasdaq Deficiency Letter

On July 21, 2026, the Company
received a delinquency notification letter (the “Notice”) from the Listing Qualifications Staff (the “Staff”)
of Nasdaq due to the Company’s non-compliance with Nasdaq Listing Rule 5250(c)(1) (the “Listing Rule”) as a result
of the Company’s failure to timely file its Annual Report on Form 10-K for the period ended March 31, 2026. The Listing Rule requires
listed companies to timely file all required periodic financial reports with the SEC. This Notice has no immediate effect on the listing
of the Company’s securities on Nasdaq. However, if the Company fails to timely regain compliance with the Rule, the Company’s
securities will be subject to delisting from Nasdaq. The Notice provides that the Company may submit to Nasdaq a plan to regain compliance
with the Nasdaq Listing Rule by September 21, 2026. If Nasdaq accepts the Company’s plan, then Nasdaq may grant the Company up
to 180 calendar days from the Filing’s due date, or until January 11, 2027, to regain compliance. If Nasdaq does not accept the
Company’s plan, then the Company will have the opportunity to appeal that decision to a Nasdaq Hearings Panel.

Our History and Corporate Structure

We initially started our
business in 2018 as Ctate Inc. (“Ctate”), a New York corporation. Our business previously experienced rapid growth initially,
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 also 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.

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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 pandemic
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 accelerated our business growth. While the pandemic has ended, the consumer behaviors and delivery
infrastructure developed during that period continue to support sustained demand for our products.

Brand Reputation: We
have a 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.

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. While we navigate short-term market challenges, including temporary fluctuations in
consumer sentiment, we remain committed to rebuilding trust through enhanced product safety, continuing to innovate with
solutions like our battery swap system and Go Fly app, growing our service portfolio through our rental program, and expanding
our retail network into key U.S. markets.

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 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.

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 23, 2026, we operate 4 retail stores in
the United States, spanning across the states of New York, Massachusetts, Washington D.C., and California. 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.

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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 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-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.

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E-bikes

We currently offer 37 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.

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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

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We are currently in the process
of developing the 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. 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. As
of March 31, 2026, the development of the app is still in development stage.

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.

Manufacturing and Assembly

We source substantially all
of our vehicle components from China and the United States. For the years ended March 31, 2026 and 2025, over 19% and 50%
of the parts were sourced from China, respectively. For the year ended March 31, 2026 and 2025, we sourced over 81% 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, Depcl Corp. (previously known as Fly Wing E-Bike Inc.) and Xiamen Innolabs Technology Co., Ltd. (“XFT”),
each of which respectively supplied approximately 70% and 19% of our accessories and components during the year ended March 31, 2026.
During the year ended March 31, 2025, our top two principal vendors included Depcl Corp and XFT, each of which respectively supplied
approximately 32% and 42% 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, 2026, we assembled 2,714 E-motorcycles,
6,722 E-bikes and 1,830 E-scooters. For the year ended March 31, 2025, we assembled 4,595 E-motorcycles, 5,974 E-bikes and 1,557
E-scooters.

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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 4 retail stores and work with 64
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.

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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 growth
in food delivery services, which was accelerated during the COVID-19 pandemic, 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 4 retail stores
in the United States, one is situated in New York, one in Massachusetts, one in California and one in Washington, D.C.
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.

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
growth opportunities across these channels. No customers account for more than 10% of our revenues for the years ended March 31,
2026 and 2025.

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.

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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”.

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 “