As filed with the Securities and Exchange Commission on April 3, 2024

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

________________

Amendment No. 1

to

FORM S-1
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933

________________

Fly-E Group, Inc.
(Exact name of registrant as specified in its charter)

________________

136-40 39th Avenue
Flushing, NY 11354
(929) 410-2770
(Address, including zip code, and telephone number, including area code, of registrant’s principal executive offices)

________________

Zhou Ou
Chief Executive Officer
136-40 39th Avenue
Flushing, NY 11354
(929) 410-2770

(Name, address, including zip code, and telephone number, including area code, of agent for service)

________________

Copies to:

_____________

Approximate date of commencement of proposed sale to the public: As soon as practicable after the effective date of this registration statement.

If any of the securities being registered on this form are to be offered on a delayed or continuous basis pursuant to Rule 415 under the Securities Act of 1933, check the following box. ☒

If this form is filed to register additional securities for an offering pursuant to Rule 462(b) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. ☐

If this form is a post-effective amendment filed pursuant to Rule 462(c) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. ☐

If this form is a post-effective amendment filed pursuant to Rule 462(d) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. ☐

Indicate by check mark whether the registrant 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:

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 7(a)(2)(B) of the Securities Act. ☐

The registrant hereby amends this registration statement on such date or dates as may be necessary to delay its effective date until the registrant shall file a further amendment which specifically states that this registration statement shall thereafter become effective in accordance with Section 8(a) of the Securities Act of 1933 or until the registration statement shall become effective on such date as the Commission, acting pursuant to said Section 8(a), may determine.

The information in this preliminary prospectus is not complete and may be changed. These securities may not be sold until the registration statement with the Securities and Exchange Commission is effective. This preliminary prospectus is not an offer to sell, nor does it seek an offer to buy these securities in any jurisdiction where the offer or sale is not permitted.

Subject to Completion Dated _______ , 2024

PROSPECTUS

3,000,000 Shares

Fly-E Group, Inc.

Common Stock

This is the initial public offering of Fly E-Group, Inc. We are offering 3,000,000 shares of our common stock, par value $0.01 per share. Prior to this offering, there has been no public market for shares of our common stock. We anticipate the initial public offering price will be between $4.00 and $5.00 per share.

We have applied to have shares of our common stock listed on the Nasdaq Capital Market under the symbol “FLYE.” There can be no assurance that such application will be approved. If shares of our common stock are not approved for listing on Nasdaq, we will not consummate this offering.

We are an “emerging growth company” and a “smaller reporting company” as defined in the federal securities laws and will be subject to reduced public company reporting requirements. See “Prospectus Summary — Implications of Being an Emerging Growth Company” and “Prospectus Summary — Implications of Being a Smaller Reporting Company.”

After the completion of this offering, our directors and executive officers will continue to control a majority of the voting power of our common stock. As a result, although we do not expect to rely on the “controlled company” exemption, we will be a “controlled company” under the listing rules of Nasdaq, and we will qualify for exemptions from certain corporate governance requirements. See “Management — Controlled Company Exemption.”

An investment in shares of our common stock is highly speculative, involves a high degree of risk and should be considered only by persons who can afford the loss of their entire investment, See “Risk Factors” beginning on page 10 of this prospectus before you make your decision to invest in our common stock.

Neither the Securities and Exchange Commission nor any other regulatory body has approved or disapproved of these securities or passed upon the accuracy or adequacy of this prospectus. Any representation to the contrary is a criminal offense.

____________

(1)     Represents underwriting discounts equal to (i) 7% per share, which is the underwriting discounts we have agreed to pay on investors in this offering introduced by the underwriters; and (ii) 5.5% per share, which is the underwriting discounts we have agreed to pay on investors in this offering introduced by us. For purpose of the calculation only, we assume 100% investors in this offering are introduced by the underwriters. We have also agreed to issue a warrant or warrants to the representative of the underwriters exercisable in the aggregate for up to such number of shares equal to 5% of the number of shares sold in this offering (the “Representative Warrants”), to reimburse the underwriters for certain expenses and to provide the representative a non-accountable expense allowance equal to 1% of the gross proceeds of this offering, payable at the closing of the offering. See “Underwriting”.

(2)      The proceeds to us presented in this table does not give effect to the exercise of (i) the option we have granted to the underwriters as described below and (ii) the Representative’s Warrants.

We have granted the underwriters an option exercisable for a period of 30 days from the date of this prospectus to purchase up to 450,000 additional shares of our common stock from us from time to time and in whole or in part at the initial public offering price, less the underwriting discounts and commissions, solely to cover over-allotments, if any. If the underwriters exercise their option in full, the total initial public offering price will be $_____, underwriting discounts and commissions will be $_____ and proceeds to us, before expenses, will be $_____.

The underwriters expect to deliver the shares of common stock to investors on or about ________________, 2024.

The Benchmark Company

The date of this prospectus is ___________________, 2024.

Table of Contents

ABOUT THIS PROSPECTUS

No dealer, salesperson or other person is authorized to give any information or to represent anything not contained in this prospectus. You must not rely on any unauthorized information or representations. This prospectus is an offer to sell only the shares offered hereby, but only under circumstances and in jurisdictions where it is lawful to do so. The information contained in this prospectus is current only as of its date.

Market data and certain industry data and forecasts used throughout this prospectus were obtained from internal company surveys, market research, consultant surveys, publicly available information, reports of governmental agencies and industry publications and surveys. Although we are responsible for all of the disclosures contained in this prospectus and we believe the market and industry data included in this prospectus is reliable, we have not independently verified any of the data from third party sources, nor have we ascertained the underlying economic assumptions relied upon therein. Similarly, we believe our internal surveys, industry forecasts and market research are reliable, even though such surveys, forecasts and research have not been independently verified. The market and industry data and forecasts included in this prospectus involve a number of assumptions and limitations, and you are cautioned not to give undue weight to such information. While we are not aware of any misstatements regarding the market and industry data and forecasts presented in this prospectus, such data and forecasts involve risks and uncertainties and are subject to change based on various factors, including those discussed under the headings entitled “Risk Factors” and “Cautionary Note Regarding Forward-Looking Statements” in this prospectus.

Risk Factors

Investing in our common stock involves a high degree of risk. You should carefully consider each of the following risks, together with all other information set forth in this prospectus, including the financial statements and the related notes, before making a decision to buy shares of our common stock. If any of the following risks materializes, our business could be harmed. In that case, the trading price of shares of our common stock could decline, and you may lose all or part of your investment.

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 increasing demand of our products, we plan to open more stores in the future. 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 certain 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 certain principal vendors who help us source parts used in our vehicles from various suppliers in China.

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, as a result of COVID-19, normal economic life throughout China was sharply curtailed and there were disruptions to normal operation of businesses in various areas. For example, in 2022, when China rigorously enforced its “Zero-COVID” policy, some manufacturing facilities were closed and work at other facilities was curtailed in many places where we sourced our vehicle components. Some of our vendors had to temporarily close a facility for disinfecting after employees tested positive for COVID-19, and others faced staffing shortages from employees who were sick or apprehensive about coming to work. Further, the ability of our vendors to ship their goods to us became difficult as transportation networks and distribution facilities reduced capacity, all of which caused an increase in shipping costs and time and affected the availability of inventories to meet our sales demand.

Although the anti-pandemic policies have been eased in China since the beginning of 2023, it is uncertain whether the Chinese government will tighten its restrictive policies and measures again in the future. Furthermore, the lingering impacts of the global pandemic may continue adversely affecting our supply chain, which in turn may materially and adversely affect our business and results of operations. Although our business operations were not materially impacted because of measures we took during the lockdown period in 2022, which included increasing order quantities for vehicle components and maintaining higher inventory levels, as well as avoiding heavy reliance on a single vendor, there can be no assurance as to whether and to what extent these mitigation measures will be effective in the event of future supply chain disruptions. Maintenance of high inventories can increase our costs and involve other risks. See “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.” 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.

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 Brooklyn, 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.

We identified material weaknesses and significant deficiencies in our internal control over financial reporting. If we are unable to remediate these material weaknesses and significant deficiencies, or identify additional material weaknesses and significant deficiencies 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, 2023, 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 security, computer operation and service organization control monitoring activities. We have also identified significant deficiencies in our internal control over financial reporting during the review of our internal control.

In response to the material weaknesses and significant deficiencies identified prior to this offering, we are in the process of implementing a number of measures to address the material weaknesses and significant deficiencies 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, and establishing an audit committee and strengthening corporate governance as well as general control over our information technology. While we believe these efforts will remediate the material weaknesses and significant deficiencies, 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 new 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 and significant deficiencies, 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. 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 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 effected. 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 may receive communications from holders of patents or trademarks regarding their proprietary rights. 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.

Potential tariffs and other restrictions on trade could increase our costs and could further increase the cost of our products, which could adversely impact the competitiveness of our products and our financial results.

We source a significant portion of our vehicle components from China. We cannot predict what actions 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. Any such cost increases or decreases in availability could slow our growth and cause our business, prospects, financial condition and operating results to suffer.

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 of 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 Common Stock and this Offering

Prior to this offering, we had no public market for our common stock and you may not be able to resell our common stock at or above the price you paid, or at all.

There has been no public market for our common stock prior to this offering. The initial public offering price for our common stock will be determined through negotiations between us and the underwriters, and may vary from the market price of our common stock following the completion of this offering. An active or liquid market in our common stock may not develop upon completion of this offering or, if it does develop, it may not be sustainable. In the absence of an active trading market for our common stock, you may not be able to resell any shares you hold at or above the initial public offering price or at all. We cannot predict the prices at which our common stock will trade.

If a limited number of participants in this offering purchase a significant percentage of the offering, the effective public float may be smaller than anticipated and the price of our common stock may be volatile.

As a company conducting a relatively small public offering, we are subject to the risk that a small number of investors will purchase a high percentage of the offering. If this were to happen, investors could find the market price of our common stock to be more volatile than they might otherwise anticipate. Companies that experience such volatility in their stock price may be more likely to be the subject of securities litigation. In addition, if a large portion of our public float were to be held by a few investors, smaller investors may find it more difficult to sell their common stock.

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

Immediately following the completion of this offering, the existing holdings of our directors and executive officers will be, in the aggregate, approximately 67.3% of our outstanding common stock. As a result, these stockholders will 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.

These stockholders acquired their shares of common stock for substantially less than the price of the shares of common stock being acquired in this offering, and these stockholders may have interests, with respect to their common stock, that are different from those of investors in this offering and 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.

If you purchase our common stock sold in this offering, you will experience immediate and substantial dilution.

If you purchase shares of our common stock in this offering, you will experience substantial and immediate dilution in the as adjusted net tangible book value per share after giving effect to this offering of $3.78 per share, based on an assumed initial public offering price of $4.50 per share, because the price that you pay will be substantially greater than the as adjusted net tangible book value per share that you acquire. This dilution is due in large part to the fact that our earlier investors paid substantially less than the initial public offering price per share when they purchased shares of our common stock. You will experience additional dilution when we issue additional shares of common stock. See “Dilution.”

Our management will have broad discretion in application of the net proceeds of this offering and may not use these proceeds effectively.

Our management will have considerable discretion in the application of the net proceeds of this offering. As a result, investors will be relying upon management’s judgment with only limited information about our specific intentions for the use of the net proceeds of this offering. We may use the net proceeds for purposes that do not yield a significant return or any return at all for our stockholders. In addition, pending their use, we may invest the net proceeds from this offering in a manner that does not produce income or that loses value. See “Use of Proceeds.”

As an emerging growth company, we are exempt from the requirements under the Sarbanes-Oxley Act that a public accounting firm attest as to internal controls, and we lack the financial controls and safeguards required of public companies.

We do not have the internal infrastructure necessary, and are not required, to complete an attestation about our financial controls that would be required under Section 404 of the Sarbanes Oxley Act of 2002. There can be no assurance that there are no significant deficiencies or material weaknesses in the quality of our financial controls. We expect to incur additional expenses and diversion of management’s time if and when it becomes necessary to perform the system and process evaluation, testing and remediation required in order to comply with the management certification and auditor attestation requirements.

If we are listed on the Nasdaq Capital Market and our financial condition deteriorates, we may not meet continued listing standards on the Nasdaq Capital Market.

The Nasdaq Capital Market also requires companies to fulfill specific requirements in order for their shares to continue to be listed. In order to qualify for continued listing on the Nasdaq Capital Market, we must meet certain criteria, including the following:

•        Our shareholders’ equity must be at least $2,500,000; or the market value of our listed securities must be at least $35,000,000; or our net income from continuing operations in our last fiscal year (or two of the last three fiscal years) must have been at least $500,000;

•        The market value of our publicly held shares must be at least $1,000,000;

•        The minimum bid price for our shares must be at least $1.00 per share;

•        We must have at least 300 shareholders;

•        We must have at least 500,000 publicly held shares;

•        We must have at least 2 market makers; and

•        We must have adopted Nasdaq-mandated corporate governance measures, including a board of directors comprised of a majority of independent directors, an Audit Committee comprised solely of independent directors and the adoption of a code of ethics among other items.

Use of Proceeds

We estimate that we will receive net proceeds from the sale of shares of common stock in this offering of approximately $11.5 million (or approximately $13.4 million if the underwriters’ option to purchase additional common stock from us is exercised in full), based upon an assumed initial public offering price of $4.50 per share, the midpoint of the range set forth on the cover page of this prospectus, and after deducting underwriting discounts and commissions and estimated offering expenses payable by us.

We intend to use the net proceeds from this offering as follows: (i) approximately $3 million for purchase of inventory and production costs of our vehicles; (ii) approximately $2 million for the expansion of our retail stores; (iii) approximately $3 million for our technology, research and development efforts, and (iv) and the reminder for working capital.

To the extent the underwriters exercise their option to purchase additional shares of common stock from us, we intend to use any additional net proceeds from exercise for working capital.

Pending the use of proceeds from this offering as described above, we plan to invest the net proceeds that we receive in this offering in short-term and intermediate-term interest-bearing obligations, investment-grade securities, certificates of deposit or direct or guaranteed obligations of the U.S. government.

Our management will have broad discretion in the application of the net proceeds from this offering and investors will be relying on the judgment of our management regarding the application of the proceeds.

Dividend Policy

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.

Capitalization

The following table sets forth our cash and cash equivalents and capitalization as of December 31, 2023 on:

•        An actual basis; and

•        a pro forma basis after giving effect to the sale of 3,000,000 shares of our common stock in this offering at an assumed initial public offering price of $4.50 per share (the midpoint of the range set forth on the cover page of this prospectus), and our receipt of the estimated $11,529,110 in net proceeds from this offering, after deducting underwriting commissions, the underwriter’s non-accountable expense allowance and estimated offering expenses payable by us.

You should read this capitalization table together with “Use of Proceeds,” “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and our financial statements and the related notes appearing elsewhere in this prospectus.

The number of shares of common stock to be outstanding after this offering is based on 22,000,000 shares outstanding as of December 31, 2023.

Dilution

Our net tangible book value as of December 31, 2023 was approximately $6,517,000 or $0.30 per share of common stock based upon 22,000,000 shares of common stock outstanding on that date. Net tangible book value per share represents the amount of our total tangible assets reduced by the amount of our total liabilities, divided by the total number of shares of common stock outstanding.

Our as adjusted net tangible book value will be approximately $18,046,000 or $0.72 per share. As adjusted net tangible book value per share represents as adjusted net tangible book value divided by the total number of shares outstanding after giving effect to the sale of the shares in this offering at the assumed initial public offering price of $4.50 per share, the midpoint of the range set forth on the cover page of this prospectus, after deducting underwriting discounts and commissions and other estimated offering expenses payable by us. This represents an immediate increase in as adjusted net tangible book value of $0.42 per share to existing stockholders and an immediate dilution of $3.78 per share to investors purchasing shares of common stock in this offering at the assumed public offering price.

The following table illustrates this dilution on a per share basis to new investors:

The following tables set forth, as of December 31, 2023, the number of shares of common stock purchased from us, the total consideration paid to us and the average price per share paid by the existing holders of our common stock and the price to be paid by new investors at the public offering price.

The number of shares of common stock to be outstanding after this offering is based on 22,000,000 shares outstanding as of December 31, 2023.

If the underwriters exercise their overallotment option, our as pro forma net tangible book value following the offering will be $0.79 per share, and the dilution to new investors in the offering will be $3.71 per share.

A $1.00 increase or decrease in the assumed public offering price per share would increase or decrease our as adjusted net tangible book value after this offering by approximately $2.76 million, and dilution per share to new investors by approximately $0.11.

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 prospectus. The following discussion contains forward-looking statements. Actual results could differ materially from the results discussed in the forward-looking statements. See “Risk Factors” and “Cautionary Note Regarding Forward-Looking Statements”.

Overview

We are 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.

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 April 3, 2024, we have 39 retail stores, including 38 stores in the U.S. and one store in Canada. We plan to expand our presence in the United States and extend our business into South America and Europe in the future. We also sell our products through our online store at flyebike.com.

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 April 3, 2024, we offered 21 E-motorcycle products, 21 E-bike products and 34 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. 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.

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 Brooklyn, New York. For the year ended March 31, 2023, we produced 2,039 E-motorcycles, 5,953 E-bikes and 2,279 E-scooters at this facility. For the nine months ended December 31, 2023, we produced 6,663 E-motorcycles, 6,119 E-bikes and 2,880 E-scooters at the same facility. In response to the increasing demand for our products, we are currently looking to lease a larger assembling facility to replace our current facility in the near future.

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 on our retail strategy and produce effective marketing initiatives to expand our brand perception with prospective customers. As of April 3, 2024, we have 38 retail stores in the United States and one in Canada. 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

The increase in our product sales price was a key driver of our revenue growth during the year ended March 31, 2023. Our net revenues increased by 26.7% from $17.2 million for the year ended March 31, 2022 to $21.8 million for the year ended March 31, 2023, primarily attributable to the increase of the average sale price for our EVs by $297, or 46.1%, from $644 in the year ended March 31, 2022 to $941 in the year ended March 31, 2023, while our sales volume slightly decreased by 1,118 units, from 12,381 units in the year ended March 31, 2022 to 11,263 units in the year ended March 31, 2023.

For the nine months ended December 31, 2023, our net revenues increased by 46.0% to $24.0 million, compared to $16.5 million for the same period in 2022, which was primarily driven by increased product sales volume and higher average sales price. In particular, the number of EVs sold increased by 5,071, or 59.6%, from 8,509 in the nine months ended December 31, 2022 to 13,580 in nine months ended December 31, 2023. The average sales price per EV increased by $59, or 6.5%, from $913 in the nine months ended December 31, 2022 to $972 in nine months ended December 31, 2023.

In the future, our ability to increase our product sales price and volume will depend on our ability to innovate in design and technology and offer products that meet the customers’ demand. We currently have a streamlined product portfolio consisting of three categories, with multiple models and specifications for each category. Moreover, 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 execute 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 $1.9 million for the year ended March 31, 2023, compared to $1.0 million for the year ended March 31, 2022. For the nine months ended December 31, 2023, our payroll expenses were $3.0 million, compared to $1.4 million for the same period in 2022. As our business expands, we expect increased payroll expenses due to hiring more employees for our retail stores and corporate office. 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, further contributing to the increase in payroll expenses. An inability to effectively manage payroll expenses while expanding the business would significantly impact our ability to grow revenue or improve our financial results.

Vendor and Supply Management

During the year ended March 31, 2023, we worked with three principal vendors, Transpro US Inc., Anhui Ineo International Trading Co., Ltd. and Fly Wing E-Bike Inc., each of which respectively supplied approximately 33%, 21% and 12% accessories and components used in all our products for the year ended March 31, 2023. During the year ended March 31, 2022, Anhui Ineo International Trading Co., Ltd. supplied approximately 70% of our accessories and components.

During the nine months ended December 31, 2023, we worked with three principal vendors, Fly Wing E-Bike Inc., Xiamen Finely Technology Co., Ltd. and Anhui Ineo International Trading Co., Ltd., each of which respectively supplied approximately 35%, 20% and 13% of our accessories and components. During the nine months ended

December 31, 2022, we worked with three principal vendors, Transpro US Inc., Anhui Ineo International Trading Co., Ltd. and Nanrobot Technology Co., Limited, each of which respectively supplied approximately 36%, 26% and 11% of our accessories and components.

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.

Recently, the COVID-19 pandemic and conflict between Russia and Ukraine have caused supply chain disruptions and challenges for many companies. For example, following the launch of a military action in Ukraine by Russia in February 2022, commodity prices, including the price of oil, gas, nickel, copper and aluminum increased. Our results of operations have not been materially impacted by either COVID-19-related supply chain constraints or the Russia-Ukraine conflict. However, 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.

Market Trends and Competition

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.

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. As such, while we expect environmental 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.

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 and less cost of revenue. Gross margin represents gross profit as a percentage of its 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 this 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 its 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 nine months ended December 31, 2023 and 2022

The following table sets forth the components of our results of operations for the nine months ended December 31, 2023 and 2022:

Net Revenues

The following table sets forth our net revenues by retail and whole sales for the nine months ended December 31, 2023 and 2022:

Our net revenues were $24.0 million for the nine months ended December 31, 2023, an increase of $7.6 million, or 46.0%, from $16.5 million for the nine months ended December 31, 2022. Our net revenue increase was driven primarily by higher sales volume and an increase in the average per unit sales price of our EVs. The number of EVs sold increased by 5,071, or 59.6%, from 8,509 in the nine months ended December 31, 2022 to 13,580 in the nine months ended December 31, 2023. The average per unit sales price of our EVs increased 6.5% from $913 in the nine months ended December 31, 2022 to $972 in the nine months ended December 31, 2023.

Our retail sales revenue increased $5.0 million, or 35.3%, from $14.2 million for the nine months ended December 31, 2022 to $19.2 million for the nine months ended December 31, 2023. Our wholesale revenue increased $2.6 million, or 114.1%, from $2.2 million for the nine months ended December 31, 2022 to $4.8 million for the nine months ended December 31, 2023. The increase in wholesale revenue was primarily attributable to the addition of two new distributors we worked with, both of which experienced rapid growth during the nine months ended December 31, 2023.

Cost of Revenues

Cost of revenues increased $4.7 million, or 47.0%, from $9.9 million for the nine months ended December 31, 2022, to $14.6 million for the nine months ended December 31, 2023. The increase in cost of revenues was primarily attributable to the increase in the number of EVs sold in the nine months ended December 31, 2023.

Gross Margin

The following table shows our gross profit and gross margin for the nine months ended December 31, 2023 and 2022:

Gross profit was $9.5 million and $6.5 million for the nine months ended December 31, 2023 and 2022, respectively. Gross margin was 39.3% and 39.8% of the nine months ended December 31, 2023 and 2022, respectively.

Total Operating Expenses

The following table sets forth the components of our total operating expenses for the nine months ended December 31, 2023 and 2022:

Total operating expenses were $7.4 million for the nine months ended December 31, 2023, an increase of $2.9 million, or 64.9%, compared to $4.5 million for the nine months ended December 31, 2022. The increase in operating expenses was primarily attributable to the increase in our payroll expenses, rent expenses, meals and entertainment expenses, and professional fees.

Selling Expenses

For the nine months ended December 31, 2023, the total payroll expenses were $1.3 million, compared to $1.0 million for the same period in 2022; rent expenses were $1.7 million, compared to $1.3 million for the same period in 2022; marketing referral expenses were $1.1 million, compared to $0.03 million for the same period in 2022; and depreciation expenses were $0.2 million, compared to $0.07 million for the same period in 2022. The increase in these expenses was primarily due to the increase in the number of new stores and new employees hired for these new stores in the nine months ended December 31, 2023.

General and Administrative Expenses

Various general and administrative expenses increased during the nine months ended December 31, 2023 compared to the same period of the previous year. For the nine months ended December 31, 2023, meals and entertainment expenses increased to $0.3 million, compared to $0.2 million for the same period in 2022, primarily due to increased meal expenses for employees who worked overtime; payroll expenses increased to $0.7 million from $0.4 million for the same period in 2022 primarily due to additional hires in operation and accounting departments; rent expenses increased to $0.2 million, compared to $0.1 million for the same period of the prior year, primarily due to the additional leasing of corporate office space in the nine months ended December 31, 2023.

Other Expenses, net

Other expenses were $24,123 for the nine months ended December 31, 2023 an increase of $6,660 or 38.1%, from $17,463 for the nine months ended December 31, 2022. The increase in other expenses was primarily due to a settlement payment of $43,701 related to an incident at one of our retail stores, offset by the Company’s receipt of the New York State Seed Funding for small business of $15,202 and a one-time promotion bonus of $4,655 from an online sales platform we use during the nine months ended December 31, 2023.

Income Tax Provisions

Provisions for income taxes were $0.73 million for the nine months ended December 31, 2023, an increase of $0.08 million from $0.65 million for the nine months ended December 31, 2022. This increase was due mainly to our increased taxable income and tax penalty paid for the late payment of our 2022 annual income tax during the nine months ended December 31, 2023.

Net Income

Net income was $1.2 million for the nine months ended December 31, 2023, a decrease of $0.1 million or 8.3%, from $1.3 million for the nine months ended December 31, 2022, which was mainly attributable to the reasons discussed above.

EBITDA

The following table sets forth the components of our EBITDA for the nine months ended December 31, 2023 and 2022:

Before interest expenses, income tax, depreciation, and amortization, for the nine months ended December 31, 2023, our net income was $2.2 million, an increase of $0.1 million, compared to $2.1 million for the nine months ended December 31, 2022, which was mainly attributable to the increase in sales described above. The ratio of EBITDA to revenue was 9.3% and 12.9% for the nine months ended December 31, 2023 and 2022, respectively. The decrease in the ratio of EBITDA was mainly due to the increase in our marketing referral expenses as a result of increased marketing activities.

Results of Operations for the years ended March 31, 2023 and 2022

The following table sets forth the components of our results of operations for the years ended March 31, 2023 and 2022:

Revenues

Our net revenues were $21.8 million for the year ended March 31, 2023, an increase of $4.6 million, or 26.7%, from $17.2 million for the year ended March 31, 2022. The increase in our net revenues was driven primarily by the increase of the average sale price of our EVs by $297, or 46.1%, from $644 in the year ended March 31, 2022 to $941 in the year ended March 31, 2023, despite that our sales volume slightly decreased by 1,118 units, from 12,381 units in the year ended March 31, 2022 to 11,263 units in the year ended March 31, 2023.

Our retail sales revenue increased $6.0 million, or 47.2%, from $12.8 million for the year ended March 31, 2022 to $18.8 million for the year ended March 31, 2023. Our wholesale revenue decreased $1.5 million, or 33.2%, from $4.4 million for the year ended March 31, 2022 to $2.9 million for the year ended March 31, 2023. The decrease in wholesale revenue primarily resulted from management’s focus shift towards expanding our retail stores during the year ended March 31, 2023.

Cost of Revenues

Cost of revenues decreased $0.5 million, or 3.3%, from $14.0 million for the year ended March 31, 2022, to $13.5 million for the year ended March 31, 2023. The decrease in cost of revenues was primarily attributable to the decrease in logistics costs as the Company sourced more EV parts and accessories within the United States rather than importing from overseas during the year ended March 31, 2023.

Gross Margin

The following table shows our gross profit and gross margin for the years ended March 31, 2023 and 2022:

Gross profit was $8.3 million and $3.2 million for the years ended March 31, 2023 and 2022, respectively. Gross margin was 38.1% and 18.9% for the years ended March 31, 2023 and 2022, respectively. The significant increase in gross profit and gross margin was a result of higher average per unit selling price, increasing from $644 for the year ended March 31, 2022 to $941 for the year ended March 31, 2023. These improvements were driven by product upgrades, enhanced sales channels, and an improved brand image in the market.

Total Operating Expenses

The following table sets for the components of our total operating expenses for the years ended March 31, 2023 and 2022:

Total operating expenses were $6.0 million for the year ended March 31, 2023, an increase of $3.4 million, or 128.6%, compared to $2.6 million for the year ended March 31, 2022. The increase in operating expenses was attributable to the increase in our payroll expenses, rent expenses, meals and entertainment expenses, professional fees, and development expenses as we expanded our business.

Selling Expenses

Total payroll expenses were $1.4 million for the year ended March 31, 2023, compared to $0.7 million for the year ended March 31, 2022. Rent expenses were $1.7 million for the year ended March 31, 2023, compared to $1.0 million for the year ended March 31, 2022. Utilities expenses were $0.13 million for the year ended March 31, 2023, compared to $0.06 million for the year ended March 31, 2022. The increase in these expenses was primarily due to the increase in the number of new stores and new employees hired for these new stores in the year ended March 31, 2023.

General and Administrative Expenses

Various general and administrative expenses increased during the year ended March 31, 2023 compared to the previous year. Meals and entertainment expenses increased to $0.3 million for the year ended March 31, 2023, compared to $0.04 million for the year ended March 31, 2022, primarily due to increased meal expenses for employees who worked overtime. Professional fees increased to $0.6 million for the year ended March 31, 2023, compared to $0.1 million for the year ended March 31, 2022, primarily attributable to the increase in audit fee, consulting, and legal counsel expenses associated with our proposed IPO. Payroll expenses increased to $0.5 million for the year ended March 31, 2023 from $0.2 million for the year ended March 31, 2022 primarily due to additional hires in operation and accounting departments. Rent expenses increased to $0.1 million for the year ended March 31, 2023, compared to $0.05 million for the prior year as a result of office space expansion in the year ended March 31, 2023.

Other Expenses, net

Other expenses were $11,915 for the year ended March 31, 2023, and $48,503 for the year ended March 31, 2022. The decrease in other expenses was primarily attributable to absence of foreign exchange losses recorded in the year ended March 31, 2023. During the year ended March 31, 2022, we conducted transactions with vendors in China using China’s currency Renminbi (RMB). However, in the year ended March 31, 2023, we switched to using U.S. dollar for inventory purchases, resulting in no foreign exchange loss recorded in the year ended March 31, 2023.

Income Tax Provisions

Provisions for income taxes were $0.8 million for the year ended March 31, 2023, an increase of $0.6 million from $0.2 million for the year ended March 31, 2022. This increase was due to our increased taxable income for the year ended March 31, 2023.

Net Income

Net income was $1.4 million for the year ended March 31, 2023, an increase of $1.0 million, or 238%, from $0.4 million for the year ended March 31, 2022, which was mainly attributable to the reasons discussed above.

EBITDA

The following table set forth the components of our EBITDA for the years ended March 31, 2023 and 2022:

Before interest expenses, income tax, depreciation, and amortization, for the year ended March 31, 2023, our net income was $2.5 million, an increase of $1.8 million, compared to $0.7 million for the year ended March 31, 2022, which was mainly attributable to the increase in sales described above. The ratio of EBITDA to revenue was 11.2% and 3.9% for the years ended March 31, 2023 and 2022, respectively.

Liquidity and Capital Resources

As of December 31, 2023, we had cash of $1.2 million. We had working capital of 2.6 million and $0.6 million as of December 31, 2023 and March 31, 2023, respectively. We had net income of $1.2 million and $1.3 million for the nine months ended December 31, 2023 and 2022, respectively.

We had funded our working capital and other capital requirements in the past primarily by equity contributions from our stockholders, 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 receivables and the realization of the inventories as of December 31, 2023. Our ability to continue to fund these items may be affected by general economic, competitive and other factors, many of which are outside of our control.

We believe our cash on hand will be sufficient to meet our current and anticipated needs for general corporate purposes for at least the next 12 months. We may, however, need additional cash resources in the future if we experience changes in business conditions or other developments. We may also need additional cash resources in the future if we find and wish to pursue opportunities for investment, acquisition, capital expenditure or similar actions. If we determine that our cash requirements exceed the amount of cash we have on hand, we may seek to issue equity or equity linked securities or obtain debt financing. 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.

Our accounts receivable represents primarily accounts receivable from the distributors that purchased our EVs and other products. As of December 31, 2023 and March 31, 2023, our accounts receivable, net of allowance for doubtful accounts, was $0.6 million and $0.4 million, respectively. Our accounts receivable turnover period decreased from 68 days in the year ended March 31, 2023 to 54 days in the nine months ended December 31, 2023, which was mainly attributable to a stricter credit policy implemented towards our U.S. distributors.

Our accounts payable represents primarily accounts payable to suppliers from whom we purchased accessories and components for our products. As of December 31, 2023 and March 31, 2023, our accounts payable was $1.0 million and $1.0 million, respectively. Our accounts payable turnover period decreased to 26 days in the nine months ended December 31, 2023 from 49 days for the year ended March 31, 2023, which was primarily the result of the Company’s switch to a new vendor and the clearance of one vendor’s balance during this period.

Our inventories primarily include our EVs, their accessories and spare parts. As of December 31, 2023 and March 31, 2023, our inventories, net of allowance, were $5.4 million and $3.8 million, respectively. The increase in inventory was primarily due to our anticipation of future sales growth. Our inventory turnover days decreased to 86 days in the nine months ended December 31, 2023 from 114 days in the year ended March 31, 2023, which was primarily due to our enhanced supply chain management, allowing us to convert our inventory into sales more efficiently.

For the nine months ended December 31, 2023 and 2022, the interest expenses on our outstanding loans amounted to $82,150 and $34,017, respectively. Refer to Note 7 of the Notes to the Unaudited Condensed Consolidated Financial Statements included within this prospectus for further information on details of our outstanding loans.

The following table summarizes our cash flow data for the nine months ended December 31, 2023 and 2022:

The following table summarizes our cash flow data for the years ended March 31, 2023 and 2022:

Operating Activities

Net cash provided by operating activities for the nine months ended December 31, 2023 was $1.7 million, which was mainly comprised of net income of $1.2 million, an increase in accounts payable of $2.3 million, a noncash item of amortization of right-of-use assets of $1.8 million, offset by an increase in inventories of $1.8 million and a decrease in operating lease liabilities of $1.7 million.

Net cash provided by operating activities for the nine months ended December 31, 2022 was $1.3 million, which was mainly comprised of net income of $1.3 million, noncash item of an increase in inventories of $0.6 million, and a noncash item of amortization of right-of-use assets of $1.6 million, offset by an increase in account receivable of $0.7 million, and a decrease in operating lease liabilities of $1.4 million.

Net cash provided by operating activities for the year ended March 31, 2023 was $1.8 million, which was mainly comprised of net income of $1.4 million, deferred income tax expenses of $0.4 million, amortization of right-of-use assets of $1.9 million and provision for inventories of $0.8 million, offset by an increase in account receivable of $0.5 million, an increase in prepayments of $0.6 million and a decrease in operating lease liabilities of $1.7 million.

Net cash provided by operating activities for the year ended March 31, 2022 was $11,688, which was mainly comprised of net income of $0.4 million, an increase in accounts payable of $1.1 million, an increase in taxes payable of $0.6 million and noncash item of depreciation and amortization of right-of-use assets of $1.2 million, offset by noncash item of deferred income taxes expense of $0.5 million, an increase in inventories of $2.1 million as we stocked up our inventories to ensure we have sufficient products for sales, and a decrease in operating lease liabilities of $0.7 million.

Investing Activities

Net cash used in investing activities was $1.0 million for the nine months ended December 31, 2023, which was due to the purchase of equipment of $0.5 million, payment of intangible assets of $0.1 million and the prepayment to related parties for software development of $0.4 million.

Net cash used in investing activities was $0.3 million for the nine months ended December 31, 2022, which was due to the purchase of equipment of $0.3 million.

Net cash used in investing activities was $0.4 million for the year ended March 31, 2023, which was due to the purchase of equipment of $0.4 million.

Net cash used in investing activities was $0.3 million for the year ended March 31, 2022, which was due to the purchase of equipment of $0.3 million.

Financing Activities

Net cash provided by financing activities was $30,550 for the nine months ended December 31, 2023, which consisted of repayment of the related party’s loan of $0.2 million, repayments of loan payables of $0.4 million, repayments of other payables of related party of $0.2 million, payments of deferred IPO cost of $0.1 million, and payments of related-party receivable of $0.1 million, offset by borrowing from loan payables of $0.8 million and capital contribution from shareholders of $0.1 million.

Net cash used in financing activities was $1.1 million for the nine months ended December 31, 2022, which consisted of repayments of other payables of related parties of $1.6 million, offset by borrowing from loan payables of $0.7 million.

Net cash used in financing activities was $1.4 million for the year ended March 31, 2023, which consisted of repayments to related parties and loan payable of $2.8 million, deferred IPO cost of $0.1 million, offset by borrowings from loan payable of $1.5 million.

Net cash provided by financing activities was $0.5 million for the year ended March 31, 2022, which consisted of borrowings from related parties of $0.5 million.

Commitments and Contractual Obligations

The following table presents our material contractual obligations as of December 31, 2023:

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 borrowing bears 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

Estimated allowance for inventories

Our estimated allowance for the inventory obsolescence reserves is based on our assessment of realization of inventory. Any excess of the cost over the realizable value of each items of inventories recognized as a provision for diminution in the value of inventories. As of December 31, 2023 and March 31, 2023, we recorded inventory allowance balance of $403,031 and $431,363, respectively.

Estimated useful lives of long-lived assets

The judgment that the long-lived assets, which include property, plant and equipment and right-of-use assets, are being amortized over their useful lives and are not impaired are significant accounting estimates. We have estimated the useful life and residual value and concluded that no impairment loss was recognized as of December 31, 2023 and March 31, 2023.

Estimated of the valuation allowance of deferred tax assets

We recognize deferred tax assets to the extent that we believe that these assets are more likely than not to be realized. In making such a determination, we consider all available positive and negative evidence, including future reversals of existing taxable temporary differences, projected future taxable income, tax-planning strategies, and results of recent operations. We have not assessed a valuation allowance as we determine it is more likely than not that all deferred tax assets will be realized before expiration.

Critical Accounting Policies

The preparation of the financial statements in conformity with the U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities as of the dates of the financial statements and the reported amounts of expenses during the reporting periods.

Revenue recognition

We follow the revenue accounting requirements of Accounting Standards Update (“ASU”) No. 2014-09, Revenue from Contracts with Customers (Topic 606) (“Accounting Standards Codification (“ASC”) 606”). The core principle underlying the revenue recognized that was included in the contract liabilities of this ASU allows us to recognize — revenue that represents the transfer of goods and services to customers in an amount that reflects the consideration to which we expect to be entitled in such exchange. This will require us 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 goods and services transfers to a customer.

Revenue from sales of products is recognized when the products are accepted by our customers or distributors. Acceptance of the products is evidenced by goods receipt notes signed by the distributors, which generally take place at our warehouse. No further obligations remain upon acceptance, and the risks and rewards of ownership of the products are transferred to the distributors. The distributors have no rights to return the products. For overseas sales to distributors, risks and rewards of ownership are transferred to the distributors when the products are delivered to and accepted by distributors at the named port of shipment. When selling products to customers through our online store and retail stores, we are responsible for delivery. Acceptance of the products is evidenced by delivery notes signed by the customers, signifying the transfer of ownership risks and rewards. For online purchases, we offer a seven-day return-and-refund policy to customers.

Revenue is recognized net of return allowances, and sales tax. Return allowances, which reduce net revenues, are estimated based on historical experience. Historically, the Company has not experienced any significant returns.

Product warranties

We provide a three-month warranty on our vehicles and the battery pack. We accrue warranty reserves at the time a vehicle is delivered to the customer. Warranty reserves include our best estimate of the projected cost to repair or to replace any items under warranty, based on actual warranty experience as it becomes available and other known factors that may impact our evaluation of historical data. We review our reserves regularly to ensure that our accruals are adequate in meeting expected future warranty obligations, and we will adjust our estimates as needed. Factors that could have an impact on the warranty reserve include the following: changes in manufacturing quality, shifts in product mix, changes in warranty coverage periods, product recalls and changes in sales volume. Warranty expense is recorded as a component of cost of revenues in the statement of operations. The portion of the warranty provision which is expected to be incurred within three months from the balance sheet date will be classified as current and classified as short-term liabilities.

Income taxes

We provide current income tax expenses in accordance with the laws of the relevant taxing authorities. As part of the process of preparing financial statements, we are required to estimate its income taxes in each of the tax jurisdictions in which it operates, including New York State, New York City, New Jersey, Texas, and Florida.

We account for income taxes using the asset and liability approach. Under this method, deferred income taxes are recognized for tax consequences in future years based on differences between the tax bases of assets and liabilities and their reported amounts in the financial statements at each year-end and tax loss carry forwards. Deferred tax assets and liabilities are measured using enacted tax rates applicable for the differences that are expected to reverse.

A valuation allowance is recorded to reduce deferred tax assets to the extent that we consider it is more likely than not that a deferred tax asset will not be realized in the foreseeable future.

We record uncertain tax positions in accordance with ASC 740 on the basis of a two-step process in which (1) we determines if the weight of available evidence indicates that it is more likely than not that the tax position will be sustained on audit, including resolution of any related appeals or litigation processes, and (2) measures the tax benefit as the largest amount that is more likely than not to be realized upon ultimate settlement. An uncertain income tax provision will not be recognized if it has less than a 50 percent likelihood of being sustained.

We consider many factors when evaluating our tax positions and estimating its tax benefits, which may require periodic adjustments, and which may not accurately forecast actual outcomes. We will include interest and fines arising from the underpayment of income taxes as a component of the provision for income taxes (if anticipated). Penalties and interest incurred related to underpayment of income tax are classified as penalties in the period incurred.

BUSINESS

Overview

We are 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.

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 April 3, 2024, we have 39 retail stores, including 38 stores in the United States and one store in Canada. We plan to expand our presence in the United States and extend our business into South America and Europe. We also sell our products through our online store at flyebike.com.

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 April 3, 2024, we offered 21 E-motorcycle products, 21 E-bike products and 34 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 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, Inc. (“Fly-E Group” or the “Company”), 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 designed for 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 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 further expand our sales network in United States and internationally. As of April 3, 2024, we operate one store in Canada and 38 retail stores in the United States, spanning across the states of New York, Texas, Florida, Washington D.C., California and New Jersey. We plan to significantly increase our footprint in the United States by opening our stores in additional states. In addition, we intend to enter selected overseas markets that offer identified growth opportunities and favorable government policies, such as South America and Europe.

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 in the process of seeking business partners, assembling a delivery team and developing 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 21 different products, which include a range of E-moped, E-motorcycle and E-tricycle.

E-moped

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

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 1239 pounds.

E-bikes

We currently offer 34 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

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

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 12 different products, which include the Insurgent E-Scooter, Flytron, H-Max and H-1 models.

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.

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 39 retail stores and work with 80 distributors in the United States to sell our products. In addition, we have our own online store and Fly E-Bike app. 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 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 38 retail stores in the United States, 28 are situated in New York, while four are in New Jersey, two in Florida, two in Texas, 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.

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.

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.

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 plan to 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 December 31, 2023, we had 80 employees, consisting of 59 full-time employees and 21 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.

Legal Proceedings

We may be subject to legal proceedings, investigations and claims incidental to the conduct of our business from time to time. 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.

Properties

Our corporate and executive offices are located in a leased facility in 136-40 39th Avenue, Flushing, NY 11354, where we lease approximately 2,500 square feet of under a lease that is due to expire on October 31, 2024. In addition, we lease a warehouse in Brooklyn, New York, where we assemble all of our vehicles. The warehouse, which comprises three areas in one location totaling approximately 27,000 square feet, is under three separate leases that are due to expire on December 14, 2025, May 30, 2026 and May 14, 2027, respectively. While 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. We do not own any real property.

Management

Directors and Executive Officers

The following table sets forth the names and ages of all of our directors and executive officers as of April 3, 2024:

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

Zhou (Andy) 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.

Ruifeng (Steven) Guo, Director and Chief Financial Officer.    Mr. Guo joined our company as a tax and financial advisor in March 2020 and has been serving as our Chief Financial Officer (“CFO”) since December 2022. Upon effectiveness of this registration statement, Mr. Guo will serve as our full-time CFO. He is currently a partner at DGLG Accounting and Tax LLC, a U.S. financial consulting firm, where he has been working since May 2020. Mr. Guo was appointed as our director on September 1, 2023. Additionally, he is the managing partner at SJ International Development, a New York based real estate management company, since October 2020. Mr. Guo is also the managing partner at PJMG LLC, a New York based consulting company, since June 2019. Prior to that, Mr. Guo worked as a senior business manager at Xinyuan Real Estate Co., Ltd. from April 2018 to April 2020. Between 2013 and 2017, Mr. Guo worked as an associate and senior auditor at three auditing firms, including Friedman LLP, Marcum LLP and Janover LLC. Mr. Guo obtained his Bachelor of Economy from Beijing International Studies University in 2010 and his MBA in Accounting from Hofstra University in 2012. Mr. Guo was selected to serve as a member of our board of directors because of his senior-level experience in the financial services industry and his extensive knowledge of our business and industry.

Rui (Ricky) 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 (Simon) Zhang, Chief Human Resource Officer.    Mr. Zhang has also been serving 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 Nominee.    Mr. Wang has been nominated to serve as a director upon effectiveness of this registration statement. 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 2007 to 2018, he provided financial advisory services to dozens of corporate clients in the United States and Asia. 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 nominated to serve as a member of our board of directors because of his extensive senior-level experience in the financial services industry and his profound knowledge of our business and the industry as a whole.

Lun Feng, Director Nominee.    Mr. Feng has been nominated to serve as a director upon effectiveness of this registration statement. 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 holds the position of 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 nominated 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.

Alan Jacobs, Director Nominee.    Mr. Jacobs has been nominated to serve as a director upon effectiveness of this registration statement. Mr. Jacobs has over 40 years of experience as a corporate and securities attorney, investment banker, business and financial advisor and senior executive of both private and public companies. Since August 2018, Mr. Jacobs has been serving as President at Worthy Lending, LLC. In addition, he has been serving as Executive Vice President, Treasurer and Chief Strategy Officer of Worthy Financial, Inc. since January 2016. Mr. Jacobs currently serves as President of the Worthy Lending V subsidiary. He currently also serves as Executive Vice President, Chief Operating Officer, and a member of the board of directors of Worthy Financial, Inc.’s wholly owned subsidiaries, including Worthy Peer Capital, Inc., Worthy Peer Capital II, Inc., Worthy Community Bonds, Inc., Worthy Community Bonds II, Inc. and Worthy Property Bonds, Inc., and as President of their respective wholly owned loan and investment subsidiaries, all since their respective dates of organization. From 2016 to 2018 Mr. Jacobs was the Founder and President of CorpFin Management Group where he was focused on business development, strategic planning, and corporate development. From September 2014 to December 2015, Mr. Jacobs was associated with ViewTrade Securities, a FINRA registered broker-dealer where he was focused on advisory and corporate services. Prior to that time and for more than 30 years, Mr. Jacobs was associated with several FINRA registered broker-dealers including Ladenburg Thalman & Co.. Inc., Josephthal & Company, and Capital Growth Securities. Mr. Jacobs received his bachelor’s degree from Franklin and Marshall College in 1963 and his law degree from Columbia University in 1966. Mr. Jacobs was nominated to serve as a member of our board of directors because of his extensive experience in the investment and financial services industry.

Director Independence

The rules of the Nasdaq Stock Market, or the Nasdaq Rules, require a majority of a listed company’s board of directors to be composed of independent directors within one year of listing. In addition, the Nasdaq Rules require that, subject to specified exceptions, each member of a listed company’s audit, compensation and nominating and governance committees be independent. Under the Nasdaq Rules, a director will only qualify as an independent director if, in the opinion of our board of directors, that person does not have a relationship that would interfere with the exercise of independent judgment in carrying out the responsibilities of a director. The Nasdaq Rules also require that audit committee members satisfy independence criteria set forth in Rule 10A-3 under the Securities Exchange Act of 1934, as amended, or the Exchange Act. In order to be considered independent for purposes of Rule 10A-3, a member of an audit committee of a listed company may not, other than in his or her capacity as a member of the audit committee, the board of directors, or any other board committee, accept, directly or indirectly, any consulting, advisory, or other compensatory fee from the listed company or any of its subsidiaries or otherwise be an affiliated person of the listed company or any of its subsidiaries. In considering the independence of compensation committee members, the Nasdaq Rules require that our board of directors must consider additional factors relevant to the duties of a compensation committee member, including the source of any compensation we pay to the director and any affiliations with the Company.

Committees of the Board of Directors

Upon effectiveness of this registration statement, our board of directors will establish an audit committee, a compensation committee and a nominating and governance committee. Each of these committees will operate under a charter that will be approved by our board of directors.

Audit Committee.    Our audit committee will consist of three independent directors. The members of the audit committee will be Bin Wang, Lun Feng and Alan Jacobs. The audit committee shall consist exclusively of directors who are financially literate. In addition, upon effectiveness of this registration statement, Mr. Wang will be 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 will consist of three independent directors. The members of the Compensation Committee will be Lun Feng, Bin Wang and Alan Jacobs. 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 will consist of three independent directors. The members of the Nominating and Governance Committee will be Alan Jacobs, Bin Wang and Lun Feng. 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.

Board Diversity

Our Nominating and Governance Committee will be responsible for reviewing with the board of directors, on an annual basis, the appropriate characteristics, skills, and experience required for the board of directors as a whole and its individual members. Although our board of directors does not have a formal written diversity policy with respect to the evaluation of director candidates, in its evaluation of director candidates, our Nominating and Governance Committee will consider factors including, without limitation, issues of character, integrity, judgment, potential conflicts of interest, other commitments, and diversity, and with respect to diversity, such factors as gender, race, ethnicity, experience, and area of expertise, as well as other individual qualities and attributes that contribute to the total diversity of viewpoints and experience represented on the board of directors.

The Nominating and Governance Committee will ensure compliance with the new rule by Nasdaq for board diversity (the “Nasdaq Diversity Rule”), on or before the date required under the Nasdaq Diversity Rule. The Nasdaq Diversity Rule requires, assuming our shares of common stock are listed on the Nasdaq Capital Market and that we are a smaller reporting company, that we will have at least two directors serving on our board of directors, at least one of which identifies as female and the second of which identifies as female, underrepresented minority or LGBTQ+, by December 31, 2026, unless our board of directors is comprised of five or less directors.

Controlled Company Exemptions

Because our directors and executive officers will continue to control a majority of the voting power of our common stock after the completion of this offering, we will be a “controlled company” for purposes of the listing standards of Nasdaq and the rules of the SEC. As a “controlled company”, exemptions under the listing standards of Nasdaq will exempt us from certain of Nasdaq’s corporate governance requirements, including the following requirements:

•        that our board of directors be composed of a majority of “independent directors,” as defined under the rules of Nasdaq,

•        that our compensation committee be composed entirely of independent directors, and

•        that our nominating and governance committee be composed entirely of independent directors.

Although we do not currently expect to rely on the exemptions afforded by Nasdaq to controlled companies, we may elect to do so in the future. Accordingly, for so long as we are a “controlled company” and to the extent we elect to take advantage of these exemptions, holders of our common stock may not have the same protections afforded to shareholders of companies that are subject to all of Nasdaq’s corporate governance requirements. If we cease to be a “controlled company”, we will be required to comply with these provisions within the transition periods specified in the rules of Nasdaq.

These exemptions do not modify the independence requirements for our audit committee.

Code of Business Conduct and Ethics

Prior to this offering, we will adopt 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. Following this offering, a copy of the code will be made available on the Corporate Governance section of our website, which is located at flyebike.com. 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.

Compensation of Executive Officers

Summary Compensation Table

The following table shows the compensation awarded to or earned during the fiscal years ended 2023 and 2022 by our chief executive officer. We did not have any officers that received more than $100,000 in compensation. The person listed in the following table is referred to herein as the “named executive officer.”

Summary Compensation Table

Narrative Disclosure to Summary Compensation Table

Zhou Ou, Chief Executive Officer

We plan to enter into an employment agreement with Mr. Ou in the near future. In order to support the company’s operations and allocate more resources towards the company’s development, Mr. Ou received compensation at the level of a store manager during the 2023 and 2022 fiscal years.

As of March 31, 2023, there were no option or stock awards outstanding.

Director Compensation

Our employee directors do not currently receive any compensation for serving as directors. The appointment of our independent directors will take effect upon the effectiveness of this registration statement. Each independent director is entitled to an annual cash compensation of $50,000.

Policies on Clawback and Recovery of Compensation

In connection with this offering, we are required to adopt and we will adopt, prior to the listing of our shares on Nasdaq, a clawback policy to address the recovery of erroneously-awarded incentive compensation in compliance with the requirements of the Dodd-Frank Act, final SEC rules and applicable listing standards.

2024 Omnibus Incentive Plan

Before the effectiveness of this registration statement, we plan to adopt the FLY-E Group Inc. 2024 Omnibus Incentive Plan (the “2024 Plan”) in order to grant equity-based and other incentive awards to our officers, employees, directors, consultants and advisers. The purpose of the 2024 Plan is to help us attract, motivate and retain such persons with awards under the 2024 Plan and thereby enhance shareholder value. The 2024 Plan will be effective upon our shareholders’ approval (the “Effective Date”). 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.

Shares Subject to the 2024 Plan

The number of shares of our common stock available for issuance under the 2024 Plan is 2,500,000 (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 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 (10th) anniversary of the Effective Date, unless earlier terminated by our board of directors or in accordance with the terms of the 2024 Plan.

CERTAIN Relationships and Related Party Transactions

From April 1, 2021 to December 31, 2023, 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 $4,198,875. These amounts payable to Mr. Ou are unsecured, bear no interest and do not have a maturity date. From April 1, 2021 to December 31, 2023, the Company repaid a total of $3,551,811 to Mr. Ou, including repayment of amounts owed to Mr. Ou prior to April 1, 2021. As of December 31, 2023, 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 December 31, 2023, March 31, 2023 and March 31, 2022, the remaining balance of these payables was $182,229, $332,481 and $2,476,418, respectively.