flyx-20240331

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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q


x			QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended March 31, 2024


o			TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from ____ to ____

Commission file number 001-40444

flyExclusive, Inc.

(Exact name of registrant as specified in its charter)


Delaware									86-1740840
(State or other jurisdiction of incorporation or organization)									(I.R.S. Employer Identification No.)

2860 Jetport Road Kinston, NC									28504
(Address of Principal Executive Offices)									(Zip Code)

(252) 208-7715

(Registrant's telephone number, including area code)

Securities registered pursuant to Section 12(b) of the Act:

Title of each class

Trading

Symbol(s)

Name of each exchange

on which registered

Class A Common Stock

FLYX

NYSE American LLC

Redeemable warrants, each whole warrant

exercisable for one share of Class A Common

Stock at an exercise price of $11.50 per share

FLYX WS

NYSE American LLC

Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports); and (2) has been subject to such filing requirements for the past 90 days. Yes x No o

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this

chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).

Yes x No o

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and "emerging growth company" in Rule 12b-2 of the Exchange Act. (Check one):


Large accelerated filer	o	Accelerated filer	o
Non-accelerated filer	x	Smaller reporting company	x
		Emerging growth company	x

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. o

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act). Yes o No x

The Registrant had outstanding 17,899,586 shares of Class A Common Shares, par value $0.0001 per share, and 59,930,000 shares of Class B Common Shares, par value $0.0001 per share as of June 30, 2024.

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TABLE OF CONTENTS


			Page
PART I. FINANCIAL INFORMATION			4
Item 1. Financial Statements			4
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations			46
Item 3. Quantitative and Qualitative Disclosures About Market Risk			62
Item 4. Controls and Procedures			62
PART II. OTHER INFORMATION			63
Item 1. Legal Proceedings			63
Item 1A. Risk Factors			63
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds			63
Item 3. Defaults Upon Senior Securities			63
Item 4. Mine Safety Disclosures			63
Item 5. Other Information			63
Item 6. Exhibits			63
SIGNATURES			65

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EXPLANATORY NOTES

Unless the context otherwise requires, all references to “flyExclusive,” the “Company,” “PubCo,” “we,” “us” and “our” in this Quarterly Report on Form 10-Q (this “Report”) refer to flyExclusive, Inc., and where appropriate, its consolidated subsidiaries, Exclusive Jets, LLC, Jetstream Aviation, LLC and LGM Enterprises, LLC.

All trade names, trademarks and service marks appearing in this Report are the property of their respective owners. We have assumed that the reader understands that all such terms are source-indicating. Accordingly, such terms, when first mentioned in this Report, appear with the trade name, trademark or service mark notice and then throughout the remainder of this report without trade name, trademark or service mark notices for convenience only and should not be construed as being used in a descriptive or generic sense.

CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS

This Quarterly Report on Form 10-Q contains “forward-looking statements.” When contained in this Report, the words “believe,” “project,” “expect,” “anticipate,” “estimate,” “intend,” “strategy,” “future,” “opportunity,” “plan,” “may,” “should,” “will,” “would,” “will be,” “will continue,” “will likely result,” and similar expressions and variations of these words or similar expressions (or the negative versions of such words or expressions) are intended to identify forward-looking statements. These forward-looking statements are not guarantees of future performance, conditions or results, and involve a number of known and unknown risks, uncertainties, assumptions and other important factors, many of which are outside our management’s control, that could cause actual results or outcomes to differ materially from those discussed in the forward-looking statements. These forward-looking statements are based on information available as of the date and current expectations, forecasts and assumptions, and involve a number of judgments, risks and uncertainties. Accordingly, forward-looking statements should not be relied upon as representing our views as of any subsequent date, and we do not undertake any obligation to update forward-looking statements to reflect events or circumstances after the date they were made, whether as a result of new information, future events or otherwise, except as may be required under applicable securities laws.

Therefore, actual outcomes and results may, and are likely to, differ materially from what is expressed or forecasted in the forward-looking statements due to numerous factors discussed from time to time in this Report as well as the risks described under Item 1A - “Risk Factors,” in our Annual Report on Form 10-K for the year ended December 31, 2023 and in other documents which we file with the Securities and Exchange Commission (“SEC”). In addition, such statements could be affected by risks and uncertainties related to:

•the ability to implement business plans, forecasts, and other expectations and identify and realize additional opportunities;

•our results of operations and financial condition;

•risks that the Business Combination (as defined herein) disrupts our current plans and operations and potential difficulties in employee retention as a result of the Business Combination;

•costs related to being a public company;

•the ability to recognize the anticipated benefits of the Business Combination;

•limited liquidity and trading of our securities;

•the outcome of any legal proceedings, including any legal proceedings related to the Equity Purchase Agreement or the Business Combination;

•the ability to maintain the listing of our securities on the NYSE American LLC (“NYSE American”) or any other national securities exchange;

•that the price of our securities may be volatile due to a variety of factors, including changes in the competitive and highly regulated industry in which we operate, variations in operating performance across competitors, changes in laws and regulations affecting our business and any changes in our capital structure;

•the risks associated with our indebtedness including the Senior Note (as defined herein) and its potential impact on our business and financial condition;

•the risk of downturns in the aviation industry, including due to increases in fuel costs in light of the war in Ukraine, the Israel and Hamas conflict in Gaza and other global political and economic issues;

•a changing regulatory landscape in the highly competitive aviation industry; and

•risks associated with the overall economy, including any future increases in interest rates and the potential for recession.

Should one or more of these risks or uncertainties materialize, or should any of the underlying assumptions prove incorrect, actual results may vary in material respects from those expressed or implied by these forward- looking statements. Forward-looking statements speak only as of the date they are made. Readers are cautioned not to put undue

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reliance on forward-looking statements, and we assume no obligation and do not intend to update or revise these forward-looking statements, whether as a result of new information, future events, or otherwise.

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PART I. FINANCIAL INFORMATION

Item 1. Financial Statements


Index to Financial Statements of flyExclusive, Inc			Page
Condensed Consolidated Balance Sheets (Unaudited)			5
Condensed Consolidated Statements of Operations and Comprehensive Loss (Unaudited)			7
Condensed Consolidated Statements of Shareholders' Equity (Deficit) / Members' Equity (Deficit) and Temporary Equity (Unaudited)			8
Condensed Consolidated Statements of Cash Flows (Unaudited)			10
Notes to Condensed Consolidated Financial Statements (Unaudited)			12
1. Organization and Operations			12
2. Summary of Significant Accounting Policies			13
3. Earnings Per Share			17
4. Merger			18
5. Fair Value Measurements			21
6. Variable Interest Entities			22
7. Revenue			23
8. Other Receivables			24
9. Parts and Supplies Inventory			24
10. Prepaid Expenses and Other Current Assets			25
11. Investments in Securities			25
12. Property and Equipment, Net			26
13. Intangible Assets			26
14. Other Current Liabilities			27
15. Other Non-Current Liabilities			28
16. Debt			28
17. Leases			33
18. Warrant Liabilities			34
19. Employee Benefits			35
20. Stock-based Compensation			36
21. Income Taxes			36
22. Related Party Transactions			37
23. Commitments and Contingencies			39
24. Stockholders’ Equity / Members' Deficit and Noncontrolling Interests			40
25. Subsequent Events			44

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Condensed Consolidated Balance Sheets (Unaudited)


(in thousands, except share amounts)	March 31, 2024		December 31, 2023
ASSETS
Current assets
Cash and cash equivalents	$	5,349	$	11,626
Accounts receivable, net	600		849
Other receivables	5,140		4,460
Due from related parties, current portion	1,980		1,911
Notes receivable, current portion	153		301
Parts and supplies inventory	5,389		5,142
Investments in securities	71,418		71,230
Prepaid engine overhauls, current portion	13,086		14,522
Aircraft held for sale, current portion	13,527		—
Prepaid expenses and other current assets	8,558		6,752
Total current assets	125,200		116,793
Notes receivable, non-current portion, net	6,187		21,177
Property and equipment, net	272,242		253,976
Aircraft held for sale, non-current portion	9,729		—
Operating lease right-of-use assets	73,727		84,649
Intangible assets, net	2,105		2,234
Prepaid engine overhauls, non-current portion	34,176		41,531
Other non-current assets	701		670
Total assets	$	524,067	$	521,030

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Condensed Consolidated Balance Sheets (Unaudited) (continued)


(in thousands, except share amounts)	March 31, 2024		December 31, 2023
LIABILITIES AND STOCKHOLDERS’ (DEFICIT) / MEMBERS' EQUITY
Current liabilities
Accounts payable	$	32,082	$	30,172
Excise tax payable	1,032		1,032
Long-term notes payable, current portion	24,852		26,471
Deferred revenue, current portion	82,329		83,914
Operating lease liabilities, current portion	16,288		17,907
Other current liabilities	23,343		28,705
Short-term notes payable	6,293		14,396
Short-term notes payable - related party	21,527		18,939
Total current liabilities	207,746		221,536
Long-term notes payable, non-current portion	184,519		166,818
Long-term notes payable - related party, non-current portion	17,560		—
Operating lease liabilities, non-current portion	58,525		68,100
Deferred revenue, non-current portion	10,945		10,026

Warrant liabilities	4,362		2,508
Other non-current liabilities	18,921		16,712
Total liabilities	$	502,578	$	485,700
Commitments and contingencies (Note 23)
Temporary equity
Redeemable noncontrolling interest	135,140		(35,525)
Series A preferred stock, par value $0.0001; 25,000,000 authorized and 25,000 shares authorized issued and outstanding, respectively	20,646		—
Stockholders' equity

Accumulated other comprehensive loss	(238)		(69)
Class A common stock; par value $0.0001; 200,000,000 and 200,000,000 shares authorized; 17,892,021 and 16,647,529 shares issued and outstanding, respectively	2		2
Class B common stock; par value $0.0001; 100,000,000 and 100,000,000 shares authorized; 59,930,000 and 59,930,000 shares issued and outstanding, respectively	6		6
Additional paid-in capital	—		126,978
Accumulated deficit	(149,279)		(80,456)
Total flyExclusive stockholders’ (deficit) / equity	(149,509)		46,461
Noncontrolling interests	15,212		24,394
Total stockholders’ (deficit) / equity	(134,297)		70,855
Total liabilities, temporary equity and stockholders' / members' equity	$	524,067	$	521,030

The accompanying notes are an integral part of these condensed consolidated financial statements (unaudited).

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Condensed Consolidated Statements of Operations and Comprehensive Loss (Unaudited)


	Three Months Ended March 31,
(in thousands, except share amounts)		2024		2023
Revenue		$	79,972	$	77,032
Costs and expenses
Cost of revenue		74,234		65,190
Selling, general and administrative		25,183		15,931
Depreciation and amortization		6,491		6,415
Loss (gain) on aircraft held for sale		1,489		(2,103)
Total costs and expenses		107,397		85,433
Loss from operations		(27,425)		(8,401)
Other income (expense)
Interest income		1,278		1,094
Interest expense		(4,655)		(4,615)

Gain on lease termination		132		29
Change in fair value of derivative liability		—		616
Change in fair value of warrant liabilities		(2,780)		—

Other income (expense)		460		(429)
Total other expense, net		(5,565)		(3,305)
Loss before income taxes		(32,990)		(11,706)
Income tax benefit		—		—
Net loss		(32,990)		(11,706)
Less: Net loss attributable to redeemable noncontrolling interests		(21,699)		—
Less: Net loss attributable to noncontrolling interests		(5,450)		(2,537)
Net loss attributable to flyExclusive, Inc.		(5,841)		(9,169)
Add: Series A Preferred Dividends		(285)		—
Net loss attributable to common stockholders		$	(6,126)	$	(9,169)
Basic and Diluted Earnings Per Share*		$	(0.35)
Weighted Average Common Shares Outstanding (Basic & Diluted)*		17,305,720

Other comprehensive loss
Net loss attributable to flyExclusive, Inc.		$	(5,841)	$	(9,169)
Unrealized gains (losses) on available-for-sale debt securities		(169)		90
Comprehensive loss attributable to flyExclusive, Inc.		$	(6,010)	$	(9,079)

The accompanying notes are an integral part of these condensed consolidated financial statements (unaudited).

*Basic and diluted earnings per share has not been presented for the three months ended March 31, 2023 in the condensed consolidated statements of operations and comprehensive loss (unaudited). As a result of the Merger (as defined in Note 4 "Merger"), the Company's capital structure was significantly altered. The Company determined that presenting earnings per share for periods prior to the Merger would not result in values meaningful to the users of the condensed consolidated financial statements (unaudited). See Earnings per Share in Note 2 "Summary of Significant Accounting Policies" and Note 3 "Earnings Per Share" for further discussion.

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Condensed Consolidated Statements of Shareholders' Equity (Deficit) / Members' Equity (Deficit) and Temporary Equity (Unaudited)


	Temporary Equity				Permanent Equity
(in thousands, except share amounts)	Redeemable noncontrolling interest		Series A Preferred stock		Class A Common stock			Class B Common stock			Additional paid-in capital		Accumulated other comprehensive loss		Accumulated deficit		Total flyExclusive stockholders’ equity (deficit)		Noncontrolling Interests		Total stockholders’ equity (deficit) / members' equity
					Shares	Amount		Shares	Amount







Balances at December 31, 2023	$	(35,525)	$	—	16,647,529	$	2	59,930,000	$	6	$	126,978	$	(69)	$	(80,456)	$	46,461	$	24,394	$	70,855
Contributions from non controlling interests	—		—		—	—		—	—		—		—		—		—		157		157
Distributions to non controlling interests	—		—		—	—		—	—		—		—		—		—		(2,455)		(2,455)


Acquisitions of non controlling interests	—		—		—	—		—	—		(1,984)		—		—		(1,984)		(1,434)		(3,418)
Unrealized gains on available-for-sale securities	—		—		—	—		—	—		—		(169)		—		(169)		—		(169)
Exchange of warrants for Class A common stock	—		—		277,447	—		—	—		371		—		—		371		—		371
Issuance of Class A common stock upon cashless exercise of warrants	—		—		967,045	—			—		4,302		—		—		4,302		—		4,302
Issuance of Series A Preferred stock	—		20,361		—	—		—	—		—		—		—		—		—		—
Accretion of Redeemable non controlling interest to redemption amount	192,364		—		—	—		—	—		(129,667)		—		(62,697)		(192,364)		—		(192,364)
Dividends payable on Series A Preferred temporary equity	—		188		—	—		—	—		—		—		(188)		(188)		—		(188)
Amortization of discount on Series A Preferred temporary equity	—		97			—			—		—		—		(97)		(97)		—		(97)
Net Income (loss)	(21,699)		—		—	—		—	—		—		—		(5,841)		(5,841)		(5,450)		(11,291)
Balances at March 31, 2024	$	135,140	$	20,646	17,892,021	$	2	59,930,000	$	6	$	—	$	(238)	$	(149,279)	$	(149,509)	$	15,212	$	(134,297)

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Condensed Consolidated Statements of Shareholders' Equity (Deficit) / Members' Equity (Deficit) and Temporary Equity (Unaudited) (continued)


		Permanent Equity
(in thousands)	LGM Enterprises, LLC members' deficit	Accumulated other comprehensive loss		Total flyExclusive stockholders’ equity		Noncontrolling Interests	Total stockholders’ equity / members' equity








Balances at December 31, 2022		$	(4,641)	$	(476)		$	(5,117)	$	52,534	$	47,417
Contributions from members		115		—			115		7,708		7,823
Distributions to members		(21,619)		—			(21,619)		(3,073)		(24,692)


Other comprehensive income		—		90			90		—		90
Net Income (loss)*		(9,169)		—			(9,169)		(2,537)		(11,706)
Balances at March 31, 2023		$	(35,314)	$	(386)		$	(35,700)	$	54,632	$	18,932

*The Merger occurred on December 27, 2023. During the pre-Merger period, net loss was attributable to LGM Enterprises, LLC and its noncontrolling interests.

The accompanying notes are an integral part of these condensed consolidated financial statements (unaudited).

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Condensed Consolidated Statements of Cash Flows (Unaudited)


	Three Months Ended March 31,
(in thousands)	2024		2023
Cash flows from operating activities:
Net loss	$	(32,990)	$	(11,706)
Adjustments to reconcile net loss to net cash from operating activities:
Depreciation and amortization	6,491		6,415
Amortization of contract costs	275		155
Non-cash interest income	(768)		(937)
Non-cash interest expense	324		2,461
Non-cash rent expense	5,599		3,532
Gain on lease termination	(132)		(29)
Loss (Gain) on aircraft held for sale	1,489		(2,103)
Change in fair value of derivative liability	—		(616)
Provision for credit losses	1,756		8
Realized losses on investment securities	46		119
Change in fair value of private placement warrant liability	910		—
Change in fair value of penny warrant liability	(2,332)		—
Change in fair value of public warrant liability	4,202		—



Changes in operating assets and liabilities, net of effects from acquisitions:
Accounts receivable	249		2,286
Accounts receivable - related parties	(69)		(1,802)

Other receivables	(680)		1,081
Parts and supplies inventory	(247)		(1,589)
Prepaid expenses and other current assets	(2,081)		592
Operating lease liabilities	(5,738)		(3,082)
Other assets	(31)		(40)
Accounts payable	1,910		(4,647)
Other current liabilities	(5,690)		2,256
Accounts payable - related parties	—		(72)
Deferred revenue	(666)		3,401

Other non-current liabilities	2,208		1,554
Net cash flows from operating activities	(25,965)		(2,763)
Cash flows from investing activities:
Capitalized development costs	(165)		(123)
Purchases of property and equipment	(38,531)		(20,733)
Proceeds from sales of property and equipment	—		16,825
Purchases of engine overhauls	(2,705)		(3,123)
Purchases of investments	(28,962)		(26,323)
Proceeds from sale of investments	29,310		26,739
Notes receivable paydowns	10,986		—

Net cash flows from investing activities	(30,067)		(6,738)

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Condensed Consolidated Statements of Cash Flows (Unaudited) (continued)


	Three Months Ended March 31,
(in thousands)	2024		2023
Cash flows from financing activities:

Proceeds from issuance of debt	39,092		44,447
Repayment of debt	(10,270)		(18,380)

Payment of deferred financing costs	(1,019)		(427)


Proceeds from notes receivable noncontrolling interest	—		34

Cash contributions from members	—		115
Cash distributions to members	—		(21,619)
Cash contributions - noncontrolling interests	157		7,708
Cash distributions - noncontrolling interests	(2,455)		(3,073)
Proceeds from preferred temporary equity issuance, net of issuance costs	24,250		—
Net cash flows from financing activities	49,755		8,805
Net decrease in cash and cash equivalents	(6,277)		(696)
Cash and cash equivalents at beginning of period	11,626		23,179
Cash and cash equivalents at end of period	$	5,349	$	22,483
Supplemental disclosure of cash flow information:


Non-cash investing and financing activities:








Exchange of public warrants for flyExclusive Class A common stock	$	371	$	—

Change in redemption value of redeemable noncontrolling interest	$	192,364	$	—








flyExclusive Class A common stock issued on cashless exercise of public warrants	$	4,302	$	—
Issuance of penny warrants in connection with Series A Preferred temporary equity issuance	$	3,746	$	—
Increase in dividends payable and accreted discount on Series A Preferred Temporary Equity	$	285	$	—
Transfers from prepaid engine overhaul to property and equipment	$	5,346	$	701
Change in purchases of property and equipment in accounts payable	$	—	$	13
Unrealized change in fair value of available-for-sale securities	$	169	$	(90)



Right of use asset impact for new leases	$	3,571	$	(10,584)
Non-cash exchanges of non-controlling ownership interests	$	3,692	$	—

The accompanying notes are an integral part of these condensed consolidated financial statements (unaudited).

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Notes to Condensed Consolidated Financial Statements (Unaudited)

(Amounts in thousands, except per share amounts)

Notes to Condensed Consolidated Financial Statements (Unaudited)

1. Organization and Operations

Nature of the Business

flyExclusive, Inc. is a holding company that has no material assets other than its ownership in LGM Enterprises, LLC ("LGM"), and flyExclusive, Inc. operates and controls all of the businesses and operations of LGM and LGM's subsidiaries. flyExclusive Inc. and its predecessor for accounting purposes, LGM, are collectively referred to herein as (“flyExclusive” or the “Company”). flyExclusive is a premier owner, operator of jet aircraft and aircraft sales, with a focus on private jet charter. The Company's businesses provide separate offerings such as wholesale and retail ad hoc flights, a jet club program, partnership program, fractional program, and other services as well.

The Company provides private jet charter services primarily in North America. On February 28, 2020, the Company acquired Sky Night, LLC (“Sky Night”), in order to develop its international presence. As part of its plan to become a full-service private aviation company, in 2021, the Company launched its maintenance, repair, and overhaul operations (“MRO”), offering maintenance, interior and exterior refurbishment to third parties in addition to maintaining its own fleet.

On December 27, 2023 (the "Closing Date"), EG Acquisition Corp., a Delaware corporation ("EGA"), and LGM, a North Carolina limited liability company, consummated a business combination (the "Merger", see Note 4 "Merger") pursuant to the equity purchase agreement dated October 17, 2022 and subsequent amendment to the equity purchase agreement dated April 21, 2023 (collectively, the "Equity Purchase Agreement" or "EPA"). In connection with the closing of the Merger, EGA changed its name to flyExclusive, Inc. The common stock of flyExclusive ("flyExclusive Common Stock" or the "Company's Common Stock") and the public warrants of flyExclusive (the “Public Warrants”) commenced trading on The NYSE American LLC under the symbol "FLYX" and "FLYX WS", respectively, on December 28, 2023.

Basis of Presentation

The accompanying condensed consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”) and with the rules and regulations of the United States Securities and Exchange Commission (the “SEC”).

In the opinion of management, the condensed consolidated financial statements reflect all adjustments, consisting of normal recurring accruals, which are necessary for the fair presentation of the financial condition, and results of operations for the interim periods presented.

The accompanying condensed consolidated financial statements were prepared in accordance with the requirements for interim financial information. Accordingly, these interim financial statements have not been audited and exclude certain disclosures required for annual financial statements. Also, the operating results presented for interim periods are not necessarily indicative of the results that may be expected for any other interim period or for the entire year. These interim financial statements should be read in conjunction with the audited consolidated financial statements of the Company included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2023.

Principles of Consolidation

The condensed consolidated financial statements include the accounts of flyExclusive, its wholly-owned subsidiaries, all majority owned subsidiaries where the ownership is more than 50% and the accounts of variable interest entities (“VIE”) for which flyExclusive or one of its subsidiaries is the primary beneficiary, regardless of the ownership percentage.

All significant intercompany transactions and balances have been eliminated in consolidation. Where the Company’s ownership interest is less than 100%, the non-redeemable noncontrolling ownership interests held by third parties in the financial position and operating results of the Company’s subsidiaries and/or consolidated VIEs are reported as noncontrolling interest in the condensed consolidated balance sheets (unaudited) within stockholders' / members' equity. Noncontrolling ownership interests that can be redeemed for cash whereby redemption is not within the sole control of the Company are classified as temporary equity in the condensed consolidated balance sheets (unaudited) in accordance with Accounting Standards Codification ("ASC") 480-10-S99-3(A)(2).

Liquidity and Going Concern

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Notes to Condensed Consolidated Financial Statements (Unaudited)

Within the three months ended March 31, 2024 and 2023, the Company incurred net losses and has operated with a working capital deficit. To date, the Company has financed its operations primarily through a combination of operating cash flows, the sale of equity securities and convertible debt, proceeds from the Merger (which was accounted for as a reverse recapitalization), and borrowings under loan facilities. At March 31, 2024, the Company had an accumulated deficit of $149,279 and a working capital deficit, as defined by a shortfall of current assets as compared with current liabilities of $82,546 and $104,743 at March 31, 2024 and December 31, 2023, respectively. The Company’s net losses were $32,990 and $11,706 for the three months ended March 31, 2024 and 2023, respectively. Net cash flows used by operating activities were $25,965 and $2,763 for the three months ended March 31, 2024 and 2023, respectively. A significant component of the Company’s operating losses and working capital deficit resulted from increased general and administrative costs associated with becoming a public company. The Company expects to incur operating losses in the near term as the Company advances its fleet modernization and associated cost savings initiatives.

As of March 31, 2024, the Company had cash and cash equivalents of $5,349.

The Company believes its cash and cash equivalents on hand, operating cash flows, proceeds from possible financings and the fractional program will be sufficient to fund operations, including capital expenditure requirements, for at least 12 months from the issuance date of these financial statements. However, the Company might need additional capital to fund growth plans or as circumstances change, which it could obtain through equity issuances, refinancing existing debt or new borrowings. Adequate capital may not be available to the Company when needed or on acceptable terms. If the Company is unable to raise capital, it could be forced to delay, reduce, suspend or cease its working capital requirements, capital expenditures and business development efforts, which would have a negative impact on its business, prospects, operating results and financial condition.

2. Summary of Significant Accounting Policies

Reclassification

Certain amounts presented in the Company’s previously issued financial statements have been reclassified to conform to the current period presentation. In the condensed consolidated financial statements (unaudited) the Company has made a reclassification of "Gain on sale of property and equipment" to a component of "Loss from operations," which was previously categorized within "Other income (Expenses)." This reclassification was made to better align with the current period’s financial statement presentation. The net loss for the three-month period ended March 31, 2023, remains unchanged from the previously issued financial statements. This reclassification had no impact on the Company's financial position, net loss, or cash flows for any period presented.

Use of Estimates

The preparation of condensed consolidated financial statements (unaudited) in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and related disclosures of contingent assets and liabilities as of the date of the condensed consolidated financial statements (unaudited) as well as the reported amounts of revenues and expenses during the reporting period. Estimates are based on several factors including the facts and circumstances available at the time the estimates are made, historical experience, risk of loss, general economic conditions and trends and the assessment of the probable future outcome. Subjective and significant estimates include, but are not limited to, determinations of the useful lives and expected future cash flows of long-lived assets, including intangibles, estimates of allowances for uncollectible accounts, determination of impairment and fair value estimates associated with asset acquisitions. Actual results could differ from those estimates. Estimates and assumptions are reviewed periodically and the effects of changes, if any, are reflected in the condensed consolidated statements of operations and comprehensive loss (unaudited) in the period that they are determined.

Public Warrants, Private Warrants and Penny Warrants

As of March 31, 2024 the Company has the following warrants issued, (i) the Public Warrants initially included in the EGA units issued in EGA's initial public offering, (ii) the warrants of EGA held by EG Sponsor LLC (the “EGA Sponsor”) that were issued to the EGA Sponsor at the closing of EGA's initial public offering (the "Private Placement Warrants,"), and (iii) warrants issued on March 4, 2024 in connection with the Series A Preferred Stock offering as described within Note 24 "Stockholders’ Equity / Members' Deficit and Noncontrolling Interests" (the "Penny Warrants" and together with the Public Warrants and Private Placement Warrants, the "Warrants").

The Company determines the accounting classification of the Warrants as either liability or equity by first assessing whether the Warrants meet liability classification in accordance with ASC 480, Distinguishing Liabilities from Equity

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Notes to Condensed Consolidated Financial Statements (Unaudited) (continued)

(“ASC 480”). Under ASC 480, a financial instrument that embodies an unconditional obligation, or a financial instrument other than an outstanding share that embodies a conditional obligation, that the issuer must or may settle by issuing a variable number of its equity shares must be classified as a liability (or an asset in some circumstances) if, at inception, the monetary value of the obligation is based solely or predominantly on any one of the following: (a) a fixed monetary amount known at inception; (b) variations in something other than the fair value of the issuer’s equity shares; or (c) variations inversely related to changes in the fair value of the issuer’s equity shares. The Company determined that the Warrants should not be classified as liabilities under ASC 480.

If financial instruments, such as the Warrants, are not required to be classified as liabilities under ASC 480, the Company assesses whether such instruments are indexed to the Company's own stock under ASC 815-40. In order for an instrument to be considered indexed to an entity's own stock, its settlement amount must always equal the difference between the following: (a) the fair value of a fixed number of the Company's equity shares, and (b) a fixed monetary amount or a fixed amount of a debt instrument issued by the Company. As there are scenarios where the settlement amount would not equal the difference between the fair value of a fixed number of shares and a fixed monetary amount (or a fixed amount of a debt instrument), the Company determined that the Warrants were not indexed to the Company's own stock and therefore that they must be classified as liabilities. The Company also determined that the Warrants met all criteria to meet the definition of a derivative under ASC 815-10-15-83.

The Company recorded the Warrants as liabilities on the condensed consolidated balance sheets (unaudited) at fair value, with subsequent changes in the fair value recognized in the condensed consolidated statements of operations and comprehensive loss (unaudited) at each reporting date.

Fair Value Measurement

Certain assets and liabilities are carried at fair value under U.S. GAAP. Fair value is defined as the exchange price that would be received for an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date. Valuation techniques used to measure fair value must maximize the use of observable inputs and minimize the use of unobservable inputs. Financial assets and liabilities carried at fair value are to be classified and disclosed in one of the following three levels of the fair value hierarchy, of which the first two are considered observable and the last is considered unobservable:

Level 1 — Quoted prices in active markets for identical assets or liabilities.

Level 2— Observable inputs (other than Level 1 quoted prices), such as quoted prices in active markets for similar assets or liabilities, quoted prices in markets that are not active for identical or similar assets or liabilities, or other inputs that are observable or can be corroborated by observable market data.

Level 3 — Unobservable inputs that are supported by little or no market activity that are significant to determining the fair value of the assets or liabilities, including pricing models, discounted cash flow methodologies and similar techniques.

The Company’s cash equivalents and investments in securities are carried at fair value in Level 1 or Level 2, determined according to the fair value hierarchy described above (see Note 5 "Fair Value Measurements").

The Company’s Bridge Notes (as defined in Note 16 "Debt") contained an embedded derivative feature that was required to be bifurcated and remeasured to fair value at each reporting period based on significant inputs not observable in the market, and was classified as a Level 3 measurement according to the fair value hierarchy described above. The carrying amount of the Company’s Bridge Notes approximated its fair value as the interest rates of the Bridge Notes are based on prevailing market rates. The Bridge Notes were converted into shares of the Company's Class A Common Stock on the Closing Date causing the derivative liability on the condensed consolidated balance sheets (unaudited) to be removed as of and for the year ended December 31, 2023.

The Company’s Penny Warrants (as defined in Note 18 "Warrant Liabilities") issued alongside the Series A Preferred Stock (as defined in Note 24 "Stockholders’ Equity / Members' Deficit and Noncontrolling Interests") represent a liability which is remeasured to fair value at each reporting period based on significant inputs not observable in the market. The fair value of the Penny Warrants is classified as a Level 3 measurement according to the fair value hierarchy described above due to the use of an unobservable inputs for volatility under the valuation method as described within Note 5 "Fair Value Measurements".

The closing price of the Public Warrants is used as the fair value of the Public Warrants and Private Warrants as of each relevant reporting date. The fair value of the Public Warrants is classified as a Level 1 fair value measurement due to the use of an observable market quote in an active market. The fair value of the Private Warrants is classified as a Level 2

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Notes to Condensed Consolidated Financial Statements (Unaudited) (continued)

fair value measurement due to the use of an observable market quote for the Public Warrants, which are considered to be a similar asset in an active market.

Receivables, Net of Allowance for Credit Losses

Accounts receivables are recorded at the invoiced or earned amount billed to the customers and are reported as net of an allowance for credit losses. Prior to adopting Accounting Standards Codification Topic 326, Financial Instruments – Credit Losses (“ASC Topic 326”), as set forth in “Recently Adopted Accounting Pronouncements” below, the Company applied an incurred loss estimate to calculate the allowance for doubtful accounts. Under ASC Topic 326, the Company maintains an allowance for credit losses and considers the level of past-due accounts based on the contractual terms of the receivables, historical write offs and existing economic conditions, as well as its relationships with, and the economic status of individual accounts to calculate the allowance for credit losses. The estimated credit losses charged to the allowance is recorded as "Selling, general and administrative" in the condensed consolidated statements of operations and comprehensive loss (unaudited). Accounts receivables are written off when deemed uncollectible based on individual credit evaluations and specific circumstances. The Company had an allowance for credit losses on accounts receivable of $80 as of both March 31, 2024 and December 31, 2023.

Notes receivables are recorded at amortized cost, and are reported as net of an allowance for credit losses. Under ASC Topic 326, the Company maintains an allowance for credit losses based on the difference between the fair value of the collateral associated with the note, less costs to sell the asset, and the amortized cost basis of the note. The Company had an allowance for credit losses on notes receivable of $827 and $2,558 as of March 31, 2024 and December 31, 2023, respectively.

Noncontrolling interest

Noncontrolling interests represent ownership interests attributable to third parties in certain consolidated subsidiaries and VIEs. Noncontrolling interests are presented as a separate component of equity on the condensed consolidated balance sheets (unaudited), condensed consolidated statements of operations and comprehensive loss (unaudited), and condensed consolidated statements of shareholders' equity (deficit) / members' equity (deficit) and temporary equity (unaudited) attributed to controlling and noncontrolling interests.

Redeemable Noncontrolling Interest

In connection with the Merger, see Note 4 "Merger" the former holders (the "Existing Equityholders") of units of ownership interest in LGM (the "LGM Common Units") retained post-Merger ownership interests in LGM as noncontrolling interests. Pursuant to the Amendment and Restated Operating Agreement, dated December 27, 2023 (the "Operating Agreement"), upon the first anniversary of the Closing Date, the Existing Equityholders may redeem all or a portion of their LGM Common Units for either (a) shares of the Company's Class A common stock (“flyExclusive Class A Common Stock” or the “Class A Common Stock”) or b) an equivalent amount of cash as determined pursuant to the Operating Agreement.

While the Company determines whether redemption settlement is for cash or shares, settlement is not considered within the sole control of the Company as the holders of the Company's Class B common stock (“flyExclusive Class B Common Stock” or the “Class B Common Stock) will designate a majority of the members of the Company's board of directors (the "Board"). Since redemption for cash is not considered within the sole control of the Company, the noncontrolling interest is classified as temporary equity in accordance with ASC 480-10-S99-3(A)(2).

For periods when the noncontrolling interest is probable of becoming redeemable (but is not currently redeemable), the Company will accrete changes in its redemption value from the date it becomes probable that it will become redeemable (the Closing Date) to its earliest redemption date (first anniversary of the Closing Date). This measurement method is in accordance with ASC 480-10-S99-3(A)15a. The Company will adjust the carrying value of the redeemable noncontrolling interest based on the higher of (1) the initial carrying value, increased or decreased for the redeemable noncontrolling interest's share of net income or loss, or (2) the redemption value. The Company is required to either (1) accrete changes in the redemption value over the period from the date of issuance to the earliest redemption date of the instrument using an appropriate methodology, usually the interest method, or (2) recognize changes in the redemption value immediately as they occur and adjust the carrying value of the security to equal the redemption value at the end of each reporting period. The Company has elected to accrete changes in the redemption value over the period from the date of issuance (the Closing Date) to the earliest redemption date (the one year anniversary of the Closing Date) using the interest method. Any change in the carrying value of the redeemable noncontrolling interest will be recorded against additional paid-in capital to the extent available, with the excess recorded against accumulated deficit within equity.

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Notes to Condensed Consolidated Financial Statements (Unaudited) (continued)

Temporary Equity

We account for our common and preferred stock subject to possible redemption in accordance with the guidance in ASC Topic 480 “Distinguishing Liabilities from Equity.” Common and preferred stock subject to mandatory redemption (if any) is classified as a liability instrument and is measured at fair value. Conditionally redeemable common and preferred stock (including common stock that feature redemption rights that are either within the control of the holder or subject to redemption upon the occurrence of uncertain events not solely within our control) is classified as temporary equity. At all other times, common stock is classified as stockholders’ equity. Our Series A Preferred Stock (as defined within Note 24 "Stockholders’ Equity / Members' Deficit and Noncontrolling Interests") feature certain redemption rights that are considered to be outside of our control and subject to the occurrence of uncertain future events. Accordingly, 25,000 shares of Series A Preferred Stock subject to possible redemption are presented at redemption value as temporary equity, outside of the stockholders’ equity section of our balance sheets at March 31, 2024.

Aircraft Sales and Aircraft Held for sale

The Company occasionally sells aircraft held for use from its fleet. The (gain) or loss from each transaction is recognized upon completion of the sale as a loss (gain) on aircraft held for sale on the condensed consolidated statements of operations and comprehensive loss (unaudited). During the three months ended March 31, 2024 and 2023, the Company recorded losses (gains) of $587 and $(2,103) on aircraft sold, respectively.

Loss (gain) on aircraft held for sale consists of the (gain) or loss on aircraft previously held for use as property and equipment and subsequently elected to actively market for sale. When a decision is made to actively market for sale, depreciation is discontinued, and aircraft held for sale is recorded at the lower of carrying value and fair value less costs to sell. During the three months ended March 31, 2024, we recorded a non-cash held for sale loss of $902 related to a change in the estimate of fair value for 3 Gulfstream GIV aircraft that were classified as held for sale in the three months ended March 31, 2024. We presented the $23,256 of aircraft assets held for sale at the lower of their current carrying value or their fair market value less costs to sell including $13,527 classified within “Current assets” and $9,729 classified within "Non Current Assets" on the Company’s condensed consolidated balance sheets (unaudited) as at March 31, 2024. The fair values are based upon observable and unobservable inputs, including market trends and conditions. The assumptions used to determine the fair value of the assets held for sale are subject to inherent uncertainty and could produce a wide range of outcomes which the Company will continue to monitor in future periods as new information becomes available. Prior to the ultimate sale of the assets, subsequent changes in the estimate of the fair value of the assets held for sale will be recorded as a (gain) or loss with a corresponding adjustment to the assets’ carrying value. The impairment of $902 is included within Loss (gain) on aircraft held for sale within the loss from operations on the Company’s condensed consolidated statements of operations and comprehensive loss (unaudited) for the three months ended March 31, 2024.

Contract Acquisition Costs

The Company pays commissions on deposits from new and recurring Jet Club member contracts. These commissions are contract acquisition costs that are capitalized as an asset on the consolidated balance sheets as these are incremental amounts directly related to attaining contracts with customers. Capitalized sales commissions were $253 and $332 during the three months ended March 31, 2024 and 2023, respectively. As of March 31, 2024 and December 31, 2023, contract acquisition costs of $577 and $514, respectively, were included within Prepaid expenses and other current assets and $662 and $631, respectively, were included within Other non-current assets on the condensed consolidated balance sheets (unaudited).

Capitalized contract costs are amortized on a straight-line basis concurrently over the same period of benefit in which the associated revenue is recognized. Amortization expense related to capitalized contract costs included in selling, general, and administrative expense in the condensed consolidated statements of operations and comprehensive loss (unaudited) was $275 and $155 during the three months ended March 31, 2024 and 2023, respectively.

Other Accounting Policies

See the Company's Annual Report on Form 10-K for the year ended December 31, 2023 for a description of other accounting principles upon which basis the accompanying consolidated financial statements were prepared.

Recently Adopted Accounting Pronouncements

In August 2020, the FASB issued 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”). ASU 2020-06 simplifies the accounting for certain financial instruments with characteristics of liabilities and equity, including convertible instruments and contracts on an entity’s own equity. The ASU is part of the FASB’s simplification initiative,

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Notes to Condensed Consolidated Financial Statements (Unaudited) (continued)

which aims to reduce unnecessary complexity in U.S. GAAP. The ASU’s amendments are effective for fiscal years beginning after December 15, 2023, and interim periods within those fiscal years. The Company adopted this ASU in fiscal 2024 and it did not have a material effect on the Company's condensed consolidated financial statements.

In March 2023, the FASB issued ASU 2023-01, which amends the application of ASU 2016-02, "Leases (Topic 842)", related to leases with entities under common control, also referred to as common control leases. The amendments to this update require an entity to consider the useful life of leasehold improvements associated with common control leases from the perspective of the common control group and amortize the leasehold improvements over the useful life of the assets to the common control group, instead of the term of the lease. Any remaining value for the leasehold improvement at the end of the lease would be adjusted through equity. The standard is effective for fiscal years beginning after December 15, 2023, and interim periods within those fiscal years. The Company adopted this ASU in fiscal 2024 and it did not have a material effect on the Company's condensed consolidated financial statements.

Recently Issued Accounting Standards Not Yet Adopted

In November 2023, the FASB issued ASU 2023-07, Segment Reporting (Topic 280) (“ASU 2023-07”), which enhances the segment disclosure requirements for public entities on an annual and interim basis. ASU 2023-07 requires an entity to disclose significant segment expenses regularly provided to the chief operating decision maker, a description of "other segment items," the title and position of the chief operating decision maker, and allows for more than one measure of a segment's profit or loss if used by the chief operating decision maker. The update also enhances interim disclosure requirements and requirements for entities with a single reportable segment. The amendments in ASU 2023-07 will become effective on a retrospective basis for annual disclosures for fiscal years beginning after December 15, 2023, with interim period disclosures required effective for fiscal years beginning after December 15, 2024. Early adoption of ASU 2023-07 is permitted. The Company is currently evaluating the impact ASU 2023-07 will have on its condensed consolidated financial statements.

In December 2023, the FASB issued ASU 2023-09, Income Taxes (Topic 740): Improvements to Income Tax Disclosures ("ASU 2023-09"). ASU 2023-09 enhances the disclosures surrounding income taxes, specifically in relation to the rate reconciliation table and income taxes paid. The standard is effective for fiscal years beginning after December 15, 2024, with early adoption permitted. The Company is currently evaluating the impact of ASU 2023-09 on its condensed consolidated financial statements.

3. Earnings Per Share

The Company computes basic earnings per share using net (loss) income attributable to Company common stockholders and the weighted average number of common shares outstanding during each period. As the Company has obligations under the Penny Warrants to issue shares for little or no cash consideration contingent only upon the passage of time (see Note 18 "Warrant Liabilities" for a description of the Penny Warrants), weighted average shares issuable under the Penny Warrants are included in the denominator in the calculation of basic and diluted EPS.

On December 27, 2023, EGA and LGM consummated the Merger pursuant to the Equity Purchase Agreement, which significantly altered the Company's capital structure. Prior to the closing of the Merger, the legal structure of LGM was a limited liability company with ownership interests consisting of members' units. Application of an exchange ratio of members' units for shares of common stock for periods prior to the Merger would not be representative of the capital structure of the Company after the Merger. As such, the Company determined that an exchange ratio should not be applied to periods before the Merger and therefore earnings (net loss) per unit for periods prior to the Merger should not be presented as it would not provide a meaningful comparison with earnings (net loss) per share for periods after the Merger. See Note 4 "Merger" for further discussion. Therefore, earnings (net loss) per share information has not been presented for the three months ended March 31, 2023 within these condensed consolidated financial statements (unaudited).

The following table sets forth the computation of the Company’s basic and diluted net (loss) income per share:

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Notes to Condensed Consolidated Financial Statements (Unaudited) (continued)


	Three Months Ended March 31,
	2024
Numerator:
Net loss	$	(32,990)
Less: Net loss attributable to redeemable noncontrolling interest	(21,699)
Less: Net loss attributable to noncontrolling interest	(5,450)
Add: Series A Preferred Dividends	(285)
Basic Net loss attributable to common stockholders	$	(6,126)

Denominator:
Weighted Average Class A Common Stock outstanding	16,920,382
Weighted Average Class A Common Stock issuable under Penny Warrants	385,338
Weighted Average Shares Outstanding - basic and diluted	17,305,720

Basic and Diluted Earnings Per Share
Basic	$	(0.35)
Diluted	$	(0.35)

The following table summarizes potentially dilutive outstanding securities for the three months ended March 31, 2024 which were excluded from the calculation of diluted EPS, because their effect would have been anti-dilutive:


			Three Months Ended March 31,
			2024
Public warrants			2,521,569
Private Placement Warrants			4,333,333
Penny Warrants			1,270,154
Total anti-dilutive features			8,125,056

4. Merger

As discussed in Note 1 "Organization and Operations" on December 27, 2023, the Company completed the Merger. Upon the closing of the Merger, the following occurred:

•Each LGM Common Unit outstanding immediately prior to the closing of the Merger, which totaled 60,000,000 units (prior to the redemption and immediate transfer of the 70,000 shares to a third-party pursuant to the Non-Redemption Agreement as defined below), was retained by the Existing Equityholders. Additionally, an equivalent number of shares of flyExclusive Class B Common Stock, which totaled 60,000,000 (prior to the transfer of the 70,000 shares to a third-party pursuant to the Non-Redemption Agreement as defined below), were issued to the Existing Equityholders.

•Each non-redeemable share of EGA Class A common stock issued and outstanding immediately prior to the closing of the Merger, which totaled 5,624,000 shares, was exchanged for, on a one-for-one basis, shares of flyExclusive Class A Common Stock.

•Each redeemable share of EGA Class A common stock subject to possible redemption that was not redeemed prior to the closing of the Merger, which totaled 1,306,922 shares, was exchanged for, on a one-for-one basis, shares of flyExclusive Class A Common Stock.

•Each share of EGA Class B common stock held by the EGA Sponsor issued and outstanding immediately prior to the closing of the Merger, which totaled 1,000 shares, was exchanged for, on a one-for-one basis, shares of flyExclusive Class A Common Stock.

•In connection with the closing of the Merger, EGA entered into agreements (the "Warrant Exchange Agreements") with certain holders of EGA's Public Warrants (the "Warrant Holders"). Pursuant to the Warrant Exchange Agreements, the Warrant Holders agreed to exchange a total of 1,694,456 EGA Public Warrants for

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Notes to Condensed Consolidated Financial Statements (Unaudited) (continued)

372,780 shares of flyExclusive Class A Common Stock. On the Closing Date, 433,332 of these EGA Public Warrants were exchanged for 95,333 shares of flyExclusive Class A Common Stock. On the Closing Date, the remaining issued and outstanding EGA Public Warrants after the exchange of these 433,332 EGA Public Warrants pursuant to the Warrant Exchange Agreements, which totaled 7,066,668 EGA Public Warrants, each became a warrant to purchase one share of flyExclusive Class A Common Stock.

•Each Private Placement Warrant to purchase one share of EGA Class A common stock held by the EGA Sponsor on the Closing Date, which totaled 4,333,333 Private Placement Warrants, became a warrant to purchase one share of flyExclusive Class A Common Stock.

•On December 26, 2023, the underwriter in EGA's initial public offering, purchased 75,000 shares of EGA Class A common stock on behalf of LGM. The shares were purchased by the underwriter from a public stockholder that elected to reverse its redemption of 75,000 shares of EGA Class A common stock. The shares were purchased for a total purchase price of $818 ($10.90 per share) and the underwriter received reimbursement of $800 of the purchase price from EGA’s Trust Account on December 27, 2023. Simultaneously with the closing of the merger between EGA and LGM on December 27, 2023, the 75,000 shares of EGA Class A common stock were automatically exchanged for shares of flyExclusive, Inc. Class A Common Stock and 73,600 shares (out of the above-mentioned 75,000 shares) were granted to employees of LGM as compensation for services provided (the grant date for the 73,600 shares was determined to be December 27, 2023).

•In connection with the Merger, EGA, LGM and Mr. Segrave, Jr. entered into an agreement (the “Non-Redemption Agreement”) with an unaffiliated third party pursuant to which such third party agreed not to redeem its shares of EGA Class A common stock subject to possible redemption. In exchange for agreeing not to redeem, Mr. Segrave transferred to the investor 70,000 shares of the Company’s Class A Common Stock, which were issued to Mr. Segrave upon the redemption of 70,000 LGM Common Units on the Closing Date. The redemption of 70,000 LGM Common Units immediately triggered the cancellation of 70,000 shares of flyExclusive Class B Common Stock.

•The outstanding principal balance under the Bridge Notes (as defined in Note 16 "Debt"), which, including additions to the principal balance as a result of the accumulation of paid in kind interest was $95,503 immediately prior to the closing of the Merger, was automatically converted into 9,550,274 shares of flyExclusive Class A Common Stock.

The Merger was accounted for as a reverse recapitalization in accordance with U.S. GAAP. Under this method of accounting, EGA was treated as the acquired company for financial reporting purposes, whereas LGM was treated as the accounting acquirer. Accordingly, for accounting purposes, the Merger was treated as the equivalent of LGM issuing shares for the net assets of EGA, accompanied by a recapitalization. The net assets of EGA were stated at historical cost with no goodwill or other intangible assets recorded, and operations prior to the Merger are those of LGM. As a result of the Merger, the Company is organized in an umbrella partnership corporation ("Up-C") structure in which substantially all of the assets of the combined company are held by LGM, and flyExclusive's only assets are its equity interests in LGM.

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Notes to Condensed Consolidated Financial Statements (Unaudited) (continued)

The following table presents the total flyExclusive Common Stock outstanding immediately after the closing of the Merger:


			Number of Shares
Exchange of EGA Class A Common stock subject to possible redemption for flyExclusive Class A common stock			1,306,922
Exchange of EGA Class A common stock not subject to possible redemption held by EGA Sponsor for flyExclusive Class A common stock			5,624,000
Exchange of EGA Class B common stock held by EGA Sponsor for flyExclusive Class A common stock			1,000
Exchange of EGA public warrants for flyExclusive Class A common stock			95,333
Subtotal - Merger, net of redemptions			7,027,255
flyExclusive Class B common stock held by LGM Existing Equityholders			59,930,000
Conversion of Bridge Notes held by affiliates of EGA Sponsor into shares of flyExclusive Class A common stock			8,326,712
Conversion of Bridge Notes held by non-affiliates into shares of flyExclusive Class A common stock			1,223,562
flyExclusive Class A common stock held by third party in accordance with execution of Non-Redemption Agreement			70,000
Total - flyExclusive Class A common stock and Class B common stock outstanding as a result of Merger			76,577,529

Deferred Underwriting Fee Agreement

On December 27, 2023, in conjunction with the closing of the Merger, the Company and the underwriter entered into two agreements (the "Amended Underwriting Agreement" and the "Amended Letter Agreement") to amend the terms of the original deferred underwriting agreement (the "Underwriting Agreement"), dated May 25, 2021, and the original letter agreement (the "Letter Agreement"), dated August 1, 2022.

The Amended Underwriting Agreement changed the payment terms of the Underwriting Agreement from a payment of $7,875 to the underwriter at the closing of the Merger to a payment of $500 at the closing of the Merger and 300,000 shares of flyExclusive Class A Common Stock to be issued to the underwriter no later than five (5) days following the initial filing of a registration statement with the SEC. The Amended Underwriting Agreement includes a provision that states that if the registration statement is not deemed to be effective within sixty (60) business days of the closing of the Merger, the amount of share consideration payable to the underwriter shall increase by 50,000 shares (the "Additional Stock") of the Company's common stock per month on the first business day of each month until the registration statement is declared effective. On January 16, 2024, the Company entered into a waiver agreement with the underwriter to waive the Additional Stock penalty if the Form S-1 is not declared effective within sixty (60) business days after the consummation of the Merger.

The Company determined the obligation to issue shares to the underwriter was a registration payment arrangement that should be accounted for under ASC 825-20-25-1, "Financial Instruments - Registration Payment Arrangements", which indicates that the contingent obligation to issue additional stock should be treated as a separate unit of account.

The obligation to issue 300,000 shares meets the definition of a derivative under ASC 815. However, the obligation meets the derivative scope exception within ASC 815-40 and therefore is not accounted for as a derivative and is classified within stockholders' equity in the condensed consolidated balance sheets (unaudited). Since the obligation to issue shares is equity-classified, the Company measured the fair value of the obligation to issue shares at inception and will not remeasure the fair value at each subsequent reporting period. The Company utilized a Finnerty Put Option Model to determine the fair value of the obligation to issue shares due to the presence of a discount for lack of marketability as the shares issuable to the underwriter will not be marketable until a registration statement is declared effective. The key inputs to the valuation model to estimate the fair value of the share obligation included volatility, share price, strike price, dividend yield, and the estimated registration effectiveness date.

As of December 31, 2023, the registration payment arrangement to contingently issue 50,000 shares per month was classified as a contingent liability in accordance with ASC 825-20-30-5. The Company did not record a contingent liability on its consolidated balance sheet as it was not probable as of December 31, 2023 that any additional stock would have to be

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Notes to Condensed Consolidated Financial Statements (Unaudited) (continued)

issued, as the Company determined it was probable that the registration statement will be deemed effective within sixty (60) business days of the closing of the Merger. The contingent liability was not relevant as of March 31, 2024 due to the waiver of the Additional Stock penalty as noted above.

The Amended Letter Agreement amended the timing of the one-time, $1,500 fee (the "Success Fee") payable to the underwriter from being due at the closing of the Merger to being due within sixty (60) days of the closing of the Merger, which was subsequently paid.

5. Fair Value Measurements

The following tables present the Company’s fair value hierarchy for its assets and liabilities that are measured at fair value on a recurring basis and indicate the level within the fair value hierarchy of the valuation techniques the Company utilized to determine such fair value:


	Fair Value Measurements at March 31, 2024
	Level 1		Level 2		Level 3		Total
Assets:
Cash equivalents:
Money market mutual funds	$	1,419	$	—	$	—	$	1,419
Short-term investments	849		70,569		—		71,418
	$	2,268	$	70,569	$	—	$	72,837
Liabilities:
Warrant liability - public warrants	$	1,085	$	—	$	—	$	1,085
Warrant liability - private placement warrants	—		1,863		—		1,863
Warrant liability - penny warrants	—		—		1,414		1,414
	$	1,085	$	1,863	$	1,414	$	4,362


	Fair Value Measurements at December 31, 2023
	Level 1		Level 2		Level 3		Total
Assets:
Cash equivalents:
Money market mutual funds	$	887	$	—	$	—	$	887
Short-term investments	849		70,381		—		71,230
	$	1,736	$	70,381	$	—	$	72,117
Liabilities:
Warrant liability - public warrants	$	1,555	$	—	$	—	$	1,555
Warrant liability - private placement warrants	—		953		—		953
	$	1,555	$	953	$	—	$	2,508

The fair values of government money market funds have been measured on a recurring basis using Level 1 inputs, which are based on unadjusted quoted market prices within active markets. The short-term investments, including investments in fixed income securities, have been measured using quoted pricing on active markets for Level 1 investments and inputs based on alternative pricing sources and models utilizing observable market inputs for Level 2 investments.

The fair value of the Public Warrants is classified as Level 1 due to the use of an observable market quote in an active market. The fair value of the Private Placement Warrants is classified as Level 2 due to the use of an observable market quote for the Public Warrants, which are considered to be a similar asset in an active market. The warrant liability is calculated by multiplying the quoted market price of the Company’s Public Warrants by the total number of Public Warrants and Private Placement Warrants.

The Company’s Level 3 liability consists of the Penny Warrants associated with the issuance of Series A Preferred Stock. This liability has been classified as Level 3 due to the use of unobservable inputs within the valuation, namely volatility.

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Notes to Condensed Consolidated Financial Statements (Unaudited) (continued)

The fair value of the Penny Warrant liability as of March 4, 2024 and March 31, 2024 was determined utilizing a Monte Carlo simulation valuation method, using the following inputs and assumptions:


	March 4, 2024
Warrant Shares	1,304,907
Aggregate Value Cap	$	11,250
Stock price	$	15.49
Strike price	$	0.01
Term (in years)	5.0 years
Volatility	95.0		%
Risk free rate	4.2		%
Dividend Rate	—		%


	March 31, 2024
Warrant Shares	1,270,154
Aggregate Value Cap	$	11,250
Stock price	$	4.32
Strike price	$	0.01
Term (in years)	4.9 years
Volatility	115.0		%
Risk free rate	4.2		%
Dividend Rate	—		%

There have been no other changes in valuation techniques and related inputs. As of March 31, 2024 and December 31, 2023, there were no transfers between Level 1, Level 2, and Level 3.

6. Variable Interest Entities

As part of the organizational structure, the Company has established numerous single-asset LLC entities (“SAEs”) each for the primary purpose of holding a single identifiable asset, individual planes / aircraft and leasing the asset to the Company through its wholly-owned subsidiaries. There are SAEs in which the Company has less than 100% equity interest (generally 50% or less) (“SAEs with Equity”). There are also SAEs in which the Company holds zero equity interests. Generally, in these instances, the Company initially acquired the aircraft, contributed the aircraft to the SAE, and subsequently sold 100% of the equity interests in the SAE and leased the aircraft back from the third-party in a sale-leaseback structured transaction (“SAEs without Equity”). The Company also has a 50% noncontrolling ownership interest in an entity that operates an aircraft paint facility (“paint entity”).

Management analyzes the Company’s variable interests including loans, guarantees, and equity investments, to determine if the Company has any variable interests in these entities. This analysis includes both qualitative and quantitative reviews. Qualitative analysis is based on an evaluation of the design and primary risk of these entities, their organizational structures including decision making abilities, and financial and contractual agreements. Quantitative analysis is based on these entities’ equity interests and investment. The Company determined it has variable interests in the paint entity and SAEs with Equity as a result of its equity interest in these entities. For those SAEs without Equity that the Company has a (a) lease agreement for the aircraft which is the primary asset of these entities (the “lessor SAEs without Equity”), and (b) either (i) has a call option and/or (ii) a lessor put option for a fixed purchase price, it is determined that the Company has variable interests in the lessor SAEs without Equity.

The Company then determines whether the entities that the Company has variable interests in are VIEs. ASC Topic 810, Consolidation, defines a VIE as an entity that either (i) lacks sufficient equity to finance its activities without additional subordinated financial support from other parties; or (ii) whose equity holders, as a group, lack the characteristics of a controlling financial interest. Paint entity, SAEs with Equity and lessor SAEs without Equity are VIEs as they met at least one of the criteria above.

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Notes to Condensed Consolidated Financial Statements (Unaudited) (continued)

A VIE is consolidated by its primary beneficiary, which is defined as the party who has a controlling financial interest in the VIE through (a) power to direct the activities of the VIE that most significantly affect the VIE’s economic performance, and (b) obligation to absorb losses or right to receive benefits of the VIE that could be significant to the VIE.

The Company uses qualitative and quantitative analyses to determine if it is the primary beneficiary of VIEs including evaluation of (a) the purpose and design of the VIE, and (b) activities that most significantly impact economic performance of the VIE. The Company also determines how decisions about significant activities are made in the VIE and the party or parties that make them. The Company determined that it is the primary beneficiary of these VIEs because it acts as manager of the entities’ aircraft or retains control of the entity through terms in the leases, thereby giving it the power to direct activities of the entities that most significantly impact its economic performance. In addition, the Company either (a) has obligations to the losses of the VIEs and the right to receive benefits from the VIEs that could potentially be significant to the entities as a result of its equity interests, or (b) is deemed to have a controlling financial interest in the VIEs due to the other equity holders of these VIEs, as a group, lacking the characteristics of a controlling financial interest.

The Company’s condensed consolidated balance sheets (unaudited) include the following assets and liabilities of these VIEs:


	March 31, 2024		December 31, 2023
Cash	$	792	$	805
Property and equipment, net	68,064		69,815
Long-term notes payable, current portion	4,759		3,087
Long-term notes payable, non-current portion	34,935		37,404

The Company’s condensed consolidated statements of operations and comprehensive loss (unaudited) include the following expenses of these VIEs:


	Three Months Ended March 31,
	2024		2023
Interest expense	$	512	$	520
Depreciation and amortization	1,752		1,940

The assets of the Company’s VIEs are only available to settle the obligations of these entities. Creditors of each of the VIEs have no recourse to the general credit of the Company.

While the Company has no contractual obligation to do so, it may voluntarily elect to provide the VIEs with additional direct or indirect financial support based on its business objectives. The Company provided financial contributions to the VIEs in the amount of $157 and $7,708 during the three months ended March 31, 2024 and 2023, respectively.

7. Revenue

Disaggregation of Revenue

The following table disaggregates revenue by service type and the timing of when these services are provided to the member or customer:


	Three Months Ended March 31,
	2024		2023
Services transferred at a point in time:
Flights	$	76,119	$	74,601
Services transferred over time:
Memberships	1,468		1,478
MRO	1,490		704
Fractional ownership purchase price	895		249
	$	79,972	$	77,032

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Notes to Condensed Consolidated Financial Statements (Unaudited) (continued)

Transaction Price

The transaction prices for each of the primary revenue streams are as follows:

•Jet Club and Charter – Membership fees (less credits issued), and flight related charges based on trips flown

•Guaranteed Revenue Program – Fleet minimums with additional charges for flight services over the guarantee

•MRO – Time and materials incurred for services performed

•Fractional Ownership – The portion of fractional interest purchase price allocated to revenue, and flight related charges based on trips flown

The following tables provide a rollforward of deferred revenue for the three months ended March 31, 2024:


	Amount



Balance as of December 31, 2023	93,940
Revenue recognized	(65,070)
Revenue deferred	64,404
Balance as of March 31, 2024	$	93,274

8. Other Receivables

Other receivables consisted of the following:


	March 31, 2024		December 31, 2023
Rebate receivables	$	1,035	$	871
Federal excise tax receivable	3,671		3,079
Insurance settlement in process	207		298
Other	227		212
	$	5,140	$	4,460

9. Parts and Supplies Inventory

Parts and supplies inventory consists primarily of aircraft parts and materials and supplies. Parts and supplies inventory, net of reserve, consisted of the following:


	March 31, 2024		December 31, 2023
Aircraft parts	$	4,917	$	4,824
Materials and supplies	472		318
	$	5,389	$	5,142

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Notes to Condensed Consolidated Financial Statements (Unaudited) (continued)

10. Prepaid Expenses and Other Current Assets

Prepaid expenses and other current assets consisted of the following:


	March 31, 2024		December 31, 2023
Prepaid vendor expenses	$	5,006	$	2,520
Prepaid insurance	278		446
Prepaid directors and officers insurance	1,888		2,518
Prepaid maintenance	5		60
Prepaid non-aircraft subscriptions	329		113
MRO revenue in excess of billings	475		581
Deferred commission	577		514
	$	8,558	$	6,752

11. Investments in Securities

The cost and fair value of marketable securities are as follows:


	March 31, 2024
	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses		Fair Value
U.S. treasury bills	$	61,650	$	47	$	(30)	$	61,667
Municipal bonds	9,051		83		(400)		8,734
Corporate/government bonds	477		30		—		507
Other bonds	478		32		—		510
	$	71,656	$	192	$	(430)	$	71,418


	December 31, 2023
	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses		Fair Value
U.S. treasury bills	$	60,801	$	131	$	—	$	60,932
Municipal bonds	9,543		148		(404)		9,287
Corporate/government bonds	477		29		—		506
Other bonds	478		27		—		505
	$	71,299	$	335	$	(404)	$	71,230

The aggregated unrealized losses on available-for-sale debt securities in the amounts of $238 and $69 have been recognized in accumulated other comprehensive loss in the Company’s condensed consolidated balance sheets (unaudited) as of March 31, 2024 and December 31, 2023, respectively.

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Notes to Condensed Consolidated Financial Statements (Unaudited) (continued)

12. Property and Equipment, Net

Property and equipment, net consisted of the following:


	March 31, 2024		December 31, 2023
Transportation equipment	$	332,758	$	311,584
Office furniture and equipment	3,147		3,131
Leasehold improvements	2,306		2,306
Construction in progress	122		147
Deposits on transportation equipment	22,581		23,923
	360,914		341,091
Less: Accumulated depreciation	(88,672)		(87,115)
Property and equipment, net	$	272,242	$	253,976

Depreciation expense of property and equipment for the three months ended March 31, 2024 and 2023, was $6,179 and $6,148, respectively. The net carrying value of disposals of long-lived assets as of March 31, 2024 and December 31, 2023 was $587 and $66,986, respectively.

Interest payments on borrowings to acquire aircraft are capitalized for the month of acquisition when the aircraft’s in-service date begins following the 15th of the month. (Interest payments for the month of acquisition would be expensed if the aircraft is placed into service before the 15th of the month). Capitalized interest was zero as of March 31, 2024 and December 31, 2023, and was included as a component of construction in progress prior to the equipment’s in-service date.

13. Intangible Assets

Intangible assets, net are as follows:


	March 31, 2024
	Intangible Assets, Gross		Accumulated Amortization		Intangible Assets, Net		Weighted-Average Useful Life (in years)
Software - in service	$	3,651	$	(2,196)	$	1,455	3
FAA certificate	650		—		650		Indefinite
Total acquired intangible assets	$	4,301	$	(2,196)	$	2,105


	December 31, 2023
	Intangible Assets, Gross		Accumulated Amortization		Intangible Assets, Net		Weighted-Average Useful Life (in years)
Software - in service	$	3,486	$	(1,902)	$	1,584	3
FAA certificate	650		—		650		Indefinite
Total acquired intangible assets	$	4,136	$	(1,902)	$	2,234

Amortization of intangible assets was $294 and $223 for the three months ended March 31, 2024 and 2023, respectively. The Company did not record any impairment charges related to definite-lived intangible assets for the three months ended March 31, 2024 and 2023.

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Notes to Condensed Consolidated Financial Statements (Unaudited) (continued)

The following is a schedule of estimated amortization expense for the following periods:



Fiscal Year	Amount
Remainder of 2024	$	792
2025	438
2026	215
2027	10
2028	—
Thereafter	—
	$	1,455

14. Other Current Liabilities

Other current liabilities consisted of the following:


	March 31, 2024		December 31, 2023
Accrued vendor payments	$	3,761	$	6,386
Accrued ERC payments	9,044		9,044
Accrued underwriter fees	—		1,500
Accrued directors and officers insurance	—		2,518
Accrued employee-related expenses	8,422		7,751
Accrued engine expenses	505