Company: FLYE
Filing Date: 2025-12-18
Form Type: 10-Q
Source: 0001213900-25-123281
Chunk: 179

Company: Fly-E Group, Inc.
Filing Date: 2025-12-18
Form: 10-Q
Item: Item 8
Chunk 179
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Battery Misconduct”). The plaintiff alleged that that, when the Company filed a Form NT 10-Q on August 14, 2025, disclosing a 32%
decline in net revenue due primarily to consumer apprehension stemming from an “increasing number of lithium-battery explosion incidents
in New York,” causing the Company’s stock price to plummet approximately 87.1%. As a result of the alleged misconduct, the
plaintiff claims that the Company has incurred and will continue to incur significant damages, including substantial legal fees and costs
associated with the class action and related internal investigations, and many other expenditures.

The relief sought, on behalf of the Company, includes
a declaration that the individual defendants breached their fiduciary duties, an award of damages against the individual defendants (jointly
and severally), restitution and disgorgement of profits from the individual defendants, and court orders directing the Company to implement
improved corporate governance and internal control procedures to prevent future damaging events.

31

Shareholder derivative action instituted on
October 28, 2025

Due to the similar factual basis, on October 28,
2025, another shareholder derivative action, Martin Flynn, derivatively on behalf of FLY-E GROUP, INC. v. Zhou (Andy) Ou, et al., was
instituted in the United States District Court, Eastern District of New York.

The principal parties are Plaintiff Martin Flynn,
derivatively acting on behalf of the nominal defendant, the Company, against individual defendants who served as directors and officers,
including Zhou Ou, the CEO and chairman of the board, Shiwen Feng, the former CFO, Bin Wang, Lun Feng, and Zanfeng Zhang, the former directors.

The action alleges that during the relevant time
period (July 15, 2025, to August 14, 2025), these defendants breached their fiduciary duties and engaged in gross mismanagement by making
materially false and misleading statements and omissions, specifically concerning the safety of the Company’s lithium battery. Although
defendants provided overwhelmingly positive statements regarding growth and brand reputation, they concealed or failed to disclose the
true impact of “recent lithium-battery accidents involving E-Bikes and E-Scooters” on sales revenues. The complaint alleged,
when the Company filed a form NT 10-Q on August 14, 2025 disclosing a 32% decrease in net revenues attributed to a decline in units sold
due to an “increasing number of lithium battery explosion incidents