Falcon's Beyond Global, Inc. Fair Value Disclosure
Assets and liabilities measured at fair value on a recurring basis are comprised of:
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As of December 31, 2024 |
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Level 1 |
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Level 2 |
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Level 3 |
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Total |
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Liabilities: |
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Warrant liabilities |
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$ |
4,711 |
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— |
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— |
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$ |
4,711 |
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$ |
4,711 |
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$ |
— |
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$ |
— |
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$ |
4,711 |
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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 were classified within Level 3 of the hierarchy as the fair value was derived using a Monte Carlo simulation analysis in a risk neutral framework, which used 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 the tables below.
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 has not paid cash dividends and does not intend to do so in the foreseeable future. The payment of any dividends is within the discretion of the Company’s board of directors and will be dependent upon the Company’s revenue and earnings, if any, capital requirements, and general financial condition. Further, the Company’s ability to declare dividends may be limited by the terms of financing or other agreements entered into by us or our subsidiaries from time to time, including certain consent rights in connection with the Strategic Investment.
On September 30, 2024, following the earnout forfeiture, the Company adjusted the fair value of all earnout shares a final time, immediately before the modification (see "Note 14 – Earnouts" for details on the modification), and ignoring the effect of the modification. The total adjusted liability balance, including the amount associated with the forfeited earnout shares, was reclassified into equity on September 30, 2024. After reclassification into equity, the earnout shares do not require subsequent fair value measurement.
Unobservable inputs of the earnout liability for earnout shares based on revenue and EBITDA targets are as follows:
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September 30, |
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Current stock price |
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8.26 |
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Earnout period – beginning |
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July 1, 2023 |
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Earnout period – end |
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December 31, 2024 |
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Equity volatility, EBITDA volatility |
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30.0 |
% |
Operational leverage ratio |
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65.00 |
% |
Revenue volatility |
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10.00 |
% |
Revenue/stock price correlation |
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40.00 |
% |
EBITDA/stock price correlation |
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30.00 |
% |
Revenue discount rate |
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12.17 |
% |
Dividend yield |
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0.00 |
% |
Unobservable inputs of the earnout liability for earnout shares based on the Company’s stock price are as follows:
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September 30, |
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Term (years) |
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5.0 |
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Volatility |
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40.00 |
% |
Risk-free rate |
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3.55 |
% |
Dividend yield |
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0.00 |
% |
Current stock price |
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8.26 |
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There were no transfers between Level 1 and Level 2, nor into and out of Level 3, during the periods presented. As of September 30, 2024, all earnouts were adjusted to fair value and reclassified into equity. See "Note 14 – Earnouts" for details on the fair value of the earnout liability as of September 30, 2024.
Historical Timeline
| Fiscal Year | Filed | |
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| 2025 | Mar 30, 2026 | Showing above |
| 2024 | Apr 3, 2025 | |
| 2023 | Apr 29, 2024 | |
About Fair Value Disclosures
Fair value disclosures classify all assets and liabilities measured at fair value into a three-level hierarchy: Level 1 (quoted market prices), Level 2 (observable inputs like yield curves), and Level 3 (unobservable inputs requiring management estimates). The proportion of Level 3 assets directly reflects how much of the balance sheet depends on internal models rather than market evidence.
Key signals: a growing Level 3 balance relative to total fair-value assets increases valuation uncertainty and earnings volatility risk. Watch for transfers between levels — assets moving from Level 2 to Level 3 often signal deteriorating market liquidity. Unrealized gains and losses on Level 3 positions flow through earnings or other comprehensive income, so large swings deserve scrutiny. For financial institutions, examine the sensitivity disclosures that show how Level 3 valuations change under alternative assumptions. Compare the fair value of debt against its carrying amount to gauge hidden leverage.