FLYEXCLUSIVE INC. quarterly report, Q2 FY2022

Business context and reporting period

Important entity distinction: The supplied filing is EG Acquisition Corp.’s Form 10-Q, not a filing under the name FLYEXCLUSIVE INC. EG Acquisition Corp. was a shell company seeking a business combination; this report does not provide operating results for flyExclusive.

The unaudited quarter and six-month periods ended June 30, 2022; the report was signed August 15, 2022. At June 30, EG Acquisition had not selected a target or begun substantive discussions with a prospective target. It had no operating revenue or business operations.

Financial results and liquidity

MetricQ2 2022Six months 2022
Operating revenueNoneNone
Formation and operating costs$676,182$1,048,459
Net income$635,092$4,925,289
Trust-account interest income$303,838$326,496
Gain from change in warrant fair value$1,016,117$5,655,933
Net income per share$0.02$0.18
Net cash used in operating activitiesSix-month amount: $633,003

Net income was driven by trust interest and non-cash warrant remeasurement gains, rather than operating activity. Operating margins are not meaningful for this pre-combination shell.

At June 30, total assets were $225.9 million, including $225.3 million of trust-account investments and $86,217 of cash outside the trust. Current assets were $551,000 versus current liabilities of $823,577; management reported a working-capital deficit of approximately $270,000. The company had a $400,000 non-interest-bearing promissory note payable to its sponsor by the earlier of May 27, 2023 or a business combination. Total liabilities were $10.4 million, including a $7.875 million deferred underwriting discount payable upon a completed business combination. Redeemable Class A shares of $225.0 million were classified as temporary equity, not permanent equity.

Changes versus prior comparable period

  • Q2 2022 net income of $635,092 compared with a $658,869 net loss in Q2 2021. The 2022 quarter included a $1.016 million warrant fair-value gain and $303,838 of trust interest; Q2 2021 included $390,561 of warrant issuance costs and a $145,534 warrant fair-value loss, with only $944 of trust interest.
  • For the six-month comparison, 2022 net income was $4.925 million versus a $659,645 loss from inception through June 30, 2021. The comparison periods differ in length and 2022 income principally reflects a $5.656 million warrant fair-value gain.
  • Warrant liabilities declined to $1.728 million from $7.384 million at December 31, 2021, producing a substantial non-cash gain. Trust-account investments rose to $225.335 million from $225.009 million.
  • Cash outside the trust fell to $86,217 from $319,220 at year-end 2021; the company received $400,000 of sponsor-note financing during the first half.

Outlook, risks and unusual items

  • The company had 24 months from its May 28, 2021 IPO closing to complete a business combination; otherwise, it was required to wind up and redeem public shares. The scheduled liquidation date was May 28, 2023. Management intended to complete a combination before that date, but disclosed no target or substantive target discussions as of June 30, 2022.
  • Management stated that low operating cash and the need for additional financing raised substantial doubt about the company’s ability to continue as a going concern through the scheduled liquidation date. Sponsor and insider funding was possible but not committed.
  • The filing identifies potential effects from COVID-19 and the Russia-Ukraine conflict as uncertain and not readily quantifiable. A business combination could also require additional financing, debt or equity issuance, and could be affected by public-share redemptions.
  • Disclosure controls were deemed ineffective due to a material weakness tied to prior restatements of the classification of redeemable Class A shares. The company said it was enhancing accounting review and consultation processes; it provided no assurance remediation would succeed.
  • No material litigation, off-balance-sheet arrangements, or material changes to previously disclosed risk factors were reported. The filing reported no subsequent events requiring disclosure.

Key facts for investors to verify

  • Confirm the issuer: this filing is for EG Acquisition Corp., not FLYEXCLUSIVE INC., and contains no flyExclusive operating financials.
  • Verify the status of any business combination, the May 28, 2023 deadline, and any subsequent extension, liquidation, or transaction filings.
  • Assess available cash outside the trust, the $400,000 sponsor note, the working-capital deficit, and whether additional sponsor or third-party financing was obtained.
  • Separate recurring operating costs and cash flows from non-cash warrant fair-value changes and trust interest when assessing reported earnings.
  • Review the prior-period restatements and subsequent remediation of the material weakness in disclosure controls.