Falcon's Beyond Global, Inc. (FBYD)

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations.

The following discussion and analysis of our financial condition and results of operations is provided to supplement our unaudited condensed consolidated financial statements and the accompanying notes as of and for the three and six months ended June 30, 2026, and 2025, included elsewhere in this Quarterly Report. We intend for this discussion to provide the reader with information to assist in understanding our unaudited condensed consolidated financial statements and the accompanying notes, the changes in those financial statements and the accompanying notes from period to period along with the primary factors that accounted for those changes. Certain information contained in this management’s discussion and analysis includes forward-looking statements that involve risks and uncertainties. Our actual results may differ materially from those anticipated in these forward-looking statements as a result of many factors. Please see “Cautionary Note Regarding Forward-Looking Statements,” in this Quarterly Report.

Overview of Business

We are a visionary entertainment and technology enterprise at the forefront of the global experience economy. We design, develop, engineer, deliver, and commercialize immersive physical and digital experiences for leading brands, developers, and destination operators worldwide, as well as for our own portfolio of entertainment and technology concepts. Our business is built on an integrated experience platform that brings together creative development, proprietary technologies, advanced engineering, IP, and operational execution to enable the repeatable creation, deployment, and scaling of entertainment experiences across multiple formats and locations globally. We operate through three complementary business divisions: Falcon’s Creative Group (“FCG”), Falcon’s Beyond Brands (“FBB”), and Falcon’s Beyond Destinations (“FBD”), each of which serves a distinct role within our operating model and participates in different stages of value creation within the experience economy. These divisions are conducted through five operating segments. FCG provides creative and advisory services including destination strategy, master planning, experiential and attraction design, digital media, interactive software, IP development, and creative guardianship for entertainment and hospitality destinations. FBB, consisting of Falcon's Attractions and FBB-Other, encompasses a broad portfolio of intellectual property, proprietary technologies, and operating businesses that design, engineer, commercialize, and deploy entertainment systems, products, content, and experiences across physical and digital environments. FBD, consisting of Producciones de Parques, S.L. (“PDP”), a joint venture between Falcon’s and Meliá Hotels International, S.A. (“Meliá”), and Destinations Operations, develops, owns, operates, and expands entertainment venues, hospitality experiences, and branded destination concepts across a variety of location‑based formats, utilizing proprietary and third‑party intellectual property.

Falcon’s Beyond Global, Inc., a Delaware corporation (“Pubco”, “FBG”, or the “Company”), entered into an Amended and Restated Agreement and Plan of Merger, dated as of September 1, 2023 (the “Merger Agreement”), by and among Pubco, FAST Acquisition Corp. II, a Delaware corporation (“FAST II”), Falcon’s Beyond Global, LLC, a Delaware limited liability company (“Falcon’s Opco”), 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 Falcon’s Opco (the “Acquisition Merger,” and collectively with the SPAC Merger, the “Business Combination”), with Falcon’s Opco as the surviving entity of such merger.

Acquisition of OES

On May 9, 2025, we acquired certain tangible assets and intellectual property, including patented technologies and proprietary engineering and manufacturing processes, from Oceaneering Entertainment Systems (“OES”), a division of Oceaneering International, Inc., for $1.6 million. The acquisition expanded our attractions services business and formed the foundation of the Falcon's Attractions segment.

Our unaudited condensed consolidated financial statements have been prepared in accordance with generally accepted accounting principles in the United States (“U.S. GAAP”). All amounts are shown in thousands of U.S. dollars unless otherwise stated.

The following reflects our results of operations for the three and six months ended June 30, 2026 and 2025.

23

Liquidity and Going Concern

We have continued to invest in initiatives focused primarily on expanding our Falcon's Beyond Brands division, including product development, talent acquisition, and selective strategic investments. These activities have contributed to operating losses and negative cash flows from operations. Net cash used in operating activities was $0.3 million for the six months ended June 30, 2026, a reduction compared with comparable prior periods. Accordingly, we evaluated our ability to continue as a going concern through at least twelve months from the date of the issuance of these unaudited condensed consolidated financial statements.

Our development plans and associated working capital needs have been funded by a combination of debt and equity investments from our stockholders and the sale of non-core assets. We expect to continue utilizing a mix of these funding sources, including access to capital markets, additional financing arrangements, potential monetization of non-core investments, and expected distributions from PDP associated with the return of required withholding taxes from the sale of the Sol Tenerife Hotel in 2025 to support our ongoing growth strategy and working capital requirements. As of June 30, 2026, we have a working capital deficit of $8.4 million that was driven by the Deferred Loan Settlement of $6.9 million, which is included within the $8.9 million of debt obligations classified as current based on their contractual maturity dates. We are actively evaluating refinancing and other alternatives with respect to these obligations. See “Note 6 – Long-term debt and borrowing arrangements” in our unaudited condensed consolidated financial statements for further discussion.

We assess our ability to meet obligations over the next twelve months based on current liquidity levels and assume the continued execution of our operating plan and certain financing and capital initiatives. Although cash flows from operations have improved compared with prior comparable periods, we have incurred operating losses and negative cash flows from operations in recent periods and have ongoing capital needs to support our growth initiatives and to settle short-term debt obligations. These conditions raise substantial doubt about our ability to continue as a going concern. We continue to take active steps to strengthen our capital position and improve liquidity, including pursuing additional financing and evaluating strategic alternatives; however, because these actions had not been completed as of the date of issuance of these financial statements, they do not alleviate the substantial doubt described above. There can be no assurance that additional capital or financing, if obtained, will provide sufficient funding for the next twelve months from the date of this Quarterly Report on Form 10-Q. This Quarterly Report on Form 10-Q does not 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 us to continue as a going concern.

Results of Operations

The following comparisons are historical results and are not indicative of future results, which could differ materially from the historical financial information presented. The following table summarizes our results of operations for the following periods:

24

Revenue

Revenue increased for the three and six months ended June 30, 2026, compared to the same period in 2025, primarily driven by the growth of the Falcon's Attractions business. As of June 30, 2026, Falcon's Attractions had a contract

[Excerpt truncated for page length; source filing is linked above.]

Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations.

The following discussion and analysis of financial condition and results of operations of the Company is provided to supplement the audited consolidated financial statements and the accompanying notes of the Company as of and for the years ended December 31, 2025, and 2024, included elsewhere in this Annual Report. We intend for this discussion to provide the reader with information to assist in understanding the Company’s audited consolidated financial statements and the accompanying notes, the changes in those financial statements and the accompanying notes from period to period along with the primary factors that accounted for those changes. Certain information contained in this management’s discussion and analysis includes forward-looking statements that involve risks and uncertainties. Our actual results may differ materially from those anticipated in these forward-looking statements as a result of many factors. Please see “Cautionary Statement Regarding Forward-Looking Statements and Risk Factor Summary,” in this Annual Report.

Overview of Business

The Company is a visionary entertainment and technology enterprise at the forefront of the global experience economy. We design, develop, engineer, deliver, and commercialize immersive physical and digital experiences for leading brands, developers, and destination operators worldwide, as well as for our own portfolio of entertainment and technology concepts. Our business is built on an integrated experience platform that brings together creative development, proprietary technologies, advanced engineering, IP, and operational execution to enable the repeatable creation, deployment, and scaling of entertainment experiences across multiple formats and locations globally. We operate through three complementary business divisions: Falcon’s Creative Group, Falcon’s Beyond Brands, and Falcon’s Beyond Destinations, each of which serves a distinct role within the Company’s operating model and participates in different stages of value creation within the experience economy. These divisions are conducted through five and four operating segments as of December 31, 2025 and 2024, respectively. FCG provides creative and advisory services including destination strategy, master planning, experiential and attraction design, digital media, interactive software, IP development, and creative guardianship for entertainment and hospitality destinations. FBB, consisting of Falcon's Attractions and FBB, encompasses a broad portfolio of intellectual property, proprietary technologies, and operating businesses that design, engineer, commercialize, and deploy entertainment systems, products, content, and experiences across physical and digital environments. FBD, consisting of PDP, a joint venture between Falcon’s and Meliá, and Destinations Operations, develops, owns, operates, and expands entertainment venues, hospitality experiences, and branded destination concepts across a variety of location‑based formats, utilizing proprietary and third‑party intellectual property.

Our consolidated financial statements have been prepared in accordance with U.S. GAAP. All amounts are shown in thousands of U.S. dollars unless otherwise stated.

The following reflects our results of operations for the years ended December 31, 2025 and 2024.

Recent Developments

Acquisition of OES

In February 2025, the Company hired a team of 29 employees that had previously worked for OES. The employees were hired under customary terms and conditions for newly hired employees and no benefits or obligations from OES were paid or assumed associated with these employees. On May 9, 2025, the Company purchased certain tangible assets and a portfolio of intellectual property, including patented technologies, proprietary engineering and manufacturing processes, from Oceaneering Entertainment Systems (“OES”), a division of Oceaneering International Inc. (“OII”) for $1.6 million cash consideration, the ("OES Acquisition"). The acquisition was completed to expand our attractions services business and was integrated to form Falcon's Attractions segment. The Company also assumed a lease for a 103,000+ square-foot facility to be utilized by the Company for research, development, manufacturing, and integration of attraction sales and services. The Company had an option to acquire vehicle inventory and lifting assets on or before July 23, 2025, for an additional $7.5 million (the "Option”), or pay $0.5 million additional consideration for the May 9th acquisition, if the Company chose not to exercise the option. The Company did not exercise the Option and paid the additional consideration of $0.5 million in January 2026.

Tenerife Sale

PDP is an unconsolidated joint venture with Meliá 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. At December 31, 2025, PDP operates one hotel resort and theme park located in Mallorca, Spain. PDP operated a second hotel located in Tenerife in the Canary Islands until the sale on May 30, 2025, when PDP sold all of the shares of Tertian XXI, S.L., ("Tertian") a wholly-owned subsidiary of PDP, which owned the real estate assets comprising of the resort hotel in Tenerife ("Tenerife Sale").

The Company received $27.0 million in a cash dividend distribution from PDP as a result of the transaction. PDP recognized a pre tax gain on sale of $60.0 million. The Company recognized its 50% share of the gain of $30.0 million in share of gain from equity method investments included in the consolidated statements of operations and comprehensive income.

55

Liquidity and Going Concern

The Company has been engaged in expanding its operations through its equity method investments, developing new product offerings, acquiring businesses, raising capital and recruiting personnel. The Company has incurred a loss from operations, and negative cash flows from operating activities, as it has invested in the integration and growth of the Falcon's Beyond Brands division and the newly acquired OES business. 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.

During 2025, the Company issued $32.5 million of shares of a newly created series of preferred stock designated as “11% Series B Cumulative Convertible Preferred Stock” (the “Series B Preferred Stock”) for $11.8 million in cash and the exchange of $20.5 million of outstanding debt. The $11.8 million in cash was utilized for the expansion of the attractions division.

The Company’s development plans, and investments have been funded by the sale of non-core assets from its equity method investments and a combination of debt and equity investments from its stockholders. During 2025, PDP sold all of the shares of Tertian XXI, S.L., a wholly-owned subsidiary of PDP, which owned the real estate assets comprising the resort hotel at Tenerife. The Company received $27.0 million in a cash dividend distribution from PDP as a result of the transaction, which was used to fund ongoing operations. See "Note 6 - Investments and advances to equity method investments."

The Company is reliant upon its stockholders, and third parties for obtaining additional financing through debt or equity raises, and from distributions from the liquidation of non-core equity method investments and assets, to fund its working capital needs, contractual commitments, and expansion plans. As of December 31, 2025, the Company continues to carry material accrued expenses and accounts payable in relation to its external advisors fees for the 2023 Business Combination. As of December 31, 2025, the Company has a working capital deficiency of $18.1 million including $0.6 million debt that matured on May 16, 2025 and debt coming due of $2.6 million.

The Company does not currently have sufficient cash or liquidity to pay all liabilities that are owed or are maturing in the next twelve months from the financial statement issuance date and fund ongoing operations and therefore concluded that substantial doubt exists about its ability to continue as a going concern. There can be no assurance that additional capital or financing raises, or liquidation of non-core assets and investments, if completed, will provide the necessary funding for the next twelve months from the date of this Annual Report on Form 10-K. This Annual Report on Form 10-K does not 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.

Factors that May Influence Future Results of Operations

Our financial results of operations may not be comparable from period to period due to several factors. Key factors affecting the results of operations are summarized below.

Strategic Investment

Our financial results are impacted by the Strategic Investment in FCG. As of July 27, 2023, the date the Company ceased to have a controlling financial interest, FCG was deconsolidated and accounted for as an equity method investment. Until the five-year anniversary of the Strategic Investment, (i) FCG may not make any distributions (except for tax distributions) to any of its members and (ii) FCG will reinvest all of its available cash to support the growth and capacity of FCG and its subsidiaries for any projects, products and purchase orders submitted by QIC to FCG and its subsidiaries. These limitations in the use of available cash restrict FCG’s ability to distribute cash to Falcon’s Opco and, in turn, Falcon’s Opco’s ability to distribute cash to the Company, which could have an adverse impact on the Company’s liquidity and ability to repay its outstanding loans.

Equity Method Investments

Our financial results are impacted by our 50% ownership of the equity interests in two of our unconsolidated joint ventures, PDP and Karnival and our 75% ownership of FCG, all of which are recognized as equity method investments.

We have recognized $17.2 million and $(3.1) million Share of gain (loss) from equity method investments, including impairment of the PDP joint venture of $(5.3) million and the Karnival joint venture of $(3.0) million in 2025, for the years ended December 31, 2025 and 2024, respectively.

The Company has a 50% interest in Karnival, a joint venture established with Raging Power Limited. The purpose of the joint venture was to hold ownership interests in entities developing and operating amusement centers located in the People’s Republic of China. In October 2025, the Company and its joint venture partners agreed to terminate this project and windup the joint venture due to protracted delays in the underlying location development schedule. The results of operations for Karnival are immaterial for the years ended December 31, 2025, and 2024.

56

The carrying value of our investments and advances as of December 31, 2025, was comprised of approximately $17.8 million for FCG, $28.6 million for PDP and $4.2 million for Karnival.

The carrying value of our investments and advances as of December 31, 2024, was comprised of approximately $25.0 million for FCG, $24.4 million for PDP and $7.1 million for Karnival.

Timing of Current Projects and Future Geographic and Product Expansion

Our financial results and liquidity needs vary from quarter-to-quarter or year-to-year depending on the timing of:

•
our signing of agreements with and related disbursement from our clients

•
FCG’s signing of agreements with and related disbursements from QIC

•
completion of our current projects

•
our contributions to, and distributions from our existing and new joint ventures

•
FBB’s strategic partnership

[Excerpt truncated for page length; the complete text is on the linked full-MD&A page.]