flyx-20240930

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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 September 30, 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 18,199,586 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 September 30, 2024.

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TABLE OF CONTENTS


			Page
PART I. FINANCIAL INFORMATION			3
Item 1. Financial Statements			3
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations			47
Item 3. Quantitative and Qualitative Disclosures About Market Risk			66
Item 4. Controls and Procedures			66
PART II. OTHER INFORMATION			68
Item 1. Legal Proceedings			68
Item 1A. Risk Factors			68
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds			68
Item 3. Defaults Upon Senior Securities			68
Item 4. Mine Safety Disclosures			68
Item 5. Other Information			68
Item 6. Exhibits			68
SIGNATURES			70

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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;

•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 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 our debt's 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 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)			4
Condensed Consolidated Statements of Operations and Comprehensive Loss (Unaudited)			6
Condensed Consolidated Statements of Shareholders' Equity (Deficit) / Members' Equity (Deficit) and Temporary Equity (Unaudited)			7
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 (Loss) Per Share			17
4. Merger			18
5. Fair Value Measurements			21
6. Variable Interest Entities			22
7. Revenue			24
8. Other Receivables			24
9. Parts and Supplies Inventory			25
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			36
20. Stock-based Compensation			36
21. Income Taxes			36
22. Related Party Transactions			37
23. Commitments and Contingencies			40
24. Stockholders’ Equity / Members' Deficit and Noncontrolling Interests			41
25. Subsequent Events			46

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Condensed Consolidated Balance Sheets (Unaudited)


(in thousands, except share amounts)	September 30, 2024		December 31, 2023
ASSETS
Current assets
Cash and cash equivalents	$	18,654	$	11,626
Accounts receivable, net	1,601		849
Other receivables	6,257		4,460
Due from related parties, current portion	1,892		1,911
Notes receivable, current portion	158		301
Parts and supplies inventory, net	5,978		5,142
Investments in securities	61,415		71,230
Prepaid engine overhauls, current portion	12,792		14,522
Aircraft held for sale, current portion	18,867		—
Prepaid expenses and other current assets	5,670		6,752
Total current assets	133,284		116,793
Notes receivable, non-current portion, net	6,120		21,177
Property and equipment, net	237,045		253,976
Aircraft held for sale, non-current portion	6,724		—
Operating lease right-of-use assets	66,387		84,649

Intangible assets, net	1,728		2,234
Prepaid engine overhauls, non-current portion	35,113		41,531
Other non-current assets	746		670
Total assets	$	487,147	$	521,030

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Condensed Consolidated Balance Sheets (Unaudited) (continued)


(in thousands, except share amounts)	September 30, 2024		December 31, 2023
LIABILITIES, STOCKHOLDERS’ (DEFICIT) / MEMBERS' EQUITY, AND TEMPORARY EQUITY
Current liabilities
Accounts payable	$	26,110	$	30,172
Excise tax payable	1,188		1,032
Long-term notes payable, current portion	81,359		26,471
Deferred revenue, current portion	87,542		83,914
Operating lease liabilities, current portion	14,748		17,907

Other current liabilities	26,677		28,705
Short-term notes payable	6,062		14,396
Short-term notes payable - related party	22,455		18,939
Total current liabilities	266,141		221,536
Long-term notes payable, non-current portion	116,517		166,818
Long-term notes payable - related party, non-current portion	21,314		—
Operating lease liabilities, non-current portion	52,663		68,100

Deferred revenue, non-current portion	12,674		10,026

Warrant liabilities	3,726		2,508
Other non-current liabilities	23,142		16,712
Total liabilities	$	496,177	$	485,700
Commitments and contingencies (Note 23)
Temporary equity
Redeemable noncontrolling interest	135,033		(35,525)
Series A preferred stock, par value $0.0001; 25,000,000 shares authorized and 25,000 shares issued and outstanding	22,618		—
Series B preferred stock, par value $0.0001; 25,000,000 shares authorized and 25,510 shares issued and outstanding	14,024		—
Stockholders' equity (deficit)

Accumulated other comprehensive income/(loss)	109		(69)
Class A common stock; par value $0.0001; 200,000,000 and 200,000,000 shares authorized; 18,199,586 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	9,453		126,978
Accumulated deficit	(201,590)		(80,456)
Total flyExclusive stockholders’ (deficit) / equity	(192,020)		46,461
Noncontrolling interests	11,315		24,394
Total stockholders’ (deficit) / equity	(180,705)		70,855
Total liabilities, temporary equity and stockholders' / members' equity	$	487,147	$	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 September 30,				Nine Months Ended September 30,
(in thousands, except share amounts)	2024		2023		2024		2023
Revenue	$	76,923	$	62,027	$	235,908	$	239,397
Costs and expenses
Cost of revenue	68,238		63,290		215,227		193,564
Selling, general and administrative	20,001		17,472		66,674		51,957
Depreciation and amortization	6,110		6,699		19,283		20,176
Loss (gain) on aircraft held for sale	3,480		(9,570)		4,897		(12,435)
Total costs and expenses	97,829		77,891		306,081		253,262
Loss from operations	(20,906)		(15,864)		(70,173)		(13,865)
Other income (expense)
Interest income	979		796		3,419		2,989
Interest expense	(5,619)		(5,674)		(15,940)		(15,601)

Gain on forgiveness of CARES Act loan	—		—		—		339

Change in fair value of derivative liability	—		(3,684)		—		(3,577)
Change in fair value of warrant liabilities	1,500		—		(2,179)		—

Other expense	(90)		(144)		(107)		(736)
Total other income (expense), net	(3,230)		(8,706)		(14,807)		(16,586)
Loss before income taxes	(24,136)		(24,570)		(84,980)		(30,451)
Income tax benefit	—		—		—		—
Net loss	(24,136)		(24,570)		(84,980)		(30,451)
Less: Net loss attributable to redeemable noncontrolling interests	(18,515)		—		(60,715)		—
Less: Net income (loss) attributable to noncontrolling interests	653		(2,503)		(6,997)		(6,762)

Net loss attributable to flyExclusive, Inc.	(6,274)		(22,067)		(17,268)		(23,689)
Add: Series A Preferred Dividends	(1,000)		—		(2,257)		—
Add: Series B Preferred Dividends	$	(451)			(451)
Net loss attributable to common stockholders	$	(7,725)	$	(22,067)	$	(19,976)	$	(23,689)
Basic and Diluted Earnings (Loss) Per Share*	$	(0.32)			$	(0.85)
Weighted Average Common Shares Outstanding (Basic & Diluted)*	24,275,741				23,586,260

Other comprehensive loss
Net loss attributable to flyExclusive, Inc.	$	(6,274)	$	(22,067)	$	(17,268)	$	(23,689)
Unrealized gains (losses) on available-for-sale debt securities	371		(352)		179		(335)
Comprehensive loss attributable to flyExclusive, Inc.	$	(5,903)	$	(22,419)	$	(17,089)	$	(24,024)

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

*Basic and diluted earnings (loss) per share has not been presented for the three and nine months ended September 30, 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 (Loss) 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		Series B Preferred stock		Class A Common stock			Class B Common stock			Additional paid-in capital		Accumulated other comprehensive income (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)
Contributions from non controlling interests	—		—		—		—	—		—	—		—		—		—		—		103		103
Distributions to non controlling interests	—		—		—		—	—		—	—		—		—		—		—		(3,734)		(3,734)
Acquisitions of non controlling interests	—		—		—		—	—		—	—		256		—		5		261		2,944		3,205
Unrealized gains on available-for-sale securities	—		—		—		—	—		—	—		—		(24)				(24)		—		(24)

Issuance of Class A common stock upon cashless exercise of warrants	—		—		—		7,565	—		—	—		35		—		—		35		—		35

Accretion of Redeemable non controlling interest to redemption amount	(5,657)		—		—		—	—		—	—		(291)		—		5,948		5,657		—		5,657

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


	Temporary Equity						Permanent Equity
(in thousands, except share amounts)	Redeemable noncontrolling interest		Series A Preferred stock		Series B Preferred stock		Class A Common stock			Class B Common stock			Additional paid-in capital		Accumulated other comprehensive income (loss)		Accumulated deficit		Total flyExclusive stockholders’ equity (deficit)		Noncontrolling Interests		Total stockholders’ equity (deficit) / members' equity
							Shares	Amount		Shares	Amount
Dividends payable on Series A Preferred temporary equity	—		631		—		—	—		—	—		—		—		(631)		(631)		—		(631)
Amortization of discount on Series A Preferred temporary equity	—		341		—		—	—		—	—		—		—		(341)		(341)		—		(341)
Net Income (loss)	(20,501)		—		—		—	—		—	—		—		—		(5,153)		(5,153)		(2,200)		(7,353)
Balances at June 30, 2024	$	108,982	$	21,618	$	—	17,899,586	$	2	59,930,000	$	6	$	—	$	(262)	$	(149,451)	$	(149,705)	$	12,325	$	(137,380)
Contributions from non controlling interests	—		—		—		—	—		—	—		—		—		—		—		6,068		6,068
Distributions to non controlling interests	—		—		—		—	—		—	—		—		—		—		—		(7,731)		(7,731)
Acquisitions of non controlling interests	—		—		—		—	—		—	—		—		—		—		—		—		—
Unrealized gains on available-for-sale securities	—		—		—		—	—		—	—		—		371		—		371		—		371

Issuance of Class A common stock pursuant to Amended Underwriting Agreement	—		—		—		300,000	—		—	—		—		—		—		—		—		—

Issuance of Series B Preferred stock	—		—		13,526		—	—		—	—		10,603		—		—		10,603		—		10,603
Accretion of Redeemable non controlling interest to redemption amount	44,566		—		—		—	—		—	—		(1,103)		—		(44,414)		(45,517)		—		(45,517)
Dividends payable on Series A Preferred temporary equity	—		827		—		—	—		—	—		—		—		(827)		(827)		—		(827)
Amortization of discount on Series A Preferred temporary equity	—		173		—		—	—		—	—		—		—		(173)		(173)		—		(173)
Dividends payable on Series B Preferred temporary equity	—		—		451		—	—		—	—		—		—		(451)		(451)		—		(451)
Amortization of discount on Series B Preferred temporary equity	—		—		47		—	—		—	—		(47)		—		—		(47)		—		(47)
Net Income (loss)	(18,515)		—		—		—	—		—	—		—		—		(6,274)		(6,274)		653		(5,621)
Balances at September 30, 2024	$	135,033	$	22,618	$	14,024	18,199,586	$	2	59,930,000	$	6	$	9,453	$	109	$	(201,590)	$	(192,020)	$	11,315	$	(180,705)

Table of contents flyExclusive, Inc.

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
Contributions from members		210		—			210		643		853
Distributions to members		(5,713)		—			(5,713)		(6,678)		(12,391)
Other comprehensive income		—		(73)			(73)		—		(73)
Net Income (loss)		7,547		—			7,547		(1,722)		5,825
Balances at June 30, 2023		$	(33,270)	$	(459)		$	(33,729)	$	46,875	$	13,146
Contributions from members		69		—			69		857		926
Distributions to members		(3,960)		—			(3,960)		(4,776)		(8,736)
Other comprehensive income		—		(352)			(352)		—		(352)
Exchanges of aircraft ownership interests		7,319		—			7,319		(7,319)		—
Net Income (loss)		(22,067)		—			(22,067)		(2,503)		(24,570)
Balances at September 30, 2023		$	(51,909)	$	(811)		$	(52,720)	$	33,134	$	(19,586)

*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).

Table of contents flyExclusive, Inc.

Condensed Consolidated Statements of Cash Flows (Unaudited)


	Nine Months Ended September 30,
(in thousands)	2024		2023
Cash flows from operating activities:
Net loss	$	(84,980)	$	(30,451)
Adjustments to reconcile net loss to net cash from operating activities:
Depreciation and amortization	19,283		20,176
Amortization of contract costs	821		558
Non-cash interest income	(2,093)		(2,282)
Non-cash interest expense	1,126		7,373
Non-cash rent expense	15,818		12,547
Gain on lease termination	(163)		(38)
Loss (Gain) on aircraft held for sale	4,897		(12,435)

Change in fair value of derivative liability	—		3,577
Provision for credit losses	2,076		(1)
Realized losses on investment securities	59		238
Change in fair value of private placement warrant liability	433		—
Change in fair value of penny warrant liability	(2,214)		—
Change in fair value of public warrant liability	3,960		—



Changes in operating assets and liabilities, net of effects from acquisitions:
Accounts receivable	(752)		13,369
Accounts receivable - related parties	19		1,431

Other receivables	(1,797)		850
Parts and supplies inventory, net	(836)		(764)
Prepaid expenses and other current assets	261		809
Operating lease liabilities	(15,989)		(11,063)
Other assets	(76)		(73)
Accounts payable	(4,062)		919
Other current liabilities	(2,932)		5,838
Accounts payable - related parties	—		(72)
Deferred revenue	6,276		23,715
Customer deposits	—		(37,500)
Other non-current liabilities	6,431		6,896
Net cash flows from operating activities	(54,434)		3,617
Cash flows from investing activities:
Capitalized development costs	(412)		(585)
Purchases of property and equipment	(14,656)		(66,962)
Proceeds from sales of property and equipment	28,533		38,073
Purchases of engine overhauls	(18,364)		(14,548)
Purchases of investments	(45,495)		(68,837)
Proceeds from sale of investments	57,449		68,746
Notes receivable paydowns	15,040		—
Net cash flows from investing activities	22,095		(44,113)

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


	Nine Months Ended September 30,
(in thousands)	2024		2023
Cash flows from financing activities:

Proceeds from issuance of debt	71,413		97,769
Repayment of debt	(50,282)		(32,528)

Payment of deferred financing costs	—		(1,455)
Payment of debt issuance costs	(4,018)		(195)

Proceeds from notes receivable noncontrolling interest	—		208

Cash contributions from members	—		394
Cash distributions to members	—		(31,292)
Cash contributions - noncontrolling interests	6,327		9,208
Cash distributions - noncontrolling interests	(13,920)		(14,527)
Proceeds from preferred temporary equity issuance, net of issuance costs	29,847		—
Net cash flows from financing activities	39,367		27,582
Net increase (decrease) in cash and cash equivalents	7,028		(12,914)
Cash and cash equivalents at beginning of period	11,626		23,179
Cash and cash equivalents at end of period	$	18,654	$	10,265
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	$	231,273	$	—
Excise tax payable	$	156	$	—







flyExclusive Class A common stock issued on cashless exercise of public warrants	$	4,337	$	—
Issuance of penny warrants in connection with Series A Preferred Temporary Equity	$	3,746	$	—

Issuance of penny warrants in connection with Series B Preferred Temporary Equity	$	11,712	$	—
Dividends payable on Class A Temporary Equity	$	2,257	$	—
Dividends payable on Class B Temporary Equity	$	451	$	—
Transfers from prepaid engine overhaul to property and equipment	$	9,833	$	10,229
Change in purchases of property and equipment in accounts payable	$	—	$	930
Unrealized change in fair value of available-for-sale securities	$	(178)	$	335


Right of use asset impact for new leases	$	7,327	$	34,269
Acquisitions of non-controlling interests	$	6,892	$	—
Non-cash exchanges of aircraft ownership interests	$	—	$	7,319
Non-cash aircraft sale-leaseback transactions	$	—	$	23,100

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)

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"). 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.

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' (deficit). Noncontrolling ownership interests that can be redeemed for cash where 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

Within the nine months ended September 30, 2024, 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

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Notes to Condensed Consolidated Financial Statements (Unaudited)

reverse recapitalization), and borrowings under loan facilities. At September 30, 2024, the Company had an accumulated deficit of $201,590 and a working capital deficit, as defined by a shortfall of current assets as compared with current liabilities of $132,857 and $104,743 as at September 30, 2024 and December 31, 2023, respectively. The Company’s net losses were $84,980 and $30,451 for the nine months ended September 30, 2024 and 2023, respectively. Net cash flows (used) provided by operating activities were $(54,434) and $3,617 for the nine months ended September 30, 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 September 30, 2024, the Company had cash and cash equivalents of $18,654.

The Company believes its cash and cash equivalents on hand, operating cash flows, and proceeds from 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 would expect to 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 months ended September 30, 2023 and nine months ended September 30, 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, parts and supplies inventory reserve, determination of impairment and fair value estimates associated with asset acquisitions and aircraft held for sale. 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 September 30, 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,"), (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 "Series A Penny Warrants"), and (iv) warrants issued on August 8, 2024 and August 14, 2024 in connection with the Series B Preferred Stock offering as described within Note 24 "Stockholders' Equity/Members' Deficit and Noncontrolling Interests" (the "Series B Penny Warrants," together with the Series A Penny Warrants, the "Penny Warrants," and together with the Public Warrants, the Private Placement Warrants and the Series A Penny Warrants, the "Warrants").

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

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 (“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 Series A Penny Warrants, the Public Warrants, and the Private Placement Warrants were not indexed to the Company's own stock and therefore they must be classified as liabilities. The Company also determined that the Series A Penny Warrants, the Public Warrants, and the Private Placement Warrants met all criteria to meet the definition of a derivative under ASC 815-10-15-83. For the Series B Penny Warrants, the Company determined that they were indexed to the Company's own stock and would be settled in shares of the Company's Class A Common Stock at an explicit share limit. As such, The Company concluded that the Series B Penny Warrants must be classified as permanent equity, and that the Series B Penny Warrants are not subject to remeasurement at each reporting date.

The Company recorded the Series A Penny Warrants, the Public Warrants, and the Private Placement 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.

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

The Company’s Series A 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 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. The Company applies 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 September 30, 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 September 30, 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)

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

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.

Temporary Equity

The Company accounts for its 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 and Series B 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 and 25,510 shares of Series B 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 September 30, 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).

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. We present aircraft assets held for sale at the lower of their current carrying value or their fair market value less costs to sell including $18,867 classified within “Current assets” and $6,724 classified within "non current assets" on the Company’s condensed consolidated balance sheets (unaudited) as of September 30, 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.

As of September 30, 2024 and December 31, 2023, the Company had 6 and 0 aircraft classified as held for sale, respectively. The following table summarizes the Company's held for sale activity during the nine months ended September 30, 2024:


	Nine Months Ended September 30,
	2024
Aircraft held for sale as of December 31, 2023	$	—
Aircraft sold	(15,353)
Aircraft reclassified to held for sale	42,831
Impairment (gain) loss due to fair value adjustments	1,887
Aircraft held for sale as of September 30, 2024	$	25,591

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 condensed consolidated balance sheets (unaudited) as these are incremental amounts directly related to attaining contracts with customers. Sales commissions

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

capitalized were $348 and $885 during the three and nine months ended September 30, 2024, respectively, and $376 and $919 during the three and nine months ended September 30, 2023. As of September 30, 2024 and December 31, 2023, contract acquisition costs of $633 and $514, respectively, were included within Prepaid expenses and other current assets and $706 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 $274 and $821 during the three and nine months ended September 30, 2024, respectively, and $219 and $558 during the three and nine months ended September 30, 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, 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 (Loss) Per Share

The Company computes basic earnings (loss) per share using net loss 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

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