Fly-E Group, Inc.(FLYE) - 2025 Q2 - Quarterly Report

Financial Performance - For the three months ended September 30, 2024, net revenues decreased by 22.1% to $6.8 million, down from$8.8 million in the same period in 2023, primarily due to a drop in total units sold by 5,850 units [213]. - For the six months ended September 30, 2024, net revenues decreased by 11.5% to $14.7 million, compared to$16.6 million for the same period in 2023, driven by a decrease in total units sold by 4,067 units [214]. - Net revenues for the three months ended September 30, 2024, were $6.8 million, a decrease of 22.1$8.8 million in the same period of 2023 [242]. - Retail sales revenue decreased by $0.8 million, or 12.5$6.8 million in Q3 2023 to $5.9 million in Q3 2024 [244]. - Wholesale revenue decreased by$1.1 million, or 54.8%, from $2.0 million in Q3 2023 to$0.9 million in Q3 2024 [244]. - Net loss for Q3 2024 was $1.1 million, a change of$1.9 million, or 253.1%, from net income of $0.7 million in Q3 2023 [252]. - Net loss for the six months ended September 30, 2024, was$1.3 million, a change of $2.5 million or 211.4$1.2 million in 2023 [267]. - EBITDA for Q3 2024 was $(1.2) million, a decrease of$2.4 million from $1.3 million in Q3 2023, with an EBITDA margin of (17.5)$(1.1) million, a decrease of $3.2 million compared to$2.1 million in 2023, with an EBITDA margin of negative 7.7% [269]. Operating Expenses - Total operating expenses increased by $1.5 million, or 54.5$4.1 million in Q3 2024 from $2.7 million in Q3 2023 [247]. - Total operating expenses increased by 57.2$7.3 million, primarily due to higher payroll, rent, and professional fees associated with business expansion [261]. - Selling expenses increased by 26.1% to $2.0 million in Q3 2024, while general and administrative expenses surged by 97.9$2.1 million [247]. Production and Sales - The company produced 1,146 E-motorcycles, 3,270 E-bikes, and 756 E-scooters for the three months ended September 30, 2024 [205]. - The decrease in net revenues was primarily due to a reduction in sales volume by 5,850 units, from 20,906 units in Q3 2023 to 15,056 units in Q3 2024 [242]. Cash Flow and Financing - As of September 30, 2024, the company had cash of $1.3 million and working capital of$2.3 million, with net cash used in operating activities approximately $9.4 million [270]. - The company funded its working capital primarily through equity contributions, IPO proceeds, and bank loans, with future obligations dependent on the realization of current assets [271]. - Net cash used in operating activities for the six months ended September 30, 2024, was$9.4 million, compared to a net cash provided of $1.6 million for the same period in 2023 [279][280]. - Net cash provided by financing activities was$12.1 million for the six months ended September 30, 2024, primarily from IPO proceeds of $9.2 million and loan proceeds of$3.7 million [285]. Inventory and Receivables - As of September 30, 2024, accounts receivable increased to $0.4 million from$0.2 million as of March 31, 2024, with a decrease in accounts receivable turnover period from 69 days to 63 days [273]. - Inventories increased significantly to $8.5 million as of September 30, 2024, from$5.4 million as of March 31, 2024, with inventory turnover days rising from 125 days to 147 days [277]. - Accounts payable decreased to $0.4 million as of September 30, 2024, from$1.2 million as of March 31, 2024, with a reduction in accounts payable turnover period from 25 days to 16 days [275]. Tax and Compliance - The company accrued $98,322 in income tax-related penalties for the six months ended September 30, 2024, compared to$73,817 for the same period in 2023, highlighting an increase in tax compliance issues [302]. - The company has not identified any significant unrecognized uncertain tax positions as of September 30, 2024, indicating a stable tax position [302]. Future Plans and Expansion - As of November 14, 2024, the company operates 37 stores, including 36 in the U.S. and one in Canada, and plans to expand into South America and Europe [202]. - The company launched a new rental program in October 2024, featuring the Fly-E Fly-11 Pro model, with plans to expand to Miami, Toronto, and Los Angeles [209]. Warranty and Reserves - The company accrued $31,036 in warranty reserves as of September 30, 2024, compared to$27,714 as of March 31, 2024 [296]. - The estimated allowance for inventory obsolescence reserves was $622,623 as of September 30, 2024, up from$514,021 as of March 31, 2024, indicating a significant increase in inventory write-downs [295]. - The company regularly reviews warranty reserves to ensure they are adequate for expected future obligations, with adjustments made as necessary based on manufacturing quality and sales volume [296]. Stock and Capital Structure - The company raised $9.0 million in gross proceeds from its IPO on June 7, 2024, with net proceeds of approximately$9.2 million after the underwriters' over-allotment option [208]. - A stock split was executed in April 2024 at a ratio of 1-for-110,000, increasing the number of authorized shares significantly [206]. - The company raised gross proceeds of $9.0 million from the IPO by selling 2,250,000 shares at$4.00 per share, with net proceeds of approximately $7.9 million [272].