Falcon's Beyond Global, Inc 10-Q for FY2025 Q1
Falcon's Beyond Global, Inc. (FBYD)
About this 10-Q
Falcon's Beyond Global, Inc filed this 10-Q on May 15, 2025, covering the quarter ended March 31, 2025 (FY2025 Q1).
Headline figures
Quarter ended March 31, 2025, as reported in this filing, compared with the same period a year earlier where the filing states it.
- Revenue
- $1.71M
- up 12.7% from $1.52M a year earlier
- Net loss
- $8.09M
- compared with net income of $114.02M a year earlier
- Diluted EPS
- -$0.13
- compared with $1.27 a year earlier
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549s
FORM
EXCHANGE ACT OF 1934
For the quarterly period ended
OR
EXCHANGE ACT OF 1934
For the transition period from __________ to __________
Commission file number
(Exact name of registrant as specified in its charter)
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Securities registered pursuant to Section 12(b) of the Act
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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.
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted 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 such files).
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.
Large accelerated filer |
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Emerging growth company |
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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.
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No
As of May 15, 2025, a total of
FALCON’S BEYOND GLOBAL, INC.
TABLE OF CONTENTS
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Page No. |
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Item 1. |
Unaudited Condensed Consolidated Financial Statements – Falcon’s Beyond Global, Inc. |
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Unaudited Condensed Consolidated Balance Sheets as of March 31, 2025 and December 31, 2024 |
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Notes to Unaudited Condensed Consolidated Financial Statements – Falcon’s Beyond Global, Inc. |
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Item 2. |
Management’s Discussion and Analysis of Financial Condition and Results of Operations |
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Item 3. |
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Item 4. |
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Item 1. |
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Item 1A. |
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Item 2. |
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Item 3. |
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Item 4. |
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Item 5. |
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Item 6. |
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i
CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS
This Quarterly Report on Form 10-Q (this “Quarterly Report”) contains statements that the Company believes are “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995. These forward-looking statements include, without limitation, statements relating to expectations for future financial performance, business strategies or expectations for our business. These statements are based on the beliefs and assumptions of the management of the Company. Although the Company believes that its plans, intentions and expectations reflected in or suggested by these forward-looking statements are reasonable, it cannot provide assurance that it will achieve or realize these plans, intentions or expectations. These statements constitute projections, forecasts and forward-looking statements, and are not guarantees of performance. Such statements can be identified by the fact that they do not relate strictly to historical or current facts. When used in this in this Quarterly Report, words such as “anticipate,” “believe,” “can,” “continue,” “could,” “estimate,” “expect,” “forecast,” “intend,” “may,” “might,” “plan,” “possible,” “potential,” “predict,” “project,” “seek,” “should,” “strive,” “target,” “will,” “would” and similar expressions may identify forward-looking statements, but the absence of these words does not mean that a statement is not forward-looking.
You should not place undue reliance on these forward-looking statements. Should one or more of a number of known and unknown risks and uncertainties materialize, or should any of our assumptions prove incorrect, the Company’s actual results or performance may be materially different from those expressed or implied by these forward-looking statements. The following important factors, risks, and uncertainties could cause actual results to differ materially from those indicated by the forward-looking statements in this Quarterly Report:
ii
iii
In addition, this Quarterly Report includes important information as to risks, uncertainties, and other factors that may cause actual results to differ materially from those expressed or implied in the forward-looking statements. See “Note 10 - Commitments and Contingencies” within Item 1 of this Quarterly Report and “Management’s Discussion and Analysis of Financial Condition and Results of Operations” within Item 2 of this Quarterly Report. Additional important information as to these factors is included in our Annual Report on Form 10-K for the year ended December 31, 2024 (“Annual Report”) in the sections titled Item 1, “Business”, Item 1A, “Risk Factors,” Item 3, “Legal Proceedings,” and Item 7, “Management’s Discussion and Analysis of Financial Condition and Results of Operations”. The forward-looking statements speak only as of the date of this Quarterly Report or, in the case of any document incorporated by reference, the date of that document. We undertake no obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events or otherwise, except as required by applicable law. Additional information as to factors that may cause actual results to differ materially from those expressed or implied in the forward-looking statements is disclosed from time to time in our other filings with the Securities and Exchange Commission (“SEC”).
iv
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements.
FALCON’S BEYOND GLOBAL, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS (UNAUDITED)
(in thousands of U.S. dollars, except share and per share data)
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As of |
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As of |
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Assets |
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Current assets: |
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Cash and cash equivalents ($ |
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$ |
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$ |
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Accounts receivable ($ |
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Contract assets |
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— |
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Other current assets |
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Total current assets |
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Investments and advances to equity method investments |
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Property and equipment, net |
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Other non-current assets |
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Total assets |
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$ |
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$ |
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Liabilities and stockholders’ equity (deficit) |
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Current liabilities: |
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Accounts payable ($ |
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$ |
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$ |
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Accrued expenses and other current liabilities ($ |
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Short term debt |
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Current portion of long-term debt ($ |
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Total current liabilities |
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Long-term debt, net of current portion ($ |
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Warrant liabilities |
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— |
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Total liabilities |
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Stockholders’ equity (deficit) |
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Class A common stock ($ |
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Class B common stock ($ |
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Additional paid-in capital |
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Accumulated deficit |
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Accumulated other comprehensive loss |
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Total deficit attributable to common stockholders |
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Non-controlling interest |
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Total deficit |
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Total liabilities and equity |
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$ |
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$ |
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See accompanying notes to unaudited condensed consolidated financial statements.
1
FALCON’S BEYOND GLOBAL, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE (LOSS) INCOME (UNAUDITED)
(in thousands of U.S. dollars, except share and per share data)
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Three months ended |
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March 31, |
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March 31, |
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Revenue ($ |
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$ |
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$ |
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Operating expenses: |
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Project design and build expense |
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Selling, general and administrative expense ($ |
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Transaction expenses |
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Credit loss expense ($ |
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Research and development expense ($ |
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Depreciation and amortization expense |
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Total operating expenses |
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Loss from operations |
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Share of (loss) gain from equity method investments |
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Interest expense ($( |
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Interest income |
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Change in fair value of warrant liabilities |
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Change in fair value of earnout liabilities |
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Foreign exchange transaction gain (loss) |
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Net (loss) income before taxes |
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$ |
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$ |
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Income tax benefit |
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Net (loss) income |
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$ |
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$ |
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Net (loss) income attributable to noncontrolling interest |
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Net (loss) income attributable to common stockholders |
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Net (loss) income per share |
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Net (loss) income per share, basic |
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Net (loss) income per share, diluted |
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Weighted average shares outstanding, basic |
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Weighted average shares outstanding, diluted |
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Other Comprehensive (loss) income: |
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Net (loss) income |
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$ |
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Foreign currency translation income |
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Total other comprehensive income |
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Total comprehensive (loss) income |
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$ |
( |
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$ |
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Comprehensive (loss) income attributable to noncontrolling interest |
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( |
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Total Comprehensive (loss) income attributable to common stockholders |
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$ |
( |
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$ |
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See accompanying notes to unaudited condensed consolidated financial statements.
2
FALCON’S BEYOND GLOBAL, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)
(in thousands of U.S. dollars)
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Three months ended |
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March 31, |
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March 31, |
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Cash flows from operating activities |
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Net (loss) income |
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$ |
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$ |
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Adjustments to reconcile net (loss) income to net cash provided by (used in) operating activities: |
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Depreciation and amortization |
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Foreign exchange transaction (gain) loss |
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Share of loss (gain) from equity method investments |
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Credit loss expense ($ |
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— |
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Change in fair value of earnouts |
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— |
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Change in fair value of warrants |
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Share based compensation expense |
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Loss on sale of equipment |
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— |
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Changes in assets and liabilities: |
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Accounts receivable ($ |
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Contract assets |
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— |
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Deferred transaction costs |
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— |
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Other current assets |
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Other non-current assets |
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Accounts payable ($ |
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Accrued expenses and other current liabilities ($ |
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( |
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Net cash provided by (used in) operating activities |
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( |
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Cash flows from investing activities |
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Purchase of property and equipment |
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( |
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Proceeds from sale of equipment |
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Investments and advances to unconsolidated joint ventures |
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— |
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( |
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Net cash used in investing activities |
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( |
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( |
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Cash flows from financing activities |
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Proceeds from debt – related party |
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— |
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Proceeds from debt – third party |
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— |
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Repayment of debt – related party |
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— |
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( |
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Repayment of debt – third party |
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( |
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( |
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Proceeds from related party credit facilities |
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Repayment of related party credit facilities |
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Proceeds from exercised warrants |
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— |
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Proceeds from RSUs issued to affiliates |
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— |
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Settlement of RSUs |
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— |
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Net cash (used in) provided by financing activities |
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( |
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Net increase in cash and cash equivalents |
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Foreign exchange impact on cash |
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Cash and cash equivalents – beginning of period |
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Cash and cash equivalents at end of period |
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$ |
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$ |
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Supplemental disclosures: |
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Cash paid for interest |
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$ |
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$ |
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Non-cash activities: |
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Conversion of warrants to common shares, Class A |
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— |
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Conversion of Class B Common Stock to Class A Common Stock |
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Reclassification of warrants to equity |
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— |
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See accompanying notes to unaudited condensed consolidated financial statements.
3
FALCON’S BEYOND GLOBAL, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY (DEFICIT) (UNAUDITED)
(in thousands of U.S. dollars, except unit and share data)
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Common Stock, |
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Common Stock, |
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Additional |
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Accumulated |
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Accumulated |
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Total |
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Non-controlling |
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Total |
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Shares |
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Amount |
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Shares |
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Amount |
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capital |
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loss |
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deficit |
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stockholders |
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Interest |
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deficit |
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December 31, 2023 |
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$ |
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$ |
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$ |
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$ |
( |
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$ |
( |
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$ |
( |
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$ |
( |
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$ |
( |
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Conversion of warrants to common shares |
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— |
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— |
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— |
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( |
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— |
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— |
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( |
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Conversion of Class B common stock to Class A common stock |
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— |
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( |
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— |
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( |
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— |
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— |
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( |
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— |
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RSU issuances |
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— |
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— |
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— |
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— |
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— |
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— |
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Net income |
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— |
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— |
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— |
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— |
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— |
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— |
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Foreign currency translation gain |
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— |
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— |
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— |
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— |
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— |
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— |
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March 31, 2024 |
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$ |
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$ |
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$ |
( |
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$ |
( |
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$ |
( |
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$ |
( |
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$ |
( |
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$ |
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Common Stock, |
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Common Stock, |
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Additional |
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Accumulated |
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Accumulated |
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Total |
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Non-controlling |
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Total |
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Shares |
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Amount |
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Shares |
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Amount |
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capital |
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loss |
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deficit |
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stockholders |
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Interest |
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deficit |
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December 31, 2024 |
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( |
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( |
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( |
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( |
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( |
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Conversion of Class B common stock to Class A common stock |
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— |
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( |
) |
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— |
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( |
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— |
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— |
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( |
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— |
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Reclassification of warrants to equity |
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— |
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— |
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— |
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— |
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— |
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— |
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RSU issuances |
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— |
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— |
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— |
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— |
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— |
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Net loss |
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— |
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— |
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— |
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— |
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— |
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— |
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( |
) |
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( |
) |
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( |
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( |
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Foreign currency translation gain |
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— |
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— |
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— |
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— |
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— |
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— |
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|
|
|
|
|
|
|
|
||||
March 31, 2025 |
|
|
|
|
$ |
|
|
|
|
|
$ |
|
|
$ |
|
|
$ |
( |
) |
|
$ |
( |
) |
|
$ |
( |
) |
|
$ |
( |
) |
|
$ |
( |
) |
|||||
See accompanying notes to unaudited condensed consolidated financial statements.
4
FALCON’S BEYOND GLOBAL, INC. AND SUBSIDIARIES
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
(in thousands of U.S. dollars, unless otherwise stated)
Merger with FAST II
Falcon’s Beyond Global, Inc., a Delaware corporation (“Pubco”, “FBG”, or the “Company”), entered into an Amended and Restated Agreement and Plan of Merger, dated as of September 1, 2023 (the “Merger Agreement”), by and among Pubco, FAST Acquisition Corp. II, a Delaware corporation (“FAST II”), Falcon’s Beyond Global, LLC, a Delaware limited liability company (“Falcon’s Opco”), and Palm Merger Sub, LLC, a Delaware limited liability company and a wholly-owned subsidiary of Pubco (“Merger Sub”).
On October 5, 2023 FAST II merged with and into Pubco (the “SPAC Merger”), with Pubco surviving as the sole owner of Merger Sub, followed by a contribution by Pubco of all of its cash (except for cash required to pay certain transaction expenses) to Merger Sub to effectuate the “UP-C” structure; and on October 6, 2023 Merger Sub merged with and into Falcon’s Opco (the “Acquisition Merger,” and collectively with the SPAC Merger, the “Business Combination”), with Falcon’s Opco as the surviving entity of such merger. Following the consummation of the transactions contemplated by the Merger Agreement (the “Closing”), the direct interests in Falcon’s Opco were held by Pubco and certain holders of the limited liability company units of Falcon’s Opco outstanding as of immediately prior to the Business Combination.
FAST II and Falcon’s Opco’s transaction costs related to the Business Combination of $
Nature of Operations
The Company operates at the intersection of content, technology, and experiences. We aim to engage, inspire and entertain people through our creativity and innovation, and to connect people with brands, with each other, and with themselves through the combination of digital and physical experiences. At the core of our business is brand creation and optimization, facilitated by our multi-disciplinary creative teams. The Company has three business divisions, which are conducted through
Basis of presentation
The unaudited condensed consolidated financial statements include the accounts of the Company and its majority-owned subsidiaries for which it exercises control. Long-term investments in affiliated companies in which the Company exercises significant influence, but which it does not control, are accounted for using the equity method. The Company does not have any significant variable interest entities or special purpose entities whose financial results are not included in the unaudited condensed consolidated financial statements.
The financial statements of the Company’s operating foreign subsidiaries are measured using the local currency as the functional currency. Assets and liabilities are translated at exchange rates as of the balance sheet date. Revenues and expenses are translated at average monthly exchange rates prevailing during the period. Resulting translation adjustments are included in Accumulated other comprehensive loss (income).
The accompanying condensed consolidated financial statements of the Company are unaudited. In the opinion of management, all adjustments necessary for a fair statement of results of operations, cash flows, and financial position have been made. Except as otherwise disclosed, all such adjustments are of a normal recurring nature. Interim results are not necessarily indicative of results for a full year. The year-end consolidated balance sheet data was derived from audited financial statements but does not include all disclosures required by generally accepted accounting principles.
The unaudited condensed consolidated financial statements and notes are presented in accordance with the rules and regulations of the Securities and Exchange Commission (“SEC”) and do not contain certain information included in the Company’s Annual Report. Therefore, these interim condensed consolidated financial statements should be read in conjunction with the consolidated financial statements and notes thereto contained in the Company’s Annual Report.
5
Principles of Consolidation
The non-controlling interest represents the membership interest in Falcon’s Opco held by holders other than the Company.
The results of operations attributable to the non-controlling interest are included in the Company’s unaudited condensed consolidated statements of operations and comprehensive (loss) income, and the non-controlling interest is reported as a separate component of equity.
The Company consolidates the assets, liabilities, and operating results of Falcon’s Opco and its wholly owned subsidiaries. All intercompany balances and transactions have been eliminated in the consolidation. The unaudited condensed consolidated financial statements of the Company have been prepared in accordance with U.S. GAAP.
Liquidity
The Company has been engaged in expanding its physical operations through its equity method investments, developing new product offerings, raising capital and recruiting personnel. As a result, the Company has incurred a loss from operations of $
The Company has committed to fund its share of additional investment in its equity investment, Karnival TP-AQ Holdings Limited (“Karnival”), for the purpose of constructing the Vquarium Entertainment Centers in the People’s Republic of China. See Note 10 – Commitments and contingencies.
The Company’s development plans, and investments have been funded by a combination of cash flows from operations, debt and committed equity contributions from its stockholders and third parties, and the Company is reliant upon its stockholders and third parties to obtain additional financing through debt or equity raises to fund its working capital needs, contractual commitments, and expansion plans. As of March 31, 2025 and December 31, 2024, the Company has accrued material amounts of expenses in relation to its external advisors, accountants and legal costs in relation to the Business Combination. The Company has a working capital deficiency of $(
Concentration of credit risk
Financial instruments which potentially subject the Company to concentrations of credit risk consist primarily of Cash and cash equivalents and Accounts receivable. The Company places its Cash and cash equivalents with financial institutions of high credit quality. At times, such amounts exceed federally insured limits. Management believes that no significant concentration of credit risk exists with respect to these cash balances because of its assessment of the creditworthiness and financial viability of the respective financial institutions.
The Company provides credit to its customers located both inside and outside the United States in its normal course of business. Receivables are presented net of an allowance for credit losses based on the Company’s assessment of the collectability of customer accounts. The Company maintains an allowance that provides for an adequate reserve to cover estimated losses on receivables as well as contract assets. The Company determines the adequacy of the allowance by estimating the probability of loss based on the Company’s historical credit loss experience and taking into consideration current market conditions and supportable forecasts that affect the collectability of the reported amount. The Company regularly evaluates receivable and contract asset balances considering factors such as the customer’s creditworthiness, historical payment experience and the age of the outstanding balance. Changes to expected credit losses during the period are included in Credit loss expense in the Company’s unaudited condensed consolidated statements of operations
6
and comprehensive (loss) income. After concluding that a reserved accounts receivable is no longer collectible, the Company reduces both the gross receivable and the allowance for credit losses.
The Falcon’s Creative Group segment has significant revenue concentration associated with a few customers. The Falcon’s Creative Group segment is now comprised of the Company’s retained equity method investment in FCG. FCG revenue depends on two customers, QIC and New Murabba. FCG had
The Company had one customer with revenue greater than
The Company had one customer with revenue greater than
Accounts receivable balances with this customer totaled $
Revenue recognition
Attraction maintenance services
The Company's Falcon Beyond Brands segment provides attraction maintenance services to its customers on a time and material basis. The Company recognizes revenue related to these services using the right to invoice practical expedient.
Recently issued accounting standards
On November 27, 2023, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2023-07, “Improvements to Reportable Segment Disclosures.” This ASU requires additional reportable segment disclosures, primarily through enhanced disclosures about significant segment expenses. In addition, the ASU enhances interim disclosure requirements effectively making the current annual requirements a requirement for interim reporting. This ASU is effective for fiscal years beginning after December 15, 2023, and interim periods within fiscal years beginning after December 15, 2024. The Company
In March 2024, the FASB issued ASU 2024-02, “Codification Improvements-Amendments to Remove References to the Concepts Statements”. The amendments in this Update affect a variety of Topics in the Codification. The amendments apply to all reporting entities within the scope of the affected accounting guidance. This update contains amendments to the Codification that remove references to various Concepts Statements. In most instances, the references are extraneous and not required to understand or apply the guidance. In other instances, the references were used in prior statements to provide guidance in certain topical areas. This ASU is effective for public business entities for fiscal years beginning after December 15, 2024. Early adoption is permitted for both interim and annual financial statements that have not yet been issued or made available for issuance. The Company
Recently issued accounting standards not yet adopted as of March 31, 2025
On December 14, 2023, the FASB issued Accounting Standards Update 2023-09, "Improvements to Income Tax Disclosures (ASU 2023-09)," which is primarily applicable to public companies and requires a significant expansion of the granularity of the income tax rate reconciliation as well as an expansion of other income tax disclosures. ASU 2023-09 requires a company to disclose specific income tax categories within the rate reconciliation table and provide additional information for reconciling items that meet a quantitative threshold (if the effect of those reconciling items is equal to or greater than 5 percent of the amount computed by multiplying pretax income (or loss) by the applicable statutory income tax rate. There are also additional disclosures related to income taxes paid disaggregated by jurisdictions, and to income taxes paid. The ASU is effective for annual periods beginning after December 15, 2024 and for interim periods in fiscal years beginning after December 15, 2025. The guidance will be applied on a prospective basis with the option to apply the standard retrospectively. Early adoption is permitted. The Company is currently evaluating the impact of adopting this standard on its income tax disclosures.
7
In November 2024, the FASB issued ASU No. 2024-03, "Income Statement-Reporting Comprehensive Income-Expense Disaggregation Disclosures (Subtopic 220-40)". The amendments in this Update require a public business entity to provide disaggregated disclosures, in the notes to the financial statements, of certain categories of expenses that are included in expense line items on the face of the income statement. Relevant expense categories include, but are not limited to, employee compensation, selling expenses, intangible asset amortization, depreciation, and purchases of inventory. The guidance is effective for fiscal years beginning after December 15, 2026, and interim periods within fiscal years beginning after December 15, 2027, is applied prospectively and may be applied retrospectively. The Company is evaluating the impact of ASU 2024-03.
Disaggregated components of revenue consisted of:
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Three months ended |
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March 31, |
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March 31, |
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Services transferred over time: |
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Shared services |
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$ |
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$ |
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||
Attraction sales and services |
|
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|
|
|
— |
|
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|
$ |
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|
$ |
|
||
Accounts receivable, net consisted of:
|
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As of |
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|||||
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March 31, |
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December 31, |
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||
Related party |
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$ |
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$ |
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Other |
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||
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$ |
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$ |
|
||
Geographic information
Revenues based on the geographic location of the Company’s customer contracts consisted of:
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Three months ended |
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March 31, |
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March 31, |
|
||
USA |
|
$ |
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$ |
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||
|
|
$ |
|
|
$ |
|
||
The Company accounts for its investments in unconsolidated joint ventures using the equity method of accounting. The Company’s joint ventures are as follows:
QIC Delaware, Inc., a Delaware corporation and an affiliate of Qiddiya Investment Company (“QIC”), holds
QIC is entitled to redeem its preferred units on the earlier of (a) the five-year anniversary of the Strategic Investment or (b) any date on which a majority of key persons cease to be employed by FCG. The LLCA contains contractual provisions regarding the distribution of FCG’s income or loss. Pursuant to these provisions, QIC is entitled to a redemption amount of the initial $
The Company and FCG are part of an intercompany service agreement (“Intercompany Services Agreement”) and a license agreement.
8
PDP is an unconsolidated joint venture with Meliá Hotels International, S.A. (“Meliá Group”) for the development and operation of hotel resorts and theme parks. The Company has
The Company has a
Sierra Parima is an equity method investment with Meliá Group focused on the development and operation of hotel resorts and theme parks. The Company has
Investments and advances to equity method investments consisted of:
|
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As of |
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|||||
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March 31, |
|
|
December 31, |
|
||
FCG |
|
$ |
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$ |
|
||
PDP |
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|
||
Karnival |
|
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|
|
|
|
||
|
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$ |
|
|
$ |
|
||
Share of (loss) income from equity method investments consisted of:
|
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Three months ended |
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|||||
|
|
March 31, |
|
|
March 31, |
|
||
FCG |
|
$ |
( |
) |
|
$ |
|
|
PDP |
|
|
|
|
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|
||
Karnival |
|
|
|
|
|
|
||
|
|
$ |
( |
) |
|
$ |
|
|
9
Share of (loss) income from FCG consisted of:
|
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Three months ended |
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|||||
|
|
March 31, |
|
|
March 31, |
|
||
Share of FCG net (loss) income |
|
$ |
( |
) |
|
$ |
|
|
Preferred unit dividend accretion |
|
|
( |
) |
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( |
) |
Basis difference amortization |
|
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( |
) |
|
|
( |
) |
|
|
$ |
( |
) |
|
$ |
|
|
Summarized balance sheet information for the Company’s equity method investments consisted of:
|
|
As of March 31, 2025 |
|
|||||||||
|
|
FCG |
|
|
PDP |
|
|
Karnival |
|
|||
Current assets |
|
$ |
|
|
$ |
|
|
$ |
|
|||
Non-current assets |
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Current liabilities |
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Non-current liabilities |
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As of December 31, 2024 |
|
|||||||||
|
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FCG |
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PDP |
|
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Karnival |
|
|||
Current assets |
|
$ |
|
|
$ |
|
|
$ |
|
|||
Non-current assets |
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Current liabilities |
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Non-current liabilities |
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The Company has certain related parties in common with its joint ventures, however, not all related parties of its joint ventures are related parties of the Company.
|
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As of March 31, 2025 |
|
|
As of December 31, 2024 |
|
||||||||||
|
|
FCG |
|
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PDP |
|
|
FCG |
|
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PDP |
|
||||
Assets |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||
Liabilities |
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|
||||
Assets comprise primarily of accounts receivable, contract assets and other current assets. Liabilities comprise primarily of accounts payable and accrued expenses and other current liabilities and contract liabilities.
Statements of operations for the Company’s equity method investments consisted of:
|
|
Three months ended March 31, 2025 |
|
|||||||||
|
|
FCG |
|
|
PDP |
|
|
Karnival |
|
|||
Total revenues |
|
$ |
|
|
$ |
|
|
$ |
|
|||
(Loss) income from operations |
|
|
( |
) |
|
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|
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|
||
Net (loss) income |
|
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( |
) |
|
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||
|
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Three months ended March 31, 2024 |
|
|||||||||
|
|
FCG |
|
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PDP |
|
|
Karnival |
|
|||
Total revenues |
|
$ |
|
|
$ |
|
|
$ |
|
|||
Income from operations |
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|
|||
Net income |
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|
|||
10
Related party activity for FCG and PDP consisted of:
|
|
Three months ended |
|
|||||||||||||
|
|
March 31, 2025 |
|
|
March 31, 2024 |
|
||||||||||
|
|
FCG |
|
|
PDP |
|
|
FCG |
|
|
PDP |
|
||||
Total revenues |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||
Total expenses |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Accrued expenses and other current liabilities consisted of:
|
|
As of |
|
|||||
|
|
March 31, |
|
|
December 31, |
|
||
Audit and professional fees |
|
$ |
|
|
$ |
|
||
Short term advance |
|
|
|
|
|
— |
|
|
Excise tax payable on FAST II stock redemptions |
|
|
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|
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|
||
Accrued payroll and related expenses |
|
|
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|
||
Accrued interest |
|
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|
||
Demand note payable |
|
|
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|
||
Other |
|
|
|
|
|
|
||
|
|
$ |
|
|
$ |
|
||
Indebtedness consisted of:
|
|
As of March 31, 2025 |
|
|
As of December 31, 2024 |
|
||||||||||
|
|
Amount |
|
|
Interest |
|
|
Amount |
|
|
Interest |
|
||||
$ |
|
$ |
|
|
|
% |
|
$ |
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% |
||||
$ |
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% |
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% |
||||
$ |
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% |
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% |
||||
€ |
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% |
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% |
||||
$ |
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% |
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% |
||||
€ |
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|
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|
% |
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|
% |
||||
|
|
|
|
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|
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|
||||
Less: Current portion of long-term debt and short term debt |
|
|
( |
) |
|
|
|
|
|
( |
) |
|
|
|
||
|
|
$ |
|
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$ |
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|
||||
The Company's debt is carried at amortized cost. Fair values are estimated based on quoted market prices for similar instruments.
The estimated fair value of the €
The estimated fair value of the €
As of March 31, 2025, the remaining commitment available under the Company’s related party revolving credit arrangements was as follows:
|
|
Available |
|
11
$ |
|
$ |
|
$15 million revolving credit arrangement
The Company has a revolving credit arrangement with Infinite Acquisitions Partners LLC (“Infinite Acquisitions”) for $
€1.5 million term loan
In April 2020, the Company entered into a
€7 million term loan
In March 2019, the Company entered into an
$1.25 million term loan
Falcon's Opco has a
$7.22 million term loan
Falcon's Opco has a
$14.77 million term loan
The Company has a
Accounts Receivable
The Company has a receivable from PDP for $
Accounts Payable
The Company reimburses certain audit and professional fees on behalf of PDP and Sierra Parima. There were $
Related party debt
The Company has various long-term debt instruments with Infinite Acquisitions. These loans had $
12
Services provided to equity method investments
FCG has been contracted for various design, master planning, attraction design, hardware sales and commercial services for themed entertainment offerings by the Company’s equity method investments. Destinations Operations recognizes management and incentive fees from the Company’s equity method investments.
Intercompany Services Agreement between FCG and the Company
There was a $
The Company recognizes related party revenue for corporate shared service support provided to FCG. The Company recognized $
FCG also provides marketing, research and development, and other services to FBG. The Company owes FCG $
Subscription agreement with Infinite Acquisitions
Infinite Acquisitions irrevocably committed to invest $
The tax provisions for the three months ended March 31, 2025, and 2024 were computed using the estimated effective tax rates applicable to the taxable jurisdictions for the full year. The Company’s tax rate is subject to management’s quarterly review and revision, as necessary. The Company’s effective tax rate was
The Company records a provision or benefit for income taxes on pre-tax income or loss based on its estimated effective tax rate for the year. Given the Company’s uncertainty regarding future taxable income, the Company maintains a full valuation allowance on its deferred tax assets.
On October 6, 2023, the partners of Falcon’s Opco at the time of the Acquisition Merger (“Exchange TRA Holders”), along with the Company (collectively the “TRA Holders”) entered into a Tax Receivable Agreement (“TRA Agreement”) with Falcon’s Opco that provides for the payment by Falcon’s Opco to the TRA Holders of
Litigation — The Company is named from time to time as a party to lawsuits and other types of legal proceedings and claims in the normal course of business. The Company accrues for contingencies when it believes that a loss is probable and that it can reasonably estimate the amount of any such loss. As previously disclosed in the Company’s Annual Report, on March 27, 2024, a lawsuit was filed against the Company by Guggenheim Securities, LLC (“Guggenheim”) in which Guggenheim alleges that the Company owes certain fees and expenses of $
13
readiness for trial date for June 28, 2025. Solely as part of the Company’s accounting approach to transaction expenses related to the Business Combination, prior to the Company’s receipt of the Guggenheim Complaint, the Company accrued $
Indemnification — In the ordinary course of business, the Company enters into certain agreements that provide for indemnification by the Company of varying scope and terms to customers, vendors, directors, officers, employees, and other parties with respect to certain matters. Indemnification includes losses from breach of such agreements, services provided by the Company, or third-party intellectual property infringement claims. These indemnities may survive termination of the underlying agreement and the maximum potential amount of future indemnification payments, in some circumstances, are not subject to a cap. As of March 31, 2025, and December 31, 2024, there were no known events or circumstances that have resulted in a material indemnification liability.
Commitments — The Company has entered into a commitment with The Hershey Licensing Company (“Hershey”) to develop venues themed with Hershey’s licensed trademarks and intellectual property in at least four locations by 2028. For each location, the Company is required to pay a one-time $
As of February 24, 2023, the Company has entered into a commitment with KIDS Licensing LLC (“KIDS”) to develop venues themed with KIDS’s licensed trademarks and intellectual property. The Company is required to pay a minimum royalty fee of minimum $
As of March 31, 2025, the Company has unfunded commitments to its unconsolidated joint venture Karnival of $
The Company has
FCG provides master planning, media, interactive and audio production, project management, experiential technology and attraction hardware development services and attraction hardware sales on a work-for-hire model. For the purpose of assessing financial performance and making resource allocation decisions, the CODM reviews full FCG results as if FCG was consolidated, instead of only the share of FCG's equity method (loss) or gain. To reconcile total segment revenue to the Company's total consolidated revenue, FCG's segment revenue is eliminated. To reconcile Segment (loss) income from operations to the Company's consolidated net (loss) income before taxes, FCG's Segment (loss) income from operations is eliminated and the Company's share of FCG's equity method (loss) or gain is added. Prior quarter segment results for FCG have been recast to show FCG segment results on a comparable basis, as if it had been consolidated by the Company for the entire quarter.
PDP develops, owns and operates hotels, theme parks and retail, dining and entertainment venues. Destinations Operations provides development and management services for themed entertainment to PDP and new development opportunities, including our investment in Karnival. The Company collectively refers to the Destinations Operations, PDP as Falcon’s Beyond Destinations. Falcon’s Beyond Brands, which is utilized for the development and commercialization of Company owned and third-party intellectual property through consumer products and media.
14
The accounting policies of the segments are the same as those described in the summary of significant accounting policies.
|
|
Three months ended March 31, 2025 |
|
|||||||||||||||||
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Falcon’s |
|
|
Falcon's Beyond Destinations |
Falcon's |
|
|
|
|
||||||||||
|
|
Creative |
|
|
Destinations Operations |
|
|
PDP |
|
|
Beyond |
|
|
Segment Total |
|
|||||
Revenue - external customers |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|||||
|
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|
|||||
Reconciliation of revenue |
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|||||
Revenue corporate unallocated |
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|
|||||
Revenue FCG |
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|
|
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( |
) |
||||
Total consolidated revenue |
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|||||
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|||||
Project design and build expense |
|
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( |
) |
|
|
( |
) |
|
|
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|
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( |
) |
|
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|
||
Selling, general and administrative |
|
|
( |
) |
|
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( |
) |
|
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( |
) |
|
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|
||
Research and development expense |
|
|
|
|
|
( |
) |
|
|
|
|
|
|
|
|
|
||||
Share of gain from equity method investments, excluding impairments |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
Segment (loss) income from operations |
|
|
( |
) |
|
|
( |
) |
|
|
|
|
|
( |
) |
|
|
( |
) |
|
|
|
Three months ended March 31, 2024 |
|
|||||||||||||||||
|
|
Falcon’s |
|
|
Falcon's Beyond Destinations |
Falcon's |
|
|
|
|
||||||||||
|
|
Creative |
|
|
Destinations Operations |
|
|
PDP |
|
|
Beyond |
|
|
Segment Total |
|
|||||
Revenue - external customers |
|
$ |
|
|
$ |
( |
) |
|
$ |
|
|
$ |
|
|
$ |
|
||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
Reconciliation of revenue |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
Revenue corporate unallocated |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
Revenue FCG |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
( |
) |
||||
Total consolidated revenue |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
Project design and build expense |
|
|
( |
) |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Selling, general and administrative |
|
|
( |
) |
|
|
( |
) |
|
|
|
|
|
( |
) |
|
|
|
||
Research and development expense |
|
|
|
|
|
( |
) |
|
|
|
|
|
|
|
|
|
||||
Share of gain from equity method investments, excluding impairments |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
Segment income (loss) from operations |
|
|
|
|
|
( |
) |
|
|
|
|
|
( |
) |
|
|
|
|||
A reconciliation of segment loss from operations to net (loss) income before taxes is as follows:
|
|
Three months ended |
|
|||||
|
|
March 31, |
|
|
March 31, |
|
||
Segment (loss) gain from operations |
|
$ |
( |
) |
|
$ |
|
|
Unallocated corporate overhead |
|
|
( |
) |
|
|
( |
) |
Elimination FCG segment loss (income) from operations |
|
|
|
|
|
( |
) |
|
Share of (loss) income from FCG |
|
|
( |
) |
|
|
|
|
Transaction expenses |
|
|
( |
) |
|
|
( |
) |
Credit loss expense |
|
|
|
|
|
( |
) |
|
Depreciation and amortization expense |
|
|
( |
) |
|
|
( |
) |
Interest expense |
|
|
( |
) |
|
|
( |
) |
Interest income |
|
|
|
|
|
|
||
Change in fair value of warrant liabilities |
|
|
|
|
|
|
||
Change in fair value of earnout liabilities |
|
|
|
|
|
|
||
Foreign exchange transaction gain (loss) |
|
|
|
|
|
( |
) |
|
Net (loss) income before taxes |
|
$ |
( |
) |
|
$ |
|
|
15
Assets and liabilities measured at fair value on a recurring basis are comprised of:
|
|
As of December 31, 2024 |
|
|||||||||||||
|
|
Level 1 |
|
|
Level 2 |
|
|
Level 3 |
|
|
Total |
|
||||
Liabilities: |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Warrant liabilities |
|
|
|
|
|
|
|
|
|
|
|
|
||||
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||
The warrant liability fair value is based on quoted market prices in active markets, and therefore is classified within Level 1 of the fair value hierarchy.
There were no transfers between Level 1 and Level 2, nor into and out of Level 3, during the period presented.
Authorized Capitalization
The total amount of the Company’s authorized capital stock consists of (a)
Common Stock
The rights of the holders of Class A Common Stock and Class B Common Stock have various terms, as follows:
Each holder of common stock is entitled to one vote for each share of common stock held of record by such holder on all matters on which stockholders generally are entitled to vote. Shares of Class B Common Stock carry the same voting rights as shares of Class A Common Stock but have no economic terms. Class B Common Stock is exchangeable, along with common units of Falcon’s Opco, into Class A Common Stock.
Preferred Stock
There are
On September 30, 2024, the Company’s board of directors declared a stock dividend of
16
The weighted average shares of common stock outstanding used to determine the Company’s Net (loss) income per share reflects the retroactive treatment of the Stock Dividend, in addition to the following:
|
|
Three months ended |
|
|||||
(amounts in thousands, except number of shares and amount per share) |
|
March 31, |
|
|
March 31, |
|
||
Numerator: |
|
|
|
|
|
|
||
Net (loss) income |
|
$ |
( |
) |
|
$ |
|
|
Net (loss) income attributable to noncontrolling interests |
|
|
( |
) |
|
|
|
|
|
|
|
|
|
|
|
||
Net (loss) income available to Class A common stockholders |
|
|
( |
) |
|
|
|
|
Adjustment for dilutive warrants |
|
|
( |
) |
|
|
— |
|
Adjustment for dilutive earnout units at Falcon’s Beyond Global, LLC |
|
|
— |
|
|
|
( |
) |
Dilutive net (loss) income attributable to Class A common stockholders |
|
$ |
( |
) |
|
$ |
|
|
Denominator: |
|
|
|
|
|
|
||
Weighted average Class A common stock outstanding - basic |
|
|
|
|
|
|
||
Adjustment for dilutive warrants |
|
|
|
|
|
— |
|
|
Adjustment for dilutive Class A earnout shares |
|
|
— |
|
|
|
|
|
Weighted average Class A common stock outstanding – diluted |
|
|
|
|
|
|
||
|
|
|
|
|
|
|
||
Net (loss) income per Class A common share - basic: |
|
|
( |
) |
|
|
|
|
Net (loss) income per Class A common share – diluted: |
|
|
( |
) |
|
|
|
|
The Company applies the treasury stock method to the Warrants and RSUs, the contingently issuable shares method to the Earnout shares, and the if-converted method for the Exchangeable noncontrolling interests, if dilutive.
|
|
Three months ended |
|
|||||
|
|
March 31, |
|
|
March 31, |
|
||
Class A earnout shares |
|
|
|
|
|
|
||
Class B earnout shares |
|
|
|
|
|
|
||
Warrants to purchase common stock |
|
|
|
|
|
|
||
RSUs |
|
|
|
|
|
|
||
Prior to January 14, 2025, the warrants were classified as a liability and measured at fair value, with changes in fair value included in the unaudited condensed consolidated statements of operations and comprehensive (loss) income. The Warrant agreement was amended effective
The remaining warrants meet the requirements for equity classification after the amendment. The Company adjusted the fair value of the warrants a final time on January 14, 2025, immediately prior to the amendment effective date. The total adjusted liability balance was reclassified into equity on January 14, 2025. After the reclassification to equity, the warrants do not require subsequent fair value measurement.
As of March 31, 2025, there are
Prior to September 30, 2024, the earnout shares were classified as a liability and measured at fair value, with changes in fair value included in the unaudited condensed consolidated statements of operations and comprehensive (loss) income. On September 30, 2024, earnout participants agreed to forfeit all remaining earnout shares held in escrow, which were to be released and earned based on meeting EBITDA and revenue targets.
17
The forfeiture is treated as a modification of the original earnout agreement. The remaining earnout shares which are to be released and earned based on the Company’s stock price meet the requirements for equity classification after the modification. The Company adjusted the fair value of the earnout shares a final time on September 30, 2024, immediately prior to the modification. The total adjusted liability balance, including the amount associated with the forfeited earnout shares, was reclassified into equity as of September 30, 2024. After the reclassification to equity, the earnout shares do not require subsequent fair value measurement.
The Company adopted a share-based compensation plan (the “Plan”) under which
The RSUs do not provide the grantee with an option to choose settlement in cash or stock. The holder of the RSU shall not be, nor have any of the rights or privileges of, a shareholder of the Company, including, without limitation, voting rights and rights to dividends, in respect to the RSUs and any shares underlying the RSUs and deliverable under the Plan unless and until such shares shall have been issued by the Company and held of record by such holder.
|
|
Restricted |
|
|
Nonvested at January 1, 2025 |
|
|
|
|
Granted |
|
|
|
|
Forfeited |
|
|
( |
) |
Vested |
|
|
( |
) |
Nonvested shares outstanding at March 31, 2025 |
|
|
|
|
Vested shares outstanding at March 31, 2025 |
|
|
|
|
The RSUs under the Plan generally vest over a
The RSUs granted under the Plan on February 7, 2025 vest each year following the grant date.
The fair value of these RSUs is estimated based on the fair value of the Company’s common stock on the date of grant using the closing price on the day of grant.
The Company recognized stock-based compensation expense of $
As of March 31, 2025 and December 31, 2024, stock-based compensation expense not yet recognized relating to nonvested awards was $
The Company has evaluated subsequent events through May 15, 2025 and determined that there have been no events that have occurred that would require adjustments to our disclosures in the unaudited condensed consolidated financial statements except for the following:
During April 2025, Falcon's Opco entered into the fourth term loan amendment with FAST II Sponsor to amend the maturity date of its $
During April 2025, Falcon's Opco entered into the fourth term loan amendment with FAST II Sponsor and Katmandu Ventures to amend the maturity date of its $
The Company repaid $
18
On May 9th, 2025, the Company purchased a certain tangible assets and portfolio of intellectual property, including patented technologies, proprietary engineering and manufacturing processes, from Oceaneering Entertainment Systems (“OES”), a division of Oceaneering International Inc. (“OII”) for $
19
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations.
The following discussion and analysis of financial condition and results of operations of the Company is provided to supplement the unaudited condensed consolidated financial statements and the accompanying notes of the Company as of and for the three months ended March 31, 2025, and 2024, included elsewhere in this Quarterly Report. We intend for this discussion to provide the reader with information to assist in understanding the Company’s unaudited condensed consolidated financial statements and the accompanying notes, the changes in those financial statements and the accompanying notes from period to period along with the primary factors that accounted for those changes. Certain information contained in this management’s discussion and analysis includes forward-looking statements that involve risks and uncertainties. Our actual results may differ materially from those anticipated in these forward-looking statements as a result of many factors. Please see “Cautionary Note Regarding Forward-Looking Statements,” in this Quarterly Report.
Overview of Business
The Company operates at the intersection of three potential high-growth business opportunities: content, technology, and experiences. We create immersive entertainment experiences by designing theme parks, developing engaging content, and bringing brands to life through innovative storytelling and technology. We aim to engage, inspire, and entertain people through our creativity and innovation, and to connect people with brands, with each other, and with themselves through the combination of digital and physical experiences. At the core of our business is brand creation and optimization, facilitated by our multi-disciplinary creative teams. The Company has three business divisions, which are conducted through four operating segments.
Our business divisions complement each other as we pursue our growth strategy: (i) the Company’s Falcon’s Creative Group division (“FCG”) creates master plans, designs attractions and experiential entertainment, and produces content, interactives and software; (ii) the Company’s Falcon’s Beyond Destinations division (“FBD”), consisting of Producciones de Parques, S.L., a joint venture between Falcon’s and Meliá Hotels International, S.A. (“Meliá”) (“PDP”), and Destinations Operations, develops a diverse range of entertainment experiences using both Falcon’s owned and third party licensed intellectual property, spanning location-based entertainment, dining, and retail; and (iii) the Company’s Falcon’s Beyond Brands division (“FBB”) endeavors to bring brands and intellectual property to life through animation, movies, licensing and merchandising, gaming, as well as ride and technology sales.
Our unaudited condensed consolidated financial statements have been prepared in accordance with generally accepted accounting principles in the United States (“US GAAP”). All amounts are shown in thousands of U.S. dollars unless otherwise stated.
The following reflects our results of operations for the three months ended March 31, 2025 and 2024.
Liquidity and Going Concern
The Company has been engaged in expanding its operations through its equity method investments, developing new product offerings, raising capital and recruiting personnel. The Company has incurred a loss from operations, and an accumulated deficit for the three months ended March 31, 2025. Accordingly, the Company performed an evaluation of its ability to continue as a going concern through at least twelve months from the date of the issuance of the interim unaudited condensed consolidated financial statements.
The Company’s development plans, and investments have been funded by a combination of cash flows from operations, debt and committed equity contributions from its stockholders, and the Company is reliant upon distributions from equity method investments, its stockholders, and third parties for obtaining additional financing through debt or equity raises to fund its working capital needs, contractual commitments, and expansion plans. As of March 31, 2025, the Company has accrued material amounts of expenses in relation to its external advisors, accountants and legal costs in relation to the Business Combination. As of March 31, 2025, the Company has a working capital deficiency of $(39.1) million which excludes debt maturing in the next 12 months. Additionally, the Company has $10.4 million in debt that is maturing in the next 12 months. The Company does not currently have sufficient cash or liquidity to pay liabilities that are owed or are maturing at this time and to fund ongoing operations. There can be no assurance that additional capital or financing raises, if completed, will provide the necessary funding for the next twelve months from the date of this Quarterly Report. This Quarterly Report does not reflect the possible future effects on the recoverability and classification of assets or the amounts and classifications of liabilities that may result from the possible inability of the Company to continue as a going concern.
20
Results of Operations
The following comparisons are historical results and are not indicative of future results, which could differ materially from the historical financial information presented.
The following table summarizes our results of operations for the following periods:
|
|
Three months ended |
|
|||||
|
|
March 31, |
|
|
March 31, |
|
||
Revenue |
|
$ |
1,708 |
|
|
$ |
1,516 |
|
Expenses: |
|
|
|
|
|
|
||
Project design and build expense |
|
|
106 |
|
|
|
— |
|
Selling, general and administrative expense |
|
|
6,298 |
|
|
|
6,793 |
|
Transaction expenses |
|
|
1,521 |
|
|
|
7 |
|
Credit loss expense |
|
|
— |
|
|
|
12 |
|
Research and development |
|
|
118 |
|
|
|
16 |
|
Depreciation and amortization expense |
|
|
4 |
|
|
|
1 |
|
Loss from operations |
|
|
(6,339 |
) |
|
|
(5,313 |
) |
Share of (loss) gain from equity method investments |
|
|
(4,063 |
) |
|
|
1,154 |
|
Interest expense |
|
|
(1,332 |
) |
|
|
(269 |
) |
Interest income |
|
|
3 |
|
|
|
3 |
|
Change in fair value of warrant liabilities |
|
|
2,886 |
|
|
|
208 |
|
Change in fair value of earnout liabilities |
|
|
— |
|
|
|
118,615 |
|
Foreign exchange transaction gain (loss) |
|
|
752 |
|
|
|
(375 |
) |
Net (loss) income before taxes |
|
$ |
(8,093 |
) |
|
$ |
114,023 |
|
Income tax benefit |
|
|
1 |
|
|
|
1 |
|
Net (loss) income |
|
$ |
(8,092 |
) |
|
$ |
114,024 |
|
Revenue
|
|
Three months ended |
|
|||||
|
|
March 31, |
|
|
March 31, |
|
||
Services transferred over time: |
|
|
|
|
|
|
||
Shared services |
|
$ |
1,622 |
|
|
$ |
1,516 |
|
Attraction sales and services |
|
|
86 |
|
|
|
— |
|
|
|
$ |
1,708 |
|
|
$ |
1,516 |
|
Revenue increased $0.2 million to $1.7 million for the three months ended March 31, 2025, compared to $1.5 million for the three months ended March 31, 2024. The increase was driven by a $0.1 million increase in shared services provided by FBG to FCG and a $0.1 million increase as a result of a new attractions maintenance contract.
Project design and build expense
Project design and build expense was $0.1 million for the three months ended March 31, 2025, as a result of a new attractions maintenance contract.
Selling, general and administrative expense
Selling, general and administrative expense decreased by $0.5 million to $6.3 million for the three months ended March 31, 2025 compared to $6.8 million for the three months ended March 31, 2024. The decrease was primarily related to a $1.8 million decrease in audit fees and professional services fees. The decrease was partially offset by a $0.9 million increase in payroll, payroll taxes, and benefits for shared services headcount to support the expansion of the business, and a $0.4 million increase in office and administrative expenses.
21
Transaction expenses
The Company incurred $1.5 million transaction expenses for the three months ended March 31, 2025 related to a proposed underwritten offering of the Company's Class A common stock that was not completed.
Research and Development
Research and development was $0.1 million for the three months ended March 31, 2025, compared to $16 thousand for the three months ended March 31, 2024. The increase was primarily attributable to the development of a location based entertainment experience.
Share of gain or loss from equity method investments
|
|
Three months ended |
|
|||||
|
|
March 31, |
|
|
March 31, |
|
||
PDP |
|
$ |
474 |
|
|
$ |
534 |
|
Karnival |
|
|
34 |
|
|
|
87 |
|
FCG |
|
|
(4,571 |
) |
|
|
533 |
|
|
|
$ |
(4,063 |
) |
|
$ |
1,154 |
|
Share of loss from equity method investments increased $5.3 million to $4.1 million loss for the three months ended March 31, 2025, compared to a $1.2 million income for the three months ended March 31, 2024. The change in loss from equity method investments was driven by:
Interest expense
Interest expense increased by $1.0 million to $1.3 million for the three months ended March 31, 2025, compared to $0.3 million for the three months ended March 31, 2024 as a result of the increase in outstanding debt and interest rates on both short and long-term debt.
Change in fair value of warrant liability
Gain due to change in fair value of warrant liabilities increased $2.7 million to $2.9 million for three months ended March 31, 2025, compared to $0.2 million for the three months ended March 31, 2024 driven by the decrease in the market value of the Warrants for the three months ended March 31, 2025. As of March 31, 2025, all warrants have been reclassified to equity and will not require subsequent fair value measurement. See Note 14 – Stock warrants in the Company’s unaudited condensed consolidated financial statements.
Change in fair value of earnout liability
As of December 31, 2024, all EBITDA and revenue based earnout shares have been earned or forfeited. The remaining earnout shares based on Company stock price targets were reclassified to equity and do not require subsequent fair value measurement. As a result, there was no change in fair value of earnout liabilities incurred three months ended March 31, 2025.
Gain due to change in fair value of earnout liability was $118.6 million for the three months ended March 31, 2024, driven by a decrease in the market price of the Company’s stock between December 31, 2023 and March 31, 2024.
22
Foreign exchange transaction gain (loss)
Foreign exchange transaction gain increased $1.2 million to a $0.8 million gain for the three months ended March 31, 2025, compared to a $(0.4) million loss for the three months ended March 31, 2024. The increase was primarily attributable to the unrealized foreign exchange gain on U.S. denominated related party debt with a Spanish subsidiary as the U.S. dollar weakened against the Euro during the three months ended March 31, 2025 and strengthened against the Euro during the three months ended March 31, 2024.
Segment Reporting
The following table presents selected information about our segments’ results:
|
|
Three months ended |
|
|||||
|
|
March 31, |
|
|
March 31, |
|
||
Revenues: |
|
|
|
|
|
|
||
Falcon’s Creative Group |
|
$ |
6,271 |
|
|
$ |
14,927 |
|
Destinations Operations |
|
|
— |
|
|
|
(2 |
) |
Falcon’s Beyond Brands |
|
|
86 |
|
|
|
— |
|
Falcon’s Creative Group deconsolidation |
|
|
(6,271 |
) |
|
|
(14,927 |
) |
Unallocated corporate revenue |
|
|
1,622 |
|
|
|
1,518 |
|
Total revenue |
|
|
1,708 |
|
|
|
1,516 |
|
Segment (loss) income from operations: |
|
|
|
|
|
|
||
Falcon’s Creative Group |
|
|
(2,492 |
) |
|
|
1,908 |
|
Destinations Operations |
|
|
(380 |
) |
|
|
(414 |
) |
PDP |
|
|
474 |
|
|
|
534 |
|
Falcon’s Beyond Brands |
|
|
(1,412 |
) |
|
|
(663 |
) |
Total segment (loss) income from operations |
|
|
(3,810 |
) |
|
|
1,365 |
|
Unallocated corporate overhead |
|
|
(2,988 |
) |
|
|
(4,129 |
) |
Elimination FCG segment loss (income) from operations |
|
|
2,492 |
|
|
|
(1,908 |
) |
Share of (loss) income from FCG |
|
|
(4,571 |
) |
|
|
533 |
|
Transaction expense |
|
|
(1,521 |
) |
|
|
(7 |
) |
Credit loss expense |
|
|
— |
|
|
|
(12 |
) |
Depreciation and amortization expense |
|
|
(4 |
) |
|
|
(1 |
) |
Interest expense |
|
|
(1,332 |
) |
|
|
(269 |
) |
Interest income |
|
|
3 |
|
|
|
3 |
|
Change in fair value of warrant liabilities |
|
|
2,886 |
|
|
|
208 |
|
Change in fair value of earnout liabilities |
|
|
— |
|
|
|
118,615 |
|
Foreign exchange transaction gain (loss) |
|
|
752 |
|
|
|
(375 |
) |
Net (loss) income before taxes |
|
$ |
(8,093 |
) |
|
$ |
114,023 |
|
Income tax benefit |
|
|
1 |
|
|
|
1 |
|
Net (loss) income |
|
$ |
(8,092 |
) |
|
$ |
114,024 |
|
Total segment loss from operations increased $5.2 million to a ($3.8) million loss for the three months ended March 31, 2025, compared to $1.4 million income for the three months ended March 31, 2024, due to the following:
23
FCG recorded revenues of $6.3 million in the three months ended March 31, 2025, representing a decrease of $8.6 million or 58% over the three months ended March 31, 2024 as a result of the timing on certain contracts' performance.
As previously announced on January 18, 2024, FCG entered into a consultancy agreement with QIC to provide a Dragon Ball theme park over the course of approximately two years. FCG recognized $4.7 million and $9.8 million in revenue relating to this Dragon Ball consultancy agreement during the three months ended March 31, 2025 and 2024, respectively.
FCG recorded project design and build expense of $5.4 million in three months ended March 31, 2025, representing a decrease of $4.1 million or 43% over the three months ended March 31, 2024 as a result of the decrease in project revenues partially offset by a decline in project gross margins on certain design projects.
FCG recorded operating loss of $(2.8) million, and net loss of $(3.0) million during the three months ended March 31, 2025, compared to an operating income of $1.6 million and net income of $(1.8) million for the three months ended March 31, 2024.
Reportable segment measures of profit and loss are earnings before interest, foreign exchange gains and losses, unallocated corporate expenses, impairments and depreciation and amortization expense. Results of operating segments include costs directly attributable to the segment including project costs, payroll and payroll-related expenses and overhead directly related to the business segment operations. Unallocated corporate overhead costs include costs related to accounting, audit, and corporate legal expenses. Unallocated corporate overhead costs are presented as a reconciling item between total income (losses) from reportable segments and the Company’s unaudited condensed consolidated financial results. For more information about our Segment Reporting, see Note 11 – Segment information in the Company’s unaudited condensed consolidated financial statements.
Non-GAAP Financial Measures
We prepare our unaudited condensed consolidated financial statements in accordance with US GAAP. In addition to disclosing financial results prepared in accordance with US GAAP, we disclose information regarding Adjusted EBITDA which is a non-GAAP measure. We define Adjusted EBITDA as net (loss) income, determined in accordance with US GAAP, for the period presented, before net interest and expense, income tax expense, depreciation and amortization, transaction expenses related to the business combination, credit loss expense related to the closure of the Sierra Parima Katmandu Park, share of equity method investee’s impairment of fixed assets, impairment of equity method investments, change in fair value of warrant liabilities, change in fair value of earnout liabilities and intangible asset impairment loss.
We believe that Adjusted EBITDA is useful to investors as it eliminates the non-cash depreciation and amortization expense that results from our capital investments and intangible assets recognized in any business combination and improves comparability by eliminating the interest expense associated with our debt facilities and eliminating the change in fair value of warrant and earnout liabilities, which may not be comparable with other companies based on our structure.
Adjusted EBITDA has limitations as an analytical tool, and you should not consider it in isolation, or as a substitute for analysis of our results as reported under US GAAP. Some of these limitations are (i) it does not reflect our cash expenditures, or future requirements for capital expenditures or contractual commitments, (ii) it does not reflect changes in, or cash requirements for, our working capital needs, (iii) it does not reflect interest expense, or the cash requirements necessary to service interest or principal payments, on our debt, (iv) although depreciation and amortization are non-cash charges, the assets being depreciated and amortized will often have to be replaced in the future, and Adjusted EBITDA does not reflect any cash requirements for such replacements, (v) it does not adjust for all non-cash income or expense items that are reflected in our statements of cash flows, and (vi) other companies in our industry may calculate these measures differently than we do, limiting their usefulness as comparative measures.
24
The following table sets forth reconciliations of net loss under US GAAP to Adjusted EBITDA for the following periods:
|
|
Three months ended |
|
|||||
|
|
March 31, |
|
|
March 31, |
|
||
Net (loss) income |
|
$ |
(8,092 |
) |
|
$ |
114,024 |
|
Interest expense |
|
|
1,332 |
|
|
|
269 |
|
Interest income |
|
|
(3 |
) |
|
|
(3 |
) |
Income tax benefit |
|
|
(1 |
) |
|
|
(1 |
) |
Depreciation and amortization expense |
|
|
4 |
|
|
|
1 |
|
EBITDA |
|
|
(6,760 |
) |
|
|
114,290 |
|
Transaction expenses |
|
|
1,521 |
|
|
|
7 |
|
Credit loss expense related to the closure of the Sierra Parima Katmandu Park |
|
|
— |
|
|
|
12 |
|
Change in fair value of warrant liabilities |
|
|
(2,886 |
) |
|
|
(208 |
) |
Change in fair value of earnout liabilities |
|
|
— |
|
|
|
(118,615 |
) |
Adjusted EBITDA |
|
$ |
(8,125 |
) |
|
$ |
(4,514 |
) |
Adjusted EBITDA loss increased by $3.6 million from $(4.5) million loss to $(8.1) million loss for the three months ended March 31, 2025, primarily driven by an increase of $5.3 million in the share of loss from equity method investments and a decrease of $0.5 million and selling, general, and administrative expense. These increases were partially offset by increases in foreign exchange transaction gain of $1.2 million.
FCG prepares standalone consolidated financial statements in accordance with US GAAP. In addition to disclosing FCG's standalone financial results prepared in accordance with US GAAP, we disclose information regarding FCG's standalone Adjusted EBITDA which is a non-GAAP measure. FCG defines Adjusted EBITDA as net (loss) income, determined in accordance with US GAAP, for the period presented, before net interest and expense, income tax expense and depreciation and amortization.
FCG believes that Adjusted EBITDA is useful to investors as it eliminates the non-cash depreciation and amortization expense that results from FCG's capital investments and intangible assets recognized in any business combination and improves comparability by eliminating the interest expense associated with our debt facilities, which may not be comparable with other companies based on our structure.
Adjusted EBITDA has limitations as an analytical tool, and you should not consider it in isolation, or as a substitute for analysis of FCG's standalone results as reported under US GAAP. Some of these limitations are (i) it does not reflect FCG's cash expenditures, or future requirements for capital expenditures or contractual commitments, (ii) it does not reflect changes in, or cash requirements for, FCG's working capital needs, (iii) it does not reflect interest expense, or the cash requirements necessary to service interest or principal payments, on FCG's debt, (iv) although depreciation and amortization are non-cash charges, the assets being depreciated and amortized will often have to be replaced in the future, and Adjusted EBITDA does not reflect any cash requirements for such replacements, (v) it does not adjust for all non-cash income or expense items that are reflected in FCG's statements of cash flows, and (vi) other companies in our industry may calculate these measures differently than FCG does, limiting their usefulness as comparative measures.
The following table sets forth reconciliations of net (loss) income for FCG under US GAAP to Adjusted EBITDA for the following periods:
|
|
Three months ended |
|
|||||
|
|
March 31, |
|
|
March 31, |
|
||
Net (loss) income |
|
$ |
(2,977 |
) |
|
$ |
1,803 |
|
Interest expense |
|
|
160 |
|
|
|
157 |
|
Interest income |
|
|
(2 |
) |
|
|
(5 |
) |
Income tax expense (benefit) |
|
|
11 |
|
|
|
(14 |
) |
Depreciation and amortization expense |
|
|
332 |
|
|
|
330 |
|
EBITDA and Adjusted EBITDA |
|
$ |
(2,476 |
) |
|
$ |
2,271 |
|
Adjusted EBITDA decreased by $4.7 million from $2.3 million gain to $(2.5) million loss for the three months ended March 31, 2025, primarily driven by a decrease in revenues of $8.6 million; partially offset by a decrease in project design and build expenses of $4.1 million. As of March 31, 2025, the contracted pipeline for FCG was $48.5 million.
25
Liquidity and Capital Resources
Sources and Uses of Liquidity
Liquidity describes the ability of a company to generate sufficient cash flows to meet the cash requirements of its business operations. Our primary short-term cash requirements are to fund working capital, short-term debt, acquisitions, contractual obligations and other commitments. Our medium-term to long-term cash requirements are to service and repay debt and to invest in facilities, equipment, technologies, location-based entertainment, media production and research and development for growth initiatives. Our principal sources of liquidity are funds from borrowings, equity contributions from our existing investors, distributions from equity method investees and cash on hand.
As of March 31, 2025, our total indebtedness was approximately $41.0 million. We had approximately $1.1 million of cash and $0.9 million available for borrowing under our lines of credit.
We anticipate managing our operations to ensure that our existing cash on hand and unused capacity on our existing lines of credit, along with distributions from equity method investees, additional debt and equity capital raises, and reviewing our portfolio of assets to provide additional liquidity over the next twelve months to meet our short-term needs. Currently, we do not have sufficient cash from operations and unused capacity to meet the next twelve months of our operations.
For the three months ended March 31, 2025, we have operational losses and accumulated deficits that raise substantial doubt about our ability to continue as a going concern. As of March 31, 2025, we have $32.2 million of accrued expenses and other current liabilities, which include $22.6 million of transaction and other related professional fees, $3.0 million short term advance, $2.2 million of excise tax payable on FAST II stock redemptions, $2.2 million of accrued payroll and related expenses, and approximately $2.2 million of other accrued expenses and current liabilities. The transaction expenses are actively being negotiated, and actual settlement may vary from the amounts recorded. Additionally, as of March 31, 2025, we have unfunded commitments to Karnival of $2.4 million (HKD 18.7 million), to be used for the purpose of constructing the Vquarium Entertainment Centers in Hong Kong.
Our capital requirements will depend on many factors, including the timing and extent of spending to support our research and development efforts, investments in technology, the expansion of sales and marketing activities, and market adoption of new and enhanced products and features. In addition, we expect to incur additional costs as a result of operating as a public company. We expect our capital expenditures and working capital requirements to increase materially in the near future. Our ability to generate cash in the future depends on our financial results which are subject to general economic, financial, competitive, legislative and regulatory factors that may be outside of our control. Our future access to, and the availability of credit on acceptable terms and conditions, is impacted by many factors, including capital market liquidity and overall economic conditions. In the event that additional financing is required from outside sources, we cannot be sure that any additional financing will be available to us on acceptable terms if at all. If we are unable to raise additional capital when desired, our business, operating results, and financial condition could be adversely affected. See the section of our Annual Report titled “Risk Factors – We will require additional capital, which additional financing may result in restrictions on our operations or substantial dilution to our stockholders, to support the growth of our business, and this capital might not be available on acceptable terms, if at all.”
Contractual and Other Obligations
Tax Receivable Agreement
In connection with the Closing of the Business Combination, the Company entered into the Tax Receivable Agreement with Falcon’s Opco, the TRA holder representative, certain members of Falcon’s Opco (the “TRA Holders”) and other persons from time-to-time party thereto. Pursuant to the Tax Receivable Agreement, among other things, the Company is required to pay to each TRA Holder 85% of certain tax benefits, if any, that it realizes (or in certain cases is deemed to realize) as a result of the increases in tax basis resulting from any exchange of new Falcon’s Opco units for Class A Common Stock or cash in the future and certain other tax benefits arising from payments under the Tax Receivable Agreement. In certain cases, the Company’s obligations under the Tax Receivable Agreement may accelerate and become due and payable, based on certain assumptions, upon a change in control and certain other termination events, as defined in the Tax Receivable Agreement. On October 24, 2024, the Company and Exchange TRA Holders entered into an Amendment to the Tax Receivable Agreement to clarify the rights of a TRA Holder that transfers units but does not assign the transferee its rights under the TRA Agreement with respect to such transferred units.
26
Commitments
Partnership with Raging Power Limited
Pursuant to the terms of our joint venture agreement with Raging Power, Falcon’s and Raging Power are each required to provide funding to Karnival in the form of non-interest-bearing advances, which will be repaid based on a percentage of gross revenues from the operation of the themed virtual ocean adventure attraction we are developing at the new 11 SKIES complex adjacent to the Hong Kong Airport. Accordingly, the joint venture agreement provides that we receive 16.6% to 20.6% of gross revenue of such location. As of March 31, 2025, we have unfunded commitments to Karnival of $2.4 million (HKD 18.7 million).
Transaction costs
Pursuant to the Business Combination during the year ended December 31, 2023, the Company received net cash proceeds from the Business Combination totaling $0.9 million, net of $1.3 million of FAST II transaction costs and $1.6 million of Falcon’s Opco transaction costs paid at Closing. FAST II and Falcon’s Opco transaction costs related to the Business Combination of $6.3 million and $15.7 million, respectively, are not yet settled as of March 31, 2025, and the Company is actively negotiating to settle them over the next 24 months. These transaction costs are recorded in accrued expenses. Negotiations regarding the terms of the costs yet to be settled are still ongoing and may change materially from these amounts accrued.
The Company is named from time to time as a party to lawsuits and other types of legal proceedings and claims in the normal course of business. As previously disclosed in the Company’s Annual Report, on March 27, 2024, a lawsuit was filed against the Company by Guggenheim Securities, LLC (“Guggenheim”) in which Guggenheim alleges that the Company owes certain fees and expenses of $11.1 million for services allegedly performed by Guggenheim in connection with the Business Combination consummated on October 6, 2023 (the “Guggenheim Complaint”). The Company has denied all liability in response to the Guggenheim Complaint. In addition, the Company filed counterclaims against Guggenheim for fraudulent inducement, breach of contract, breach of the implied covenant of good faith and fair dealing, breach of fiduciary duty, negligence, fraudulent misrepresentation and negligent misrepresentation. Guggenheim moved to dismiss the counterclaims, and the Company opposed that motion. On April 11, 2025, the Company's allegations for breach of contract were sufficient to maintain a claim against Guggenheim and the remainder of the Company's counterclaims were dismissed with leave to replead. On May 5, 2025, the Company filed amended counterclaims against Guggenheim. The case is in its early stages, discovery has commenced, and the Court has set a readiness for trial date for June 28, 2025. Solely as part of the Company’s accounting approach to transaction expenses related to the Business Combination, prior to the Company’s receipt of the Guggenheim Complaint, the Company accrued $11.1 million as of March 31, 2025 and December 31, 2024, with respect to the alleged amended engagement agreement with Guggenheim. The Company intends to vigorously defend itself against the claims alleged in the Guggenheim Complaint and contest the amounts Guggenheim asserts are owed, and to pursue damages based on the Company's counterclaims.
Related Party Loans
The Company has entered into various financing agreements with Infinite Acquisitions and Katmandu Ventures, LLC (“Katmandu Ventures”). As of March 31, 2025, we have aggregate outstanding balances of $28.9 million and $0.9 million under these financing agreements. The loans with Katmandu ventures were modified on April 16, 2025 to extend the maturity date to May 16, 2025.
For more information regarding our related party transactions, see Note 6 — Long-term debt and borrowing arrangements and Note 7 — Related party transactions in the Company’s unaudited condensed consolidated financial statements.
Cash Flows
The following table summarizes our cash flows for the period presented:
|
|
Three months ended |
|
|||||
|
|
March 31, |
|
|
March 31, |
|
||
Cash provided by (used in) operating activities |
|
$ |
945 |
|
|
$ |
(3,768 |
) |
Cash used in investing activities |
|
|
(90 |
) |
|
|
(2,096 |
) |
Cash (used in) provided by financing activities |
|
|
(601 |
) |
|
|
6,231 |
|
27
Cash Flows from Operating Activities
Our cash flows used in operating activities are primarily driven by transaction, legal and professional fees associated with public company compliance costs and corporate overhead activities.
Cash provided by operating activities for the three months ended March 31, 2025, was $0.9 million compared to $(3.8) million for the three months ended March 31, 2024, representing a $4.7 million decrease in cash used in operating activities due to timing of payments.
Cash Flows from Investing Activities
Our primary investing activities consisted of the purchase and sale of property, plant and equipment. Net cash used in investing activities was $(0.1) million during the three months ended March 31, 2025, compared to $(2.1) million net cash used by investing activities during the three months ended March 31, 2024, primarily related to a decrease of $2.1 million in advances made to unconsolidated joint ventures.
Cash Flows from Financing Activities
Net cash used by financing activities increased to $(0.6) million in the three months ended March 31, 2025, compared to $6.2 million cash provided by financing activities in the three months ended March 31, 2024. The increase consisted primarily of $5.2 million decrease in net proceeds from related party loans and $1.3 million decrease in net repayments on third party loans.
Item 3. Quantitative and Qualitative Disclosures About Market Risk.
This item is not applicable as we are a smaller reporting company.
Item 4. Controls and Procedures.
Our management, with the participation of our Chief Executive Officer and Chief Financial Officer, has evaluated the effectiveness of our disclosure controls and procedures (as such term is defined in Rules 13a-15(e) and 15d-15(e) under the Securities and Exchange Act of 1934, as amended (“Exchange Act”)) as of the end of the period covered by this Quarterly Report. Disclosure controls and procedures are designed to ensure that information required to be disclosed by us in the reports that we file or submit under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in SEC rules and forms, and that such information is accumulated and communicated to our management, including our Chief Executive Officer and Chief Financial Officer, to allow timely decisions regarding required disclosures. Management recognizes that any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving their objectives and management necessarily applies its judgment in evaluating the cost benefit relationship of possible controls and procedures. Based on such evaluation, our Chief Executive Officer and Chief Financial Officer have concluded that, as of March 31, 2025, our disclosure controls and procedures were not effective due to the identification of material weaknesses in our internal control over financial reporting.
Previously Reported Material Weaknesses
As previously disclosed in Part II Item 9A of our Annual Report on Form 10-K for the year ended December 31, 2023 and Part II Item 9A of our Annual Report on Form 10-K for the year ended December 31, 2024, in connection with the preparation and audit of the 2023 consolidated financial statements, management concluded that material weaknesses existed in the Company’s internal control over financial reporting with respect to the Company’s Risk Assessment, Control Activities, Monitoring, Control Environment and Information and Communication. These material weaknesses continue to exist as of March 31, 2025.”
Remediation Efforts
We are in the process of implementing measures designed to improve our internal control over financial reporting and remediate the deficiencies that led to the material weaknesses discussed above. Our detailed remediation plans, which are currently in process, include the following actions:
28
In addition, as we continue to evaluate and work to improve our internal control over financial reporting, management may decide to take additional measures to address control deficiencies or determine to modify our remediation plan.
In light of the material weaknesses discussed above, we performed additional procedures to ensure that our consolidated financial statements included in this Quarterly Report were prepared in accordance with U.S. GAAP. Following such additional procedures, our management, including our Chief Executive Officer and Chief Financial Officer, has concluded that our consolidated financial statements present fairly, in all material respects, our financial position, results of operations and cash flows for the periods presented in this Quarterly Report, in conformity with U.S. GAAP.
Changes in Internal Control over Financial Reporting
Except as otherwise described herein, there was no change in our internal control over financial reporting identified in connection with the evaluation required by Rule 13a-15(d) and 15d-15(d) of the Exchange Act that occurred during the quarter ended March 31, 2025 that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.
29
PART II. OTHER INFORMATION
Item 1. Legal Proceedings.
The Company is named from time to time as a party to lawsuits and other types of legal proceedings and claims in the normal course of business. As previously disclosed in the Company’s Annual Report, on March 27, 2024, a lawsuit was filed against the Company by Guggenheim Securities, LLC (“Guggenheim”) in which Guggenheim alleges that the Company owes certain fees and expenses of $11.1 million for services allegedly performed by Guggenheim in connection with the Business Combination consummated on October 6, 2023 (the “Guggenheim Complaint”). The Company has denied all liability in response to the Guggenheim Complaint. In addition, the Company filed counterclaims against Guggenheim for fraudulent inducement, breach of contract, breach of the implied covenant of good faith and fair dealing, breach of fiduciary duty, negligence, fraudulent misrepresentation and negligent misrepresentation. Guggenheim moved to dismiss the counterclaims, and the Company opposed that motion. On April 11, 2025, the Company's allegations for breach of contract were sufficient to maintain a claim against Guggenheim and the remainder of the Company's counterclaims were dismissed with leave to replead. On May 5, 2025, the Company filed amended counterclaims against Guggenheim. The case is in its early stages, discovery has commenced, and the Court has set a readiness for trial date for June 28, 2025. Solely as part of the Company’s accounting approach to transaction expenses related to the Business Combination, prior to the Company’s receipt of the Guggenheim Complaint, the Company accrued $11.1 million as of March 31, 2025 and December 31, 2024, with respect to the alleged amended engagement agreement with Guggenheim. The Company intends to vigorously defend itself against the claims alleged in the Guggenheim Complaint and contest the amounts Guggenheim asserts are owed, and to pursue damages based on the Company's counterclaims.
Item 1A. Risk Factors.
Factors that could cause our actual results to differ materially from those in this Quarterly Report are any of the risks described in our Annual Report. Any of these factors could result in a significant or material adverse effect on our results of operations or financial condition. Additional risk factors not presently known to us or that we currently deem immaterial may also impair our business or results of operations. As of the date of this Quarterly Report there have been no material changes to the risk factors disclosed in the Annual Report. We may disclose changes to such risk factors or disclose additional risk factors from time to time in our future filings with the SEC.
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds.
None.
Item 3. Defaults Upon Senior Securities.
None.
Item 4. Mine Safety Disclosures.
Not applicable.
Item 5. Other Information.
30
Item 6. Exhibits
The following exhibits are filed as part of, or incorporated by reference into, this Quarterly Report:
31.1* |
|
Certification of Principal Executive Officer pursuant to Exchange Act Rule 13a-14(a). |
31.2* |
|
Certification of Principal Financial Officer pursuant to Exchange Act Rule 13a-14(a). |
32.1** |
|
|
32.2** |
|
|
101.INS* |
|
Inline XBRL Instance Document |
101.SCH* |
|
Inline XBRL Taxonomy Extension Schema With Embedded Linkbase Document |
104 |
|
Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101). |
* Filed herewith
** Furnished herewith
31
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.
Date: May 15, 2025 |
|
FALCON’S BEYOND GLOBAL, INC. |
|
|
|
(Registrant) |
|
|
|
|
|
|
|
By |
/s/ Joanne Merrill |
|
|
|
Joanne Merrill |
|
|
|
Chief Financial Officer |
|
|
|
(Principal Financial Officer and Principal Accounting Officer and Authorized Signatory) |
32
Exhibit 31.1
CERTIFICATION OF CHIEF EXECUTIVE OFFICER
PURSUANT TO RULE 13A-14(A) UNDER THE SECURITIES EXCHANGE ACT OF 1934,
AS ADOPTED PURSUANT TO SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002
I, Cecil D. Magpuri, certify that:
1. I have reviewed this Quarterly Report on Form 10-Q of Falcon’s Beyond Global, Inc.;
2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
4. The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
(a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
(b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
(c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
(d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and
5. The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):
(a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
(b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.
Date: May 15, 2025 |
By: |
/s/ Cecil D. Magpuri |
|
|
Name: Cecil D. Magpuri |
|
|
Title: Chief Executive Officer |
|
|
(Principal Executive Officer) |
Exhibit 31.2
CERTIFICATION OF CHIEF FINANCIAL OFFICER
PURSUANT TO RULE 13A-14(A) UNDER THE SECURITIES EXCHANGE ACT OF 1934,
AS ADOPTED PURSUANT TO SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002
I, Joanne Merrill, certify that:
1. I have reviewed this Quarterly Report on Form 10-Q of Falcon’s Beyond Global, Inc.;
2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
4. The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
(a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
(b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
(c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
(d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and
5. The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):
(a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
(b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.
Date: May 15, 2025 |
By: |
/s/ Joanne Merrill |
|
|
Name: Joanne Merrill |
|
|
Title: Chief Financial Officer |
|
|
(Principal Financial and Principal Accounting Officer) |
Exhibit 32.1
CERTIFICATION PURSUANT TO
18 U.S.C. SECTION 1350
AS ADOPTED PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002
In connection with the Quarterly Report of Falcon’s Beyond Global, Inc. (the “Company”) on Form 10-Q for the quarterly period ended March 31, 2025, as filed with the Securities and Exchange Commission (the “Report”), I, Cecil D. Magpuri, Chief Executive Officer of the Company, certify, pursuant to 18 U.S.C. §1350, as added by §906 of the Sarbanes-Oxley Act of 2002, that:
1. The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and
2. To my knowledge, the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company as of and for the period covered by the Report.
Date: May 15, 2025 |
By: |
/s/ Cecil D. Magpuri |
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Name: Cecil D. Magpuri |
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Title: Chief Executive Officer |
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(Principal Executive Officer) |
Exhibit 32.2
CERTIFICATION PURSUANT TO
18 U.S.C. SECTION 1350
AS ADOPTED PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002
In connection with the Quarterly Report of Falcon’s Beyond Global, Inc. (the “Company”) on Form 10-Q for the quarterly period ended March 31, 2025, as filed with the Securities and Exchange Commission (the “Report”), I, Joanne Merrill, Chief Financial Officer of the Company, certify, pursuant to 18 U.S.C. §1350, as added by §906 of the Sarbanes-Oxley Act of 2002, that:
1. The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and
2. To my knowledge, the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company as of and for the period covered by the Report.
Date: May 15, 2025 |
By: |
/s/ Joanne Merrill |
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Name: Joanne Merrill |
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Title: Chief Financial Officer |
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(Principal Financial and Principal Accounting Officer) |