Company: FLYE
Filing Date: 2025-12-18
Form Type: 10-Q
Source: 0001213900-25-123281
Chunk: 363

Company: Fly-E Group, Inc.
Filing Date: 2025-12-18
Form: 10-Q
Item: Item 4
Chunk 363
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 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 in New York," which caused the Company’s stock price
to drop approximately 87%. The misconduct resulted in substantial harm to the Company, including costs incurred for defending the separate
Securities Class Action. The relief sought, on behalf of the Company, includes a declaration that the action may be maintained as a derivative
action, an award of damages sustained by the Company, restitution and disgorgement of profits from the Individual Defendants, and the
granting of appropriate equitable relief, such as the institution of appropriate corporate governance measures.

Item 1A. Risk Factors. 

There have been no material changes to our
Risk Factors as disclosed in our Annual Report on Form 10-K for the year ended March 31, 2025 as filed with the SEC on July 15, 2025
other than those included below.

An adverse determination in any significant
product liability claim against us could materially adversely affect our business, results of operations or financial condition.

The
development, production, marketing, sale and usage of our vehicles will expose us to significant risks associated with product liability
claims. As a provider of consumer products, we are, from time to time, subject to civil litigation regarding those products, including
in publicly-available court filings. Our business is vulnerable to product liability claims, and we may face inherent risk of exposure
to claims in the event our vehicles do not perform or are claimed to not have performed as expected. If our products are defective, malfunction
or are used incorrectly by our customers, it may result in bodily injury, property damage or other injury, including death, which could
give rise to product liability claims against us. For example, our certain EVs use lithium-ion batteries, which, if not appropriately
managed and controlled, can rapidly release energy by venting smoke and flames that can ignite nearby