Falcon's Beyond Global, Inc. 10-Q

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations. Unless otherwise stated or unless the context otherwise requires, the terms “ we ,” “ us ,” “ our ,” “ Pubco ,” and the “ Company ” refer to Falcon’s Beyond Global, Inc., a Delaware corporation. The following discussion and analysis should be read in conjunction with the Unaudited Financial Statements and accompanying notes, which appear elsewhere in this Quarterly Report on Form 10-Q. Cautionary Note Regarding Forward-Looking Statements This Quarterly Report on Form 10-Q contains forward-looking statements within the meaning of the “safe harbor” provisions of the Private Securities Litigation Reform Act of 1995, including with respect to the effects of the Business Combination . These statements are based on the beliefs and assumptions of Pubco’s management and are subject to a number of factors and uncertainties that could cause actual results to differ materially from those described in the forward-looking statements. While Pubco believes that its plans, intentions and expectations reflected in or suggested by these forward-looking statements are reasonable, Pubco cannot assure you that it will achieve or realize these plans, intentions or expectations. Forward-looking statements can generally be identified by the use of 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, but the absence of these words does not mean that a statement is not forward-looking. Forward-looking statements in this Quarterly Report on Form 10-Q may include, but are not limited to, statements regarding the development of Pubco’s products, the amount of capital and other benefits to be provided by the Business Combination, estimates and forecasts of other financial and performance metrics, and projections of market opportunity and market share. These statements are based on various assumptions, whether or not identified in this Quarterly Report, and on the current expectations of Pubco’s management and are not predictions of actual performance. These forward-looking statements are provided for illustrative purposes only and are not intended to serve as and must not be relied on by any investor as a guarantee, an assurance, a prediction or a definitive statement of fact or probability. Actual events and circumstances are difficult or impossible to predict and may differ from assumptions, and such differences may be material. Many actual events and circumstances are beyond the control of Pubco. These forward-looking statements are subject to a number of risks and uncertainties, including, but not limited to, the likelihood of which could be adversely affected by (1) changes in domestic and foreign business, market, financial, political, and legal conditions in general and in the entertainment industry in particular; (2) volatility in the price of Pubco’s securities; (3) the enforceability of Falcon’s intellectual property, including its patents, and the potential infringement on the intellectual property rights of others, cyber security risks or potential breaches of data security; (4) any failure to realize the anticipated benefits of the completed transaction; (5) risks related to the rollout of Falcon’s business and the timing of expected business milestones; (6) the effects of competition on Falcon’s business; and (7) and those factors discussed in the section titled “ Risk Factors ” in the final prospectus of Pubco and definitive proxy statement of FAST II, dated September 15, 2023 (the “ Proxy Statement/Prospectus ”) that forms a part of Pubco’s Registration Statement on Form S-4 (File No. 333-269778) and was filed with the U.S. Securities and Exchange Commission (the “ SEC ”) on September 15, 2023 and other documents Pubco has filed, or will file, with the SEC. If any of these risks materialize or our assumptions prove incorrect, actual results could differ materially from the results implied by these forward-looking statements. There may be additional risks that Pubco presently knows, or that Pubco currently believes are immaterial, that could also cause actual results to differ from those contained in the forward-looking statements. In addition, the forward-looking statements reflect Pubco’s expectations, plans, or forecasts of future events and views as of the date of this Quarterly Report on Form 10-Q. Pubco anticipates that subsequent events and developments will cause Pubco’s assessments to change. However, while Pubco may elect to update these forward-looking statements at some point in the future, Pubco specifically disclaims any obligation to do so. These forward-looking statements should not be relied upon as a representation of Pubco’s assessments as of any date subsequent to the date of this Quarterly Report on Form 10-Q. Accordingly, undue reliance should not be placed upon the forward-looking statements. 4 Overview Pubco was incorporated in Delaware on July 8, 2022 solely for the purpose of effecting a business combination transaction (the “ Business Combination ”) among Pubco, Falcon’s Beyond Global, LLC, a Florida limited liability company (which has since redomesticated as a Delaware limited liability company, “ Falcon’s ”) and FAST Acquisition Corp. II, a Delaware corporation (“ FAST II ”), pursuant to that certain Amended and Restated Agreement and Plan of Merger, dated as of 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 Pubco, Falcon’s, FAST II, and Palm Merger Sub, LLC, a Delaware limited liability company and a wholly-owned subsidiary of Pubco (“ Merger Sub ”). As of September 30, 2023, Pubco was a wholly-owned subsidiary of Falcon’s. As of September 30, 2023, and prior to the completion of the Business Combination, Pubco had no assets, no operations, and only nominal capitalization. Recent Developments The Business Combination was effected between October 5, 2023 and October 6, 2023 in two steps: (a) on October 5, 2023 (the “ SPAC Merger Effective Time ”), 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 (the “ Acquisition Merger Effective Time ”), Merger Sub merged with and into Falcon’s (the “ Acquisition Merger ”), with Falcon’s as the surviving entity of such merger. Following the consummation of the Business Combination, the direct interests in Falcon’s were held by Pubco and certain holders of the limited liability company units of Falcon’s outstanding as of immediately prior to the Business Combination. See our Current Report on Form 8-K, filed with the SEC on October 12, 2023, for more information about the consummation of the Business Combination. See the Form 8-K/A, which will be filed following the filing of this Quarterly Report on Form 10-Q, for the unaudited consolidated financial statements of Falcon’s for the three and nine month periods ended September 30, 2023 and related Management’s Discussion and Analysis of Financial Condition and Results of Operations. Results of Operations From inception to September 30, 2023, and prior to the Business Combination, Pubco had no operations. Liquidity and Capital Resources From inception to September 30, 2023, and prior to the Business Combination, Pubco had no assets and no liabilities. Off-Balance Sheet Financing Arrangements Pubco did not have any off-balance sheet arrangement as of September 30, 2023. Contractual Obligations As of September 30, 2023, Pubco did not have any long-term debt, capital or operating lease obligations. Critical Accounting Estimates The preparation of financial statements and related disclosures in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, disclosure of contingent assets and liabilities at the date of the consolidated financial statements, and income and expenses during the periods reported. As of September 30, 2023, and prior to the completion of the Business Combination, Pubco had no assets, no operations, and only nominal capitalization and accordingly no critical accounting estimates. 5 JOBS Act Pubco is an “emerging growth company” as defined in Section 2(a) of the Securities Act, as modified by the Jumpstart Our Business Startups Act of 2012 (the “ JOBS Act ”). Section 102(b)(1) of the JOBS Act exempts emerging growth companies from being required to comply with new or revised financial accounting standards until private companies (that is, those that have not had a registration statement under the Securities Act declared effective or do not have a class of securities registered under the Exchange Act) are required to comply with the new or revised financial accounting standards. The JOBS Act provides that a company can elect to opt out of the extended transition period and comply with the requirements that apply to non-emerging growth companies but any such election to opt out is irrevocable. Pubco has not elected to opt out of such extended transition period, which means that when a standard is issued or revised and it has different application dates for public or private companies, Pubco, as an emerging growth company, can adopt the new or revised standard at the time private companies adopt the new or revised standard. This may make comparison of Pubco’s financial statements with another public company which is neither an emerging growth company nor an emerging growth company which has opted out of using the extended transition period difficult or impossible because of the potential differences in accounting standards used. Pubco will remain an emerging growth company until the earlier of: (1) the last day of the fiscal year (a) following the fifth anniversary of the effectiveness of Pubco’s Registration Statement on Form S-4 (File No. 333-269778), (b) in which Pubco has total annual revenue of at least $1,235,000,000, or (c) in which Pubco is deemed to be a large accelerated filer, which means the market value of its common equity that is held by non-affiliates exceeds $700 million as of the end of the prior fiscal year’s second fiscal quarter; and (2) the date on which Pubco has issued more than $1.00 billion in non-convertible debt securities during the prior three-year period.