Fly-E Group, Inc. (FLYE) 10-K Summary
Business Context and Reporting Period
Company: Fly-E Group, Inc.
Reporting Period: Fiscal year ended March 31, 2026.
Business Overview: Fly-E Group designs, sells, and rents smart electric motorcycles, e-bikes, and e-scooters under the "Fly E-Bike" brand. The company operates 4 retail stores in the U.S. (New York, Massachusetts, Washington D.C., California) and one online store. It also offers rental services in New York City and Los Angeles via the "Go Fly" app.
Recent Corporate Actions: The company completed a 1-for-5 reverse stock split in July 2025 and a 1-for-20 reverse stock split in November 2025. All share data in this report is retroactively adjusted.
Key Financial Metrics
| Metric | Fiscal 2026 | Fiscal 2025 | Change |
|---|---|---|---|
| Net Revenues | $19.1 million | $25.4 million | (25.0%) |
| Gross Profit | $4.7 million | $10.5 million | (55.4%) |
| Gross Margin | 24.4% | 41.1% | -16.7 pts |
| Net Loss | $(9.3) million | $(5.3) million | 75.0% increase |
| Operating Cash Flow | $(13.8) million | $(10.1) million | N/A |
| Cash on Hand (Mar 31, 2026) | $0.3 million | $0.8 million | N/A |
| Total Debt (Principal) | $6.0 million | $7.4 million | N/A |
Revenue Breakdown (2026): Retail sales ($6.9M), Wholesale ($11.6M), Rental services ($0.6M).
Debt Status: The company has a $5 million revolving credit facility with Peapack-Gladstone Bank. The company defaulted on repayment obligations in August 2025 and entered into forbearance agreements extending deadlines to June 30, 2026.
Material Changes vs. Prior Period
- Revenue Decline: Net revenues dropped 25% primarily due to a 28% decrease in total units sold (from 58,765 to 42,101) and price reductions to clear aged inventory. Retail sales fell 68% due to store closures and safety concerns regarding lithium-ion batteries.
- Margin Compression: Gross margin collapsed from 41.1% to 24.4% due to lower average selling prices, increased procurement costs, and a shift in sales mix toward lower-margin wholesale channels following the disposal of retail subsidiaries.
- Store Disposal: The company sold 28 subsidiaries (retail stores) during the year to streamline operations. While this reduced operating expenses (Selling expenses down 53%), it resulted in significant inventory clearance losses ($1.9M) and impairment charges ($0.6M).
- Legal Settlement: The company paid a $1.0 million settlement to UL LLC regarding trademark infringement claims related to uncertified products.
Guidance, Risks, and Contingencies
Going Concern: Management has expressed substantial doubt about the company's ability to continue as a going concern. With only $0.3 million in cash and a net loss of $9.3 million, the company relies on future equity financing, debt refinancing, or support from related parties to meet obligations.
Legal and Regulatory Risks:
- SEC Investigation: The SEC initiated an investigation on January 21, 2026. Details are not public, but the company is cooperating.
- Securities Class Action: A lawsuit filed in September 2025 alleges false statements regarding revenue growth and concealment of lithium battery safety issues. An amended complaint was filed in May 2026.
- Shareholder Derivative Suits: Consolidated derivative actions allege breach of fiduciary duty and gross mismanagement by directors and officers.
- Nasdaq Compliance: The company received a delinquency notice from Nasdaq for failing to timely file its 10-K. It has until September 21, 2026, to submit a compliance plan to avoid delisting.
- Internal Controls: The company identified material weaknesses in internal controls over financial reporting, including insufficient accounting personnel and lack of formal IT controls.
Investor Verification Checklist
- Liquidity Runway: Verify the status of negotiations with Peapack-Gladstone Bank regarding the $4.9M debt default and the feasibility of the proposed equity financing plans.
- Legal Exposure: Monitor the outcome of the SEC investigation and the securities class action lawsuit, which could result in significant damages or sanctions.
- Nasdaq Listing Status: Confirm whether the company submits a compliance plan to Nasdaq by the September 21, 2026 deadline to avoid delisting.
- Internal Control Remediation: Assess the progress of hiring qualified accounting personnel and implementing IT controls to address the identified material weaknesses.
- Revenue Sustainability: Evaluate the impact of the shift from retail to wholesale sales on long-term profitability and brand value, given the 68% drop in retail revenue.