Falcon's Beyond Global, Inc.

(in thousands of U.S. dollars, unless otherwise stated)

Description of business and basis of presentation

Merger with FAST II

Falcon’s Beyond Global, Inc., a Delaware corporation (“Pubco”, “FBG”, or the “Company”), entered into an Amended and Restated Agreement and Plan of Merger, dated as of September 1, 2023 (the “Merger Agreement”), by and among Pubco, FAST Acquisition Corp. II, a Delaware corporation (“FAST II”), Falcon’s Beyond Global, LLC, a Delaware limited liability company (“Falcon’s Opco”), and Palm Merger Sub, LLC, a Delaware limited liability company and a wholly-owned subsidiary of Pubco (“Merger Sub”).

On October 5, 2023, FAST II merged with and into Pubco (the “SPAC Merger”), with Pubco surviving as the sole owner of Merger Sub, followed by a contribution by Pubco of all of its cash (except for cash required to pay certain transaction expenses) to Merger Sub to effectuate the “UP-C” structure; and on October 6, 2023, Merger Sub merged with and into Falcon’s Opco (the “Acquisition Merger,” and collectively with the SPAC Merger, the “Business Combination”), with Falcon’s Opco as the surviving entity of such merger. Following the consummation of the transactions contemplated by the Merger Agreement (the “Closing”), the direct interests in Falcon’s Opco were held by Pubco and certain holders of the limited liability company units of Falcon’s Opco outstanding as of immediately prior to the Business Combination.

Based on developments from the court cases related to the Business Combination, payments of previously accrued expenses are no longer probable, which resulted in the recognition of a transaction credit of $4.0 million and $15.1 million for the three and six months ended June 30, 2026, respectively. Following the reversal of these no longer probable accrued transaction expenses, the Company has a remaining accrual for transaction expenses related to the Business Combination of $1.1 million. See “Note 7 – Commitments and contingencies” for additional discussion.

Acquisition of OES

On May 9, 2025, the Company acquired certain tangible assets and intellectual property, including patented technologies and proprietary engineering and manufacturing processes, from Oceaneering Entertainment Systems (“OES”), a division of Oceaneering International, Inc., for $1.6 million. The acquisition expanded the Company's attractions services business and formed the foundation of the Falcon's Attractions segment.

Nature of operations

The Company is a visionary entertainment and technology enterprise at the forefront of the global experience economy. We design, develop, engineer, deliver, and commercialize immersive physical and digital experiences for leading brands, developers, and destination operators worldwide, as well as for our own portfolio of entertainment and technology concepts. Our business is built on an integrated experience platform that brings together creative development, proprietary technologies, advanced engineering, intellectual property (“IP”), and operational execution to enable the repeatable creation, deployment, and scaling of entertainment experiences across multiple formats and locations globally. We operate through three complementary business divisions: Falcon’s Creative Group (“FCG”), Falcon’s Beyond Brands (“FBB”), and Falcon’s Beyond Destinations (“FBD”), each of which serves a distinct role within the Company’s operating model and participates in different stages of value creation within the experience economy. These divisions are conducted through five operating segments as of June 30, 2026. FCG provides creative and advisory services including destination strategy, master planning, experiential and attraction design, digital media, interactive software, IP development, and creative guardianship for entertainment and hospitality destinations. FBB, consisting of Falcon's Attractions and FBB-Other, encompasses a broad portfolio of intellectual property, proprietary technologies, and operating businesses that design, engineer, commercialize, and deploy entertainment systems, products, content, and experiences across physical and digital environments. 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, owns, operates, and expands entertainment venues, hospitality experiences, and branded destination concepts across a variety of location‑based formats, utilizing proprietary and third‑party intellectual property.

Basis of presentation

The unaudited condensed consolidated financial statements include the accounts of the Company and its majority-owned subsidiaries for which it exercises control. Long-term investments in affiliated companies in which the Company exercises significant influence, but which it does not control, are accounted for using the equity method. The Company does not have any significant variable interest entities or special purpose entities whose financial results are not included in the unaudited condensed consolidated financial statements.

The financial statements of the Company’s foreign operating subsidiaries are measured using the local currency as the functional currency. Assets and liabilities are translated at exchange rates as of the balance sheet date. Revenues and expenses are translated at average monthly exchange rates prevailing during the period. Resulting translation adjustments are included in Accumulated other comprehensive income (loss).

The accompanying condensed consolidated financial statements of the Company are unaudited. In the opinion of management, all adjustments necessary for a fair statement of results of operations, cash flows, and financial position have been made. Except as otherwise disclosed, all such adjustments are of a normal recurring nature. Interim results are not necessarily indicative of results for a full year. The year-end consolidated balance sheet data was derived from audited financial statements but does not include all disclosures required by generally accepted accounting principles in the United States of America (“U.S. GAAP”).

The unaudited condensed consolidated financial statements and notes are presented in accordance with the accrual basis of accounting in accordance with U.S. GAAP, with the rules and regulations of the Securities and Exchange Commission (“SEC”) and do not contain certain information included in the Company’s Annual Report on Form 10-K filed with the SEC on March 30, 2026.

Therefore, these interim condensed consolidated financial statements should be read in conjunction with the consolidated financial statements and notes thereto contained in the Company’s Annual Report.

Principles of consolidation

The noncontrolling interest represents the membership interest in Falcon’s Opco held by holders other than the Company.

The results of operations attributable to the noncontrolling interest are included in the Company’s unaudited condensed consolidated statements of operations and comprehensive income (loss), and the noncontrolling interest is reported as a separate component of equity.

The Company consolidates the assets, liabilities, and operating results of Falcon’s Opco and its wholly owned subsidiaries. All intercompany balances and transactions have been eliminated in the consolidation.

Liquidity

The Company has continued to invest in initiatives focused primarily on expanding its Falcon's Beyond Brands division, including product development, talent acquisition, and selective strategic investments. These activities have contributed to operating losses and negative cash flows from operations. Net cash used in operating activities was $0.3 million for the six months ended June 30, 2026, a reduction compared with comparable prior periods. As required by Accounting Standards Codification (“ASC”) 205-40, Disclosures of Uncertainties about an Entity’s Ability to Continue as a Going Concern, the Company evaluated its ability to continue as a going concern through at least twelve months from the date of the issuance of these unaudited condensed consolidated financial statements.

The Company’s development plans and associated working capital needs have been funded by a combination of debt and equity investments from its stockholders and the sale of non-core assets. The Company expects to continue utilizing a mix of these funding sources, including access to capital markets, additional financing arrangements, potential monetization of non-core investments, and expected distributions from PDP associated with the return of required withholding taxes from the sale of the Sol Tenerife Hotel in 2025 to support its ongoing growth strategy and working capital requirements. As of June 30, 2026, the Company had a working capital deficit of $8.4 million, driven by the $6.9 million Deferred Loan Settlement, which is included within the $8.9 million of debt obligations classified as current based on their contractual maturity dates. The Company is actively evaluating refinancing and other alternatives with respect to these obligations. See“Note 6 – Long-term debt and borrowing arrangements” for additional discussion.

Management’s assessment of the Company’s 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. Although cash flows from operations have improved compared with prior comparable periods, the Company has incurred operating losses and negative cash flows from operations in recent periods and has ongoing capital needs to support its growth initiatives and to settle short-term debt obligations. These conditions raise substantial doubt about the Company’s ability to continue as a going concern. The Company continues to take active steps to strengthen its capital position and improve liquidity, including pursuing additional financing and evaluating strategic alternatives; however, because these actions had not been completed as of the date of issuance of these financial statements, they do not alleviate the substantial doubt described above. 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 the Company to continue as a going concern.

Summary of significant accounting policies

Revenue recognition

The Company recognizes revenue in accordance with ASC 606, Revenue from Contracts with Customers (“ASC 606”). Revenue is recognized when control of goods or services transfers to customers in an amount that reflects the consideration the Company expects to be entitled to in exchange for those goods or services.

The Company generates revenue from the following revenue streams:

•

Shared services: The Company provides corporate shared services to FCG on a time-and-materials basis and recognizes revenue using the right-to-invoice practical expedient.

•

Destinations operations services: Revenue is derived from management and incentive fees, typically based on a percentage of revenues or profits of managed operations. The Company applies the practical expedient to recognize revenue for the amount invoiced when the invoice corresponds directly to the value of the Company's performance to date.

•

Attraction services: The Falcon's Attractions segment provides engineering services, fabrication, integration, installation and maintenance services and in-service support for ride systems and attraction hardware, typically under project-specific contractual arrangements or on a time-and-materials basis. Revenue from project-based arrangements is recognized over time using the cost-to-cost input method when the criteria for over-time recognition are met, based on costs incurred relative to total estimated costs. Revenue from time-and-materials arrangements is recognized over time as the services are provided using the right-to-invoice practical expedient when the amount invoiced corresponds directly to the value of the Company’s performance completed to date.

•

Product sales: The Falcon's Attractions segment provides ride system components and hardware for theme park attractions, with revenue recognized at a point in time when control of goods transfers to the customer.

The Company accounts for contracts once the parties have approved the contract, the rights and payment terms are identifiable, the contract has commercial substance, and collectability of consideration is probable. The Company evaluates contracts to determine whether they should be combined or accounted for separately in accordance with ASC 606. Contracts are combined when entered into with the same customer at or near the same time and are negotiated with a single commercial objective or have interdependent consideration. Based on its historical analysis, the Company has not identified instances requiring contract combination. Contract modifications are assessed to determine whether they should be accounted for as a separate contract or as part of the existing contract, depending on whether the additional goods or services are distinct and priced at their standalone selling prices.

Performance obligations represent promises to transfer distinct goods or services to a customer. The Company’s contracts may include one or multiple performance obligations depending on the nature of the arrangement. The Company’s conclusions regarding performance obligations vary by revenue stream:

•

Shared services arrangements generally contain multiple performance obligations, as each service type is distinct.

•

Destinations operations and attraction services for time-and-materials contracts generally consist of a single performance obligation satisfied over time, representing a series of distinct services that are substantially the same and have the same pattern of transfer.

•

Attraction services for project-based contracts typically contain a single performance obligation involving the delivery of highly customized and integrated goods and services.

•

Product sales contracts may include multiple performance obligations, as individual goods are typically distinct.

The Company has concluded that it acts as principal in its significant revenue arrangements given it controls the specified goods or services before being transferred to the customer.

The transaction price represents the consideration the Company expects to be entitled to in exchange for transferring goods or services to a customer. Customer contracts predominantly contain a single performance obligation and, in a limited number of cases, include variable consideration. Based on the facts and circumstances of each contract, management applies judgment in determining the transaction price, allocating the transaction price to performance obligations, and recognizing revenue. Variable consideration consists of incentive fees, milestone payments, or performance-based penalties. Estimated variable consideration is included in the transaction price only to the extent that it is probable that a significant reversal of revenue recognized will not occur when the related uncertainty is resolved. The Company reassesses estimates of variable consideration at each reporting date and updates such estimates as facts and circumstances change.

Revenue is recognized either over time or at a point in time depending on when control of the goods or services transfers to the customer. Revenue is recognized over time when one of the following criteria is met:

•

The customer simultaneously receives and consumes the benefits of the Company’s performance as it occurs; or

•

The Company’s performance creates or enhances an asset that has no alternative use to the Company and for which the Company has an enforceable right to payment for performance completed to date.

The Company applies judgment in determining the timing of revenue recognition and the measurement of progress toward completion of performance obligations. Significant estimates include total contract costs, progress toward completion, and the estimation of variable consideration and related constraints. Changes in estimates are recognized in the period of change and may result in adjustments to revenue or profitability.

The Company's payment terms consist of those services billed regularly as provided and those products delivered at a point in time, which are invoiced after the performance obligation is satisfied. Product and service contracts with milestone payments due at agreed progress points during the contract are invoiced when those milestones are reached, which may differ from the timing of revenue recognition. Contract balances arise from the timing of revenue recognition, billings, and cash collections. Contract assets represent revenue recognized in excess of amounts billed to customers. Contract liabilities represent billings in excess of revenue recognized. The Company assesses contract assets for impairment in accordance with applicable accounting guidance.

The Company expenses freight and shipping costs as incurred. Taxes assessed by governmental authorities that are imposed on and concurrent with specific revenue-producing transactions and collected from customers are excluded from revenue.

The Company has concluded that its contracts do not include a significant financing component, as payment terms are consistent with industry practices and are not intended to provide financing to either party.

The Company uses the equity method, in accordance with ASC 323, Investments - Equity Method and Joint Ventures(“ASC 323”), to account for investments in corporate joint ventures when the Company has the ability to exercise significant influence over the operating decisions of the investee. Such investments are initially recorded at cost and subsequently adjusted for the Company's proportionate share of the net earnings or loss of the investee. This proportionate share is included in Share of gain (loss) from equity method investments in the condensed consolidated statements of operations and comprehensive income (loss).

Cash distributions received, if any, from these investees are evaluated to determine whether they represent a return on investment or a return of investment. Distributions determined to be a return on investment are recognized in earnings. Distributions determined to be a return of investment reduce the carrying amount of the investment. When cumulative distributions exceed the carrying amount of an investment, the Company reduces the carrying amount to zero, and any additional distributions are generally recognized in earnings in the period received. This determination requires judgment and considers factors including the investee’s earnings, retained earnings, and cash flow characteristics. When an investment’s carrying amount is reduced to zero, the Company discontinues recognizing its share of further income or loss unless it has incurred obligations or committed to provide financial support to the investee. Subsequent earnings are recognized only after the Company’s share of such earnings exceeds previously unrecognized losses.

The Company evaluates equity method investments for impairment when events or changes in circumstances indicate that fair value may be below carrying value. An impairment charge is recorded when such impairment is deemed to be other-than-temporary. In making this determination, the Company considers the severity and duration of the decline in fair value, the financial condition and near-term prospects of the investee, and other relevant market conditions.

Concentration of credit risk

Financial instruments which potentially subject the Company to concentrations of credit risk consist primarily of Cash and cash equivalents, Accounts receivable and Contract assets. The Company places its Cash and cash equivalents with financial institutions of high credit quality. At times, such amounts exceed federally insured limits. Management believes that no significant concentration of credit risk exists with respect to these cash balances because of its assessment of the creditworthiness and financial viability of the respective financial institutions.

The Company provides credit to its customers located both inside and outside the United States in its normal course of business. Receivables are presented net of an allowance for credit losses based on the Company’s assessment of the collectability of customer accounts. The Company maintains an allowance that provides for an adequate reserve to cover estimated losses on receivables as well as contract assets. The Company determines the adequacy of the allowance by estimating the probability of loss based on the Company’s historical credit loss experience and taking into consideration current market conditions and supportable forecasts that affect the collectability of the reported amount. The Company regularly evaluates receivable and contract asset balances considering factors such as the customer’s creditworthiness, historical payment experience and the age of the outstanding balance. The Company incurred less than $0.1 million of credit loss expense during the three and six months ended June 30, 2026. Changes to expected credit losses during the period are included in Selling, general and administrative expense in the Company’s unaudited condensed consolidated statements of operations and comprehensive income (loss). After concluding that a reserved accounts receivable is no longer collectible, the Company reduces both the gross receivable and the allowance for credit losses. There wasno allowance for credit losses as of both June 30, 2026 and December 31, 2025.

The Company hadthree customers that each accounted for more than 10% of total revenue for the periods presented below. Revenue from Customer A was primarily attributable to unallocated corporate revenues. Revenue from Customer B and Customer C was primarily attributable to the Falcon's Attractions segment.

Customers representing more than 10% of total revenue consisted of:

• Less than 10%

Customers representing more than 10% of total accounts receivable consisted of:

Reclassifications

Certain prior period amounts in these unaudited condensed consolidated financial statements have been reclassified to conform to the current period presentation.

Recently issued accounting standards

In July 2025, the FASB issued ASU 2025-05, “Financial Instruments—Credit Losses (Topic 326): Measurements of Credit Losses for Accounts Receivable and Contract Assets,” which introduces a practical expedient for estimating expected credit losses on current accounts receivable and contract assets. Under this expedient, entities may assume that conditions existing at the balance sheet date will persist for the remaining life of the asset, which simplifies the estimation process by eliminating the need to forecast future economic conditions for short-term assets. The Company adopted this ASU as of March 31, 2026 and elected to apply the practical expedient. The adoption of this ASU didnot have a material impact on the Company’s unaudited condensed consolidated financial statements.

In April 2026, the FASB issued ASU 2026‑01, “Initial Measurement of Paid‑in‑Kind Dividends on Equity‑Classified Preferred Stock.” The amendments in this update standardize the initial measurement of paid‑in‑kind dividends on equity‑classified preferred stock and require such dividends to be initially measured based on the paid‑in‑kind dividend rate specified in the applicable preferred stock agreement. The ASU is effective for fiscal years beginning after December 15, 2026, and interim periods within those fiscal years, with early adoption permitted. The Company early adopted this ASU on a prospective basis as of January 1, 2026. The adoption of this ASU didnot have a material impact on the Company’s unaudited condensed consolidated financial statements.

Recently issued accounting standards not yet adopted as of June 30, 2026

In November 2024, the FASB issued ASU 2024-03, “Income Statement-Reporting Comprehensive Income-Expense Disaggregation Disclosures (Subtopic 220-40)”. The amendments in this ASU require a public business entity to provide disaggregated disclosures, in the notes to the financial statements, of certain categories of expenses that are included in expense line items on the face of the income statement. Relevant expense categories include, but are not limited to, employee compensation, selling expenses, intangible asset amortization, depreciation, and purchases of inventory. The ASU is effective for fiscal years beginning after December 15, 2026, and interim periods within fiscal years beginning after December 15, 2027. Prospective application is required, but retrospective application may be applied. The Company is evaluating the impact of this ASU.

Revenue

Disaggregated components of revenue consisted of:

Accounts receivable consisted of:

During the six months ended June 30, 2026, the Company recognized $0.7 million of revenue from contract liabilities, including amounts previously included as of January 1, 2026. The contract liabilities outstanding at the beginning of the year were fully recognized as revenue during the period.

As of June 30, 2026, the aggregate amount of the transaction price for open contracts allocated to remaining performance obligations was $28.4 million. The Company expects to recognize approximately 87% of its remaining performance obligations as revenue within the next 12 months and the balance thereafter.

Geographic information

Geographic revenues are attributed to the location of the Company's customer contracts. Except for the United States and Japan, as presented below, no individual country represented more than 10% of total revenue. Geographic revenues consisted of:

(1) Revenue attributed to Japan was $0.6 million and $1.2 million for thethree and six months ended June 30, 2026, respectively.

The Company accounts for its investments in unconsolidated joint ventures using the equity method of accounting. The Company’s joint ventures are as follows:

i)

Falcon’s Creative Group

QIC Delaware, Inc., a Delaware corporation and an affiliate of Qiddiya Investment Company (“QIC”), holds 25% of FCG's equity interest in the form of preferred units (the “Strategic Investment”), and the Company holds the remaining 75% of the equity interest in the form of common units. FCG's amended and restated limited liability company agreement (“LLCA”) includes QIC as a member and provides QIC with certain consent, priority and preemptive rights.

QIC is entitled to redeem its preferred units on the earlier of (a) the five-year anniversary of the Strategic Investment on July 27, 2028 or (b) any date on which a majority of key persons cease to be employed by FCG. The LLCA contains contractual provisions regarding the distribution of FCG’s income or loss. Pursuant to these provisions, QIC is entitled to a redemption amount of the initial $30.0 million investment plus a 9% annual compounding preferred return. QIC does not absorb losses from FCG that would cause its investment to drop below this redemption amount, and any losses not absorbed by QIC are fully allocated to the Company.

The Company and FCG are part of an intercompany service agreement (“Intercompany Services Agreement”) and a license agreement.

ii)

PDP

PDP is an unconsolidated joint venture with Meliá Hotels International, S.A. (“Meliá Group”) for the development and operation of hotel resorts and theme parks. The Company has 50% voting rights and shares 50% of profits and losses in this joint venture. PDP operates one hotel resort and theme park located in Mallorca, Spain. PDP operated a hotel located at Tenerife in the Canary Islands until the sale on May 30, 2025. In March 2026, the Company received a distribution from PDP of $1.7 million related to performance from the Mallorca property. Subsequent to June 30, 2026, the Company received a second distribution from PDP in the amount of $1.7 million.

iii)

Karnival

The Company has a 50% interest in Karnival, an unconsolidated joint venture with Raging Power Limited, a subsidiary of New World Development Company Limited (“Raging Power”). The purpose of the joint venture was to hold ownership interests in entities developing and operating amusement centers located in the People’s Republic of China. The Company has concluded that Karnival is a VIE, because the Company does not have the power to direct the activities that most significantly impact the economic performance of Karnival, as such decisions are taken by the unanimous consent of the representatives of the joint venture partners. The Company, therefore, does not consolidate Karnival and accounts for the investment as an equity method investment. In October 2025, the Company and its joint venture partners agreed to terminate this project and wind up the joint venture due to protracted delays in the underlying location development schedule. In March 2026, the Company received a partial distribution from Karnival in the amount of $1.5 million. In April 2026, the Company received a second partial distribution from Karnival in the amount of $1.9 million. In June 2026, the Company received a third partial distribution from Karnival in the amount of $2.0 million, resulting in total distributions of $5.4 million for thesix months ended June 30, 2026.

Investments and advances to equity method investments consisted of:

Share of income (loss) from equity method investments consisted of:

Share of income (loss) from FCG consisted of:

Share of income (loss) from PDP consisted of:

Share of income (loss) from Karnival consisted of:

Summarized balance sheet information for the Company’s equity method investments consisted of:

Accrued expenses and other current liabilities

Accrued expenses and other current liabilities consisted of:

Long-term debt and borrowing arrangements

Indebtedness consisted of:

(1) $0.5 million demand note; repaid in full February 2026.

(2) €1.5 million term loan due April 2026; repaid in full April 2026.

(3) $0.25 million demand note; repaid in full May 2026.

The Company's debt is carried at amortized cost. Fair values are estimated based on quoted market prices for similar instruments. The Company considers its debt to be Level 2 in the fair value hierarchy.

The estimated fair value of the $5.5 million revolving credit arrangement, $15.0 million revolving credit arrangement and Deferred Loan Settlement as of June 30, 2026 was $2.2 million, $3.5 million and $6.2 million, respectively. The estimated fair value of the €7.0 million term loan, $5.5 million revolving credit arrangement and Deferred Loan Settlement as of December 31, 2025 was $2.0 million, $3.3 million and $5.9 million, respectively.

$5.5 million revolving credit arrangement

The Company has a revolving credit arrangement with Infinite Acquisitions Partners LLC (“Infinite Acquisitions”) for $5.5 million. The arrangement matures on September 30, 2034 and has a variable interest rate of the three-month Secured Overnight Financing Rate on the first day of the applicable quarter plus 2.75%.

$15.0 million revolving credit arrangement

In November 2025, the Company entered into a revolving credit arrangement between Falcon's Attractions, LLC and Infinite Acquisitions Partners LLC (“Infinite Acquisitions”) for $15.0 million. The arrangement matures on September 30, 2030 and has a variable interest rate of the three-month Secured Overnight Financing Rate on the first day of the applicable quarter plus 2.75%.

€7.0 million term loan

In March 2019, the Company entered into aneight-year €7.0 million term loan with a Spanish bank, with a variable interest rate at six-month Euribor plus 2.00%. The loan was interest only for the first eighteen months, thereafter principal and interest are payable monthly in arrears. The loan is collateralized by the Company’s investment in PDP and matures in April 2027.

$0.9 million term loan

Falcon's Opco has a one-year $0.9 million term loan with Katmandu Ventures, LLC (“Katmandu Ventures”). The loan bears a fixed interest rate at 11.75% per annum. Interest and principal payments were due May 16, 2025. As of June 30, 2026, accrued interest on the loan is included in Interest expense in the unaudited condensed consolidated statements of operations and comprehensive income (loss). The Company is in negotiations to amend the loan.

Deferred Loan Settlement

The Company and FAST Sponsor II LLC (“FAST”) entered into a Confidential Settlement Agreement and Release, dated as of November 26, 2025 pursuant to which the Company paid an upfront settlement payment of $2.5 million on December 1, 2025, and agreed to pay FAST a deferred settlement payment of $7.0 million on or before January 31, 2027 (the “Deferred Loan Settlement”).

Commitments and contingencies

Litigation

The Company is named from time to time as a party to lawsuits and other types of legal proceedings and claims in the normal course of business. The Company accrues for contingencies when it believes that a loss is probable and that it can reasonably estimate the amount of any such loss in accordance with ASC 450, Contingencies(“ASC 450”).

During the three months ended June 30, 2026, the Company reversed $4.0 million of a previously recorded accrual for other expenses related to the Business Combination because management no longer believes that the risk of loss is probable in accordance with ASC 450.

This further supports what was previously disclosed during the three months ended March 31, 2026, when the Company reversed $11.1 million of a previously recorded accrual associated with the alleged amended engagement agreement with Guggenheim Securities, LLC (“Guggenheim”). The lawsuit was filed against the Company by 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. The Company filed counterclaims against Guggenheim for fraud, breach of contract, breach of fiduciary duty, and equitable rescission. On March 31, 2026, the Supreme Court of the State of New York (the “Court”) heard oral arguments on each party’s motions for summary judgment. The Court denied the Company’s motion and granted Guggenheim’s motion in part; however, the Court allowed certain of the Company’s counterclaims to proceed. The Court denied Guggenheim’s motion for summary judgment on its claims and ordered that the matter would proceed to trial. The parties filed cross notices of appeal. In light of the order from the Court for the motions for summary judgment, management reevaluated its prior conclusion regarding the likelihood of loss associated with the Guggenheim matter. Based on the current procedural posture, including the Court’s findings and the pendency of the Company’s counterclaims, management no longer believes that a loss related to Guggenheim’s claims is probable. Rather, the Company has concluded that the risk of loss is reasonably possible in accordance with ASC 450. The Company intends to vigorously defend itself against the claims alleged in the Guggenheim Complaint and the ultimate outcome of this matter remains uncertain.

These reversals reflect management’s updated assessment that the recognition criteria for a loss contingency under ASC 450 are no longer met and as such, no accruals pertaining to the aforementioned have been recorded as of June 30, 2026. Based on the current assessment that a loss is no longer probable, no estimate of possible loss or range of loss can be made at this time, and an adverse outcome could have a material effect on the Company’s financial condition, results of operations, or cash flows in a future period.

Indemnification

In the ordinary course of business, the Company enters into certain agreements that provide for indemnification by the Company of varying scope and terms to customers, vendors, directors, officers, employees, and other parties with respect to certain matters. Indemnification includes losses from breach of such agreements, services provided by the Company, or third-party intellectual property infringement claims. These indemnities may survive termination of the underlying agreement and the maximum potential amount of future indemnification payments, in some circumstances, are not subject to a cap. As of June 30, 2026, and December 31, 2025, there were no known events or circumstances that have resulted in a material indemnification liability.

Commitments

The Company has a commitment with KIDS Licensing LLC (“KIDS”) to develop venues themed with KIDS’s licensed trademarks and intellectual property. The Company is required to pay a minimum royalty fee of $0.1 million per year through 2032.

Stock warrants

Prior to January 14, 2025, the warrants were classified as a liability and measured at fair value, with changes in fair value included in the unaudited condensed consolidated statements of operations and comprehensive income (loss). The warrant agreement was amended effective January 14, 2025. The amendment provides for the mandatory exchange of the warrants for shares of Class A Common Stock at an exchange ratio of 0.25 shares of Class A Common Stock per warrant, on October 6, 2028. The warrants will not be exercisable and the holders of the warrants will have no further rights except to receive shares of Class A Common Stock on October 6, 2028.

The remaining warrants meet the requirements for equity classification after the amendment. The Company adjusted the fair value of the warrants a final time on January 14, 2025, immediately prior to the amendment effective date. The total adjusted liability balance was reclassified into equity on January 14, 2025. After the reclassification to equity, the warrants do not require subsequent fair value measurement.

As of both June 30, 2026 and December 31, 2025, there are 5,177,089 warrants outstanding which will be exchanged for 1,294,272 shares of Class A Common Stock on October 6, 2028.

Net income (loss) per share

The weighted average shares of common stock outstanding used to determine the Company’s net income (loss) per share reflects the following:

The following securities were not included in the computation because the effect would be anti-dilutive or issuance of such shares is contingent upon the satisfaction of certain conditions which were not satisfied by the end of the period:

With respect to unvested Class A earnout shares,375,000 are subject to forfeiture under the deferred settlement agreement.

Share-based compensation

The Company adopted a share-based compensation plan (the “Plan”) under which each vested Restricted Stock Unit represents the right to receive one Class A Common Share. Under the Plan, RSUs with service-based conditions may be granted to directors, officers, employees, and non-employees. RSUs were granted to employees of both the Company and FCG. However, FCG fully reimburses FBG for the compensation cost associated with these grants. As such, expenses related to the RSUs granted to employees of FCG do not represent a purchase of services or contribution to FCG.

The RSUs do not provide the grantee with an option to choose settlement in cash or stock. The holder of the RSU shall not be, nor have any of the rights or privileges of, a shareholder of the Company, including, without limitation, voting rights and rights to dividends, in respect to the RSUs and any shares underlying the RSUs and deliverable under the Plan unless and until such shares shall have been issued by the Company and held of record by such holder. The fair value of these RSUs is estimated based on the fair value of the Company’s common stock on the date of grant using the closing price on the day of grant. A summary of the Plan’s RSUs award activity is as follows:

The RSUs under the Plan generally vest withinone tofive years following the date of grant.

Certain RSUs granted under the Plan on January 28, 2026 vest as follows: (1)32.5% on the grant date; (2)20% on November 1, 2026; (3)22.5% on November 1, 2027; and (4)25% on November 1, 2028. All other RSUs granted under the Plan on January 28, 2026 vest on the first anniversary of the grant date.

RSUs granted under the Plan on June 10, 2026 vest as follows: (1)25% on December 10, 2026; (2)25% on June 10, 2027; (3)25% on December 10, 2027; (4)25% on June 10, 2028.

The Company recognized stock-based compensation expense of $0.6 million and $0.3 million for the three months ended June 30, 2026 and 2025, respectively, and $1.3 million and $0.8 million for the six months ended June 30, 2026 and 2025, respectively, which is included in Selling, general and administrative expenses in the unaudited condensed consolidated statements of operations and comprehensive income (loss). The $0.3 million and $0.2 million compensation costs for RSUs granted to FCG employees for the three months ended June 30, 2026 and 2025, respectively, and $0.6 million and $0.4 million for the six months ended June 30, 2026 and 2025, respectively, are recognized as a reimbursement from FCG and do not impact the Company’s unaudited condensed consolidated statements of operations and comprehensive income (loss).

As of June 30, 2026 and December 31, 2025, stock-based compensation expense not yet recognized relating to nonvested awards was $6.5 million and $5.8 million, respectively, of which $2.5 million and $2.3 million relates to compensation cost for RSUs granted to FCG employees, respectively. Stock compensation expense recognized by FCG is reimbursed to FBG.

Income taxes

The tax provisions for the three and six months ended June 30, 2026, and 2025 were computed using the estimated effective tax rates applicable to the taxable jurisdictions for the full year. The Company’s tax rate is subject to management’s quarterly review and revision, as necessary. The Company’s effective tax ratewas 0% for the three and six months ended June 30, 2026, and 2025. The Company paidno income taxes for the three and six months ended June 30, 2026, and 2025.

The Company records a provision or benefit for income taxes on pre-tax income or loss based on its estimated effective tax rate for the year. Given the Company’s uncertainty regarding future taxable income, the Company maintains a full valuation allowance on its deferred tax assets.

Tax receivable agreement

On October 6, 2023, the partners of Falcon’s Opco at the time of the Acquisition Merger (“Exchange TRA Holders”), along with the Company (collectively the “TRA Holders”) entered into a Tax Receivable Agreement (“TRA Agreement”) with Falcon’s Opco that provides for the payment by Falcon’s Opco to the TRA Holders of 85% of the amount of tax benefits, if any, that it realizes, or in some circumstances, is deemed to realize, as a result of (i) future redemptions funded by Falcon’s Opco or exchanges, or deemed exchanges in certain circumstances, of common units of Falcon’s Opco for the Company’s Class A common stock, par value $0.0001 per share (“Class A Common Stock”) or cash, and (ii) certain additional tax benefits attributable to payments made under the Tax Receivable Agreement (the “TRA Payment”). 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.

Segment information

The Company hasfive reportable operating segments, FCG, Destinations Operations, PDP, Falcon's Attractions and FBB-Other. The Company’s Chief Operating Decision Makers (“CODM”) is its Executive Chairman and Chief Executive Officer, who review financial information for purposes of making operating decisions, assessing financial performance, and allocating resources. Operating segments are organized based on product lines and, for our location-based entertainment, by geography. The CODM assesses the segments' performance by using each segment's income (loss) from operations, these results are used predominantly in the budgeting and forecasting process. The CODM consider segment results when making decisions about the allocation of operating and capital resources. Segment income (loss) from operations include costs directly attributable to the segment including project design and build expenses, cost of product sales, selling, general and administrative expenses, research and development expenses, and the share of gain (loss) from equity method investments excluding impairments. Unallocated corporate expenses which include accounting, audit, and professional services fees that support external reporting activities, are presented as a reconciling item between total segment income (loss) from operations and the Company’s unaudited condensed consolidated financial statement results.

FCG provides creative and advisory services including destination strategy, master planning, experiential and attraction design, digital media, interactive software, IP development, and creative guardianship for entertainment and hospitality destinations. For the purpose of assessing financial performance and making resource allocation decisions, the CODM reviews full FCG results as if FCG was consolidated, instead of only the share of FCG's equity method gain. To reconcile total segment revenue to the Company's total consolidated revenue, FCG's segment revenue is eliminated. To reconcile Segment loss from operations to the Company's consolidated net income before taxes, FCG's Segment income from operations is eliminated and the Company's share of FCG's equity method loss is added.

PDP develops, owns and operates hotels, theme parks and retail, dining and entertainment venues. Destinations Operations provides development and management services for themed entertainment to PDP and develops, owns, operates, and expands entertainment venues, hospitality experiences, and branded destination concepts across a variety of location‑based formats, utilizing proprietary and third‑party intellectual property. The Company collectively refers to the Destinations Operations and PDP as Falcon’s Beyond Destinations.

Falcon's Attractions designs, engineers, manufactures, and sells proprietary and customized ride systems, attraction hardware, and related technologies for theme parks, location‑based entertainment venues, and destination developments worldwide. FBB-Other is utilized for the development and commercialization of Company owned and third-party intellectual property through consumer products and media.

The accounting policies of the segments are the same as those described in the summary of significant accounting policies.

A reconciliation of segment income (loss) from operations to net income (loss) before taxes is as follows:

Identifiable assets and capital expenditures are comprised of:

Related party transactions

Other current assets

The Company has a short-term advance to fund working capital to FCG for $5.3 million and $1.0 million as of June 30, 2026 and December 31, 2025, respectively.

Related party loans

The Company hastwo financing agreements with Infinite Acquisitions with a total outstanding balance of $7.6 million and $5.0 million as of June 30, 2026 and December 31, 2025, respectively.

The Company hasa financing agreement with Katmandu Ventures, LLC (“Katmandu Ventures”) with a total outstanding balance of $0.6 million as of June 30, 2026. The loan was due on May 16, 2025 and the Company is in negotiations to amend the loan. There was a total outstanding balance of $1.1 million as of December 31, 2025, which was inclusive of a second financing agreement that was repaid in full during February 2026.

See “Note 6 – Long-term debt and borrowing arrangements” for additional information.

Services provided to equity method investments

Destinations Operations recognizes management and incentive fees from the Company’s equity method investments.

Intercompany Services Agreement between FCG and the Company

There were accounts receivable balances of $3.2 million and $1.6 million outstanding as of June 30, 2026 and December 31, 2025, respectively, primarily related to the Intercompany Services Agreement.

The Company recognizes related party revenue for corporate shared service support provided to FCG and PDP. Total related party revenues from services provided to our equity method investments were $2.1 million and $1.7 million for the three months ended June 30, 2026 and 2025, respectively. Of the total related party revenues from services provided to our equity method investments, the Company recognized $2.0 million and $1.6 million revenue related to services provided to FCG for the three months ended June 30, 2026 and 2025, respectively.

Total related party revenues from services provided to our equity method investments were $4.1 million and $3.4 million for the six months ended June 30, 2026 and 2025, respectively. Of the total related party revenues from services provided to our equity method investments, the Company recognized $3.9 million and $3.2 million revenue related to services provided to FCG for the six months ended June 30, 2026 and 2025, respectively.

FCG also provides marketing, research and development, and other services to FBG. The Company owes FCG $0.1 million related to these services as of both June 30, 2026, and December 31, 2025. The Company and FCG have also incurred reimbursable costs on behalf of each other. The Company had $0.7 million and $0.6 million in accounts receivable from FCG related to reimbursable costs as of June 30, 2026 and December 31, 2025, respectively.

Equity method investment financing

Scott Demerau, the Executive Chairman and his wife are investors of the lender that provided $2.75 million financing to a third party buyer of land sold by FCG in February 2026.

Subsequent events

The Company has evaluated subsequent events through August 13, 2026 and determined that no events have occurred that require recognition or disclosure in the accompanying unaudited condensed consolidated financial statements, other than disclosed in the notes to the financial statements.