Company: FLYE
Filing Date: 2025-12-18
Form Type: 10-Q
Source: 0001213900-25-123281
Chunk: 327

Company: Fly-E Group, Inc.
Filing Date: 2025-12-18
Form: 10-Q
Item: Item 3
Chunk 327
---
), against Individual defendants Zhou Ou, the Company's CEO and Chairman,  Shiwen
Feng, the Company's former CFO and director, Lun Feng, Bin Wang, and Zanfeng Zhang, former directors of the Company.

The factual basis centers on the individual defendants'
knowing or reckless breaches of fiduciary duties concerning Lithium Battery Misconduct (as defined below) during the relevant period of
July 15, 2025, through August 14, 2025. Plaintiff alleges that defendants consistently represented that the Company’s EVs were safe,
but concealed that the lithium batteries used in their products lacked required New York City safety certification, were substandard quality,
and posed a significant safety hazard, having resulted in multiple deadly fires in the greater New York City area (the "Lithium Battery
Misconduct"). The plaintiff alleged 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.

55

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