Falcon's Beyond: $9.3M deficit, going-concern warning
Positive operating cash flow did not resolve substantial doubt about Falcon’s ability to continue as a going concern.
Sentiment and the balance of points
Rhea-AI Sentiment reads the wording of the document, how positive or negative its language is on a 1 to 5 scale. The balance of points shown with the takes weighs what the document actually discloses, so the two can disagree, for example when a trial that missed its main goal is described in upbeat language.
Falcon’s Beyond Global, Inc. (FBYD) reported third-quarter 2026 revenue of $7.289 million, compared with $4.054 million a year earlier, while its net loss narrowed to $7.663 million from $10.412 million. For the first nine months, revenue was $18.283 million versus $8.311 million, but the company recorded a $1.860 million net loss compared with $6.608 million in net income in the prior-year period.
Operating cash flow was positive at $2.114 million for the nine months, versus $20.280 million used in the same 2025 period. At September 30, 2026, cash was $1.941 million and the working capital deficit was $9.3 million; current liabilities were $29.012 million against current assets of $19.734 million. Management said these conditions raise substantial doubt about the company’s ability to continue as a going concern; financing initiatives had not been completed and did not alleviate that doubt. Remaining performance obligations were $28.0 million, with approximately 93% expected to be recognized as revenue within the next 12 months.
How this balance works
Rhea-AI gives every point it takes from this document a weight. Minor counts 1, Moderate 3 and Major 9, so one Major point outweighs several Minor ones. The bar adds up the weights on each side, and when neither side holds more than 65% of the total the balance reads Mixed.
It reads the document as published, with the same rules for every company, and it does not look at what the market expected or at how the stock traded, so a point can be objectively good on a day the stock falls.
Rhea-AI Sentiment measures something else, the tone of the wording.
Positive
- Moderate pointQ3 revenue: $7.289 million, versus $4.054 million in 2025.
- Moderate pointNine-month operating cash flow: $2.114 million, versus $20.280 million used.
Negative
- Major pointManagement said conditions raise substantial doubt about going-concern ability.
- Major pointFalcon’s disclosed material weaknesses in internal controls over financial reporting.
- Moderate pointNine-month results: $1.860 million net loss, versus $6.608 million income.
- Minor pointLiquidity: $9.3 million working-capital deficit at September 30, 2026.
Filing Explained
The company has no accrued loss for the unresolved Guggenheim lawsuit and says it cannot currently estimate a possible loss or range.
Form 10-Q is the company’s unaudited quarterly report; this one says 5,177,089 warrants remain outstanding and are to be mandatorily exchanged on
The warrants will not be exercisable, and holders have no further rights other than receiving those shares on the exchange date.
Guggenheim alleges that the company owes
Key Figures
Key Terms
going concern financial
contract liabilities financial
equity method investments financial
remaining performance obligations financial
FAQ
AI-generated questions and answers. How Rhea-AI works. Not financial advice.
What revenue and net loss did FBYD report in Q3 2026?
Why did FBYD disclose substantial doubt about continuing as a going concern?
AI-generated analysis. How Rhea-AI works. Not financial advice.
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM
EXCHANGE ACT OF 1934
For the quarterly period ended
OR
EXCHANGE ACT OF 1934
For the transition period from __________ to __________
Commission file number
(Exact name of registrant as specified in its charter)
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Registrant’s telephone number, including area code:
Securities registered pursuant to Section 12(b) of the Act
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Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
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If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No
As of November 12, 2026, a total of
FALCON’S BEYOND GLOBAL, INC.
TABLE OF CONTENTS
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Page No. |
PART I. FINANCIAL INFORMATION |
1 |
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Item 1. |
Financial Statements |
1 |
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Condensed Consolidated Balance Sheets as of September 30, 2026 (Unaudited) and December 31, 2025 |
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Condensed Consolidated Statements of Operations and Comprehensive Income (Loss) for the Three and Nine Months Ended September 30, 2026 and 2025 (Unaudited) |
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Condensed Consolidated Statements of Cash Flows for the Nine Months Ended September 30, 2026 and 2025 (Unaudited) |
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Condensed Consolidated Statements of Stockholders’ Equity (Deficit) for the Nine Months Ended September 30, 2026 and 2025 (Unaudited) |
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Notes to the Condensed Consolidated Financial Statements (Unaudited) |
5 |
Item 2. |
Management’s Discussion and Analysis of Financial Condition and Results of Operations |
23 |
Item 3. |
Quantitative and Qualitative Disclosures About Market Risk |
35 |
Item 4. |
Disclosure Controls and Procedures |
35 |
PART II. OTHER INFORMATION |
37 |
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Item 1. |
Legal Proceedings |
37 |
Item 1A. |
Risk Factors |
37 |
Item 2. |
Unregistered Sales of Equity Securities and Use of Proceeds |
38 |
Item 3. |
Defaults Upon Senior Securities |
38 |
Item 4. |
Mine Safety Disclosures |
38 |
Item 5. |
Other Information |
38 |
Item 6. |
Exhibits |
39 |
SIGNATURES |
40 |
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i
CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS
This Quarterly Report on Form 10-Q (this “Quarterly Report”) contains statements that the Company believes are “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995. These forward-looking statements include, without limitation, statements relating to expectations for future financial performance, business strategies or expectations for our business. These statements are based on the beliefs and assumptions of the management of the Company. Although the Company believes that its plans, intentions and expectations reflected in or suggested by these forward-looking statements are reasonable, it cannot provide assurance that it will achieve or realize these plans, intentions or expectations. These statements constitute projections, forecasts and forward-looking statements, and are not guarantees of future performance. Such statements can be identified by the fact that they do not relate strictly to historical or current facts. When used in this Quarterly Report, words such as “anticipate,” “believe,” “can,” “continue,” “could,” “estimate,” “expect,” “forecast,” “intend,” “may,” “might,” “plan,” “possible,” “potential,” “predict,” “project,” “seek,” “should,” “strive,” “target,” “will,” “would” and similar expressions may identify forward-looking statements, but the absence of these words does not mean that a statement is not forward-looking.
You should not place undue reliance on these forward-looking statements. Should one or more of a number of known and unknown risks and uncertainties materialize, or should any of our assumptions prove incorrect, the Company’s actual results or performance may be materially different from those expressed or implied by these forward-looking statements. The following important factors, risks, and uncertainties could cause actual results to differ materially from those indicated by the forward-looking statements in this Quarterly Report:
ii
iii
In addition, this Quarterly Report includes important information as to risks, uncertainties, and other factors that may cause actual results to differ materially from those expressed or implied in the forward-looking statements. See “Note 7 – Commitments and contingencies” within Item 1 of this Quarterly Report and “Management’s Discussion and Analysis of Financial Condition and Results of Operations” within Item 2 of this Quarterly Report. Additional important information as to these factors is included in our Annual Report on Form 10-K for the year ended December 31, 2025 (“Annual Report”) in the sections titled Item 1, “Business”, Item 1A, “Risk Factors,” Item 3, “Legal Proceedings,” and Item 7, “Management’s Discussion and Analysis of Financial Condition and Results of Operations”. The forward-looking statements speak only as of the date of this Quarterly Report or, in the case of any document incorporated by reference, the date of that document. We undertake no obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events or otherwise, except as required by applicable law. Additional information as to factors that may cause actual results to differ materially from those expressed or implied in the forward-looking statements is disclosed from time to time in our other filings with the Securities and Exchange Commission (“SEC”).
iv
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements.
FALCON’S BEYOND GLOBAL, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(in thousands of U.S. dollars, except share and per share data)
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As of |
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(UNAUDITED) |
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December 31, |
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Assets |
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Cash and cash equivalents ($ |
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Accounts receivable ($ |
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Contract assets |
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Other current assets ($ |
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Total current assets |
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Investments and advances to equity method investments |
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Operating lease right-of-use assets |
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Property and equipment, net |
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Intangible assets, net |
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Other non-current assets |
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Total assets |
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$ |
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Liabilities and stockholders’ equity |
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Accounts payable ($ |
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$ |
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Accrued expenses and other current liabilities ($ |
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Contract liabilities |
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Operating lease liability, current |
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Short-term debt ($ |
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Long-term debt, current |
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Total current liabilities |
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Operating lease liability, net of current portion |
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Long-term debt, net of current portion ($ |
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Total liabilities |
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Commitments and contingencies – Note 7 |
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Stockholders’ equity |
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Series B preferred stock ($ |
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Class A common stock ($ |
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Class B common stock ($ |
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Additional paid-in capital |
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Accumulated deficit |
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Accumulated other comprehensive income (loss) |
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Total equity attributable to common stockholders |
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Noncontrolling interest |
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Total equity |
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Total liabilities and equity |
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$ |
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See accompanying notes to unaudited condensed consolidated financial statements.
1
FALCON’S BEYOND GLOBAL, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME (LOSS) (UNAUDITED)
(in thousands of U.S. dollars, except share and per share data)
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Three months ended |
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Nine months ended |
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September 30, |
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September 30, |
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September 30, |
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September 30, |
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Revenue: |
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Services ($ |
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$ |
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$ |
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$ |
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Product sales |
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Total revenue |
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Operating expenses: |
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Project design and build expense ($ |
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Cost of product sales |
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Selling, general and administrative expense ($ |
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Transaction credit |
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( |
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Research and development expense ($ |
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Depreciation and amortization expense |
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Total operating expenses |
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Income (loss) from operations |
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Share of gain (loss) from equity method investments |
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Interest expense ($( |
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( |
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Interest income |
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Change in fair value of warrant liabilities |
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Foreign exchange transaction gain (loss) |
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Gain on bargain purchase of OES Acquisition |
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Net income (loss) before taxes |
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( |
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( |
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$ |
( |
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$ |
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Income tax (expense) benefit |
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Net income (loss) |
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$ |
( |
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$ |
( |
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$ |
( |
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$ |
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Net income (loss) attributable to noncontrolling interest |
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( |
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Net income (loss) attributable to common stockholders |
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( |
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Net income (loss) per share |
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Net income (loss) per share, basic |
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Net income (loss) per share, diluted |
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Weighted average shares outstanding, basic |
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Weighted average shares outstanding, diluted |
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Other Comprehensive income (loss): |
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Net income (loss) |
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$ |
( |
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$ |
( |
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$ |
( |
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$ |
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Foreign currency translation income (loss) |
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Total comprehensive income (loss) |
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$ |
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$ |
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$ |
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$ |
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Comprehensive income (loss) attributable to noncontrolling interest |
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Total comprehensive income (loss) attributable to common stockholders |
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$ |
( |
) |
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$ |
( |
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$ |
( |
) |
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$ |
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See accompanying notes to unaudited condensed consolidated financial statements.
2
FALCON’S BEYOND GLOBAL, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)
(in thousands of U.S. dollars)
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Nine months ended |
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September 30, |
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September 30, |
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Cash flows from operating activities |
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Net income (loss) |
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$ |
( |
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$ |
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Adjustments to reconcile net income (loss) to net cash used in operating activities: |
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Depreciation and amortization |
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Foreign exchange transaction gain (loss) |
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Share of gain (loss) from equity method investments |
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Interest converted to preferred stock |
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Change in fair value of warrants |
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Share based compensation expense |
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Distribution from equity method investment PDP |
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Gain on bargain purchase of OES Acquisition |
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Changes in assets and liabilities: |
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Accounts receivable ($( |
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Contract assets |
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Deferred transaction costs |
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Other current assets |
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( |
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Other non-current assets |
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( |
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Accounts payable ($ |
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( |
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( |
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Accrued expenses and other current liabilities ($( |
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( |
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Contract liabilities |
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Operating lease assets and liabilities |
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Net cash provided by (used in) operating activities |
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Cash flows from investing activities |
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Purchase of property and equipment |
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Proceeds from sale of equipment |
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Short-term advances to affiliate – related party |
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( |
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( |
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Issuance of short-term loan |
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( |
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Repayment of short-term loan |
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Distribution from equity method investment PDP |
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Distribution from equity method investment Karnival |
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OES Acquisition |
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( |
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Net cash provided by (used in) investing activities |
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( |
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Cash flows from financing activities |
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Proceeds from issuance of Series B preferred stock ($ |
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Repayment of debt ($( |
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Proceeds from related party credit facilities |
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Repayment of related party credit facilities |
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Proceeds from RSUs issued to affiliates |
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Settlement of RSUs |
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Net cash provided by (used in) financing activities |
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Net increase (decrease) in cash and cash equivalents |
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Foreign exchange impact on cash |
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Cash and cash equivalents at beginning of year |
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Cash and cash equivalents at end of period |
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$ |
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$ |
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Supplemental disclosures: |
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Cash paid for interest |
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$ |
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Non-cash activities: |
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Debt to series B preferred stock conversion - principal |
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Conversion of warrants to common shares, Class A |
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Conversion of Class B Common Stock to Class A Common Stock |
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See accompanying notes to unaudited condensed consolidated financial statements.
3
FALCON’S BEYOND GLOBAL, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY (DEFICIT) (UNAUDITED)
(in thousands of U.S. dollars, except unit and share data)
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Preferred Stock |
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Common Stock, |
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Common Stock, |
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Additional |
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Accumulated |
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Accumulated |
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Total |
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Noncontrolling |
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Total equity |
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Shares |
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Amount |
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Shares |
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Amount |
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Shares |
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Amount |
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capital |
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income (loss) |
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deficit |
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stockholders |
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interest |
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(deficit) |
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December 31, 2024 |
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Conversion of Class B common stock to Class A common stock |
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Reclassification of warrants to equity |
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RSU issuances |
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Net income (loss) |
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Foreign currency translation |
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March 31, 2025 |
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|||||
RSU issuances |
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Net income (loss) |
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Foreign currency translation |
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June 30, 2025 |
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Series B preferred stock issued |
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Series B preferred stock issued, debt to equity conversion |
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RSU issuances |
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Net income (loss) |
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Foreign currency translation |
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September 30, 2025 |
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Preferred Stock |
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Common Stock, |
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Common Stock, |
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Additional |
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Accumulated |
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Accumulated |
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Total |
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Noncontrolling |
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Total |
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Shares |
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Amount |
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Shares |
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Amount |
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Shares |
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Amount |
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capital |
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income (loss) |
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deficit |
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stockholders |
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interest |
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equity |
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December 31, 2025 |
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$ |
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Conversion of Class B common stock to Class A common stock |
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Preferred stock dividend |
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RSU issuances |
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Net income (loss) |
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Foreign currency translation |
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( |
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March 31, 2026 |
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Conversion of Class B common stock to Class A common stock |
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Preferred stock dividend |
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RSU issuances |
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Net income (loss) |
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Foreign currency translation |
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June 30, 2026 |
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Conversion of Class B common stock to Class A common stock |
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Preferred stock dividend |
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RSU issuances |
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Net income (loss) |
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Foreign currency translation |
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( |
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( |
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September 30, 2026 |
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See accompanying notes to unaudited condensed consolidated financial statements.
4
FALCON’S BEYOND GLOBAL, INC. AND SUBSIDIARIES
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
(in thousands of U.S. dollars, unless otherwise stated)
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 $
Acquisition of OES
On
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 (“FC”), 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
5
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. Historically, these activities have contributed to operating losses and negative cash flows from operations. For the nine months ended September 30, 2026, however, the Company generated net cash provided by operating activities of $
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 September 30, 2026, the Company had a working capital deficit of $
6
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. While the Company generated positive cash flows from operations for the nine months ended September 30, 2026, following negative operating cash flows in prior comparable periods, the Company continues to have 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.
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:
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:
7
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 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.
Investments and advances to equity method investments
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
8
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 $
The Company had
Customers representing more than 10% of total revenue consisted of:
|
|
Three months ended |
|
|
Nine months ended |
|
||||||||||
|
|
September 30, |
September 30, |
|
|
September 30, |
September 30, |
|
||||||||
Customer A – related party, FCG |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||
Customer B |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Customer C |
|
|
|
|
* |
|
|
|
|
|
* |
|
||||
* Less than 10%
Customers representing more than 10% of total accounts receivable consisted of:
|
|
As of |
|
|||||
|
|
September 30, |
|
|
December 31, |
|
||
Customer A – related party, FCG |
|
$ |
|
|
$ |
|
||
Customer B |
|
|
|
|
|
|
||
Customer C |
|
|
|
|
* |
|
||
9
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
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
Recently issued accounting standards not yet adopted as of September 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.
Disaggregated components of revenue consisted of:
|
|
Three months ended |
|
|
Nine months ended |
|
||||||||||
|
|
September 30, |
|
|
September 30, |
|
|
September 30, |
|
|
September 30, |
|
||||
Revenue transferred over time: |
|
|
|
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|
|
|
|
|
|
|
||||
Shared services |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||
Destinations operations services |
|
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|
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|
|
|
|
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|
||||
Creative and attraction services |
|
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|
||||
|
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|
||||
Revenue transferred at a point in time: |
|
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|
||||
Product sales |
|
|
|
|
|
|
|
|
|
|
|
|
||||
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||
Accounts receivable consisted of:
|
|
As of |
|
|||||
|
|
September 30, |
|
|
December 31, |
|
||
Related party |
|
$ |
|
|
$ |
|
||
Third party |
|
|
|
|
|
|
||
|
|
$ |
|
|
$ |
|
||
10
During the nine months ended September 30, 2026, the Company recognized $
As of September 30, 2026, the aggregate amount of the transaction price for open contracts allocated to remaining performance obligations was $
Geographic information
Geographic revenues are attributed to the location of the Company's customer contracts. Except for the United States, no individual country represented more than 10% of total revenue. Geographic revenues consisted of:
|
|
Three months ended |
|
|
Nine months ended |
|
||||||||||
|
|
September 30, |
|
|
September 30, |
|
|
September 30, |
|
|
September 30, |
|
||||
United States |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||
International: |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Europe |
|
|
|
|
|
|
|
|
|
|
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|
||||
Asia |
|
|
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|
|
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|
|
||||
Middle East |
|
|
|
|
|
|
|
|
|
|
|
|
||||
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||
The Company accounts for its investments in unconsolidated joint ventures using the equity method of accounting. The Company’s joint ventures are as follows:
QIC Delaware, Inc., a Delaware corporation and an affiliate of Qiddiya Investment Company (“QIC”), holds
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 $
The Company and FCG are part of an intercompany service agreement (“Intercompany Services Agreement”) and a license agreement.
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
11
The Company has a
Investments and advances to equity method investments consisted of:
|
|
As of |
|
|||||
|
|
September 30, |
|
|
December 31, |
|
||
FCG |
|
$ |
|
|
$ |
|
||
PDP |
|
|
|
|
|
|
||
Karnival |
|
|
|
|
|
|
||
|
|
$ |
|
|
$ |
|
||
Share of income (loss) from equity method investments consisted of:
|
|
Three months ended |
|
|
Nine months ended |
|
||||||||||
|
|
September 30, |
|
|
September 30, |
|
|
September 30, |
|
|
September 30, |
|
||||
FCG |
|
$ |
( |
) |
|
$ |
( |
) |
|
$ |
( |
) |
|
$ |
( |
) |
PDP |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Karnival |
|
|
|
|
|
( |
) |
|
|
|
|
|
( |
) |
||
|
|
$ |
( |
) |
|
$ |
( |
) |
|
$ |
( |
) |
|
$ |
|
|
Share of income (loss) from FCG consisted of:
|
|
Three months ended |
|
|
Nine months ended |
|
||||||||||
|
|
September 30, |
|
|
September 30, |
|
|
September 30, |
|
|
September 30, |
|
||||
Share of FCG net income (loss) (excluding gain on sale of land) |
|
$ |
( |
) |
|
$ |
( |
) |
|
$ |
( |
) |
|
$ |
( |
) |
Share of FCG net income (loss) from gain on sale of land |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Preferred unit dividend accretion |
|
|
( |
) |
|
|
( |
) |
|
|
( |
) |
|
|
( |
) |
Basis difference amortization |
|
|
( |
) |
|
|
( |
) |
|
|
( |
) |
|
|
( |
) |
|
|
$ |
( |
) |
|
$ |
( |
) |
|
$ |
( |
) |
|
$ |
( |
) |
12
Share of income (loss) from PDP consisted of:
|
|
Three months ended |
|
|
Nine months ended |
|
||||||||||
|
|
September 30, |
|
|
September 30, |
|
|
September 30, |
|
|
September 30, |
|
||||
Share of PDP net income (excluding gain on sale from Tenerife and impairment of PDP) |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||
Share of PDP net income from gain on sale of Tenerife |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Impairment of PDP |
|
|
|
|
|
|
|
|
|
|
|
( |
) |
|||
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||
Share of income (loss) from Karnival consisted of:
|
|
Three months ended |
|
|
Nine months ended |
|
||||||||||
|
|
September 30, |
|
|
September 30, |
|
|
September 30, |
|
|
September 30, |
|
||||
Share of Karnival net income (loss) (excluding gain on excess distributions over investment) |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||
Gain on excess distributions over investment of Karnival |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Impairment of Karnival |
|
|
|
|
|
( |
) |
|
|
|
|
|
( |
) |
||
|
|
$ |
|
|
$ |
( |
) |
|
$ |
|
|
$ |
( |
) |
||
Summarized balance sheet information for the Company’s equity method investments consisted of:
|
|
As of |
|
|||||||||||||||||||||
|
|
September 30, 2026 |
|
|
December 31, 2025 |
|
||||||||||||||||||
|
|
FCG |
|
|
PDP |
|
|
Karnival |
|
|
FCG |
|
|
PDP |
|
|
Karnival |
|
||||||
Current assets |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||||
Non-current assets |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Current liabilities |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Non-current liabilities |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Accrued expenses and other current liabilities consisted of:
|
|
As of |
|
|||||
|
|
September 30, |
|
|
December 31, |
|
||
Transaction and professional fees |
|
$ |
|
|
$ |
|
||
Accrued payroll and related expenses |
|
|
|
|
|
|
||
Accrued interest |
|
|
|
|
|
|
||
Attraction services and product costs |
|
|
|
|
|
|
||
Other |
|
|
|
|
|
|
||
|
|
$ |
|
|
$ |
|
||
13
Indebtedness consisted of:
|
|
As of |
|
|||||||||||||
|
|
September 30, 2026 |
|
|
December 31, 2025 |
|
||||||||||
|
|
Amount |
|
|
Interest |
|
|
Amount |
|
|
Interest |
|
||||
$ |
|
$ |
|
|
|
% |
|
$ |
|
|
|
% |
||||
$ |
|
|
|
|
|
% |
|
|
|
|
|
% |
||||
$ |
|
|
|
|
|
% |
|
|
|
|
|
% |
||||
€ |
|
|
|
|
|
% |
|
|
|
|
|
% |
||||
€ |
|
|
|
|
|
% |
|
|
|
|
|
% |
||||
Deferred Loan Settlement |
|
|
|
|
|
% |
|
|
|
|
|
% |
||||
$ |
|
|
|
|
|
% |
|
|
|
|
|
% |
||||
$ |
|
|
|
|
|
% |
|
|
|
|
|
% |
||||
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
Less: Current portion of long-term debt and short-term debt |
|
|
( |
) |
|
|
|
|
|
( |
) |
|
|
|
||
|
|
$ |
|
|
|
|
|
$ |
|
|
|
|
||||
(1)
(2)
(3)
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 $
$
The Company has a revolving credit arrangement with Infinite Acquisitions Partners LLC (“Infinite Acquisitions”) for $
$
In November 2025, the Company entered into a revolving credit arrangement between Falcon's Attractions, LLC and Infinite Acquisitions Partners LLC (“Infinite Acquisitions”) for $
€
In March 2019, the Company entered into an
$
Falcon's Opco has a
14
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 $
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 $
This further supports what was previously disclosed during the three months ended March 31, 2026, when the Company reversed $
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,
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 September 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 $
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
15
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 September 30, 2026 and December 31, 2025, there are
The weighted average shares of common stock outstanding used to determine the Company’s net income (loss) per share reflects the following:
|
|
Three months ended |
|
|
Nine months ended |
|
||||||||||
(amounts in thousands, except number of shares and amount per share) |
|
September 30, |
|
|
September 30, |
|
|
September 30, |
|
|
September 30, |
|
||||
Numerator: |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Net income (loss) |
|
$ |
( |
) |
|
$ |
( |
) |
|
$ |
( |
) |
|
$ |
|
|
Net income (loss) attributable to noncontrolling interests |
|
|
( |
) |
|
|
( |
) |
|
|
( |
) |
|
|
|
|
Series B Preferred Stock dividends |
|
|
( |
) |
|
|
( |
) |
|
|
( |
) |
|
|
( |
) |
Income allocated to participating Series B Preferred Stock |
|
|
|
|
|
|
|
|
( |
) |
|
|
( |
) |
||
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
Net income (loss) available to Class A common stockholders |
|
|
( |
) |
|
|
( |
) |
|
|
( |
) |
|
|
|
|
Adjustment for dilutive warrants |
|
|
|
|
|
|
|
|
|
|
|
( |
) |
|||
Dilutive net income (loss) attributable to Class A common stockholders |
|
$ |
( |
) |
|
$ |
( |
) |
|
$ |
( |
) |
|
$ |
|
|
Denominator: |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Weighted average Class A common stock outstanding – basic |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Adjustment for dilutive warrants |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Weighted average Class A common stock outstanding – diluted |
|
|
|
|
|
|
|
|
|
|
|
|
||||
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
Net income (loss) per Class A common share – basic: |
|
|
( |
) |
|
|
( |
) |
|
|
( |
) |
|
|
|
|
Net income (loss) per Class A common share – diluted: |
|
|
( |
) |
|
|
( |
) |
|
|
( |
) |
|
|
|
|
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:
|
|
Three months ended |
|
|
Nine months ended |
|
||||||||||
|
|
September 30, |
|
|
September 30, |
|
|
September 30, |
|
|
September 30, |
|
||||
Class A earnout shares |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Class B earnout shares |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Series B Preferred Stock shares |
|
|
|
|
|
|
|
|
|
|
|
|
||||
RSUs |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Class A shares subject to forfeiture under the deferred settlement agreement |
|
|
|
|
|
|
|
|
|
|
|
|
||||
With respect to unvested Class A earnout shares,
16
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.
|
|
Restricted |
|
|
Nonvested at January 1, 2026 |
|
|
|
|
Granted |
|
|
|
|
Forfeited |
|
|
( |
) |
Vested |
|
|
( |
) |
Nonvested shares outstanding at September 30, 2026 |
|
|
|
|
The RSUs under the Plan generally vest within one to
Certain RSUs granted under the Plan on January 28, 2026 vest as follows: (1)
RSUs granted under the Plan on June 10, 2026 vest as follows: (1)
The Company recognized stock-based compensation expense of $
As of September 30, 2026 and December 31, 2025, stock-based compensation expense not yet recognized relating to nonvested awards was $
The tax provisions for the three and nine months ended September 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 rate was
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.
17
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
During the third quarter of 2026, the Company commenced operations of FBC. As of September 30, 2026, the Company had
FCG and FBC provide 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. Other Brand and Media Services 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.
18
|
|
Three months ended September 30, 2026 |
|
|||||||||||||||||||||||||
|
|
Falcon’s Creative |
|
|
Falcon's Beyond Destinations |
|
|
Falcon's Beyond Brands |
|
|
|
|
||||||||||||||||
|
|
Falcon's Creative |
|
|
Falcon's Beyond Creative |
|
|
Destinations Operations |
|
|
PDP |
|
|
Falcon's Attractions |
|
|
Other Brand and Media Services |
|
|
Segment Total |
|
|||||||
Revenue external customers: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||
Services |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|||||||
Product sales |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||
Total revenue |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||
Reconciliation of revenue |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||
Revenue corporate unallocated |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||
Revenue FCG |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
( |
) |
||||||
Total consolidated revenue |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||
Project design and build expense |
|
|
( |
) |
|
|
( |
) |
|
|
|
|
|
|
|
|
( |
) |
|
|
|
|
|
|
||||
Cost of product sales |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
( |
) |
|
|
|
|
|
|
||||||
Selling, general and administrative |
|
|
( |
) |
|
|
( |
) |
|
|
( |
) |
|
|
|
|
|
( |
) |
|
|
( |
) |
|
|
|
||
Research and development expense |
|
|
( |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Share of gain (loss) from equity method investments |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||
Segment income (loss) from operations |
|
$ |
( |
) |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
( |
) |
|
$ |
( |
) |
|
$ |
( |
) |
|||
|
|
Three months ended September 30, 2025 |
|
|||||||||||||||||||||
|
|
Falcon’s |
|
|
Falcon's Beyond Destinations |
|
|
Falcon's Beyond Brands |
|
|
|
|
||||||||||||
|
|
Creative |
|
|
Destinations Operations |
|
|
PDP |
|
|
Falcon's Attractions |
|
|
Other |
|
|
Segment Total |
|
||||||
Revenue external customers: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Services |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||||
Product sales |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Total revenue |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Reconciliation of revenue |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Revenue corporate unallocated |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Revenue FCG |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
( |
) |
|||||
Total consolidated revenue |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Project design and build expense |
|
|
( |
) |
|
|
|
|
|
|
|
|
( |
) |
|
|
|
|
|
|
||||
Cost of product sales |
|
|
|
|
|
|
|
|
|
|
|
( |
) |
|
|
|
|
|
|
|||||
Selling, general and administrative |
|
|
( |
) |
|
|
( |
) |
|
|
|
|
|
( |
) |
|
|
( |
) |
|
|
|
||
Research and development expense |
|
|
|
|
|
( |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|||||
Share of gain (loss) from equity method investments, excluding impairment of Karnival |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Segment income (loss) from operations |
|
$ |
( |
) |
|
$ |
|
|
$ |
|
|
$ |
( |
) |
|
$ |
( |
) |
|
$ |
( |
) |
||
19
|
|
Nine months ended September 30, 2026 |
|
|||||||||||||||||||||||||
|
|
Falcon’s Creative |
|
|
Falcon's Beyond Destinations |
|
|
Falcon's Beyond Brands |
|
|
|
|
||||||||||||||||
|
|
Falcon's Creative |
|
|
Falcon's Beyond Creative |
|
|
Destinations Operations |
|
|
PDP |
|
|
Falcon's Attractions |
|
|
Other Brand and Media Services |
|
|
Segment Total |
|
|||||||
Revenue external customers: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||
Services |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|||||||
Product sales |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||
Total revenue |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||
Reconciliation of revenue |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||
Revenue corporate unallocated |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||
Revenue FCG |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
( |
) |
||||||
Total consolidated revenue |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||
Project design and build expense |
|
|
( |
) |
|
|
( |
) |
|
|
|
|
|
|
|
|
( |
) |
|
|
( |
) |
|
|
|
|||
Cost of product sales |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
( |
) |
|
|
|
|
|
|
||||||
Selling, general and administrative |
|
|
( |
) |
|
|
( |
) |
|
|
( |
) |
|
|
|
|
|
( |
) |
|
|
( |
) |
|
|
|
||
Research and development expense |
|
|
( |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Share of gain (loss) from equity method investments, excluding gain on excess distributions over investment of Karnival |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||
Segment income (loss) from operations |
|
$ |
( |
) |
|
$ |
|
|
$ |
( |
) |
|
$ |
|
|
$ |
( |
) |
|
$ |
( |
) |
|
$ |
( |
) |
||
|
|
Nine months ended September 30, 2025 |
|
|||||||||||||||||||||
|
|
Falcon’s |
|
|
Falcon's Beyond Destinations |
|
|
Falcon's Beyond Brands |
|
|
|
|
||||||||||||
|
|
Creative |
|
|
Destinations Operations |
|
|
PDP |
|
|
Falcon's Attractions |
|
|
Other |
|
|
Segment Total |
|
||||||
Revenue external customers: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Services |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||||
Product sales |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Total revenue |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Reconciliation of revenue |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Revenue corporate unallocated |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Revenue FCG |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
( |
) |
|||||
Total consolidated revenue |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Project design and build expense |
|
|
( |
) |
|
|
|
|
|
|
|
|
( |
) |
|
|
|
|
|
|
||||
Cost of product sales |
|
|
|
|
|
|
|
|
|
|
|
( |
) |
|
|
|
|
|
|
|||||
Selling, general and administrative |
|
|
( |
) |
|
|
( |
) |
|
|
|
|
|
( |
) |
|
|
( |
) |
|
|
|
||
Research and development expense |
|
|
( |
) |
|
|
( |
) |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Share of gain (loss) from equity method investments, excluding gain on Tenerife Sale and impairment of PDP and impairment of Karnival |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Segment income (loss) from operations |
|
$ |
( |
) |
|
$ |
( |
) |
|
$ |
|
|
$ |
( |
) |
|
$ |
( |
) |
|
$ |
( |
) |
|
20
A reconciliation of segment income (loss) from operations to net income (loss) before taxes is as follows:
|
|
Three months ended |
|
|
Nine months ended |
|
||||||||||
|
|
September 30, |
|
|
September 30, |
|
|
September 30, |
|
|
September 30, |
|
||||
Segment income (loss) from operations |
|
$ |
( |
) |
|
$ |
( |
) |
|
$ |
( |
) |
|
$ |
( |
) |
Unallocated corporate overhead |
|
|
( |
) |
|
|
( |
) |
|
|
( |
) |
|
|
( |
) |
Elimination FCG segment income (loss) from operations |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Share of income (loss) from FCG |
|
|
( |
) |
|
|
( |
) |
|
|
( |
) |
|
|
( |
) |
Transaction credit |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Depreciation and amortization expense |
|
|
( |
) |
|
|
( |
) |
|
|
( |
) |
|
|
( |
) |
Share of equity method investee's gain on Tenerife Sale |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Impairment of PDP |
|
|
|
|
|
|
|
|
|
|
|
( |
) |
|||
Gain on excess distributions over investment of Karnival |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Impairment of Karnival |
|
|
|
|
|
( |
) |
|
|
|
|
|
( |
) |
||
Interest expense |
|
|
( |
) |
|
|
( |
) |
|
|
( |
) |
|
|
( |
) |
Interest income |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Change in fair value of warrant liabilities |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Foreign exchange transaction gain (loss) |
|
|
|
|
|
( |
) |
|
|
|
|
|
|
|||
Gain on bargain purchase of OES Acquisition |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Net income (loss) before taxes |
|
$ |
( |
) |
|
$ |
( |
) |
|
$ |
( |
) |
|
$ |
|
|
Identifiable assets and capital expenditures are comprised of:
|
|
Total Assets |
|
|
Capital Expenditures |
|
||||||||||
|
|
As of |
|
|
Nine months ended |
|
||||||||||
|
|
September 30, |
|
|
December 31, |
|
|
September 30, |
|
|
September 30, |
|
||||
FCG |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||
FBC |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Destinations Operations |
|
|
|
|
|
|
|
|
|
|
|
|
||||
PDP |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Falcon's Attractions |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Other Brand and Media Services |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Unallocated corporate assets and intersegment eliminations |
|
|
|
|
|
|
|
|
( |
) |
|
|
( |
) |
||
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||
Other current assets
The Company has a short-term advance to fund working capital to FCG for $
Related party loans
The Company has
21
The Company has a financing agreement with Katmandu Ventures, LLC (“Katmandu Ventures”) with a total outstanding balance of $
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. See “Note 3 – Revenue” for additional information.
Transactions between FCG and the Company
Transactions between FCG and the Company, primarily related to the Intercompany Services Agreement, are summarized as follows:
|
|
Three months ended |
|
|
Nine months ended |
|
||||||||||
|
|
September 30, |
|
|
September 30, |
|
|
September 30, |
|
|
September 30, |
|
||||
Sales to FCG included in: |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Services |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||
Costs from FCG included in: |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Project design and build expense |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Selling, general and administrative expense |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Research and development expense |
|
|
|
|
|
|
|
|
|
|
|
|
||||
|
|
As of |
|
|||||
|
|
September 30, |
|
|
December 31, |
|
||
Assets from FCG included in: |
|
|
|
|
|
|
||
Accounts receivable |
|
$ |
|
|
$ |
|
||
Liabilities to FCG included in: |
|
|
|
|
|
|
||
Accounts payable |
|
|
|
|
|
|
||
Equity method investment financing
Scott Demerau, the Executive Chairman and his wife are investors of the lender that provided $
The Company has evaluated subsequent events through the date of issuance of these unaudited condensed consolidated financial statements and determined that no subsequent events occurred that required recognition or disclosure.
22
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations.
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 and nine months ended September 30, 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.
Overview of Business
We are 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, 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 (“FC”), Falcon’s Beyond Brands (“FBB”), and Falcon’s Beyond Destinations (“FBD”), each of which serves a distinct role within our operating model and participates in different stages of value creation within the experience economy. These divisions are conducted through six operating segments. FC, consisting of Falcon's Beyond Creative (“FBC”) and Falcon's Creative Group (“FCG”) provided 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 Other Brand and Media Services, 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. (“PDP”), a joint venture between Falcon’s and Meliá Hotels International, S.A. (“Meliá”), 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.
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.
Acquisition of OES
On May 9, 2025, we 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 our attractions services business and formed the foundation of the Falcon's Attractions segment.
Our unaudited condensed consolidated financial statements have been prepared in accordance with generally accepted accounting principles in the United States (“U.S. GAAP”). All amounts are shown in thousands of U.S. dollars unless otherwise stated.
The following reflects our results of operations for the three and nine months ended September 30, 2026 and 2025.
23
Liquidity and Going Concern
We have continued to invest in initiatives focused primarily on expanding our Falcon's Beyond Brands division, including product development, talent acquisition, and selective strategic investments. Historically, these activities have contributed to operating losses and negative cash flows from operations. For the nine months ended September 30, 2026, however, we generated net cash provided by operating activities of $2.1 million, representing an improvement in operating cash flows compared with prior comparable periods. Nonetheless, we evaluated our 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.
Our development plans and associated working capital needs have been funded by a combination of debt and equity investments from our stockholders and the sale of non-core assets. We expect 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 our ongoing growth strategy and working capital requirements. As of September 30, 2026, we have a working capital deficit of $9.3 million that was driven by the Deferred Loan Settlement of $7.0 million, which is included within the $8.5 million of debt obligations classified as current based on their contractual maturity dates, and $8.7 million of contract liabilities. Contract liabilities increased as a result of billings and customer payments received in advance of satisfying the related performance obligations, primarily under new creative and attraction services contracts. Although these contract liabilities are classified as current liabilities, their settlement is generally expected to occur through the delivery of goods and services and the recognition of revenue rather than through a cash repayment. We continue to evaluate financing alternatives with respect to these obligations and may utilize available cash to settle such obligations, to the extent sufficient liquidity is available. See “Note 6 – Long-term debt and borrowing arrangements” and “Note 3 – Revenue” in our unaudited condensed consolidated financial statements for further discussion.
We assess our ability to meet obligations over the next twelve months based on current liquidity levels and assume the continued execution of our operating plan and certain financing and capital initiatives. While we generated positive cash flows from operations for the nine months ended September 30, 2026, following negative operating cash flows in prior comparable periods, we continue to have ongoing capital needs to support our growth initiatives and to settle short-term debt obligations. These conditions raise substantial doubt about our ability to continue as a going concern. We continue to take active steps to strengthen our 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 us to continue as a going concern.
24
Results of Operations
The following comparisons are historical results and are not indicative of future results, which could differ materially from the historical financial information presented. The following table summarizes our results of operations for the following periods:
|
|
Three months ended September 30, |
|
|
Nine months ended September 30, |
|
||||||||||||||||||
|
|
2026 |
|
|
2025 |
|
|
$ Change |
|
|
2026 |
|
|
2025 |
|
|
$ Change |
|
||||||
Revenue |
|
$ |
7,289 |
|
|
$ |
4,054 |
|
|
$ |
3,235 |
|
|
$ |
18,283 |
|
|
$ |
8,311 |
|
|
$ |
9,972 |
|
Expenses: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Project design and build expense |
|
|
2,264 |
|
|
|
933 |
|
|
|
1,331 |
|
|
|
4,278 |
|
|
|
1,388 |
|
|
|
2,890 |
|
Cost of product sales |
|
|
1,014 |
|
|
|
475 |
|
|
|
539 |
|
|
|
3,172 |
|
|
|
558 |
|
|
|
2,614 |
|
Selling, general and administrative expense |
|
|
7,249 |
|
|
|
6,174 |
|
|
|
1,075 |
|
|
|
22,637 |
|
|
|
19,114 |
|
|
|
3,523 |
|
Transaction credit |
|
|
— |
|
|
|
(10 |
) |
|
|
10 |
|
|
|
(15,057 |
) |
|
|
(1,788 |
) |
|
|
(13,269 |
) |
Research and development expense |
|
|
— |
|
|
|
(2 |
) |
|
|
2 |
|
|
|
— |
|
|
|
199 |
|
|
|
(199 |
) |
Depreciation and amortization expense |
|
|
126 |
|
|
|
168 |
|
|
|
(42 |
) |
|
|
390 |
|
|
|
212 |
|
|
|
178 |
|
Income (loss) from operations |
|
|
(3,364 |
) |
|
|
(3,684 |
) |
|
|
320 |
|
|
|
2,863 |
|
|
|
(11,372 |
) |
|
|
14,235 |
|
Share of gain (loss) from equity method investments |
|
|
(4,146 |
) |
|
|
(6,840 |
) |
|
|
2,694 |
|
|
|
(4,209 |
) |
|
|
14,944 |
|
|
|
(19,153 |
) |
Interest expense |
|
|
(185 |
) |
|
|
(930 |
) |
|
|
745 |
|
|
|
(577 |
) |
|
|
(3,104 |
) |
|
|
2,527 |
|
Interest income |
|
|
6 |
|
|
|
4 |
|
|
|
2 |
|
|
|
19 |
|
|
|
9 |
|
|
|
10 |
|
Change in fair value of warrant liabilities |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
2,886 |
|
|
|
(2,886 |
) |
Foreign exchange transaction gain (loss) |
|
|
26 |
|
|
|
(61 |
) |
|
|
87 |
|
|
|
44 |
|
|
|
2,146 |
|
|
|
(2,102 |
) |
Gain on bargain purchase of OES Acquisition |
|
|
— |
|
|
|
1,098 |
|
|
|
(1,098 |
) |
|
|
— |
|
|
|
1,098 |
|
|
|
(1,098 |
) |
Net income (loss) before taxes |
|
$ |
(7,663 |
) |
|
$ |
(10,413 |
) |
|
$ |
2,750 |
|
|
$ |
(1,860 |
) |
|
$ |
6,607 |
|
|
$ |
(8,467 |
) |
Income tax (expense) benefit |
|
|
— |
|
|
|
1 |
|
|
|
(1 |
) |
|
|
— |
|
|
|
1 |
|
|
|
(1 |
) |
Net income (loss) |
|
$ |
(7,663 |
) |
|
$ |
(10,412 |
) |
|
$ |
2,749 |
|
|
$ |
(1,860 |
) |
|
$ |
6,608 |
|
|
$ |
(8,468 |
) |
Revenue
|
|
Three months ended September 30, |
|
|
Nine months ended September 30, |
|
||||||||||||||||||
|
|
2026 |
|
|
2025 |
|
|
$ Change |
|
|
2026 |
|
|
2025 |
|
|
$ Change |
|
||||||
Revenue transferred over time: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Shared services |
|
$ |
1,985 |
|
|
$ |
1,793 |
|
|
$ |
192 |
|
|
$ |
5,770 |
|
|
$ |
5,017 |
|
|
$ |
753 |
|
Destinations operations services |
|
|
414 |
|
|
|
442 |
|
|
|
(28 |
) |
|
|
561 |
|
|
|
588 |
|
|
|
(27 |
) |
Creative and attraction services |
|
|
3,361 |
|
|
|
984 |
|
|
|
2,377 |
|
|
|
7,105 |
|
|
|
1,714 |
|
|
|
5,391 |
|
|
|
$ |
5,760 |
|
|
$ |
3,219 |
|
|
$ |
2,541 |
|
|
$ |
13,436 |
|
|
$ |
7,319 |
|
|
$ |
6,117 |
|
Revenue transferred at a point in time: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Product sales |
|
|
1,529 |
|
|
|
835 |
|
|
|
694 |
|
|
|
4,847 |
|
|
|
992 |
|
|
|
3,855 |
|
|
|
$ |
7,289 |
|
|
$ |
4,054 |
|
|
$ |
3,235 |
|
|
$ |
18,283 |
|
|
$ |
8,311 |
|
|
$ |
9,972 |
|
Revenue increased for the three and nine months ended September 30, 2026, compared to the same period in 2025, primarily driven by the growth of the Falcon's Attractions and FBC businesses. As of September 30, 2026, Falcon's Attractions and Falcon's Beyond Creative had a contracted pipeline of $17.1 million and $10.9 million, respectively.
Project design and build expense
Project design and build expense increased for the three and nine months ended September 30, 2026, compared to the same period in 2025, primarily driven by new attractions service contracts.
25
Cost of product sales
Cost of product sales increased for the three and nine months ended September 30, 2026, compared to the same period in 2025, primarily driven by new attractions product sales.
Selling, general and administrative expense
Selling, general and administrative expense increased for the three and nine months ended September 30, 2026, compared to the same period in 2025, primarily driven by the OES integration, growth of attraction services, and support functions required to scale operations.
Transaction credit
We recognized a transaction credit of $15.1 million for the nine months ended September 30, 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 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 our Class A common stock that was not completed.
Share of gain (loss) from equity method investments
|
|
Three months ended September 30, |
|
|
Nine months ended September 30, |
|
||||||||||||||||||
|
|
2026 |
|
|
2025 |
|
|
$ Change |
|
|
2026 |
|
|
2025 |
|
|
$ Change |
|
||||||
Share of PDP net gain (loss) (excluding gain on sale from Tenerife and impairment of PDP) |
|
$ |
1,735 |
|
|
$ |
1,270 |
|
|
$ |
465 |
|
|
$ |
1,502 |
|
|
$ |
2,460 |
|
|
$ |
(958 |
) |
Share of PDP net gain (loss) from gain on sale of Tenerife |
|
|
— |
|
|
|
264 |
|
|
|
(264 |
) |
|
|
— |
|
|
|
30,019 |
|
|
|
(30,019 |
) |
Impairment of PDP |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
(5,332 |
) |
|
|
5,332 |
|
Share of Karnival net gain (loss) (excluding gain on excess distributions over investment) |
|
|
— |
|
|
|
9 |
|
|
|
(9 |
) |
|
|
24 |
|
|
|
63 |
|
|
|
(39 |
) |
Gain on excess distributions over investment of Karnival |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
1,201 |
|
|
|
— |
|
|
|
1,201 |
|
Impairment of Karnival |
|
|
— |
|
|
|
(3,005 |
) |
|
|
3,005 |
|
|
|
— |
|
|
|
(3,005 |
) |
|
|
3,005 |
|
Share of FCG net gain (loss) (excluding gain on sale of land) |
|
|
(5,881 |
) |
|
|
(5,378 |
) |
|
|
(503 |
) |
|
|
(8,559 |
) |
|
|
(9,261 |
) |
|
|
702 |
|
Share of FCG net gain (loss) from gain on sale of land |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
1,623 |
|
|
|
— |
|
|
|
1,623 |
|
|
|
$ |
(4,146 |
) |
|
$ |
(6,840 |
) |
|
$ |
2,694 |
|
|
$ |
(4,209 |
) |
|
$ |
14,944 |
|
|
$ |
(19,153 |
) |
Share of loss from equity method investments decreased for the three months ended September 30, 2026 and share of loss from equity method investments increased for the nine months ended September 30, 2026, compared to the same periods in 2025, primarily driven by:
As of June 30, 2025, the Company recognized an other-than-temporary impairment charge of $5.3 million, which is recorded in Share of gain (loss) from equity method investments.
26
Interest expense
Interest expense decreased for the three and nine months ended September 30, 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.
Change in fair value of warrant liability
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.
Foreign exchange transaction gain (loss)
Foreign exchange transaction gain decreased for the nine months ended September 30, 2026, compared to the same periods in 2025, primarily attributable to the decrease of the U.S. denominated related party debt with a Spanish subsidiary.
27
Segment Reporting
The following table presents selected information about our segments’ results:
|
|
Three months ended September 30, |
|
|
Nine months ended September 30, |
|
||||||||||||||||||
|
|
2026 |
|
|
2025 |
|
|
$ Change |
|
|
2026 |
|
|
2025 |
|
|
$ Change |
|
||||||
Revenues: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
FCG |
|
$ |
5,238 |
|
|
$ |
5,745 |
|
|
$ |
(507 |
) |
|
$ |
30,771 |
|
|
$ |
24,336 |
|
|
$ |
6,435 |
|
FBC |
|
|
1,024 |
|
|
|
— |
|
|
|
1,024 |
|
|
|
1,047 |
|
|
|
— |
|
|
|
1,047 |
|
Destinations Operations |
|
|
414 |
|
|
|
442 |
|
|
|
(28 |
) |
|
|
561 |
|
|
|
588 |
|
|
|
(27 |
) |
Falcon's Attractions |
|
|
3,866 |
|
|
|
1,819 |
|
|
|
2,047 |
|
|
|
10,905 |
|
|
|
2,706 |
|
|
|
8,199 |
|
FCG deconsolidation |
|
|
(5,238 |
) |
|
|
(5,745 |
) |
|
|
507 |
|
|
|
(30,771 |
) |
|
|
(24,336 |
) |
|
|
(6,435 |
) |
Unallocated corporate revenue |
|
|
1,985 |
|
|
|
1,793 |
|
|
|
192 |
|
|
|
5,770 |
|
|
|
5,017 |
|
|
|
753 |
|
Total revenue |
|
|
7,289 |
|
|
|
4,054 |
|
|
|
3,235 |
|
|
|
18,283 |
|
|
|
8,311 |
|
|
|
9,972 |
|
Segment income (loss) from operations: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
FCG |
|
|
(3,644 |
) |
|
|
(3,174 |
) |
|
|
(470 |
) |
|
|
(1,865 |
) |
|
|
(2,888 |
) |
|
|
1,023 |
|
FBC |
|
|
125 |
|
|
|
— |
|
|
|
125 |
|
|
|
128 |
|
|
|
— |
|
|
|
128 |
|
Destinations Operations |
|
|
145 |
|
|
|
110 |
|
|
|
35 |
|
|
|
(250 |
) |
|
|
(510 |
) |
|
|
260 |
|
PDP |
|
|
1,735 |
|
|
|
1,270 |
|
|
|
465 |
|
|
|
1,501 |
|
|
|
2,459 |
|
|
|
(958 |
) |
Falcon's Attractions |
|
|
(1,153 |
) |
|
|
(1,730 |
) |
|
|
577 |
|
|
|
(3,374 |
) |
|
|
(4,470 |
) |
|
|
1,096 |
|
Other Brand and Media Services |
|
|
(241 |
) |
|
|
(286 |
) |
|
|
45 |
|
|
|
(544 |
) |
|
|
(709 |
) |
|
|
165 |
|
Total segment income (loss) from operations |
|
|
(3,033 |
) |
|
|
(3,810 |
) |
|
|
777 |
|
|
|
(4,404 |
) |
|
|
(6,118 |
) |
|
|
1,714 |
|
Unallocated corporate overhead |
|
|
(2,114 |
) |
|
|
(1,611 |
) |
|
|
(503 |
) |
|
|
(7,739 |
) |
|
|
(7,195 |
) |
|
|
(544 |
) |
Elimination FCG segment income (loss) from operations |
|
|
3,644 |
|
|
|
3,174 |
|
|
|
470 |
|
|
|
1,865 |
|
|
|
2,888 |
|
|
|
(1,023 |
) |
Share of income (loss) from FCG |
|
|
(5,881 |
) |
|
|
(5,378 |
) |
|
|
(503 |
) |
|
|
(6,936 |
) |
|
|
(9,261 |
) |
|
|
2,325 |
|
Transaction credit |
|
|
— |
|
|
|
10 |
|
|
|
(10 |
) |
|
|
15,057 |
|
|
|
1,788 |
|
|
|
13,269 |
|
Depreciation and amortization expense |
|
|
(126 |
) |
|
|
(168 |
) |
|
|
42 |
|
|
|
(390 |
) |
|
|
(212 |
) |
|
|
(178 |
) |
Share of equity method investee's gain on Tenerife Sale |
|
|
— |
|
|
|
264 |
|
|
|
(264 |
) |
|
|
— |
|
|
|
30,019 |
|
|
|
(30,019 |
) |
Impairment of PDP |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
(5,332 |
) |
|
|
5,332 |
|
Gain on excess distributions over investment of Karnival |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
1,201 |
|
|
|
— |
|
|
|
1,201 |
|
Impairment of Karnival |
|
|
— |
|
|
|
(3,005 |
) |
|
|
3,005 |
|
|
|
— |
|
|
|
(3,005 |
) |
|
|
3,005 |
|
Interest expense |
|
|
(185 |
) |
|
|
(930 |
) |
|
|
745 |
|
|
|
(577 |
) |
|
|
(3,104 |
) |
|
|
2,527 |
|
Interest income |
|
|
6 |
|
|
|
4 |
|
|
|
2 |
|
|
|
19 |
|
|
|
9 |
|
|
|
10 |
|
Change in fair value of warrant liabilities |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
2,886 |
|
|
|
(2,886 |
) |
Foreign exchange transaction gain (loss) |
|
|
26 |
|
|
|
(61 |
) |
|
|
87 |
|
|
|
44 |
|
|
|
2,146 |
|
|
|
(2,102 |
) |
Gain on bargain purchase of OES Acquisition |
|
|
— |
|
|
|
1,098 |
|
|
|
(1,098 |
) |
|
|
— |
|
|
|
1,098 |
|
|
|
(1,098 |
) |
Net income (loss) before taxes |
|
$ |
(7,663 |
) |
|
$ |
(10,413 |
) |
|
$ |
2,750 |
|
|
$ |
(1,860 |
) |
|
$ |
6,607 |
|
|
$ |
(8,467 |
) |
Income tax (expense) benefit |
|
|
— |
|
|
|
1 |
|
|
|
(1 |
) |
|
|
— |
|
|
|
1 |
|
|
|
(1 |
) |
Net income (loss) |
|
$ |
(7,663 |
) |
|
$ |
(10,412 |
) |
|
$ |
2,749 |
|
|
$ |
(1,860 |
) |
|
$ |
6,608 |
|
|
$ |
(8,468 |
) |
28
|
|
Three months ended September 30, |
|
|
Nine months ended September 30, |
|
||||||||||||||||||
|
|
2026 |
|
|
2025 |
|
|
$ Change |
|
|
2026 |
|
|
2025 |
|
|
$ Change |
|
||||||
Share of FCG net income (loss), before adjustments |
|
$ |
(4,210 |
) |
|
$ |
(3,776 |
) |
|
$ |
(434 |
) |
|
$ |
(3,575 |
) |
|
$ |
(4,471 |
) |
|
$ |
896 |
|
Share of FCG net income (loss) from gain on sale of land |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
1,623 |
|
|
|
— |
|
|
|
1,623 |
|
Preferred unit dividend accretion |
|
|
(845 |
) |
|
|
(776 |
) |
|
|
(69 |
) |
|
|
(2,507 |
) |
|
|
(2,313 |
) |
|
|
(194 |
) |
Basis difference amortization |
|
|
(826 |
) |
|
|
(826 |
) |
|
|
— |
|
|
|
(2,477 |
) |
|
|
(2,477 |
) |
|
|
— |
|
|
|
$ |
(5,881 |
) |
|
$ |
(5,378 |
) |
|
$ |
(503 |
) |
|
$ |
(6,936 |
) |
|
$ |
(9,261 |
) |
|
$ |
2,325 |
|
FCG revenues decreased for the three months ended September 30, 2026 and increased for the nine months ended September 30, 2026, compared to the same periods in 2025, as a result of the timing of certain contract performance obligations. As of September 30, 2026, the contracted pipeline for FCG was $13.0 million.
FCG project design and build expense decreased for the three months ended September 30, 2026, compared to the same period in 2025, primarily driven by timing of certain current long-term contracts. FCG project design and build expense increased for the nine months ended September 30, 2026, compared to the same period in 2025, primarily driven by an increase in project revenues.
FBC revenues increased for the three and nine months ended September 30, 2026, compared to the same period in 2025, as a result of the commencement of operations in 2026. As of September 30, 2026, FBC had a contracted pipeline of $10.9 million.
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.
29
Non-GAAP Financial Measures
We prepare our consolidated financial statements in accordance with U.S. GAAP. In addition to financial measures prepared in accordance with U.S. GAAP, we present Adjusted EBITDA, a non-GAAP financial measure. We define Adjusted EBITDA as net income (loss) before interest expense, interest income, income taxes, depreciation and amortization, transaction-related credits, changes in the fair value of warrant liabilities, impairment charges, and certain gains or losses associated with equity method investments that are not considered indicative of our core operating performance.
Management believes Adjusted EBITDA provides useful supplemental information regarding the operating performance of our business by excluding the effects of financing decisions, capital structure, depreciation and amortization, and other items that may not be representative of ongoing operations. Adjusted EBITDA should not be considered in isolation or as a substitute for net income (loss), operating income (loss), cash flows from operating activities, or other measures prepared in accordance with U.S. GAAP. A reconciliation of net income (loss), the most directly comparable U.S. GAAP measure, to Adjusted EBITDA is included below.
The following table sets forth reconciliations of net income (loss) under U.S. GAAP to Adjusted EBITDA for the following periods:
|
|
Three months ended September 30, |
|
|
Nine months ended September 30, |
|
||||||||||||||||||
|
|
2026 |
|
|
2025 |
|
|
$ Change |
|
|
2026 |
|
|
2025 |
|
|
$ Change |
|
||||||
Net income (loss) |
|
$ |
(7,663 |
) |
|
$ |
(10,412 |
) |
|
$ |
2,749 |
|
|
$ |
(1,860 |
) |
|
$ |
6,608 |
|
|
$ |
(8,468 |
) |
Interest expense |
|
|
185 |
|
|
|
930 |
|
|
|
(745 |
) |
|
|
577 |
|
|
|
3,104 |
|
|
|
(2,527 |
) |
Interest income |
|
|
(6 |
) |
|
|
(4 |
) |
|
|
(2 |
) |
|
|
(19 |
) |
|
|
(9 |
) |
|
|
(10 |
) |
Income tax expense (benefit) |
|
|
— |
|
|
|
(1 |
) |
|
|
1 |
|
|
|
— |
|
|
|
(1 |
) |
|
|
1 |
|
Depreciation and amortization expense |
|
|
126 |
|
|
|
168 |
|
|
|
(42 |
) |
|
|
390 |
|
|
|
212 |
|
|
|
178 |
|
EBITDA |
|
|
(7,358 |
) |
|
|
(9,319 |
) |
|
|
1,961 |
|
|
|
(912 |
) |
|
|
9,914 |
|
|
|
(10,826 |
) |
Transaction credit |
|
|
— |
|
|
|
(10 |
) |
|
|
10 |
|
|
|
(15,057 |
) |
|
|
(1,788 |
) |
|
|
(13,269 |
) |
Share of equity method investee's gain on sale of land |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
(1,623 |
) |
|
|
— |
|
|
|
(1,623 |
) |
Share of equity method investee's gain on Tenerife Sale |
|
|
— |
|
|
|
(264 |
) |
|
|
264 |
|
|
|
— |
|
|
|
(30,019 |
) |
|
|
30,019 |
|
Impairment of PDP |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
5,332 |
|
|
|
(5,332 |
) |
Gain on excess distributions over investment of Karnival |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
(1,201 |
) |
|
|
— |
|
|
|
(1,201 |
) |
Impairment of Karnival |
|
|
— |
|
|
|
3,005 |
|
|
|
(3,005 |
) |
|
|
— |
|
|
|
3,005 |
|
|
|
(3,005 |
) |
Change in fair value of warrant liabilities |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
(2,886 |
) |
|
|
2,886 |
|
Gain on bargain purchase of OES Acquisition |
|
|
— |
|
|
|
(1,098 |
) |
|
|
1,098 |
|
|
|
— |
|
|
|
(1,098 |
) |
|
|
1,098 |
|
Adjusted EBITDA |
|
$ |
(7,358 |
) |
|
$ |
(7,686 |
) |
|
$ |
328 |
|
|
$ |
(18,793 |
) |
|
$ |
(17,540 |
) |
|
$ |
(1,253 |
) |
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 (loss) before interest expense, interest income, income taxes, depreciation and amortization, and gain on sale of land.
FCG believes Adjusted EBITDA provides useful supplemental information regarding the operating performance of our business by excluding the effects of financing decisions, capital structure, depreciation and amortization, and other items that may not be representative of ongoing operations. Adjusted EBITDA should not be considered in isolation or as a substitute for net income (loss), operating income (loss), cash flows from operating activities, or other measures prepared in accordance with U.S. GAAP. A reconciliation of net income (loss), the most directly comparable U.S. GAAP measure, to Adjusted EBITDA is included below.
30
The following table sets forth reconciliations of net income (loss) for FCG under U.S. GAAP to Adjusted EBITDA for the following periods:
|
|
Three months ended September 30, |
|
|
Nine months ended September 30, |
|
||||||||||||||||||
|
|
2026 |
|
|
2025 |
|
|
$ Change |
|
|
2026 |
|
|
2025 |
|
|
$ Change |
|
||||||
Net income (loss) |
|
$ |
(4,210 |
) |
|
$ |
(3,776 |
) |
|
$ |
(434 |
) |
|
$ |
(1,952 |
) |
|
$ |
(4,471 |
) |
|
$ |
2,519 |
|
Interest expense |
|
|
136 |
|
|
|
151 |
|
|
|
(15 |
) |
|
|
416 |
|
|
|
451 |
|
|
|
(35 |
) |
Interest income |
|
|
(12 |
) |
|
|
(14 |
) |
|
|
2 |
|
|
|
(36 |
) |
|
|
(16 |
) |
|
|
(20 |
) |
Income tax expense (benefit) |
|
|
48 |
|
|
|
26 |
|
|
|
22 |
|
|
|
121 |
|
|
|
40 |
|
|
|
81 |
|
Depreciation and amortization expense |
|
|
357 |
|
|
|
354 |
|
|
|
3 |
|
|
|
1,072 |
|
|
|
1,027 |
|
|
|
45 |
|
EBITDA |
|
|
(3,681 |
) |
|
|
(3,259 |
) |
|
|
(422 |
) |
|
|
(379 |
) |
|
|
(2,969 |
) |
|
|
2,590 |
|
Gain on sale of land |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
(1,623 |
) |
|
|
— |
|
|
|
(1,623 |
) |
Adjusted EBITDA |
|
$ |
(3,681 |
) |
|
$ |
(3,259 |
) |
|
$ |
(422 |
) |
|
$ |
(2,002 |
) |
|
$ |
(2,969 |
) |
|
$ |
967 |
|
Liquidity and Capital Resources
Sources and Uses of Liquidity
Liquidity describes the ability of a company to generate sufficient cash flows to meet the cash requirements of its business operations. Our primary short-term cash requirements are to fund working capital, short-term debt, acquisitions, contractual obligations and other commitments. Our medium-term to long-term cash requirements are to service and repay debt and to invest in facilities, equipment, technologies, location-based entertainment, media production and research and development for growth initiatives. Our principal sources of liquidity are funds from operations, borrowings, equity contributions from investors, distributions from equity method investees, and cash on hand.
As of September 30, 2026, our total indebtedness was approximately $16.1 million. We had approximately $1.9 million of cash, including $0.5 million of restricted cash, and $12.9 million available for borrowing under our lines of credit.
We anticipate managing our operations to ensure that our existing cash on hand and unused capacity on our existing lines of credit, along with cash flows from operations, distributions from equity method investees, additional debt and equity capital raises, and our portfolio of assets, 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, can provide additional liquidity over the next twelve months to meet our short-term needs. Management’s assessment of our ability to meet our obligations over the next twelve months is based on current liquidity levels and assumes the continued execution of our operating plan and certain financing and capital initiatives. While we generated positive cash flows from operations for the nine months ended September 30, 2026, representing an improvement from negative operating cash flows in prior comparable periods, we have ongoing capital needs to support our growth initiatives and to settle short-term debt obligations. These conditions raise substantial doubt about our ability to continue as a going concern. We continue to take active steps to strengthen our 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. We continue to take active steps to strengthen our 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.
As of September 30, 2026, we have a working capital deficit of $9.3 million, driven by the $7.0 million Deferred Loan Settlement, which is included within the $8.5 million of debt obligations classified as current based on their contractual maturity dates, and $8.7 million of contract liabilities. Contract liabilities increased as a result of billings and customer payments received in advance of satisfying the related performance obligations, primarily under new creative and attraction services contracts. Although these contract liabilities are classified as current liabilities, their settlement is generally expected to occur through the delivery of goods and services and the recognition of revenue rather than through a cash repayment. We continue to evaluate financing alternatives with respect to these obligations and may utilize available cash to settle such obligations, to the extent sufficient liquidity is available. See “Note 6 – Long-term debt and borrowing arrangements” and “Note 3 – Revenue” in our unaudited condensed consolidated financial statements for further discussion.
31
Our capital requirements will depend on many factors, including the timing and extent of spending to support our research and development efforts, investments in technology, the expansion of sales and marketing activities, and market adoption of new and enhanced products and features. In addition, we expect to incur compliance and oversight costs as a result of operating as a public company. We expect our capital expenditures and working capital requirements to increase materially in the near future. Our ability to generate cash in the future depends on our financial results which are subject to general economic, financial, competitive, legislative and regulatory factors that may be outside of our control. Our future access to, and the availability of credit on acceptable terms and conditions, is impacted by many factors, including capital market liquidity and overall economic conditions. In the event that additional financing is required from outside sources, we cannot be sure that any additional financing will be available to us on acceptable terms if at all. If we are unable to raise additional capital when desired, our business, operating results, and financial condition could be adversely affected. See the section of our Annual Report titled “Risk Factors – We will require additional capital, which additional financing may result in restrictions on our operations or substantial dilution to our stockholders, to support the growth of our business, and this capital might not be available on acceptable terms, if at all.”
Contractual and Other Obligations
Tax Receivable Agreement
In connection with the Closing of the Business Combination, we entered into the Tax Receivable Agreement with Falcon’s Opco, the TRA holder representative, certain members of Falcon’s Opco (together with the Company, the “TRA Holders”) and other persons from time-to-time party thereto. Pursuant to the Tax Receivable Agreement, among other things, Falcon's Opco 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, 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.
Transaction costs
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 $15.1 million for the nine months ended September 30, 2026. Following the reversal of these no longer probable accrued transaction expenses, we have a remaining accrual for transaction expenses related to the Business Combination of $1.1 million.
See “Note 7 – Commitments and contingencies” in our unaudited condensed consolidated financial statements for further discussion.
Related Party Loans
We have two financing agreements with Infinite Acquisitions with a total outstanding balance of $7.6 million and $5.0 million as of September 30, 2026 and December 31, 2025, respectively.
We have a financing agreement with Katmandu Ventures, LLC (“Katmandu Ventures”) with a total outstanding balance of $0.6 million as of September 30, 2026. The loan was due on May 16, 2025 and we are 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” in our unaudited condensed consolidated financial statements for further discussion.
Cash Flows
The following table summarizes our cash flows for the period presented:
|
|
Nine months ended September 30, |
|
|||||||||
|
|
2026 |
|
|
2025 |
|
|
$ Change |
|
|||
Cash provided by (used in) operating activities |
|
$ |
2,114 |
|
|
$ |
(20,280 |
) |
|
$ |
22,394 |
|
Cash provided by (used in) investing activities |
|
|
(2,562 |
) |
|
|
23,189 |
|
|
|
(25,751 |
) |
Cash provided by (used in) financing activities |
|
|
537 |
|
|
|
2,768 |
|
|
|
(2,231 |
) |
32
Cash Flows from Operating Activities
Net cash flows provided by operating activities increased for the nine months ended September 30, 2026, compared to the same period in 2025, primarily due to improved operating performance and favorable changes in working capital. In addition, we received a $3.5 million dividend distribution from PDP in the current period.
Cash Flows from Investing Activities
Net cash used in investing activities increased for the nine months ended September 30, 2026, compared to the same period in 2025, primarily related to the absence of the dividend distribution from PDP from the gain on sale from Tenerife in the prior period. In the current period we made short-term advances of $8.0 million to FCG during the current period, compared to $2.0 million during the prior period. This was partially offset by $5.4 million dividend distributions we received from Karnival.
Cash Flows from Financing Activities
Net cash provided by financing activities decreased for the nine months ended September 30, 2026, compared to the same period in 2025, primarily due to lower net borrowings. Net debt proceeds were $0.5 million during the current period, compared to $2.7 million during the prior period.
Critical Accounting Estimates
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, except for the addition of the following:
Revenue recognition
We recognize 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 we expect to be entitled to in exchange for those goods or services.
We generate revenue from the following revenue streams:
We account 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. We evaluate 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, we have 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.
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Performance obligations represent promises to transfer distinct goods or services to a customer. Our contracts may include one or multiple performance obligations depending on the nature of the arrangement. Our conclusions regarding performance obligations vary by revenue stream:
We have concluded that we act as principal in our significant revenue arrangements given we control the specified goods or services before being transferred to the customer.
The transaction price represents the consideration we expect 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. We reassess estimates of variable consideration at each reporting date and update 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:
We apply 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.
Our 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. We assess contract assets for impairment in accordance with applicable accounting guidance.
We expense 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.
We have concluded that our 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.
Investments and advances to equity method investments
We use 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 we have the ability to exercise significant influence over the operating decisions of the investee. Such investments are initially recorded at cost and subsequently adjusted for our 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
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return of investment reduce the carrying amount of the investment. When cumulative distributions exceed the carrying amount of an investment, we reduce 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, we discontinue 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 our share of such earnings exceeds previously unrecognized losses.
We evaluate 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, we consider 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.
Item 3. Quantitative and Qualitative Disclosures About Market Risk.
This item is not applicable as we are a smaller reporting company.
Item 4. Controls and Procedures.
Our management, with the participation of our Chief Executive Officer and Chief Financial Officer, has evaluated the effectiveness of our disclosure controls and procedures (as such term is defined in Rules 13a-15(e) and 15d-15(e) under the Securities and Exchange Act of 1934, as amended (“Exchange Act”)) as of the end of the period covered by this Quarterly Report. Disclosure controls and procedures are designed to ensure that information required to be disclosed by us in the reports that we file or submit under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in SEC rules and forms, and that such information is accumulated and communicated to our management, including our Chief Executive Officer and Chief Financial Officer, to allow timely decisions regarding required disclosures. Management recognizes that any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving their objectives and management necessarily applies its judgment in evaluating the cost benefit relationship of possible controls and procedures. Based on such evaluation, our Chief Executive Officer and Chief Financial Officer have concluded that, as of September 30, 2026, our disclosure controls and procedures were not effective due to the identification of material weaknesses in our internal control over financial reporting.
Previously Reported Material Weaknesses
As previously disclosed in Part II Item 9A of our Annual Report on Form 10-K for the year ended December 31, 2025, in connection with the preparation and audit of the 2023 consolidated financial statements, management concluded that material weaknesses existed in our internal control over financial reporting with respect to our Risk Assessment, Control Activities, Monitoring, Control Environment and Information and Communication. These material weaknesses continue to exist as of September 30, 2026.
Remediation Efforts
We are in the process of implementing measures designed to improve our internal control over financial reporting and remediate the deficiencies that led to the material weaknesses discussed above. Our detailed remediation plans, which are currently in process, include the following actions:
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We are committed to continuing to strengthen our internal control over financial reporting and will refine our remediation plan as appropriate, including implementing additional measures if management determines they are necessary.
In light of the material weaknesses discussed above, we performed additional procedures to ensure that our consolidated financial statements included in this Quarterly Report were prepared in accordance with U.S. GAAP. Following such additional procedures, our management, including our Chief Executive Officer and Chief Financial Officer, has concluded that our consolidated financial statements present fairly, in all material respects, our financial position, results of operations and cash flows for the periods presented in this Quarterly Report, in conformity with U.S. GAAP.
Changes in Internal Control over Financial Reporting
Except as otherwise described herein, there was no change in our internal control over financial reporting identified in connection with the evaluation required by Rule 13a-15(d) and 15d-15(d) of the Exchange Act that occurred during the quarter ended September 30, 2026 that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.
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PART II. OTHER INFORMATION
Item 1. Legal Proceedings.
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.
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 September 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.
Item 1A. Risk Factors.
Factors that could cause our actual results to differ materially from those in this Quarterly Report are any of the risks described in our Annual Report. Any of these factors could result in a significant or material adverse effect on our results of operations or financial condition. Additional risk factors not presently known to us or that we currently deem immaterial may also impair our business or results of operations. As of the date of this Quarterly Report, other than as set forth below, there have been no material changes to the risk factors disclosed in the Annual Report. We may disclose changes to such risk factors or disclose additional risk factors from time to time in our future filings with the SEC.
The use of new and evolving technologies, such as artificial intelligence (“AI”), in our products and services may result in reputational harm, competitive harm or legal liability.
We have in the past, and will in the future, integrate new and evolving technologies, such as AI, into our products and services. As with many innovations, AI presents risks and challenges that could affect its adoption and, as a result, our business. We currently have, and may continue to have, certain customer contracts that prohibit or restrict our use of AI for these customers. Our implementation of AI in our products and services may have unintended consequences due to its inherent limitations or our failure to use it effectively including by potentially, but inadvertently, violating the terms of these customer contracts which could harm our business financially or reputationally. Additionally, the intellectual property ownership and license rights of new technologies in the artificial intelligence space have not been fully addressed by U.S. or global courts. As a result of our use or development of AI, we may lose intellectual property and other proprietary rights in any data, content, confidential information, trade secrets, or other materials that we provide as inputs to AI technology.
To the extent we develop or use this technology more broadly in the future, we may encounter other significant legal risks related to, among other things, data breaches, website terms of service claims, tort claims, claimed violations of privacy, and data or consumer protection laws. The regulatory landscape surrounding artificial intelligence is evolving, and the expanded use of machine learning technologies may become subject to regulatory scrutiny under new laws or new interpretations of existing laws. Failure to comply with applicable artificial intelligence-related regulations, or to adapt to new regulatory requirements as they emerge, could result in fines, penalties, litigation, or restrictions on our business operations.
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Conversely, our failure to adequately use or develop AI may place us at a competitive disadvantage. Our competitors or other third parties may incorporate AI in a similar or different manner, and may do so more quickly or more successfully than us, which could impair our ability to compete effectively and adversely affect our results of operations.
Our failure to appropriately protect against any of the above, or any other associated change with a dynamic and novel technology like AI, could have a materially adverse effect on our business or financial condition.
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds.
None.
Item 3. Defaults Upon Senior Securities.
None.
Item 4. Mine Safety Disclosures.
Not applicable.
Item 5. Other Information.
10b5-1 Trading Arrangements
During the quarter ended September 30, 2026,
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Item 6. Exhibits.
The following exhibits are filed as part of, or incorporated by reference into, this Quarterly Report:
21.1* |
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List of Subsidiaries of Falcon's Beyond Global, Inc. |
31.1* |
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Certification of Principal Executive Officer pursuant to Exchange Act Rule 13a-14(a). |
31.2* |
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Certification of Principal Financial Officer pursuant to Exchange Act Rule 13a-14(a). |
32.1** |
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Certification of Principal Executive Officer pursuant to Exchange Act Rule 13a-14(b) and 18 U.S.C. Section 1350. |
32.2** |
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Certification of Principal Financial Officer pursuant to Exchange Act Rule 13a-14(b) and 18 U.S.C. Section 1350. |
101.INS* |
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Inline XBRL Instance Document |
101.SCH* |
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Inline XBRL Taxonomy Extension Schema With Embedded Linkbase Document |
104 |
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Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101). |
* Filed herewith
** Furnished herewith
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.
Date: November 12, 2026 |
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FALCON’S BEYOND GLOBAL, INC. |
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(Registrant) |
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By: |
/s/ Joanne Merrill |
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Joanne Merrill |
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Chief Financial Officer |
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(Principal Financial Officer and Principal Accounting Officer and Authorized Signatory) |
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