Falcon's Beyond Global, Inc.

Previous wording

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.

Current wording

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 six months ended June 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.

Previous wording

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.

Current wording

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.

Previous wording

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.

Current wording

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.

Previous wording

The following reflects our results of operations for the three months ended March 31, 2025 and 2024.

Current wording

The following reflects our results of operations for the three and six months ended June 30, 2025 and 2024.

Previous wording

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.

Current wording

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, an accumulated deficit and negative cash flows from operating activities for the six months ended June 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.

Previous wording

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.

Current wording

The Company’s development plans, and investments have been funded by a combination of debt and committed equity contributions 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 June 30, 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 June 30, 2025, the Company has a working capital deficiency of $27.4 million including $8.5 million debt that matured on May 16, 2025 and debt coming due of $0.4 million.

Previous wording

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.

Current wording

Selling, general and administrative expense increased for the three months ended June 30, 2025, compared to the same period in 2024, primarily driven by a $1.0 million increase in payroll, payroll taxes, and benefits to support the expansion of the attraction services business, a $0.8 million increase in office and administrative expenses and a $0.2 million increase in royalty expense primarily driven by the development of a location based entertainment experience. The increase was partially offset by a $0.7 million decrease in audit and professional services fees.

Previous wording

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.

Current wording

The Company recognized a transaction credit of $3.5 million for the six months ended June 30, 2025 as a result of a transaction expense settlement. The transaction credit was partially offset by $1.7 million transaction expenses for the six months ended June 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.

Previous wording

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.

Current wording

PDP: Share of net income from PDP increased for the three and six months ended June 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 $59.5 million. The Company recognized its 50% share of the gain of $29.8 million within the Share of gain from equity method investments.

Previous wording

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.

Current wording

Karnival: Share of net income from Karnival decreased for the three and six months ended June 30, 2025, compared to the same periods in 2024, primarily driven by a decrease in interest income.

Previous wording

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.

Current wording

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:

Previous wording

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.

Current wording

Interest expense increased for the three and six months ended June 30, 2025, compared to the same periods in 2024, primarily driven by the increase in outstanding debt and interest rates on both short and long-term debt.

Previous wording

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.

Current wording

Gain due to change in fair value of warrant liabilities increased for the six months ended June 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 16 – Stock warrants in the Company’s unaudited condensed consolidated financial statements.

Previous wording

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.

Current wording

As of June 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 six months ended June 30, 2025.

Previous wording

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.

Current wording

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

Previous wording

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.

Current wording

Foreign exchange transaction gain increased for the three and six months ended June 30, 2025, compared to the same periods in 2024. The increase is 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 and six months ended June 30, 2025 and strengthened against the Euro during the three and six months ended June 30, 2024.

Previous wording

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.

Current wording

FCG segment income decreased for the six months ended June 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:

Previous wording

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.

Current wording

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. Dragon Ball consultancy agreement revenue was $4.8 million and $11.5 million for the three months ended June 30, 2025 and 2024, respectively, and $9.5 million and $21.3 million for the six months ended June 30, 2025 and 2024, respectively.

Previous wording

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.

Current wording

FCG project design and build expense decreased for the three and six months ended June 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.

Previous wording

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.

Current wording

Destinations Operations segment loss from operations decreased for the three and six months ended June 30, 2025, compared to the same periods in 2024, primarily driven by decreased shared services allocations.

Previous wording

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.

Current wording

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 13 – Segment information in the Company’s unaudited condensed consolidated financial statements.

Previous wording

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.

Current wording

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, change in fair value of warrant liabilities and change in fair value of earnout liabilities.

Previous wording

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.

Current wording

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.

Previous wording

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

Current wording

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

Previous wording

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.

Current wording

Adjusted EBITDA loss increased for the six months ended June 30, 2025, compared to the same period in 2024, primarily driven by a $0.6 million increase in losses from operations, a $5.5 million decrease in share of gain from equity method investments, partially offset by an increase of $2.7 million in foreign exchange transaction gain.

Previous wording

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.

Current wording

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.

Previous wording

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.

Current wording

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.

Previous wording

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

Current wording

The following table sets forth reconciliations of net income (loss) for FCG under U.S. GAAP to Adjusted EBITDA for the following periods:

Previous wording

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.

Current wording

Adjusted EBITDA decreased for the six months ended June 30, 2025, compared to the same period in 2024, primarily driven by a decrease in revenues of $12.1 million; partially offset by a decrease in project design and build expenses of $7.0 million. As of June 30, 2025, the contracted pipeline for FCG was $47.2 million.

Previous wording

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.

Current wording

As of June 30, 2025, our total indebtedness was approximately $40.6 million. We had approximately $26.1 million of cash and $1.0 million available for borrowing under our lines of credit.

Previous wording

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.

Current wording

For the six months ended June 30, 2025, we have operational losses, accumulated deficits and negative cash flows from operating activities that raise substantial doubt about our ability to continue as a going concern. As of June 30, 2025, we have $35.0 million of accrued expenses and other current liabilities and short term advances, which include $18.6 million of transaction and other related professional fees, $8.0 million short term advances, $2.4 million of excise tax payable on FAST II stock redemptions, $2.6 million of accrued payroll and related expenses, and approximately $3.4 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 June 30, 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.

Previous wording

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.

Current wording

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 $12.2 million, respectively, are not yet settled as of June 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.

Previous wording

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.

Current wording

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 has now filed counterclaims against Guggenheim for fraud, breach of contract, breach of fiduciary duty, and equitable recession. Guggenheim has denied all liability as to those amended counterclaims. On June 30, 2025, Guggenheim filed a Notice of Issue and Certificate of Readiness for trial, but discovery has not been concluded and Falcon's moved to strike it. 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 June 30, 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 amended counterclaims.

Previous wording

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.

Current wording

The Company has entered into various financing agreements with Infinite Acquisitions and Katmandu Ventures, LLC (“Katmandu Ventures”). As of June 30, 2025, we have aggregate outstanding balances of $28.8 million and $0.9 million under these financing agreements, respectively. The loan with Katmandu Ventures was due on May 16, 2025 and we are in negotiations to amend the loan.

Previous wording

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.

Current wording

Cash used in operating activities increased for the six months ended June 30, 2025, compared to the same period in 2024, due to timing of payments.

Previous wording

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.

Current wording

Net cash provided by financing activities decreased for the six months ended June 30, 2025, compared to the same period in 2024, primarily as a result of $6.5 million decrease in net proceeds from related party loans and $1.3 million decrease in net repayments on third party loans, partially offset by $8.0 million on short term advances.