# Falcon's Beyond Global, Inc.: Form 10-Q for the period ended Mar 31, 2025

- Company: [Falcon's Beyond Global, Inc.](/companies/fbyd.md) (CIK 1937987)
- Form: 10-Q
- Filed: 2025-05-15
- Accepted by EDGAR: May 15, 2025, 20:31 ET
- Period: 2025-03-31
- Accession: 0000950170-25-072750
- Inline XBRL: yes
- Main document: https://www.sec.gov/Archives/edgar/data/1937987/000095017025072750/fbyd-20250331.htm
- All documents and exhibits: https://www.sec.gov/Archives/edgar/data/1937987/000095017025072750/

## Figures reported in this filing

Standardized XBRL line items for the period ended 2025-03-31.

| Line item | Period | Value | XBRL concept |
| --- | --- | ---: | --- |
| Research and development | 3 months, 2025-01-01 to 2025-03-31 | $118.0k | us-gaap:ResearchAndDevelopmentExpense |
| Selling, general and administrative | 3 months, 2025-01-01 to 2025-03-31 | $6.3m | us-gaap:SellingGeneralAndAdministrativeExpense |
| Operating income | 3 months, 2025-01-01 to 2025-03-31 | −$6.3m | us-gaap:OperatingIncomeLoss |
| Interest expense | 3 months, 2025-01-01 to 2025-03-31 | $1.3m | us-gaap:InterestExpense |
| Income tax | 3 months, 2025-01-01 to 2025-03-31 | −$1.0k | us-gaap:IncomeTaxExpenseBenefit |
| Diluted EPS | 3 months, 2025-01-01 to 2025-03-31 | −$0.13 | us-gaap:EarningsPerShareDiluted |
| Basic EPS | 3 months, 2025-01-01 to 2025-03-31 | −$0.10 | us-gaap:EarningsPerShareBasic |
| Diluted shares (weighted) | 3 months, 2025-01-01 to 2025-03-31 | 37,509,127 shares | us-gaap:WeightedAverageNumberOfDilutedSharesOutstanding |
| Operating cash flow | 3 months, 2025-01-01 to 2025-03-31 | $945.0k | us-gaap:NetCashProvidedByUsedInOperatingActivities |
| Capital expenditure | 3 months, 2025-01-01 to 2025-03-31 | $92.0k | us-gaap:PaymentsToAcquirePropertyPlantAndEquipment |
| Cash and equivalents | at 2025-03-31 | $1.1m | us-gaap:CashAndCashEquivalentsAtCarryingValue |
| Current assets | at 2025-03-31 | $2.7m | us-gaap:AssetsCurrent |
| Total assets | at 2025-03-31 | $56.7m | us-gaap:Assets |
| Current liabilities | at 2025-03-31 | $52.1m | us-gaap:LiabilitiesCurrent |
| Total liabilities | at 2025-03-31 | $82.7m | us-gaap:Liabilities |
| Long-term debt | at 2025-03-31 | $30.6m | us-gaap:LongTermDebtNoncurrent |
| Current portion of debt | at 2025-03-31 | $1.9m | us-gaap:LongTermDebtCurrent |
| Short-term borrowings | at 2025-03-31 | $8.5m | us-gaap:ShortTermBorrowings |
| Shareholders' equity | at 2025-03-31 | −$11.6m | us-gaap:StockholdersEquity |

## Management's discussion and analysis

As filed, 33,945 characters.

*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.

### 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, 2025 | March 31, 2024 |
| --- | ---: | ---: |
| 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

| Services transferred over time: | Three months ended March 31, 2025 | March 31, 2024 |
| --- | ---: | ---: |
| 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.

#### 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, 2025 | March 31, 2024 |
| --- | ---: | ---: |
| 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:

- **PDP:** Share of net income from PDP remained consistent for the three months ended March 31, 2025, compared to the three months ended March 31, 2024. The Company recognized its 50% share of PDP’s net income.
- **Karnival:** Share of net income from Karnival decreased by less than $0.1 million for three months ended March 31, 2025 primarily driven by interest income.
- **FCG**: Share of net loss from FCG was $4.6 million for the three months ended March 31, 2025. The Company recognizes 100% of net income, 9% preferred return to QIC and amortization of the basis difference on deconsolidation of FCG. FCG's net loss of $3.0 million for the three months ended March 31, 2025 was increased by adjustments of $1.6 million comprised of $0.8 million in accretion of preference dividend and fees, and $0.8 million in amortization of basis difference.

#### 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.

#### 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:

| Revenues: | Three months ended March 31, 2025 | March 31, 2024 |
| --- | ---: | ---: |
| 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:

- FCG segment loss for the three months ended March 31, 2025, increased $4.4 million to $(2.5) million loss as compared to income of $1.9 million in the three months ended March 31, 2024, primarily as a result of a decrease in revenues and a decrease in margins on certain current long-term contracts. The net loss was increased by adjustments of $(1.6) million comprised of $(0.8) million in accretion of preference dividend and fees, and $(0.8) million in incremental amortization on the intangible assets on the difference between the Company’s share of net assets measured at fair value and FCG’s carrying value.

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.

- Destinations Operations segment loss from operations for the three months ended March 31, 2025, remained consistent compared to the three months ended March 31, 2024.
- PDP segment income remained consistent for the three months ended March 31, 2025, compared to the three months ended March 31, 2024.
- FBB segment loss from operations for the three months ended March 31, 2025 increased $0.7 million to $(1.4) million compared to $(0.7) million for the three months ended March 31, 2024. The increase is primarily as a result of selling, general and administrative expense increase of $0.7 million in payroll related costs to develop the Destinations Operations division.

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.

The following table sets forth reconciliations of net loss under US GAAP to Adjusted EBITDA for the following periods:

|  | Three months ended March 31, 2025 | March 31, 2024 |
| --- | ---: | ---: |
| **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, 2025 | March 31, 2024 |
| --- | ---: | ---: |
| **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.

### 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.

### 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, 2025 | March 31, 2024 |
| --- | ---: | ---: |
| 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.

## Controls and procedures

As filed, 4,654 characters.

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:

- We have engaged a third-party consulting firm to accelerate our risk assessment based on the criteria established in the COSO framework and to support in the design, implementation and documentation of controls to ensure timely and accurate financial reporting.
- We have designed and implemented systems and controls to enable effective and timely review of period end close procedures, and accounting review processes.
- We have engaged a third-party global consulting firm to enhance our review of significant accounting transactions and other new technical accounting and financial reporting issues and preparing and reviewing accounting memoranda. We have hired

additional qualified accounting and financial reporting personnel to support the nature, growth and complexity of our business.

- We are in the process of designing and implementing controls and documentation segregation of duties over information technology systems used to create or maintain financial reporting records.

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.

## Risk factors

As filed, 689 characters.

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.

Filed May 15, 2025.
Source: SEC EDGAR, the filing index for accession 0000950170-25-072750. Last ingested by Listed: Oct 24, 2026, 15:16 ET. No prices; not investment advice.