Falcon's Beyond Global, Inc.

Falcon's Beyond Global, Inc. operates as a visionary entertainment and technology enterprise focused on designing, developing, engineering, delivering, and commercializing immersive physical and digital experiences globally ¹. The company's business model is built on an integrated experience platform that combines creative development, proprietary technologies, advanced engineering, intellectual property (IP), and operational execution to enable repeatable creation, deployment, and scaling of entertainment experiences across multiple formats and locations worldwide ¹. The company generates revenue through a mix of project-based services, system sales, and potential licensing arrangements, serving leading brands, developers, and destination operators, as well as its own portfolio of entertainment and technology concepts ¹.

The company operates through three complementary business divisions: Falcon's Creative Group (FCG), Falcon's Beyond Brands (FBB), and Falcon's Beyond Destinations (FBD) ¹. 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 ¹. FBB encompasses a broad portfolio of IP, proprietary technologies, and operating businesses that design, engineer, commercialize, and deploy entertainment systems, products, content, and experiences across physical and digital environments ¹. FBD develops, owns, operates, and expands entertainment venues, hospitality experiences, and branded destination concepts across various location-based formats, utilizing proprietary and third-party IP ¹. FCG and Producciones de Parques, S.L. (PDP) are currently accounted for as equity method investments and represent a substantial portion of the Company’s operations ¹.

The FCG segment generates revenue primarily through professional services arrangements tied to defined scopes of work and project milestones, typically spanning multiple phases of development from concept to creative oversight ¹. Revenue is also generated through recurring monthly fees for ongoing services or advisory roles, and time-and-materials-based arrangements for supplemental engagements ¹. For the year ended December 31, 2025, FCG's revenues were $38.703 million ². The FBB division's primary operating focus is Falcon's Attractions, which designs, engineers, manufactures, and sells proprietary and customized ride systems, attraction hardware, and related technologies ¹. Revenue in this segment is generated through system sales, engineering services, fabrication, integration, installation, and aftermarket support ¹. For the year ended December 31, 2025, Falcon's Attractions generated $7.748 million in revenue ². The FBD division focuses on securing development partners and commercial relationships for location-based entertainment and destination projects, with revenue potentially derived from management fees, licensing fees, revenue-sharing arrangements, or equity participation ¹. The Destinations Operations segment, part of FBD, generated $609 thousand in revenue for the year ended December 31, 2025 ².

For the fiscal year ended December 31, 2025, total revenue was $14.896 million ³, an increase from $6.745 million in the prior year ³. The company reported a loss from operations of $13.408 million ³, an improvement from a loss of $15.867 million in 2024 ³. Net income for 2025 was $6.312 million ³, a significant decrease from $149.481 million in 2024 ³, primarily due to the absence of the large gain from the change in fair value of earnout liabilities recognized in 2024. Diluted EPS was $0.03 ⁴ for 2025, compared to $1.41 ⁴ in 2024. Cash used in operating activities was $24.603 million ⁵, while cash provided by investing activities was $24.189 million ⁵, and cash provided by financing activities was $3.707 million ⁵. As of December 31, 2025, cash and cash equivalents totaled $1.868 million ⁶. Total debt outstanding was approximately $15.6 million ⁷. The company had a working capital deficiency of $18.1 million ⁸ as of December 31, 2025.

Revenue increased by $8.151 million ³ year-over-year, primarily driven by new attractions contracts ⁹. Project design and build expense increased by $2.373 million ³ and cost of product sales increased by $1.579 million ³, both due to new attractions service and sales contracts ⁹. Selling, general and administrative expense increased by $3.088 million ³ to $25.496 million ³, mainly due to a $7.1 million increase in payroll, professional fees, occupancy, and marketing to support the expansion of the attraction services business, partially offset by a $2.3 million decrease in payroll and professional services fees and a $0.6 million credit from a network intrusion settlement ⁹. Share of gain from equity method investments increased by $20.080 million ³ to $16.959 million ³, primarily due to a $30.0 million share of gain from the Tenerife Sale by PDP, partially offset by impairment charges of $5.3 million ³ for PDP and $3.0 million ³ for Karnival ⁹. Interest expense increased by $1.486 million ³ to $3.384 million ³ due to higher interest rates on debt ⁹. The gain on bargain purchase of OES Acquisition was $1.098 million ³ in 2025 ⁹.

During 2025, the company completed the asset purchase and operational integration of Oceaneering Entertainment Systems (OES) on May 15, 2025, acquiring proprietary technologies, patents, engineering, and manufacturing expertise, and a 106,000+ square foot facility for research, development, testing, and integration ¹. This acquisition enhances the Company’s ability to deliver end-to-end solutions through engineering, production, and installation ¹. In May 2025, the joint venture PDP completed the disposition of the Sol Tenerife Hotel, resulting in a cash dividend distribution of approximately $27.0 million ¹ to the Company ⁹. In October 2025, the joint venture Karnival TP-AQ Holdings Limited was agreed to be wound up due to protracted delays ¹. The company also mutually agreed to terminate its licensing agreement with The Hershey Company ¹. On December 12, 2025, the first stock-price-based earnout trigger was met, resulting in 15,000,000 ¹ earnout shares being released and delivered to Earnout Participants ¹. On September 8, 2025, the company entered into a Debt Exchange Agreement, exchanging approximately $20.5 million ¹ of indebtedness for 4,092,326 ¹ shares of Series B Preferred Stock ¹.

The company's consolidated financial statements have been prepared on a going concern basis, but management has concluded that substantial doubt exists about its ability to continue as a going concern due to a working capital deficiency of $18.1 million ⁸, $0.6 million ⁸ in debt that matured on May 16, 2025, and $2.6 million ⁸ in debt coming due in the next 12 months, coupled with insufficient current cash or liquidity to pay all maturing liabilities and fund ongoing operations ⁸. The company is reliant on stockholders and third parties for additional financing through debt or equity raises, and from distributions from the liquidation of non-core equity method investments and assets to fund its working capital needs, contractual commitments, and expansion plans ⁸. There is no assurance that additional capital or financing, or liquidation of non-core assets, will provide the necessary funding for the next twelve months ⁸.

The company's strategic direction for 2025 and early 2026 emphasizes the continued growth of FCG and FBB, alongside a more asset-efficient operating approach within FBD ¹. FCG is expanding its engagement in the Kingdom of Saudi Arabia, reinforcing its role as a long-term creative, design, and technology partner on complex destination-scale projects ¹. In October 2025, FCG commenced a concept refinement engagement with QIC for a major entertainment destination ¹. FCG completed creative guardian services for Aquarabia Qiddiya City in February 2026, a large-scale water theme park set to open in 2026, for which FCG was the original IP developer, master planner, attraction designer, and creative guardian ¹. FCG remains actively engaged under a Consultancy Services Agreement from January 2024 with QIC for the first-ever Dragon Ball theme park at Qiddiya City, providing design, technology, and construction-related services ¹. FCG is also engaged in content and hardware consulting for 3D Gaming Arenas in Qiddiya's Gaming & Esports District ¹. In August 2025, New Murabba Development Company (NMDC) commenced a second phase of a strategic agreement with FCG, appointing FCG as Creative and Content Advisor for The Mukaab, positioning Falcon's in a "Lead Creative Role" for immersive attractions, interactive environments, and integrated technologies ¹.

The company plans to continue investing in creative, technological, and operational capabilities, including enhancements to proprietary systems, experiential technologies, and IP development ¹. The integration of OES into Falcon's Attractions, completed on May 15, 2025, provides expanded capabilities in the design and manufacture of advanced attraction and show systems, enhancing the company's ability to deliver end-to-end solutions through engineering, production, and installation ¹. This acquisition included OES's portfolio of proprietary technologies and patents, engineering and manufacturing expertise, and the lease of a 106,000+ square foot facility for research, development, testing, and integration ¹. FBB also serves as the steward of the company's proprietary technology and IP portfolio, which includes 142 ¹ issued patents and 64 ¹ pending applications ¹.

The FBD business is transitioning towards a more capital-disciplined, asset-efficient operating model, which may involve discontinuing, restructuring, or allowing certain third-party licensing or joint venture arrangements to expire ¹. The company continues to evaluate its portfolio of joint ventures and strategic initiatives to prioritize opportunities aligned with its current operating strategy ¹. The closure of Katmandu Park DR to visitors in March 2024 and the Tenerife Sale in May 2025, along with the commencement of liquidation of the Karnival joint venture in October 2025, are part of this strategy to reduce ongoing capital expenditures and operational losses ¹.

The company expects its capital expenditures and working capital requirements to increase materially in the near future ¹⁰. It also anticipates incurring additional costs as a result of operating as a public company ¹⁰. Research and development expenses are expected to increase in future periods as the company continues to invest in these activities to achieve its operational and commercial goals ⁹. The company's ability to generate cash in the future depends on its financial results, which are subject to general economic, financial, competitive, legislative, and regulatory factors outside of its control ¹⁰.

The company's ability to declare dividends may be limited by the terms of financing or other agreements, including certain consent rights related to the Strategic Investment ¹¹. The Series B Preferred Stock has an annual cumulative dividend rate of 11% ¹² of the $5.00 ¹² per share liquidation preference, accruing quarterly ¹². Prior to January 1, 2027, accrued dividends will be paid in Series B Preferred Stock, with an option for cash payment if shareholder approval for stock issuance is not obtained ¹². On and after January 1, 2027, all dividends accrued after that date will be paid in cash ¹². The Board's present intention is to retain all earnings for business operations and does not anticipate declaring any cash dividends on common stock in the foreseeable future ¹¹.

The company faces substantial doubt about its ability to continue as a going concern due to a working capital deficiency of $18.1 million ⁸, $0.6 million ⁸ in debt that matured on May 16, 2025, and $2.6 million ⁸ in debt coming due in the next 12 months, coupled with insufficient current cash or liquidity to pay all maturing liabilities and fund ongoing operations ⁸. A significant portion of FCG's revenue is derived from two large clients, QIC and NMDC, which generated an aggregate of approximately 60% ¹³ and 39% ¹³ of FCG's revenues respectively in 2025, with active agreements that may be terminated by either party with 14 to 30 days' notice ¹. Operating in the Kingdom of Saudi Arabia exposes the company to risks including compliance with changing laws, intellectual property enforcement challenges, and geopolitical instability ¹. The company's indebtedness of approximately $15.6 million ⁷ could limit cash flow for operations and future investments ¹. Cybersecurity threats are constantly evolving, and despite measures taken, a future cybersecurity event could occur, potentially leading to business disruption, data loss, reputational damage, and financial liabilities ¹. The company has identified material weaknesses in its internal controls over financial reporting related to risk assessment, control activities, monitoring, and control environment, which could impact its ability to accurately report financial results ¹.

Management's message emphasizes a strategic shift towards aligning its business portfolio, capital deployment, and operating focus with a platform-based strategy, prioritizing the growth of FCG and FBB while pursuing a more asset-efficient approach within FBD. The company is actively engaged in expanding its operations in the Kingdom of Saudi Arabia, with FCG serving as a long-term creative, design, and technology partner on large-scale development initiatives, including the Aquarabia Qiddiya City water theme park and the Dragon Ball theme park at Qiddiya City, as well as acting as Creative and Content Advisor for The Mukaab in Riyadh. Management has also focused on enhancing technological and operational capabilities through investments and acquisitions, such as the integration of Oceaneering Entertainment Systems (OES) into Falcon's Attractions, which expands the company's ability to deliver end-to-end solutions. Despite these strategic initiatives, management has concluded that substantial doubt exists about the company's ability to continue as a going concern, citing a working capital deficiency of $18.1 million ⁸ and insufficient liquidity to meet upcoming obligations. The company is actively seeking additional financing through debt or equity raises and distributions from the liquidation of non-core assets to address its liquidity needs.