Item 1. Financial Statements
Item
1. Financial Statements.
FALCON’S
BEYOND GLOBAL, INC.
(a wholly owned subsidiary of Falcon’s Beyond Global, LLC)
BALANCE SHEETS
(UNAUDITED)
As of
September 30,
2023
As of
December 31,
2022
Assets
Total assets
$ —
$ —
Liabilities and stockholder’s equity
Total liabilities
—
—
Commitments and contingencies
Stockholder’s equity:
Common stock, $ 0.01 par value; 10 shares issued and outstanding
0.1
0.1
Due from stockholder
( 0.1 )
( 0.1 )
Total stockholder’s equity
—
—
Total liabilities and stockholder’s equity
$ —
$ —
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FALCON’S
BEYOND GLOBAL, INC.
NOTES TO THE SEPTEMBER 30, 2023 AND
DECEMBER 31, 2022 BALANCE SHEETS
(UNAUDITED)
1. Description
of business
Falcon’s
Beyond Global, Inc., (the “Company” or “Pubco”), formerly Palm Holdco, Inc., is a wholly owned subsidiary of
Falcon’s Beyond Global, LLC (“Falcon”) and was incorporated in Delaware on July 8, 2022. The Company was formed
solely for the purpose of completing the transactions contemplated by the Amended and Restated Agreement and Plan of Merger dated January 31,
2023, as amended by Amendment No. 1 dated June 25, 2023, Amendment No. 2 dated July 7, 2023, and Amendment No. 3 dated September 1, 2023
(the “Merger Agreement”), by and among the Company, Falcon, FAST Acquisition Corp. II (“FAST II”),
and Palm Merger Sub, LLC, a wholly owned subsidiary of the Company (“Merger Sub”). Following the consummation of the transaction
contemplated by the Merger Agreement, the Company will be the surviving publicly traded corporation, and will own all of the equity interests
in Falcon. See Note 4 – Subsequent Events for a discussion of the consummation of the transactions contemplated by the Merger Agreement.
Going
Concern
Pursuant
to the Financial Accounting Standards Board (the “FASB”) Accounting Standards Codification (“ASC”) 205, Presentation
of Financial Statements , the Company is required to assess its ability to continue as a going concern for a period of one year from
the date of the issuance of the financial statements.
The
Company is a wholly owned subsidiary of Falcon which has been engaged in expanding its physical operations through its unconsolidated
joint ventures, developing new product offerings, raising capital and recruiting personnel and as a result has generated losses and negative
cash flows from operations. As such, additional capital investments are required in order to execute the strategic plan of Falcon. While
Falcon intends to raise additional capital through a combination of sources, there can be no assurances that such efforts will be successful.
Accordingly, substantial doubt about Falcon’s ability to continue as a going concern is raised and as the Company is a wholly owned
subsidiary of Falcon, there is substantial doubt about the Company’s ability to continue as a going concern for at least one year
from the date these financial statements are issued. The balance sheet does not include any adjustments that might result from the outcome
of this uncertainty should Falcon be unable to continue as a going concern.
2. Summary
of Significant Accounting Policies
Basis
of Presentation
The
balance sheets are presented in accordance with accounting principles generally accepted in the United States of America (“GAAP”).
Separate statements of income and comprehensive income, changes in stockholder’s equity and cash flows have not been presented
because there have been no activities in this entity for the nine months ended September 30, 2023 and period ended September 30, 2022.
Use
of Estimates
The
preparation of the financial statements in conformity with GAAP requires the Company’s management to make estimates and assumptions
that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the balance
sheets. Actual results could differ from those estimates.
Organization
costs
Costs
related to incorporation of the Company have been paid by Falcon and recorded as an expense of Falcon.
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3. Stockholder’s
Equity
The
Company’s authorized capital stock consists of 100 shares of common stock, with a par value of $ 0.01 per share. On July 8,
2022, the Company issued 10 shares of common stock to Falcon for aggregate consideration of $ 0.1 .
The
Merger Agreement provides for the reclassification of a number of membership units of Falcon necessary to meet initial listing requirements
and clarify earnout targets.
On
June 23, 2023, Falcon entered into an amendment to the credit agreement dated December 30, 2021 with Infinite Acquisitions, LLLP (“Infinite
Acquisitions”) (as so amended, the “Credit Agreement”), pursuant to which (i) the Company joined as a party to the
Credit Agreement, (ii) Infinite Acquisitions agreed to transfer, in its sole discretion, $ 4.8 million, a portion of the amounts due to
Infinite Acquisitions under Falcon’s $ 10.0 million revolving credit facility to Infinite Acquisition’s equity holders (the
“Debt Transfer(s),” all such transferred debt the “Transferred Debt” and each equity holder the “Debt Transferee”)
and (iii) the Company, Falcon and Infinite Acquisitions agreed that each Debt Transferee shall have the right to cause the Company to
exchange such Debt Transferee’s Transferred Debt for shares of the Company’s Series A Preferred Stock at the closing of the
merger of Merger Sub with Falcon. See Note 4 – Subsequent Events.
4. Subsequent
Events
The
Company has evaluated all subsequent events through November 14, 2023, which is the date on which the balance sheets and notes to the
balance sheets were available to be issued.
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 (b) on October 6, 2023 Merger Sub merged with and into Falcon (the “Acquisition
Merger,” and collectively with the SPAC Merger, the “Business Combination”), with Falcon 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 were held by Pubco and certain holders of the limited liability company units of Falcon outstanding as of immediately
prior to the Business Combination.
Transferred
Debt of $ 4.8 million was exchanged for an aggregate of 475,000 shares of Pubco Series A Preferred Stock at Closing.
The
Business Combination is accounted for similar to a reverse recapitalization, with no goodwill or other intangible assets recorded, in
accordance with GAAP. Following the closing of the Business Combination, Falcon’s Executive Chairman, Mr. Scott Demerau, together
with other members of the Demerau family, continue to collectively have a controlling interest (as determined in accordance with GAAP)
in Pubco through their control of Katmandu Ventures LLC, and through the membership of Lucas Demerau,
Nathan Markey and Cory Demerau on the board of directors of the general partner of Infinite Acquisitions. As the Business Combination
represents a common control transaction from an accounting perspective, the Business Combination is treated similar to a reverse recapitalization.
As there is no change in control, Falcon has been determined to be the accounting acquirer and Pubco will be treated as the “acquired”
company for financial reporting purposes. Accordingly, for accounting purposes, the Business Combination will be treated as the equivalent
of Falcon issuing stock for the net assets of Pubco, accompanied by a recapitalization. The net assets of Pubco will be stated at historical
cost, with no goodwill or other intangible assets recorded. Subsequently, results of operations presented for the period prior to the
Business Combination will be those of Falcon.
The
total number of shares of Pubco Class A Common Stock outstanding immediately following the Closing was 7,985,976 ; the total number of
shares of Pubco Class B Common Stock outstanding immediately following the Closing was 127,596,617 ; the total number of shares of Pubco
Series A Preferred Stock outstanding immediately following the Closing was 656,415 ; and the total number of Pubco Warrants outstanding
immediately following the Closing was 8,440,667 .
On
November 6, 2023 the 656,415 shares of Pubco Series A Preferred Stock (the “Preferred Stock”) automatically converted into
shares of the Pubco Class A Common Stock. Following the automatic conversion of the Preferred Stock, there are no outstanding shares
of Preferred Stock. The conversion rate was 0.90909 shares of Pubco Class A Common Stock for each Preferred Stock, resulting in an aggregate
of approximately 600,000 shares of Pubco Class A Common Stock to be issued upon conversion. Cash will be paid in lieu of fractional shares
of Pubco Class A Common Stock.
In
connection with the automatic conversion of the Preferred Stock, the outstanding Pubco Warrants will no longer be exercisable for (i)
0.580454 shares of Pubco Class A Common Stock and (ii) 0.5 shares of Preferred Stock. Each outstanding Pubco Warrant will now be exercisable
for 1.034999 shares of Pubco Class A Common Stock pursuant to the terms of the Pubco Warrants.
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