Falcon's Beyond Global, Inc.: Form 10-Q for the period ended Sep 30, 2025

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 and nine months ended September 30, 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 ride and technology sales and service, animation, movies, licensing and merchandising, and gaming.

Our unaudited condensed consolidated financial statements have been prepared in accordance with generally accepted accounting principles in the United States (“U.S. GAAP”). All amounts are shown in thousands of U.S. dollars unless otherwise stated.

The following reflects our results of operations for the three and nine months ended September 30, 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 negative cash flows from operating activities, as it has invested in growing the Falcon's Beyond Brands division and the newly acquired OES business, for the nine months ended September 30, 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 debt and equity investments from its stockholders, and distributions from the sale of non-core assets from its equity method investments. The Company is reliant upon its stockholders, and third parties for obtaining additional financing through debt or equity raises, and from distributions from equity method investments, to fund its working capital needs, contractual commitments, and expansion plans. As of September 30, 2025, the Company continues to carry material accrued expenses and accounts payable in relation to its external advisors fees for the 2023 Business Combination. As of September 30, 2025, the Company has a working capital deficiency of $27.0 million including $8.2 million debt that matured on May 16, 2025 and debt coming due of $1.9 million.

The Company does not currently have sufficient cash or liquidity to pay all liabilities that are owed or are maturing in the next twelve months and fund ongoing operations. There can be no assurance that additional capital or financing raises, or liquidation of non-core assets and investments, 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:

Revenue

Revenue increased for the three and nine months ended September 30, 2025, compared to the same periods in 2024, primarily driven by new attractions contracts.

Project design and build expense

Project design and build expense increased for the three and nine months ended September 30, 2025, compared to the same periods in 2024, primarily driven by new attractions sales and service contracts.

Selling, general and administrative expense

Selling, general and administrative expense increased for the three months ended September 30, 2025, compared to the same period in 2024, primarily driven by a $2.1 million increase in payroll, payroll taxes, and benefits, professional fees, occupancy costs and marketing to support the expansion of the attraction services business. The increase was partially offset by $0.6 million credit in full settlement of a claim against a third party network service provider to recover expenses related to a network intrusion.

Selling, general and administrative expense increased for the nine months ended September 30, 2025, compared to the same period in 2024, primarily driven by a $5.2 million increase in payroll, payroll taxes, and benefits, professional fees, occupancy costs and marketing to support the expansion of the attraction services business. The decrease was partially offset by a $2.3 million decrease in audit and professional services fees and by a $0.6 million credit in full settlement of a claim against a third party network service provider to recover expenses related to a network intrusion.

Transaction (credit) expenses

The Company recognized a transaction credit of $3.5 million for the nine months ended September 30, 2025 as a result of a transaction expense settlement. The transaction credit was partially offset by $1.7 million transaction expenses for the nine months ended September 30, 2025 related to a proposed underwritten offering of the Company's Class A common stock during the first quarter in 2025 that was not completed.

Research and Development

Research and development increased for the nine months ended September 30, 2025, compared to the same periods in 2024, primarily driven by the development of a location based entertainment experience.

Depreciation and amortization expense

Depreciation and amortization expense increased for the three and nine months ended September 30, 2025, compared to the same periods in 2024, primarily driven by the OES Acquisition. See “Note 3 – Business combination” within Item 1 of this Quarterly Report.

Share of (loss) gain from equity method investments

Share of (loss) gain from equity method investments increased for the three and nine months ended September 30, 2025, compared to the same periods in 2024 was primarily driven by:

PDP: Share of net income from PDP decreased for the three months ended September 30, 2025, compared to the same periods in 2024, primarily driven by lower net income due to absence of the the Tenerife property following the sale of Tertian earlier in the year, partially offset by purchase price adjustments on the sale of Tertian and a higher foreign currency translation rate.

Share of net income from PDP increased for the nine months ended September 30, 2025, compared to the same periods in 2024. On May 30, 2025, PDP sold all the shares of Tertian XXI, S.L., ("Tertian") a wholly-owned subsidiary of PDP, which owned the real estate assets comprising the resort hotel at Tenerife, the ("Tenerife Sale"). The Company received $27.0 million in a cash dividend distribution from PDP as a result of the transaction. PDP recognized a pre tax gain on sale of $60.0 million. The Company recognized its 50% share of the gain of $30.0 million within the share of (loss) gain from equity method investments.

The fair value of the Company’s remaining investment in PDP, which operates one hotel resort and theme park located in Mallorca, Spain, was determined to be below the recorded value. As of June 30, 2025, the Company recognized an other-than-temporary impairment charge of $5.3 million, which is recorded in share of (loss) gain from equity method investments.

See “Note 5 – Investments and advances to equity method investments” within Item 1 of this Quarterly Report. The Company recognized its 50% share of PDP’s net income.

• Karnival: Share of net loss from Karnival increased for the three and nine months ended September 30, 2025, compared to the same periods in 2024, primarily driven by an impairment in the carrying value of the investment. The fair value of the

Company’s investment in Karnival was determined to be $4.2 million. During October 2025, the Company and its joint venture partner have agreed to terminate this project and windup the joint venture due to protracted delays in the underlying location development schedule. As a result the Company recognized an other-than-temporary impairment charge of $3.0 million, which is recorded in share of (loss) gain from equity method investments in the consolidated statement of operations and comprehensive (loss) income.

• FCG: The Company recognizes 100% of net income (loss), 9% preferred return to QIC and amortization of the basis difference on deconsolidation of FCG. FCG's net income (loss) was impacted by adjustments for accretion of preference dividend and fees, and amortization of basis difference as follows:

Interest expense

Interest expense increased for the three and nine months ended September 30, 2025, compared to the same periods in 2024, primarily driven by the increase in 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 for the nine months ended September 30, 2025, compared to the same period in 2024, primarily driven by the decrease in the market value of the warrants through January 14, 2025. As of March 31, 2025, all warrants have been reclassified to equity and will not require subsequent fair value measurement. See "Note 18 – Stock warrants" in the Company’s unaudited condensed consolidated financial statements.

Change in fair value of earnout liability

As of September 30, 2025, 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 for the three and nine months ended September 30, 2025.

Gain due to change in fair value of earnout liability was for the three and nine months ended September 30, 2024, primarily driven by a decrease in the market price of the Company’s stock between December 31, 2023 and September 30, 2024.

Foreign exchange transaction (loss) gain

Foreign exchange transaction loss increased for the three months ended September 30, 2025, compared to the same periods in 2024. The change is primarily attributable to the foreign exchange loss on U.S. denominated intercompany debt with a Spanish subsidiary as the U.S. dollar strengthened against the Euro during the three months ended September 30, 2025, and weakened against the Euro during the three months ended September 30, 2024. This intercompany debt was repaid during the three months ended September 30, 2025.

Foreign exchange transaction gain increased for the nine months ended September 30, 2025, compared to the same periods in 2024. The change is primarily attributable to the foreign exchange gain on U.S. denominated intercompany party debt with a Spanish subsidiary as the U.S. dollar weakened against the Euro during the nine months ended September 30, 2025, and strengthened against the Euro during the nine months ended September 30, 2024.

Gain on bargain purchase of OES Acquisition

The fair value of the identifiable assets acquired and liabilities assumed in the OES Acquisition exceeded the fair value of the purchase price. Therefore, the Company recognized $1.1 million gain on bargain purchase of OES Acquisition for the three and nine months ended September 30, 2025. See “Note 3 – Business combination" in the Company’s unaudited condensed consolidated financial statements.

Segment Reporting

The following table presents selected information about our segments’ results:

• FCG segment income decreased for the nine months ended September 30, 2025, compared to the same periods in 2024, primarily as a result of a decrease in revenues and a decrease in margins on certain current long-term contracts. FCG's net income (loss) was adjusted for accretion of preference dividend and fees, and amortization of basis difference as follows:

FCG revenues decreased for the three and nine months ended September 30, 2025, compared to the same periods in 2024, as a result of the timing of certain contract performance obligations.

FCG project design and build expense decreased for the three and nine months ended September 30, 2025, compared to the same periods in 2024, primarily driven by the decrease in project revenues partially offset by a decline in project gross margins on certain design projects.

• Destinations Operations segment income (loss) from operations increased (decreased) for the three and nine months ended September 30, 2025, respectively, compared to the same periods in 2024, primarily driven by decreased shared services allocations.
• PDP's share segment income increased for the three and nine months ended September 30, 2025, compared to the same periods in 2024, as a result of the Tenerife Sale partially offset by the impairment of PDP. See “Note 5 – Investments and advances to equity method investments” within Item 1 of this Quarterly Report.
• FBB segment loss from operations increased for the three and nine months ended September 30, 2025 compared to the same periods in 2024, primarily driven by an increase in payroll and selling, general and administrative costs related costs to develop the Falcon's Attractions business, partially offset by increases in revenue net of project design and build expenses, from new attractions service contracts.

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 (loss) from reportable segments and the Company’s unaudited condensed consolidated financial results. For more information about our Segment Reporting, see Note 14 – 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 U.S. GAAP. In addition to disclosing financial results prepared in accordance with U.S. GAAP, we disclose information regarding Adjusted EBITDA which is a non-GAAP measure. We define Adjusted EBITDA as net income, determined in accordance with U.S. GAAP, for the period presented, before net interest and expense, income tax expense, depreciation and amortization, transaction (credit) 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 gain on Tenerife Sale, impairment of PDP, impairment of Karnival, change in fair value of warrant liabilities, change in fair value of earnout liabilities and gain on bargain purchase of OES Acquisition.

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 U.S. 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 U.S. GAAP to Adjusted EBITDA for the following periods:

Adjusted EBITDA loss increased for the three months ended September 30, 2025, compared to the same period in 2024, primarily driven by a $1.1 million increase in losses from operations from the integration of the OES acquisition, a $4.0 million decrease in the share of (loss) gain from equity method investments and a decrease of $0.9 million in foreign exchange transaction gain.

Adjusted EBITDA loss increased for the nine months ended September 30, 2025, compared to the same period in 2024, primarily driven by a $0.7 million increase in losses from operations from the integration of the OES acquisition, a $9.7 million decrease in share of gain from equity method investments, partially offset by an increase of $1.8 million in foreign exchange transaction gain.

FCG prepares standalone consolidated financial statements in accordance with U.S. GAAP. In addition to disclosing FCG's standalone financial results prepared in accordance with U.S. GAAP, we disclose information regarding FCG's standalone Adjusted EBITDA which is a non-GAAP measure. FCG defines Adjusted EBITDA as net income, determined in accordance with U.S. 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 U.S. 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 U.S. GAAP to Adjusted EBITDA for the following periods:

Adjusted EBITDA decreased for the three months ended September 30, 2025, compared to the same period in 2024, primarily driven by a decrease in revenues of $7.4 million; partially offset by a decrease in project design and build expenses of $3.5 million and a decrease in selling, general and administrative expense of $0.3 million.

Adjusted EBITDA decreased for the nine months ended September 30, 2025, compared to the same period in 2024, primarily driven by a decrease in revenues of $19.5 million; partially offset by a decrease in project design and build expenses of $10.5 million and a decrease in selling, general and administrative expense of $1.1 million. As of September 30, 2025, the contracted pipeline for FCG was $48.3 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.

On September 8, 2025, the Company issued $28.7 million of Series B Preferred Stock for $8.0 million in cash and the exchange of $20.7 million of outstanding debt and accrued interest.

As of September 30, 2025, our total indebtedness was approximately $16.1 million. We had approximately $4.3 million of cash and cash equivalents and $10.0 million available for borrowing under our lines of credit. On November 10, 2025 we entered into a new $15.0 million line of credit agreement and amended our existing line of credit agreement to reduce the borrowing capacity to $5.5 million. Collectively, these agreements increasing cash available for borrowing by $5.5 million.

We anticipate managing our operations to ensure that our existing cash on hand and unused capacity on our 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 settle our outstanding liabilities and meet the needs of our next twelve months of our operations.

For the nine months ended September 30, 2025, we have operational losses, and negative cash flows from operating activities that raise substantial doubt about our ability to continue as a going concern. As of September 30, 2025, we have $21.1 million of accrued expenses and other current liabilities, which include $16.0 million of transaction and other related professional fees, $2.1 million of accrued payroll and related expenses, $2.0 million accrued interest and approximately $1.0 million of other accrued expenses and current liabilities. The transaction expenses are actively being negotiated, and actual settlement may vary from the amounts recorded.

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.

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 $4.1 million and $12.2 million, respectively, are not yet settled as of September 30, 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. Guggenheim denied all liability as to those amended counterclaims. On June 30, 2025, Guggenheim filed a Notice of Issue and Certificate of Readiness for trial, and on October 27, 2025 Guggenheim moved for summary judgment on its claims, which the Company opposed; on the same day, the Company moved for partial summary judgment on its claims which Guggenheim opposed. Pursuant to 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 September 30, 2025 and December 31, 2024, with respect to the alleged amended engagement agreement with Guggenheim.

Related Party Loans

On September 8, 2025, the Company exchanged $20.5 million of debt and accrued interest with Infinite Acquisitions for the issuance of $20.5 million of shares of Series B Preferred Stock.

The Company has a financing agreement with Katmandu Ventures, LLC (“Katmandu Ventures”) with an outstanding balance of $0.6 million as of September 30, 2025. The loan was due on May 16, 2025 and we are in negotiations to amend the loan.

See "Note 9 – Long-term debt and borrowing arrangements", "Note 10 – Related party transactions" and "Note 16 – Equity" in the Company’s unaudited condensed consolidated financial statements.

Cash Flows

The following table summarizes our cash flows for the period presented:

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, operating costs of our Falcon's Attraction services business and corporate overhead activities.

Cash used in operating activities increased for the nine months ended September 30, 2025, compared to the same period in 2024, due to the settlement of accounts payable and accrued obligations associated with our corporate overhead and compliance costs, and the investment in working capital for the growth of the Falcon's Beyond Brands business following the OES Acquisition.

Cash Flows from Investing Activities

Net cash provided by investing activities increased for the nine months ended September 30, 2025, compared to the same period in 2024, primarily related to a $27.0 million dividend distribution from PDP, partially offset by $2.0 million advance to affiliate and $1.6 million cash paid for the OES Acquisition.

Cash Flows from Financing Activities

Net cash provided by financing activities decreased for the nine months ended September 30, 2025, compared to the same period in 2024. The Company received $8.0 million in proceeds from the issuance Series B Preferred Stock and made net repayments of $5.3 of debt in the nine months ended September 30, 2025. For the nine months ended September 30, 2024, the Company received $6.0 million in net proceeds from debt and warrant exercises, $2.3 million in short term advances from affiliates and $0.6 million in proceeds from issuances of RSUs to affiliates.

Critical Accounting Estimates

The Company's critical accounting policies have not changed materially from those reported in the Company’s Annual Report on Form 10-K filed with the SEC on April 3, 2025, except for the addition of the following:

Business Combinations

The Company utilizes the acquisition method of accounting under ASC 805, Business Combinations ("ASC 805"), for all transactions and events in which it obtains control over one or more other businesses (even if less than 100% ownership is acquired), to recognize the fair value of all assets and liabilities assumed and to establish the acquisition date fair value as of the measurement date.

While the Company uses its best estimates and assumptions as part of the purchase price allocation process to accurately value assets acquired and liabilities assumed as of the acquisition date, the estimates and assumptions are inherently uncertain and subject to refinement. As a result, during the measurement period, which may be up to one year from the acquisition date, the Company records adjustments to the assets acquired and liabilities assumed, with the corresponding offset to goodwill or bargain purchase to the extent we identify adjustments to the preliminary fair values. For changes in the valuation of intangible assets between the preliminary and final purchase price allocation, the related amortization is adjusted in the period it occurs. Subsequent to the measurement period, any adjustment to assets acquired or liabilities assumed is included in operating results in the period in which the adjustment is determined. Transaction expenses that are incurred in connection with a business combination, other than costs associated with the issuance of debt or equity securities, are expensed as incurred.

Contingent consideration is classified as a liability or as equity on the basis of the definitions of a financial liability and an equity instrument; contingent consideration payable in cash is classified as a liability. The Company recognizes the fair value of any contingent consideration that is transferred to the seller in a business combination on the date at which control of the acquiree is obtained. Contingent consideration payments related to acquisitions are measured at fair value each reporting period using Level 3 unobservable inputs (as defined in the Fair value measurement policy included in the Company’s Annual Report on Form 10-K filed with the SEC on April 3,

2025). When reported, any changes in the fair value of these contingent consideration payments are included in contingent earnout expense on the consolidated statements of operations and comprehensive (loss) income.

Partial impairment of Investment in PDP

The Tenerife sale represents a significant change in circumstances that could impact the fair value of the Company’s remaining investment in PDP. Accordingly, the Company performed an impairment evaluation of its equity method investment in PDP to determine whether the remaining carrying amount of the investment exceeds its fair value.

The Company evaluated its remaining equity investment in PDP for impairment as of June 30, 2025 and determined that it was other-than-temporarily impaired. The Company estimated the fair value of its investment in PDP using the direct capitalization method of the income approach. The Company used the property's estimated net operating income, yearly growth rate, capital expenditure reserves and a capitalization rate as the primary significant unobservable inputs (Level 3). The estimated fair value is based upon assumptions that Management believes are reasonable, and the impact of variations in these estimates or the underlying assumptions could be material. The fair value of the Company’s investment in PDP was determined to be $27.1 million. For the nine months ended September 30, 2025, the Company recognized an other-than-temporary impairment charge of $5.3 million, which is recorded in share of (loss) gain from equity method investments in the consolidated statement of operations and comprehensive (loss) income.

Partial Impairment of Investment in Karnival

The winding up of the joint venture represents a significant change in circumstances that could impact the fair value of the Company’s remaining investment in Karnival. Accordingly, the Company performed an impairment evaluation of its equity method investment in Karnival to determine whether the remaining carrying amount of the investment exceeds its fair value.

The Company evaluated its remaining equity investment in Karnival for impairment as of September 30, 2025 and determined that it was other-than-temporarily impaired. The Company estimated the fair value of its investment in Karnival using the liquidation value of cash and cash equivalents less estimated costs to liquidate valuation inputs (Level 2). The estimated fair value is based upon assumptions that Management believes are reasonable, and the impact of variations in these estimates or the underlying assumptions could be material. The fair value of the Company’s investment in Karnival was determined to be $4.2 million. For the three and nine months ended September 30, 2025, the Company recognized an other-than-temporary impairment charge of $3.0 million, which is recorded in share of (loss) gain from equity method investments in the consolidated statement of operations and comprehensive (loss) income.

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 September 30, 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 September 30, 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 of 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 September 30, 2025 that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.

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, other than as set forth below, 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.

The impairments of our intangible assets and equity method investment in our joint ventures have materially and adversely impacted our business and results of operations and may do so again in the future.

Under accounting principles generally accepted in the United States, we review certain assets for impairment annually in the fourth quarter of each fiscal year, or more frequently if events or changes in circumstances indicate the carrying value may not be recoverable. Further, we review our equity-method investments for impairment whenever events or changes in circumstances indicate that the carrying amount of the investment may not be recoverable. We recognize an impairment of an equity-method investment if the fair value of the investment as a whole, and not the underlying assets, has declined and the decline is other than temporary. The outcome of such testing previously has resulted in, and in the future could result in, impairments of our assets, including our property, plant, and equipment, intangible assets, goodwill and/or our equity method investment in our joint ventures.

Our Sierra Parima segment experienced losses in 2023 as a result of financial, operational, infrastructure challenges encountered at the Katmandu Park DR following its opening in March 2023. Sierra Parima performed an evaluation of its long-lived fixed assets in accordance with ASC 360 to determine whether their fair value is less than carrying value. As a result of this analysis, Sierra Parima recorded a fixed asset impairment of $46.7 million as of December 31, 2023. Based on the estimated sale or liquidation proceeds from Sierra Parima, and Sierra Parima’s outstanding debts remaining to be settled, the fair value of the Company’s investment in Sierra Parima was determined to be zero. The impairment is the result of management’s estimates and assumptions regarding the likelihood of certain outcomes related to various liquidation and sale scenarios and pending legal matters, the timing of which remains uncertain. These estimates were determined primarily using significant unobservable inputs (Level 3). The estimates that the Company makes with respect to its equity method investment are based upon assumptions that management believes are reasonable, and the impact of variations in these estimates or the underlying assumptions could be material. On May 30, 2025, the Company’s investment in Sierra Parima was sold for nominal consideration and no gain or loss on the sale was recognized. For more information about the impairment charge with respect to Sierra Parima, see "Note 5 – Investments and advances to equity method investments – Sierra Parima” to our unaudited condensed consolidated financial statements contained in Item 1 of this Quarterly Report.

Further, the Tenerife Sale, which was completed on May 30, 2025, represented a significant change in circumstances that could impact the fair value of the Company’s remaining investment in PDP. The Company evaluated its remaining equity investment in PDP for impairment as of June 30, 2025 and determined that it was other-than-temporarily impaired. The Company estimated the fair value of its investment in PDP using the direct capitalization method of the income approach. The Company used the property's estimated net operating income, yearly growth rate, capital expenditure reserves and a capitalization rate as the primary significant unobservable inputs (Level 3). The estimated fair value is based upon assumptions that management believes are reasonable, and the impact of variations in these estimates or the underlying assumptions could be material. The fair value of the Company’s investment in PDP was determined to be $27.1 million. As of June 30, 2025, the Company recognized an other-than-temporary impairment charge of $5.3 million, which is recorded in share of (loss) gain from equity method investments in the consolidated statement of operations and comprehensive (loss) income. See Note 5 – Investments and advances to equity method investments – PDP to our unaudited condensed consolidated financial statements contained in Item 1 of this Quarterly Report.

The Company has a 50% interest in Karnival, an unconsolidated joint venture. The Company and its joint venture partners have agreed to commence the liquidation process of the joint venture. The liquidation process of the joint venture represents a significant change in circumstances that could impact the fair value of the Company’s remaining investment in Karnival. Accordingly, the Company performed an impairment evaluation of its equity method investment in Karnival to determine whether the remaining carrying amount of the investment exceeds its fair value, and determined that, as of September 30, 2025, it was other-than-temporarily impaired. The Company estimated the fair value of its investment in Karnival using the liquidation value of cash and cash equivalents less estimated costs to liquidate valuation inputs (Level 2). The estimated fair value is based upon assumptions that management believes are reasonable, and the impact of variations in these estimates or the underlying assumptions could be material. The fair value of the Company’s investment in Karnival was determined to be $4.2 million. As of September 30, 2025, the Company recognized an other-than-temporary impairment charge of $3.0 million, which is recorded in share of (loss) gain from equity method investments in the consolidated statement of operations and comprehensive (loss) income.

The accounting estimates related to impairments are susceptible to change, including estimating fair value which requires considerable judgment. For goodwill, management’s estimate of a reporting unit’s future financial results is sensitive to changes in assumptions, such as changes in stock prices, weighted-average cost of capital, terminal growth rates and industry multiples. Similarly, cash flow estimates utilized for purposes of evaluating long-lived assets and equity method investments (such as in our PDP joint venture) require us to make projections and assumptions for many years into the future for pricing, demand, competition, operating costs, timing of operations, and other factors. We evaluate long-lived assets and equity method investments for impairment when events or changes in circumstances indicate, in management’s judgment, that the carrying value of such assets may not be recoverable (meaning, in the case of its equity method investment, that such investment has suffered other-than-temporary declines in value under ASC 323, Investments: Equity Method Investments and Joint Ventures). When a quantitative assessment is performed, we use estimates and assumptions in estimating our reporting units’, our long-lived assets’ and our equity method investment’s fair values that we believe are reasonable and appropriate at that time; however assumptions and estimates are inherently subject to significant business, economic, competitive and other risks that could materially affect the calculated fair values and the resulting conclusions regarding impairments, which could materially affect our results of operations and financial position.

We cannot guarantee that in future periods we will not be required to recognize additional impairment charges, whether in our other equity method investments, to the extent it is regained in the future, or other intangible assets, nor that we will be able to avoid a significant charge to earnings in our consolidated financial statements during the period in which an impairment is determined to exist. Impairments to our equity method investment in our PDP joint venture have materially and adversely affected our results of operations in the past, and could again in the future, as could reductions in the carrying value of any intangible assets or our other equity method investments.

Following the closure of Katmandu Park DR and the Tenerife Sale, and the commencement of liquidation of our Karnival joint venture, our FBD business is in transition, and the repositioning and rebranding of FBD projects will be subject to timing, budgeting and other risks which could have a material adverse effect on us. In addition, the ongoing need for capital expenditures to develop our FBD business could have a material adverse effect on us, including our financial condition, liquidity and results of operations.

In our FBD business, we may encounter difficulties in adapting our asset-efficient strategy or in developing and maintaining effective joint partnerships with our existing JV partners, Meliá and Raging Power, and/or with new joint venture partnerships. We expect our asset-efficient strategy to reduce our capital expenditures by harnessing the strengths and resources of current and future strategic partners, allowing us to focus on our core competencies of bringing incredible experiences to people. However, we may not be able to execute on such strategy effectively. For example, we may not be able to negotiate agreements with our existing joint venture partners or with new joint venture partners on terms that are acceptable to us or at all, and our ability to successfully operate an asset-efficient model exposes us to different risks than we face with an asset-heavy model, as we will be increasingly subject to the risks inherent in third-party infrastructure over which we would have limited control. Further, our efforts to reduce our existing capital expenditures may not be successful. For example, while we believe the closure of Katmandu Park DR to visitors was in the best interest of the Sierra Parima joint venture with Meliá because the closure eliminates potential ongoing operational losses at the Katmandu Park DR, and while we believe the Tenerife Sale and commencement of liquidation of our Karnival joint venture were each similarly in our best interests, there may be unexpected consequences of such closure, sale and liquidation that negatively impact our business or that of our joint venture partner, whereby such unexpected consequences could be the basis for a dispute with our joint venture partner.

Further, even with an asset-efficient business model, our FBD business may still be subject to traditional risks associated with resort and theme park development, acquisition, expansion, repositioning and rebranding, including, among others:

• construction delays or cost overruns that may increase project costs;
• receipt of zoning and other required governmental permits and authorizations;
• increased costs due to competition for labor, including employees and subcontractors, skilled in emerging technology;
• strikes or other labor issues;
• restrictions or delays in transportation and import-export procedures;
• delays or cost inflation in the supply chain and third-party vendors required to develop the resorts and parks;
• development costs incurred for projects that are not pursued to completion;
• investment of substantial capital without, in the case of developed or repositioned resorts, immediate corresponding income;
• results that may not achieve our desired revenue or profit goals;
• acts of nature such as earthquakes, wildfires, hurricanes, volcanic eruptions, floods or fires that could adversely impact a resort;
• ability to raise capital, including construction or acquisition financing; and
• governmental restrictions on the nature or size of a project.

In addition, in the future, certain of our construction timelines may be lengthened and/or require increased development costs due to competition for skilled construction labor and employees with relevant technical expertise, disruption in the supply chain for materials, increased costs for raw materials and supplies, labor relations and construction practices in foreign markets, rising inflation, the conflict between Russia and Ukraine and the Israel-Hamas war; and these circumstances could continue or worsen in the future. As a result of the foregoing, we cannot assure you that any of our development, acquisition, expansion, repositioning and rebranding projects will be completed on time or within budget or that the ultimate rates of investment return will be as we forecasted at the time the project was commenced. If we are unable to complete a project on time or within budget, the resort and/or theme park’s projected operating results may be adversely affected, which could have a material adverse effect on us, including our business, financial condition, liquidity, results of operations and prospects.

The FBD properties, including the resorts owned and operated by our PDP joint venture with Meliá, also have an ongoing need for renovations, rebranding and other capital improvements and expenditures, including to replace furniture, fixtures and equipment from time to time as the need arises. While we believe the closure of Katmandu Park DR to visitors, the Tenerife Sale, and the commencement of liquidation of Karnival should help reduce our ongoing capital expenditures, we still have assets through our PDP joint venture, including a hotel and theme park in Mallorca, Spain.

In addition, because a principal competitive factor for a theme park or other attraction is the uniqueness and perceived quality of its rides and experiential technologies, we must make significant up-front and continued capital investments, from the initial construction of the theme parks through maintenance and potentially the addition of new rides, attractions and technologies. These up-front and continued capital investments may not ever result in net income.

In addition to liquidity risks, these capital expenditures may result in declines in revenues while hotels and parks are in initial construction, while rooms, restaurants, rides or attractions are out of service for rebranding or maintenance, and while areas of our properties are closed due to capital improvement projects. We expect our costs will increase over time, and our losses may continue, as we expect to continue to invest additional funds in expanding our business and sales and marketing activities. We also expect to incur additional general and administrative expenses as a result of our growth and expect our costs to continue increase to support our operations as a public company. Historically, our costs have increased over the years due to these factors, and we expect to continue to incur increasing costs to support our anticipated future growth. For example, following the opening of our Katmandu Park DR in March 2023, we experienced various financial, operational, and infrastructure challenges that led to lower than planned open days and attendance at the park. As a result, in March 2024, we closed Katmandu Park DR to visitors. For more information about the closure of the Katmandu Park DR, see "Note 5 – Investments and advances to equity method investments – Sierra Parima" to our unaudited condensed consolidated financial statements contained in Item 1 of this Quarterly Report.

The costs of capital improvements, expenditures or any of the above noted factors, or if we are unable to generate adequate revenue growth and manage our expenses, could have a material adverse effect on us, including our financial condition, liquidity and results of operations. There is also a risk that our estimates of the cost of such capital improvements will not be accurate, causing us to seek additional financing and creating construction delays. In addition, any construction delays or ride downtime can adversely affect attendance at our hotels, theme parks and other interactive attractions and our ability to realize revenue growth.