Falcon's Beyond Global, Inc. 10-K

Item 9A. Controls and Procedures Evaluation of Disclosure Controls and Procedures Our management, with the participation of our Chief Executive Officer and Chief Financial Officer, has evaluated the effectiveness of our disclosure controls and procedures (as such term is defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act) as of the end of the period covered by this Annual Report. Disclosure controls and procedures are designed to ensure that information required to be disclosed by us in the reports that we file or submit under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in SEC rules and forms, and that such information is accumulated and communicated to our management, including our Chief Executive Officer and Chief Financial Officer, to allow timely decisions regarding required disclosures. Management recognizes that any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving their objectives and management necessarily applies its judgment in evaluating the cost benefit relationship of possible controls and procedures. Based on such evaluation, our Chief Executive Officer and Chief Financial Officer have concluded that, as of December 31, 2023, our disclosure controls and procedures were not effective because disclosure controls have not been established or implemented and due to the identification of material weaknesses in our internal control over financial reporting. Material Weaknesses A material weakness is a deficiency, or a combination of deficiencies, in internal control over financial reporting, such that there is a reasonable possibility that a material misstatement of the Company’s annual or interim financial statements will not be prevented or detected on a timely basis. In connection with the preparation and audit of the 2023 consolidated financial statements, we identified the following material weaknesses in the Company’s internal control over financial reporting : Risk Assessment – We did not design and implement an effective risk assessment based on the criteria established in the COSO framework. Specifically, these control deficiencies constitute material weaknesses, either individually or in the aggregate, relating to: (i) identifying, assessing, and communicating appropriate objectives, (ii) identifying and analyzing risks to achieve these objectives, (iii) contemplating fraud risks, and (iv) identifying and assessing changes in the business that could impact our system of internal controls. Control Activities – We did not design and implement effective control activities based on the criteria established in the COSO framework. We have identified deficiencies in the principles associated with the control activities component of the COSO framework. Specifically, these control deficiencies constitute material weaknesses, either individually or in the aggregate, relating to: (i) selecting and developing control activities and information technology that contribute to the mitigation of risks and support achievement of objectives; and (ii) deploying control activities through policies that establish what is expected and procedures that put policies into action. 84 The following deficiencies, individually and in the aggregate, contributed to material weaknesses in control activities, including: ● We did not have an adequate segregation of duties or appropriate level of review that is needed to comply with financial reporting requirements. ● We did not design or maintain controls over period end close procedures. ● We did not design or maintain effective controls over the period end financial reporting process and preparation of financial statements. Specifically, we did not design and implement a sufficient level of formal accounting policies and procedures that define how transactions across the business cycles should be initiated, recorded, processed and reported and appropriately authorized and approved. ● We did not design or maintain controls or document segregation of duties over information technology systems used to create or maintain financial reporting records. Monitoring – We did not design and implement effective monitoring activities based on the criteria established in the COSO framework. We have identified deficiencies in the principles associated with the monitoring component of the COSO framework. Specifically, these control deficiencies constitute material weaknesses, either individually or in the aggregate, relating to: (i) selecting, developing, and performing ongoing evaluation to ascertain whether the components of internal controls are present and functioning; and (ii) evaluating and communicating internal control deficiencies in a timely manner to those parties responsible for taking corrective action. Control Environment – We did not maintain an effective control environment based on the criteria established in the COSO framework. We have identified deficiencies in the principles associated with the control environment of the COSO framework. Specifically, these control deficiencies constitute material weaknesses, either individually or in the aggregate, relating to: (i) appropriate organizational structure, reporting lines, and authority and responsibilities in pursuit of objectives; (ii) our commitment to attract, develop, train, and retain an appropriate complement of accounting employees; and (iii) establishing a control environment and holding individuals accountable for their internal control related responsibilities. We did not design or maintain an effective control environment to enable the identification and mitigation of risks of accounting errors based on the contributing factors to material weaknesses in the control environment, including: ● The Company did not create the proper environment for effective internal control over financial reporting and to ensure that: (i) there were adequate processes for oversight; (ii) there was accountability for the performance of internal control over financial reporting responsibilities; (iii) personnel with key positions had the appropriate training and capacity to carry out their responsibilities. ● The Company did not maintain a sufficient complement of management, accounting, financial reporting personnel who had appropriate levels of knowledge, experience, and training in accounting and internal control matters commensurate with the nature, growth and complexity of our business. The lack of sufficient appropriately skilled and trained personnel contributed to our failure to: (i) adequately identify potential risks; (ii) include in the scope of our internal controls framework certain systems relevant to financial reporting and the preparation of our consolidated financial statements; and (iii) design and implement certain risk-mitigating internal controls. Information and Communication – We did not generate or provide adequate quality supporting information and communication based on the criteria established in the COSO framework. We have identified deficiencies in the principles associate d with the information and communication component of the COSO framework. Specifically, these control deficiencies constitute material weaknesses, either individually or in the aggregate, relating to: (i) obtaining, generating, and using relevant quality information to support the function of internal control; and (ii) communicating accurate information internally and externally, including providing information pursuant to objectives, responsibilities, and functions of internal control. 85 Management’s Annual Report on Internal Control over Financial Reporting This Annual Report does not include a report of management’s assessment regarding internal control over financial reporting or an attestation report of the company’s registered public accounting firm due to a transition period established by rules of the Securities and Exchange Commission for newly public companies. Changes in Internal Control over Financial Reporting Except as otherwise described herein, there was no change in our internal control over financial reporting identified in connection with the evaluation required by Rule 13a-15(d) and 15d-15(d) of the Exchange Act that occurred during the quarter ended December 31, 2023 that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting. Remediation Efforts We are in the process of designing and implementing a plan to remediate the material weaknesses discussed above. Our remediation plans include strengthening our control environment with an immediate focus on hiring experienced personnel, designing and implementing risk assessment processes, implementing and enhancing our business processes and control activities, consistently generating and providing quality information and communication and re-designing and implementing monitoring controls. Our detailed remediation plans include actions such as implementing systems and controls to enhance our review of significant accounting transactions and other new technical accounting and financial reporting issues and preparing and reviewing accounting memoranda addressing these issues, hiring experienced personnel, implementing controls to enable an effective and timely review period end close procedures, and implementing controls to enable an accurate and timely review of accounting records that support our accounting processes and maintain documents for internal accounting reviews. We have also engaged a third-party consulting firm to assist us with our formal internal control plan and to provide accounting services related to complex accounting transactions. In addition, as we continue to evaluate and work to improve our internal control over financial reporting, management may determine to take additional measures to address control deficiencies or determine to modify our remediation plan. In light of the material weaknesses discussed above, we performed additional procedures to ensure that our consolidated financial statements included in this Annual Report were prepared in accordance with U.S. GAAP. Following such additional procedures, our management, including our including our Chief Executive Officer and Chief Financial Officer, has concluded that our consolidated financial statements present fairly, in all material respects, our financial position, results of operations and cash flows for the periods presented in this Annual Report, in conformity with U.S. GAAP. Item 9B. Other Information. None . Item 9C. Disclosure Regarding Foreign Jurisdictions that Prevent Inspections. Not applicable. 86 PART III Item 10. Directors, Executive Officers and Corporate Governance. The information required by this Item will be set forth in our definitive proxy statement for our 2024 Annual Meeting of Stockholders (the “Proxy Statement”) and is incorporated herein by reference. We maintain a Code of Conduct that is applicable to all of our directors, officers and employees. The Code of Conduct sets forth standards of ethical business conduct, including conflicts of interest, compliance with applicable laws, rules and regulations, timely and truthful disclosure, and reporting mechanisms for illegal or unethical behavior. The Code of Conduct also satisfies the requirements for a code of ethics as defined by Item 406 of Regulation S-K promulgated by the SEC. If the Company were to amend or waive any provision of the Code of Conduct that applies to the Company’s principal executive officer, principal financial officer, principal accounting officer or any person performing similar functions, the Company intends to satisfy its disclosure obligations, if any, with respect to any such waiver or amendment by posting such information on its website set forth above, rather than by filing a Current Report on Form 8-K. Amendments and waivers to the Code of Conduct must be approved by our Board or a Board Committee and will be promptly disclosed (other than technical, administrative or non-substantive changes) on our website. The Code of Conduct is available on the Investor Relations page of the Company’s website, https://falconsbeyond.com. Item 11. Executive Compensation. The information required by this Item will be set forth in the Proxy Statement is incorporated herein by reference. Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters. The information required by this Item will be set forth in the Proxy Statement and is incorporated herein by reference. Item 13. Certain Relationships and Related Transactions, and Director Independence. The information required by this Item will be set forth in the Proxy Statement and is incorporated herein by reference. Item 14. Principal Accountant Fees and Services. The information required by this Item will be set forth in the Proxy Statement and is incorporated herein by reference. 87 PART IV Item 15. Exhibit and Financial Statement Schedules. (a) Financial Statements and Schedules (1) The following financial statements of Falcon’s Beyond Global, Inc. and Falcon’s Creative Group, LLC, as applicable, supplemental information, and report of independent registered public accounting firm are included in this Annual Report: Audited Consolidated Financial Statements of Falcon’s Beyond Global, Inc. Page Report of Independent Registered Public Accounting Firm (PCAOB ID: # 34 ) F-2 Consolidated Balance Sheets as of December 31, 2023 and 2022 F-3 Consolidated Statements of Operations and Comprehensive Loss for the years ended December 31, 2023 and 2022 F-4 Consolidated Statements of Cash Flows for the years ended December 31, 2023 and 2022 F-5 Consolidated Statements of Stockholders’ Equity (Deficit)/Members’ Equity for the years ended December 31, 2023 and 2022 F-6 Notes to the Consolidated Financial Statements F-7 Audited Consolidated Financial Statements of Falcon’s Creative Group, LLC Page Independent Auditors’ Report (PCAOB ID: #34) F-44 Consolidated Balance Sheet as of December 31, 2023 F-45 Consolidated Statement of Operations for the year ended December 31, 2023 F-46 Consolidated Statement of Cash Flows for the year ended December 31, 2023 F-47 Consolidated Statement of Members’ Equity for the year ended December 31, 2023 F-48 Notes to the Consolidated Financial Statements F-49 (2) List of financial statement schedules: All schedules have been omitted because they are not required, not applicable, or the information is otherwise included. 88 (b) Exhibits: The following exhibits are filed or furnished as an exhibit to this Annual Report. Exhibit Number Description 2.1† Composite Amended and Restated Agreement and Plan of Merger, dated January 31, 2023, as amended on June 25, 2023, July 7, 2023 and September 1, 2023, by and among FAST Acquisition Corp. II, Falcon’s Beyond Global, LLC, Falcon’s Beyond Global, Inc. and Palm Merger Sub, LLC (incorporated herein by reference to Exhibit 2.1 to Amendment No. 4 to the Registration Statement on Form S-4 (File No. 333-269778) filed September 1, 2023). 3.1 Amended and Restated Certificate of Incorporation of Falcon’s Beyond Global, Inc. (incorporated by reference to Exhibit 3.1 to Falcon Beyond Global Inc.’s Current Report on Form 8-K filed October 12, 2023). 3.2 Amended and Restated By-Laws of Falcon’s Beyond Global, Inc. (incorporated by reference to Exhibit 3.2 to Falcon Beyond Global Inc.’s Current Report on Form 8-K filed October 12, 2023). 4.1 Specimen Class A Common Stock Certificate of Falcon’s Beyond Global, Inc. (incorporated by reference to Exhibit 4.1 to Amendment No. 2 to the Registration Statement on Form S-4 (File No. 333-269778) filed June 28, 2023). 4.2 Second Amended and Restated Warrant Agreement, dated November 3, 2023, by and between Falcon’s Beyond Global, Inc. and Continental Stock Transfer & Trust Company (incorporated by reference to Exhibit 4.1 to Falcon Beyond Global Inc.’s Current Report on Form 8-K filed November 7, 2023). 4.3* Description of Securities 10.1 Tax Receivable Agreement, dated October 6, 2023, by and among Falcon’s Beyond Global, Inc., Falcon’s Beyond Global LLC, the TRA Holder Representative, the TRA Holders and other persons from time to time party thereto (incorporated by reference to Exhibit 10.1 to Falcon Beyond Global Inc.’s Current Report on Form 8-K filed October 12, 2023). 10.2 A&R Operating Agreement of Falcon’s Beyond Global, LLC, dated October 6, 2023 by and between Falcon’s Beyond Global, Inc. and each member of Falcon’s Beyond Global, LLC (incorporated by reference to Exhibit 10.2 to Falcon Beyond Global Inc.’s Current Report on Form 8-K filed October 12, 2023). 10.3+ Form of Indemnification Agreement between Falcon’s Beyond Global, Inc. and each of its officers and directors(incorporated by reference to Exhibit 10.3 to Falcon Beyond Global Inc.’s Current Report on Form 8-K filed October 12, 2023). 10.4 Amended and Restated Sponsor Lock-Up Agreement, dated January 31, 2023, by and among Falcon’s Beyond Global, LLC, FAST Sponsor II LLC, and the Securityholders (incorporated by reference to Exhibit 10.4 to the Registration Statement on Form S-4 (File No. 333-269778) filed February 14, 2023). 10.5 Company Lock-Up Agreement, dated July 11, 2022, by and among FAST Acquisition Corp. II, Falcon’s Beyond Global, LLC, Falcon’s Beyond Global, Inc. (formerly known as Palm Holdco, Inc.) and each of the members of Falcon’s Beyond Global, LLC identified on the signature pages thereto (incorporated by reference to Exhibit 10.5 to the Registration Statement on Form S-4 (File No. 333-269778) filed February 14, 2023). 10.6 Subscription Agreement, dated July 11, 2022, by and among FAST Acquisition Corp. II, FAST Sponsor II LLC, and the other parties thereto (incorporated by reference to Exhibit 10.5 to the Registration Statement on Form S-4 (File No. 333-269778) filed February 14, 2023). 10.7 Registration Rights Agreement, dated October 5, 2023, by and among Falcon’s Beyond Global, Inc. and each of the stockholders of Falcon’s Beyond Global, Inc. identified on the signature pages thereto (incorporated by reference to Exhibit 10.9 to Falcon Beyond Global Inc.’s Current Report on Form 8-K filed October 12, 2023). 89 Exhibit Number Description 10.8† Earnout Escrow Agreement, dated October 6, 2023, by and among Falcon’s Beyond Global, Inc., Falcon’s Beyond Global, LLC and each of the persons receiving Earnout Shares and Earnout Units identified on the signature pages thereto (incorporated by reference to Exhibit 10.10 to Falcon Beyond Global Inc.’s Current Report on Form 8-K filed October 12, 2023). 10.9 Form of Stockholder’s Agreement between Falcon’s Beyond Global, Inc. and each of the persons receiving Earnout Shares and Earnout Units (incorporated by reference to Exhibit 10.11 to Falcon Beyond Global Inc.’s Current Report on Form 8-K filed October 12, 2023). 10.10+ Falcon’s Beyond Global, Inc. 2023 Incentive Plan (incorporated by reference to Exhibit 10.12 to Falcon Beyond Global Inc.’s Current Report on Form 8-K filed October 12, 2023). 10.11† Joint Venture and Shareholders Agreement, dated December 13, 2012, by and among Katmandu Collections, LLLP, Producciones de Parques, S.L. and Meliá Hotels International, S.A. (incorporated by reference to Exhibit 10.8 to Amendment No. 1 to the Registration Statement on Form S-4 (File No. 333-269778) filed May 15, 2023). 10.12† First Amendment to Joint Venture and Shareholders Agreement, dated June 28, 2013, by and among Katmandu Collections, LLLP, Producciones de Parques, S.L. and Meliá Hotels International, S.A. (incorporated by reference to Exhibit 10.9 to Amendment No. 1 to the Registration Statement on Form S-4 (File No. 333-269778) filed May 15, 2023). 10.13† Second Amendment to Joint Venture and Shareholders Agreement, dated January 29, 2014, by and among Katmandu Collections, LLLP, Producciones de Parques, S.L. and Meliá Hotels International, S.A. (incorporated by reference to Exhibit 10.10 to Amendment No. 1 to the Registration Statement on Form S-4 (File No. 333-269778) filed May 15, 2023). 10.14 Third Amendment to Joint Venture and Shareholders Agreement, dated May 10, 2014, by and among Katmandu Collections, LLLP, Producciones de Parques, S.L. and Meliá Hotels International, S.A. (incorporated by reference to Exhibit 10.11 to Amendment No. 1 to the Registration Statement on Form S-4 (File No. 333-269778) filed May 15, 2023). 10.15 Fourth Amendment to Joint Venture and Shareholders Agreement, dated November 25, 2015, by and among Katmandu Collections, LLLP, Producciones de Parques, S.L. and Meliá Hotels International, S.A. (incorporated by reference to Exhibit 10.12 to Amendment No. 1 to the Registration Statement on Form S-4 (File No. 333-269778) filed May 15, 2023). 10.16 Fifth Amendment to Joint Venture and Shareholders Agreement, dated July 15, 2016, by and among Katmandu Collections, LLLP, Producciones de Parques, S.L. and Meliá Hotels International, S.A. (incorporated by reference to Exhibit 10.13 to Amendment No. 1 to the Registration Statement on Form S-4 (File No. 333-269778) filed May 15, 2023). 10.17 Sixth Amendment to Joint Venture and Shareholders Agreement, dated December 12, 2016, by and among Katmandu Collections, LLLP, Producciones de Parques, S.L. and Meliá Hotels International, S.A. (incorporated by reference to Exhibit 10.14 to Amendment No. 1 to the Registration Statement on Form S-4 (File No. 333-269778) filed May 15, 2023). 10.18† Joint Venture and Shareholders Agreement, dated June 26, 2019, by and between Fun Stuff, S.L. and Meliá Hotels International, S.A. (incorporated by reference to Exhibit 10.15 to Amendment No. 1 to the Registration Statement on Form S-4 (File No. 333-269778) filed May 15, 2023). 10.19 Subscription Agreement, dated as of May 10, 2023, by and between Falcon’s Beyond Global, LLC and Infinite Acquisitions, LLLP (incorporated by reference to Exhibit 10.16 to Amendment No. 1 to the Registration Statement on Form S-4 (File No. 333-269778) filed May 15, 2023). 10.20† Leisure and Entertainment Services Agreement, dated December 13, 2012, by and between Katmandu Collections, LLLP and Producciones de Parques, S.L. (incorporated by reference to Exhibit 10.17 to Amendment No. 1 to the Registration Statement on Form S-4 (File No. 333-269778) filed May 15, 2023). 10.21† Leisure and Commercial Services Agreement, dated June 26, 2019, by and between Katmandu Collections, LLLP and Sierra Parima, S.A. (incorporated by reference to Exhibit 10.18 to Amendment No. 1 to the Registration Statement on Form S-4 (File No. 333-269778) filed May 15, 2023). 10.22†# House Quest Attraction Hardware Sales Agreement, dated June 20, 2022, by and between Sierra Parima, S.A.S. and Falcon’s Treehouse National, LLC. (incorporated by reference to Exhibit 10.19 to Amendment No. 2 to the Registration Statement on Form S-4 (File No. 333-269778) filed June 28, 2023). 90 Exhibit Number Description 10.23# Amendment No. 1 to House Quest Attraction Hardware Sales Agreement, dated May 9, 2023, by and between Sierra Parima, S.A.S. and Falcon’s Treehouse National, LLC (incorporated by reference to Exhibit 10.20 to Amendment No. 2 to the Registration Statement on Form S-4 (File No. 333-269778) filed June 28, 2023). 10.24# Attraction Hardware Sales Agreement, dated November 17, 2021, by and between Sierra Parima, S.A.S. and Falcon’s Treehouse National, LLC (incorporated by reference to Exhibit 10.21 to Amendment No. 2 to the Registration Statement on Form S-4 (File No. 333-269778) filed June 28, 2023). 10.25 First Amendment to Subscription Agreement, dated as of June 23, 2023, by and between Falcon’s Beyond Global, LLC and Infinite Acquisitions LLLP (incorporated by reference to Exhibit 10.22 to Amendment No. 2 to the Registration Statement on Form S-4 (File No. 333-269778) filed June 28, 2023). 10.26 Credit Agreement, dated December 30, 2021, by and between Falcon’s Beyond Global, LLC and Infinite Acquisitions LLLP (formerly Katmandu Collections, LLLP) (incorporated by reference to Exhibit 10.23 to Amendment No. 2 to the Registration Statement on Form S-4 (File No. 333-269778) filed June 28, 2023). 10.27 Amendment to Credit Agreement, dated June 23, 2023, by and among Infinite Acquisitions, LLLP (formerly Katmandu Collections, LLLP), Falcon’s Beyond Global, LLC and Falcon’s Beyond Global, Inc. (incorporated by reference to Exhibit 10.24 to Amendment No. 2 to the Registration Statement on Form S-4 (File No. 333-269778) filed June 28, 2023). 10.28 Form of Exchange Agreement by and between the Holders of Debt thereunder and Falcon’s Beyond Global, Inc. (incorporated by reference to Exhibit A to Exhibit 10.24 to Amendment No. 2 to the Registration Statement on Form S-4 (File No. 333-269778) filed June 28, 2023). 10.29† Subscription Agreement, dated as of July 27, 2023, by and between Falcon’s Beyond Global, LLC and QIC Delaware, Inc. (incorporated by reference to Exhibit 10.27 to Amendment No. 3 to the Registration Statement on Form S-4 (File No. 333-269778) filed August 14, 2023). 10.30† Third Amended and Restated Limited Liability Company Agreement of Falcon’s Creative Group, LLC, by and between Qiddiya Investment Company and Falcon’s Beyond Global, LLC (incorporated by reference to Exhibit 10.28 to Amendment No. 5 to the Registration Statement on Form S-4 (File No. 333-269778) filed September 5, 2023). 10.31*+ Falcon’s Beyond Global, LLC Long-Term Incentive Plan. 10.32* Amendment No. 1 to the Third Amended and Restated Limited Liability Company Agreement of Falcon’s Creative Group, LLC, by and between QIC Delaware, Inc. and Falcon’s Beyond Global, LLC. 10.33 Loan Agreement, dated as of April 9, 2024, entered into by and among Falcon’s Beyond Global, LLC and Katmandu Ventures, LLC (incorporated by reference to Exhibit 10.1 to Falcon’s Beyond Global, Inc.’s Current Report on Form 8-K filed on April 15, 2024). 10.34 Loan Agreement, dated as of April 9, 2024, entered into by and among Falcon’s Beyond Global, LLC and Universal Kat Holdings, LLC (incorporated by reference to Exhibit 10.2 to Falcon’s Beyond Global, Inc.’s Current Report on Form 8-K filed on April 15, 2024). 21.1 List of Subsidiaries of Falcon’s Beyond Global, Inc. (incorporated by reference to Exhibit 21.1 to the Registration Statement on Form S-1 (File No. 333-275243) filed November 1, 2023.) 23.1* Consent of Deloitte & Touche LLP. 23.2* Consent of Deloitte & Touche LLP. 24.1** Power of Attorney (included on signature page to this Annual Report). 31.1* Certification of Chief Executive Officer (Principal Executive Officer) Pursuant to Rules 13a-14(a) and 15d-14(a) under the Securities Exchange Act of 1934, as Adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. 31.2* Certification of Chief Financial Officer (Principal Financial and Accounting Officer) Pursuant to Rules 13a-14(a) and 15d-14(a) under the Securities Exchange Act of 1934, as Adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. 91 Exhibit Number Description 32.1** Certification of Chief Executive Officer (Principal Executive Officer) Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. 32.2** Certification of Chief Financial Officer (Principal Financial and Accounting Officer) Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. 97.1* Clawback Policy of Falcon’s Beyond Global, Inc. 101.INS* Inline XBRL Instance Document. 101.SCH* Inline XBRL Taxonomy Extension Schema Document. 101.CAL* Inline XBRL Taxonomy Extension Calculation Linkbase Document. 101.DEF* Inline XBRL Taxonomy Extension Definition Linkbase Document. 101.LAB* Inline XBRL Taxonomy Extension Label Linkbase Document. 101.PRE* Inline XBRL Taxonomy Extension Presentation Linkbase Document. 104* Cover Page Interactive Data File (Embedded within the Inline XBRL document and included in Exhibit) † Certain of the exhibits and schedules to this Exhibit have been omitted in accordance with Regulation S-K Item 601(a)(5). The Company agrees to furnish a copy of all omitted exhibits and schedules to the SEC upon its request. + Denotes management contract of compensatory plan or arrangement. # Certain identified information has been omitted pursuant to Item 601(b)(10) of Regulation S-K because such information is both (i) not material and (ii) would likely cause competitive harm to the Registrant if publicly disclosed. The Registrant hereby undertakes to furnish supplemental copies of the unredacted exhibit upon request by the Securities and Exchange Commission. * Filed herewith. ** Furnished herewith. Item 16. Form 10-K Summary. None. 92 Index to Consolidated Financial Statements Audited Consolidated Financial Statements of Falcon’s Beyond Global, Inc. Page Report of Independent Registered Public Accounting Firm (PCAOB ID: #34) F-2 Consolidated Balance Sheets as of December 31, 2023 and 2022 F-3 Consolidated Statements of Operations and Comprehensive Loss for the years ended December 31, 2023 and 2022 F-4 Consolidated Statements of Cash Flows for the years ended December 31, 2023 and 2022 F-5 Consolidated Statements of Stockholders’ Equity (Deficit)/Members’ Equity for the years ended December 31, 2023 and 2022 F-6 Notes to the Consolidated Financial Statements F-7 Audited Consolidated Financial Statements of Falcon’s Creative Group, LLC Page Independent Auditors’ Report (PCAOB ID: #34) F-44 Consolidated Balance Sheet as of December 31, 2023 F-45 Consolidated Statement of Operations for the year ended December 31, 2023 F-46 Consolidated Statement of Cash Flows for the year ended December 31, 2023 F-47 Consolidated Statement of Members’ Equity for the year ended December 31, 2023 F-48 Notes to the Consolidated Financial Statements F-49 F- 1 REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM To the stockholders and the Board of Directors of Falcon’s Beyond Global, Inc. Opinion on the Financial Statements We have audited the accompanying consolidated balance sheets of Falcon’s Beyond Global, Inc. and subsidiaries (the “Company”) as of December 31, 2023 and 2022, the related consolidated statements of operations and comprehensive loss, stockholders’ equity (deficit)/members’ equity, and cash flows for the years then ended, and the related notes (collectively referred to as the “financial statements”). In our opinion, the financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2023 and 2022, and the results of its operations and its cash flows for the years then ended, in conformity with accounting principles generally accepted in the United States of America. Going Concern The accompanying financial statements have been prepared assuming that the Company will continue as a going concern. As discussed in Note 1 to the financial statements, the Company has a working capital deficiency, debt maturing in the next twelve months, and has material commitments to fund its share of additional investments in its unconsolidated joint ventures and is reliant upon its stockholders and third-parties to provide future financing, through debt or equity, to fund its working capital needs, contractual commitments and expansion plans. The Company incurred an operating loss and had negative operating cash flows for the year ended December 31, 2023. These factors give rise to substantial doubt about its ability to continue as a going concern. Management’s plans with regards to these matters are also described in Note 1. The financial statements do not include any adjustments that might result from the outcome of this uncertainty. Basis for Opinion These financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on the Company’s financial statements based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB. We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. As part of our audits, we are required to obtain an understanding of internal control over financial reporting but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting. Accordingly, we express no such opinion. Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audits provide a reasonable basis for our opinion. Emphasis of Matter As discussed in Note 1 to the financial statements, the Company entered into a subscription agreement resulting in the deconsolidation of Falcon’s Creative Group, LLC on July 27, 2023. /s/ Deloitte & Touche LLP Tampa, Florida April 29, 2024 We have served as the Company’s auditor since 2021. F- 2 FALCON’S BEYOND GLOBAL, INC. AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS (in thousands of U.S. dollars) As of December 31, 2023 As of December 31, 2022 Assets Current assets: Cash and cash equivalents $ 672 $ 8,366 Accounts receivable, net ($ 632 and $ 489 related party as of December 31, 2023 and 2022, respectively) 696 3,309 Contract assets ($ 0 and $ 1,680 related party as of December 31, 2023 and 2022, respectively) — 2,692 Inventories — 407 Deferred transaction costs — 1,842 Other current assets 1,061 842 Total current assets 2,429 17,458 Investments and advances to equity method investments 60,643 71,979 Operating lease right-of-use assets ($ 0 and $ 709 related party as of December 31, 2023 and 2022, respectively) — 1,003 Finance lease right-of-use assets ($ 0 and $ 570 related party as of December 31, 2023 and 2022, respectively) — 582 Property and equipment, net 23 802 Intangible assets, net — 8,304 Goodwill — 11,471 Other non-current assets 264 671 Total assets $ 63,359 $ 112,270 Liabilities and stockholders’ equity (deficit)/members’ equity Current liabilities: Accounts payable ($ 1,357 and $ 73 related party as of December 31, 2023 and 2022, respectively) $ 3,852 $ 4,626 Accrued expenses and other current liabilities ($ 475 and $ 737 related party as of December 31, 2023 and 2022, respectively) 20,840 3,990 Contract liabilities ($ 0 and $ 600 related party as of December 31, 2023 and 2022, respectively) — 1,296 Current portion of long-term debt ($ 4,878 and $ 5,607 related party as of December 31, 2023 and 2022, respectively) 6,651 7,408 Earnout liabilities – current portion 183,055 — Total current liabilities 214,398 17,320 Operating lease liability, net of current portion ($ 0 and $ 675 related party as of December 31, 2023 and 2022, respectively) — 849 Other long term payables 5,500 — Long-term debt, net of current portion ($ 18,897 and $ 20,124 related party as of December 31, 2023 and 2022, respectively) 22,965 25,737 Earnout liabilities 305,586 — Warrant liabilities 3,904 — Total liabilities 552,353 43,906 Commitments and contingencies – Note 15 Stockholders’ equity (deficit)/Members’ equity Members’ capital — 94,201 Class A common stock ($ 0.0001 par value, 500,000,000 shares authorized; 7,871,643 issued and outstanding at December 31, 2023 and no shares were issued and outstanding as of December 31, 2022) 1 — Class B common stock ($ 0.0001 par value, 150,000,000 shares authorized; 52,034,117 issued and outstanding at December 31, 2023 and no shares were issued and outstanding as of December 31, 2022) 5 — Additional paid-in capital 11,699 — Accumulated deficit ( 68,594 ) ( 24,147 ) Accumulated other comprehensive loss ( 216 ) ( 1,690 ) Total equity attributable to common stockholders/Members’ equity ( 57,105 ) 68,364 Non-controlling interest ( 431,889 ) — Total equity ( 488,994 ) 68,364 Total liabilities and equity $ 63,359 $ 112,270 See accompanying notes to consolidated financial statements F- 3 FALCON’S BEYOND GLOBAL, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS (in thousands of U.S. dollars, except share and per share data) Year ended December 31, 2023 Year ended December 31, 2022 Revenue ($ 6,779 and $ 5,848 related party as of December 31, 2023 and 2022, respectively) $ 18,244 $ 15,950 Operating expenses: Project design and build expense 10,151 11,344 Selling, general and administrative expense 28,064 18,439 Transaction expenses 26,021 — Credit loss expense ($ 5,965 and $ 0 related party as of December 31, 2023 and 2022, respectively) 5,965 — Research and development expense ($ 1,248 and $ 0 related party as of December 31, 2023 and 2022, respectively) 1,248 2,771 Intangible asset impairment expense – Note 7 2,377 — Depreciation and amortization expense 1,576 737 Total operating expenses 75,402 33,291 Loss from operations ( 57,158 ) ( 17,341 ) Share of (loss) gain from equity method investments ( 52,452 ) 1,513 Gain on deconsolidation of FCG 27,402 — Interest expense ( 1,124 ) ( 1,113 ) Interest income ($ 87 and $ 0 related party as of December 31, 2023 and 2022, respectively) 95 — Loss on disposal of assets — ( 9 ) Change in fair value of warrant liabilities ( 2,972 ) — Change in fair value of earnout liabilities ( 345,413 ) — Foreign exchange transaction gain (loss) 367 ( 478 ) Net loss before taxes $ ( 431,255 ) $ ( 17,428 ) Income tax benefit 325 — Net loss $ ( 430,930 ) $ ( 17,428 ) Net loss attributable to noncontrolling interest ( 383,326 ) — Net loss attributable to common stockholders ( 47,604 ) — Net loss per share, basic and diluted ( 6.71 ) — Weighted average shares outstanding, basic and diluted 7,095,204 — Comprehensive loss: Net loss $ ( 430,930 ) $ ( 17,428 ) Foreign currency translation loss ( 348 ) ( 429 ) Total other comprehensive loss ( 348 ) ( 429 ) Total comprehensive loss $ ( 431,278 ) $ ( 17,857 ) Comprehensive loss attributable to noncontrolling interest ( 383,648 ) — Comprehensive loss attributable to common stockholders $ ( 47,630 ) $ ( 17,857 ) See accompanying notes to consolidated financial statements F- 4 FALCON’S BEYOND GLOBAL, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS (in thousands of U.S. dollars) Year ended December 31, 2023 Year ended December 31, 2022 Cash flows from operating activities Net loss $ ( 430,930 ) $ ( 17,428 ) Adjustments to reconcile net loss to net cash used in operating activities: Depreciation and amortization 1,576 737 Deferred loss on sales to equity method investments — ( 174 ) Foreign exchange transaction loss ( 367 ) 484 Share of (gain) loss from equity method investments 52,452 ( 1,513 ) Gain on deconsolidation of FCG ( 27,402 ) — Change in deferred tax assets ( 26 ) — Credit loss expense ($ 5,965 and $ 0 related party for the year ended December 31, 2023 and 2022, respectively) 5,965 — Intangible asset impairment 2,377 — Change in fair value of earnouts 345,413 — Change in fair value of warrants 2,972 — Share based compensation expense 68 — Loss on disposal of fixed assets — 9 Changes in assets and liabilities: Accounts receivable, net ($( 5,680 ) and $( 392 ) related party for the year ended December 31, 2023 and 2022, respectively) ( 3,830 ) ( 986 ) Other current assets ( 904 ) ( 453 ) Inventories — 203 Contract assets ($ 1,680 and $( 1,547 ) related party for the year ended December 31, 2023 and 2022, respectively) 466 ( 2,228 ) Capitalization of ride media content ( 78 ) ( 1,250 ) Deferred transaction costs 1,842 ( 1,842 ) Operating lease assets and liabilities ( 23 ) — Other non-current assets ($( 1,310 ) and $ 0 related party for the year ended December 31, 2023 and 2022 respectively) ( 1,006 ) ( 126 ) Accounts payable ($ 1,284 related party for the year ended December 31, 2023) 3,791 4,305 Accrued expenses and other current liabilities ($( 434 ) and $ 604 related party for the year ended December 31, 2023 and 2022 respectively) 18,850 2,296 Other long-term payables 5,500 ( 70 ) Contract liabilities ($ 235 and $( 1,715 ) related party for the year ended December 31, 2023 and 2022, respectively) ( 128 ) ( 1,254 ) Net cash used in operating activities ( 23,422 ) ( 19,290 ) Cash flows from investing activities Purchase of property and equipment ( 308 ) ( 320 ) Proceeds from sale of equipment 4 — Cash inflow on deconsolidation of FCG 2,577 — Investments and advances to equity method investments ( 1,991 ) ( 25,790 ) Principal payments on notes receivable — 349 Advances to related party — ( 500 ) Net cash provided by (used in) investing activities 282 ( 26,261 ) Cash flows from financing activities Principal payment on finance lease obligation ( 106 ) ( 185 ) Proceeds from debt – related party — 7,250 Repayment of debt – related party ( 3,310 ) ( 138 ) Repayment of debt – third party ( 1,709 ) ( 1,455 ) Proceeds from related party credit facilities 18,439 7,200 Repayment of related party credit facilities ( 4,146 ) — Proceeds from exercised warrants 4,173 — Equity contributions – issuance of Predecessor membership units 1,791 38,209 Net cash provided by financing activities 15,132 50,881 Net (decrease) increase in cash and cash equivalents ( 8,008 ) 5,330 Foreign exchange impact on cash 314 ( 55 ) Cash and cash equivalents – beginning of period 8,366 3,091 Cash and cash equivalents at end of year $ 672 $ 8,366 Supplemental disclosures: Cash paid for interest $ 1,341 $ 606 Non-cash activities: Debt to equity conversion – principal (See Note 10) 11,893 19,846 Debt to equity conversion – accrued interest (See Note 10) 131 154 Warrants to equity conversion 6,809 — Operating lease right-of-use assets obtained in exchange for new operating lease liabilities (all new operating lease assets and liabilities have been deconsolidated as of July 27, 2023) 514 — Finance lease right-of-use assets obtained in exchange for new finance lease liabilities (all new finance lease assets and liabilities have been deconsolidated as of July 27, 2023) 35 See accompanying notes to consolidated financial statements F- 5 FALCON’S BEYOND GLOBAL, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY (DEFICIT)/MEMBERS’ EQUITY (in thousands of U.S. dollars) Members’ Preferred Stock, Series A Common Stock, Class A Common Stock, Class B Additional paid-in Accumulated other comprehensive Accumulated Members’ Non- Controlling Total Equity Shares Amount Shares Amount Shares Amount capital loss deficit equity Interest equity December 31, 2021 $ 35,992 $ ( 1,261 ) $ ( 6,719 ) $ 28,012 $ 28,012 Units issued 38,209 38,209 38,209 Units issued, debt to equity conversion 20,000 20,000 20,000 Net loss ( 17,428 ) ( 17,428 ) ( 17,428 ) Foreign currency translation loss ( 429 ) ( 429 ) ( 429 ) December 31, 2022 $ 94,201 $ ( 1,690 ) $ ( 24,147 ) $ 68,364 $ 68,364 Members’ Preferred Stock, Series A Common Stock, Class A Common Stock, Class B Additional paid-in Accumulated other comprehensive Accumulated Shareholder’s Non-Controlling Total Equity Shares Amount Shares Amount Shares Amount capital loss deficit equity Interest equity December 31, 2022 $ 94,201 $ $ $ $ $ ( 1,690 ) $ ( 24,147 ) $ 68,364 $ $ 68,364 Units issued 1,791 1,791 1,791 Units issued, debt to equity conversion (See Note 10) 7,275 7,275 7,275 Reclass of Members’ equity ( 103,267 ) 103,267 - - - Establishment of NCI ( 92,513 ) 1,514 18,072 ( 72,927 ) 72,927 - Preferred Stock, Series A issued, debt to equity conversion 475,000 - 495 495 4,255 4,750 New classes of equity - par value 181,415 - 6,048,519 1 52,034,117 5 ( 6 ) - - - Warrants ( 369 ) ( 369 ) ( 3,176 ) ( 3,545 ) Earnouts ( 14,915 ) ( 14,915 ) ( 128,313 ) ( 143,228 ) Recapitalization on Merger with FAST II - 656,415 $ - 6,048,519 $ 1 52,034,117 $ 5 $ 10,874 $ ( 176 ) $ ( 20,990 ) $ ( 10,286 ) $ ( 54,307 ) $ ( 64,593 ) Conversion of Preferred Shares to Common Shares, Class A ( 656,415 ) - 596,671 - - - - - Conversion of Warrants to Common Shares, Class A 1,226,453 - 817 817 5,992 6,809 Stock compensation expense 8 8 60 68 Net loss ( 47,604 ) ( 47,604 ) ( 383,326 ) ( 430,930 ) Foreign currency translation loss ( 40 ) ( 40 ) ( 308 ) ( 348 ) December 31, 2023 $ - - $ - 7,871,643 $ 1 52,034,117 $ 5 $ 11,699 $ ( 216 ) $ ( 68,594 ) $ ( 57,105 ) $ ( 431,889 ) $ ( 488,994 ) See accompanying notes to consolidated financial statements F- 6 FALCON’S BEYOND GLOBAL, INC. AND SUBSIDIARIES NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEARS ENDED DECEMBER 31, 2023 AND 2022 (in thousands of U.S. dollars, unless otherwise stated) 1. Description of business and basis of presentation Merger with FAST II Falcon’s Beyond Global, Inc., a Delaware corporation (“Pubco”, “FBG”, or the “Company”), entered into a Plan of Merger, dated as of January 31, 2023 (the “Merger Agreement”), by and among Pubco, FAST Acquisition Corp. II, a Delaware corporation (“FAST II”), Falcon’s Beyond Global, LLC, a Florida limited liability company that has since redomesticated as a Delaware limited liability company (the “Predecessor”), 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 Predecessor (the “Acquisition Merger,” and collectively with the SPAC Merger, the “Business Combination”), with the Predecessor as the surviving entity of such merger. Following the consummation of the transactions contemplated by the Merger Agreement (the “Closing”), the direct interests in the Predecessor were held by Pubco and certain holders of the limited liability company units of the Predecessor outstanding as of immediately prior to the Business Combination. Pursuant to the Business Combination, the Company received net cash proceeds from the Business Combination totaling $ 1.0 million, net of $ 1.3 million FAST II transaction costs and $ 1.6 million of Predecessor transaction costs paid at Closing. FAST II and Predecessor’s transaction costs related to the Business Combination of $ 6.4 million and $ 15.7 million, respectively, are not yet settled at December 31, 2023 and the Company expects to settle them over the next 24 months. These transaction costs are recorded in accrued expenses and long-term payables. Negotiations regarding the terms of the costs yet to be settled are still ongoing and may change materially from these amounts accrued. All transaction costs incurred in connection with the Business Combination are recorded in profit or loss. Unpaid debt obligations to Infinite Acquisitions (the “Transferred Debt”) of $ 4.8 million was exchanged for an aggregate of 475,000 shares of Series A Preferred Stock at Closing. See Note 11 – Related party transactions. The total number of shares of Class A Common Stock outstanding immediately following the Closing was 6,048,519 ; the total number of shares of Class B Common Stock outstanding immediately following the Closing was 52,034,117 ; the total number of shares of Series A Preferred Stock outstanding immediately following the Closing was 656,415 ; and the total number of Warrants outstanding immediately following the Closing was 8,440,641 . On November 6, 2023 the 656,415 shares of Series A Preferred Stock (the “Preferred Stock”) automatically converted into shares of the Class A Common Stock. Following the automatic conversion of the Preferred Stock, there are no outstanding shares of Preferred Stock. The conversion rate is 0.90909 shares of Class A Common Stock for each Preferred Stock, resulting in an aggregate of approximately 596,671 shares of Class A Common Stock to be issued upon conversion. Cash was paid in lieu of fractional shares of Class A Common Stock. F- 7 In connection with the automatic conversion of the Preferred Stock, the outstanding Warrants will no longer be exercisable for (i) 0.580454 shares of Class A Common Stock and (ii) 0.5 shares of Preferred Stock. Each outstanding Warrant will now be exercisable for 1.034999 shares of Class A Common Stock pursuant to the terms of the Warrants. Nature of Operations The Company operates at the intersection of content, technology, and experiences. We aim to engage, inspire and entertain people through our creativity and innovation, and to connect people with brands, with each other, and with themselves through the combination of digital and physical experiences. At the core of our business is brand creation and optimization, facilitated by our multi-disciplinary creative teams. We believe the complementary strengths of our business divisions facilitates invaluable insights and streamlined growth. The Company has three business divisions, which are conducted through five operating segments. Our three business lines feed into each other to accelerate our growth strategy: (i) Falcon’s Creative Group, LLC (“FCG”) creates master plans, designs attractions and experiential entertainment, and produces content, interactives and software; (ii) Falcon’s Beyond Destinations, consisting of Producciones de Parques, S.L. (“PDP”), Sierra Parima, and Destinations Operations, develops a diverse range of entertainment experiences using both Company owned and third party licensed intellectual property, spanning location-based entertainment, dining, and retail; and (iii) Falcon’s Beyond Brands brings brands and intellectual property to life through animation, movies, licensing and merchandising, gaming, as well as ride and technology sales. See Note 16 – Segment information and Note 8 – Investments and advances to equity method investments. Basis of presentation The Business Combination is accounted for similar to a reverse recapitalization, with no goodwill or other intangible assets recorded, in accordance with U.S. GAAP. Following the closing of the Business Combination, the Predecessor’s Executive Chairman, Mr. Scott Demerau, together with other members of the Demerau family, continue to collectively have a controlling interest of Pubco. 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, the Predecessor 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 the Predecessor 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 are those of the Predecessor. Predecessor was formed on April 22, 2021, in the state of Florida, for the purpose of acquiring the outstanding membership units of Katmandu Group, LLC and its subsidiaries (“Katmandu”), Falcon’s Treehouse, LLC and its subsidiaries (“Treehouse”) and Falcon’s Treehouse National, LLC (“National”). On April 30, 2021, The Magpuri Revocable Trust, owners of Treehouse and National, and Katmandu Collections, LLLP, (“Collections”) owners of Katmandu, entered into a Consolidation Agreement, whereby The Magpuri Revocable Trust contributed 100 % of its ownership interests in Treehouse and National in exchange for 33.33 % of the membership interests of the Predecessor, and Collections contributed 100 % of its ownership in Katmandu in exchange for 66.67 % of the membership interests of the Predecessor. In June 2022, Katmandu Collections, LLLP was renamed Infinite Acquisitions, LLLP and subsequently renamed Infinite Acquisitions Partners LLP (“Infinite Acquisitions”). Principles of Consolidation The non-controlling interest represents the membership interest in Predecessor held by holders other than the Company. The results of operations attributable to the non-controlling interests are included in the Company’s consolidated statements of operations and comprehensive loss, and the non-controlling interests are reported as a separate component of equity. F- 8 The Company consolidates the assets, liabilities and operating results of Predecessor and its wholly owned subsidiaries. All intercompany balances and transactions have been eliminated in the consolidation. The consolidated financial statements of the Company have been prepared in accordance with generally accepted accounting principles in the United States (“U.S. GAAP”). Liquidity The Company has been engaged in expanding its physical operations through its equity method investments, developing new product offerings, raising capital and recruiting personnel. As a result, the Company has incurred a loss from operations of $ 57.2 million for the year ended December 31, 2023, accumulated deficit attributable to common stockholders of $ 68.6 million as of December 31, 2023, and negative cash flows from operating activities of $ 23.4 million for the year ended December 31, 2023. Accordingly, the Company performed an evaluation of its ability to continue as a going concern through at least twelve months from the date of the issuance of these consolidated financial statements under Accounting Standards Codification (“ASC”) 205-40, Disclosures of Uncertainties about an Entity’s Ability to Continue as a Going Concern . The Company has committed to fund its share of additional investment in its equity investment, Karnival TP-AQ Holdings Limited (“Karnival”), for the purpose of constructing the Vquarium Entertainment Centers in the People’s Republic of China. See Note 15 – Commitments and contingencies. On July 27, 2023, Falcon’s Creative Group, LLC (“FCG”), a wholly owned subsidiary of the Company, received a net closing payment from Qiddiya Investment Company (“QIC”), on behalf QIC Delaware, Inc., of $ 17.5 million ($ 18.0 million payment, net of $ 0.5 million in reimbursements relating to due diligence fees incurred by Qiddiya.) The remaining $ 12.0 million of the $ 30.0 million investment is being held by QIC and will be released upon the establishment of an employee retention and attraction incentive program. These funds are to be used exclusively by FCG to fund its operations and growth and cannot be used to satisfy the commitments of other segments. The Company’s development plans, and investments have been funded by a combination of debt and committed equity contributions from its stockholders, and the Company is reliant upon its stockholders and third parties for obtaining additional financing through debt or equity raises to fund its working capital needs, contractual commitments, and expansion plans. As of December 31, 2023 the Company has incurred material amounts of expenses in relation to its external advisors, accountants and legal costs in relation to its Form S-4 and other filings. The Company has a working capital deficiency of ($ 212.0 ) million (inclusive of the $ 183.1 million Earnout liability – current portion to be settled in shares) as of December 31, 2023. Additionally, the Company has $ 6.7 million in debt that is maturing in the next 12 months. The Company does not currently have sufficient cash or liquidity to pay liabilities that are owed or are maturing at this time. See Note 22 – Subsequent events. There can be no assurance that the additional capital or financing raises, if completed, will provide the necessary funding for the next twelve months from the date these consolidated financial statements will be issued. As a result, there is substantial doubt as to the Company’s ability to continue as a going concern for the twelve-month period following the issuance of these consolidated financial statements. The accompanying consolidated financial statements do not include any adjustments to 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 the Company to continue as a going concern. Deconsolidation of Falcon’s Creative Group, LLC On July 27, 2023, pursuant to the Subscription Agreement by and between FCG and QIC Delaware, Inc., (the “Subscription Agreement”), QIC Delaware, Inc., a Delaware corporation and an affiliate of QIC, invested $ 30.0 million in FCG (“Strategic Investment”). Following the closing of the Subscription Agreement, FCG now has two members: QIC, holding 25 % of the equity interest in the form of preferred units, and the Company, holding the remaining 75 % of the equity interest in the form of common units. In connection with the Strategic Investment, FCG amended and restated its limited liability company agreement (“LLCA”) to include QIC as a member and to provide QIC with certain consent, priority and preemptive rights; and the Company and FCG entered into an intercompany service agreement (“Intercompany Services Agreement”) and a license agreement. Upon the closing of the Subscription Agreement, FCG received a closing payment of $ 17.5 million (net of $ 0.5 million in reimbursements relating to due diligence fees incurred by QIC). QIC released in April 2024 the remaining $ 12.0 million investment into FCG pursuant to the terms of the Subscription Agreement upon the establishment of an employee retention and attraction incentive program. F- 9 QIC is entitled to redeem its preferred units on the earlier of (a) the five-year anniversary of the Strategic Investment or (b) any date on which a majority of key persons cease to be employed by FCG. The LLCA contains contractual provisions regarding the distribution of FCG’s income or loss. Pursuant to these provisions, QIC is entitled to a redemption amount of the initial $ 30.0 million investment plus a 9 % annual compounding preferred return. As a result, QIC does not absorb losses from FCG that would cause its investment to drop below this redemption amount and any losses not absorbed by QIC are fully allocated to the Company. The LLCA grants QIC the right to block or participate in certain significant operating and capital decisions of FCG, including the approval of FCG’s budget and business plan, strategic investments, and incurring additional debt, among others. These rights allow QIC to effectively participate in significant financial and operating decisions of FCG that are made in FCG’s ordinary course of business. As such, as of July 27, 2023 the Company does not have a controlling financial interest since QIC has the substantive right to participate in FCG’s business decisions. Therefore, FCG is deconsolidated and accounted for as an equity method investment in the Company’s consolidated financial statements. In connection with the deconsolidation of FCG, the Company received cash of approximately $ 4.0 million to settle outstanding intercompany receivable balances. As of December 31, 2023 the assets and liabilities of FCG, including goodwill which comprised the total goodwill balance of the Company, are no longer included within the Company’s consolidated balance sheet. See Note 8 – Investments and advances to equity method investments for the Company’s recognition of its retained investment in FCG. The Company’s retained interest in FCG will continue to be presented separately as a reportable segment in Note 16 – Segment Information. 2. Summary of significant accounting policies Use of estimates The preparation of consolidated financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, disclosures of contingent assets and liabilities as of the date of the consolidated financial statements, and the reported amounts of revenues and expenses during the reporting periods. The Company has prepared the estimates using the most current and best available information that are considered reasonable under the circumstances. However, actual results may differ materially from those estimates. Accounting policies subject to estimates include, but are not limited to, inputs used to recognize revenue over time, inventory valuation, fair value of assets and liabilities acquired in relation to a business combination, deferred tax valuation allowances, the valuation and impairment testing of goodwill and investments in equity method investments, and the valuation of warrant and earnout liabilities. Cash and cash equivalents The Company considers all highly liquid instruments with an original maturity of three months or less as cash equivalents. Inventories Inventories consist of theme park ride vehicles that are valued at the lower of cost or net realizable value. Cost is calculated on a first-in, first-out (“FIFO”) basis. Net realizable value is determined as the estimated selling price in the ordinary course of business less the estimated costs necessary to complete the sale. The Company reviews its inventories for obsolescence and any such inventories are written down to net realizable value. All inventory was deconsolidated with FCG as of July 27, 2023. Additionally, the Company wrote down all inventory as of December 31, 2023. There were no adjustments to net realizable value of inventories as of December 31, 2022. F- 10 Property and equipment, net Property and equipment is stated at historical cost, net of accumulated depreciation and impairment losses. Expenditures that materially increase the life of the assets are capitalized. Routine repairs and maintenance are expensed as incurred. When an item is retired or sold, the cost and applicable accumulated depreciation are removed, and any resulting gain or loss is recognized in the consolidated statements of operations and comprehensive loss. Depreciation is calculated on a straight-line basis over the estimated useful life of the asset using the following terms: Equipment 3 – 5 years Furniture 7 years Leasehold improvements Lesser of lease term or asset life Leases The Company evaluates leases at the commencement of the lease to determine the classification as an operating or finance lease. A right-of-use (“ROU”) asset and corresponding lease liability are recorded at lease commencement. Operating and finance lease liabilities are recognized based on the present value of minimum lease payments over the remaining expected lease term. Lease expenses related to operating leases are recognized on a straight-line basis as a component of Selling, general and administrative expense in the consolidated statements of operations and comprehensive loss. Amortization expense and interest expense related to finance leases are included in Depreciation and amortization expense and Interest expense, respectively, in the consolidated statements of operations and comprehensive loss. Deferred transaction costs Costs incurred in connection with preparation for the Business Combination were previously deferred. However, all transaction costs, including the balance previously deferred, have been expensed as of December 31, 2023 and are included in Transaction expenses, along with the transaction expenses previously including within Selling, general and administrative expense. Transaction expense is now stated separately in the consolidated statements of operations and comprehensive loss. Goodwill and Intangible assets Goodwill represents the excess of purchase consideration over the fair value of identifiable assets acquired and liabilities assumed when a business is acquired. The Company initially records its intangible assets at fair value. Definite lived intangible assets consist of customer relationships, trademarks, developed technology, and media content which are amortized over their estimated useful lives. See Note 7 – Intangible assets, net. Goodwill is not amortized, but instead reviewed for impairment at least annually during the fourth quarter, or more frequently if circumstances indicate that the value of goodwill may be impaired. The impairment analysis of goodwill is performed at the reporting unit level. A qualitative assessment is first conducted to determine whether it is more likely than not that the fair value of the applicable reporting unit exceeds the carrying value taking into consideration significant events, and changes in the overall business environment or macroeconomic conditions. If we conclude that it is more likely than not that the fair value of a reporting unit is less than its carrying value, then we perform a quantitative impairment test by comparing the fair value of a reporting unit with its carrying amount. We recognize an impairment on goodwill if the estimated fair value of a reporting unit is less than its carrying value, in an amount not to exceed the carrying value of the reporting unit’s goodwill. There was no goodwill impairment charges recognized during the years ended December 31, 2023 and 2022. As of December 31, 2023 the assets and liabilities of FCG, including goodwill which comprised the total goodwill balance of the Company, are no longer included within the Company’s consolidated balance sheet. F- 11 The Company reviews definite lived intangible assets for impairment whenever events or changes in circumstances indicate that the carrying amount of such assets may not be recoverable. Recoverability of these amortizing intangible assets is determined by comparing the forecasted undiscounted net cash flows of the operation to which the assets relate to the carrying amount. If the operation is determined to be unable to recover the carrying amount of its assets, then the assets are written down to fair value. Fair value is determined based on discounted cash flows or appraised values, depending on the nature of the assets. There were $ 2.4 million in impairment losses recognized for definite lived intangible assets for the year ended December 31, 2023 comprised entirely of the impairment of the Company’s Ride Media Content asset. See the Ride Media Content policy below as well as Note 7 – Intangible assets, net. No impairment losses were recognized for the year ended December 31, 2022. Ride Media Content RMC consists of themed audio and visual content following a storyline that is displayed to guests while in the queue and during the ride. The same RMC can be deployed on rides of a similar nature. The Company earns a fixed annual fee for licensing the right to use the RMC to customers. In accordance with ASC 926-20, Other Assets—Film Costs [Entertainment—Films] (“ASC 926”), the Company capitalizes costs to produce the RMC, including direct production costs and production overhead. The RMC is expected to be predominantly monetized individually, as the RMC is not expected to be monetized with other films or license agreements. The predominant monetization strategy is determined when capitalization of production costs commences and is reassessed if there is a significant change to the expected future monetization strategy. For RMC that is predominantly monetized on an individual basis, the Company uses a computation method to amortize capitalized production costs on the ratio of the RMC’s current period revenues to its estimated remaining ultimate revenue (i.e., the total revenue to be earned in the RMC’s remaining life cycle.) The RMC is typically licensed for a 10 -year period with a fixed annual fee. Amortization begins when the RMC is first deployed and starts generating revenue. Unamortized RMC costs are tested for impairment whenever events or changes in circumstances indicate that the fair value of the RMC may be less than its unamortized costs. If the carrying value of an individual RMC exceeds the estimated fair value, an impairment charge will be recorded in the amount of the difference. For content that is predominately monetized individually, the Company utilizes estimates including ultimate revenues and additional costs to be incurred (including marketing and distribution costs), in order to determine whether the carrying value of the RMC is impaired. The full value of the Company’s RMC asset has been impaired as of December 31, 2023. See Note 7 – Intangible assets, net. Owned RMC is presented as a noncurrent asset within Intangible assets, net. Amortization of RMC assets is primarily included in Depreciation and amortization expense in the consolidated statements of operations and comprehensive loss. Recoverability of other long-lived assets The Company’s other long-lived assets consist primarily of property and equipment and lease ROU assets. The Company evaluates long-lived assets for impairment whenever events or changes in circumstances indicate the carrying value of such assets may not be recoverable. For property and equipment and lease ROU assets, the Company compares the estimated undiscounted cash flows generated by the asset or asset group to the current carrying value of the asset. If the undiscounted cash flows are less than the carrying value of the asset, then the asset is written down to fair value. There were no impairment losses recognized for other long-lived assets as of both December 31, 2023 and 2022. Investments and advances to equity method investments The Company uses the equity method to account for investments in corporate joint ventures when we have the ability to exercise significant influence over the operating decisions of the joint venture. Such investments are initially recorded at cost and subsequently adjusted for our proportionate share of the net earnings or loss of the investee, which is reported in Share of (gain) loss from equity method investments in the consolidated statements of operations and comprehensive loss. Dividends received, if any, from these joint ventures reduce the carrying amount of our investment. F- 12 The Company monitors the equity method investments for impairment and records reductions in their carrying value if the carrying amount of an investment exceeds its fair value. An impairment charge is recorded when such impairment is deemed to be other-than-temporary. 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 $ 14.1 million in other-than-temporary impairment losses recognized for investments in equity method investments during the year ended December 31, 2023, related to the Company’s equity method investment in Sierra Parima, which is reported in Share of (gain) loss from equity method investments in the consolidated statements of operations and comprehensive loss. See Note 8 – Investments and advances to equity method investments. There were no impairment losses recognized for investments in equity method investments during the year ended December 31, 2022. Revenue recognition Falcon’s Creative Group Based on the specific analysis of its contracts, the Company has determined that its contracts are subject to revenue recognition in accordance with ASC 606, Revenue from Contracts with Customers (“ASC 606”). Recognition under the ASC 606 five-step model involves (i) identification of the contract, (ii) identification of performance obligations in the contract, (iii) determination of the transaction price, (iv) allocation of the transaction price to the previously identified performance obligations, and (v) revenue recognition as the performance obligations are satisfied. During step one of the five step model, the Company considers whether contracts should be combined or separated, and based on this assessment, the Company combines closely related contracts when all the applicable criteria are met. The combination of two or more contracts requires judgment in determining whether the intent of entering into the contracts was effectively to enter into a single contract, which should be combined to reflect an overall profit rate. Similarly, the Company may separate an arrangement, which may consist of a single contract or group of contracts, with varying rates of profitability, only if the applicable criteria are met. Judgment is involved in determining whether a group of contracts may be combined or separated based on how the arrangement and the related performance criteria were negotiated. The conclusion to combine a group of contracts or separate a contract could change the amount of revenue and gross profit recorded in a given period. A performance obligation is a promise in a contract to transfer a distinct good or service to the customer. A contract’s transaction price is allocated to each distinct performance obligation and recognized as revenue when the performance obligation is satisfied. The Company’s contracts with customers do not include a right of return relative to delivered products. In certain cases, contracts are modified to account for changes in the contract specifications or requirements. In most instances, contract modifications are accounted for as part of the existing contract. Certain contracts with customers have options for the customer to acquire additional goods or services. In most cases, the pricing of these options are reflective of the standalone selling price of the good or service. These options do not provide the customer with a material right and are accounted for only when the customer exercises the option to purchase the additional goods or services. If the option on the customer contract was not indicative of the standalone selling price of the good or service, the material right would be accounted for as a separate performance obligation. A significant portion of the Company’s revenue is derived from master planning and design contracts, media production contracts and turnkey attraction contracts. The Company accounts for a contract once it has approval and commitment from all parties, the rights and payment terms of the parties can be identified, the contract has commercial substance and the collectability of the consideration, or transaction price, is probable. Contracts are often subsequently modified to include changes in specifications or requirements, these changes are not accounted for until they meet the requirements noted above. Each promised good or service within a contract is accounted for separately under the guidance of ASC 606, if they are distinct. Promised goods or services not meeting the criteria for being a distinct performance obligation are bundled into a single performance obligation with other goods or services that together meet the criteria for being distinct. The appropriate allocation of the transaction price and recognition of revenue is then applied for the bundled performance obligation. The Company has concluded that its service contracts generally contain a single performance obligation given the interrelated nature of the activities which are significantly customized and not distinct within the context of the contract. Once the Company identifies the performance obligations, the Company determines the transaction price, which includes estimating the amount of variable consideration to be included in the transaction price, if any. The Company’s contracts generally do not contain credits, price concessions, or other types of potential variable consideration. Prices are fixed at contract inception and are not generally contingent on performance or any other criteria. F- 13 The Company engages in long-term contracts for production and service activities and recognizes revenue for performance obligations over time. These long-term contracts involve the planning, design, and development of attractions. Revenue is recognized over time (versus point in time recognition), as the Company’s performance creates an asset with no alternative use to the Company and the Company has an enforceable right to payment for performance completed to date, and the customer receives the benefit as the Company builds the asset. The Company considers the nature of these contracts and the types of products and services provided when determining the proper accounting for a particular contract. These are primarily fixed-price contracts. For long-term contracts, the Company typically recognizes revenue using the input method, using a cost-to-cost measure of progress. The Company believes that this method represents the most faithful depiction of the Company’s performance because it directly measures value transferred to the customer. Contract estimates are based on various assumptions to project the outcome of future events that may span several years. These assumptions include, but are not limited to, the amount of time to complete the contract, including the assessment of the nature and complexity of the work to be performed; the cost and availability of materials; the availability of subcontractor services and materials; and the availability and timing of funding from the customer. The Company bears the risk of changes in estimates to complete on a fixed-price contract, which may cause profit levels to vary from period to period. For over time contracts, the Company recognizes anticipated contract losses as soon as they become known and estimable. Accounting for long-term contracts requires significant judgment relative to estimating total costs, in particular, assumptions relative to the amount of time to complete the contract, including the assessment of the nature and complexity of the work to be performed. The Company’s estimates are based upon the professional knowledge and experience of its engineers, program managers and other personnel, who review each long-term contract monthly to assess the contract’s schedule, performance, technical matters and estimated cost at completion. Changes in estimates are applied retrospectively and when adjustments in estimated contract costs are identified, such revisions may result in current period adjustments to earnings applicable to performance in prior periods. On long-term contracts, the portion of the payments retained by the customer is not considered a significant financing component. At contract inception, the Company also expects that the lag period between the transfer of a promised good or service to a customer and when the customer pays for that good or service will not constitute a significant financing component. Many of the Company’s long-term contracts have milestone payments, which align the payment schedule with the progress towards completion on the performance obligation. On some contracts, the Company may be entitled to receive an advance payment, which is not considered a significant financing component because it is used to facilitate inventory demands at the onset of a contract and to safeguard the Company from the failure of the other party to abide by some or all of their obligations under the contract. Contract balances result from the timing of revenue recognized, billings and cash collections, and the generation of Contract assets and liabilities. Contract assets represent revenue recognized in excess of amounts invoiced to the customer and the right to payment is not subject to the passage of time. Contract liabilities are presented on the Company’s consolidated balance sheets and consist of billings in excess of revenues. Billings in excess of revenues represent milestone billing contracts where the billings of the contract exceed recognized revenues. Destinations Operations The principal sources of revenues for the Destinations Operations segment are resort and theme park management and incentive fees. Resort and theme park management and incentive fees are based on a percentage of revenues and profits, respectively earned by the theme parks during the corresponding period. See Note 3 – Revenue. Shared Services After FCG’s deconsolidation from the Company on July 27, 2023, the Company continues to provide various corporate shared service support to FCG. Fees related to these services are subject to revenue recognition in accordance with ASC 606. F- 14 Digital media license revenue The Company enters into contracts with its customers to license the right to use digital ride media content (“RMC”) for a fixed fee. Revenue is recognized based on this amount at the point-in-time when the license is transferred to the customer as there are no further performance obligations once the license is transferred. See Note 11 – Related party transactions. Transaction expenses Transaction expenses are stated separately in the consolidated statements of operations and comprehensive loss. Transaction expenses include professional services expenditures directly related to business combinations, other investments, and disposals of other assets and liabilities that qualify as a business. Selling, general and administrative expenses Selling, general and administrative expenses include payroll, payroll taxes and benefits for non-project related employee salaries, share-based compensation, taxes, and benefits as well as technology infrastructure, marketing, occupancy, finance and accounting, legal, human resources, and corporate overhead expenses. Research and development expenses Research and development expenses primarily consist of related party vendor costs involved in research and development activities related to the development of new products. Research and development expenses are expensed in the period incurred. Income taxes The Company is treated as a corporation for U.S. federal and state income tax purposes and is subject to U.S. federal and state income taxes, in addition to local and foreign income taxes, with respect to our allocable share of taxable income generated by Falcon’s Beyond Global, LLC. Falcon’s Beyond Global, LLC is treated as a partnership for U.S. federal income tax purposes and therefore is not subject to U.S. federal and state income taxes except for certain consolidated subsidiaries that are subject to taxation in foreign jurisdictions as a result of their entity classification for tax reporting purposes. The Company accounts for income taxes under the asset and liability method, which requires the recognition of deferred tax assets (“DTA”) and deferred tax liabilities (“DTL”) for the expected future tax consequences of events that have been included in the financial statements. Under this method, the Company determines DTAs and DTLs on the basis of the differences between the financial statement and tax bases of assets and liabilities by using enacted tax rates in effect for the year in which the differences are expected to reverse. The effect of a change in tax rates on DTAs and DTLs is recognized in income in the period that includes the enactment date. The Company recognizes DTAs to the extent that it is believed that these assets are more likely than not to be realized. In making such a determination, the Company considers all available positive and negative evidence, including future reversals of existing taxable temporary differences, projected future taxable income, tax-planning strategies, carryback potential if permitted under the tax law, and results of recent operations. If determined that FBG would be able to realize DTAs in the future in excess of their net recorded amount, FBG would make an adjustment to the DTA valuation allowance, which would reduce the provision for income taxes. FBG records uncertain tax positions in accordance with ASC 740, Income Taxes (“ASC 740”) on the basis of a two-step process in which (1) the Company will determine whether it is more likely than not that the tax positions will be sustained on the basis of the technical merits of the position and (2) for those tax positions that meet the more-likely-than-not recognition threshold, FBG recognizes the largest amount of tax benefit that is more than 50 percent likely to be realized upon ultimate settlement with the related tax authority. The Company recognizes interest and penalties related to tax positions in income tax expense. F- 15 Fair value measurement The Company accounts for certain of its financial assets and liabilities at fair value. The Company uses the following three-level hierarchy, which prioritizes, within the measurement of fair value, the use of market-based information over entity-specific information for fair value measurements based on the nature of inputs used in the valuation of an asset or liability as of the measurement date. Level 1 — Quoted prices for identical instruments in active markets. Level 2 — Quoted prices for similar instruments in active markets, quoted prices for similar instruments in markets that are not active; and model-derived valuations in which significant inputs and value drivers are observable in active markets. Level 3 — Valuations derived from valuation techniques in which one or more significant inputs or value drivers are unobservable and include situations where there is little, if any, market activity for the asset or liability. Fair value focuses on an exit price and is defined as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. When determining the fair value measurements for assets and liabilities which are required to be recorded at fair value, the Company considers the principal or most advantageous market in which the Company would transact and the market-based risk measurements or assumptions that market participants would use in pricing the asset or liability, such as risk inherent in valuation techniques, transfer restrictions and credit risks. The inputs or methodology used for valuing financial instruments are not necessarily an indication of the risk associated with investing in those financial instruments. The carrying amounts of Cash and cash equivalents, Accounts receivables, Accounts payable and Accrued expenses and other current liabilities approximate fair value due to the short-term maturities of these assets and liabilities. The carrying amounts of finance leases are discounted to approximate fair value. Translation of foreign currencies The functional currency for the Company’s foreign operations is the applicable local currency. The Company translates assets and liabilities of subsidiaries with a functional currency other than the U.S. dollar using the applicable exchange rate as of the consolidated balance sheet dates and the results of operations and cash flows at the average exchange rates during the corresponding reporting period. Gains and losses resulting from the translation of these foreign currencies into U.S. dollars are recorded in foreign currency translation adjustments in the consolidated statements of operations and comprehensive loss. Transactional gains and losses and the re-measurement of foreign currency denominated assets and liabilities held in non-functional currency of the underlying entity are included in Foreign currency translation loss in the consolidated statements of operations and comprehensive loss, respectively. Related party transactions Related parties are comprised of i) parties which have the ability, directly or indirectly, to control or exercise significant influence over the other party in making financial and operating decisions, and ii) parties under common control. Transactions where there is a transfer of resources or obligations between related parties are disclosed or referenced in Note 11 – Related party transactions. Net loss per share Basic earnings per share of Class A common stock is computed by dividing net income attributable to the Company by the weighted average number of shares of Class A common stock outstanding during the period. Diluted earnings per share of Class A common stock is computed by dividing net income attributable to the Company, adjusted for the assumed exchange of all potentially dilutive securities by the weighted average number of shares of Class A common stock outstanding adjusted to give effect to potentially dilutive securities, to the extent their inclusion is dilutive to earnings per share. F- 16 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 consolidated statements of operations and comprehensive loss. The Company remeasures the fair value of the warrants based on the quoted market price of the warrants. For the year ended December 31, 2023, the Company recognized $ 3.0 million of losses related to the change in fair value of warrant liabilities, which is recognized in Change in fair value of warrant liabilities in the consolidated statements of operations and comprehensive loss. See Note 19 – Stock warrants. Earnout Liability 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 (“Earnout Shares”) in the form of Class A and Class B common stock of the Company, 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. The Earnout Shares are classified as a liability and measured at fair value, with changes in fair value included in the consolidated statements of operations and comprehensive loss. See Note 17 – Fair value measurement and Note 20 – Earnouts. Incentive Award Plan The Company maintains the 2023 Incentive Award Plan (the “Plan”) under which the Company issued grants of restricted stock units (“RSUs”) on December 21, 2023, to officers, directors, employees, and non-employees that vest according to a five-year graded vesting schedule (i.e., portions of the award vest at different times during the vesting period). The Company recognizes compensation expense for the RSUs in accordance with ASC 718, Compensation — Stock Compensation (“ASC 718”) using the straight-line attribution method. That is, compensation expense for these awards will be recognized on straight-line basis over the requisite service period. The RSUs are settled in equity and do not grant the Company the ability to settle in cash or transfer other assets. The compensation expense related to the RSUs is based on the estimated fair value of the Company’s Class A Common Stock on the grant date using the closing share price. Furthermore, the Company accounts for forfeitures as they occur and will reverse any compensation expense previously recognized in the period of forfeiture. The Company initially reserved 939,330 shares of its Class A Common Stock for the issuance of awards under the 2023 Incentive Plan. See Note 21 – Share-Based Compensation. Recently issued accounting standards New accounting standards adopted during the year ended December 31, 2023 In June 2016, the FASB issued Accounting Standards Update (“ASU”) No. 2016-13, Financial Instruments — Credit Losses (Topic 326) — Measurement of Credit Losses on Financial Instruments (“ASC 326”). This standard amends several aspects of the measurement of credit losses on consolidated financial statements, including trade receivables. The standard replaces the existing incurred credit loss model with the Current Expected Credit Losses (“CECL”) model and amends certain aspects of accounting for purchased financial assets with deterioration in credit quality since origination. Under CECL, the allowance for losses for financial assets that are measured at amortized costs reflect management’s estimate of credit losses over the remaining expected life of the financial assets, based on historical experience, current conditions and forecasts that affect the collectability of the reported amount. The Company adopted this standard for its fiscal year beginning on January 1, 2023. The adoption did not have a material impact on our financial statements. Recently issued accounting standards not yet adopted as of December 31, 2023 On November 27, 2023, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2023-07, “Improvements to Reportable Segment Disclosures.” This ASU requires additional reportable segment disclosures, primarily through enhanced disclosures about significant segment expenses. In addition, the ASU enhances interim disclosure requirements effectively making the current annual requirements a requirement for interim reporting. This ASU is effective for fiscal years beginning after December 15, 2023, and interim periods within fiscal years beginning after December 15, 2024. Early adoption is permitted. The Company is currently evaluating these new disclosure requirements. On December 14, 2023, the FASB issued Accounting Standards Update 2023-09 entitled Improvements to Income Tax Disclosures (ASU 2023-09), which is primarily applicable to public companies and requires a significant expansion of the granularity of the income tax rate reconciliation as well as an expansion of other income tax disclosures. ASU 2023-09 requires a company to disclose specific income tax categories within the rate reconciliation table and provide additional information for reconciling items that meet a quantitative threshold (if the effect of those reconciling items is equal to or greater than 5 percent of the amount computed by multiplying pretax income (or loss) by the applicable statutory income tax rate. There are also additional disclosures related to income taxes paid disaggregated by jurisdictions, and to income taxes paid. The ASU is effective for annual periods beginning after December 15, 2024. The guidance will be applied on a prospective basis with the option to apply the standard retrospectively. Early adoption is permitted. The Company is currently evaluating the impact of adoption of ASU 2023-09 on its Consolidated Financial Statements and disclosures. F- 17 Concentration of credit risk Financial instruments which potentially subject the Company to concentrations of credit risk consist primarily of Cash and cash equivalents, Accounts receivable and Contract Assets. The Company places its Cash and cash equivalents with financial institutions of high credit quality. At times, such amounts exceed federally insured limits. Management believes that no significant concentration of credit risk exists with respect to these cash balances because of its assessment of the creditworthiness and financial viability of the respective financial institutions. The Company provides credit to its customers located both inside and outside the United States in its normal course of business. Receivables are presented net of an allowance for credit losses based on the Company’s assessment of the collectability of customer accounts. The Company maintains an allowance that provides for an adequate reserve to cover estimated losses on receivables as well as contract assets. The Company determines the adequacy of the allowance by estimating the probability of loss based on the Company’s historical credit loss experience and taking into consideration current market conditions and supportable forecasts that affect the collectability of the reported amount. The Company regularly evaluates receivable and contract asset balances considering factors such as the customer’s credit worthiness, historical payment experience and the age of the outstanding balance. Changes to expected credit losses during the period are included in Credit loss expense in the Company’s consolidated statements of operations and comprehensive loss. After concluding that a reserved accounts receivable is no longer collectible, the Company reduces both the gross receivable and the allowance for credit losses. The Falcon’s Creative Group segment has significant revenue concentration associated with a few customers. As of July 27, 2023 FCG was deconsolidated and accounted for as an equity method investment in the Company’s consolidated financial statements. The Falcon’s Creative Group segment is now comprised of the Company’s retained equity method investment in FCG. 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. The Company had three customers with revenues greater than 10 % of total revenue, approximately $ 11.1 million for one customer, $ 3.6 million for the second customer, and $ 2.1 million for the third customer, for the year ended December 31, 2023. Accounts receivable, net balances with these three customers totaled $ 0.6 million ( 86 % of total Accounts receivable, net) as of December 31, 2023. The Company has two customers with revenues greater than 10 % of total revenue, approximately $ 8.9 million for one customer and $ 4.8 million for the second customer, for the year ended December 31, 2022. Accounts receivable, net balances with these two customers totaled $ 2.6 million ( 77 % of total Accounts receivable, net) as of December 31, 2022. 3. Revenue As of July 27, 2023, FCG was deconsolidated and accounted for as an equity method investment in the Company’s consolidated financial statements. The consolidated statement of operations and comprehensive loss therefore includes approximately seven months of activity related to FCG prior to deconsolidation during the year ended December 31, 2023. As of December 31, 2023 the assets and liabilities of FCG are no longer included within the Company’s consolidated balance sheet. Prior to deconsolidation, FCG’s operations generated a majority of the Company’s consolidated revenue and contract asset and liability balances. See Deconsolidation of Falcon’s Creative Group, LLC under Note 1 – Description of business and basis of presentation. Disaggregated components of revenue for the Company for the years ended December 31, 2023 and 2022 are as follows: Year ended December 31, 2023 2022 Services transferred over time: Design and project management services $ 10,555 $ 10,963 Media production services 1,773 392 Attraction hardware and turnkey sales 2,052 4,302 Other 2,533 293 Total revenue from services transferred over time $ 16,913 $ 15,950 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 $ 18,244 $ 15,950 F- 18 Starting in March 2023 and continuing through the year ended December 31, 2023, the Company licensed the right to use RMC to Sierra Parima. See Note 2 – Summary of significant accounting policies and Note 11 – Related party transactions for further discussion. After the deconsolidation of FCG, the Company recognizes related party revenue for corporate shared service support provided to FCG. Total related party revenues from services provided to our equity method investments were $ 6.8 million and $ 5.8 million for the years ended December 31, 2023 and 2022, respectively. Of the total related party revenues from services provided to our equity method investments, the Company recognized $ 2.1 million revenue related to intercompany services provided to FCG for the year ended December 31, 2023. The following tables present the components of our Accounts receivable and contract balances: As of December 31, 2023 Related party Other Total Accounts receivable, net $ 632 $ 64 $ 696 Contract assets — — — Contract liabilities — — — As of December 31, 2022 Related party Other Total Accounts receivable, net $ 489 $ 2,820 $ 3,309 Contract assets 1,680 1,012 2,692 Contract liabilities ( 600 ) ( 696 ) ( 1,296 ) Revenue recognized for the year ended December 31, 2023 that was included in the contract liability balance as of December 31, 2022 was $ 1.2 million. Revenue recognized for the year ended December 31, 2022 that was included in the contract liability balance as of December 31, 2021 was $ 2.5 million. Geographic information The Company has contracts with customers located in the United States, Caribbean, Saudi Arabia, Hong Kong, Qatar, Vietnam, Rwanda, China, and Spain. The following table presents revenues based on the geographic location of the Company’s customer contracts: Year ended December 31, 2023 2022 Saudi Arabia $ 11,358 $ 9,759 Caribbean 3,603 5,222 USA 2,160 93 Hong Kong 635 320 Other 488 556 Total revenue $ 18,244 $ 15,950 F- 19 Destinations Operations Management and incentive fees of $ 0.5 million and $ 0.3 million from our Mallorca, Spain equity method investment were recognized in the years ended December 31, 2023 and 2022, respectively. 4. Other current assets Other current assets as of December 31, 2023 and 2022 consisted of the following: Year ended December 31, 2023 2022 Insurance prepaid assets $ 54 $ — Advance to Meliá Hotels International, S.A (See Note 11) 500 — Prepaid expenses — 824 Tax refund receivable 393 — Other 114 18 $ 1,061 $ 842 5. Property and equipment, net Property and equipment as of December 31, 2023 and 2022 consisted of the following: Year ended December 31, 2023 2022 Equipment $ 19 $ 1,139 Furniture 13 169 Leasehold improvements — 83 32 1,391 Accumulated depreciation ( 9 ) ( 589 ) $ 23 $ 802 Depreciation expense was $ 0.1 million and $ 0.3 million for the years ended December 31, 2023 and 2022, respectively. $ 1.7 million of gross assets and $ 0.7 million of accumulated depreciation was deconsolidated with FCG on July 27, 2023. 6. Leases The Company’s operating leases primarily consisted of real estate property for office and warehouse space, with various terms extending through 2040. The Company had finance leases related to an office, facility and computer equipment. The Company did not sublease any properties. The Company leased office space from a related party, Penut Productions, LLC (“Penut”), a wholly owned subsidiary of The Magpuri Revocable Trust, under a series of long-term lease agreements. Rental amounts are due monthly, and the Company is responsible for taxes, insurance, and maintenance on the leased locations. F- 20 As of July 27, 2023, FCG was deconsolidated and accounted for as an equity method investment in the Company’s consolidated financial statements. Prior to deconsolidation, FCG was the lessee for all leases, and the consolidated balance sheets therefore do not include any right-of-use assets or lease liabilities as of December 31, 2023. Additionally, the consolidated statement of operations and comprehensive loss therefore includes approximately seven months of activity related to FCG prior to deconsolidation in the year ended December 31, 2023. See Deconsolidation of Falcon’s Creative Group, LLC under Note 1 – Description of business and basis of presentation. The following table presents the amounts of ROU assets and lease liabilities as of December 31, 2023 and 2022: As of December 31, 2023 As of December 31, 2022 Related party Other Total Related party Other Total Right-of-use assets: Operating $ — $ — $ — $ 709 $ 294 $ 1,003 Finance — — — 570 12 582 Total right-of-use assets $ — $ — $ — $ 1,279 $ 306 $ 1,585 Lease liabilities Current: Operating (1) $ — $ — $ — $ 35 $ 121 $ 156 Finance (2) — — — 88 5 93 Total current — — — 123 126 249 Non-current: Operating — — — 675 174 849 Finance (3) — — — 1,001 5 1,006 Total non-current — — — 1,676 179 1,855 Total lease liabilities $ — $ — $ — $ 1,799 $ 305 $ 2,104 (1) Included in Accrued expenses and other current liabilities (2) Included in current portion of Long-term debt (3) Included in the Long-term debt Finance lease assets were reported net of accumulated amortization of $ 0 and $ 154 thousand as of December 31, 2023 and 2022 respectively. The components of lease expense in the consolidated statements of operations and comprehensive loss for the years ended December 31, 2023 and 2022 are as follows: Year ended December 31, 2023 Year ended December 31, 2022 Related party Other Total Related Party Other Total Operating lease expense $ 47 $ 191 $ 238 $ 81 $ 86 $ 167 Finance lease expense: Amortization of leased assets 39 9 48 61 28 89 Interest on lease liabilities 40 1 41 72 2 74 Total lease expense $ 126 $ 201 $ 327 $ 214 $ 116 $ 330 F- 21 Supplemental cash flow information related to leases for the years ended December 31, 2023 and 2022 is as follows: Year ended December 31, 2023 2022 Cash paid for amounts included in the measurement of lease liabilities: Operating cash outflows from operating leases $ 260 $ 162 Operating cash outflows from finance leases 41 74 Financing cash outflows from finance leases 65 111 Right-of-use assets obtained in exchange for lease liabilities: Operating leases 514 344 Finance leases 35 — In determining the discount rate applied, the Company considered several factors. For certain leases, the Company determined that the discount rate implied in the lease was determinable and was closely aligned with the lessors third party borrowing rate based on the payment terms of the lease which was designed for the lease payments to cover the property owners financing and related costs. The weighted-average remaining lease terms and discount rates as of December 31, 2023 and 2022, are as follows: As of December 31, 2023 As of December 31, 2022 Weighted-average remaining lease term (Years) Operating leases — 10 Finance leases — 13.6 Weighted-average discount rate Operating leases — 6.90 % Finance leases — 6.39 % 7. Intangible assets, net The following table presents the Company’s intangible assets: Customer relationships Tradenames and trademarks Developed technology Ride media content Total Cost: As of December 31, 2022 $ 1,100 $ 2,800 $ 1,500 $ 3,479 $ 8,879 Additions — — — 78 78 Deconsolidation of FCG 1,100 2,800 1,500 — 5,400 As of December 31, 2023 $ — $ — $ — $ 3,557 $ 3,557 Accumulated amortization and impairment: As of December 31, 2022 $ 183 $ 225 $ 167 $ — $ 575 Amortization expense 83 101 75 1,180 1,439 Impairment — — — 2,377 2,377 Deconsolidation of FCG 266 326 242 — 834 As of December 31, 2023 $ — $ — $ — $ 3,557 $ 3,557 Carrying amount: As of December 31, 2022 $ 917 $ 2,575 $ 1,333 $ 3,479 $ 8,304 As of December 31, 2023 $ — $ — $ — $ — $ — F- 22 As of FCG’s deconsolidation on July 27, 2023, the assets and liabilities of FCG are no longer included within the Company’s consolidated balance sheet. FCG’s deconsolidated intangible assets include customer relationships, trademarks and tradenames, and developed technology. Intangible asset amortization expense was $ 0.3 million for the year ended December 31, 2022. During the year ended December 31, 2023, the Company assessed impairment indicators in accordance with ASC 926 and determined that there has been a significant decrease in the amount of expected ultimate revenue to be recognized from the RMC intangible asset. Development plans for future parks, where this RMC would have been deployed, have been deferred indefinitely until which time the Company can evaluate the funding required to develop these parks. These circumstances indicate that the fair value may be less than the unamortized cost of the ride media content. As significant uncertainty exists as to when capital may be available to commit to these future projects, the Company could not reasonably project any future cash flows from the RMC intangible asset, and its value has been fully impaired as of December 31, 2023. As the RMC intangible asset has been fully impaired, there is no estimated future amortization of intangible assets as of December 31, 2023. 8. Investments and advances to equity method investments The Company accounts for its investments in unconsolidated joint ventures using the equity method of accounting. The Company’s joint ventures are as follows: i) Falcon’s Creative Group As of July 27, 2023, FCG was deconsolidated and accounted for as an equity method investment in the Company’s consolidated financial statements. See Deconsolidation of Falcon’s Creative Group, LLC under Note 1 – Description of business and basis of presentation for a discussion of the terms of the Strategic Investment which required the deconsolidation of FCG. As of July 27, 2023, the Company recorded the investment in FCG at fair value, which was determined to be $ 39.1 million. Gain on deconsolidation In accordance with ASC 810, Consolidation , the Company estimated the fair value of the retained investment in FCG at the date of deconsolidation. The fair value of the Company’s retained interest was valued using an option pricing model considering the terms of each class of FCG’s equity securities. The equity value that was allocated between the Preferred Units and the Common Stock was calibrated such that the Preferred Units’ allocated value was equal to the purchase price of $ 30.0 million. The fair value of the Company’s retained investment was estimated to be $ 39.1 million. As a result, the Company recognized a gain of $ 27.4 million on the deconsolidation of FCG, presented as a Gain on deconsolidation of FCG in the Company’s consolidated statements of operations and comprehensive loss. 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. In accordance with ASC 323, Investments , and ASC 805, Business Combinations (“ASC 805”), the Company applied the acquisition method of accounting to the identifiable assets and liabilities of FCG, which have been measured at estimated fair values as of the deconsolidation date. Management concluded that the carrying value of FCG’s tangible assets and liabilities approximated fair value. The Company estimated the fair value of FCG’s intangible assets primarily using Level 3 inputs. Estimates of fair value represent management’s best estimate of assumptions about future events and uncertainties, including significant judgments related to future cash flows, discount rates, competitive trends, margin and revenue growth assumptions. Inputs used were generally obtained from historical data supplemented by current and anticipated market conditions and growth rates. F- 23 The Company determined that on the date of deconsolidation, there was a difference between the fair value of its retained investment in FCG and the Company’s proportional interest in the equity of FCG. This equity method basis difference was comprised of customer relationships, tradenames and trademarks and developed technology. Tradenames and trademarks and developed technology fair values were determined using the relief from royalty method, which estimates the cost savings generated by a company related to the ownership of an asset for which it would otherwise have had to pay royalties or license fees on revenues earned through the use of the asset. The discount rate used was determined at the time of measurement based on an analysis of the implied internal rate of return of the transaction, weighted average cost of capital and weighted average return on assets. Customer relationships represent the existing relationships with FCG’s customers. The fair value was determined using a multi-period excess earnings method which involves isolating the net earnings attributable to the asset being measured based on the present value of the incremental after-tax cash flows (excess earnings) attributable solely to the intangible asset over its remaining useful life. Other tangible assets were valued at the existing carrying values as they approximated the estimated fair value of those items at the deconsolidation date and did not result in a basis difference. Summarized financial results are presented below for the period beginning July 28, 2023 and ended December 31, 2023, which represent the period the Company accounts for FCG as an equity method investment. As described in Note 1, the LLCA contains contractual provisions regarding the distribution of FCG’s income or loss. Pursuant to these provisions, QIC is entitled to a redemption amount of the initial $ 30.0 million investment plus a 9 % annual compounding preferred return. As a result, QIC does not absorb losses from FCG that would cause its investment to drop below this redemption amount and any losses not absorbed by QIC are fully allocated to the Company. ii) PDP PDP is an unconsolidated joint venture with Meliá Hotels International, S.A. (“Meliá Group”) for the development and operation of hotel resorts and theme parks. The Company has 50 % voting rights and shares 50 % of profits and losses in this joint venture. PDP operates a hotel resort and theme park located in Mallorca, Spain and a hotel located at Tenerife in the Canary Islands. iii) Sierra Parima Sierra Parima is an equity method investment with Meliá Group for the development and operation of hotel resorts and theme parks. The Company has 50 % voting rights and shares 50 % of profits and losses in this joint venture. Sierra Parima has one theme park in Punta Cana in the Dominican Republic. The Company has concluded that Sierra Parima is a variable interest entity (“VIE”), that the Company does not have the power to direct the activities that most significantly impact the economic performance of Sierra Parima, as such decisions are taken by the unanimous consent of the representatives of the joint venture partners. The Company, therefore, does not consolidate Sierra Parima and accounts for the investment as an equity method investment. The Company advanced $ 33.8 million, to partially fund construction of the theme park. These advances are non-interest-bearing and no repayment terms have been established. The advances provided to Sierra Parima are accounted for as investments and classified within advances to equity method investments. F- 24 Full Impairment of Investment in Sierra Parima Katmandu Park completed construction and opened to visitors in early 2023. Although various operational challenges encountered upon opening have been resolved, Katmandu Park visitor levels have continued to be below management’s expectations. Melia and the Company have jointly decided to wind down operations and are evaluating avenues for potential liquidation or sale of the property. Based on this determination, Sierra Parima first performed an evaluation of its long-lived fixed assets in accordance with ASC 360, Property, Plant and Equipment (“ASC 360”) to determine whether their fair value is less than carrying value. As a result of this analysis, Sierra Parima recorded a fixed asset impairment of $ 46.7 million. The impairment recognized by Sierra Parima is component of the Company’s equity method share of Sierra Parima’s loss for the full year ended December 31, 2023. As Sierra Parima recorded a fixed asset impairment under ASC 360, the Company further evaluated its remaining equity investment in Sierra Parima for impairment as of December 31, 2023 and determined that it was other-than-temporarily impaired. The Company estimated the fair value of its investment in Sierra Parima using probability weighted scenarios assigned to discounted future cash flows. The impairment is the result of management’s estimates and assumptions regarding the likelihood of certain outcomes related to various liquidation and sale scenarios and pending legal matters, the timing of which remains uncertain. These estimates were determined primarily using significant unobservable inputs (Level 3). The estimates that the Company makes with respect to its equity method investment are based upon assumptions that management believes are reasonable, and the impact of variations in these estimates or the underlying assumptions could be material. Based on the estimated sale or liquidation proceeds from Sierra Parima, and Sierra Parima’s outstanding debts remaining to be settled, the fair value of the Company’s investment in Sierra Parima was determined to be zero . As of December 31, 2023, the Company recognized an other-than-temporary impairment charge of $ 14.1 million, which is recorded in Share of gain (loss) from equity method investments in the consolidated statement of operations and comprehensive loss. There are no other liquidity arrangements, guarantees or other financial commitments between the Company and Sierra Parima. The Company is not committed to provide any additional funding as of December 31, 2023. Any future capital fundings will be discretionary. iv) Karnival On November 2, 2021, the Company entered into a joint venture agreement to acquire a 50 % interest in Karnival TP-AQ Holdings Limited (“Karnival”), a joint venture established with Raging Power Limited. The purpose of the joint venture is to hold ownership interests in entities developing and operating amusement centers located in the People’s Republic of China. The first location is currently under development in Hong Kong. The Company has concluded that Karnival is a VIE, that the Company does not have the power to direct the activities that most significantly impact the economic performance of Karnival, as such decisions are taken by the unanimous consent of the representatives of the joint venture partners. The Company, therefore, does not consolidate Karnival and accounts for the investment as an equity method investment. The Company and its joint venture partner are committed to funding non-interest-bearing advances of $ 9 million (HKD 69.7 million) each, over a three-year period. As of December 31, 2023, the Company had funded $ 6.6 million (HKD 51 million). These advances are repayable to the joint venture partners based on a percentage of gross revenues from operations commencing from the first year of operations. The advances provided to Karnival are accounted for as investments and classified within Investments and advances to unconsolidated joint ventures equity method investments. There are no other liquidity arrangements, guarantees or other financial commitments between the Company and Karnival. Therefore, the Company’s maximum risk of financial loss is the investment balance and remaining unfunded capital commitment of $ 2.4 million (HKD 18.7 million) as of December 31, 2023. F- 25 Investments and advances to equity method investments as of December 31, 2023 and 2022 consisted of the following: As of December 31, 2023 2022 FCG $ 30,930 $ - PDP 22,870 23,688 Sierra Parima - 41,735 Karnival 6,843 6,556 $ 60,643 $ 71,979 The Company’s share of gain or (loss) from equity method investments for the years ended December 31, 2023, and 2022 comprised of: Year ended December 31, 2023 2022 FCG (1) $ ( 8,145 ) $ - PDP ( 1,522 ) 3,229 Sierra Parima ( 43,073 ) ( 1,719 ) Karnival 288 3 $ ( 52,452 ) $ 1,513 (1) The share of loss from the Company’s equity method investment in FCG is subsequent to FCG’s deconsolidation on July 27, 2023. The Company recognized 100 % of the losses related to its equity method investment in FCG based on the terms of the LLCA. The following tables provide summarized Balance Sheet information for the Company’s equity method investments: As of December 31, 2023 FCG PDP Sierra Parima Karnival Current assets $ 12,575 $ 8,283 $ 2,697 $ 16,030 Non-current assets 19,730 87,280 18,714 1,805 Current liabilities 7,375 14,048 62,070 ( 17,250 ) Non-current liabilities 1,801 35,777 9,973 — As of December 31, 2022 PDP Sierra Parima Karnival Current assets $ 9,216 $ 5,741 $ 13,102 Non-current assets 93,657 58,631 — Current liabilities 14,108 47,877 13,095 Non-current liabilities 41,389 9,155 — F- 26 The following tables provide summarized related party balances of Sierra Parima and PDP: As of December 31, 2023 PDP Sierra Parima (1) Assets $ 2,288 $ 2,230 Liabilities 1,685 57,438 As of December 31, 2022 PDP Sierra Parima (1) Assets $ 2,050 $ 2,690 Liabilities 1,803 43,575 (1) Sierra Parima accounts for advances from the Company as liabilities. The Company accounts for advances to Sierra Parima as investments and classified within advances to equity method investments The following tables provides summarized statements of operations for the Company’s equity method investments: Year ended December 31, 2023 FCG (1) PDP Sierra Parima Total revenues $ 8,033 $ 41,259 $ 2,639 Impairment of fixed assets — ( 5,427 ) ( 46,743 ) Income (loss) from operations ( 6,153 ) 153 ( 57,626 ) Net loss ( 6,034 ) ( 3,044 ) ( 57,970 ) (1) The summarized results of FCG disclosed above are subsequent to FCG’s deconsolidation on July 27, 2023. Year ended December 31, 2022 PDP Sierra Parima Total revenues $ 33,962 $ 226 Income (loss) from operations 2,540 ( 3,403 ) Net income (loss) 6,457 ( 3,438 ) The results of operations for Karnival for the years ended December 31, 2023 and 2022 were not material for the periods presented and, as such, not included in the tables above. The following tables provides Sierra Parima and PDP’s summarized related party activity: Year ended December 31, 2023 PDP Sierra Parima Total revenues $ 168 $ 1,406 Total expenses 4,720 1,418 Year ended December 31, 2022 PDP Sierra Parima Total revenues $ 889 $ 23 Total expenses 3,980 4,167 F- 27 9. Accrued expenses and other current liabilities The Company’s Accrued expenses and other current liabilities consisted of: Year ended December 31, 2023 2022 Audit and professional fees $ 17,605 $ 1,101 Excise tax payable on FAST II stock redemptions 2,211 — Accrued payroll and related expenses 592 781 Accrued interest 9 405 Project-related accruals — 888 Operating lease liabilities, current portion — 156 Accrued insurance premiums — 20 Other 423 638 $ 20,840 $ 3,989 Accrued expenses and other current liabilities with related parties was $ 0.3 million and $ 0.7 million as of December 31, 2023 and 2022 respectively. Excise tax liability On August 16, 2022, the Inflation Reduction Act of 2022 (the “IR Act”) was signed into federal law. The IR Act provides for, among other things, a new U.S. federal 1 % excise tax on certain repurchases of stock by publicly traded U.S. domestic corporations and certain U.S. domestic subsidiaries of publicly traded foreign corporations occurring on or after January 1, 2023. The excise tax is imposed on the repurchasing corporation itself, not its shareholders from which shares are repurchased. The amount of the excise tax is generally 1 % of the fair market value of the shares repurchased at the time of the repurchase. However, for purposes of calculating the excise tax, repurchasing corporations are permitted to net the fair market value of certain new stock issuances against the fair market value of stock repurchases during the same taxable year. In connection with the Business Combination, holders of FAST II Class A Common Stock exercised their right to redeem those shares for a pro rata portion of the cash in the FAST II trust account. These redemptions are subject to the excise tax, and the resulting liability was assumed by the Company in the Business Combination. On February 13, 2023, the Treasury Department and Internal Revenue Service issued a Notice 2023-18, which provided interim guidance regarding the application of the corporate stock repurchase excise tax. The notice states that no taxpayer is required to report the new stock repurchase excise tax or make payment on such excise tax before forthcoming regulations are finalized. The regulations have not been finalized at the time of this filing. F- 28 10. Long-term debt and borrowing arrangements The Company’s indebtedness as of December 31, 2023 and 2022 consisted of the following: 2023 2022 Amount Interest Rate Amount Interest Rate €2.5 million revolving credit arrangement (due December 2023, fully converted to Predecessor Financing Units in October 2023) $ — — $ 2,090 3.00 % $10 million revolving credit arrangement (due December 2026) ($ 6,828 and $ 629 outstanding with related party as of December 31, 2023 and December 31, 2022, respectively) 6,828 2.75 % 629 2.75 % €1.5 million term loan (due April 2026) 980 1.70 % 1,344 1.70 % $12.785 million term loan – related party (due December 2026) 9,697 2.75 % 12,786 2.75 % €7 million term loan (due April 2027) 4,861 6.00 % 5,972 2.88 % $7.25 million term loan – related party (due December 2027) 7,250 3.75 % 7,250 3.75 % $1.975 million term loan – related party (due December 2029, fully converted to Predecessor Financing Units in October 2023) — — 1,975 3.00 % Finance leases — — 1,099 6.39 % 29,616 33,145 Less: Current portion of long-term debt 6,651 7,408 $ 22,965 $ 25,737 The Company’s outstanding debt as of December 31, 2023 matures as follows: Within 1 year $ 6,651 Between 1 and 2 years 6,895 Between 2 and 3 years 13,592 Between 3 and 4 years 2,478 Total $ 29,616 As of December 31, 2023, the remaining commitment available under the Company’s related party revolving credit arrangements was the following: Available Capacity $ 10 million revolving credit arrangement (due December 2026) $ 3,172 $ 3,172 €2.5 million revolving credit arrangement In December 2019, the Company entered into a € 2.5 million revolving credit arrangement with Collections. This facility is subject to an annual fixed interest rate of 3.00 % and matured in December 2023. On October 4, 2023, the remaining amount of the credit arrangement was converted as part of the debt-to-equity conversion discussed below. F- 29 $10 million revolving credit arrangement In December 2021, the Company entered into a $ 10.0 million revolving credit arrangement with Collections. This arrangement, which is subject to an annual fixed interest rate of 2.75 %, matures in December 2026. On October 6, 2022, $ 7.6 million of the outstanding balance was converted as part of the debt-to-equity conversion discussed below. On October 4, 2023, the amount outstanding as of October 4, 2023 on the credit arrangement was converted as part of the debt-to-equity conversion discussed below. As of December 31, 2023 Infinite Acquisitions loaned an additional $ 6.8 million to the Company through its existing line of credit. €1.5 million term loan In April 2020, the Company entered into a six-year € 1.5 million Institute of Official Credit (ICO) term loan with a Spanish bank, with a fixed interest rate of 1.70 %. The loan was interest only for the first twelve months, thereafter principal and interest is payable monthly in arrears. $12.785 million term loan In December 2021, the Company entered into a five-year $ 12.785 million term loan with Collections. The loan bears interest at 2.75 % per annum. The loan is interest only for the first twelve months, thereafter principal and interest is payable quarterly in arrears. €7 million term loan In March 2019, the Company entered into a seven-year € 7 million term loan with a Spanish bank, which was interest only for the first eighteen months, thereafter principal and interest was payable monthly in arrears. In January 2021, the loan was modified and bears interest at six-month Euribor plus 2.00 %. Loan is collateralized by the Company’s investment in PDP. $1.975 million term loan In June 2019, the Company entered into a ten-year $ 1.975 million term loan with Collections. The loan bears interest at 3.00 % per annum. The loan was interest only for the first 24 months, thereafter principal and interest is payable quarterly in arrears. On October 4, 2023, the remaining amount of the term loan was converted as part of the debt-to-equity conversion discussed below. $7.25 million Term Loan In December 2022, the Company entered into a five-year $ 7.25 million term loan with Infinite Acquisitions. The loan bears interest at 3.75 % per annum. The loan is interest only for the first twelve months, thereafter principal and interest is payable quarterly in arrears. Conversion of debt to equity with Infinite Acquisitions On October 6, 2022, the Company entered into a Conversion Agreement with Infinite Acquisitions pursuant to which $ 20.0 million of the debt owed to Infinite Acquisitions was converted to 2,000,000 membership units in Falcon’s Beyond Global, LLC (“Predecessor Financing Units”). The Company converted the following debt instruments: $ 8.5 million outstanding balance on the $ 8.7 million term loan, $ 3.9 million outstanding balance on the $ 5 million revolving credit facility, and $ 7.6 million of the outstanding balance on the $ 10 million revolving credit facility. On October 4, 2023, the Company entered into a Conversion Agreement with Infinite Acquisitions pursuant to which $ 7.3 million of the debt owed to Infinite Acquisitions was converted to 727,500 Predecessor Financing Units. The Company converted the following debt instruments: $ 3.4 million outstanding balance on the $ 10.0 million revolving credit arrangement, $ 2.1 million outstanding balance on the 2.5 million euro revolving credit arrangement, and $ 1.8 million of the outstanding balance on the $ 1.975 million term loan. F- 30 During the period between December 31, 2022 and December 31, 2023, there was no new debt issued. See Note 11 – Related party transactions for discussion related to the $ 10 million revolving credit arrangement with Infinite Acquisitions. Finance leases The Company’s finance leases consisted primarily of leases of the Company’s headquarters which were leased by FCG from a related party, Penut. See Note 6 – Leases. As of July 27, 2023, FCG was deconsolidated and accounted for as an equity method investment in the Company’s consolidated financial statements. The consolidated balance sheets therefore do not include any finance leases as of December 31, 2023, given that FCG was the lessee for all leases prior to deconsolidation. 11. Related party transactions Related party notes The Company held a series of related party notes receivable from Penut, a wholly owned subsidiary of The Magpuri Revocable Trust. Each promissory note bore interest at 4 % per year. On August 30, 2022, Penut repaid the outstanding balances of the notes receivable in full. In January 2023 the Company loaned $ 2.5 million to Infinite Acquisitions for 20 days. The Company received interest income at 2.75 % during this 20-day period. Interest income from this short-term related party advance was less than $ 0.1 million. Accrued expenses and other current liabilities The Company has a short-term advance from PDP to Fun Stuff for $ 0.4 million, repayable within one year of issuance and non-interest bearing. Accounts Payable The Company reimburses certain audit and professional fees on behalf of PDP and Sierra Parima. There were $ 1.2 million and $ 0.7 million unpaid audit and professional fees as of December 31, 2023 and December 31, 2022, respectively related to PDP and Sierra Parima. The Company incurred expenses related to reimbursable audit and professional fees of $ 0.9 million and $ 0.7 million for the years ended December 31, 2023 and December 31, 2022, respectively. Long-term debt The Company has various long-term debt instruments with Infinite Acquisitions with accrued interest of $ 0.0 million and $ 0.4 million as of December 31, 2023 and December 31, 2022, respectively related to these loans. These balances are included within Accrued expenses and other current liabilities on the consolidated balance sheets. During the year ended December 31, 2022, the Company converted a portion of debt with Infinite Acquisitions to equity. See Note 10 – Long-term debt and borrowing arrangements. On June 23, 2023, the Company entered into an amendment to the credit agreement dated December 30, 2021 with Infinite Acquisitions (as so amended, the “Credit Agreement”), pursuant to which (i) Falcon’s Beyond Global, Inc., which was formerly known as Palm Holdco, Inc., 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 the $ 10 million revolving credit facility to Infinite Acquisition’s equity holders, which are not related parties to the Company (the “Debt Transfer(s),” all such transferred debt the “Transferred Debt” and each equity holder the “Debt Transferee”) and (iii) Pubco, the Company and Infinite Acquisitions agreed that each Debt Transferee shall have the right to cause Pubco to exchange such Debt Transferee’s Transferred Debt for a number of shares of Pubco Series A Preferred Stock (“Exchange Right”) calculated based on an exchange price equal to the fair value of the Pubco Series A Preferred Stock at the time of the exchange. Management determined the fair value of the Exchange Right is substantially equivalent to the cash redemption; therefore, there was no gain or loss recognized during the year ended December 31, 2023. The exchange occurred at the acquisition merger close, which is the date Palm Merger Sub, LLC, a Delaware limited liability company and a wholly owned subsidiary of Pubco, merged into the Company. See Note 1 – Description of business and basis of presentation. F- 31 Conversion of debt to equity with Infinite Acquisitions On October 6, 2022, the Company entered into a Conversion Agreement with Infinite Acquisitions pursuant to which $ 20.0 million of the debt owed to Infinite Acquisitions was converted to 2,000,000 Predecessor Financing Units. The Company converted the following debt instruments: $ 8.5 million outstanding balance on the $ 8.7 million term loan, $ 3.9 million outstanding balance on the $ 5 million revolving credit facility, and $ 7.6 million of the outstanding balance on the $ 10 million revolving credit facility. During the period between December 31, 2022 and December 31, 2023, there was no new debt issued. In addition, the remaining amounts related to the $ 10 million revolving credit arrangement, 2.5 million euro revolving credit arrangement, and the $ 1.975 million term loan were converted to equity on October 4, 2023. Services provided to equity method investments FCG has been contracted for various design, master planning, attraction design, hardware sales and commercial services for themed entertainment offerings by the Company’s equity method investments. As of July 27, 2023 FCG has been deconsolidated and is also now accounted for as an equity method investment. See Deconsolidation of Falcon’s Creative Group, LLC under Note 1 – Description of business and basis of presentation. Destinations Operations recognizes management and incentive fees from the Company’s equity method investments. Refer to Note 3 – Revenue for amounts recognized during the years ended December 31, 2023 and 2022. Intercompany Services Agreement between FCG and the Company In conjunction with the closing of the Subscription Agreement described in Note 1 – Description of business and basis of presentation, the Intercompany Services Agreement was established between FCG and the Company. No balances are outstanding on this Intercompany Service Agreement as of December 31, 2023. The Company recognized $ 2.1 million revenue related to intercompany services provided to FCG for the year ended December 31, 2023. See Note 3 – Revenue. FCG also provides marketing, R&D, and other services to FBG. The Company currently owes less than $ 0.1 million to FCG related to these services as of December 31, 2023. The Company has also incurred reimbursable costs on behalf of FCG subsequent to July 27, 2023. The Company has $ 0.6 million in accounts receivable from FCG related to these reimbursable costs as of December 31, 2023. RSUs of the Company provided to FCG employees The Company issued 0.4 million restricted stock units to FCG employees under the Incentive Award Plan on December 21, 2023. See Note 1 – Description of business and basis of presentation. The Company was reimbursed by FCG for the entire stock compensation expense during the year ended December 31, 2023. Periodic stock compensation costs related to RSUs issued to FCG employees is recognized as a receivable from FCG and does not impact the Company’s consolidated statements of operations and comprehensive loss. Digital media license revenue and related receivable with equity method investment During March 2023, the Company licensed the right to use digital ride media content to Sierra Parima. The Company recognized digital media license revenue of $ 1.3 million for the year ended December 31, 2023, and interest income of $ 0.1 million for the year ended December 31, 2023. See Note 2 – Summary of significant accounting policies. F- 32 Expected credit loss on receivables from equity method investment During the year ended December 31, 2023, the Company revised its estimated expected credit loss on all receivables from Sierra Parima. Katmandu Park’s recent financial performance has been below management’s expectations. Based on an evaluation of Sierra Parima’s credit characteristics, the expected credit loss reserve was increased by $ 6.0 million during the year ended December 31, 2023 which represents the Company’s estimate of expected credit losses over the contractual life of each receivable. This loss reserve now offsets all receivables from Sierra Parima as of December 31, 2023. A portion of these reserved receivables was removed from the Company’s Balance Sheet with the deconsolidation of FCG. The Company will continue to periodically evaluate these estimates to determine if additional reserves are needed. See Note 2 – Summary of significant accounting policies and Note 1 – Description of business and basis of presentation for further discussion. The allowance for credit loss activity for the year ended December 31, 2023 and 2022 was as follows: For the year ended December 31 2023 2022 Beginning balance $ — $ — Credit loss expense 5,965 — Balance deconsolidated with FCG ( 3,878 ) — Ending balance $ 2,087 $ — Advance to Meliá Group In January 2022, the Company advanced $ 0.5 million to Meliá Group to be used by Meliá as an earnest money deposit for a potential land acquisition in Playa del Carmen intended for the site of a future hotel and entertainment development. The advance is non-interest bearing and has been classified in Other current assets as of December 31, 2023. This balance was classified in Other non-current assets as of December 31, 2022. Subscription agreement with Infinite Acquisitions On May 10, 2023, the Company entered into a subscription agreement to receive $ 20.0 million from Infinite Acquisitions in exchange for membership units of the Company. On October 4, 2023, the Company entered into a Conversion Agreement with Infinite Acquisitions pursuant to which $ 7.3 million of the debt owed to Infinite Acquisitions was converted to 727,500 Predecessor Financing Units. The Company converted the following debt instruments: $ 3.4 million outstanding balance on the $ 10.0 million revolving credit arrangement, $ 2.1 million outstanding balance on the 2.5 million euro revolving credit arrangement, and $ 1.8 million of the outstanding balance on the $ 1.975 million term loan. Additionally, Infinite Acquisitions considered the $ 7.3 million debt conversion as funding a portion of the $ 20.0 million of anticipated funding under the Infinite Acquisitions Subscription Agreement. This Subscription Agreement was cancelled in conjunction with the Business Combination. On October 4, 2023, Infinite Acquisitions irrevocably committed to fund an additional approximately $ 12.8 million to the Company by December 31, 2023. As of December 31, 2023 Infinite Acquisitions loaned $ 6.8 million to the Company through its existing revolving credit arrangement. The Company treated this $ 6.8 million loan as partial satisfaction of Infinite Acquisition’s 12.8 million irrevocable funding agreement. As of December 31, 2023 there were no debt to equity conversion agreements in place with Infinite Acquisitions related to this $ 6.8 million loan. The remaining $6.0 million Infinite Acquisition’s funding commitment was not received as of December 31, 2023. See Note 22 – Subsequent events for details on additional loans received after the year ended December 31, 2023. F- 33 12. Income taxes The Company is treated as a corporation for U.S. federal and state income tax purposes and is subject to U.S. federal and state income taxes, in addition to local and foreign income taxes, with respect to its allocable share of taxable income generated by Falcon’s Beyond Global, LLC and its subsidiaries. Falcon’s Beyond Global, LLC is treated as a partnership for U.S. federal income tax purposes and therefore is not subject to U.S. federal and state income taxes except for certain consolidated subsidiaries that are subject to taxation in foreign jurisdictions as a result of their entity classification for tax reporting purposes. The Income (loss) before income taxes includes the following components (in thousands): For the year ended December 31 December 31, 2023 December 31, 2022 Income (loss) before income taxes United States $ ( 390,099 ) $ ( 18,311 ) Foreign ( 41,156 ) 883 Total ( 431,255 ) ( 17,428 ) The income tax provision consists of the following for the years ended December 31, 2023 and 2022: December 31, 2023 December 31, 2022 Current Federal $ ( 393 ) $ — State 94 — Foreign $ ( 26 ) Deferred Federal — — State — — Foreign — — Income tax provision $ ( 325 ) $ — A reconciliation of the statutory federal income tax rate to the Company’s effective tax rate (benefit) is as follows for the years ended December 31, 2023 and 2022: December 31, 2023 December 31, 2022 Statutory federal income tax rate 21.00 % 21.0 % Noncontrolling Interests ( 18.68 )% ( 21.0 )% Valuation Allowance ( 2.72 )% ( 1.0 )% Effect of foreign operations 2.18 % 0.0 % Impairment ( 2.17 )% 0.0 % Other 0.47 % 1.0 % Effective tax rate 0.08 % 0.0 % F- 34 The Company’s net deferred tax assets are as follows as of December 31, 2023 and 2022: December 31, 2023 December 31, 2022 Deferred tax assets: Start-up/Organization costs $ 1,326 $ - Partnership Investment 36,004 - Net operating loss carryforwards 339 434 Other ( 152 ) 11 Total deferred tax assets 37,517 445 Valuation allowance ( 37,517 ) ( 445 ) Deferred tax asset, net of allowance $ — $ — At each balance sheet date, management assesses the need to establish a valuation allowance that reduces deferred income tax assets when it is more likely than not that all, or some portion, of the deferred income tax assets will not be realized. A valuation allowance would be based on all available information including the Company’s assessment of uncertain tax positions and projections of future taxable income and capital gain from each tax-paying component in each jurisdiction, principally derived from business plans and available tax planning strategies. Management has reviewed all available evidence, both positive and negative, in determining the need for a valuation allowance with respect to the gross deferred tax assets. In determining the manner in which available evidence should be weighted, management believes that significant uncertainty exists with respect to future realization of the deferred tax assets and has therefore established a full valuation allowance. As of December 31, 2023, the Company has foreign net operating loss carryforwards of $ 1.4 million for tax purposes, which will never expire if unused. As of December 31, 2022, the net operating loss carryforwards are not more likely than not of being realized. The Company did not have any state or local net operating losses, or any foreign tax credit carryforwards, net of valuation allowance. There were no unrecognized tax benefits as of December 31, 2023 and 2022. No amounts were accrued for the payment of interest and penalties at December 31, 2023 and 2022. The Company is currently not aware of any issues under review that could result in significant payments, accruals or material deviation from its position. The Company is subject to income tax examinations by major taxing authorities since inception. The Company’s policy is to record interest and penalties associated with unrecognized tax benefits as additional income in the accompanying consolidated statement of operations and comprehensive loss. In the normal course of business, the Company is subject to examination by U.S. federal and certain state, local and foreign tax regulators. At December 31, 2023, U.S. federal tax returns related to predecessor entities for the years 2019 through 2021 are generally open under the normal statute of limitations and therefore subject to examination. State and local tax returns of our predecessor entities are generally open to audit for tax year 2021. In addition, certain foreign subsidiaries’ tax returns from 2016 to 2021 are also open for examination by various regulators. The Company files its tax returns as prescribed by the tax laws of the jurisdictions in which it operates. Although the outcome of tax audits is always uncertain, the Company does not believe the outcome of any future audit will have a material adverse effect on the Company’s consolidated financial statements. F- 35 13. Tax Receivable Agreement The Acquisition Merger occurred on October 6, 2023, and the partners of Falcon’s Beyond Global, LLC at the time of the Acquisition Merger (“Exchange TRA Holders”), along with Falcon’s Beyond Global, LLC (“LLC”) and Falcon’s Beyond Global, Inc. (“Pubco”)(collectively the “TRA Holders”), entered into a Tax Receivable Agreement (“TRA”) dated October 6, 2023. There were no Exchanges, as defined in the TRA, at the time of the Acquisition Merger and the Units held by the Exchange TRA Holders are subject to a lock-up agreement, by which no Exchanges may be made beginning on October 6, 2023 and ending on the earlier of (i) 180 days later, or (ii) such date the date on which the volume weighted average closing sale price of the Pubco Class A Common Stock equals or exceeds $ 12.00 per share for any 20 trading days within any 30-consecutive trading day period, beginning at least 150 days after October 6, 2023. There will be no TRA Liability until an Exchange occurs. Furthermore, the future amounts payable under the TRA will vary depending upon a number of factors, including the amount, character, and timing of the taxable income of Pubco in the future. As of December 31, 2023, the Company has determined there is no resulting liability related to the TRA arising from the Acquisition Merger. Should the Company determine that the Tax Receivable Agreement liability be considered probable at a future date based on new information, any changes will be recorded within income tax expense (benefit) at that time. 14. Retirement plan The Company sponsors the Falcon’s Beyond 401(k) Profit Sharing Plan (“the Plan”) that covers all qualifying employees over 21 years of age and who have completed 3-months of service. The Plan allows participants to contribute up to 100 % of their wages into the Plan and allows for discretionary profit-sharing contributions from FBG. Participants vest at 20 % per year over a five -year vesting period. Once a participant completes five years of service, all contributions are immediately vested. Under the Plan, eligible employees can also contribute a portion of their salary, and the Company will match up to 3 % of those contributions. The Company’s obligation is limited to its contributions to the plan, and the retirement benefit is dependent on the performance of the investments chosen by the participants. The Company contributed $ 0.2 million to the Plan for both the years ended December 31, 2023 and 2022 which is included as a component of Selling, general and administrative expense in the consolidated statement of operations and comprehensive loss. 15. Commitments and contingencies Litigation — The Company is named from time to time as a party to lawsuits and other types of legal proceedings and claims in the normal course of business. The Company accrues for contingencies when it believes that a loss is probable and that it can reasonably estimate the amount of any such loss. There were no material accruals for legal proceedings or claims as of December 31, 2023 and 2022. F- 36 Indemnification — In the ordinary course of business, the Company enters into certain agreements that provide for indemnification by the Company of varying scope and terms to customers, vendors, directors, officers, employees, and other parties with respect to certain matters. Indemnification includes losses from breach of such agreements, services provided by the Company, or third-party intellectual property infringement claims. These indemnities may survive termination of the underlying agreement and the maximum potential amount of future indemnification payments, in some circumstances, are not subject to a cap. As of December 31, 2023 and 2022, there were no known events or circumstances that have resulted in a material indemnification liability. Commitments — As of December 31, 2023 the Company has unfunded commitments to its unconsolidated joint venture Karnival of $ 2.4 million (HKD 18.7 million). However, the Company does not currently have the liquidity to fund such amounts and the ability to do so in the future is contingent upon securing additional financing or capital raises. See Note 1 – Description of business and basis of presentation. 16. Segment information The Company has five operating segments, Falcon’s Creative Group, PDP, Sierra Parima, Destinations Operations and Falcon’s Beyond Brands, all of which are reportable segments. The Company’s Chief Operating Decision Makers are its Executive Chairman and Chief Executive Officer, who review financial information for purposes of making operating decisions, assessing financial performance, and allocating resources. Operating segments are organized based on product lines and, for our location-based entertainment, by geography. 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 expenses which include payroll and related benefits for executive, accounting, finance, marketing, human resources, legal and information technology support services, audit, tax corporate legal expenses are presented as Unallocated corporate overhead as a reconciling item between total income (losses) from reportable segments and the Company’s consolidated financial statement results. During the year ended December 31, 2022, the Company created a new operating segment, Falcon’s Beyond Brands, which is utilized for the development and commercialization of Company owned and third-party intellectual property through consumer products and media. Falcon’s Creative Group provides master planning, media, interactive and audio production, project management, experiential technology and attraction hardware development services and attraction hardware sales on a work-for-hire model. Pursuant to the Subscription Agreement, Falcon’s Creative Group is now deconsolidated effective July 27, 2023, and accounted for as an equity method investment in the Company’s consolidated financial statements. The operating segment still remains a reportable segment for the Company. 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. Falcon’s Creative Group provides services for projects located worldwide. See Note 3 – Revenue. The Company’s equity method investments, PDP and Sierra Parima develop, own and operate hotels, theme parks and retail, dining and entertainment venues. See Note 8 – Investment and advances to equity method investments. Destinations Operations provides development and management services for themed entertainment to PDP, Sierra Parima and new development opportunities. The Company collectively refers to the Destinations Operations, PDP and Sierra Parima as Falcon’s Beyond Destinations. Reportable segments measure of profit and loss is earnings before interest, taxes, foreign exchange gain (loss), gain on deconsolidation of FCG, impairments and depreciation and amortization. See Note 11 – Related party transactions for transactions between the Company’s wholly-owned businesses and equity method investments. F- 37 Year ended December 31, 2023 Falcon’s Falcon’s Beyond Destinations Falcons Unallocated Creative Group Destinations Operations PDP Sierra Parima Beyond Brands Intersegment eliminations corporate overhead Total Revenue $ 14,514 $ 481 $ - $ - $ 1,482 $ ( 279 ) $ 2,046 $ 18,244 Share of gain or (loss) from equity method investments, excluding impairments ( 6,024 ) 288 1,192 ( 5,614 ) - ( 2,140 ) - ( 12,298 ) Segment income (loss) from operations ( 10,577 ) ( 1,807 ) 1,192 ( 5,614 ) ( 4,015 ) ( 2,341 ) ( 42,342 ) ( 65,504 ) Depreciation and amortization expense ( 1,576 ) Gain on deconsolidation of FCG 27,402 Share of equity method investee’s impairment of fixed assets ( 26,084 ) Impairment of equity method investments ( 14,069 ) Impairment of intangible assets ( 2,377 ) Interest expense ( 1,124 ) Interest income 95 Change in fair value of warrant liabilities ( 2,972 ) Change in fair value of earnout liabilities ( 345,413 ) Foreign exchange transaction gains (losses) 367 Income tax benefit 325 Net loss $ ( 430,930 ) (1) Revenue for the period ended July 27, 2023 (prior to FCG’s deconsolidation). (2) The Company’s share of gain or loss from its equity method investment in FCG subsequent to deconsolidation on July 27, 2023. Year ended December 31, 2022 Falcon’s Falcon’s Beyond Destinations Falcons Unallocated Creative Group Destinations Operations PDP Sierra Parima Beyond Brands Intersegment eliminations corporate overhead Total Revenue $ 17,460 $ 293 $ — $ — $ — $ ( 1,803 ) $ $ 15,950 Share of gain or (loss) from equity method investments 3 3,229 ( 1,719 ) 1,513 Segment income (loss) from operations 698 ( 1,195 ) 3,229 ( 1,719 ) ( 3,699 ) ( 553 ) ( 11,852 ) ( 15,091 ) Depreciation and amortization expense ( 737 ) Interest expense ( 1,113 ) Other expense ( 9 ) Foreign exchange transaction loss ( 478 ) Net loss $ ( 17,428 ) F- 38 Identifiable assets as of December 31, 2023 and December 31, 2022 are as follows: As of December 31, 2023 2022 Falcon’s Creative Group $ 30,930 $ 28,650 Destinations Operations 6,964 7,811 PDP 22,870 23,688 Sierra Parima - 41,562 Falcons Beyond Brands - 4,275 Unallocated corporate assets and intersegment eliminations 2,595 6,284 Total assets $ 63,359 $ 112,270 Assets for PDP and Sierra Parima represent the Company’s investment and advances to these equity method investments — See Note 8 – Investments and advances to equity method investments. These investments are held by a subsidiary located in Mallorca, Spain. Total capital expenditures for the Company were $ 0.3 million for the year ended December 31, 2023 and 2022. Capital expenditures were primarily for computer and office equipment located in the United States. 17. Fair value measurement The Company did not have any assets or liabilities measured at fair value on a recurring basis as of December 31, 2022. The following table provides information related to the Company’s assets and liabilities measured at fair value on a recurring basis as of December 31, 2023: December 31, 2023 Level 1 Level 2 Level 3 Total Liabilities: Warrant liabilities 3,904 3,904 Earnout liabilities 488,641 488,641 $ 3,904 $ $ 488,641 $ 492,545 The warrant liability fair value is based on quoted market prices in active markets, and therefore is classified within Level 1 of the fair value hierarchy. The earnouts based on revenue and earnings before interest, taxes, depreciation and amortization (“EBITDA”) as well as the earnouts based on the Company’s stock price have been classified within Level 3 of the hierarchy as the fair value is derived using a Monte Carlo simulation analysis in a risk neutral framework, which uses a combination of observable (Level 2) and unobservable (Level 3) inputs. Key estimates and assumptions impacting the fair value measurement include the Company’s revenue and EBITDA forecasts as well as the assumptions listed in tables below. The fair value measurement associated with the earnout liability is highly sensitive to changes in stock price and forecasted amounts for revenue through 2024. Any changes to stock price and forecasted revenues in 2024 will result in remeasurement of the earnout liability and could result in material gains or losses being recognized in the statement of operations. The Company estimated the fair value per share of the underlying common stock based, in part, on the results of third-party valuations and additional factors deemed relevant. The risk-free interest rate was determined by reference to the U.S. Treasury yield curve for time periods approximately equal to the remaining contractual term of the earnouts. The Company estimated a 0 % expected dividend yield as of December 31, 2023, based on the fact that prior to the Business Combination, the Company had never paid or declared dividends and does not intend to do so in the foreseeable future. Prior to the Business Combination, the Company was a private company and lacked company-specific historical and implied volatility information of its stock, and as such, the expected stock volatility was based on the historical volatility of publicly traded peer companies for a term equal to the remaining expected term of the warrants. The following table presents the unobservable inputs of the earnout liability for earnout shares based on revenue and EBITDA targets: Amount Current stock price 12.30 Earnout period – beginning July 1, 2023 Earnout period – end December 31, 2024 Equity volatility, EBITDA volatility 25.0 % Operational leverage ratio 65.0 % Revenue volatility 10.0 % Revenue/stock price correlation 45.0 % EBITDA/stock price correlation 25.0 % Revenue discount rate 9.21 % Dividend yield 0.0 % F- 39 The following table presents the unobservable inputs of the earnout liability for earnout shares based on the Company’s stock price: Amount Term (years) 5.8 Volatility 40.0 % Risk-free rate 3.8 % Dividend yield 0.0 % Current stock price 12.30 The following table summarizes the activity for the Company’s Level 3 instruments measured at fair value on a recurring basis (in thousands): Earnout Liabilities Balance as of December 31, 2022 $ - Issuances 143,228 Change in fair value 345,413 Balance as of December 31, 2023 488,641 There were no transfers between Level 1 and Level 2, nor into and out of Level 3, during the periods presented. 18. Equity and net loss per share Authorized Capitalization The total amount of the Company’s authorized capital stock consists of (a) 650,000,000 shares of Common Stock, par value $ 0.0001 per share consisting of (i) 500,000,000 shares of Class A Common Stock, (ii) 150,000,000 shares of Class B Common Stock, and (b) 30,000,000 shares of preferred stock, par value $ 0.0001 per share, of which 12,000,000 shares are classified and designated as 8 % Series A cumulative convertible preferred stock. Common Stock The rights of the holders of Class A Common Stock and Class B Common Stock have various terms, as follows: Each holder of Company Common Stock is entitled to one vote for each share of Company Common Stock held of record by such holder on all matters on which stockholders generally are entitled to vote. Shares of Pubco Class B Common Stock carry the same voting rights as shares of Pubco Class A Common Stock but have no economic terms. Class B Common Stock is exchangeable, along with common units of Falcon’s Beyond Global, LLC, into Class A Common Stock. F- 40 Series A Cumulative Convertible Preferred Stock In connection with the Business Combination, the Company issued 656,415 shares of Series A Preferred Stock. Holders of Series A Preferred Stock may at any time elect to convert their shares of Series A Preferred Stock into shares of Class A Common Stock. The number of shares of Class A Common Stock to be issued upon conversion is equal to the quotient of $ 10.00 divided by $ 11.00 , subject to adjustment (the “Conversion Rate”). If at any time volume weighted average closing price of the Class A Common Stock exceeds $ 14.30 for at least 20 trading days during a period of 30 consecutive trading days the shares of Series A Preferred Stock will be automatically converted, without any action on the part of the holders thereof, into shares of Class A Common Stock at the then applicable Conversion Rate. Dividends on shares of Series A Preferred Stock are cumulative and accrue at the rate of 8.0 % per annum from the Closing Date until such time as the shares are converted into Class A Common Stock. On November 6, 2023, all 656,415 shares of the Company’s Series A Preferred Stock automatically converted into 596,671 shares of Class A Common Stock. In order to maintain the “Up-C” structure, the Company forfeited the preferred units of Falcon’s Beyond Global, LLC that it previously held and was issued a number of shares of common units of Falcon’s Beyond Global, LLC equal to the number of shares of Class A Common Stock issued upon conversion of the Series A Preferred Stock. Following the automatic conversion of the Series A Preferred Stock, there are no outstanding shares of Preferred Stock as of December 31, 2023. In connection with the automatic conversion of the Series A Preferred Stock, each outstanding warrant is now exercisable for 1.034999 shares of Class A Common Stock. See Note 19 – Stock warrants. The weighted average shares outstanding for the year ended December 31, 2023 used to determine the Company’s Net loss per share reflects the following: For the period from October 6, 2023 to December 31, 2023 Numerator: Net income/(loss) ( 396,744 ) Net income/(loss) attributable to noncontrolling interests ( 349,139 ) Net income/(loss) available to Class A common stock ( 47,605 ) Denominator: Weighted average Class A common stock outstanding - basic and diluted 7,095,204 Net income/(loss) per Class A common share - basic and diluted: ( 6.71 ) The Company applies the treasury stock method to the Warrants and RSUs, the contingently issuable shares method to the Earnout shares, and the if-converted method for the exchangeable noncontrolling interests, if dilutive. The following securities were not included in the computation because the effect would be anti-dilutive or issuance of such shares is contingent upon the satisfaction of certain conditions which were not satisfied by the end of the period: For the period from October 6, 2023 to December 31, 2023 Earnout shares 1,937,500 Warrants to purchase common stock 5,205,769 RSUs 939,330 F- 41 19. Stock warrants Immediately following the closing of the Business Combination there were 8,440,641 warrants outstanding. The warrants do not meet the criteria for equity treatment under ASC 815. As such, the warrants are classified as liabilities and are adjusted to fair value at the end of each reporting period. The Company remeasures the fair value of the warrants based on their quoted market price. For the year ended December 31, 2023, the Company recognized $ 3.0 million of losses related to the change in fair value of warrant liabilities, which is recognized in Change in fair value of warrant liabilities in the consolidated statements of operations and comprehensive loss. The following table summarizes the Company’s outstanding common stock warrants as of December 31, 2023: Year of Issue Number of Shares Issuable Exercise Price Expiration Date Classification 2023 5,387,966 $ 11.50 Oct-2028 Liability 20. Earnouts At the closing of the Business Combination, the Company issued 1,937,500 Earnout Shares in the form of Class A Common Stock and 75,562,500 Earnout Shares in the form of Class B Common Stock. The Earnout Shares were placed into an escrow account for the benefit of certain holders pursuant to the Merger Agreement. Earnout Shares were deposited into escrow at the Closing and will be earned, released and delivered upon satisfaction of certain milestones related to the Earnings Before Interest, Taxes, Depreciation and Amortization (“EBITDA”) of the Company and the gross revenue of the Company during periods between July 1, 2023 and December 31, 2024 and the volume weighted average closing sale price of the Company’s shares of Class A Common Stock during the five-year period beginning on the one-year anniversary of the Acquisition Merger and ending on the six-year anniversary of the Acquisition Merger. The Earnout Shares are classified as a liability and measured at fair value, with changes in fair value included in the consolidated statements of operations and comprehensive loss. As of December 31, 2023, the fair value of the earnout liability was $ 488.6 million. For the year ended December 31, 2023, the Company recognized $ 345.4 million of losses related to the change in fair value of earnout liabilities included in Change in fair value of earnout liabilities in the consolidated statements of operations and comprehensive loss. See Note 17 – Fair value measurement. 21. Share-Based Compensation The Company adopted a share-based compensation plan (the “Plan”) under which 939,330 restricted stock units (“Restricted Stock Units” or “RSUs”) are registered. Each vested Restricted Stock Unit represents the right to receive one Class A Common Share. Under the Plan, RSUs with service based conditions may be granted to directors, officers, employees, and non-employees. RSUs were granted to employees of both the Company and FCG. However, FCG will fully reimburse FBG for the compensation cost associated with these grants. As such, expenses related to the RSUs granted to employees of FCG do not represent a purchase of services or contribution to FCG. F- 42 The RSUs do not provide the grantee with an option to choose settlement in cash or stock. The holder of the RSU shall not be, nor have any of the rights or privileges of, a shareholder of the Company, including, without limitation, voting rights and rights to dividends, in respect to the RSUs and any shares underlying the RSUs and deliverable under the Plan unless and until such shares shall have been issued by the Company and held of record by such holder. A summary of the Plan’s RSUs award activity is as follows: Restricted Stock Units Nonvested at January 1, 2023 - Granted 939,330 Forfeited - Vested - Expired - Nonvested at December 31, 2023 939,330 Vested at December 31, 2023 - The RSUs under the Plan will vest over a five-year period following the one-year anniversary of the date of grant. The grant date of all RSUs associated with the Plan is December 21, 2023. The fair value of these RSUs is estimated based on the fair value of the Company’s common stock on the date of grant using the closing price on the day of grant. A summary of the Plan’s RSUs vesting schedule is as follows: Vesting Date RSU Vested (% of total) December 1, 2024 15 % December 1, 2025 17.5 % December 1, 2026 20 % December 1, 2027 22.5 % December 1, 2028 25 % The Company elected the straight-line attribution method to account for the compensation cost over the five-year requisite service period for the entire award, as long as the participant continues to provide service to the Company. Forfeitures are accounted for at the time the forfeiture occurs. The Company recognized stock-based compensation expense of less than $ 0.1 million for the year ended December 31, 2023, which is included within selling, general and administrative expenses in the consolidated statements of operations and comprehensive loss. The compensation cost for RSU’s granted to FCG employees is recognized as a receivable from FCG and does not impact the Company’s consolidated statements of operations and comprehensive loss. 22. Subsequent events Following the Closing of the Business Combination through December 31, 2023, Infinite Acquisitions loaned the Company $ 6.8 million pursuant to its existing $ 10.0 million revolving credit arrangement. Subsequent to December 31, 2023, Infinite Acquisitions has loaned an additional $ 4.8 million to the Company pursuant to the revolving credit arrangement through April 26, 2024. The revolving credit arrangement is subject to an annual fixed interest rate of 2.75 % and matures in December 2026. In April 2024, the Predecessor entered into a term loan agreement with Katmandu Ventures, LLC (“Katmandu Ventures”), a greater than 10 % shareholder of the Company, pursuant to which Katmandu Ventures made a loan to the Predecessor in the principal amount of approximately $ 7.2 million, and a term loan agreement with Universal Kat Holdings, LLC (“Universal Kat”), pursuant to which Universal Kat has made a loan to the Predecessor in the principal amount of approximately $ 1.3 million. Such term loans bear interest at a rate of 8.88 % per annum, payable quarterly in arrears, and will mature on March 31, 2025. Approximately $ 5.4 million of the proceeds of the term loans was used to repay a portion of the outstanding loans under the Infinite Acquisitions revolving credit arrangement. On March 27, 2024, the Company received a formal complaint related to breach of a contract with Guggenheim Securities. Guggenheim Securities claims that the Company owes transaction fees and expenses of $ 9,556,512.70 , in addition to anticipatory repudiation of an additional $ 1,500,000.00 . The Company anticipates payment of the full amount to Guggenheim Securities and has accrued the entire $ 11.1 million as of December 31, 2023. On April 16, 2024, QIC released the remaining $ 12.0 million of the $ 30.0 million investment to FCG upon the establishment of the employee retention and attraction incentive program. These funds can be used by FCG to fund its operations and growth and cannot be used to satisfy the commitments of other segments. On March 7, 2024, Sierra Parima’s Katmandu Park in Punta Cana, Dominican Republic (“Katmandu Park”) was closed to visitors. The closure follows financial, operational, and infrastructure challenges at the Katmandu Park and a recent shift in the Company’s strategic focus. As of December 31, 2023 the Company fully impaired its investment in Sierra Parima. See Note 8 – Investments and advances to equity method investments. F- 43 INDEPENDENT AUDITOR’S REPORT To the Board of Managers of Falcon’s Creative Group, LLC. Opinion We have audited the consolidated financial statements of Falcon’s Creative Group, LLC and subsidiaries (the “Company”), which comprise the consolidated balance sheet as of December 31, 2023, and the related consolidated statements of operations, cash flows, and members’ equity for the year then ended, and the related notes to the consolidated financial statements (collectively referred to as the “financial statements”). In our opinion, the accompanying financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2023, and the results of its operations and its cash flows for the year then ended in accordance with accounting principles generally accepted in the United States of America. Basis for Opinion We conducted our audit in accordance with auditing standards generally accepted in the United States of America (GAAS). Our responsibilities under those standards are further described in the Auditor’s Responsibilities for the Audit of the Financial Statements section of our report. We are required to be independent of the Company and to meet our other ethical responsibilities, in accordance with the relevant ethical requirements relating to our audit. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion. Responsibilities of Management for the Financial Statements Management is responsible for the preparation and fair presentation of the financial statements in accordance with accounting principles generally accepted in the United States of America, and for the design, implementation, and maintenance of internal control relevant to the preparation and fair presentation of financial statements that are free from material misstatement, whether due to fraud or error. In preparing the financial statements, management is required to evaluate whether there are conditions or events, considered in the aggregate, that raise substantial doubt about the Company’s ability to continue as a going concern for one year after the date that the financial statements are issued. Auditor’s Responsibilities for the Audit of the Financial Statements Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditor’s report that includes our opinion. Reasonable assurance is a high level of assurance but is not absolute assurance and therefore is not a guarantee that an audit conducted in accordance with GAAS will always detect a material misstatement when it exists. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control. Misstatements are considered material if there is a substantial likelihood that, individually or in the aggregate, they would influence the judgment made by a reasonable user based on the financial statements. In performing an audit in accordance with GAAS, we: ● Exercise professional judgment and maintain professional skepticism throughout the audit. ● Identify and assess the risks of material misstatement of the financial statements, whether due to fraud or error, and design and perform audit procedures responsive to those risks. Such procedures include examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. ● Obtain an understanding of internal control relevant to the audit in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control. Accordingly, no such opinion is expressed. ● Evaluate the appropriateness of accounting policies used and the reasonableness of significant accounting estimates made by management, as well as evaluate the overall presentation of the financial statements. ● Conclud e whether, in our judgment, there are conditions or events, considered in the aggregate, that raise substantial doubt about the Company’s ability to continue as a going concern for a reasonable period of time. We are required to communicate with those charged with governance regarding, among other matters, the planned scope and timing of the audit, significant audit findings, and certain internal control-related matters that we identified during the audit. /s/ Deloitte & Touche LLP Tampa, Florida April 29, 2024 F- 44 FALCON’S CREATIVE GROUP, LLC CONSOLIDATED BALANCE SHEET (in thousands of U.S. dollars) As of December 31, 2023 Assets Current assets: Cash and cash equivalents $ 5,504 Accounts receivable, net ($4,576 related party) 4,650 Contract assets ($1,748 related party) 1,840 Other current assets 581 Total current assets 12,575 Operating lease right-of-use assets ($675 related party) 1,218 Finance lease right-of-use assets ($504 related party) 536 Property and equipment, net 2,078 Intangible assets, net 4,305 Goodwill 11,471 Other non-current assets 122 Total assets $ 32,305 Liabilities and members’ equity Current liabilities: Accounts payable ($586 related party) $ 3,370 Accrued expenses and other current liabilities 2,462 Contract liabilities ($1,122 related party) 1,122 Finance lease liability, current ($92 related party) 109 Operating lease liability, current ($37 related party) 312 Total current liabilities 7,375 Finance lease liability, net of current portion ($909 related party) 921 Operating lease liability, net of current portion ($638 related party) 880 Total liabilities $ 9,176 Commitments and contingencies – Note 11 Temporary equity - Preferred units subject to possible redemption $ 18,234 Members’ equity Members’ capital $ 4,895 Total members’ equity $ 4,895 Total liabilities, preferred units subject to possible redemption and members’ equity $ 32,305 See accompanying notes to consolidated financial statements F- 45 FALCON’S CREATIVE GROUP, LLC CONSOLIDATED STATEMENT OF OPERATIONS (in thousands of U.S. dollars) Year ended December 31, 2023 Revenue ($10,280 related party) $ 22,547 Operating expenses: Project design and build expense 15,994 Selling, general and administrative expense 13,811 Credit loss expense ($3,878 related party) 3,963 Inventory write off 407 Research and development expense 112 Depreciation and amortization expense 869 Total operating expenses 35,156 Loss from operations (12,609 ) Interest income 120 Interest expense (75 ) Foreign exchange transaction gain (loss) (19 ) Net loss before taxes (12,583 ) Income tax benefit 54 Net loss $ (12,529 ) See accompanying notes to consolidated financial statements F- 46 FALCON’S CREATIVE GROUP, LLC CONSOLIDATED STATEMENT OF CASH FLOWS (in thousands of U.S. dollars) Year ended December 31, 2023 Cash flows from operating activities Net loss $ (12,529 ) Adjustments to reconcile net loss to net cash used in operating activities: Depreciation and amortization 869 Credit loss expense ($3,878 related party) 3,963 Inventory write-off 407 Changes in assets and liabilities: Accounts receivable, net ($4,279 related party) (5,496 ) Other –current assets (57 ) Contract assets ($48 related party) 968 Other non-current assets 47 Accounts payable 1,257 Operating lease assets / liabilities (28 ) Accrued expenses and other current liabilities 881 Contract liabilities ($522 related party) (174 ) Net cash used in operating activities (9,892 ) Cash flows from investing activities Purchase of property and equipment (729 ) Net cash used in investing activities (729 ) Cash flows from financing activities Settlement of intergroup payables to FBG (1,176 ) Principal payment on finance lease obligation (173 ) Issue of Preferred Units – Strategic Investment 17,500 Net cash provided by financing activities 16,151 Net increase in cash and cash equivalents 5,530 Cash and cash equivalents – beginning of period (26 ) Cash and cash equivalents at end of year $ 5,504 Supplemental disclosures: Cash paid for interest – finance leases $ 69 Non-cash activities: Contribution from FBG in connection with Strategic Investment (See Note 8) 6,995 Right-of-use assets obtained in exchange for new operating lease liabilities (See Note 5) 514 Right-of-use assets obtained in exchange for new finance lease liabilities (See Note 5) 35 See accompanying notes to consolidated financial statements F- 47 FALCON’S CREATIVE GROUP, LLC CONSOLIDATED STATEMENT OF MEMBERS’ EQUITY (in thousands of U.S. dollars, except for unit data) Members’ Equity Temporary Equity Common Units Members’ Capital Preferred Units Temporary Equity December 31, 2022 $ 11,163 $ — December 31, 2022 (recast in connection with Strategic Investment, see Note 1) 75 11,163 — Preferred units issued, subject to possible redemption 25 17,500 Contribution from FBG on deconsolidation of FCG (see Note 8) 6,995 Net loss (12,529 ) Accretion on preferred units subject to possible redemption to redemption amount (734 ) 734 December 31, 2023 75 $ 4,895 25 $ 18,234 See accompanying notes to consolidated financial statements F- 48 FALCON’S CREATIVE GROUP, LLC NOTES TO THE CONSOLIDATED FINANCIAL STATEMENT FOR THE YEAR ENDED DECEMBER 31, 2023 (in thousands of U.S. dollars, unless otherwise stated) 1. Description of business and basis of presentation Falcon’s Creative Group, LLC provides master planning, media and audio production, project management, experiential technologies, and attraction hardware development, procurement, and sales on a work-for-hire or licensing model for clients. The Company consolidates Falcon’s Treehouse National, LLC (“National”) and Falcon’s Treehouse, LLC and together with its subsidiaries Falcon’s Digital Media, LLC, Falcon’s Licensing, LLC and Falcon’s Creative Group Philippines, Inc. (“Treehouse”), together with National (“FCG” or the “Company”). Prior to the Strategic Investment on July 27, 2023 as defined below, FCG was a wholly owned subsidiary of Falcon’s Beyond Global, LLC. Falcon’s Beyond Global, LLC (“FBG”) was formed on April 22, 2021, in the state of Florida, for the purpose of acquiring the outstanding membership units of Katmandu Group, LLC and its subsidiaries (“Katmandu”), and FCG. On April 30, 2021, The Magpuri Revocable Trust, owners of FCG, and Katmandu Collections, LLLP, (“Collections”) owners of Katmandu, entered into a Consolidation Agreement, whereby The Magpuri Revocable Trust and Collections contributed 100% of its ownership interests in FCG and Katmandu and 66.67% of the membership interests of FBG. In accordance with Accounting Standards Codification (“ASC”) 805, Business Combinations (“ASC 805”), Katmandu was determined to be the accounting acquirer. As such, FBG applied the acquisition method of accounting to the identifiable assets and liabilities of FCG, which were measured at fair values as of the acquisition date. The Company elected to apply pushdown accounting, therefore the new basis of accounting established by FBG for the individual assets and liabilities of the Company as of the acquisition date are reflected in the standalone financial statements of the Company. As a result, the Company recognized intangible assets. See Note 6 — Intangible assets, net. The excess of the deemed purchase consideration over the fair value of net assets acquired was recorded by the Company as goodwill. The consolidated financial statements of the Company have been prepared in accordance with generally accepted accounting principles in the United States (“US GAAP”). All intercompany balances and transactions have been eliminated in the consolidation. Strategic Investment On July 27, 2023, pursuant to the Subscription Agreement by and between FCG and QIC Delaware, Inc., (the “Subscription Agreement”), QIC Delaware, Inc., a Delaware corporation and an affiliate of Qiddiya Investment Company (“QIC”), invested $30.0 million in FCG (“Strategic Investment”). Following the closing of the Subscription Agreement, the Company now has two members: QIC, holding 25% of the equity interest in the form of 25 Preferred Units, and FBG, holding the remaining 75% of the equity interest in the form of 75 Common Units. In connection with the Strategic Investment, the Company amended and restated its limited liability company agreement (“LLCA”) to include QIC as a member and to provide QIC with certain consent, priority and preemptive rights; and FBG and the Company entered into an intercompany service agreement (“Intercompany Services Agreement”) and a license agreement. Upon the closing of the Subscription Agreement, the Company received a closing payment of $17.5 million (net of $0.5 million in reimbursements relating to due diligence fees incurred by QIC). The remaining $12 million of the $30 million investment is being held by QIC and will be released to the Company upon the establishment of an employee retention and attraction incentive program that incentivizes employees of the Company and its subsidiaries. The preferred units are entitled to a preferred return, which is an amount necessary to result in a rate of return of 9% per annum, compounding annually and accruing from the date of the Strategic Investment (“Preferred Return”) . F- 49 The preferred units feature certain redemption rights that are considered to be outside of the Company’s control and subject to the occurrence of future events. The preferred units become redeemable on the earlier of (i) the five-year anniversary of the Strategic Investment and (ii) any date on which a majority of key persons, as defined in the LLCA, cease to be employed by FCG (the “Redemption Commencement Date”). At any time after the Redemption Commencement Date, QIC may elect, in its sole discretion, to require the Company to redeem any or all of the outstanding preferred units for the redemption amount of such preferred units as of the redemption date, which is an amount equal to the QIC’s investment amount plus the Preferred Return. As of December 31, 2023, these preferred units are recorded in the consolidated balance sheet as Temporary equity. The Company accretes the Preferred Return and $0.5 million reimbursable fees to Temporary Equity over the period from the date of issuance to the five year anniversary of the Strategic Investment. The LLCA grants QIC the right to block or participate in certain significant operating and capital decisions of the Company, including the approval of the Company’s budget and business plan, strategic investments, and incurring additional debt, among others. These rights allow QIC to effectively participate in significant financial and operating decisions of the Company that are made in the Company’s ordinary course of business. The Company’s activity prior to July 27, 2023 is included within the consolidated financial statements of FBG and as of July 27, 2023, the Company has been deconsolidated from FBG and is now accounted for as an equity method investment in FBG’s consolidated financial statements. The Company’s consolidated statement of operations and consolidated statement of cash flows include the full year of activity for the year ended December 31, 2023. 2. Summary of significant accounting policies Use of estimates The preparation of consolidated financial statements in conformity with US GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, disclosures of contingent assets and liabilities as of the date of the consolidated financial statements, and the reported amounts of revenues and expenses during the reporting periods. The Company has prepared the estimates using the most current and best available information that are considered reasonable under the circumstances. However, actual results may differ materially from those estimates. Accounting policies subject to estimates include, but are not limited to, inputs used to recognize revenue over time and the valuation and impairment testing of goodwill. Cash and cash equivalents The Company considers all highly liquid instruments with an original maturity of three months or less as cash equivalents. Concentration of credit risk Financial instruments which potentially subject the Company to concentrations of credit risk consist primarily of Cash and cash equivalents, Accounts receivable and Contract assets. The Company places its Cash and cash equivalents with financial institutions of high credit quality. At times, such amounts exceed federally insured limits. Management believes that no significant concentration of credit risk exists with respect to these cash balances because of its assessment of the creditworthiness and financial viability of the respective financial institutions. The Company provides credit to its customers located both inside and outside the United States in its normal course of business. Receivables are presented net of an allowance for credit losses based on the Company’s assessment of the collectability of customer accounts. The Company maintains an allowance that provides for an adequate reserve to cover estimated losses on receivables as well as contract assets. The Company determines the adequacy of the allowance by estimating the probability of loss based on the Company’s historical credit loss experience and taking into consideration current market conditions and supportable forecasts that affect the collectability of the reported amount. The Company regularly evaluates receivable and contract asset balances considering factors such as the customer’s credit worthiness, historical payment experience and the age of the outstanding balance. Changes to expected credit losses during the period are included in Credit loss expense in the Company’s consolidated statement of operations. After concluding that a reserved accounts receivable is no longer collectible, the Company reduces both the gross receivable and the allowance for credit losses. F- 50 The Company had two customers with revenue greater than 10% of total revenue for the year ended December 31, 2023, approximately $18.2 million for one customer and $2.4 million for the second customer, respectively. Accounts receivable balances for the two customers totaled $3.8 million (83% of total Accounts receivable, net) as of December 31, 2023. Inventories Inventories consist of theme park ride vehicles that are valued at the lower of cost or net realizable value. Cost is calculated on a first-in, first-out (“FIFO”) basis. Net realizable value is determined as the estimated selling price in the ordinary course of business less the estimated costs necessary to complete the sale. The Company reviews its inventories for obsolescence and any such inventories are written down to net realizable value. Inventories were written down by $0.4 million to $0 as of December 31, 2023. Property and equipment, net Property and equipment are stated at historical cost, net of accumulated depreciation and impairment losses. Expenditures that materially increase the life of the assets are capitalized. Routine repairs and maintenance are expensed as incurred. When an item is retired or sold, the cost and applicable accumulated depreciation are removed, and any resulting gain or loss is recognized in the consolidated statement of operations. Depreciation is calculated on a straight-line basis over the estimated useful life of the asset using the following terms: Equipment 3 – 5 years Furniture 7 years Leasehold improvements Lesser of lease term or asset life Leases The Company evaluates leases at the commencement of the lease to determine the classification as an operating or finance lease. A right-of-use (“ROU”) asset and corresponding lease liability are recorded at lease commencement. Operating and finance lease liabilities are recognized based on the present value of minimum lease payments over the remaining expected lease term. Lease expenses related to operating leases are recognized on a straight-line basis as a component of Selling, general and administrative expense in the consolidated statement of operations. Amortization expense and interest expense related to finance leases are included in Depreciation and amortization expense and Interest expense, respectively, in the consolidated statement of operations. Goodwill and Intangible assets Goodwill represents the excess of purchase consideration over the fair value of identifiable assets acquired and liabilities assumed when a business is acquired. The Company initially records its intangible assets at fair value. Definite lived intangible assets consist of customer relationships, trademarks and trade names and developed technology which are amortized over their estimated useful lives. Note 6 — Intangible assets, net. Goodwill is not amortized, but instead reviewed for impairment at least annually during the fourth quarter, or more frequently if circumstances indicate that the value of goodwill may be impaired. The impairment analysis of goodwill is performed at the reporting unit level. A qualitative assessment is first conducted to determine whether it is more likely than not that the fair value of the applicable reporting unit exceeds the carrying value taking into consideration significant events, and changes in the overall business environment or macroeconomic conditions. If we conclude that it is more likely than not that the fair value of a reporting unit is less than its carrying value, then we perform a quantitative impairment test by comparing the fair value of a reporting unit with its carrying amount. We recognize an impairment on goodwill if the estimated fair value of a reporting unit is less than its carrying value, in an amount not to exceed the carrying value of the reporting unit’s goodwill. There were no changes to goodwill and no goodwill impairment charges recognized during the year ended December 31, 2023. F- 51 The Company reviews definite lived intangible assets for impairment whenever events or changes in circumstances indicate that the carrying amount of such assets may not be recoverable. Recoverability of these amortizing intangible assets is determined by comparing the forecasted undiscounted net cash flows of the operation to which the assets relate to the carrying amount. If the operation is determined to be unable to recover the carrying amount of its assets, then the assets are written down to fair value. Fair value is determined based on discounted cash flows or appraised values, depending on the nature of the assets. There were no impairment losses recognized for definite lived intangible assets for the year ended December 31, 2023. Recoverability of Other long-lived assets The Company’s other long-lived assets consist primarily of property and equipment and lease ROU assets. The Company evaluates long-lived assets for impairment whenever events or changes in circumstances indicate the carrying value of such assets may not be recoverable. For property and equipment and lease ROU assets, the Company compares the estimated undiscounted cash flows generated by the asset or asset group to the current carrying value of the asset. If the undiscounted cash flows are less than the carrying value of the asset, then the asset is written down to fair value. There was no impairment loss recognized for other long-lived assets for the year ended December 31, 2023. Revenue recognition Based on the specific analysis of its contracts, the Company has determined that its contracts are subject to revenue recognition in accordance with ASC 606, Revenue from Contracts with Customers (“ASC 606”). Recognition under the ASC 606 five-step model involves (i) identification of the contract, (ii) identification of performance obligations in the contract, (iii) determination of the transaction price, (iv) allocation of the transaction price to the previously identified performance obligations, and (v) revenue recognition as the performance obligations are satisfied. During step one of the five step model, the Company considers whether contracts should be combined or separated, and based on this assessment, the Company combines closely related contracts when all the applicable criteria are met. The combination of two or more contracts requires judgment in determining whether the intent of entering into the contracts was effectively to enter into a single contract, which should be combined to reflect an overall profit rate. Similarly, the Company may separate an arrangement, which may consist of a single contract or group of contracts, with varying rates of profitability, only if the applicable criteria are met. Judgment is involved in determining whether a group of contracts may be combined or separated based on how the arrangement and the related performance criteria were negotiated. The conclusion to combine a group of contracts or separate a contract could change the amount of revenue and gross profit recorded in a given period. A performance obligation is a promise in a contract to transfer a distinct good or service to the customer. A contract’s transaction price is allocated to each distinct performance obligation and recognized as revenue when the performance obligation is satisfied. The Company’s contracts with customers do not include a right of return relative to delivered products. In certain cases, contracts are modified to account for changes in the contract specifications or requirements. In most instances, contract modifications are accounted for as part of the existing contract. Certain contracts with customers have options for the customer to acquire additional goods or services. In most cases, the pricing of these options are reflective of the standalone selling price of the good or service. These options do not provide the customer with a material right and are accounted for only when the customer exercises the option to purchase the additional goods or services. If the option on the customer contract was not indicative of the standalone selling price of the good or service, the material right would be accounted for as a separate performance obligation. A significant portion of the Company’s revenue is derived from master planning and design contracts, media production contracts and turnkey attraction contracts. The Company accounts for a contract once it has approval and commitment from all parties, the rights and payment terms of the parties can be identified, the contract has commercial substance and the collectability of the consideration, or transaction price, is probable. Contracts are often subsequently modified to include changes in specifications or requirements, these changes are not accounted for until they meet the requirements noted above. Each promised good or service within a contract is accounted for separately under the guidance of ASC 606, if they are distinct. Promised goods or services not meeting the criteria for being a distinct performance obligation are bundled into a single performance obligation with other goods or services that together meet the criteria for being distinct. The appropriate allocation of the transaction price and recognition of revenue is then applied for the bundled performance obligation. The Company has concluded that its service contracts generally contain a single performance obligation given the interrelated nature of the activities which are significantly customized and not distinct within the context of the contract. F- 52 Once the Company identifies the performance obligations, the Company determines the transaction price, which includes estimating the amount of variable consideration to be included in the transaction price, if any. The Company’s contracts generally do not contain credits, price concessions, or other types of potential variable consideration. Prices are fixed at contract inception and are not generally contingent on performance or any other criteria. The Company engages in long-term contracts for production and service activities and recognizes revenue for performance obligations over time. These long-term contracts involve the planning, design, and development of attractions. Revenue is recognized over time (versus point in time recognition), as the Company’s performance creates an asset with no alternative use to the Company and the Company has an enforceable right to payment for performance completed to date, and the customer receives the benefit as the Company builds the asset. The Company considers the nature of these contracts and the types of products and services provided when determining the proper accounting for a particular contract. These are primarily fixed-price contracts. For long-term contracts, the Company typically recognizes revenue using the input method, using a cost-to-cost measure of progress. The Company believes that this method represents the most faithful depiction of the Company’s performance because it directly measures value transferred to the customer. Contract estimates are based on various assumptions to project the outcome of future events that may span several years. These assumptions include, but are not limited to, the amount of time to complete the contract, including the assessment of the nature and complexity of the work to be performed; the cost and availability of materials; the availability of subcontractor services and materials; and the availability and timing of funding from the customer. The Company bears the risk of changes in estimates to complete on a fixed-price contract, which may cause profit levels to vary from period to period. For over time contracts, the Company recognizes anticipated contract losses as soon as they become known and estimable. Accounting for long-term contracts requires significant judgment relative to estimating total costs, in particular, assumptions relative to the amount of time to complete the contract, including the assessment of the nature and complexity of the work to be performed. The Company’s estimates are based upon the professional knowledge and experience of its engineers, program managers and other personnel, who review each long-term contract monthly to assess the contract’s schedule, performance, technical matters and estimated cost at completion. Changes in estimates are applied retrospectively and when adjustments in estimated contract costs are identified, such revisions may result in current period adjustments to earnings applicable to performance in prior periods. On long-term contracts, the portion of the payments retained by the customer is not considered a significant financing component. At contract inception, the Company also expects that the lag period between the transfer of a promised good or service to a customer and when the customer pays for that good or service will not constitute a significant financing component. Many of the Company’s long-term contracts have milestone payments, which align the payment schedule with the progress towards completion on the performance obligation. On some contracts, the Company may be entitled to receive an advance payment, which is not considered a significant financing component because it is used to facilitate inventory demands at the onset of a contract and to safeguard the Company from the failure of the other party to abide by some or all of their obligations under the contract. Contract balances result from the timing of revenue recognized, billings and cash collections, and the generation of Contract assets and liabilities. Contract assets represent revenue recognized in excess of amounts invoiced to the customer and the right to payment is not subject to the passage of time. Contract liabilities are presented on the Company’s consolidated balance sheet and consist of billings in excess of revenues. Billings in excess of revenues represent milestone billing contracts where the billings of the contract exceed recognized revenues. Selling, general and administrative expenses Our Selling, general and administrative expenses include payroll, payroll taxes and benefits for non-project related employee salaries, taxes, and benefits as well as technology infrastructure, marketing, occupancy, finance and accounting, legal, human resources, and corporate overhead expenses. A portion of these expenses are shared services purchased from FBG. Research and development expenses Research and development expenses primarily consist of internal labor costs involved in research and development activities related to the development of new products. Research and development expenses are expensed in the period incurred. F- 53 Income taxes The Company is considered a partnership for US income tax purposes, and therefore, its members are subject to tax on the Company’s income. The consolidated financial statements do not include a provision for federal or state income tax expense or benefit arising from net income or loss reported in the consolidated statement of operations for these entities as the taxable income or loss is included in the tax returns of the Company’s members. The Company accounts for income taxes under the asset and liability method, which requires the recognition of deferred tax assets (“DTA”) and deferred tax liabilities (“DTL”) for the expected future tax consequences of events that have been included in the financial statements. Under this method, the Company determines DTAs and DTLs on the basis of the differences between the financial statement and tax bases of assets and liabilities by using enacted tax rates in effect for the year in which the differenc e s are expected to reverse. The effect of a change in tax rates on DTAs and DTLs is recognized in income in the period that includes the enactment date. The Company recognizes DTAs to the extent that it is believed that these assets are more likely than not to be realized. In making such a determination, the Company considers all available positive and negative evidence, including future reversals of existing taxable temporary differences, projected future taxable income, tax-planning strategies, carryback potential if permitted under the tax law, and results of recent operations. If determined that FCG would be able to realize DTAs in the future in excess of their net recorded amount, FCG would make an adjustment to the DTA valuation allowance, which would reduce the provision for income taxes. FCG records uncertain tax positions in accordance with ASC 740, Income Taxes (“ASC 740”) on the basis of a two-step process in which (1) the Company will determine whether it is more likely than not that the tax positions will be sustained on the basis of the technical merits of the position and (2) for those tax positions that meet the more-likely-than-not recognition threshold, FCG recognizes the largest amount of tax benefit that is more than 50 percent likely to be realized upon ultimate settlement with the related tax authority. The Company recognizes interest and penalties related to tax positions in income tax expense. Fair value measurement The Company accounts for certain of its financial assets and liabilities at fair value. The Company uses the following three-level hierarchy, which prioritizes, within the measurement of fair value, the use of market-based information over entity-specific information for fair value measurements based on the nature of inputs used in the valuation of an asset or liability as of the measurement date. Level 1 — Quoted prices for identical instruments in active markets. Level 2 — Quoted prices for similar instruments in active markets, quoted prices for similar instruments in markets that are not active; and model-derived valuations in which significant inputs and value drivers are observable in active markets. Level 3 — Valuations derived from valuation techniques in which one or more significant inputs or value drivers are unobservable and include situations where there is little, if any, market activity for the asset or liability. Fair value focuses on an exit price and is defined as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. When determining the fair value measurements for assets and liabilities which are required to be recorded at fair value, the Company considers the principal or most advantageous market in which the Company would transact and the market-based risk measurements or assumptions that market participants would use in pricing the asset or liability, such as risk inherent in valuation techniques, transfer restrictions and credit risks. The inputs or methodology used for valuing financial instruments are not necessarily an indication of the risk associated with investing in those financial instruments. The carrying amounts of Cash and cash equivalents, Accounts receivables, Accounts payable and Accrued expenses and other current liabilities approximate fair value due to the short-term maturities of these assets and liabilities. The carrying amounts of finance leases are discounted to approximate fair value. Related party transactions Related parties are comprised of i) parties which have the ability, directly or indirectly, to control or exercise significant influence over the other party in making financial and operating decisions, and ii) parties under common control. Transactions where there is a transfer of resources or obligations between related parties are disclosed or referenced in Note 8 — Related party transactions. F- 54 Recently issued accounting standards In June 2016, the FASB issued ASU No. 2016-13, Financial Instruments — Credit Losses (Topic 326) — Measurement of Credit Losses on Financial Instruments (“ASC 326”). This standard amends several aspects of the measurement of credit losses on consolidated financial statements, including trade receivables. The standard replaces the existing incurred credit loss model with the Current Expected Credit Losses (“CECL”) model and amends certain aspects of accounting for purchased financial assets with deterioration in credit quality since origination. Under CECL, the allowance for losses for financial assets that are measured at amortized costs reflect management’s estimate of credit losses over the remaining expected life of the financial assets, based on historical experience, current conditions and forecasts that affect the collectability of the reported amount. The Company adopted this standard for its fiscal year beginning on January 1, 2023. The adoption did not have a material impact on our financial statements. 3. Revenue Disaggregated components of revenue for the Company are as follows: Year ended December 31, 2023 Services transferred over time: Media production services $ 2,753 Design and project management services 17,701 Attraction hardware and turnkey sales 2,093 Total revenue $ 22,547 Total revenue from services provided to our related parties was $10.3 million for the year ended December 31, 2023. See Note 8 – Related party transactions. The following tables present the components of our Accounts receivable, net and contract balances: As of December 31, 2023 Related party Other Total Accounts receivable, net $ 4,576 $ 74 $ 4,650 Contract assets 1,748 92 1,840 Contract liabilities (1,122 ) — (1,122 ) As of December 31, 2023, the aggregate amount of the transaction price for open contracts allocated to remaining performance obligations was $ 15.3 million. The Company expects to recognize approximately 96% of its remaining performance obligations as revenue within the next 12 months and the balance thereafter. Geographic information The Company has contracts with customers located in the United States, Caribbean, Saudi Arabia, Hong Kong, and Spain. The following table presents revenues based on the geographic location of the Company’s customer contracts: Year ended December 31, 2023 Saudi Arabia $ 18,411 Caribbean 2,440 USA 392 Hong Kong 1,284 Other 20 Total revenue $ 22,547 F- 55 4. Property and equipment, net Property and equipment consisted of the following: Year ended December 31, 2023 Equipment $ 1,525 Furniture 203 Leasehold improvements 250 Software and licenses 26 Construction in progress 920 Property and equipment, total 2,924 Accumulated depreciation (846 ) Property and equipment, net $ 2,078 Depreciation expense was $ 0.3 million for the year ended December 31, 2023. 5. Leases The Company’s operating leases primarily consist of real estate property for office and warehouse space, with various terms extending through 2040. The Company has finance leases related to an office, facility and computer equipment. The Company has not subleased any properties. The Company leases office space from a related party, Penut Productions, LLC (“Penut”), a wholly owned subsidiary of The Magpuri Revocable Trust, under a series of long-term lease agreements. Rental amounts are due monthly, and the Company is responsible for taxes, insurance, and maintenance on the leased locations. The following table presents the amounts of ROU assets and lease liabilities: As of December 31, 2023 Related party Other Total Right-of-use assets: Operating $ 675 $ 543 $ 1,218 Finance 504 32 536 Total right-of-use assets $ 1,179 $ 575 $ 1,754 Lease liabilities Current: Operating $ 37 $ 275 $ 312 Finance 92 17 109 Total current 129 292 421 Non-current: Operating $ 638 242 $ 880 Finance 909 12 921 Total non-current 1,547 254 1,801 Total lease liabilities $ 1,676 $ 546 $ 2,222 F- 56 Finance lease assets are reported net of accumulated amortization of $ 0.2 million as of December 31, 2023. The components of lease expense in the consolidated statement of operations are as follows: Year ended December 31, 2023 Related party Other Total Operating lease expense $ 81 $ 326 $ 407 Finance lease expense: Amortization of leased assets 66 16 82 Interest on lease liabilities 67 2 69 Total lease expense $ 214 $ 344 $ 558 Supplemental cash flow information related to leases is as follows: Year ended December 31, 2023 Cash paid for amounts included in the measurement of lease liabilities: Operating cash outflows from operating leases $ 435 Operating cash outflows from finance leases 69 Financing cash outflows from finance leases 104 Right-of-use assets obtained in exchange for lease liabilities: Operating leases 514 Finance leases 35 In determining the discount rate applied, the Company considered several factors. For certain leases, the Company determined that the discount rate implied in the lease was determinable and was closely aligned with the lessors third party borrowing rate based on the payment terms of the lease which was designed for the lease payments to cover the property owners financing and related costs. The weighted-average remaining lease terms and discount rates are as follows: As of December 31, 2023 Weighted-average remaining lease term (Years) Operating leases 7.7 Finance leases 15.1 Weighted-average discount rate Operating leases 7.84 % Finance leases 6.45 % F- 57 The annual maturities of the Company’s operating lease liabilities as of December 31, 2023, are as follows: Related party Other Total 2024 $ 81 $ 312 $ 393 2025 81 253 334 2026 81 — 81 2027 81 — 81 2028 81 — 81 Thereafter 584 — 584 Total future lease commitments $ 989 $ 565 $ 1,554 Less imputed interest (314 ) (48 ) (362 ) Present value of lease liabilities $ 675 $ 517 $ 1,192 The annual maturities of the Company’s finance lease liabilities as of December 31, 2023, are as follows: Related party Other Total 2024 $ 155 $ 18 $ 173 2025 155 13 168 2026 155 — 155 2027 116 — 116 2028 76 — 76 Thereafter 883 — 883 Total future lease commitments $ 1,540 $ 31 $ 1,571 Less imputed interest (539 ) (2 ) (541 ) Present value of lease liabilities $ 1,001 $ 29 $ 1,030 6. Intangible assets, net The following table presents the Company’s intangible assets: Year ended December 31, 2023 Customer relationships $ 1,100 Tradenames and trademarks 2,800 Developed technology 1,500 Intangible assets, total 5,400 Accumulated amortization (1,095 ) Intangible assets, net $ 4,305 F- 58 The weighted average amortization period for customer relationships, tradenames and trademarks, and developed technology is 5, 7, and 6 years, respectively. Intangible asset amortization was $0.5 million for the year ended December 31, 2023. The following table presents our estimated future amortization of intangible assets as of December 31, 2023: Amount For the years ended December 31, 2024 $ 738 2025 738 2026 738 2027 738 2028 667 Thereafter 686 $ 4,305 7. Accrued expenses and other current liabilities The Company’s Accrued expenses and other current liabilities consisted of: As of December 31, 2023 Accrued payroll and related expenses $ 672 Accrued insurance premiums 15 Project-related accruals 1,355 Audit and professional fees 361 Other 59 $ 2,462 There were no accrued expenses and other current liabilities with related parties as of December 31, 2023. 8. Related party transactions Lease agreements The Company leases office space from Penut, a wholly owned subsidiary of The Magpuri Revocable Trust. See Note 5 — Leases. Settlement of intercompany payables to FBG on deconsolidation In connection with the Strategic Investment, the Company paid cash of approximately $4.0 million to FBG to settle a portion of the outstanding intercompany payable balance. The $7.0 million remaining balance of intercompany payables to FBG not settled as of deconsolidation from FBG on July 27, 2023 was treated as a members’ equity contribution from FBG. Intercompany Services Agreement between FBG and the Company In conjunction with the closing of the Subscription Agreement described in Note 1 - Description of business and basis of presentation, the Intercompany Services Agreement was established between FBG and the Company. No balances are outstanding on this Intercompany Services Agreement as of December 31, 2023. The Company also provides research and development, and other services to FBG’s subsidiaries Falcon’s Beyond Brands and Falcon’s Beyond Destinations. FBG currently owes less than $0.1 million to FCG related to these services as of December 31, 2023. FBG has also incurred reimbursable costs on behalf of FCG subsequent to July 27, 2023. FCG has $0.6 million in amounts owed to FBG related to these reimbursable costs as of December 31, 2023. Expected credit loss on receivables from Sierra Parima During the year ended December 31, 2023, the Company revised its estimated expected credit loss on all receivables from Sierra Parima, an unconsolidated joint venture of FBG. Based on an evaluation of Sierra Parima’s credit characteristics, the expected credit loss reserve was increased to $3.9 million as of December 31, 2023, which represents the Company’s estimate of expected credit losses over the contractual life of each receivable. This loss reserve now offsets all receivables from Sierra Parima as of December 31, 2023. As of FCG’s deconsolidation from FBG on July 27, 2023, Sierra Parima and Karnival are no longer related parties of the Company. F- 59 The Company will continue to periodically evaluate these estimates to determine if additional reserves are needed. See Note 2 — Summary of significant accounting policies. See Note 1 — Description of business and basis of presentation for further discussion. 9. Income taxes Falcon’s Creative Group, LLC and its subsidiaries are primarily comprised of partnerships and other “pass-through entities” not subject to income tax. As a pass-through entity, each member therein is responsible for income taxes related to income or loss based on their respective share of an entity’s income and expenses. Certain consolidated subsidiaries are subject to taxation in the local jurisdictions as a result of their entity classification for tax reporting purposes. The income (loss) before income taxes includes the following components (in thousands): December 31, 2023 Income (loss) before income taxes United States $ (12,637 ) Foreign 54 Total $ (12,583 ) The Company has provided U.S. federal, foreign and state and local corporate income tax for certain consolidated subsidiaries. The provision for income taxes consists of the following (in thousands): December 31, 2023 Current Federal $ - State - Foreign 54 Deferred - Federal - State - Foreign - Income tax benefit $ 54 The tax effects of temporary differences resulted in the following deferred tax assets and liabilities (in thousands): As of December 31, 2023 Net operating loss carry forward $ - Other - Valuation allowance - Deferred tax asset, net of allowance $ - The following table reconciles the U.S. federal statutory tax rate to the effective income tax rate of the Company’s income tax expense: December 31, 2023 Statutory federal income tax rate 21.0 % Partnership earnings not subject to tax (19.2 )% Other (1.4 )% Effective tax rate 0.4 % F- 60 At each balance sheet date, management assesses the need to establish a valuation allowance that reduces deferred income tax assets when it is more likely than not that all, or some portion, of the deferred income tax assets will not be realized. A valuation allowance would be based on all available information including the Company’s assessment of uncertain tax positions and projections of future taxable income and capital gain from each tax-paying component in each jurisdiction, principally derived from business plans and available tax planning strategies. As of December 31, 2023, the Company had no net operating loss carryforwards for tax purposes. The Company’s policy is to record interest and penalties associated with unrecognized tax benefits as additional income in the accompanying Consolidated Statement of Operations. Accrued interest and penalties are included on the related tax liability line in the Consolidated Balance Sheet. As of December 31, 2023, the Company had no unrecognized tax benefits. There were no changes in the Company’s unrecognized tax benefits during the year ended December 31, 2023. The Company did not recognize any interest or penalties during fiscal 2023 related to unrecognized tax benefits. FCG and its subsidiaries are included in a single United States partnership federal income tax return. FCG and its subsidiaries are subject to routine examination by tax authorities in Philippines jurisdiction. Tax year 2023 is considered open for purposes of federal examination under statutes of limitations. There are no ongoing U.S. federal, state, or foreign tax audits or examinations as of the date of the issuance of these consolidated financial statements. Treehouse files a separate local income tax return. 10. Retirement plan The Company sponsors a 401(k) plan (“The Plan”) for its employees. Under the Plan, eligible employees can contribute a portion of their salary, and the Company will match up to 3% of those contributions. The Company’s obligation is limited to its contributions to the plan, and the retirement benefit is dependent on the performance of the investments chosen by the participants. The employer match for 2023 was $0.2 million which is included as a component of Selling, general and administrative expense in the consolidated statement of operations. 11. Commitments and contingencies Litigation — The Company is named from time to time as a party to lawsuits and other types of legal proceedings and claims in the normal course of business. The Company accrues for contingencies when it believes that a loss is probable and that it can reasonably estimate the amount of any such loss. There were no material accruals for legal proceedings or claims as of December 31, 2023. Indemnification — In the ordinary course of business, the Company enters into certain agreements that provide for indemnification by the Company of varying scope and terms to customers, vendors, directors, officers, employees, and other parties with respect to certain matters. Indemnification includes losses from breach of such agreements, services provided by the Company, or third-party intellectual property infringement claims. These indemnities may survive termination of the underlying agreement and the maximum potential amount of future indemnification payments, in some circumstances, are not subject to a cap. As of December 31, 2023, there were no known events or circumstances that have resulted in a material indemnification liability. 12. Subsequent events On January 9, 2024, the Company obtained a mortgage loan of $6.2 million from Climate First Bank for purposes of its acquisition of property in Orlando, Florida for a new headquarters for FCG. The property, consisting of approximately 9.59 acres and a 53,600 square foot office building, was purchased from Valencia Community College in Orlando, Florida for $10.3 million. The mortgage loan, which is prepayable without penalty, has an 8.75% interest rate for the first five years with an initial 18-month interest only period. The interest rate resets to the five-year US Treasury plus 275 basis points after five years and shall remain fixed until the end of the term on January 9, 2034. On January 18, 2024, Falcon’s Treehouse, a subsidiary of the Company, and QIC entered into a Consultancy Services Agreement (the “Services Agreement”), pursuant to which, among other things, Falcon’s Treehouse agreed to provide certain design, technological and construction services related to the design and development of one theme park. The Services Agreement has a total contract value of up to approximately $83.1 million. The Services Agreement is expected to conclude between January 7, 2026, and July 24, 2027. F- 61 SIGNATURE Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized. FALCON’S BEYOND GLOBAL, INC. Dated: April 29, 2024 By: /s/ Cecil D. Magpuri Name: Cecil D. Magpuri Title: Chief Executive Officer and Director (Principal Executive Officer) POWER OF ATTORNEY Each person whose signature appears below constitutes and appoints each of each of Cecil D. Magpuri and Joanne Merrill, acting alone or together with another attorney-in-fact, as his or her true and lawful attorney-in-fact and agent, with full power of substitution and resubstitution, for such person and in his or her name, place and stead, in any and all capacities, to sign any or all amendments to this report, and to file the same, with all exhibits thereto, and other documents in connection therewith, with the Securities and Exchange Commission, granting unto said attorney-in-fact and agents, and each of them, full power and authority to do and perform each and every act and thing requisite and necessary to be done in and about the premises, as fully to all intents and purposes as he might or could do in person, hereby ratifying and confirming all that said attorney-in-fact and agent, or his or her substitute or substitutes, may lawfully do or cause to be done by virtue hereof. Pursuant to the requirements of the Exchange Act, this report has been signed by the following persons on behalf of the registrant and in the capacities on the dates indicated. Signature Title Date /s/ Cecil D. Magpuri Chief Executive Officer and Director April 29, 2024 Cecil D. Magpuri (Principal Executive Officer) /s/ Joanne Merrill Chief Financial Officer April 29, 2024 Joanne Merrill (Principal Financial Officer and Principal Accounting Officer) /s/ Scott Demerau Executive Chairman and Director April 29, 2024 Scott Demerau /s/ Jarrett T. Bostwick Director April 29, 2024 Jarrett T. Bostwick /s/ Simon Philips Director April 29, 2024 Simon Philips /s/ Sandy Beall Director April 29, 2024 Sandy Beall /s/ Doug Jacob Director April 29, 2024 Doug Jacob 93