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OFFON

EG ACQUISITION CORP.

(EGGF)
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EG ACQUISITION CORP. Management's Discussion and Analysis of Financial Condition and Results of Operations. (form 10-Q)

11/22/2021 | 05:16pm EST
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 have not selected any specific business combination
target and, as of September 30, 2021, we have not, nor has anyone on our behalf,
initiated any substantive discussions, directly or indirectly, with any business
combination target. 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.
Results of Operations
We have neither engaged in any operations nor generated any revenues to date.
The only activities through September 30, 2021 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.
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.
Liquidity and Capital Resources
As of September 30, 2021, we had approximately $0.5 million in its operating
bank account, and working capital of approximately $0.8 million.
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.

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We fully paid the note to the Sponsor on September 30, 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.
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.
Based on the foregoing, management believes that we will have sufficient working
capital to meet our needs through the earlier of the consummation of a Business
Combination or one year from this filing. Over this time period, we will be
using these funds for paying existing accounts payable, identifying and
evaluating prospective Initial Business Combination candidates, performing due
diligence on prospective target businesses, paying for travel expenditures,
selecting the target business to merge with or acquire, and structuring,
negotiating and consummating the Business Combination.
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 ASC
480-10-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 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, 2021 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 per common share is the same as basic net
income 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 balance sheet 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
Management does not believe that any 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; Commitments and Contractual Obligations
As of September 30, 2021, we did not have any
off-balance
sheet arrangements as defined in Item 303(a)(4)(ii) of
Regulation S-K
and did not have any commitments or contractual obligations.

                                     - 20 -

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