Falcon's Beyond Global Inc.
08/13/2026 | Press release | Distributed by Public on 08/13/2026 05:31
Quarterly Report for Quarter Ending June 30, 2026 (Form 10-Q)
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 six months ended June 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 Group ("FCG"), 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 five operating segments. FCG provides creative and advisory services including destination strategy, master planning, experiential and attraction design, digital media, interactive software, IP development, and creative guardianship for entertainment and hospitality destinations. FBB, consisting of Falcon's Attractions and FBB-Other, encompasses a broad portfolio of intellectual property, proprietary technologies, and operating businesses that design, engineer, commercialize, and deploy entertainment systems, products, content, and experiences across physical and digital environments. FBD, consisting of Producciones de Parques, S.L. ("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 six months ended June 30, 2026 and 2025.
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. These activities have contributed to operating losses and negative cash flows from operations. Net cash used in operating activities was $0.3 million for the six months ended June 30, 2026, a reduction compared with comparable prior periods. Accordingly, 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 June 30, 2026, we have a working capital deficit of $8.4 million that was driven by the Deferred Loan Settlement of $6.9 million, which is included within the $8.9 million of debt obligations classified as current based on their contractual maturity dates. We are actively evaluating refinancing and other alternatives with respect to these obligations. See "Note 6 - Long-term debt and borrowing arrangements" 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. Although cash flows from operations have improved compared with prior comparable periods, we have incurred operating losses and negative cash flows from operations in recent periods and 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.
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 |
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|||||||||||||||||||||||
|
June 30, |
June 30, |
Change |
June 30, |
June 30, |
Change |
|||||||||||||||||||
|
Revenue |
$ |
5,618 |
$ |
2,549 |
$ |
3,069 |
$ |
10,994 |
$ |
4,257 |
$ |
6,737 |
||||||||||||
|
Expenses: |
||||||||||||||||||||||||
|
Project design and build expense |
1,069 |
348 |
721 |
2,014 |
454 |
1,560 |
||||||||||||||||||
|
Cost of product sales |
1,029 |
83 |
946 |
2,158 |
83 |
2,075 |
||||||||||||||||||
|
Selling, general and administrative expense |
7,652 |
6,644 |
1,008 |
15,388 |
12,940 |
2,448 |
||||||||||||||||||
|
Transaction credit |
(4,000 |
) |
(3,299 |
) |
(701 |
) |
(15,057 |
) |
(1,778 |
) |
(13,279 |
) |
||||||||||||
|
Research and development expense |
- |
83 |
(83 |
) |
- |
201 |
(201 |
) |
||||||||||||||||
|
Depreciation and amortization expense |
130 |
40 |
90 |
264 |
44 |
220 |
||||||||||||||||||
|
Income (loss) from operations |
(262 |
) |
(1,350 |
) |
1,088 |
6,227 |
(7,687 |
) |
13,914 |
|||||||||||||||
|
Share of gain (loss) from equity method investments |
153 |
25,846 |
(25,693 |
) |
(63 |
) |
21,783 |
(21,846 |
) |
|||||||||||||||
|
Interest expense |
(218 |
) |
(841 |
) |
623 |
(392 |
) |
(2,174 |
) |
1,782 |
||||||||||||||
|
Interest income |
7 |
2 |
5 |
13 |
5 |
8 |
||||||||||||||||||
|
Change in fair value of warrant liabilities |
- |
- |
- |
- |
2,886 |
(2,886 |
) |
|||||||||||||||||
|
Foreign exchange transaction gain (loss) |
2 |
1,455 |
(1,453 |
) |
18 |
2,207 |
(2,189 |
) |
||||||||||||||||
|
Net income (loss) before taxes |
$ |
(318 |
) |
$ |
25,112 |
$ |
(25,430 |
) |
$ |
5,803 |
$ |
17,020 |
$ |
(11,217 |
) |
|||||||||
|
Income tax (expense) benefit |
- |
- |
- |
- |
- |
- |
||||||||||||||||||
|
Net income (loss) |
$ |
(318 |
) |
$ |
25,112 |
$ |
(25,430 |
) |
$ |
5,803 |
$ |
17,020 |
$ |
(11,217 |
) |
|||||||||
Revenue
|
Three months ended |
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|||||||||||||||||||||||
|
June 30, |
June 30, |
Change |
June 30, |
June 30, |
Change |
|||||||||||||||||||
|
Revenue transferred over time: |
||||||||||||||||||||||||
|
Shared services |
$ |
1,872 |
$ |
1,601 |
$ |
271 |
$ |
3,808 |
$ |
3,223 |
$ |
585 |
||||||||||||
|
Destinations operations services |
147 |
146 |
1 |
147 |
146 |
1 |
||||||||||||||||||
|
Attraction services |
1,983 |
645 |
1,338 |
3,721 |
731 |
2,990 |
||||||||||||||||||
|
$ |
4,002 |
$ |
2,392 |
$ |
1,610 |
$ |
7,676 |
$ |
4,100 |
$ |
3,576 |
|||||||||||||
|
Revenue transferred at a point in time: |
||||||||||||||||||||||||
|
Product sales |
1,616 |
157 |
1,459 |
3,318 |
157 |
3,161 |
||||||||||||||||||
|
$ |
5,618 |
$ |
2,549 |
$ |
3,069 |
$ |
10,994 |
$ |
4,257 |
$ |
6,737 |
|||||||||||||
Revenue increased for the three and six months ended June 30, 2026, compared to the same period in 2025, primarily driven by the growth of the Falcon's Attractions business. As of June 30, 2026, Falcon's Attractions had a contracted pipeline of $28.4 million.
Project design and build expense
Project design and build expense increased for the three and six months ended June 30, 2026, compared to the same period in 2025, primarily driven by new attractions service contracts.
Cost of product sales
Cost of product sales increased for the three and six months ended June 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 six months ended June 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 $4.0 million and $15.1 million for the three and six months ended June 30, 2026, respectively, 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 six months ended June 30, 2025, as a result of a transaction expense settlement. The transaction credit was partially offset by $1.7 million transaction expenses for the six months ended June 30, 2025 related to a proposed underwritten offering of our Class A common stock that was not completed.
Share of gain (loss) from equity method investments
|
Three months ended |
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|||||||||||||||||||||||
|
June 30, |
June 30, |
Change |
June 30, |
June 30, |
Change |
|||||||||||||||||||
|
Share of PDP net gain (loss) (excluding gain on sale from Tenerife and impairment of PDP) |
$ |
189 |
$ |
715 |
$ |
(526 |
) |
$ |
(233 |
) |
$ |
1,189 |
$ |
(1,422 |
) |
|||||||||
|
Share of PDP net gain (loss) from gain on sale of Tenerife |
- |
29,755 |
(29,755 |
) |
- |
29,755 |
(29,755 |
) |
||||||||||||||||
|
Impairment of PDP |
- |
(5,332 |
) |
5,332 |
- |
(5,332 |
) |
5,332 |
||||||||||||||||
|
Share of Karnival net gain (loss) (excluding gain on excess distributions over investment) |
- |
20 |
(20 |
) |
24 |
54 |
(30 |
) |
||||||||||||||||
|
Gain on excess distributions over investment of Karnival |
1,201 |
- |
1,201 |
1,201 |
- |
1,201 |
||||||||||||||||||
|
Share of FCG net gain (loss) (excluding gain on sale of land) |
(1,237 |
) |
688 |
(1,925 |
) |
(2,678 |
) |
(3,883 |
) |
1,205 |
||||||||||||||
|
Share of FCG net gain (loss) from gain on sale of land |
- |
- |
- |
1,623 |
- |
1,623 |
||||||||||||||||||
|
$ |
153 |
$ |
25,846 |
$ |
(25,693 |
) |
$ |
(63 |
) |
$ |
21,783 |
$ |
(21,846 |
) |
||||||||||
Share of gain from equity method investments decreased for the three months ended June 30, 2026 and share of loss from equity method investments increased for the six months ended June 30, 2026, compared to the same periods in 2025, primarily driven by:
•
PDP: Share of gain from PDP decreased for the three months ended June 30, 2026 and share of loss for the six months ended June 30, 2026 increased, compared to the same period in 2025, primarily driven by the sale of the Sol Tenerife Hotel in the second quarter of 2025. Following the prior-year sale of the Sol Tenerife Hotel, which operated year-round and generated peak occupancy during the winter season, current-period results reflect the loss of its full-year contribution and the seasonal nature of the remaining property, which was closed for most of the first quarter. Accordingly, current-period results reflect expected seasonal fluctuations.
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.
•
Karnival: Share of net gain from Karnival increased for the three and six months ended June 30, 2026, compared to the same period in 2025, primarily driven by a gain on excess distributions over investment of $1.2 million.
•
FCG: We recognize 100% of net gain (loss), less 9% preferred return to QIC and amortization of the basis difference on deconsolidation of FCG. See "Segment Reporting" below for further details.
Interest expense
Interest expense decreased for the three and six months ended June 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 three and six months ended June 30, 2026, compared to the same period in 2025. The change is primarily attributable to the decrease of the U.S. denominated related party debt with a Spanish subsidiary.
Segment Reporting
The following table presents selected information about our segments' results:
|
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|
June 30, |
June 30, |
Change |
June 30, |
June 30, |
Change |
|||||||||||||||||||
|
Revenues: |
||||||||||||||||||||||||
|
FCG |
$ |
12,508 |
$ |
12,319 |
$ |
189 |
$ |
25,533 |
$ |
18,590 |
$ |
6,943 |
||||||||||||
|
Destinations Operations |
147 |
146 |
1 |
147 |
146 |
1 |
||||||||||||||||||
|
Falcon's Attractions |
3,599 |
802 |
2,797 |
7,039 |
888 |
6,151 |
||||||||||||||||||
|
FCG deconsolidation |
(12,508 |
) |
(12,319 |
) |
(189 |
) |
(25,533 |
) |
(18,590 |
) |
(6,943 |
) |
||||||||||||
|
Unallocated corporate revenue |
1,872 |
1,601 |
271 |
3,808 |
3,223 |
585 |
||||||||||||||||||
|
Total revenue |
5,618 |
2,549 |
3,069 |
10,994 |
4,257 |
6,737 |
||||||||||||||||||
|
Segment income (loss) from operations: |
||||||||||||||||||||||||
|
FCG |
1,029 |
2,775 |
(1,746 |
) |
1,779 |
284 |
1,495 |
|||||||||||||||||
|
Destinations Operations |
(153 |
) |
(255 |
) |
102 |
(395 |
) |
(620 |
) |
225 |
||||||||||||||
|
PDP |
189 |
714 |
(525 |
) |
(234 |
) |
1,188 |
(1,422 |
) |
|||||||||||||||
|
Falcon's Attractions |
(1,059 |
) |
(1,465 |
) |
406 |
(2,221 |
) |
(2,738 |
) |
517 |
||||||||||||||
|
FBB-Other |
(141 |
) |
(269 |
) |
128 |
(303 |
) |
(422 |
) |
119 |
||||||||||||||
|
Total segment income (loss) from operations |
(135 |
) |
1,500 |
(1,635 |
) |
(1,374 |
) |
(2,308 |
) |
934 |
||||||||||||||
|
Unallocated corporate overhead |
(2,779 |
) |
(2,599 |
) |
(180 |
) |
(5,622 |
) |
(5,586 |
) |
(36 |
) |
||||||||||||
|
Elimination FCG segment income (loss) from operations |
(1,029 |
) |
(2,775 |
) |
1,746 |
(1,779 |
) |
(284 |
) |
(1,495 |
) |
|||||||||||||
|
Share of income (loss) from FCG |
(1,237 |
) |
688 |
(1,925 |
) |
(1,055 |
) |
(3,883 |
) |
2,828 |
||||||||||||||
|
Transaction credit |
4,000 |
3,299 |
701 |
15,057 |
1,778 |
13,279 |
||||||||||||||||||
|
Depreciation and amortization expense |
(130 |
) |
(40 |
) |
(90 |
) |
(264 |
) |
(44 |
) |
(220 |
) |
||||||||||||
|
Share of equity method investee's gain on Tenerife Sale |
- |
29,755 |
(29,755 |
) |
- |
29,755 |
(29,755 |
) |
||||||||||||||||
|
Impairment of PDP |
- |
(5,332 |
) |
5,332 |
- |
(5,332 |
) |
5,332 |
||||||||||||||||
|
Gain on excess distributions over investment of Karnival |
1,201 |
- |
1,201 |
1,201 |
- |
1,201 |
||||||||||||||||||
|
Interest expense |
(218 |
) |
(841 |
) |
623 |
(392 |
) |
(2,174 |
) |
1,782 |
||||||||||||||
|
Interest income |
7 |
2 |
5 |
13 |
5 |
8 |
||||||||||||||||||
|
Change in fair value of warrant liabilities |
- |
- |
- |
- |
2,886 |
(2,886 |
) |
|||||||||||||||||
|
Foreign exchange transaction gain (loss) |
2 |
1,455 |
(1,453 |
) |
18 |
2,207 |
(2,189 |
) |
||||||||||||||||
|
Net income (loss) before taxes |
$ |
(318 |
) |
$ |
25,112 |
$ |
(25,430 |
) |
$ |
5,803 |
$ |
17,020 |
$ |
(11,217 |
) |
|||||||||
|
Income tax (expense) benefit |
- |
- |
- |
- |
- |
- |
||||||||||||||||||
|
Net income (loss) |
$ |
(318 |
) |
$ |
25,112 |
$ |
(25,430 |
) |
$ |
5,803 |
$ |
17,020 |
$ |
(11,217 |
) |
|||||||||
•
FCG segment income decreased for the three months ended June 30, 2026, compared to the same period in 2025, primarily as a result of timing of certain current long-term contracts. FCG segment income increased for the six months ended June 30, 2026, compared to the same period in 2025, primarily as a result of an increase in margins on certain current long-term contracts and gain on sale of land. FCG's net income (loss) was adjusted for accretion of preference dividend and fees, and amortization of basis difference as follows:
|
Three months ended |
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|||||||||||||||||||||||
|
June 30, |
June 30, |
Change |
June 30, |
June 30, |
Change |
|||||||||||||||||||
|
Share of FCG net income (loss), before adjustments |
$ |
424 |
$ |
2,282 |
$ |
(1,858 |
) |
$ |
635 |
$ |
(695 |
) |
$ |
1,330 |
||||||||||
|
Share of FCG net income (loss) from gain on sale of land |
- |
- |
- |
1,623 |
- |
1,623 |
||||||||||||||||||
|
Preferred unit dividend accretion |
(836 |
) |
(768 |
) |
(68 |
) |
(1,662 |
) |
(1,537 |
) |
(125 |
) |
||||||||||||
|
Basis difference amortization |
(825 |
) |
(826 |
) |
1 |
(1,651 |
) |
(1,651 |
) |
- |
||||||||||||||
|
$ |
(1,237 |
) |
$ |
688 |
$ |
(1,925 |
) |
$ |
(1,055 |
) |
$ |
(3,883 |
) |
$ |
2,828 |
|||||||||
FCG revenues increased for the three and six months ended June 30, 2026, compared to the same period in 2025, as a result of the timing of certain contract performance obligations. As of June 30, 2026, the contracted pipeline for FCG was $17.1 million.
FCG project design and build expense decreased for the three months ended June 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 six months ended June 30, 2026, compared to the same period in 2025, primarily driven by an increase in project revenues.
•
Destinations Operations segment loss from operations decreased for the three and six months ended June 30, 2026, compared to the same period in 2025, primarily driven by decreased shared services allocations.
•
PDP's share of segment income decreased for the three months ended June 30, 2026 and share of segment loss increased for the six months ended June 30, 2026, compared to the same period in 2025, as a result of the sale of the resort hotel at Tenerife.
•
Falcon's Attractions segment loss decreased for the three and six months ended June 30, 2026, compared to the same period in 2025, primarily due to increased revenue from attraction services and product sales, which more than offset higher related operating costs. The improvement in segment performance was also impacted by the acquisition of OES in May 2025, which contributed to increases in revenue, project design and build expense, and cost of product sales for the three and six months ended June 30, 2026, compared to the prior periods. As of June 30, 2026, Falcon's Attractions had a contracted pipeline of $28.4 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.
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 |
Six months ended |
|||||||||||||||||||||||
|
June 30, |
June 30, |
Change |
June 30, |
June 30, |
Change |
|||||||||||||||||||
|
Net income (loss) |
$ |
(318 |
) |
$ |
25,112 |
$ |
(25,430 |
) |
$ |
5,803 |
$ |
17,020 |
$ |
(11,217 |
) |
|||||||||
|
Interest expense |
218 |
841 |
(623 |
) |
392 |
2,174 |
(1,782 |
) |
||||||||||||||||
|
Interest income |
(7 |
) |
(2 |
) |
(5 |
) |
(13 |
) |
(5 |
) |
(8 |
) |
||||||||||||
|
Income tax expense (benefit) |
- |
- |
- |
- |
- |
- |
||||||||||||||||||
|
Depreciation and amortization expense |
130 |
40 |
90 |
264 |
44 |
220 |
||||||||||||||||||
|
EBITDA |
23 |
25,991 |
(25,968 |
) |
6,446 |
19,233 |
(12,787 |
) |
||||||||||||||||
|
Transaction credit |
(4,000 |
) |
(3,299 |
) |
(701 |
) |
(15,057 |
) |
(1,778 |
) |
(13,279 |
) |
||||||||||||
|
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 |
- |
(29,755 |
) |
29,755 |
- |
(29,755 |
) |
29,755 |
||||||||||||||||
|
Impairment of PDP |
- |
5,332 |
(5,332 |
) |
- |
5,332 |
(5,332 |
) |
||||||||||||||||
|
Gain on excess distributions over investment of Karnival |
(1,201 |
) |
- |
(1,201 |
) |
(1,201 |
) |
- |
(1,201 |
) |
||||||||||||||
|
Change in fair value of warrant liabilities |
- |
- |
- |
- |
(2,886 |
) |
2,886 |
|||||||||||||||||
|
Adjusted EBITDA |
$ |
(5,178 |
) |
$ |
(1,731 |
) |
$ |
(3,447 |
) |
$ |
(11,435 |
) |
$ |
(9,854 |
) |
$ |
(1,581 |
) |
||||||
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.
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 |
Six months ended |
|||||||||||||||||||||||
|
June 30, |
June 30, |
Change |
June 30, |
June 30, |
Change |
|||||||||||||||||||
|
Net income (loss) |
$ |
424 |
$ |
2,282 |
$ |
(1,858 |
) |
$ |
2,258 |
$ |
(695 |
) |
$ |
2,953 |
||||||||||
|
Interest expense |
135 |
140 |
(5 |
) |
280 |
300 |
(20 |
) |
||||||||||||||||
|
Interest income |
(12 |
) |
(1 |
) |
(11 |
) |
(24 |
) |
(3 |
) |
(21 |
) |
||||||||||||
|
Income tax expense (benefit) |
73 |
2 |
71 |
73 |
14 |
59 |
||||||||||||||||||
|
Depreciation and amortization expense |
358 |
341 |
17 |
715 |
673 |
42 |
||||||||||||||||||
|
EBITDA |
978 |
2,764 |
(1,786 |
) |
3,302 |
289 |
3,013 |
|||||||||||||||||
|
Gain on sale of land |
- |
- |
- |
(1,623 |
) |
- |
(1,623 |
) |
||||||||||||||||
|
Adjusted EBITDA |
$ |
978 |
$ |
2,764 |
$ |
(1,786 |
) |
$ |
1,679 |
$ |
289 |
$ |
1,390 |
|||||||||||
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 our existing investors, distributions from equity method investees and cash on hand.
As of June 30, 2026, our total indebtedness was approximately $16.5 million. We had approximately $3.1 million of 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 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. Although cash flows from operations have improved compared with prior comparable periods, we have incurred operating losses and negative cash flows from operations in recent periods and 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 June 30, 2026, we have a working capital deficit of $8.4 million, driven by the $6.9 million Deferred Loan Settlement, which is included within the $8.9 million of debt obligations classified as current based on their contractual maturity dates. We are actively evaluating refinancing and other alternatives with respect to these obligations. See "Note 6 - Long-term debt and borrowing arrangements" in our unaudited condensed consolidated financial statements for further discussion.
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 (the "TRA Holders") and other persons from time-to-time party thereto. Pursuant to the Tax Receivable Agreement, among other things, we are required to pay to each TRA Holder 85% of certain tax benefits, if any, that it realizes (or in certain cases is deemed to realize) as a result of the increases in tax basis resulting from any exchange of new Falcon's Opco units for Class A Common Stock or cash in the future and certain other tax benefits arising from payments under the Tax Receivable Agreement. In certain cases, our obligations under the Tax Receivable Agreement may accelerate and become due and payable, based on certain assumptions, upon a change in control and certain other termination events, as defined in the Tax Receivable Agreement. On October 24, 2024, we and Exchange TRA Holders entered into an Amendment to the Tax Receivable Agreement to clarify the rights of a TRA Holder that transfers units but does not assign the transferee its rights under the TRA Agreement with respect to such transferred units.
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 $4.0 million and $15.1 million for the three and six months ended June 30, 2026, respectively. Following the reversal of these no longer probable accrued transaction expenses, 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 June 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 June 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:
|
Six months ended |
||||||||||||
|
June 30, |
June 30, |
Change |
||||||||||
|
Cash provided by (used in) operating activities |
$ |
(347 |
) |
$ |
(6,959 |
) |
$ |
6,612 |
||||
|
Cash provided by (used in) investing activities |
887 |
25,233 |
(24,346 |
) |
||||||||
|
Cash provided by (used in) financing activities |
693 |
6,931 |
(6,238 |
) |
||||||||
Cash Flows from Operating Activities
Net cash flows used in operating activities decreased for the six months ended June 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 $1.7 million dividend distribution from PDP in the current period.
Cash Flows from Investing Activities
Net cash provided by investing activities decreased for the six months ended June 30, 2026, compared to the same period in 2025, primarily related to the dividend distribution from PDP from the gain on sale from Tenerife in the prior period. In the current period we received $5.4 million dividend distributions from Karnival and made short-term advances of $4.3 million to FCG.
Cash Flows from Financing Activities
Net cash provided by financing activities decreased for the six months ended June 30, 2026, compared to the same period in 2025, primarily due to lower net borrowings. Net debt proceeds were $0.9 million during the current period, compared to $6.9 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:
•
Shared services: We provide corporate shared services to FCG on a time-and-materials basis and recognizes revenue using the right-to-invoice practical expedient.
•
Destinations operations services: Revenue is derived from management and incentive fees, typically based on a percentage of revenues or profits of managed operations. We apply the practical expedient to recognize revenue for the amount invoiced when the invoice corresponds directly to the value of our performance to date.
•
Attraction services: The Falcon's Attractions segment provides engineering services, fabrication, integration, installation and maintenance services and in-service support for ride systems and attraction hardware, typically under project-specific contractual arrangements or on a time-and-materials basis. Revenue from project-based arrangements is recognized over time using the cost-to-cost input method when the criteria for over-time recognition are met, based on costs incurred relative to total estimated costs. Revenue from time-and-materials arrangements is recognized over time as the services are provided using the right-to-invoice practical expedient when the amount invoiced corresponds directly to the value of our performance completed to date.
•
Product sales: The Falcon's Attractions segment provides ride system components and hardware for theme park attractions, with revenue recognized at a point in time when control of goods transfers to the customer.
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.
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:
•
Shared services arrangements generally contain multiple performance obligations, as each service type is distinct.
•
Destinations operations and attraction services for time-and-materials contracts generally consist of a single performance obligation satisfied over time, representing a series of distinct services that are substantially the same and have the same pattern of transfer.
•
Attraction services for project-based contracts typically contain a single performance obligation involving the delivery of highly customized and integrated goods and services.
•
Product sales contracts may include multiple performance obligations, as individual goods are typically distinct.
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:
•
The customer simultaneously receives and consumes the benefits of our performance as it occurs; or
•
Our performance creates or enhances an asset that has no alternative use to us and for which we have an enforceable right to payment for performance completed to date.
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 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.
Falcon's Beyond Global Inc. published this content on August 13, 2026, and is solely responsible for the information contained herein. Distributed via EDGAR on August 13, 2026 at 11:32 UTC. If you believe the information included in the content is inaccurate or outdated and requires editing or removal, please contact us at [email protected]