What changed in Falcon's Beyond Global, Inc.'s 10-K — 2024 vs 2025

Item 1. Business – Intellectual Property Research and Development ” for more information.

Intangible asset impairment expense Our intangible asset impairment expense consists entirely of the impairment of the Ride Media Content (“RMC”) intangible asset owned by our FBB segment. 57 Depreciation and amortization expense Our Depreciation and amortization expense is primarily attributed to the amortization of finite-lived intangible assets, comprising of RMC, trade names, customer relationships, developed technology and right-of-use assets for our finance lease.

All trade names, customer relationships, developed technology and finance lease right-of-use assets have been deconsolidated with FCG as of July 27, 2023. We also incurred depreciation expenses for property and equipment utilized in the operation of our businesses.

Share of loss from equity method investments Our Share of loss from equity method investments represents our proportional share of net earnings or losses of our unconsolidated joint ventures.

During 2023 and 2024, our parks and resorts, which operated within our unconsolidated joint ventures, generated revenue through the sales of hotel rooms, park admissions, food and beverage, merchandise, and ancillary services, and for fiscal 2023, the principal costs of parks and resorts were employee wages and benefits, advertising, maintenance, utilities, and insurance.

Factors that have affected these costs have included fixed operating costs, competitive wage pressures, food, beverage and merchandise costs, costs for construction, repairs and maintenance and inflationary pressures. After the deconsolidation of FCG on July 27, 2023 the Company accounts for its retained investment under the equity method.

FCG generates revenues from master planning, attraction design, experiential entertainment, content production, interactives, and software. The principal costs of these services are project design and build expense, employee wages and benefits, research and development, sales and marketing, depreciation and amortization, software costs, legal fees, consultant fees, and occupancy costs.

To determine whether an impairment is other-than-temporary, we consider our ability and intent to hold the investment until the carrying amount is fully recovered.

There were $0 and $14.1 million in impairment losses recognized for investments in equity method investments during the year ended December 31, 2024 and 2023, respectively, entirely related to impairment of the Company’s equity method investment in Sierra Parima. See Note 7 – Investments and advances to unconsolidated joint ventures.

Gain on deconsolidation of FCG Our gain on deconsolidation consists of the gain recognized on the deconsolidation of FCG. The gain recognized on deconsolidation is the difference between the estimated fair value of the Company’s retained investment in FCG and the carrying value of FCG’s net assets.

See Deconsolidation of Falcon’s Creative Group LLC under Note 1 – Description of business and basis of presentation in the Company’s audited consolidated financial statements for further discussion. Interest expense Our Interest expense consists primarily of the interest on our debt instruments and finance lease liabilities.

Interest expense related to debt instruments is generated by related party and third-party loans and lines of credit used primarily to fund working capital and operations. See Note 9 – Long-term debt and borrowing arrangements in the Company’s audited consolidated financial statements for a description of our indebtedness and “Liquidity and Capital Resources ” below.

Interest income During fiscal 2023, our Interest income consisted primarily of interest income recognized in connection with licensing the right to use digital ride media content to Sierra Parima. The agreement required ten equal annual payments of $0.3 million to the Company beginning in March 2023. As the payments were deferred over a ten-year period, a significant financing component exists.

Therefore, the Company recognized a financing receivable discounted based on the contracted annual payments and recognized interest income beginning in March 2023. As of December 31, 2023, the Company recognized an expected credit loss reserve against all balances due from Sierra Parima, including receivables related to this ride media license. See Credit loss expense in results of operations below .

As such, the Company recognized less than $0.1 million in interest income for the year ended December 31, 2024.

Change in fair value of warrant liabilities The Company accounts for Warrants assumed in connection with the Business Combination (see Note 1 – Description of business and basis of presentation) in accordance with the guidance contained in ASC 815, Derivatives and Hedging (“ASC 815”), under which the Warrants do not meet the criteria for equity treatment and must be recorded as liabilities.

Accordingly, the Company classifies the Warrants as liabilities at their fair value and adjusts the Warrants to fair value at the end of each reporting period.

The liability is subject to re-measurement at each balance sheet date until exercised, and any change in fair value is recognized in the results of operations. 58 Change in fair value of earnout liabilities At the Closing of the Business Combination, pursuant to the Merger Agreement, certain holders were entitled to receive up to a total of 1,937,500 and 75,562,500 contingent earnout shares in the form of Class A Common Stock and Class B Common Stock, respectively.

The earnout shares were deposited into escrow at the Closing and are to be earned, released and delivered upon satisfaction of, or forfeited and canceled up on the failure of certain milestones.

Prior to September 30, 2024, the earnout shares were classified as a liability and measured at fair value, with changes in fair value included in the results of operations. On September 30, 2024, earnout participants agreed to forfeit all remaining earnout shares held in escrow, which were to be released and earned based on meeting EBITDA and revenue targets.

An aggregate of 437,500 shares of Class A common stock and 17,062,500 shares of Class B common stock and an equal number of Falcon’s Opco units were forfeited in connection with the earnout shares forfeiture. The forfeiture is treated as a modification of the original earnout agreement.

The remaining earnout shares which are to be released and earned based on the Company’s stock price meet the requirements for equity classification after the modification. The Company adjusted the fair value of the earnout shares a final time on September 30, 2024, immediately prior to the modification.

The total adjusted liability balance, including the amount associated with the forfeited earnout shares, was reclassified into equity as of September 30, 2024. Prior to reclassification into equity, the fair value of the earnout liability was $250.1 million and $488.6 million as of September 30, 2024, and December 31, 2023, respectively.

For the years ended December 31, 2024 and 2023, the Company recognized $172.3 million and $(345.4) million of gain (loss) related to the change in fair value of earnout liabilities included in the consolidated statement of operations and comprehensive income (loss). After the reclassification to equity, the earnout shares will not require subsequent fair value measurement.

Foreign exchange transaction (loss) gain Our Foreign exchange transaction (loss) gain include our transactional gains and losses on the settlement or re-measurement of our non-functional currency denominated assets and liabilities.

Since we conduct business in jurisdictions outside of the United States, we generate realized and unrealized transactional foreign exchange gains and losses from the remeasurement of U.S. dollar denominated cash and debt balances held by Fun Stuff, our Euro functional currency subsidiary, and the settlement of vendor balances denominated in non-functional currencies.

As the U.S. dollar strengthens against the Euro, we record realized and unrealized foreign exchange losses; as the U.S. dollar weakens against the Euro, we record realized and unrealized foreign exchange gains.

Falcon’s Opco is organized as a limited liability company taxed as a partnership. The consolidated financial statements of Falcon’s Opco do not include a provision for federal or state income tax expense or benefit as our taxable income or loss is included in the tax returns of Falcon’s Opco’s members.

Our foreign subsidiaries and unconsolidated joint ventures are subject to tax in their local jurisdiction and we record a provision for income tax expense or benefit where applicable. 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 results of operations for the year ended December 31, 2023, includes approximately seven months of activity related to FCG LLC prior to deconsolidation on July 27, 2023. Any discussions related to results, operations, and accounting policies associated with FCG are referring to the periods prior to deconsolidation.

See Deconsolidation of Falcon’s Creative Group LLC under Note 1 – Description of business and basis of presentation and Note 8 – Investments and advances to equity method investments in the Company’s audited consolidated financial statements. 59 The following table summarizes our results of operations for the following periods: Year ended December 31, 2024 December 31, 2023 Revenue $ 6,745 $ 18,244 Expenses: Project design and build expense — 10,151 Selling, general and administrative expense 22,408 28,064 Transaction expenses 7 26,021 Credit loss expense 12 5,965 Research and development 179 1,248 Intangible assets impairment expense — 2,377 Depreciation and amortization expense 6 1,576 Loss from operations (15,867 ) (57,158 ) Share of loss from equity method investments (3,121 ) (52,452 ) Gain on deconsolidation of FCG — 27,402 Interest expense (1,898 ) (1,124 ) Interest income 12 95 Change in fair value of warrant liabilities (836 ) (2,972 ) Change in fair value of earnout liabilities 172,270 (345,413 ) Foreign exchange transaction (loss) gain (1,077 ) 367 Net income (loss) before taxes $ 149,483 $ (431,255 ) Income tax (expense) benefit (2 ) 325 Net income (loss) $ 149,481 $ (430,930 ) Revenue Year ended December 31, 2024 December 31, 2023 Services transferred over time: Design and project management services $ — $ 10,555 Media production services — 1,773 Attraction hardware and turnkey sales — 2,052 Other 6,745 2,533 Total revenue from services transferred over time 6,745 16,913 Services transferred at a point in time: Digital media licenses — 1,331 Total revenue from services transferred at a point in time — 1,331 Total revenue $ 6,745 $ 18,244 Revenue decreased $11.5 million to $6.7 million for the year ended December 31, 2024, compared to $18.2 million for the year ended December 31, 2023.

Guggenheim has moved to dismiss the counterclaims, and the Company has opposed that motion. The case is in its early stages, discovery has commenced, and the Court has set a readiness for trial date for June 28, 2025.