Falcon’s Beyond Global, Inc. — Form 10-Q Summary
Business context and reporting period
This quarterly report covers the period ended September 30, 2023 and was filed November 14, 2023. During the reporting period, Falcon’s Beyond Global, Inc. (“Pubco”) was a newly formed, wholly owned subsidiary of Falcon’s Beyond Global, LLC, established solely to complete the business combination with FAST Acquisition Corp. II.
As of September 30, 2023, Pubco was a shell company with no assets, operations, or meaningful capitalization. The business combination closed in two steps on October 5 and October 6, 2023, after the quarter ended. The filing therefore does not present the operating results of the Falcon’s business for the three- or nine-month periods; those results were expected to be provided in Form 8-K/A.
Financial condition and key metrics
| Metric | September 30, 2023 | December 31, 2022 |
|---|---|---|
| Total assets | $0 | $0 |
| Total liabilities | $0 | $0 |
| Stockholders’ equity | $0 | $0 |
- No statements of operations, comprehensive income, changes in equity, or cash flows were presented because Pubco had no activities during the reported periods.
- Revenue, profit or loss, operating cash flow, margins, cash balances, and liquidity metrics for the Falcon’s operating business are not provided in this Form 10-Q.
- Pubco had no long-term debt, capital or operating lease obligations, or off-balance-sheet arrangements as of September 30, 2023.
- Pubco’s balance sheet reflected 10 shares of common stock issued for aggregate consideration of $0.1 and an offsetting amount due from its stockholder.
Material changes and subsequent events
- The SPAC merger closed on October 5, 2023, followed by the acquisition merger with Falcon’s on October 6, 2023.
- The transaction is accounted for as a reverse recapitalization and common-control transaction, with Falcon’s treated as the accounting acquirer. No goodwill or other intangible assets were recorded.
- Transferred debt of $4.8 million was exchanged at closing for 475,000 shares of Pubco Series A Preferred Stock.
- Immediately after closing, Pubco had 7,985,976 Class A common shares, 127,596,617 Class B common shares, 656,415 Series A preferred shares, and 8,440,667 warrants outstanding.
- On November 6, 2023, the preferred shares automatically converted at a rate of 0.90909 Class A shares per preferred share, resulting in approximately 600,000 Class A shares. Following conversion, no preferred shares remained outstanding.
- Following the conversion, each warrant became exercisable for 1.034999 shares of Class A common stock rather than the former combination of common and preferred shares.
Guidance, outlook, risks, and unusual items
- No financial guidance or operating outlook is provided in this Form 10-Q because Pubco had no operating history during the period.
- The filing states that Falcon’s had generated losses and negative operating cash flows while expanding physical operations, developing products, raising capital, and recruiting personnel.
- Management disclosed substantial doubt about Falcon’s ability to continue as a going concern for at least one year from issuance of the financial statements. Falcon’s expected to require additional capital, but there is no assurance that financing efforts will succeed.
- Risks include failure to realize expected benefits of the business combination, execution and timing of business milestones, competition, intellectual-property and cybersecurity risks, market volatility, and changes in business, financial, political, legal, and entertainment-industry conditions.
- Falcon’s management had identified material weaknesses in internal control over financial reporting. Pubco reported effective disclosure controls as of September 30, 2023, but the reported controls primarily related to the pre-combination shell entity.
- Management reported no material litigation currently pending and no significant market risks for Pubco during the period.
Important facts for investors to verify
- Review the subsequent Form 8-K/A for Falcon’s consolidated revenue, earnings, cash flows, debt, liquidity, and operating trends for the three and nine months ended September 30, 2023.
- Assess Falcon’s going-concern disclosure, financing needs, available liquidity, and ability to raise additional capital.
- Evaluate the identified internal-control material weaknesses and any remediation plans or updates after the business combination.
- Confirm the final post-closing share count, preferred-stock conversion, warrant terms, and potential dilution.
- Review the business combination’s transaction costs, cash proceeds, debt arrangements, and the effect of the reverse-recapitalization accounting.