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 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.

Current wording

The following discussion and analysis of our financial condition and results of operations is provided to supplement our unaudited condensed consolidated financial statements and the accompanying notes as of and for the three months ended March 31, 2026, and 2025, included elsewhere in this Quarterly Report. We intend for this discussion to provide the reader with information to assist in understanding our 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

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

Current wording

The following reflects our results of operations for the three months ended March 31, 2026 and 2025.

Previous wording

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.

Current wording

We assess our ability to meet obligations over the next twelve months based on current liquidity, assuming continued execution of our operating plan and financing and capital initiatives. While we believe these assumptions are reasonable, we have incurred recurring operating losses and negative cash flows from operations. These conditions, together with our ongoing capital needs to support its growth initiatives and working capital requirements, raise substantial doubt about our ability to continue as a going concern. We continue to take active steps to strengthen its capital position and improve liquidity, including pursuing additional financing and evaluating strategic alternatives. While management believes these actions may enhance our financial flexibility, they do not change the conclusion that substantial doubt exists about our ability to continue as a going concern. There can be no assurance that additional capital or financing, if obtained, will provide sufficient funding for the next twelve months from the date of this Quarterly Report on Form 10-Q. This Quarterly Report on Form 10-Q 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 us to continue as a going concern.

Previous wording

The following comparisons are historical results and are not indicative of future results, which could differ materially from the historical financial information presented.

Current wording

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:

Previous wording

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.

Current wording

Revenue increased for the three months ended March 31, 2026, compared to the same period in 2025, primarily driven by new attractions contracts.

Previous wording

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.

Current wording

Project design and build expense increased for the three months ended March 31, 2026, compared to the same period in 2025, primarily driven by new attractions service contracts.

Previous wording

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.

Current wording

Selling, general and administrative expense increased for the three months ended March 31, 2026, compared to the same period in 2025, primarily driven by an increase in payroll, payroll taxes, and benefits, professional fees, occupancy costs and marketing to support the continued expansion of the attraction services business.

Previous wording

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.

Current wording

We recognized a transaction credit of $11.1 million for the three months ended March 31, 2026 for the reversal of accrued transaction expenses related to the Business Combination. See "Note 7 – Commitments and contingencies" in our unaudited condensed consolidated financial statements for additional discussion. We incurred $1.5 million of transaction expense for the three months ended March 31, 2025 related to a proposed underwritten offering of our Class A common stock that was not completed.

Previous wording

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:

Current wording

Share of loss from equity method investments increased for the three months ended March 31, 2026, compared to the same period in 2025, primarily driven by:

Previous 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:

Current wording

FCG: We recognize 100% of net gain (loss), 9% preferred return to QIC and amortization of the basis difference on deconsolidation of FCG. See "Segment Reporting" below for further details.

Previous wording

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.

Current wording

Interest expense decreased for the three months ended March 31, 2026, compared to the same period in 2025, primarily driven by decreases in both short and long-term debt resulting from principal payments made during the period and exchange of debt and accrued interest for shares of Series B Preferred Stock in the third quarter of 2025.

Previous wording

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.

Current wording

As of March 31, 2025, all warrant liabilities were reclassified to equity and do not require subsequent fair value measurement. See Note 8 – Stock warrants in our unaudited condensed consolidated financial statements.

Previous wording

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.

Current wording

Foreign exchange transaction gain decreased for the three months ended March 31, 2026, compared to the same period in 2025. The change is primarily attributable to the decrease of the U.S. denominated related party debt with a Spanish subsidiary.

Previous wording

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:

Current wording

FCG segment income increased for the three months ended March 31, 2026, compared to the same period in 2025, primarily as a result of an increase in margins on certain current long-term contracts and gain on sale of land. FCG's net income (loss) was adjusted for accretion of preference dividend and fees, and amortization of basis difference as follows:

Previous wording

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.

Current wording

FCG revenues increased for the three months ended March 31, 2026, compared to the same period in 2025, as a result of the timing of certain contract performance obligations. As of March 31, 2026, the contracted pipeline for FCG was $29.2 million.

Previous wording

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.

Current wording

FCG project design and build expense increased for the three months ended March 31, 2026, compared to the same period in 2025, primarily driven by an increase in project revenues.

Previous wording

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.

Current wording

Destinations Operations segment loss from operations decreased for the three months ended March 31, 2026, compared to the same period in 2025, 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 (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.

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 our unaudited condensed consolidated financial results. For more information about our Segment Reporting, see Note 13 – Segment information in our unaudited condensed consolidated financial statements.

Previous 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, 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.

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 (loss), determined in accordance with U.S. GAAP, for the period presented, before net interest and expense, income tax (expense) benefit, depreciation and amortization, transaction expense (credit) related to the Business Combination and change in fair value of warrant liabilities.

Previous wording

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.

Current wording

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 liabilities, which may not be comparable with other companies based on our structure.

Previous wording

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

Current wording

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

Previous 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.

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, depreciation and amortization and gain on sale of land.

Previous wording

The following table sets forth reconciliations of net (loss) income for FCG under U.S. 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

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.

Current wording

As of March 31, 2026, our total indebtedness was approximately $16.7 million. We had approximately $1.2 million of cash and $13.2 million available for borrowing under our lines of credit.

Previous wording

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.

Current wording

We anticipate managing our operations to ensure that our existing cash on hand and unused capacity on our existing lines of credit, along with distributions from equity method investees, additional debt and equity capital raises, and our portfolio of assets can provide additional liquidity over the next twelve months to meet our short-term needs. Management’s assessment of our ability to meet its obligations over the next twelve months is based on current liquidity levels and assumes the continued execution of its operating plan and certain financing and capital initiatives. While management believes these assumptions are reasonable, we have incurred recurring operating losses and negative cash flows from operations. These conditions, together with our ongoing capital needs to support its growth initiatives and working capital requirements, raise substantial doubt about our ability to continue as a going concern. We continue to take active steps to strengthen its capital position and improve liquidity, including pursuing additional financing and evaluating strategic alternatives. While management believes these actions may enhance our financial flexibility, they do not change the conclusion that substantial doubt exists about our ability to continue as a going concern.

Previous wording

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.

Current wording

In connection with the Closing of the Business Combination, we 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, we are 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, our 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, we 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.

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 $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.

Current wording

Transaction costs related to the Business Combination of $5.1 million are not yet settled as of March 31, 2026 and we are 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 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.

Current wording

We have a financing agreement with Katmandu Ventures, LLC (“Katmandu Ventures”) with a total outstanding balance of $0.6 million as of March 31, 2026. The loan was due on May 16, 2025 and we are in negotiations to amend the loan.

Previous wording

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.

Current wording

See "Note 6 – Long-term debt and borrowing arrangements" and "Note 14 – Related party transactions" in our unaudited condensed consolidated financial statements.

Previous wording

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.

Current wording

Our cash flows used in operating activities increased for the three months ended March 31, 2026, compared to the same period in 2025, due to the continued investment in working capital for the growth of the Falcon's Attractions business, partially offset by a $1.7 million dividend distribution from PDP.

Previous wording

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.

Current wording

Net cash provided by investing activities increased for the three months ended March 31, 2026, compared to the same period in 2025, primarily related to a $1.5 million dividend distribution from Karnival.

Previous wording

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:

Current wording

Our critical accounting policies have not changed materially from those reported in our Annual Report on Form 10-K filed with the SEC on March 30, 2026.