Business Description

– Intellectual Property Research and Development ” for more information. Depreciation and amortization expense We incurred depreciation expenses for property and equipment utilized in the operation of our businesses. We incurred amortization expense for finite-lived intangible assets, comprising of developed technology, trade names and trademarks, OES trade name and software rights, and right-of-use assets for our finance lease. Share of gain (loss) from equity method investments Our Share of gain (loss) from equity method investments represents our proportional share of net earnings or losses of our unconsolidated joint ventures. Our parks and resorts, which operated within our unconsolidated joint ventures, generated revenue through the sales of hotel rooms, park admissions, food and beverage, merchandise, and ancillary services, and the principal costs of parks and resorts were employee wages and benefits, advertising, maintenance, utilities, and insurance. Factors that have affected these costs have included fixed operating costs, competitive wage pressures, food, beverage and merchandise costs, costs for construction, repairs and maintenance and inflationary pressures. FCG generates revenues from master planning, attraction design, experiential entertainment, content production, interactives, and software. The principal costs of these services are project design and build expense, employee wages and benefits, research and development, sales and marketing, depreciation and amortization, software costs, legal fees, consultant fees, and occupancy costs. 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 $8.3 million and $0 in impairment losses recognized for investments in equity method investments during the year ended December 31, 2025 and 2024, respectively. See "Note 6 – Investments and advances to unconsolidated joint ventures" in the Company’s audited consolidated financial statements. Interest expense Our Interest expense consists of the interest on our debt instruments generated by related party and third-party loans and lines of credit used primarily to fund working capital and operations. See "Note 11 – Long-term debt and borrowing arrangements" in the Company’s audited consolidated financial statements for a description of our indebtedness and “Liquidity and Capital Resources ” below. Change in fair value of warrant liabilities Prior to January 14, 2025, the warrants were classified as a liability and measured at fair value, with changes in fair value included in the consolidated statements of operations and comprehensive income. The warrant agreement was amended effective January 14, 2025. The amendment provides for the mandatory exchange of the warrants for shares of Class A Common Stock at an exchange ratio of 0.25 shares of Class A Common Stock per warrant, on October 6, 2028. The warrants will not be exercisable and the holders of the warrants will have no further rights except to receive shares of Class A Common Stock on October 6, 2028. The remaining warrants meet the requirements for equity classification after the amendment. The Company adjusted the fair value of the warrants a final time on January 14, 2025, immediately prior to the amendment effective date. The total adjusted liability balance was reclassified into equity on January 14, 2025. After the reclassification to equity, the warrants do not require subsequent fair value measurement. 58 Change in fair value of earnout liabilities 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 in the form of Class A Common Stock and Class B Common Stock, respectively. The earnout shares were deposited into escrow and are to be earned, released and delivered upon satisfaction of, or forfeited and canceled up on the failure of certain milestones. Prior to September 30, 2024, the earnout shares were classified as a liability and measured at fair value, with changes in fair value included in the results of operations.…