References to "we", "us", "our" or the "Company" are to EG Acquisition Corp., except where the context requires otherwise. The following discussion should be read in conjunction with our unaudited condensed financial statements and related notes thereto included elsewhere in this report.

Cautionary Note Regarding Forward-Looking Statements

This Quarterly Report on Form 10-Q includes forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended (the "Exchange Act"). We have based these forward-looking statements on our current expectations and projections about future events. These forward-looking statements are subject to known and unknown risks, uncertainties and assumptions about us that may cause our actual results, levels of activity, performance or achievements to be materially different from any future results, levels of activity, performance or achievements expressed or implied by such forward-looking statements. In some cases, you can identify forward-looking statements by terminology such as "may," "should," "could," "would," "expect," "plan," "anticipate," "believe," "estimate," "continue," or the negative of such terms or other similar expressions. Factors that might cause or contribute to such a discrepancy include, but are not limited to, those described in our other Securities and Exchange Commission ("SEC") filings.

Overview

We are a blank check company incorporated as a Delaware corporation and formed for the purpose of effecting a merger, capital stock exchange, asset acquisition, stock purchase, reorganization or similar business combination with one or more businesses. We intend to effectuate our initial business combination using cash from the proceeds of the initial public offering and the private placement of the private placement warrants, the proceeds of the sale of our shares in connection with our initial business combination (pursuant to a forward purchase agreement), shares issued to the owners of the target, debt issued to bank or other lenders or the owners of the target, or a combination of the foregoing.

On May 28, 2021, we consummated the initial public offering of 22,500,000 units, at a price of $10.00 per unit, generating gross proceeds of $225,000,000. Simultaneously with the closing of the initial public offering, we consummated the sale of 4,333,333 private placement warrants, at a price of $1.50 per private placement warrant, in a private placement to the Sponsor, generating gross proceeds of $6,500,000.

Of the net proceeds from the IPO and associated private placements, $225,000,000 of cash was placed in the trust account. We cannot assure you that our plans to complete our Initial Business Combination will be successful.

Recent Developments

Equity Purchase Agreement

The Equity Purchase Agreement, dated October 17, 2022 (the "Effective Date"), was entered into by and among EG, LGM and, for certain limited purposes, Thomas James Segrave, Jr., Thomas James Segrave, Jr., as Custodian for Laura Grace Segrave, Thomas James Segrave, Jr., as Custodian for Madison Lee Segrave, Thomas James Segrave, Jr., as Custodian for Lillian May Segrave, and Thomas James Segrave, Jr., as Custodian for Thomas James Segrave III (collectively, the "LGM Existing Equityholders") and, for certain limited purposes, Sponsor, and, as the representative of the LGM Existing Equityholders, Thomas James Segrave, Jr. The Equity Purchase Agreement and the transactions contemplated thereby were unanimously approved by EG's board of directors and by the members and manager of LGM, respectively.

Business Combination

Pursuant to the Equity Purchase Agreement, following the closing of the Business Combination (the "Closing"), PubCo will be organized in an umbrella partnership-C corporation ("Up-C") structure, in which substantially all of the assets of the combined company will be held by LGM, and PubCo's only assets will be its equity interests in LGM. At the Closing:

• EG will amend its existing certificate of incorporation to: (a) change its


    name to "flyExclusive, Inc.", (b) convert all then-outstanding shares of
    class B common stock, par value $0.0001 per share, of EG (the "EG Class B
    Common Stock"), held by Sponsor (the "Sponsor Stock"), into shares of class A
    common stock, par value $0.0001 per share, of PubCo (such class A common
    stock, the "PubCo Class A Common Stock"), and (c) issue to the LGM Existing
    Equityholders class B common stock, par value $0.0001 per share, of PubCo
    (the "PubCo Class B 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 (the "A&R Operating Agreement") to: (a) restructure
    its capitalization to (i) issue to EG 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 EG Common Stock, any potential PIPE investment (the "PIPE
    Investment") and the conversion of the Bridge Notes (as described below))
    (the "PubCo Units"); and (ii) reclassify the existing LGM common units into
    LGM common units, and (b) appoint PubCo as the managing member of LGM;



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• As consideration for the PubCo Units, EG will contribute to LGM the amount


    held in the trust fund established for the benefit of its stockholders held
    in the trust account (the "Trust Account"), less the amount of cash required
    to fund the redemption of class A common stock, par value $0.0001 per share,
    of EG (the "EG Class A Common Stock") held by eligible stockholders who elect
    to have their shares redeemed as of the Closing, plus the aggregate proceeds
    from the PIPE Investment and the deemed contribution of the aggregate
    proceeds of the Bridge Notes (each defined below), less the deferred
    underwriting commission payable to BTIG, LLC (collectively, the "Contribution
    Amount"). 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 EG in connection with the Business Combination (the
    "Transaction Expenses") by wire transfer of immediately available funds on
    behalf of LGM and EG to those persons to whom such amounts are owed; and

• Without any action on the part of any holder of a warrant to purchase one


    whole share of EG Class A Common Stock (an "EG Warrant"), each EG 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.

Bridge Note

In connection with the execution of the Equity Purchase Agreement, on October 17, 2022, LGM entered into a Senior Subordinated Convertible Note with an investor and, for certain limited provisions thereof, EG, pursuant to which LGM borrowed an aggregate principal amount of $50,000,000 at a rate of 10% per annum. LGM has also agreed to enter into additional Senior Subordinated Convertible Notes with additional investors (collectively, the "Lenders") on the same terms for an aggregate principal amount of $35,000,000 (all Senior Subordinated Convertible Notes discussed in this paragraph collectively, the "Bridge Notes") by October 31, 2022, bringing the total principle amount of the Bridge Notes to $85,000,000 in the aggregate. Concurrently with the Closing, the Bridge Notes will be automatically exchanged for the number of PubCo Class A Common Stock equal to the quotient of (a) the total amount owed by LGM under the Bridge Notes divided by (b) $10.00 (subject to adjustment in certain instances, as described in the Bridge Notes). Unless otherwise consented to by the Lenders, the proceeds of the Bridge Notes are to be used primarily for the acquisition of additional aircraft and payment of expenses related thereto.

Results of Operations

We have neither engaged in any operations nor generated any revenues to date. The only activities through September 30, 2022 were organizational activities and those necessary to prepare for the initial public offering. We do not expect to generate any operating revenues until after the completion of our initial business combination. We will generate non-operating income in the form of interest income on marketable securities held in the trust account. We will incur expenses as a result of being a public company (for legal, financial reporting, accounting and auditing compliance), as well as for due diligence expenses in connection with searching for, and completing, a Business Combination. in connection with searching for, and completing, a Business Combination.

For the three months ended September 30, 2022, we had net loss of $269,493, which consisted of $1,330,764 in formation and operating costs and provision for income taxes of $202,808, offset by $248,483 in change in fair value of warrants, and $1,015,596 in interest earned on marketable securities held in the Trust Account.

For the nine months ended September 30, 2022, we had net income of $4,655,796, which consisted of $5,904,416 in change in fair value of warrants, and $1,342,092 in interest earned on marketable securities held in the Trust Account, offset by $2,379,223 in formation and operating costs and provision for income taxes of $211,489.

For the three months ended September 30, 2021, we had net income of $3,445,588, which consisted of $3,790,648 in change in fair value of warrants and $2,895 in interest earned on marketable securities held in the Trust Account, offset by $347,406 in formation and operating costs and $549 in warrant issuance costs.

For the period from January 28, 2021 (inception) through September 30, 2021, we had net income of $2,785,943, which consisted of $3,645,114 in change in fair value of warrants and $3,839 in interest earned on marketable securities held in the Trust Account, offset by $471,900 in formation and operating costs and $391,110 in warrant issuance costs.

Going Concern and Liquidity

As of September 30, 2022, we had approximately $54,894 in our operating bank account, and a working capital deficit of approximately $1,161,663.

Prior to the completion of the Initial Public Offering, our liquidity needs had been satisfied through a payment of certain offering costs of $25,000 from the Sponsor for the Founder Shares, and the loan under an unsecured promissory note from the Sponsor of $66,366.

We fully paid the note to the Sponsor on December 31, 2021. Subsequent to the consummation of the Initial Public Offering and Private Placement, our liquidity needs have been satisfied through the proceeds from the consummation of the Private Placement not held in the Trust Account.

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.



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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. These conditions raise substantial doubt about the Company's ability to continue as a going concern for a period of time within one year after the date that the financial statements are issued. If the estimate of the costs of identifying a target business, under taking in-depth due diligence and negotiating a Business Combination are less than the actual amount necessary to do so, the Company may have insufficient funds available to operate its business prior to its Business Combination. Moreover, the Company may need to obtain additional financing or draw on the Working Capital Loans (as defined below) either to complete a Business Combination or because it becomes obligated to redeem a significant number of the Public Shares upon consummation of the Business Combination, in which case the Company may issue additional securities or incur debt in connection with such Business Combination. Subject to compliance with applicable securities laws, the Company would only complete such financing simultaneously with the completion of the Business Combination.

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 May 28, 2023, the scheduled liquidation date of the Company if it does not complete a Business Combination prior to such date. Management intends to complete a Business Combination prior to mandatory liquidation date. The Company is within 6 months of its mandatory liquidation date as of the time of filing of this Quarterly Report on Form 10-Q. These condensed financial statements do not include any adjustments relating to the recovery of the recorded assets or the classification of the liabilities that might be necessary should the Company be unable to continue as a going concern.

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 condensed financial statements. The unaudited condensed financial statements do not include any adjustments that might result from the outcome of this uncertainty.

Critical Accounting Policies

The preparation of these unaudited condensed 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 unaudited condensed 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 SEC and its staff's guidance on redeemable equity instruments, which has been codified in ASC480-10-S99, redemption provisions not solely within the control of the Company require common stock subject to redemption to be classified outside of permanent equity. Therefore, all Class A common stock has been classified outside of permanent equity.

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 (Loss) 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 three months ended September 30, 2022 and 2021 and for the nine months ended September 30, 2022 and for the period from January 28, 2021 (inception) through September 30, 2021 because the warrants are contingently exercisable, and the contingencies have not yet been met. As a result, diluted net income (loss) per common share is the same as basic net income (loss) per common share for the periods.

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 condensed 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.



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Recent Accounting Standards

In August 2020, the FASB issued Accounting Standards Update ("ASU") 2020-06, Debt-Debt with Conversion and Other Options (Subtopic 470-20) and Derivatives and Hedging-Contracts in Entity's Own Equity (Subtopic 815-40) ("ASU 2020-06") to simplify accounting for certain financial instruments. ASU 2020-06 eliminates the current models that require separation of beneficial conversion and cash conversion features from convertible instruments and simplifies the derivative scope exception guidance pertaining to equity classification of contracts in an entity's own equity. The new standard also introduces additional disclosures for convertible debt and freestanding instruments that are indexed to and settled in an entity's own equity. ASU 2020-06 amends the diluted earnings per share guidance, including the requirement to use the if-converted method for all convertible instruments. As a smaller reporting company, ASU 2020-06 is effective January 1, 2024 for fiscal years beginning after December 15, 2023 and should be applied on a full or modified retrospective basis, with early adoption permitted beginning on January 1, 2021. The Company is currently assessing the impact, if any, that ASU 2020-06 would have on its financial position, results of operations or cash flows.

Management does not believe that any other recently issued, but not yet effective, accounting standards, if currently adopted, would have a material effect on our condensed financial statements.

Off-Balance Sheet Arrangements

As of September 30, 2022, we did not have any off-balance sheet arrangements as defined in Item 303(a)(4)(ii) of Regulation S-K.

Commitments and Contractual Obligations

We do not have any long-term debt, capital lease obligations, operating lease obligations or long-term liabilities, other than an agreement to pay the Sponsor a total of $10,000 per month for office space, secretarial and administrative. We began incurring these fees on May 25, 2021 and will continue to incur these fees monthly until the earlier of the completion of the business combination and our liquidation.

The underwriter will be entitled to a deferred underwriting discount of 3.5% of the gross proceeds of the IPO held in the Trust Account, or $7,875,000, upon the completion of the Company's initial Business Combination subject to the terms of the underwriting agreement.

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