The following discussion and analysis of the Company's financial condition and
results of operations should be read in conjunction with our audited financial
statements and the notes related thereto which are included in "Item 8.
Financial Statements and Supplementary Data" of this Annual Report on Form 10-
Overview
We are a blank check company incorporated as a
On
Of the net proceeds from the IPO and associated private placements,
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Table of Contents Recent Developments Equity Purchase Agreement
On
Business Combination
Pursuant to the Equity Purchase Agreement, following the Closing,
• We will amend our existing certificate of incorporation to: (a) change our name to "flyExclusive, Inc.," (b) convert all then-outstanding shares of our Class B common stock, par value$0.0001 per share, into PubCo Class A Common Stock, and (c) issue to the LGM Existing Equityholders PubCo ClassB Common Stock, which carries one vote per share but no economic rights; • LGM and its members will adopt the Amended and Restated Limited Liability Company Agreement of LGM to: (a) restructure its capitalization to (i) issue to us the number of common units of LGM equal to the number of outstanding shares of PubCo Class A Common Stock immediately after giving effect to the Business Combination (taking into account any redemption of our Class A common stock, any potential PIPE investment, and the conversion of the Bridge; and (ii) reclassify the existing LGM common units into LGM common units, and (b) appointPubCo as the managing member of LGM; • As consideration for the PubCo Units, we will contribute to LGM the amount held in the trust account, less the amount of cash required to fund the redemption of our Class A common stock, par value$0.0001 per share, held by eligible stockholders who elect to have their shares redeemed as of the Closing, plus the aggregate proceeds from any potential PIPE investment and the deemed contribution of the aggregate proceeds of the Bridge Notes, less the deferred underwriting commission payable toBTIG, LLC . Immediately after the contribution of the Contribution Amount, LGM will pay the amount of unpaid fees, commissions, costs or expenses that have been incurred by LGM and us in connection with the Business Combination by wire transfer of immediately available funds on behalf of LGM and us to those persons to whom such amounts are owed; • Prior to the Closing, an aggregate amount equal to the sum of (without duplication), (a) an amount equal to (1) the amount of cash in the Trust Account, less (2) the required amount of cash taken from the Trust Account to fund any redemptions of our Class A common stock, plus (b) the aggregate proceeds received by the Company from thePost-Signing PIPE Investment (if any), plus (c) the aggregate proceeds received by LGM from the funding of the Bridge Notes, less (d)$7,875,000 (representing the amount held in the Trust Account for the deferred underwriting commission) (the "Closing Date Cash Contribution Amount"); • An amount equal to: (i)$0 , in the event the Closing Date Cash Contribution Amount is$85,000,000 or less; (ii) the lesser of (A)$15,000,000 and (B) the excess of the Closing Date Cash Contribution Amount over$85,000,000 , in the event the Closing Date Cash Contribution Amount is more than$85,000,000 and less than$185,000,000 ; and (iii) the lesser of (A)$20,000,000 and (B)$15,000,000 plus the excess of the Closing Date Cash Contribution Amount over$185,000,000 , in the event the Closing Date Cash Contribution Amount is more than$185,000,000 (the "Closing Date Cash Repurchase Amount"); provided that should the Closing Date Cash Repurchase Amount result in the LGM Existing Equityholders owning, in the aggregate, less than fifty one percent (51%) of the outstanding LGM common units as of immediately following the Closing, the Closing Date Cash Repurchase Amount shall be capped at such amount as would result in the LGM Existing Equityholders owning, in the aggregate fifty one percent (51%) of the LGM common units; and • Without any action on the part of any holder of our warrants, each warrant that is issued and outstanding immediately prior to the Closing will be converted into a warrant to purchase one whole share of PubCo Class A Common Stock in accordance with its terms.
In connection with the execution of the Equity Purchase Agreement, on
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Results of Operations
We have neither engaged in any operations nor generated any revenues to date.
The only activities through
For the year ended
For the period from
Going Concern and Liquidity
As of
Until the consummation of a business combination, the Company will be using the funds not held in the Trust Account for identifying and evaluating prospective acquisition candidates, performing due diligence on prospective target businesses, paying for travel expenditures, selecting the target business to acquire, and structuring, negotiating and consummating the business combination.
In addition, in order to finance transaction costs in connection with a business combination, our Sponsor or an affiliate of the Sponsor or certain of our officers and directors may, but are not obligated to, provide us Working Capital Loans. To date, there were no amounts outstanding under any Working Capital Loans.
The Company has incurred and expects to continue to incur significant costs in
pursuit of its acquisition plans. The Company will need to raise additional
capital through loans or additional investments from its Sponsor, stockholders,
officers, directors, or third parties. The Company's officers, directors and
Sponsor may, but are not obligated to, loan the Company funds, from time to time
or at any time, in whatever amount they deem reasonable in their sole
discretion, to meet the Company's working capital needs. Accordingly, the
Company may not be able to obtain additional financing. Additionally, it is
uncertain that we will have sufficient liquidity to fund the working capital
needs of the Company through
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If the Company is unable to complete the Business Combination because it does not have sufficient funds available, the Company will be forced to cease operations and liquidate the Trust Account. In addition, following the Business Combination, if cash on hand is insufficient, the Company may need to obtain additional financing in order to meet its obligations.
In connection with the Company's assessment of going concern considerations in
accordance with FASB's Accounting Standards Update ("ASU")2014-15, "Disclosures
of Uncertainties about an Entity's Ability to Continue as a Going Concern,"
management determined that the liquidity raises substantial doubt about the
Company's ability to continue as a going concern through
Management is currently evaluating the impact of the COVID-19 pandemic on the industry and has concluded that while it is reasonably possible that the virus could have a negative effect on the Company's financial position, results of its operations, and/or search for a target company, the specific impact is not readily determinable as of the date of these financial statements. The financial statements do not include any adjustments that might result from the outcome of this uncertainty.
Critical Accounting Policies
The preparation of these financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statement. Actual results could differ from those estimates.
Class A Common Stock Subject to Possible Redemption
All of the 22,500,000 Class A common stock sold as part of the Units in the IPO
contain a redemption feature which allows for the redemption of such public
shares in connection with the Company's liquidation, if there is a stockholder
vote or tender offer in connection with the Business Combination and in
connection with certain amendments to the Company's amended and restated
certificate of incorporation. In accordance with
The Company recognizes changes in redemption value immediately as they occur and adjusts the carrying value of redeemable common stock to equal the redemption value at the end of each reporting period. Increases or decreases in the carrying amount of redeemable common stock are affected by charges against additional paid in capital and accumulated deficit.
Net Income Per Common Share
The Company has two classes of shares, which are referred to as Class A common
stock and Class B common stock. Earnings and losses are shared pro rata between
the two classes of shares. The 11,833,333 potential common shares for
outstanding warrants to purchase the Company's stock were excluded from diluted
earnings per share for the year ended
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Derivative Financial Instruments
The Company evaluates its financial instruments to determine if such instruments are derivatives or contain features that qualify as embedded derivatives in accordance with ASC Topic 815, "Derivatives and Hedging". Derivative instruments are initially recorded at fair value on the grant date and re-valued at each reporting date, with changes in the fair value reported in the statements of operations. Derivative assets and liabilities are classified in the balance sheets as current or non-current based on whether or not net-cash settlement or conversion of the instrument could be required within 12 months of the balance sheet date. The Company has determined that both the Public Warrants and Private Placement Warrants are derivative instruments.
Recent Accounting Standards
In
Management does not believe that any recently issued, but not yet effective, accounting standards, if currently adopted, would have a material effect on our financial statements.
Off-Balance Sheet Arrangements; Commitments and Contractual Obligations
As of
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