Company: FLYE
Filing Date: 2025-12-18
Form Type: 10-Q
Source: 0001213900-25-123281
Chunk: 258

Company: Fly-E Group, Inc.
Filing Date: 2025-12-18
Form: 10-Q
Item: Item 2
Chunk 258
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 that defendants provided
materially false and misleading positive statements about revenue growth, brand reputation, and business expansion, while concealing or
minimizing material adverse facts concerning the safety of the Company’s lithium battery and inadequate forecasting processes, which
were already taking a material toll on E-vehicle (the “EV”) sales revenue. The plaintiff alleged when the Company filed a
form NT 10-Q on August 14, 2025, which disclosed a 32% decrease in net revenues primarily driven by a decline in total units sold, attributed
by the Company to “recent lithium-battery accidents involving E-Bikes and E-Scooters”; the price of Company’s common
stock declined dramatically by about 87% in a single day, resulting in economic loss for the plaintiff and the class.

The relief sought includes determining that the
action may be maintained as a class action, requiring defendants to pay damages sustained by the plaintiff and the class, and awarding
pre-judgment and post-judgment interest, along with reasonable attorneys’ fees, expert fees, and other costs, with the monetary
damages sought being certified to be in excess of $150,000.00.

Shareholder derivative action instituted on
November 17, 2025

An action titled Kishan Shah, derivatively on
behalf of FLY-E GROUP, INC. v. Zhou Ou, et al., was instituted on November 17, 2025 and is pending in the United States District Court,
Eastern District of New York.

The principal parties include plaintiff Kishan
Shah, representing the Company (the nominal defendant), 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 that, when the Company