| Description of business and basis of presentation | 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 (“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. Following
the consummation of the transactions contemplated by the Merger Agreement (the “Closing”), the direct interests in Falcon’s
Opco were held by Pubco and certain holders of the limited liability company units of Falcon’s Opco outstanding as of immediately
prior to the Business Combination. FAST II and Falcon’s Opco’s
transaction costs related to the Business Combination of $6.4 million and $15.7 million, respectively, are not yet settled at March 31,
2024. Negotiations regarding the terms of the costs yet to be settled are still ongoing and may change materially from these amounts accrued.
Costs incurred in excess of the gross proceeds are recorded in profit or loss. 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 develops a diverse range of entertainment experiences
using both owned and third party licensed intellectual property, consisting of Producciones de Parques, S.L. (“PDP”), Sierra
Parima (Sierra Parima’s Katmandu Park in Punta Cana, Dominican Republic (“Katmandu Park DR”) was closed to visitors
on March 7, 2024, see Note 4 – Investments and advances to equity method investments, section “ Full Impairment of Investment
in Sierra Parima”) Basis of presentation The Business Combination was 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, Falcon’s Opco’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 was treated similar to a reverse recapitalization. As there
was no change in control, Falcon’s Opco has been determined to be the accounting acquirer and Pubco was treated as the “acquired”
company for financial reporting purposes. Accordingly, for accounting purposes, the Business Combination was treated as the equivalent
of Falcon’s Opco issuing stock for the net assets of Pubco, accompanied by a recapitalization. The net assets of Pubco were 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 Falcon’s Opco. Falcon’s Opco 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 Falcon’s Opco,
and Collections contributed 100% of its ownership in Katmandu in exchange for 66.67% of the membership interests of Falcon’s Opco.
In June 2022, Katmandu Collections, LLLP was renamed Infinite Acquisitions, LLLP and subsequently renamed Infinite Acquisitions
Partners LLP (“Infinite Acquisitions”). The accompanying condensed consolidated
financial statements of the Company are unaudited. In the opinion of management, all adjustments necessary for a fair statement of results
of operations, cash flows, and financial position have been made. Except as otherwise disclosed, all such adjustments are of a normal
recurring nature. Interim results are not necessarily indicative of results for a full year. The year-end consolidated balance sheet
data was derived from audited financial statements but does not include all disclosures required by generally accepted accounting principles. The unaudited condensed consolidated
financial statements and notes are presented in accordance with the rules and regulations of the Securities and Exchange Commission (SEC)
and do not contain certain information included in the Company’s Annual Report. Therefore, these interim statements should be read
in conjunction with the consolidated financial statements and notes thereto contained in the Company’s Annual Report. The unaudited condensed consolidated
financial statements include the accounts of the Company and its majority-owned subsidiaries for which it exercises control. Long-term
investments in affiliated companies in which the Company exercises significant influence, but which it does not control, are accounted
for using the equity method. Investments in which the Company does not exercise significant influence (generally, when the Company has
an investment of less than 20.0% and no representation on the investee’s board of directors) are accounted for at fair value, or at cost
minus impairment adjusted for observable price changes in orderly transactions for an identical or similar investment of the same issuer
for those investments that do not have readily determinable fair values. All significant inter-company transactions and accounts have
been eliminated. The Company does not have any significant variable interest entities or special purpose entities whose financial results
are not included in the unaudited condensed consolidated financial statements. The financial statements of the Company’s
operating foreign subsidiaries are measured using the local currency as the functional currency. Assets and liabilities are translated
at exchange rates as of the balance sheet date. Revenues and expenses are translated at average monthly exchange rates prevailing during
the period. Resulting translation adjustments are included in Accumulated other comprehensive loss. A reclassification of the credit loss
expense of $0.3 million from selling, general and administrative expense to a separate financial statement line item within the unaudited
condensed consolidated statement of operations and comprehensive income (loss) for the three months ended March 31, 2023 was performed
to conform to the current period presentation. Principles of Consolidation The non-controlling interest represents
the membership interest in Falcon’s Opco held by holders other than the Company. The results of operations attributable
to the non-controlling interests are included in the Company’s unaudited condensed consolidated statements of operations and comprehensive
income (loss), and the non-controlling interests are reported as a separate component of equity. The Company consolidates the assets,
liabilities and operating results of Falcon’s Opco and its wholly owned subsidiaries. All intercompany balances and transactions
have been eliminated in the consolidation. The unaudited condensed 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 $5.3 million for the three months ended March 31, 2024, accumulated deficit
attributable to common stockholders of $51.4 million as of March 31, 2024, and negative cash flows from operating activities of $3.8 million
for the three months ended March 31, 2024. 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 unaudited condensed 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 10 –
Commitments and contingencies. On July 27, 2023, Falcon’s Creative Group, LLC, 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.). In April 2024, The Company’s development plans,
and investments have been funded by a combination of debt and committed equity contributions from its stockholders and third parties,
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 March 31, 2024, 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 ($191.6) million (inclusive of the $155.3 million Earnout liability – current portion
to be settled in shares) as of March 31, 2024. Additionally, the Company has $15.1 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
17– 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 unaudited condensed 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 unaudited condensed consolidated financial statements. The accompanying unaudited condensed 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. 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. 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. QIC, as the holder of the preferred
units of FCG, has priority with respect to any distributions by FCG, to the extent there is cash available. Under the LLCA, such distributions
are payable (i) first, to QIC until the holders’ preferred return is reduced to zero, (ii) second, to QIC until the investment
amount is reduced to zero, (iii) third, to the Company until it has received an amount equal to the amount paid to QIC, and (iv) fourth,
to QIC and the Company on a pro-rata basis of 25% and 75%, respectively. 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 was deconsolidated and accounted for as an equity method investment in the Company’s unaudited condensed consolidated
financial statements. After July 27, 2023, the assets and
liabilities of FCG are no longer included within the Company’s consolidated balance sheet as of December 31, 2023. See Note 4– 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 11– Segment Information. |
