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What changed in Funko, Inc.'s 10-K — 2024 vs 2025

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Paragraph-level year-over-year comparison of Funko, Inc.'s 2024 and 2025 10-K annual filings, covering the Business, Risk Factors, Legal Proceedings, Cybersecurity, MD&A and Market Risk sections. Every new, removed and edited paragraph is highlighted side-by-side so you can see exactly what management changed in the 2025 report.

+445 added−468 removedSource: 10-K (2026-03-12) vs 10-K (2025-03-13)

Top changes in Funko, Inc.'s 2025 10-K

445 paragraphs added · 468 removed · 344 edited across 7 sections

Item 1. Business

Business — how the company describes what it does

71 edited+27 added−26 removed103 unchanged
Biggest changeFor the years ended December 31, 2024, 2023 and 2022 approximately 56%, 55% and 53%, respectively, of our net sales were generated in the third and fourth quarters, as our customers build up their inventories in anticipation of the holiday season.
Biggest changeFor the years ended December 31, 2025, 2024 and 2023 approximately 58%, 56% and 55%, respectively, of our net sales were generated in the third and fourth quarters, as our customers build up their inventories in anticipation of the holiday season. 13 Table of Contents Generally, the first quarter of the year represents the lowest volume of shipments and sales in our business and in the retail and toy industries generally, and it is also the least profitable quarter due to the various fixed costs of the business.
Our direct-to-consumer channel includes our own e-commerce websites in the U.S. and Europe as well as our three flagship retail stores located in the U.S. 6 Table of Contents Leading Design and Creative Capabilities Our in-house creative team layers our own whimsical, fun and distinct stylization onto content providers’ characters, creating unique products for which there is substantial consumer demand.
Our direct-to-consumer channel includes our own e-commerce websites in the U.S., Mexico and Europe as well as our three flagship retail stores located in the U.S. 6 Table of Contents Leading Design and Creative Capabilities Our in-house creative team layers our own whimsical, fun and distinct stylization onto content providers’ characters, creating unique products for which there is substantial consumer demand.
Mike was previously on the board of directors of Barstool Sports, Night Media, Epic Gardening, The Action Network, Otter Media, Ellation (Crunchyroll), and a board observer of Cameo. Mr. Kerns is a graduate of UCLA with a BA in History. We believe Mr. Kerns broad management, business and entertainment experience make him well-qualified to serve on our board of directors.
Mike was previously on the board of directors of Barstool Sports, Night Media, Epic Gardening, The Action Network, Otter Media, Ellation (Crunchyroll), and a board observer of Cameo. Mr. Kerns is a graduate of UCLA with a BA in History. We believe Mr. Kerns' broad management, business and entertainment experience make him well-qualified to serve on our board of directors.
Examples of our classic evergreen properties include Star Wars Classic, Harry Potter, DC Comics, Marvel Comics, Pokémon and WWE. • Current Releases. Properties in the current release category typically are tied to new movie releases, current television series or new video game titles. These properties are intended to capitalize on the excitement of fans surrounding the launch of new content.
Examples of our classic evergreen properties include Star Wars Classic, Harry Potter, DC Comics, Marvel Comics, Pokémon and WWE. • Current Releases. Properties in the current release category typically are tied to new movie releases, current television series or newer video game titles. These properties are intended to capitalize on the excitement of fans surrounding the launch of new content.
We believe our innovative product design and market positioning have disrupted the licensed product markets and helped to define today’s pop culture products category. The Pop Culture Industry Pop culture encompasses virtually everything that someone can be a fan of—movies, TV shows, anime, video games, music, sports, books and more.
We believe our innovative product design and market positioning have disrupted the licensed product markets and helped to define today’s pop culture products category. The Pop Culture Industry Pop culture encompasses virtually everything that someone can be a fan of—movies, TV shows, streaming, anime, video games, music, sports, books and more.
Additionally, by utilizing our in-house creative team we have the ability to develop our own content and intellectual property. Our current products are principally figures, fashion accessories, apparel, plush products, accessories, homewares, NFTs, vinyl records and limited-edition posters. Our Brands and Designs We have multiple proprietary brands under which most of our products are marketed.
Additionally, by utilizing our in-house creative team we have the ability to develop our own content and intellectual property. Our current products are principally figures, fashion accessories, apparel, plush products, accessories, homewares, vinyl records and limited-edition posters. Our Brands and Designs We have multiple proprietary brands under which most of our products are marketed.
In addition to offering multiple properties and product categories, we create and sell a variety of unique brands that have their own look and feel. Our brand portfolio includes Core Collectible (which include Pop! Vinyl, as well as other branded lines such as Soda, Bitty Pop!, and Pop!
In addition to offering multiple properties and product categories, we create and sell a variety of unique brands that have their own look and feel. Our brand portfolio includes Core Collectible (which include Pop! Vinyl, as well as other branded lines such as Bitty Pop! and Pop!
Our ability to effectively engage with our customers has resulted in a deep affinity for Funko and our products. 11 Table of Contents Funko continues to acquire new fans through high profile social media sites such as Facebook, X (formerly Twitter), Instagram, TikTok and YouTube.
Our ability to effectively engage with our customers has resulted in a deep affinity for Funko and our products. 11 Table of Contents Funko continues to acquire new fans through high profile social media sites such as Facebook, X, Instagram, TikTok and YouTube.
We also sell our products directly to consumers through our e-commerce business, three flagship retail stores and, to a lesser extent, at specialty licensing and comic book shows, conventions and exhibitions in cities throughout the United States, including at Comic-Con events. Our direct-to-consumer sales accounted for approximately 24%, 21%, and 13% of our sales for 2024, 2023, and 2022, respectively.
We also sell our products directly to consumers through our e-commerce business, three flagship retail stores and, to a lesser extent, at specialty licensing and comic book shows, conventions and exhibitions in cities throughout the United States, including at Comic-Con events. Our direct-to-consumer sales accounted for approximately 24%, 24%, and 21% of our sales for 2025, 2024, and 2023, respectively.
In addition to our full-time sales staff, we also retain several independent sales representatives to sell and promote our products both domestically and internationally. We sell our products to our customers with payment terms typically varying from 30 to 90 days (average 57 days).
In addition to our full-time sales staff, we also retain several independent sales representatives to sell and promote our products both domestically and internationally. We sell our products to our customers with payment terms typically varying from 30 to 90 days (average 60 days).
We contract the manufacture of most of our products to third-party unaffiliated manufacturers primarily located in Vietnam, China and Mexico and ship those products to our warehouse or third-party logistics facilities in the United States, the United Kingdom and the Netherlands.
We contract the manufacture and assembly of most of our products to third-party unaffiliated manufacturers primarily located in Vietnam, China, Cambodia and Mexico and ship those products to our warehouse or third-party logistics facilities in the United States, the United Kingdom and the Netherlands.
This allows our business to be diversified across properties, as well as evergreen and current content. 5 Table of Contents For the years ended December 31, 2024, 2023 and 2022, no single property accounted for more than 5% of our sales, and the portion of our sales for the years ended December 31, 2024, 2023 and 2022 attributable to our top five third-party properties was 18%, 17%, and 18%, respectively.
This allows our business to be diversified across properties, as well as evergreen and current content. 5 Table of Contents For the years ended December 31, 2025, 2024 and 2023, no single property accounted for more than 5% of our sales, and the portion of our sales for the years ended December 31, 2025, 2024 and 2023 attributable to our top five third-party properties was 19%, 18%, and 17%, respectively.
As a result, consumers are participating in the story of these properties via social media platforms and conventions, such as Comic-Con, Anime Expo and Star Wars Celebration, rather than being solely consumers of content. By being a part of the conversation regarding their favored content, fans reinforce their love for it, thereby creating a cycle of fandom.
As a result, consumers are participating in the story of these properties via social media platforms and conventions, such as Comic-Con and Anime Expo, rather than being solely consumers of content. By being a part of the conversation regarding their favored content, fans reinforce their love for it, thereby creating a cycle of fandom.
On October 30, 2015, ACON Funko Investors, L.L.C., through FAH, LLC, acquired a controlling interest in FHL, which is also a holding company with no operating assets or operations. FAH, LLC owns 100% of FHL and FHL owns 100% of Funko, LLC, which is the operating entity. Available Information Our Internet address is www.funko.com.
On October 30, 2015, ACON Funko Investors, L.L.C., through FAH, LLC, acquired a controlling interest in FHL, which is also a holding company with no operating assets or operations. FAH, LLC owns 100% of FHL and FHL owns 100% of Funko, LLC, which is the operating entity. 17 Table of Contents Available Information Our Internet address is www.funko.com.
Daw was a member of the law firm of Sidley Austin LLP, where he was a partner. Mr. Daw received a J.D. from the University of Michigan Law School and a B.S. in Industrial and Labor Relations from Cornell University. 15 Table of Contents Andy Oddie has served as Chief Commercial Officer since May 2022.
Daw was a member of the law firm of Sidley Austin LLP, where he was a partner. Mr. Daw received a J.D. from the University of Michigan Law School and a B.S. in Industrial and Labor Relations from Cornell University. Andy Oddie has served as Chief Commercial Officer since May 2022.
We are building out our sports, music and video game fandoms and diversifying our offering with personalized products, such as Pop! Yourself, micro collectibles and blind boxes containing mystery figures.
We are building out our sports, music, video game and content creator fandoms and diversifying our offering with personalized products, such as Pop! Yourself, micro collectibles and blind boxes containing mystery figures.
In addition, our online products and services, including our e-commerce and digital communications activities, are or may be subject to U.S. and non-U.S. data privacy and cybersecurity laws, such as the U.S. Children’s Online Privacy Protection Act, the California Consumer Privacy Act (“CCPA”), and the EU/UK General Data Protection Regulation (“GDPR”).
In addition, our online products and services, including our e-commerce and digital communications activities, are or may be subject to U.S. and non-U.S. digital marketing, such as the CAN-SPAM Act, and data privacy and cybersecurity laws, such as the U.S. Children’s Online Privacy Protection Act, the California Consumer Privacy Act (“CCPA”), and the EU/UK General Data Protection Regulation (“GDPR”).
From April 2015 to October 2019, Mr. Le Pendeven served multiple senior-level finance roles at Volcom, a subsidiary of the Kering Group, most recently as Vice President, Financial Planning & Analysis, where he oversaw global financial planning. From January 2008 to March 2015, Mr. Le Pendeven was a Director, Financial Planning & Analysis in the corporate finance group at Quiksilver.
Le Pendeven served multiple senior-level finance roles at Volcom, a subsidiary of the Kering Group, most recently as Vice President, Financial Planning & Analysis, where he oversaw global financial planning. From January 2008 to March 2015, Mr. Le Pendeven was a Director, Financial Planning & Analysis in the corporate finance group at Quiksilver. Mr.
Jacobs is on the board of directors of The Chernin Group, Hodinkee, Collectors Universe and The North Road Company. He previously served on the board of directors of Barstool Sports, Goldin Auctions, Equip, Scopely, Exploding Kittens, The Action Network, Otter Media, Fullscreen, Ellation (Crunchyroll), Hello Sunshine, Hodinkee, Headspace, and Gunpowder & Sky. Mr.
Jacobs is on the board of directors of TCG, The Chernin Group, Collectors Universe, Epic Gardening and The North Road Company. He previously served on the board of directors of Barstool Sports, Goldin Auctions, Equip, Scopely, Exploding Kittens, The Action Network, Otter Media, Fullscreen, Ellation (Crunchyroll), Hello Sunshine, Hodinkee, Headspace, and Gunpowder & Sky. Mr.
Due to a change in executive management during the year ended December 31, 2024, our CODM has changed from our prior Chief Financial Officer and Chief Operating Officer to our current Chief Executive Officer. Because our CODM reviews financial performance and allocates resources at a consolidated level on a regular basis, we have one segment.
Due to a change in executive management during the year ended December 31, 2025, our CODM has changed from our prior Chief Executive Officer to our current Chief Executive Officer. Because our CODM reviews financial performance and allocates resources at a consolidated level on a regular basis, we have one segment.
Our license agreements require us to make royalty payments to the licensor based on our sales of the licensed product and, in some cases, require us to incur other charges. For the years ended December 31, 2024, 2023 and 2022, the average royalty rate was 16.1%, 16.4% and 16.1%, respectively.
Our license agreements require us to make royalty payments to the licensor based on our sales of the licensed product and, in some cases, require us to incur other charges. For the years ended December 31, 2025, 2024 and 2023, the average royalty rate was 17.4%, 16.1% and 16.4%, respectively.
Edwards currently serves on the board of directors of VF Corporation, a leading apparel, footwear and accessories company, and Fanatics Inc., a global digital sports platform, and previously served on the board of directors of Mattel Inc. from 2012 to 2018. Mr. Edwards received a BBA and MBA from Bernard Baruch College. The board believes Mr.
Edwards currently serves on the board of directors of VF Corporation, a leading apparel, footwear and accessories company, and Fanatics Inc., a global digital sports platform, and previously served on the board of directors of Mattel Inc. from 2012 to 2018. Mr. Edwards received a BBA and MBA from Bernard Baruch College. We believe Mr.
Harinstein is qualified to serve as a director of the Company due to his financial expertise, leadership experience and knowledge of the collectibles industry. 16 Table of Contents Diane Irvine has served on the board of directors of Funko, Inc. and FAH, LLC since August 2017. Ms.
Harinstein is qualified to serve as a director of the Company due to his financial expertise, leadership experience and knowledge of the collectibles industry. Diane Irvine has served on the board of directors of Funko, Inc. and FAH, LLC since August 2017. Ms.
Mr. Le Pendeven earned a M.B.A from the Paul Merage School of Business at University of California - Irvine and a B.A. in Science, Technology and Society from Stanford University. Tracy Daw has served as Funko, Inc.’s Chief Legal Officer and Secretary since March 2022 and as the Senior Vice President and General Counsel of FAH, LLC since July 2016.
Le Pendeven earned a M.B.A. from the Paul Merage School of Business at University of California - Irvine and a B.A. in Science, Technology and Society from Stanford University. 14 Table of Contents Tracy Daw has served as Funko, Inc.’s Chief Legal Officer and Secretary since March 2022 and as the Senior Vice President and General Counsel of FAH, LLC since July 2016.
Three of the top U.S. pop culture-related conventions, including New York Comic Con, Comic Con International: San Diego and Anime Expo 2024, drew sell-out crowds and reaching capacity at each event location. This represents a cultural shift supporting the acceptability of fan affinity for pop culture content across all demographic categories of fans.
For example, three of the top U.S. pop culture-related conventions, including New York Comic Con, Comic Con International: San Diego and Anime Expo 2025, drew sell-out crowds, reaching capacity at each event location. This represents a cultural shift supporting the acceptability of fan affinity for pop culture content across demographic categories of fans.
Additionally, products that we design and sell based on current television series or new video game titles are expected to have a market demand depending on the popularity and longevity of the title, which is generally expected to be multiple years. Examples of our current TV properties include One Piece, The Mandalorian, Demon Slayer, Naruto, and Stranger Things.
Additionally, products that we design and sell based on current television series or new video game titles are expected to have a market demand depending on the popularity and longevity of the title, which is generally expected to be multiple years. Examples of our current TV properties include One Piece and Stranger Things.
Our Strategic Differentiation Deep and Extensive Licensing Partnerships We have strong licensing relationships with many established content providers and strive to partner with content providers across multiple genres, including movies, television, video games, anime, sports, and music. In 2024, we had license agreements with over 250 content providers covering approximately 930 active licensed properties.
Our Strategic Differentiation Deep and Extensive Licensing Partnerships We have strong licensing relationships with many established content providers and strive to partner with content providers across multiple genres, including movies, television, video games, anime, sports, and music. In 2025, we had license agreements with over 250 content providers covering approximately 800 active licensed properties.
We expect to continue to develop new product designs and lines, which may develop into proprietary brands in the future. 8 Table of Contents Our Licenses Licensors. We have strong licensing relationships with many established content providers and seek to establish new licensing relationships with content providers in order to capitalize on new and emerging trends in pop culture.
We expect to continue to develop new product designs and lines, which may develop into proprietary brands in the future. Our Licenses Licensors. We have strong licensing relationships with many established content providers and seek to establish new licensing relationships with content providers in order to capitalize on new and emerging trends in pop culture.
Additionally, the portion of our sales related to evergreen properties for the years ended December 31, 2024, 2023 and 2022 was approximately 73%, 67%, and 64%, respectively. Broad Portfolio of Brands We create products to attract a broad array of fans across consumer demographic groups.
Additionally, the portion of our sales related to evergreen properties for the years ended December 31, 2025, 2024 and 2023 was approximately 69%, 73%, and 67%, respectively. Broad Portfolio of Brands We create products to attract a broad array of fans across consumer demographic groups.
The Pop! brand has also been applied across many of our other product categories, including plush, accessories, apparel and homewares. Core Collectible branded products, which include Pop! Vinyl, represented 77%, 73% and 76% of our sales for the years ended 2024, 2023 and 2022, respectively.
The Pop! brand has also been applied across many of our other product categories, including plush, accessories, apparel and homewares. Core Collectible branded products, which include Pop! Vinyl, represented 80%, 77% and 73% of our sales for the years ended 2025, 2024 and 2023, respectively.
Our Loungefly branded products are generally licensed fashion accessories including stylized handbags, backpacks, wallets, clothing, and other accessories. Loungefly branded products represented 16%, 20% and 19% for the years ended 2024, 2023 and 2022, respectively. Other brands we market under include Mystery Minis, Bitty Pop!, and Pop! Yourself.
Our Loungefly branded products are generally licensed fashion accessories including stylized handbags, backpacks, wallets, clothing, and other accessories. Loungefly branded products represented 17%, 16% and 20% for the years ended 2025, 2024 and 2023, respectively. Other brands we market under include Mystery Minis, Bitty Pop!, and Pop! Yourself.
We infuse our distinct designs and aesthetic sensibility into our extensive portfolio of licensed content over a wide variety of product categories, including figures, bags, wallets, apparel, accessories, plush, homewares, digital non-fungible tokens ("NFTs"), vinyl records and limited-edition posters, which we make available at highly accessible price points under our Funko, Loungefly and Mondo brands.
We infuse our distinct designs and aesthetic sensibility into our extensive portfolio of licensed content over a wide variety of product categories, including figures, bags, wallets, apparel, plush, accessories, homewares, vinyl records and limited-edition posters, which we make available at highly accessible price points under our Funko, Loungefly and Mondo brands.
In addition, changes in trade policies of the U.S. or other countries, such as tariffs or retaliatory tariffs, may contribute to inflationary conditions and increase the manufacturing costs or limit the availability of our products, particularly with regard to our products manufactured and/or assembled in China and Mexico.
In addition, changes in trade policies of the U.S. or other countries, such as tariffs or retaliatory tariffs, have and may continue to contribute to inflationary conditions and increase the manufacturing costs or limit the availability of our products, particularly with regard to our products manufactured and/or assembled in Vietnam, China, Cambodia and Mexico.
Prior to joining The Chernin Group, Mr. Kerns was a Senior Vice President at Yahoo!, leading the Homepage, Video, and Global Media Properties product and business unit. Mr. Kerns previously cofounded Citizen Sports, where he was CEO and led the company to a successful acquisition by Yahoo! in 2010. Mr.
Kerns was a Senior Vice President at Yahoo!, leading the Homepage, Video, and Global Media Properties product and business unit. Mr. Kerns previously cofounded Citizen Sports, where he was CEO and led the company to a successful acquisition by Yahoo! in 2010. Mr.
With the help of our in-house creative team, we have also developed our own proprietary products, such as our Pop! Yourself personalized products. As a result of our creative capabilities and broad portfolio of licenses, we create a substantial number of new products each year.
With the help of our in-house creative team, we have also developed our own proprietary products, such as our Pop! Yourself personalized products. As a result of our creative capabilities and broad portfolio of licenses, we create a substantial number of new products each year. Growth Strategies Make Culture Pop!
We believe our sales are currently underpenetrated internationally as we generate the majority of our net sales in the United States. Sales generated from customers outside of the United States accounted for approximately 35%, 31% and 27% of our sales for the years ended December 31, 2024, 2023 and 2022, respectively.
We believe our sales are currently underpenetrated internationally as we generate the majority of our net sales in the United States. Sales generated from customers outside of the United States accounted for approximately 40%, 35% and 31% of our sales for the years ended December 31, 2025, 2024 and 2023, respectively.
While most of our sales originate in the United States and the United Kingdom from inventory we hold in our warehouses and third-party logistics locations, certain of our customers may take title to our products upon shipment from the factory or at the port. We establish reserves for sales allowances, including promotional and other allowances, at the time of sale.
While a majority of our sales originate in the United States and the United Kingdom from inventory we hold in our warehouses and third-party logistics locations, certain of our customers may take title to our products upon shipment from the factory or at the port. We establish sales allowances, including promotional and other allowances, at the time of sale.
In addition, we also develop product lines that we market under the broader Funko brand, such as Funko action figures, Funko Soda, and Funko Plush product lines. In 2022, we completed our acquisition of Mondo Collectibles, a boutique collectibles brand specializing in high-end collectibles as well as limited-edition art prints and vinyl records.
In addition, we also develop product lines that we market under the broader Funko brand, such as Funko action figures, Funko Soda, and Funko Plush product lines. We also market under Mondo, a boutique collectibles brand specializing in high-end collectibles as well as limited-edition art prints and vinyl records.
Our royalty expense for any given year will vary depending on the mix of products and properties sold during that year. For the years ended December 31, 2024, 2023 and 2022, we incurred royalty expenses of $168.9 million, $179.7 million and $213.1 million, respectively. Our licenses are generally not exclusive.
Our royalty expense for any given year will vary depending on the mix of products and properties sold during that year. For the years ended December 31, 2025, 2024 and 2023, we incurred royalty expenses of $158.5 million, $168.9 million and $179.7 million, respectively. Our licenses are generally not exclusive.
However, the rapid growth we have experienced in recent years may have masked the full effects of seasonal factors on our business to date, and as such, seasonality may have a greater effect on our results of operations in future periods.
However, the volatility in net sales we have experienced in recent years may have masked the full effects of seasonal factors on our business to date, and as such, seasonality may have a greater effect on our results of operations in future periods.
Domestically, we sell our products to specialty retailers, mass-market retailers and e-commerce sites. Our key retail partners in the United States include Target, Amazon, Entertainment Earth, GameStop and Hot Topic. Internationally, we sell our products directly to similar retailers, primarily in Europe, through our subsidiary Funko UK, Ltd. Our key international retail customers include Amazon, GameStop, and Fnac.
Domestically, we sell our products to specialty retailers, mass-market retailers and e-commerce sites. Our key retail partners in the United States include Amazon, Hot Topic, Walmart, Target and GameStop. Internationally, we sell our products directly to similar retailers, primarily in Europe, through our subsidiary Funko UK, Ltd. Our key international retail customers include Amazon, Smyths Toys, and Carrefour.
Our flexible and low-fixed cost production model enables us to move from product design of a figure to shipping, with a minimal upfront investment for most figures of $5,000 to $10,000 in tooling, molds and internal design costs as of December 31, 2024.
Our flexible and low-fixed cost production model enables us to move from product design of a figure to shipping, with a minimal upfront investment for most figures of $7,500 to $15,000 in tooling, molds and internal design costs as of December 31, 2025.
None of our employees are represented by a labor union or are party to a collective bargaining agreement, and we have had no labor-related work stoppages.
None of our employees are represented by a labor union or are party to a collective bargaining agreement, and we have had no labor-related work stoppages. We believe that we have good relationships with our employees.
The reserves are determined as a percentage of sales based upon either historical experience or upon estimates or programs agreed upon by our customers and us. As of December 31, 2024 and 2023, we had reserves for sales allowances of $42.2 million and $44.1 million, respectively.
The reserves are determined as a percentage of sales based upon either historical experience or upon estimates or programs agreed upon by our customers and us. As of December 31, 2025 and 2024, we had sales allowances of $39.8 million and $42.2 million, respectively.
Our key retail partners in the United States include Target, Amazon, Entertainment Earth, GameStop and Hot Topic. Internationally, we sell our products directly to similar retailers, primarily in Europe, through our subsidiary Funko UK, Ltd. Our key international retail customers include Amazon, GameStop, and Fnac.
Our key retail partners in the United States include Amazon, Hot Topic, Walmart, Target and GameStop. Internationally, we sell our products directly to similar retailers, primarily in Europe, through our subsidiary Funko UK, Ltd. Our key international retail customers include Amazon, Smyths Toys, and Carrefour.
Denson’s extensive experience in brand building, brand management and organizational leadership in the public company context makes him well-qualified to serve as the Chairman of our board of directors. Trevor Edwards has served on the board of directors of Funko, Inc. since July 2022. Mr.
Denson’s extensive experience in brand building, brand management and organizational leadership in the public company context makes him well-qualified to serve as the Chairman of our board of directors. Reed Duchscher has served on the board of directors of Funko, Inc. since January 2026. Mr.
Our core benefits packages are supplemented with specific programs centered around voluntary benefits, paid time away from work, training and employee physical and mental well-being. As of December 31, 2024, we employed 1,283 full-time employees. We employed 1,055 people in North America, 207 people in Europe and 21 people in Asia.
Our core benefits packages are supplemented with specific programs centered around voluntary benefits, paid time away from work, training and employee physical and mental well-being. As of December 31, 2025, we employed 1,104 full-time employees. We employed 870 people in North America, 211 people in Europe and 23 people in Asia.
Examples of our current video game properties are Fortnite, Overwatch and Five Nights at Freddy’s. 9 Table of Contents We expect these categories and the properties they encompass to evolve over time as current content becomes classic evergreen and as new forms of pop culture content emerge.
Examples of a current video game property is Five Nights at Freddy’s. We expect these categories and the properties they encompass to evolve over time as current content becomes classic evergreen and as new forms of pop culture content emerge.
Yves Le Pendeven has served as Funko, Inc.'s Chief Financial Officer since August 2024. Since joining Funko in October 2019, Mr. Le Pendeven has held several roles as a senior finance executive, most recently serving as Acting Chief Financial Officer from March 2024 to August 2024 and before that as Deputy Chief Financial Officer from August 2023 to March 2024.
Le Pendeven has held several roles as a senior finance executive, most recently serving as Acting Chief Financial Officer from March 2024 to August 2024 and before that as Deputy Chief Financial Officer from August 2023 to March 2024. From April 2015 to October 2019, Mr.
Levy received an M.B.A. and B.A. in Economics from Harvard University. We believe Ms. Levy’s extensive experience in entertainment and media, in particular her familiarity with consumer products licensing, make her well-qualified to serve on our board of directors. 17 Table of Contents Michael Lunsford has served on the board of directors of Funko, Inc. since October 2018.
Levy received an M.B.A. and B.A. in Economics from Harvard University. We believe Ms. Levy’s extensive experience in entertainment and media, in particular her familiarity with consumer products licensing, make her well-qualified to serve on our board of directors.
As of December 31, 2024, we owned approximately 98 registered U.S. trademarks, 278 registered international trademarks, 12 pending U.S. trademark applications and 52 pending international trademark applications. Most of our products are produced and sold under trademarks owned by or licensed to us.
As of December 31, 2025, we owned approximately 112 registered U.S. trademarks, 346 registered international trademarks, 5 pending U.S. trademark applications and 24 pending international trademark applications. Most of our products are produced and sold under trademarks owned by or licensed to us.
We believe that we have good relationships with our employees. 13 Table of Contents Seasonality While our customers in the retail industry, and many of our competitors, typically operate in highly seasonal businesses, we have historically experienced only moderate seasonality in our business.
Seasonality While our customers in the retail industry, and many of our competitors, typically operate in highly seasonal businesses, we have historically experienced only moderate seasonality in our business.
We believe we have a diverse customer base, with our top ten wholesale customers representing approximately 31%, 32%, and 41%, of our 2024, 2023, and 2022 sales, respectively. No single customer accounted for over 10% of sales during these periods.
We intend to continue to increase our focus on these efforts in the future. We believe we have a diverse customer base, with our top ten wholesale customers representing approximately 31%, 31%, and 32%, of our 2025, 2024, and 2023 sales, respectively. No single customer accounted for over 10% of sales during these periods.
Harinstein has served on the board of directors of Groupon, Inc. since July 2023 and previously served on the board of directors of Alkuri Global Acquisition Corp. from January 2021 to December 2021. Mr. Harinstein received his B.A. from Northwestern University and his M.B.A. from the University of Chicago. The board believes Mr.
Harinstein currently serves on the board of directors of Collectors, Inc., Lucky Strike Entertainment, and Groupon, Inc. and previously served on the board of directors of Alkuri Global Acquisition Corp. from January 2021 to December 2021. Mr. Harinstein received his B.A. from Northwestern University and his M.B.A. from the University of Chicago. We believe Mr.
Edwards extensive marketing and brand management experience, as well as public company leadership experience, make him well-qualified to serve on the board. Jason Harinstein has served on the board of directors of Funko, Inc. since December 2024. Mr. Harinstein has served as the Chief Financial Officer of Collectors Holdings, Inc., a provider of authentication and grading services, since December 2021.
Edwards' extensive marketing and brand management experience, as well as public company leadership experience, make him well-qualified to serve on our board of directors. Jason Harinstein has served on the board of directors of Funko, Inc. since December 2024. Mr.
For the year ended December 31, 2022, 13% of sales were related to the Company's largest license agreement, with no other license agreement accounting for more than 10% of sales. Licensed Properties. We strive to license every pop culture property that we believe is relevant to consumers.
For the years ended December 31, 2025, 2024 and 2023, 36%, 37% and 31% of sales, respectively, were related to the Company's five largest license agreements, with no individual license agreement accounting for more than 10% of sales. Licensed Properties. We strive to license every pop culture property that we believe is relevant to consumers.
Our creative team is passionate about pop culture, and we believe we have a strong pipeline of talent given our culture and the opportunity we provide to work with the most relevant pop culture content.
Additionally, from time to time our creative team will develop new styles and products based on our own intellectual property. Our creative team is passionate about pop culture, and we believe we have a strong pipeline of talent given our culture and the opportunity we provide to work with the most relevant pop culture content.
Prior to such role, he served as Chief Financial Officer for Flatiron Health, a healthtech company dedicated to improving cancer care, from April 2017 to December 2021. Mr.
Harinstein has served as the Chief Financial Officer of Collectors Holdings, Inc., a provider of authentication and grading services, since December 2021. Prior to such role, he served as Chief Financial Officer for Flatiron Health, a healthtech company dedicated to improving cancer care, from April 2017 to December 2021. Mr.
See Item 1A, “Risk Factors.” 14 Table of Contents Information about our Executive Officers and Board of Directors The following table provides information regarding our executive officers and members of our board of directors (ages as of March 13, 2025): Name Age Position(s) Cynthia Williams 58 Chief Executive Officer and Director Yves Le Pendeven 46 Chief Financial Officer Tracy Daw 59 Chief Legal Officer and Secretary Andy Oddie 52 Chief Commercial Officer Charles Denson 68 Chairman of the Board of Directors Trevor Edwards 62 Director Jason Harinstein 49 Director Diane Irvine 66 Director Jesse Jacobs 49 Director Michael Kerns 48 Director Sarah Kirshbaum Levy 54 Director Michael Lunsford 57 Director Executive Officers Cynthia Williams has served as Funko, Inc.'s Chief Executive Officer and Director since May 2024.
See Item 1A, “Risk Factors.” Information about our Executive Officers and Board of Directors The following table provides information regarding our executive officers and members of our board of directors (ages as of March 12, 2026): Name Age Position(s) Josh Simon 47 Chief Executive Officer and Director Yves Le Pendeven 47 Chief Financial Officer Tracy Daw 60 Chief Legal Officer and Secretary Andy Oddie 53 Chief Commercial Officer Husnal Shah 48 Chief Product Officer Charles Denson 69 Chairman of the Board of Directors Reed Duchscher 36 Director Trevor Edwards 63 Director Jason Harinstein 50 Director Diane Irvine 67 Director Jesse Jacobs 50 Director Michael Kerns 49 Director Sarah Kirshbaum Levy 55 Director Executive Officers Josh Simon has served as Funko, Inc.'s Chief Executive Officer and Director since September 2025.
Products that we design and sell based on new movie releases are expected to have a limited duration of market demand, depending on the popularity of the title. Examples of new movie releases are Deadpool & Wolverine, Inside Out 2 and Moana 2.
Products that we design and sell based on new movie releases are expected to have a limited duration of market demand, depending on the popularity of the title. Examples of new movie releases are KPop Demon Hunters, Lilo and Stitch (2025) and Wicked: For Good.
Underground Toys Limited was acquired by Funko in early 2017. Directors Charles Denson has served on the board of directors of Funko, Inc. since its formation in April 2017, and on the board of directors of FAH, LLC since June 2016. Mr.
School of Business Management at Gujarat University in India. Directors Charles Denson has served on the board of directors of Funko, Inc. since its formation in April 2017, and on the board of directors of FAH, LLC since June 2016. Mr.
Jacobs is a graduate of the University of Pennsylvania with a BA in English and Communications and holds an MBA from the Wharton School at the University of Pennsylvania. We believe Mr. Jacobs broad management, business and entertainment experience make him well-qualified to serve on our board of directors.
Jacobs is a graduate of the University of Pennsylvania with a BA in English and Communications and holds an MBA from the Wharton School at the University of Pennsylvania. We believe Mr.
Michael Kerns has served on the board of directors of Funko, Inc. since November 2023. Mr. Kerns is a Co-founder and Partner at TCG. Mr. Kerns joined The Chernin Group, LLC in 2015, helping lead the company's investment efforts as President of TCG Digital. Mr. Kerns has deep experience starting, managing, and investing in digital media and consumer technology companies.
Kerns joined The Chernin Group, LLC in 2015, helping lead the company's investment efforts as President of TCG Digital. Mr. Kerns has deep experience starting, managing, and investing in digital media and consumer technology companies. Prior to joining The Chernin Group, Mr.
Additionally, there has been an increase in high-quality scripted television series in recent years as content providers vie for binge worthy shows to attract consumers. Although recent strikes by the Writers Guild of America and the Screen Actors Guild have interrupted content creation, content providers have continued to invest in new high-quality original content.
Additionally, there has been an increase in high-quality scripted television series in recent years as content providers vie for binge worthy shows to attract consumers.
We believe that alternative sources of supply are available to us although we cannot be assured that we can obtain adequate supplies of manufactured products on a timely basis or at all. We base our production schedules for products on our internal forecasts, taking into account historical trends of similar products and properties, current market information and communications with customers.
We believe that further alternative sources of supply are available to us although we cannot be assured that we can obtain adequate supplies of manufactured products on a timely basis or at all.
Our fans routinely express their passion for our products and brands through social media and live pop culture events, such as Comic-Con or our own Funko themed events.
Vinyl figures, which allows our fans to express their fandom frequently and impulsively. We continue to introduce innovative products designed to facilitate fan engagement across different price points and categories. Our fans routinely express their passion for our products and brands through social media and live pop culture events, such as Comic-Con or our own Funko themed events.
Our creative team layers our whimsical, fun and unique style onto the content we license to create product designs that resonate with consumers. Additionally, from time to time our creative team will develop new styles and products based on our own intellectual property.
We leverage our creative, art and sculpting teams to design and develop a majority of our products in-house from inception to production. Our creative team layers our whimsical, fun and unique style onto the content we license to create product designs that resonate with consumers.
We believe we also provide value to content providers by maximizing the lifetime value of their content by extending its relevance to consumers through ongoing fan engagement. License Agreements . Our license agreements permit us to use the intellectual property of our licensors in connection with the products we design and sell.
Our license agreements permit us to use the intellectual property of our licensors in connection with the products we design and sell.
Product Design and Development We believe our creative product designs and nimble speed to market are key reasons why content providers trust us with their properties and consumers passionately engage with our brands and products. We leverage our creative, art and sculpting teams to design and develop products in-house from inception to production.
The percent of our sales attributable to classic evergreen and current releases may fluctuate in any given year based on the number and popularity of new content releases. 9 Table of Contents Product Design and Development We believe our creative product designs and nimble speed to market are key reasons why content providers trust us with their properties and consumers passionately engage with our brands and products.
Broad Consumer Appeal and Engagement Fans are increasingly looking for ways to express their affinity for and engage with their favorite pop culture content. Over time, many of our consumers evolve from occasional buyers to more frequent purchasers, whom we categorize as enthusiasts or collectors.
Over time, many of our consumers evolve from occasional buyers to more frequent purchasers, whom we categorize as enthusiasts or collectors. We create products to appeal to a broad array of fans across consumer demographic groups. We strive to keep our products at an accessible price point, generally under $15 for our standard Pop!
We are continuing to invest in the growth of our international business, both directly and through third-party distributors.
We are continuing to invest in the growth of our international business, both directly and through third-party distributors. We believe there are opportunities to further increase our sales in other regions, such as Asia and Latin America, by expanding our direct sales to retailers, co-branded franchise stores and/or through expanded distributor relationships.
Removed
Yourself), Loungefly (softlines including bags, wallets, backpacks and apparel) and Other (which includes our emerging brands, such as Digital Pop! and Mondo). The portion of sales attributed to Core Collectible branded products in the years ended December 31, 2024, 2023 and 2022 was 77%, 73% and 76%, respectively.
Added
Yourself), Loungefly (softlines including bags, wallets, backpacks and apparel) and Other (which includes our emerging brands, such as Mondo). Broad Consumer Appeal and Engagement Fans are increasingly looking for ways to express their affinity for and engage with their favorite pop culture content.
Removed
The portion of sales attributed to Loungefly branded products in the years ended December 31, 2024, 2023 and 2022 was 16%, 20% and 19%, respectively. The portion of sales attributable to Other branded products in the years ended December 31, 2024, 2023 and 2022 was 7%, 7%, and 5%.
Added
We believe our growth opportunity is at the intersection of Culture, Creativity and Commerce. Culture We believe we should be the definitive brand for transforming pop culture into products. We strive to be at the center of the moments everyone is talking about, created by us or with us, across all corners of pop culture.
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We estimate that enthusiasts, who are more engaged in pop culture, and collectors, who regularly purchase our products and self-identify as collectors, each make up approximately one-third of our consumers. We create products to appeal to a broad array of fans across consumer demographic groups.
Added
We intend to enhance our ability to identify trends and supercharge our speed to market. During the year ended December 31, 2025, we were among the first to recognize the mass audience and collector appeal of KPop Demon Hunters and moved quickly to create an exciting lineup of products to have on the retail shelves for the holiday season.
Removed
We strive to keep our products at an accessible price point, generally under $15 for our figures, which allows our fans to express their fandom frequently and impulsively. We continue to introduce innovative products designed to facilitate fan engagement across different price points and categories.
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This launch was one of our biggest presale events when it launched on our e-commerce site. It is a priority for us to rebuild credibility and enthusiasm with core collectors and mega fans, by improving execution around limited editions, storytelling and drop cadence.
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Growth Strategies Grow our Core Pop Culture Business We intend to grow our core business by utilizing our strength in building fun, creative and nostalgic programs at retail through: (1) leveraging an increasing array of content, categories and distribution; (2) creating programs that utilize evergreen content with a focus on targeting underpenetrated content genres to expand our addressable market; and (3) continued product innovation to bring new designs and products to market.

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Item 1A. Risk Factors

Risk Factors — what could go wrong, per management

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Biggest changeAdditionally, we are required to take all commercially reasonable action to cause (1) the board of directors to be comprised of at least seven directors or such other number of directors as our board of directors may determine; (2) the individuals designated in accordance with the terms of the Stockholders Agreement to be included in the slate of nominees to be elected to the board of directors at each annual meeting of our stockholders at which a director’s term expires; and (3) the individuals designated in accordance with the terms of the Stockholders Agreement to fill the applicable vacancies on the board of directors. 43 Table of Contents In addition, the Stockholders Agreement provides that for as long as the TCG Related Parties beneficially own, directly or indirectly, in the aggregate, 22% or more of all issued and outstanding shares of our Class A common stock (assuming that all outstanding common units in FAH, LLC are redeemed for newly issued shares of our Class A common stock on a one-for-one basis), we will not take, and will cause our subsidiaries not to take, certain actions or enter into certain transactions (whether by merger, consolidation, or otherwise) without the prior written approval of TCG, including: • entering into any transaction or series of related transactions in which any person or group (other than the TCG Related Parties and any group that includes the TCG Related Parties), acquires, directly or indirectly, in excess of 50% of the then outstanding shares of any class of our or our subsidiaries’ capital stock, or following which any such person or group has the direct or indirect power to elect a majority of the members of our board of directors or to replace us as the sole manager of FAH, LLC (or to add another person as co-manager of FAH, LLC); • the reorganization, voluntary bankruptcy, liquidation, dissolution or winding up of us or any of our subsidiaries; • the sale, lease or exchange of all or substantially all of our and our subsidiaries’ property and assets; • the resignation, replacement or removal of us as the sole manager of FAH, LLC, or the appointment of any additional person as a manager of FAH, LLC; • the creation of a new class or series of capital stock or other equity securities of us or, in the event such creation would materially and adversely impair the rights of the TCG Related Parties as holders of our Class A common stock, any of our subsidiaries; • the issuance of additional shares of Class A common stock, Class B common stock, preferred stock or other equity securities of us other than (x) under any stock option or other equity compensation plan approved by our board of directors or the compensation committee, or (y) pursuant to the exercise or conversion of any options, warrants or other securities existing as of the date of the Stockholders Agreement or, in the event such creation would materially and adversely impair the rights of the TCG Related Parties as holders of our Class A common stock, equity securities of any of our subsidiaries; • any amendment or modification of our certificate of incorporation or bylaws or any similar organizational documents of any of our subsidiaries that would, in either case, materially and adversely impair the rights of the TCG Related Parties as holders of our Class A common stock, and • except to the extent of the express restrictions applicable to TCG and its controlled affiliates in the Stockholders Agreement, any action to adopt, approve or implement any plan, agreement or provision that would, among other things, negatively affect TCG’s or its controlled affiliates’ ability to continue to hold or acquire additional shares of our capital stock or other securities. 44 Table of Contents Additionally, the Continuing Equity Owners who, as of March 11, 2025, collectively hold approximately 1.2% of the combined voting power of our common stock, and certain transferees of former Continuing Equity Owners that have been joined to our TRA (the "TRA Parties") may receive payments from us under the Tax Receivable Agreement in connection with our purchase of common units of FAH, LLC directly from certain of the Continuing Equity Owners upon a redemption or exchange of their common units in FAH, LLC, including the issuance of shares of our Class A common stock upon any such redemption or exchange.
Biggest changeIn addition, the Stockholders Agreement provides that for as long as the TCG Related Parties beneficially own, directly or indirectly, in the aggregate, 22% or more of all issued and outstanding shares of our Class A common stock (assuming that all outstanding common units in FAH, LLC are redeemed for newly issued shares of our Class A common stock on a one-for-one basis, excluding for this purpose any shares of Class A common stock issued, from time to time, in at-the-market offerings, up to a maximum of $40.0 million), we will not take, and will cause our subsidiaries not to take, certain actions or enter into certain transactions (whether by merger, consolidation, or otherwise) without the prior written approval of TCG, including: • entering into any transaction or series of related transactions in which any person or group (other than the TCG Related Parties and any group that includes the TCG Related Parties), acquires, directly or indirectly, in excess of 50% of the then outstanding shares of any class of our or our subsidiaries’ capital stock, or following which any such person or group has the direct or indirect power to elect a majority of the members of our board of directors or to replace us as the sole manager of FAH, LLC (or to add another person as co-manager of FAH, LLC); • the reorganization, voluntary bankruptcy, liquidation, dissolution or winding up of us or any of our subsidiaries; • the sale, lease or exchange of all or substantially all of our and our subsidiaries’ property and assets; • the resignation, replacement or removal of us as the sole manager of FAH, LLC, or the appointment of any additional person as a manager of FAH, LLC; • the creation of a new class or series of capital stock or other equity securities of us or, in the event such creation would materially and adversely impair the rights of the TCG Related Parties as holders of our Class A common stock, any of our subsidiaries; 43 Table of Contents • the issuance of additional shares of Class A common stock, Class B common stock, preferred stock or other equity securities of us other than (x) under any stock option or other equity compensation plan approved by our board of directors or the compensation committee, or (y) pursuant to the exercise or conversion of any options, warrants or other securities existing as of the date of the Stockholders Agreement or, in the event such creation would materially and adversely impair the rights of the TCG Related Parties as holders of our Class A common stock, equity securities of any of our subsidiaries; • any amendment or modification of our certificate of incorporation or bylaws or any similar organizational documents of any of our subsidiaries that would, in either case, materially and adversely impair the rights of the TCG Related Parties as holders of our Class A common stock, and • except to the extent of the express restrictions applicable to TCG and its controlled affiliates in the Stockholders Agreement, any action to adopt, approve or implement any plan, agreement or provision that would, among other things, negatively affect TCG’s or its controlled affiliates’ ability to continue to hold or acquire additional shares of our capital stock or other securities.
Various meteorological phenomena and extreme weather events (including, but not limited to, storms, flooding, drought, wildfire, and extreme temperatures) may disrupt our operations or those of our suppliers, requiring us or our suppliers to incur additional operating or capital expenditures, or otherwise adversely impact our business, financial condition, or results of operations, either directly or indirectly through impacting our suppliers.
Various meteorological phenomena and extreme weather events (including, but not limited to, storms, flooding, drought, wildfire, and extreme temperatures) may disrupt our operations and those of our suppliers, requiring us or our suppliers to incur additional operating or capital expenditures, or otherwise adversely impact our business, financial condition, or results of operations, either directly or indirectly through impacting our suppliers.
The Complaint alleges that the Company and certain individual defendants violated Sections 10(b) and 20(a) of the Exchange Act, as amended, as well as Rule 10b-5 promulgated thereunder by making allegedly materially misleading statements in documents filed with the SEC, as well as in earnings calls and presentations to investors, regarding a planned upgrade to its enterprise resource planning system and the relocation of a distribution center, as well as by omitting material facts about the same subjects necessary to make the statements made therein not misleading.
The amended complaint alleges that the Company and certain individual defendants violated Sections 10(b) and 20(a) of the Exchange Act, as amended, as well as Rule 10b-5 promulgated thereunder by making allegedly materially misleading statements in documents filed with the SEC, as well as in earnings calls and presentations to investors, regarding a planned upgrade to its enterprise resource planning system and the relocation of a distribution center, as well as by omitting material facts about the same subjects necessary to make the statements made therein not misleading.
Our ability to comply with our financial covenants and the other covenants and restrictions under our Credit Facilities may be affected by events and factors beyond our control, and there can be no guarantee that we will be able to further amend our Credit Facilities in order to avoid or mitigate the risk of any potential breach that may occur in the future.
Our ability to comply with the Financial Covenants and the other covenants and restrictions under our Credit Facilities may be affected by events and factors beyond our control, and there can be no guarantee that we will be able to further amend our Credit Facilities in order to avoid or mitigate the risk of any potential breach that may occur in the future.
Our failure to comply with our financial covenants as described above, or with any of the other covenants or restrictions under our Credit Facilities, could result in an event of default under our Credit Facilities.
Our failure to comply with the Financial Covenants as described above, or with any of the other covenants or restrictions under our Credit Facilities, could result in an event of default under our Credit Facilities.
We are currently subject to securities class action and derivative litigation and may be subject to similar or other litigation in the future, all of which will require significant management time and attention, result in significant legal expenses and may result in unfavorable outcomes, which may have a material adverse effect on our business, operating results and financial condition, and negatively affect the price of our Class A common stock.
We are currently subject to securities class action and may be subject to similar or other litigation in the future, all of which will require significant management time and attention, result in significant legal expenses and may result in unfavorable outcomes, which may have a material adverse effect on our business, operating results and financial condition, and negatively affect the price of our Class A common stock.
The factors affecting the further development of blockchain networks and digital assets, include, without limitation: • worldwide growth in the adoption and use of digital assets and other blockchain technologies; • further government and quasi-government regulation of digital assets and their use, or restrictions on or regulation of access to and operation of blockchain networks or similar systems; 39 Table of Contents • the maintenance and development of the open-source software protocol of blockchain networks; • changes in consumer demographics and public tastes and preferences; • the availability and popularity of other forms or methods of buying and selling goods and services, or trading assets including new means of using government-backed currencies or existing networks; • the extent to which current purchaser interest in cryptocurrencies represents a speculative “bubble;" • the extent to which historic price volatility in cryptocurrencies and digital assets continues into the future; • general economic conditions in the United States and the world; • the regulatory environment relating to cryptocurrencies and blockchains; and • a decline in the popularity or acceptance of cryptocurrencies or other blockchain-based tokens.
The factors affecting the further development of blockchain networks and digital assets, include, without limitation: 40 Table of Contents • worldwide growth in the adoption and use of digital assets and other blockchain technologies; • further government and quasi-government regulation of digital assets and their use, or restrictions on or regulation of access to and operation of blockchain networks or similar systems; • the maintenance and development of the open-source software protocol of blockchain networks; • changes in consumer demographics and public tastes and preferences; • the availability and popularity of other forms or methods of buying and selling goods and services, or trading assets including new means of using government-backed currencies or existing networks; • the extent to which current purchaser interest in cryptocurrencies represents a speculative “bubble;" • the extent to which historic price volatility in cryptocurrencies and digital assets continues into the future; • general economic conditions in the United States and the world; • the regulatory environment relating to cryptocurrencies and blockchains; and • a decline in the popularity or acceptance of cryptocurrencies or other blockchain-based tokens.
Increased attention to, and evolving expectations for, sustainability and environmental, social, and governance (“ESG”) initiatives could increase our costs or otherwise adversely impact our business and reputation. Expectations surrounding climate, human capital, and other ESG matters continue to evolve rapidly. For example, we have previously been subject to media scrutiny for our management of product inventory.
Increased attention to, and evolving expectations for, sustainability and environmental, social, and governance (“ESG”) initiatives could increase our costs or otherwise adversely impact our business and reputation. Expectations surrounding climate change, human capital, and other ESG matters continue to evolve rapidly. For example, we have previously been subject to media scrutiny for our management of product inventory.
In the future, we may require additional capital to respond to business opportunities, challenges, acquisitions or unforeseen circumstances, including in the event we are unable to maintain compliance with the financial or other covenants contained in the Credit Agreement, and may determine to engage in equity or debt financings or enter into credit facilities or refinance existing indebtedness for other reasons.
In the future, we expect to require additional capital to respond to business opportunities, challenges, acquisitions or unforeseen circumstances, including in the event we are unable to maintain compliance with the Financial Covenants or other covenants contained in the Credit Agreement, and may determine to engage in equity or debt financings or enter into credit facilities or refinance existing indebtedness for other reasons.
In addition, our amended and restated certificate of incorporation and our amended and restated bylaws contain provisions that may make the acquisition of our company more difficult without the approval of our board of directors, including, but not limited to, the following: • our board of directors is classified into three classes, each of which serves for a staggered three-year term; • only the chairperson of our board of directors or a majority of our board of directors may call special meetings of our stockholders; • we have authorized undesignated preferred stock, the terms of which may be established and shares of which may be issued without stockholder approval; • any action required or permitted to be taken by our stockholders at an annual meeting or special meeting of stockholders may not be taken by written consent in lieu of a meeting; • our amended and restated certificate of incorporation and our amended and restated bylaws may be amended or repealed by the affirmative vote of the holders of at least 66 2 / 3 % of the votes which all our stockholders would be entitled to cast in any annual election of directors and our amended and restated bylaws may also be amended or repealed by a majority vote of our board of directors; • we require advance notice and duration of ownership requirements for stockholder proposals; and 50 Table of Contents • we have opted out of Section 203 of the Delaware General Corporation Law of the State of Delaware, or the DGCL, however, our amended and restated certificate of incorporation contains provisions that are similar to Section 203 of the DGCL (except with respect to TCG and certain other parties, including certain affiliates, associates and transferees of TCG).
In addition, our amended and restated certificate of incorporation and our amended and restated bylaws contain provisions that may make the acquisition of our company more difficult without the approval of our board of directors, including, but not limited to, the following: • our board of directors is classified into three classes, each of which serves for a staggered three-year term; • only the chairperson of our board of directors or a majority of our board of directors may call special meetings of our stockholders; • we have authorized undesignated preferred stock, the terms of which may be established and shares of which may be issued without stockholder approval; • any action required or permitted to be taken by our stockholders at an annual meeting or special meeting of stockholders may not be taken by written consent in lieu of a meeting; • our amended and restated certificate of incorporation and our amended and restated bylaws may be amended or repealed by the affirmative vote of the holders of at least 66 2 / 3 % of the votes which all our stockholders would be entitled to cast in any annual election of directors and our amended and restated bylaws may also be amended or repealed by a majority vote of our board of directors; • we require advance notice and duration of ownership requirements for stockholder proposals; and • we have opted out of Section 203 of the Delaware General Corporation Law of the State of Delaware, or the DGCL, however, our amended and restated certificate of incorporation contains provisions that are similar to Section 203 of the DGCL (except with respect to TCG and certain other parties, including certain affiliates, associates and transferees of TCG).
If we breach any of these obligations or any other obligations set forth in any of our license agreements, we could be subject to monetary penalties and our rights under such license agreements could be terminated, either of which could have a material adverse effect on our business, financial condition and results of operations. 21 Table of Contents Our success is also partially dependent on the reputation of our licensors and the goodwill associated with their intellectual property, and their ability to protect and maintain the intellectual property rights that we use in connection with our products, all of which may be harmed by factors outside our control.
If we breach any of these obligations or any other obligations set forth in any of our license agreements, we could be subject to monetary penalties and our rights under such license agreements could be terminated, either of which could have a material adverse effect on our business, financial condition and results of operations. 26 Table of Contents Our success is also partially dependent on the reputation of our licensors and the goodwill associated with their intellectual property, and their ability to protect and maintain the intellectual property rights that we use in connection with our products, all of which may be harmed by factors outside our control.
Compliance can be costly, require us to establish or augment programs to diligence or monitor our suppliers, or, in the case of legislation such as the Uyghur Forced Labor Prevention Act, to design supply chains to avoid certain regions altogether.
Compliance can be costly, require us to establish or augment programs to diligence or monitor our suppliers, or, in the case of legislation such as the Uyghur Forced Labor Prevention Act ("UFLPA"), to design supply chains to avoid certain regions altogether.
A decrease in gross margin can be the result of numerous factors, including, but not limited to: • changes in customer, geographic, or product mix; • introduction of new products, including our expansion into additional product categories; • increases in the royalty rates under our license agreements; • new or increased tariffs impacting our products or raw materials for our products; • inability to meet minimum guaranteed royalties; • increases in, or our inability to reduce, our costs, including as a result of inflation; • entry into new markets or growth in lower margin markets; • increases in raw materials, labor or other manufacturing- and inventory-related costs; • increases in transportation costs, including the cost of fuel, and increased shipping costs to meet customer demand; • increased price competition; • changes in the dynamics of our sales channels, including those affecting the retail industry and the financial health of our customers; • inability to increase prices in order to meet increased costs; • increases in sales discounts and allowances provided to our customers; • acquisitions of companies with a lower gross margin than ours; and • overall execution of our business strategy and operating plan.
A decrease in gross margin can be the result of numerous factors, including, but not limited to: • changes in customer, geographic, or product mix; • introduction of new products, including our expansion into additional product categories; • increases in the royalty rates under our license agreements; • new or increased tariffs impacting our products or raw materials for our products; 28 Table of Contents • inability to meet minimum guaranteed royalties; • increases in, or our inability to reduce, our costs, including as a result of inflation; • entry into new markets or growth in lower margin markets; • increases in raw materials, labor or other manufacturing- and inventory-related costs; • increases in transportation costs, including the cost of fuel, and increased shipping costs to meet customer demand; • increased price competition; • changes in the dynamics of our sales channels, including those affecting the retail industry and the financial health of our customers; • inability to increase prices in order to meet increased costs; • increases in sales discounts and allowances provided to our customers; • acquisitions of companies with a lower gross margin than ours; and • overall execution of our business strategy and operating plan.
Please see “Organizational Structure Risks—TCG has significant influence over us, including over decisions that require the approval of stockholders, and its interests, along with the interests of our other Continuing Equity Owners and certain other parties, in our business may conflict with the interests of our other stockholders.” Our amended and restated certificate of incorporation provides, subject to certain exceptions, that the Court of Chancery of the State of Delaware will be the sole and exclusive forum for certain stockholder litigation matters and our amended and restated bylaws designate the federal district courts of the United States as the exclusive forum for actions arising under the Securities Act, which could limit our stockholders’ ability to obtain a favorable judicial forum for disputes with us or our directors, officers, employees or stockholders.
Please see “Organizational Structure Risks—TCG has significant influence over us, including over decisions that require the approval of stockholders, and its interests, along with the interests of our other Continuing Equity Owners and certain other parties, in our business may conflict with the interests of our other stockholders.” 50 Table of Contents Our amended and restated certificate of incorporation provides, subject to certain exceptions, that the Court of Chancery of the State of Delaware will be the sole and exclusive forum for certain stockholder litigation matters and our amended and restated bylaws designate the federal district courts of the United States as the exclusive forum for actions arising under the Securities Act, which could limit our stockholders’ ability to obtain a favorable judicial forum for disputes with us or our directors, officers, employees or stockholders.
This could result in the then-current owners of FAH, LLC equity interests (including us) bearing the burden of income tax audit adjustments in accordance with their then-current ownership of FAH, LLC, even if their ownership percentage of FAH, LLC during the taxable period that gave rise to the audit adjustment was different. 34 Table of Contents In addition, changes in law and policy relating to taxes could adversely affect us.
This could result in the then-current owners of FAH, LLC equity interests (including us) bearing the burden of income tax audit adjustments in accordance with their then-current ownership of FAH, LLC, even if their ownership percentage of FAH, LLC during the taxable period that gave rise to the audit adjustment was different. 36 Table of Contents In addition, changes in law and policy relating to taxes could adversely affect us.
Policies and practices of individual retailers may adversely affect us as well, including those relating to access to and time on shelf space, price demands, payment terms and favoring the products of our competitors. Our retail customers make no binding long-term commitments to us regarding purchase volumes and make all purchases by delivering purchase orders.
Policies and practices of individual retailers can adversely affect us as well, including those relating to access to and time on shelf space, price demands, payment terms and favoring the products of our competitors. Our retail customers make no binding long-term commitments to us regarding purchase volumes and make all purchases by delivering purchase orders.
These license agreements typically have short terms (between two and three years), are not automatically renewable, and, in some cases, give the licensor the right to terminate the license agreement at will. 20 Table of Contents Our license agreements typically provide that our licensors own the intellectual property rights in the products we design and sell under the license.
These license agreements typically have short terms (between two and three years), are not automatically renewable, and, in some cases, give the licensor the right to terminate the license agreement at will. 25 Table of Contents Our license agreements typically provide that our licensors own the intellectual property rights in the products we design and sell under the license.
To the extent our e-commerce business does not generate more net sales than costs, our business, financial condition and results of operations will be adversely affected. 36 Table of Contents We could be subject to future product liability suits or product recalls which could have a significant adverse effect on our financial condition and results of operations.
To the extent our e-commerce business does not generate more net sales than costs, our business, financial condition and results of operations will be adversely affected. 38 Table of Contents We could be subject to future product liability suits or product recalls which could have a significant adverse effect on our financial condition and results of operations.
For example, our former Chief Executive Officer, Brian Mariotti and another former Funko executive, have created a collectible products company that recently launched with certain products that compete with our offerings. Mr. Mariotti may rely on licensing, supplier, marketing and other relationships he established while at Funko to produce, market and sell his products.
For example, our former Chief Executive Officer, Brian Mariotti and other former Funko executives, have created a collectible products company that recently launched with certain products that compete with our offerings. Mr. Mariotti may rely on licensing, supplier, marketing and other relationships he established while at Funko to produce, market and sell his products.
We do not currently maintain key man life insurance policies on any member of our senior management team or on our other key employees. In addition, competition for qualified personnel is intense. We compete with many other potential employers in recruiting, hiring and retaining our senior management team and our many other skilled officers and other employees around the world.
We do not currently maintain key person life insurance policies on any member of our senior management team or on our other key employees. In addition, competition for qualified personnel is intense. We compete with many other potential employers in recruiting, hiring and retaining our senior management team and our many other skilled officers and other employees around the world.
Additionally, as discussed above, we use third-party manufacturers located in Vietnam, China and Mexico to produce most of our products.
Additionally, as discussed above, we use third-party manufacturers located in Vietnam, Cambodia, China and Mexico to produce most of our products.
Moreover, due to the novelty of the asset class and the evolving patchwork of regulatory oversight of digital asset markets, fraud and market manipulation are not uncommon in such markets, all of which could negatively impact the value of our digital assets and have an adverse impact on our business. 40 Table of Contents Use of social media may materially and adversely affect our reputation or subject us to fines or other penalties.
Moreover, due to the novelty of the asset class and the evolving patchwork of regulatory oversight of digital asset markets, fraud and market manipulation are not uncommon in such markets, all of which could negatively impact the value of our digital assets and have an adverse impact on our business. 41 Table of Contents Use of digital marketing and social media may materially and adversely affect our reputation or subject us to fines or other penalties.
Sales of a certain product or group of products tied to a particular content release can dramatically increase our net sales in any given quarter or year. Our results of operations may also fluctuate as a result of factors such as the delivery schedules set by our customers and holiday shut down schedules set by our third-party manufacturers.
Sales of a certain product or group of products tied to a particular content release can dramatically increase our net sales in any given quarter or year. 33 Table of Contents Our results of operations may also fluctuate as a result of factors such as the delivery schedules set by our customers and holiday shut down schedules set by our third-party manufacturers.
This Confidential Information relates to all aspects of our business, including but not limited to current and future products and entertainment under development, and also contains certain customer, consumer, supplier, partner and employee data. We face numerous and evolving cybersecurity risks that threaten the confidentiality, integrity, availability, and privacy of our IT Systems and Confidential Information.
This Confidential Information relates to all aspects of our business, including but not limited to current and future products and entertainment under development, and also contains certain customer, consumer, supplier, partner and employee data. 52 Table of Contents We face numerous and evolving cybersecurity risks that threaten the confidentiality, integrity, availability, and privacy of our IT Systems and Confidential Information.
Accordingly, we may lose a corporate opportunity or suffer competitive harm, which could negatively impact our business or prospects. Our principal asset consists of our interest in FAH, LLC, and accordingly, we depend on distributions from FAH, LLC to pay taxes and expenses, including payments under the Tax Receivable Agreement.
Accordingly, we may lose a corporate opportunity or suffer competitive harm, which could negatively impact our business or prospects. 44 Table of Contents Our principal asset consists of our interest in FAH, LLC, and accordingly, we depend on distributions from FAH, LLC to pay taxes and expenses, including payments under the Tax Receivable Agreement.
Our top ten wholesale customers represented approximately 31%, 32% and 41% of our sales for the years ended December 31, 2024, 2023 and 2022, respectively. We depend on retailers to provide adequate and attractive space for our products and point of purchase displays in their stores.
Our top ten wholesale customers represented approximately 31%, 31% and 32% of our sales for the years ended December 31, 2025, 2024 and 2023, respectively. We depend on retailers to provide adequate and attractive space for our products and point of purchase displays in their stores.
Such attacks may involve internal or external actors, including state-sponsored organizations, opportunistic hackers and hacktivists, and may result from the exploitation of bugs, misconfigurations or vulnerabilities in our IT Systems (or open-source or commercial software that is integrated into our IT Systems), human error, social engineering/phishing, supply chain attacks, or malware deployment (for example, ransomware), and may disrupt our operations and/or compromise data.
Such attacks may involve internal or external actors, including state-sponsored organizations, opportunistic hackers and hacktivists, and may result from the exploitation of bugs, misconfigurations or vulnerabilities in our IT Systems (or open-source or commercial software that is integrated into our IT Systems), human error, social engineering/phishing, supply chain attacks, or malware deployment (for example, ransomware).
For example, in recent years, the retail industry faced reductions in sales due to macroeconomic uncertainty which adversely impacted our sales. 22 Table of Contents Due to the challenging environment for traditional “brick-and-mortar” retail locations caused by declining in-store traffic, many retailers have closed physical stores, and some traditional retailers have engaged in significant reorganizations, filed for bankruptcy and gone out of business.
For example, in recent years, the retail industry has faced reductions in sales due to macroeconomic uncertainty which adversely impacted our sales. Due to the challenging environment for traditional “brick-and-mortar” retail locations caused by declining in-store traffic, many retailers have closed physical stores, and some traditional retailers have engaged in significant reorganizations, filed for bankruptcy and gone out of business.
If we are unable to maintain the strength of our corporate culture, our competitive ability and our business may be adversely affected. 29 Table of Contents Our operating results may fluctuate from quarter to quarter and year to year due to the seasonality of our business, as well as due to the timing and popularity of new product releases.
If we are unable to maintain the strength of our corporate culture, our competitive ability and our business may be adversely affected. Our operating results may fluctuate from quarter to quarter and year to year due to the seasonality of our business, as well as due to the timing and popularity of new product releases.
If consumer demand for our Core Collectible branded category products were to decrease, our business, financial condition and results of operations could be adversely affected unless we were able to develop and market additional products that generated an equivalent amount of net sales at a comparable gross margin, which there is no guarantee we would be able to do.
If consumer demand for our products were to decrease, our business, financial condition and results of operations could be adversely affected unless we were able to develop and market additional products that generated an equivalent amount of net sales at a comparable gross margin, which there is no guarantee we would be able to do.
Many factors, which are outside our control, may cause the market price of our Class A common stock to fluctuate significantly, including those described elsewhere in this “Risk Factors” section, as well as the following: • our operating and financial performance and prospects; • our quarterly or annual earnings or those of other companies in our industry compared to market expectations; • conditions that impact demand for our products; • future announcements concerning our business, our customers’ businesses or our competitors’ businesses; • the public’s reaction to our press releases, other public announcements and filings with the SEC; 54 Table of Contents • the size of our public float; • coverage by or changes in financial estimates by securities analysts or failure to meet their expectations; • market and industry perception of our success, or lack thereof, in pursuing our growth strategy; • short sales of our stock or trading phenomena such as "short squeezes"; • strategic actions by us or our competitors, such as acquisitions or restructurings; • changes in laws or regulations which adversely affect our industry, our licensors or us; • changes in accounting standards, policies, guidance, interpretations or principles; • changes in senior management or key personnel; • issuances, exchanges or sales, or expected issuances, exchanges or sales of our capital stock; • changes in our dividend policy; • adverse resolution of new or pending litigation against us; • the imposition of fines or other remedial measures as a result of regulatory violations or civil liability; and • changes in general market, economic and political conditions in the United States and global economies or financial markets, including those resulting from natural disasters, terrorist attacks, acts of war, pandemics or other health crises and responses to such events.
Many factors, which are outside our control, may cause the market price of our Class A common stock to fluctuate significantly, including those described elsewhere in this “Risk Factors” section, as well as the following: • our operating and financial performance and prospects; • our quarterly or annual earnings or those of other companies in our industry compared to market expectations; • conditions that impact demand for our products; • future announcements concerning our business, our customers’ businesses or our competitors’ businesses; • the public’s reaction to our press releases, other public announcements and filings with the SEC; • the size of our public float; • coverage by or changes in financial estimates by securities analysts or failure to meet their expectations; • market and industry perception of our success, or lack thereof, in pursuing our growth strategy; • short sales of our stock or trading phenomena such as "short squeezes"; • strategic actions by us or our competitors, such as acquisitions or restructurings; • changes in laws or regulations which adversely affect our industry, our licensors or us; • changes in accounting standards, policies, guidance, interpretations or principles; • changes in senior management or key personnel; • issuances, exchanges or sales, or expected issuances, exchanges or sales of our capital stock; • changes in our dividend policy; • adverse resolution of new or pending litigation against us; • the imposition of fines or other remedial measures as a result of regulatory violations or civil liability; and • changes in general market, economic and political conditions in the United States and global economies or financial markets, including those resulting from increased tariffs, natural disasters, terrorist attacks, acts of war, pandemics or other health crises and responses to such events. 54 Table of Contents As a result, volatility in the market price of our Class A common stock may prevent investors from being able to sell their Class A common stock at or above the price they paid for them or at all.
See “Our substantial sales and manufacturing operations outside the United States subject us to risks associated with international operations.” We are subject to a series of risks related to climate change. There are inherent climate-related risks wherever business is conducted.
See “Our substantial sales and manufacturing operations outside the United States subject us to risks associated with international operations.” 34 Table of Contents We are subject to a series of risks related to climate change. There are inherent climate-related risks wherever business is conducted.
See “Ownership of Our Class A Common Stock Risks.” In certain circumstances, FAH, LLC will be required to make distributions to us and the Continuing Equity Owners and certain of their transferees, and the distributions that FAH, LLC will be required to make may be substantial.
See “Ownership of Our Class A Common Stock Risks.” 45 Table of Contents In certain circumstances, FAH, LLC will be required to make distributions to us and the Continuing Equity Owners and certain of their transferees, and the distributions that FAH, LLC will be required to make may be substantial.
If we are not successful in developing our e-commerce channel and other new sales channels, our net sales and profitability may be adversely affected. 23 Table of Contents Our industry is highly competitive and the barriers to entry are low. If we are unable to compete effectively with existing or new competitors, our sales, market share and profitability could decline.
If we are not successful in developing our e-commerce channel and other new sales channels, our net sales and profitability may be adversely affected. Our industry is highly competitive and the barriers to entry are low. If we are unable to compete effectively with existing or new competitors, our sales, market share and profitability could decline.
If market conditions, demand for our products or consumer preferences shift or we face distribution challenges prior to the sales of the inventory, we may have excess inventory that we may need to hold for a long period of time, write down, and/or sell at prices lower than expected or discard.
When market conditions, demand for our products or consumer preferences shift or we face distribution challenges prior to the sales of the inventory, we have and may in the future have excess inventory that we need to hold for a long period of time, write down, and/or sell at prices lower than expected or discard.
The costs required to protect our trademarks and copyrights may be substantial. 27 Table of Contents In addition, we may fail to apply for, or be unable to obtain, protection for certain aspects of the intellectual property used in or beneficial to our business.
The costs required to protect our trademarks and copyrights may be substantial. In addition, we may fail to apply for, or be unable to obtain, protection for certain aspects of the intellectual property used in or beneficial to our business.
Additionally, the third-party manufacturers that produce most of our products are located in Vietnam, China and Mexico. As a result, we are subject to various risks resulting from our international operations.
Additionally, the third-party manufacturers that produce or assemble most of our products are located in Vietnam, China, Cambodia and Mexico. As a result, we are subject to various risks resulting from our international operations.
Both advocates and opponents to certain ESG matters increasingly resort to a range of activism forms, including media campaigns and litigation, to advance their perspectives. Addressing these varying demands and expectations may be costly, and our efforts may not be successful or have the desired effect.
Both advocates and opponents to certain ESG matters increasingly resort to a range of activism forms, including media campaigns and litigation, to advance their perspectives. Addressing these varying demands and expectations (including any associated regulatory obligations) may be costly, and our efforts may not be successful or have the desired effect.
The payments under the Tax Receivable Agreement are also not conditioned upon the TRA Parties maintaining a continued ownership interest in FAH, LLC. The amounts that we may be required to pay to the TRA Parties under the Tax Receivable Agreement may be accelerated in certain circumstances and may also significantly exceed the actual tax benefits that we ultimately realize.
The payments under the Tax Receivable Agreement are also not conditioned upon the TRA Parties maintaining a continued ownership interest in FAH, LLC. 46 Table of Contents The amounts that we may be required to pay to the TRA Parties under the Tax Receivable Agreement may be accelerated in certain circumstances and may also significantly exceed the actual tax benefits that we ultimately realize.
Moreover, while we have separate licensing arrangements with Disney, LucasFilm and Marvel, these parties are all under common ownership by Disney and collectively these licensors accounted for approximately 32%, 38% and 44% of our sales for the years ended December 31, 2024, 2023 and 2022, respectively.
Moreover, while we have separate licensing arrangements with Disney, LucasFilm and Marvel, these parties are all under common ownership by Disney and collectively these licensors accounted for approximately 28%, 32% and 38% of our sales for the years ended December 31, 2025, 2024 and 2023, respectively.
Bribery Act of 2010 and similar anti-corruption and anti-bribery laws in other jurisdictions generally prohibit companies, their officers, directors, employees and third-party intermediaries, business partners, and agents from making improper payments or other improper things of value to government officials or other persons.
The FCPA, the U.K. Bribery Act of 2010 and similar anti-corruption and anti-bribery laws in other jurisdictions generally prohibit companies, their officers, directors, employees and third-party intermediaries, business partners, and agents from making improper payments or other improper things of value to government officials or other persons.
Disruptive attacks, such as through ransomware and other extortion-based tactics, that can temporarily or permanently disable operations or otherwise disrupt our business are becoming increasingly prevalent.
Disruptive attacks, such as through ransomware and other extortion-based tactics, that can temporarily or permanently disable our IT Systems or otherwise disrupt our business are becoming increasingly prevalent.
Additionally, global consumer protection, data privacy and cybersecurity legal requirements, such as under the General Data Protection Regulation ("GDPR") and the California Consumer Privacy Act ("CCPA"), are evolving rapidly and increasingly exposing companies to significant fines and penalties for violations, including in relation to security incidents.
Additionally, global consumer protection, data privacy and cybersecurity legal requirements, such as under the GDPR and the CCPA, are evolving rapidly and increasingly exposing companies to significant fines and penalties for violations, including in relation to security incidents.
Approximately 56%, 55% and 53%, of our net sales for the years ended December 31, 2024, 2023 and 2022, respectively, were made in the third and fourth quarters, as our customers build up their inventories in anticipation of the holiday season.
Approximately 58%, 56% and 55%, of our net sales for the years ended December 31, 2025, 2024 and 2023, respectively, were made in the third and fourth quarters, as our customers build up their inventories in anticipation of the holiday season.
Certain of the products we purchase from manufacturers in China have been or may in the future be subject to these tariffs, which, to the extent we alter our pricing as a result of such tariffs, could make our products less competitive than those of our competitors whose inputs are not subject to these tariffs.
Certain of the products we purchase from manufacturers in China, Vietnam, Cambodia and Mexico have been or may in the future be subject to these tariffs, which, to the extent we alter our pricing further as a result of such tariffs, could make our products less competitive than those of our competitors whose inputs are not subject to these tariffs.
Our top ten licensors collectively accounted for approximately 63%, 68% and 74% of our sales for the years ended December 31, 2024, 2023 and 2022, respectively.
Our top ten licensors collectively accounted for approximately 63%, 63% and 68% of our sales for the years ended December 31, 2025, 2024 and 2023, respectively.
Funds we receive from FAH, LLC to satisfy its tax distribution obligations generally will not be available for reinvestment in our business.
Funds we receive from FAH, LLC to satisfy its tax distribution obligations may not be available for reinvestment in our business.
We may also be negatively affected by changes in retailers’ inventory policies and practices, including as a result of macroeconomic factors. As a result of the desire of retailers to more closely manage inventory levels, we are required to more closely anticipate demand, and this could require us to carry additional inventory.
We are also and may in the future be negatively affected by changes in retailers’ inventory policies and practices, including as a result of macroeconomic factors. As a result of the desire of retailers to more closely manage inventory levels, we are required to more closely anticipate demand, and this has, at times required us to carry additional inventory.
This risk is exacerbated by the fact that we do not have written contracts reserving capacity or providing loss contingencies with certain of our manufacturers. While we believe our external sources of manufacturing could be shifted, if necessary, to alternative sources of supply, we would require a significant period of time to make such a shift.
This risk is exacerbated by the fact that we do not have written contracts reserving capacity or providing loss contingencies with certain of our manufacturers. While we believe our external sources of manufacturing can be shifted, to alternative sources of supply, we would require significant planning to make such a shift.
No assurance can be made that these and other changes in our leadership will not have a material adverse impact on our relationships with licensors, and if we fail to manage our licensor relationships successfully, our business, financial condition or results of operations could be adversely affected.
No assurance can be made that the recent and any future changes in our leadership or changes in our financial condition will not have a material adverse impact on our relationships with licensors, and if we fail to manage our licensor relationships successfully, our business, financial condition or results of operations could be materially adversely affected.
Any actual or perceived failure to comply with new or existing laws, regulations, and other requirements relating to privacy and the protection of personal information may result in negative publicity, claims, investigations and litigation, and adversely affect our business, results of operations, or financial performance.
Any of the foregoing could materially adversely affect our business, financial condition and results of operations. 55 Table of Contents Any actual or perceived failure to comply with new or existing laws, regulations, and other requirements relating to privacy and the protection of personal information may result in negative publicity, claims, investigations and litigation, and adversely affect our business, results of operations, or financial performance.
The CCPA, imposes data protection obligations on companies doing business in California, including consumer rights processes, limitations on Personal Information uses, and opt outs for certain disclosures of Personal Information and uses of sensitive Personal Information.
The CCPA, imposes data protection obligations on certain companies that do business in California and process the Personal Information of California residents, including consumer rights processes, limitations on Personal Information uses, and opt outs for certain disclosures of Personal Information and uses of sensitive Personal Information.
Further changes in U.S. trade policies, tariffs, taxes, export restrictions or other trade barriers, or restrictions on raw materials or components may limit our ability to produce products, increase our manufacturing costs, decrease our profit margins, reduce the competitiveness of our products, or inhibit our ability to sell products or purchase raw materials or components, which would have a material adverse effect on our business, results of operations and financial condition.
Further changes in U.S. trade policies, tariffs, taxes, export restrictions or other trade barriers, or restrictions on raw materials or components may limit our ability to produce products, increase our manufacturing costs, decrease our profit margins, reduce the competitiveness of our products, or inhibit our ability to sell products or purchase raw materials or components, which would have a material adverse effect on our business, results of operations and financial condition. 21 Table of Contents Our indebtedness could adversely affect our financial health and competitive position.
For the years ended December 31, 2024, 2023 and 2022, our gross margins (exclusive of depreciation and amortization), calculated as net sales less cost of sales as a percentage of net sales, were 41.4%, 30.4% and 32.8%, respectively.
For the years ended December 31, 2025, 2024 and 2023, our gross margins (exclusive of depreciation and amortization), calculated as net sales less cost of sales as a percentage of net sales, were 38.7%, 41.4% and 30.4%, respectively.
The OECD is also issuing guidelines that are different, in some respects, than current international tax principles, and adoption of these guidelines may increase tax uncertainty and increase taxes applicable to us. We cannot predict whether the U.S.
The OECD is also issuing guidelines that are different, in some respects, than current international tax principles, and adoption of these guidelines may increase tax uncertainty and increase taxes applicable to us.
The failure to realize the anticipated benefits from our business strategy could have a material adverse effect on our prospects, business, financial condition and results of operations. Our success depends, in part, on our ability to successfully manage our inventories.
The failure to realize the anticipated benefits from our business strategy could have a material adverse effect on our prospects, business, financial condition and results of operations. Our success depends, in part, on our ability to successfully manage our inventories. We regularly face challenges in managing our inventory levels.
U.S. tariff impositions against Vietnam, China or Mexico could have a material adverse effect on our business, results of operations and financial condition. 33 Table of Contents In addition, trade-related legislation may adversely impact our operations and financial results.
U.S. tariff impositions against Vietnam, Cambodia, China and/or Mexico have had and could continue to have a material adverse effect on our business, results of operations and financial condition. In addition, trade-related legislation may adversely impact our operations and financial results.
As a result, it may be difficult to respond to changes in consumer preferences and market conditions, which, for pop culture products, can change rapidly. If we do not accurately anticipate the popularity of certain products, then we may not have sufficient inventory to meet demand.
As a result, at any given time it is difficult to respond to changes in consumer preferences and market conditions, which, for pop culture products, can change rapidly. At the times when we do not accurately anticipate the popularity of certain products, then we may not have sufficient inventory to meet demand.
If toy companies or other competitors produce higher margin or more popular merchandise than our products, our retail customers may reduce purchases of our products and, in turn, devote less shelf space and resources to the sale of our products, which could have a material adverse effect on our sales and profitability. 24 Table of Contents Our gross margin may not be sustainable and may fluctuate over time.
If toy companies or other competitors produce higher margin or more popular merchandise than our products, our retail customers may reduce purchases of our products and, in turn, devote less shelf space and resources to the sale of our products, which could have a material adverse effect on our sales and profitability.
The facilities under our Credit Agreement mature in September 2026. We may not be able to timely refinance our existing debt, secure additional debt or equity financing on favorable terms, or at all, including due to market volatility and uncertainty resulting from international conflicts or geopolitical tensions, among other factors.
The Credit Facilities under the Credit Agreement will mature on December 31, 2027. We may not be able to timely refinance our existing debt, secure additional debt or equity financing on favorable terms, or at all, including due to our current financial condition, market volatility and uncertainty resulting from international conflicts or geopolitical tensions, among other factors.
It is their skill, creativity and hard work that drive our success. In particular, our success depends to a significant extent on the continued service and performance of our senior management team.
Our officers and employees are at the heart of all of our efforts. It is their skill, creativity and hard work that drive our success. In particular, our success depends to a significant extent on the continued service and performance of our senior management team.
To do so, we must continue to increase the productivity of our existing employees and to hire, train and manage new employees as needed, which we may not be able to do successfully or without compromising our corporate culture.
Our success depends in part upon our ability to manage our growth effectively. To do so, we must continue to increase the productivity of our existing employees and to hire, train and manage new employees as needed, which we may not be able to do successfully or without compromising our corporate culture.
On June 2, 2023, a purported stockholder filed a putative class action lawsuit in the United States District Court for the Western District of Washington, captioned Studen v. Funko, Inc. , et al .
The parties have submitted the settlement agreement to the Court of Chancery for approval. On June 2, 2023, a purported stockholder filed a putative class action lawsuit in the United States District Court for the Western District of Washington, captioned Studen v. Funko, Inc., et al.
As of December 31, 2024, we owned approximately 98 registered U.S. trademarks, 278 registered international trademarks, 12 pending U.S. trademark applications and 52 pending international trademark applications . The market for our products depends to a significant extent upon the value associated with our product design, our proprietary brands and the properties we license.
As of December 31, 2025, we owned approximately 112 registered U.S. trademarks, 346 registered international trademarks, 5 pending U.S. trademark applications and 24 pending international trademark applications . The market for our products depends to a significant extent upon the value associated with our product design, our proprietary brands and the properties we license.
Plaintiff seeks to represent a putative class of investors who purchased or acquired Funko common stock between March 3, 2022 and March 1, 2023. On May 16, 2024, the Court granted the Company’s motion to dismiss with leave for Plaintiffs to file a second amended complaint.
Plaintiffs seek to represent a putative class of investors who purchased or acquired Funko common stock between March 3, 2022 and March 1, 2023, and seek, among other things, compensatory damages and attorneys' fees and costs. On May 16, 2024, the Court granted the Company’s motion to dismiss with leave for Plaintiffs to file a second amended complaint.
This would permit the lending banks under such facilities to take certain actions, including halting future borrowings under the Revolving Credit Facility, terminating all outstanding commitments and declaring all amounts due under our Credit Agreement to be immediately due and payable, including all outstanding borrowings, accrued and unpaid interest thereon, and prepayment premiums with respect to such borrowings and any terminated commitments.
This would permit the lending banks under such facilities to take certain actions, including terminating all outstanding commitments and declaring all amounts due under our Credit Agreement to be immediately due and payable, including all outstanding borrowings, accrued and unpaid interest thereon, and prepayment premiums with respect to such borrowings and any terminated commitments and exercising other remedies as set forth in the Credit Agreement.
Bribery Act of 2010, similar anti-bribery and anti-corruption laws and local and international environmental, labor, health and safety laws, and in dealing with changes in governmental policies and the evolution of laws and regulations and related enforcement; • difficulties understanding the retail climate, consumer trends, local customs and competitive conditions in foreign markets which may be quite different from the United States; • changes in international labor costs and other costs of doing business internationally; • the imposition of and changes in tariffs, quotas, taxes or other protectionist measures by any major country or market in which we operate, which could make it significantly more expensive and difficult to import products into that country or market, raise the cost of such products, decrease our sales of such products or decrease our profitability; • proper payment of customs duties and/or excise taxes; • natural disasters, pandemics and other health crises, and the greater difficulty and cost in recovering therefrom; • transportation delays and interruptions; • difficulties in moving materials and products from one country to another, including port congestion, strikes or other labor disruptions, trade route disruptions due to geopolitical tensions and other transportation delays and interruptions; and • increased investment and operational complexity to make our products compatible with systems in various countries and compliant with local laws.
Bribery Act of 2010, similar anti-bribery and anti-corruption laws and local and international environmental, labor, health and safety laws, and in dealing with changes in governmental policies and the evolution of laws and regulations and related enforcement; • difficulties understanding the retail climate, consumer trends, local customs and competitive conditions in foreign markets which may be quite different from the United States; • changes in international labor costs and other costs of doing business internationally; • proper payment of customs duties and/or excise taxes; 20 Table of Contents • natural disasters, pandemics and other health crises, and the greater difficulty and cost in recovering therefrom; • difficulties in moving materials and products from one country to another, including port congestion, strikes or other labor disruptions, trade route disruptions due to geopolitical tensions and other transportation delays and interruptions; and • increased investment and operational complexity to make our products compatible with systems in various countries and compliant with local laws.
Additionally, we have no guarantee that any particular property we license will translate into a successful product. Products tied to a particular content release may be developed and released before demand for the underlying content is known. The underperformance of any such product may result in reduced sales and operating profit for us.
Additionally, we have no guarantee that any particular property we license will translate into a successful product. Products tied to a particular content release may be developed and released before demand for the underlying content is known.
Our gross margin has historically fluctuated, primarily as a result of changes in product mix, changes in our costs, including inventory management, price competition and acquisitions.
Our gross margin may not be sustainable and may fluctuate over time. Our gross margin has historically fluctuated, primarily as a result of changes in product mix, changes in our costs, including inventory management, price competition and acquisitions.
Alternatively, if demand or future sales do not reach forecasted levels, we could have excess inventory that we may need to hold for a long period of time, write down, sell at prices lower than expected or discard. 19 Table of Contents In addition, we may face difficulties processing inventory through our distribution centers, which could cause us to hold inventory for an extended period of time.
Similarly, when demand or future sales do not reach forecasted levels, it often results and could continue to result in our having excess inventory that we may need to hold for a long period of time, write down, sell at prices lower than expected or discard. 24 Table of Contents In addition, we often face and may in the future face difficulties processing inventory through our distribution centers, which could cause us to hold inventory for an extended period of time.
We originally reserved for issuance 5,518,518 shares of Class A common stock under our 2017 Incentive Award Plan (the “2017 Plan”), including, as of December 31, 2024, 1,468,202 shares of Class A common stock underlying stock options we granted to certain of our directors, executive officers and other employees and 2,377,793 shares of Class A common stock underlying restricted stock units we granted to certain of our executive officers, consultants and other employees.
We originally reserved for issuance 5,518,518 shares of Class A common stock under our 2017 Incentive Award Plan (the “2017 Plan”), including, as of December 31, 2025, 1,310,692 shares of Class A common stock underlying stock options we granted to certain of our directors, executive officers and other employees, 2,374,748 shares of Class A common stock underlying restricted stock units we granted to certain of our executive officers, consultants and other employees and 750,000 shares of Class A common stock underlying performance stock units we granted to certain of our executive officers.
We rely to a large extent on our online presence to reach consumers and use third-party social media platforms as marketing tools. For example, we maintain Facebook, X (formerly Twitter), Instagram, TikTok and YouTube accounts.
We rely to a large extent on our online presence to reach consumers and use third-party social media platforms as marketing tools. We rely on internet search engines, such as Google and we maintain Facebook, X, Instagram, TikTok and YouTube accounts.
Also, remote working arrangements increase the risk that threat actors will exploit vulnerabilities inherent in many non-corporate home networks. 53 Table of Contents Any compromise of the confidentiality, integrity, or availability of Confidential Information (including that of our customers, consumers, suppliers, partners, employees or ourselves) or our IT Systems, or failure to prevent or mitigate the loss of or damage to this Confidential Information or our IT Systems could substantially disrupt our operations, harm our customers, consumers and other business partners, damage our reputation, violate applicable laws and regulations and subject us to litigation (including class action lawsuits) or regulatory actions, and result in additional costs for remediation and compliance, as well as to liabilities and loss of business that could be material.
Any compromise of the confidentiality, integrity, or availability of Confidential Information (including that of our customers, consumers, suppliers, partners, employees or ourselves) or our IT Systems, or failure to prevent or mitigate the loss of or damage to this Confidential Information or our IT Systems could substantially disrupt our operations, harm our customers, consumers and other business partners, damage our reputation, violate applicable laws and regulations and subject us to litigation (including class action lawsuits) or regulatory actions, and result in additional costs for remediation and compliance, as well as to liabilities and loss of business that could be material.
These international sales and manufacturing operations, including operations in emerging markets, are subject to risks that may significantly harm our sales, increase our costs or otherwise damage our business, including: • currency conversion risks and currency fluctuations; • limitations on the repatriation of earnings; • potential challenges to our transfer pricing determinations and other aspects of our cross-border transactions, which can materially increase our taxes and other costs of doing business; • political instability, civil unrest, war and economic instability, such as the current situation with Ukraine and Russia or Israel and Hamas and any impacts on surrounding regions; • greater difficulty enforcing intellectual property rights and weaker laws protecting such rights; 32 Table of Contents • complications in complying with different laws and regulations in varying jurisdictions, including the U.S.
These international sales and manufacturing operations, including operations in emerging markets, are subject to risks that may significantly harm our sales, increase our costs or otherwise damage our business, including: • the imposition of and changes in tariffs, quotas, taxes or other protectionist measures by any major country or market in which we operate, which could make it significantly more expensive and difficult to import products into that country or market, raise the cost of such products, decrease our sales of such products or decrease our profitability; • currency conversion risks and currency fluctuations; • limitations on the repatriation of earnings; • potential challenges to our transfer pricing determinations and other aspects of our cross-border transactions, which can materially increase our taxes and other costs of doing business; • political instability, civil unrest, war and economic instability, such as the current situation with Ukraine and Russia or Israel and Hamas and any impacts on surrounding regions; • greater difficulty enforcing intellectual property rights and weaker laws protecting such rights; • complications in complying with different laws and regulations in varying jurisdictions, including the U.S.
FAH, LLC and certain of its material domestic subsidiaries from time to time are parties to a credit agreement (as amended, the “Credit Agreement”), providing for a term loan facility in the amount of $180.0 million (the “Term Loan Facility”) and a revolving credit facility of $150.0 million (the “Revolving Credit Facility” and together with the Term Loan Facility, the “Credit Facilities”).
FAH, LLC and certain of its material domestic subsidiaries from time to time (collectively, the "Credit Agreement Parties") are parties to a credit agreement dated as of September 17, 2021 (as amended, restated, amended and restated, supplemented, waived or otherwise modified from time to time, the “Credit Agreement”), providing for a term loan facility in the amount of $180.0 million (the “Term Loan Facility”) and a revolving credit facility of $125.0 million (the “Revolving Credit Facility” and together with the Term Loan Facility, the “Credit Facilities”).
FAH, LLC’s ability to make such distributions may be subject to various limitations and restrictions. We have no material assets other than our ownership of 52,966,785 common units of FAH, LLC as of December 31, 2024, representing approximately 97.2% of the economic interest in FAH, LLC.
FAH, LLC’s ability to make such distributions may be subject to various limitations and restrictions. We have no material assets other than our ownership of 55,327,398 common units of FAH, LLC as of December 31, 2025, representing approximately 99.7% of the economic interest in FAH, LLC.
We spend considerable resources in designing and developing products in conjunction with planned movie, television, video game, music and other content releases by various third-party content providers.
Our business is largely dependent on content development and creation by third parties. We spend considerable resources in designing and developing products in conjunction with planned movie, television, video game, music and other content releases by various third-party content providers.
We also entered into a Registration Rights Agreement pursuant to which the shares of Class A common stock issued to certain of the Continuing Equity Owners (including each of our then-current executive officers) upon such redemption and remaining shares of Class A common stock issued to the Former Equity Owners in connection with the Transactions (such shares now being held by TCG) are eligible for resale, subject to certain limitations set forth in the Registration Rights Agreement. 48 Table of Contents We cannot predict the size of future issuances of our Class A common stock or the effect, if any, that future issuances and sales of shares of our Class A common stock may have on the market price of our Class A common stock.
We also entered into a Registration Rights Agreement pursuant to which the shares of Class A common stock issued to certain of the Continuing Equity Owners (including each of our then-current executive officers) upon such redemption and remaining shares of Class A common stock issued to the Former Equity Owners in connection with the Transactions (such shares now being held by TCG) are eligible for resale, subject to certain limitations set forth in the Registration Rights Agreement.
Changes in the retail industry and markets for consumer products affecting our retail customers or retailing practices could negatively impact our business, financial condition and results of operations. Our products are primarily sold to consumers through retailers that are our direct customers or customers of our distributors.
Our products are primarily sold to consumers through retailers that are our direct customers or customers of our distributors. As such, trends and changes in the retail industry can negatively impact our business, financial condition and results of operations.
If we devote time and resources to developing and marketing products that consumers do not find appealing enough to buy in sufficient quantities, our sales and profits may decline, and our business performance may be damaged. Similarly, if our product offerings fail to correctly anticipate consumer interests, our sales and earnings will be adversely affected.
If we devote time and resources to developing and marketing products that consumers do not find appealing enough to buy in sufficient quantities, our sales and profits may decline, and our business performance may be damaged.

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Item 1C. Cybersecurity

Cybersecurity — threats and controls disclosure

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Biggest changeThis does not imply that we meet any specific technical standards, specifications, or requirements, only that we use the NIST CSF as a guide to implement controls to combat and respond to cybersecurity risks.
Biggest changeWe measure the maturity of our information security program in a manner informed by the National Institute of Standards and Technology (“NIST”) Cybersecurity Framework (“CSF”). This does not imply that we meet any specific technical standards, specifications, or requirements, only that we use the NIST CSF as a guide to implement controls to combat and respond to cybersecurity risks.
Our cybersecurity risk management program is integrated into our overall risk management program, and shares common methodologies, reporting channels and governance processes that apply across the enterprise risk management program to other legal, compliance, strategic, operational, and financial risk areas.
Our cybersecurity risk management program is integrated into our overall risk management program, and shares common methodologies, reporting channels and governance processes that apply across the risk management program to other legal, compliance, strategic, operational, and financial risk areas.
The Committee reports to the full Board regarding its activities, including those related to cybersecurity. 58 Table of Contents Our management and senior IT team, including our Chief Executive Officer, Chief Financial Officer, Chief Legal Officer, Global Head of Technology, and SVP, People & Culture, are responsible for assessing and managing our material risks from cybersecurity threats.
The Committee reports to the full Board regarding its activities, including those related to cybersecurity. 57 Table of Contents Our management and senior IT team, including our Chief Executive Officer, Chief Financial Officer, Chief Legal Officer, Global Head of Technology, and SVP, People & Culture, are responsible for assessing and managing our material risks from cybersecurity threats.
Cybersecurity Governance Our board of directors considers cybersecurity risk as part of its risk oversight function and has delegated to the Audit Committee ("Committee") oversight of overall risk assessment and management, which includes cybersecurity and other information technology risks. The Committee receives periodic reports from management on our cybersecurity risks.
Cybersecurity Governance Our board of directors considers cybersecurity risk as part of its risk oversight function and has delegated to the Audit Committee ("Committee") oversight of overall risk assessment and management, including oversight of management's implementation of our cybersecurity risk management program. The Committee receives periodic reports from management on our cybersecurity risks.
In addition, management updates the Committee, as where it deems appropriate, regarding any material cybersecurity incidents.
In addition, management updates the Committee, where it deems appropriate, regarding cybersecurity incidents it considers to be significant.
Removed
We perform an annual assessment to measure the maturity of our information security program in a manner aligned with the National Institute of Standards and Technology (“NIST”) Cybersecurity Framework (“CSF”).

Item 2. Properties

Properties — owned and leased real estate

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Biggest changeLEGAL PROCEEDINGS See Note 14 "Commitments and Contingencies - Legal Contingencies" in the Notes to Consolidated Financial Statements included in this Form 10-K for a discussion of material legal proceedings. ITEM 4. MINE SAFETY DISCLOSURES Not applicable. 59 Table of Contents PART II
Biggest changeLEGAL PROCEEDINGS See Note 14 "Commitments and Contingencies - Legal Contingencies" in the Notes to Consolidated Financial Statements included in this Form 10-K for a discussion of material legal proceedings. ITEM 4. MINE SAFETY DISCLOSURES Not applicable. 58 Table of Contents PART II
ITEM 2. PROPERTIES As of December 31, 2024, our leased properties primarily consist of office space, warehouses and distribution facilities.
ITEM 2. PROPERTIES As of December 31, 2025, our leased properties primarily consist of office space, warehouses and distribution facilities.

Item 5. Market for Registrant's Common Equity

Market for Common Equity — stock, dividends, buybacks

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Biggest changeAny such determination will also depend upon our business prospects, results of operations, financial condition, cash requirements and availability and other factors that our board of directors may deem relevant. 60 Table of Contents Stock Performance Graph The following graph and table illustrate the total return from December 31, 2019 through December 31, 2024, for (i) our Class A common stock, (ii) the Russell 2000 Index, and (iii) the Russell 2000 Consumer Discretionary Index.
Biggest changeAny such determination will also depend upon our business prospects, results of operations, financial condition, cash requirements and availability and other factors that our board of directors may deem relevant.
The graph and the table assume that $100 was invested on December 31, 2019 in each of our Class A common stock, the Russell 2000 Index, and the Russell 2000 Consumer Discretionary Index, and that any dividends were reinvested.
The graph and the table assume that $100 was invested on December 31, 2020 in each of our Class A common stock, the Russell 2000 Index, and the Russell 2000 Consumer Discretionary Index, and that any dividends were reinvested.
Issuer Purchases of Equity Securities There were no share repurchases during the fourth quarter of the fiscal year ended December 31, 2024.
Issuer Purchases of Equity Securities There were no share repurchases during the fourth quarter of the fiscal year ended December 31, 2025.
There is no established public trading market for our Class B common stock. Holders of Record As of March 11, 2025, there were 36 stockholders of record of our Class A common stock. As of March 11, 2025, there were 7 stockholders of record of our Class B common stock.
There is no established public trading market for our Class B common stock. Holders of Record As of March 10, 2026, there were 35 stockholders of record of our Class A common stock. As of March 10, 2026, there were 5 stockholders of record of our Class B common stock.
The comparisons reflected in the graph and table are not intended to forecast the future performance of our stock and may not be indicative of our future performance. 12/31/2019 12/31/2020 12/31/2021 12/31/2022 12/31/2023 12/31/2024 Funko, Inc. 100.00 60.49 109.56 63.58 45.05 78.03 Russell 2000 100.00 119.96 137.74 109.59 128.14 142.93 Russell 2000 Consumer Discretionary 100.00 126.95 163.03 113.10 142.24 153.74 61 Table of Contents ITEM 6. [RESERVED.] 62 Table of Contents
The comparisons reflected in the graph and table are not intended to forecast the future performance of our stock and may not be indicative of our future performance. 12/31/2020 12/31/2021 12/31/2022 12/31/2023 12/31/2024 12/31/2025 Funko, Inc. 100.00 181.12 105.11 74.47 129.00 32.76 Russell 2000 100.00 114.82 91.35 106.82 119.14 134.40 Russell 2000 Consumer Discretionary 100.00 128.41 89.09 112.04 121.10 117.98 60 Table of Contents ITEM 6. [RESERVED.] 61 Table of Contents
Added
Unregistered Sales of Equity Securities None. 59 Table of Contents Stock Performance Graph The following graph and table illustrate the total return from December 31, 2020 through December 31, 2025, for (i) our Class A common stock, (ii) the Russell 2000 Index, and (iii) the Russell 2000 Consumer Discretionary Index.

Item 7. Management's Discussion & Analysis

Management's Discussion & Analysis (MD&A) — revenue / margin commentary

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Biggest changeResults of Operations Year Ended December 31, 2024 Compared to Year Ended December 31, 2023 The following table sets forth information comparing the components of net loss for the years ended December 31, 2024 and 2023: Year Ended December 31, Period over Period Change 2024 2023 Dollar Percentage (in thousands, except percentages) Net sales $ 1,049,850 $ 1,096,086 $ (46,236) (4.2) % Cost of sales (exclusive of depreciation and amortization) 615,318 763,085 (147,767) (19.4) % Selling, general, and administrative expenses 358,958 377,065 (18,107) (4.8) % Depreciation and amortization 62,583 59,763 2,820 4.7 % Total operating expenses 1,036,859 1,199,913 (163,054) (13.6) % Loss from operations 12,991 (103,827) 116,818 nm Interest expense, net 20,575 27,970 (7,395) (26.4) % Loss on extinguishment of debt — 494 (494) nm Gain on tax receivable agreement liability adjustment — (100,223) 100,223 nm Other expense (income), net 2,922 (127) 3,049 nm Loss before income taxes (10,506) (31,941) 21,435 (67.1) % Income tax expense 4,564 132,497 (127,933) (96.6) % Net loss (15,070) (164,438) 149,368 (90.8) % Less: net loss attributable to non-controlling interests (352) (10,359) 10,007 (96.6) % Net loss attributable to Funko, Inc. $ (14,718) $ (154,079) $ 139,361 (90.4) % Net Sales Net sales were $1.0 billion for the year ended December 31, 2024, a decrease of 4.2% compared to $1.1 billion for the year ended December 31, 2023.
Biggest changeResults of Operations Year Ended December 31, 2025 Compared to Year Ended December 31, 2024 The following table sets forth information comparing the components of net loss for the years ended December 31, 2025 and 2024: Year Ended December 31, Period over Period Change 2025 2024 Dollar Percentage (in thousands, except percentages) Net sales $ 908,209 $ 1,049,850 $ (141,641) (13.5) % Cost of sales (exclusive of depreciation and amortization) 556,940 615,318 (58,378) (9.5) % Selling, general, and administrative expenses 337,715 358,958 (21,243) (5.9) % Depreciation and amortization 59,097 62,583 (3,486) (5.6) % Total operating expenses 953,752 1,036,859 (83,107) (8.0) % (Loss) income from operations (45,543) 12,991 (58,534) (450.6) % Interest expense, net 19,181 20,575 (1,394) (6.8) % Other (income) expense, net (785) 2,922 (3,707) (126.9) % Loss before income taxes (63,939) (10,506) (53,433) 508.6 % Income tax expense 4,356 4,564 (208) (4.6) % Net loss (68,295) (15,070) (53,225) 353.2 % Less: net loss attributable to non-controlling interests (935) (352) (583) 165.6 % Net loss attributable to Funko, Inc. $ (67,360) $ (14,718) $ (52,642) 357.7 % Net Sales Net sales were $908.2 million for the year ended December 31, 2025, a decrease of 13.5% compared to $1.0 billion for the year ended December 31, 2024.
We define Adjusted Net Income (Loss) as net loss attributable to Funko, Inc. adjusted for the reallocation of loss attributable to non-controlling interests from the assumed exchange of all outstanding common units and options in FAH, LLC for newly issued-shares of Class A common stock of Funko, Inc. and further adjusted for the impact of certain non-cash charges and other items that we do not consider in our evaluation of ongoing operating performance.
We define Adjusted Net (Loss) Income as net loss attributable to Funko, Inc. adjusted for the reallocation of loss attributable to non-controlling interests from the assumed exchange of all outstanding common units and options in FAH, LLC for newly issued-shares of Class A common stock of Funko, Inc. and further adjusted for the impact of certain non-cash charges and other items that we do not consider in our evaluation of ongoing operating performance.
We define Adjusted Earnings (Loss) per Diluted Share as Adjusted Net Income (Loss) divided by the weighted-average shares of Class A common stock outstanding, assuming (1) the full exchange of all outstanding common units and options in FAH, LLC for newly issued-shares of Class A common stock of Funko, Inc. and (2) the dilutive effect of stock options and unvested common units, if any.
We define Adjusted (Loss) Earnings per Diluted Share as Adjusted Net (Loss) Income divided by the weighted-average shares of Class A common stock outstanding, assuming (1) the full exchange of all outstanding common units and options in FAH, LLC for newly issued-shares of Class A common stock of Funko, Inc. and (2) the dilutive effect of stock options and unvested common units, if any.
(3) For the year ended December 31, 2024, includes a net one-time legal settlement gain of $1.4 million related to a previously disclosed Loungefly customs-related matter and costs of $4.8 million related to contract settlement agreements and related services for assets held for sale (including fair market value adjustments of $1.3 million) related to a potential business initiative and the sale of certain assets under Funko Games.
For the year ended December 31, 2024, includes a net one-time legal settlement gain of $1.4 million related to a previously disclosed Loungefly customs-related matter and costs of $4.8 million related to contract settlement agreements and related services for assets held for sale (including fair market value adjustments of $1.3 million) related to a potential business initiative and the sale of certain assets under Funko Games.
If our operating results fail to improve or if we are otherwise unable to maintain compliance with the financial or other covenants under the Credit Agreement, our lenders could, among other things, terminate all outstanding commitments thereunder and accelerate all outstanding borrowings and other obligations, which would require us to seek additional financing.
If our operating results fail to improve or if we are otherwise unable to maintain compliance with the Financial Covenants or other covenants under the Credit Agreement, our lenders could, among other things, terminate all outstanding commitments thereunder and accelerate all outstanding borrowings and other obligations, which would require us to seek additional financing.
Management uses the Non-GAAP Financial Measures: • as a measurement of operating performance because they assist us in comparing the operating performance of our business on a consistent basis, as they remove the impact of items not directly resulting from our core operations; • for planning purposes, including the preparation of our internal annual operating budget and financial projections; • as a consideration to assess incentive compensation for our employees; • to evaluate the performance and effectiveness of our operational strategies; and • to evaluate our capacity to expand our business. 71 Table of Contents By providing these Non-GAAP Financial Measures, together with reconciliations, we believe we are enhancing investors’ understanding of our business and our results of operations, as well as assisting investors in evaluating how well we are executing our strategic initiatives.
Management uses the Non-GAAP Financial Measures: • as a measurement of operating performance because they assist us in comparing the operating performance of our business on a consistent basis, as they remove the impact of items not directly resulting from our core operations; • for planning purposes, including the preparation of our internal annual operating budget and financial projections; • as a consideration to assess incentive compensation for our employees; • to evaluate the performance and effectiveness of our operational strategies; and • to evaluate our capacity to expand our business. 69 Table of Contents By providing these Non-GAAP Financial Measures, together with reconciliations, we believe we are enhancing investors’ understanding of our business and our results of operations, as well as assisting investors in evaluating how well we are executing our strategic initiatives.
Pursuant to the Second Amended and Restated FAH, LLC Agreement, FAH, LLC will generally make pro rata tax distributions to holders of common units in an amount sufficient to fund all or part of their tax obligations with respect to the taxable income of FAH, LLC that is allocated to them. 81 Table of Contents Pursuant to the Tax Receivable Agreement, we are required to make cash payments to the TRA Parties equal to 85% of the tax benefits, if any, that we realize, or in some circumstances are deemed to realize, as a result of (1) any redemptions funded by us or exchanges (or deemed exchanges in certain circumstances) of common units for Class A common stock or cash, and (2) certain additional tax benefits attributable to payments under the Tax Receivable Agreement ("Tax Receivable Agreement Payments”).
Pursuant to the Second Amended and Restated FAH, LLC Agreement, FAH, LLC will generally make pro rata tax distributions to holders of common units in an amount sufficient to fund all or part of their tax obligations with respect to the taxable income of FAH, LLC that is allocated to them. 79 Table of Contents Pursuant to the Tax Receivable Agreement, we are required to make cash payments to the TRA Parties equal to 85% of the tax benefits, if any, that we realize, or in some circumstances are deemed to realize, as a result of (1) any redemptions funded by us or exchanges (or deemed exchanges in certain circumstances) of common units for Class A common stock or cash, and (2) certain additional tax benefits attributable to payments under the Tax Receivable Agreement ("Tax Receivable Agreement Payments”).
Components of our Results of Operations Net Sales We sell a broad array of licensed pop culture consumer products across a variety of categories, including figures, plush, accessories, apparel, homewares, NFTs, vinyl records and limited-edition posters, primarily to retail customers and distributors.
Components of our Results of Operations Net Sales We sell a broad array of licensed pop culture consumer products across a variety of categories, including figures, plush, accessories, apparel, homewares, vinyl records and limited-edition posters, primarily to retail customers and distributors.
The Credit Agreement contains a number of covenants that, among other things and subject to certain exceptions, restrict our ability to: • incur additional indebtedness; • incur certain liens; • consolidate, merge or sell or otherwise dispose of our assets; • make investments, loans, advances, guarantees and acquisitions; • pay dividends or make other distributions on equity interests, or redeem, repurchase or retire equity interests; • enter into transactions with affiliates; • enter into sale and leaseback transactions in respect to real property; 77 Table of Contents • enter into swap agreements; • enter into agreements restricting our subsidiaries’ ability to pay dividends; • issue or sell equity interests or securities convertible into or exchangeable for equity interests; • redeem, repurchase or refinance other indebtedness; and • amend or modify our governing documents.
The Credit Agreement contains a number of covenants that, among other things and subject to certain exceptions, restrict our ability to: • incur additional indebtedness; • incur certain liens; • consolidate, merge or sell or otherwise dispose of our assets; • make investments, loans, advances, guarantees and acquisitions; • pay dividends or make other distributions on equity interests, or redeem, repurchase or retire equity interests; • enter into transactions with affiliates; • enter into sale and leaseback transactions in respect to real property; • enter into swap agreements; • enter into agreements restricting our subsidiaries’ ability to pay dividends; 75 Table of Contents • issue or sell equity interests or securities convertible into or exchangeable for equity interests; • redeem, repurchase or refinance other indebtedness; and • amend or modify our governing documents.
Our royalty costs and gross margins will also be impacted from period to period based on our mix of licensed products sold, as well as a variety of other factors including reserves for minimum guarantees and ongoing and future royalty audits.
Our royalty costs and gross margins will also be impacted from period to period based on our mix of licensed products sold, as well as a variety of other factors including reserves for minimum guarantees and accruals for ongoing and future royalty audits.
Our products are produced and assembled by third-party manufacturers primarily in Vietnam, China and Mexico. The use of third-party manufacturers enables us to avoid incurring fixed product costs, while maximizing flexibility, capacity and capability.
Our products are produced and assembled by third-party manufacturers primarily in Vietnam, China, Cambodia and Mexico. The use of third-party manufacturers enables us to avoid incurring fixed product costs, while maximizing flexibility, capacity and capability.
Cost of Sales Cost of sales consists primarily of product costs, royalty expenses paid to our licensors, the cost to ship our products, including both inbound freight and duties and outbound products to our customers and inventory management. Our cost of sales excludes depreciation and amortization.
Cost of Sales Cost of sales consists primarily of product costs, royalty expenses paid to our licensors, the cost to ship our products, including both inbound freight, duties and tariffs and outbound products to our customers and inventory management. Our cost of sales excludes depreciation and amortization.
Each of the adjustments described herein and in the reconciliation table below help management with a measure of our core operating performance over time by removing items that are not related to day-to-day operations. 72 Table of Contents The following tables reconcile the Non-GAAP Financial Measures to the most directly comparable U.S.
Each of the adjustments described herein and in the reconciliation table below help management with a measure of our core operating performance over time by removing items that are not related to day-to-day operations. 70 Table of Contents The following tables reconcile the Non-GAAP Financial Measures to the most directly comparable U.S.
We have strategically adjusted our inventory buy-in to focus on non-exclusive core products in order to help mitigate this impact. 63 Table of Contents Key Performance Indicators We consider the following metrics to be key performance indicators to evaluate our business, develop financial forecasts, and make strategic decisions.
We have strategically adjusted our inventory buy-in to focus on non-exclusive core products in order to help mitigate this impact. 62 Table of Contents Key Performance Indicators We consider the following metrics to be key performance indicators to evaluate our business, develop financial forecasts, and make strategic decisions.
For the year ended December 31, 2024, net cash used in investing activities was $25.2 million, which was used for the purchase of property and equipment, primarily related to tooling and molds, offset by proceeds from the sale of inventory and certain intellectual property marketed under and related to Funko Games.
For the year ended December 31, 2024, net cash used in investing activities was $25.2 million and was primarily related to the purchase of property and equipment, related to tooling and molds, offset by proceeds from the sale of inventory and certain intellectual property marketed under and related to Funko Games. Financing Activities .
Conditions that would necessitate an impairment assessment include a significant decline in the observable market value of an asset, a significant change in the extent or manner in which an asset is used, or any other significant adverse change that would indicate that the carrying amount of an asset or group of assets may not be recoverable. Income Taxes.
Conditions that would necessitate an impairment assessment include a significant decline in the observable market value of an asset, a significant change in the extent or manner in which an asset is used, or any other significant adverse change that would indicate that the carrying amount of an asset or group of assets may not be recoverable.
We infuse our distinct designs and aesthetic sensibility into one of the industry’s largest portfolios of licensed content over a wide variety of product categories, including figures, plush, accessories, apparel, homewares, digital NFTs, vinyl records and limited-edition posters.
We infuse our distinct designs and aesthetic sensibility into one of the industry’s largest portfolios of licensed content over a wide variety of product categories, including figures, plush, accessories, apparel, homewares, vinyl records and limited-edition posters.
Our results of operations for the year ended December 31, 2022, including a discussion of the year ended December 31, 2023 compared to the year ended December 31, 2022, can be found under "Management's Discussion and Analysis of Financial Condition and Results of Operations" in our Annual Report on Form 10-K for the year ended December 31, 2023.
Our results of operations for the year ended December 31, 2023, including a discussion of the year ended December 31, 2024 compared to the year ended December 31, 2023, can be found under "Management's Discussion and Analysis of Financial Condition and Results of Operations" in our Annual Report on Form 10-K for the year ended December 31, 2024.
The Credit Agreement defines “change of control” to include, among other things, any person or group other than ACON and its affiliates becoming the beneficial owner of more than 35% of the voting power of the equity interests of Funko, Inc.
The Credit Agreement defines “change of control” to include, among other things, any person or group other than TCG and its affiliates becoming the beneficial owner of more than 35% of the voting power of the equity interests of Funko, Inc.
We sell our products in numerous countries across North America, Europe, Latin America, Asia and Africa, with approximately 35% of our net sales generated outside of the United States. We also source, procure and assemble inventory, primarily out of Vietnam, China and Mexico. As such, we are exposed to and impacted by global macroeconomic factors.
We sell our products in numerous countries across North America, Europe, Latin America, Asia and Africa, with approximately 40% of our net sales generated outside of the United States. We also source, procure and assemble inventory, primarily out of Vietnam, China, Cambodia and Mexico. As such, we are exposed to and impacted by global macroeconomic factors.
We have invested considerably in general and administrative costs to support the growth and anticipated growth of our business and anticipate continuing to do so in the future. 67 Table of Contents Depreciation and Amortization Depreciation expense is recognized on a straight-line basis over the estimated useful lives of our property and equipment.
We have invested considerably in general and administrative costs to support the growth and anticipated growth of our business and anticipate continuing to do so in the future. Depreciation and Amortization Depreciation expense is recognized on a straight-line basis over the estimated useful lives of our property and equipment.
As noted in the table below, the Non-GAAP Financial Measures include adjustments for non-cash charges related to equity-based compensation programs, loss on debt extinguishment, acquisition transaction costs and other expenses, certain severance, relocation and related costs, foreign currency transaction gains and losses, tax receivable agreement liability adjustments and other unusual or one-time items.
As noted in the table below, the Non-GAAP Financial Measures include adjustments for non-cash charges related to equity-based compensation programs, acquisition transaction costs and other expenses, certain severance, relocation and related costs, foreign currency transaction gains and losses, tax receivable agreement liability adjustments and other unusual or one-time items.
Additional future liquidity needs may include tax distributions, the redemption right held by the Continuing Equity Owners that they may exercise from time to time (should we elect to exchange their common units for a cash payment), payments under the Tax Receivable Agreement and general cash requirements for operations and capital expenditures (including a future enterprise resource management system (ERP), additional platforms to support our direct-to-consumer experience, and capital build out of new leased warehouse and office space).
Additional future liquidity needs will likely include tax distributions, interest payments, repayment of our debt facilities, the redemption right held by the Continuing Equity Owners that they may exercise from time to time (should we elect to exchange their common units for a cash payment), payments under the Tax Receivable Agreement and general cash requirements for operations and capital expenditures (including a future enterprise resource management system (ERP), additional platforms to support our direct-to-consumer experience, and capital build out of new leased warehouse and office space).
We define Adjusted EBITDA as EBITDA further adjusted for non-cash charges related to equity-based compensation programs, loss on debt extinguishment, acquisition transaction costs and other expenses, certain severance, relocation and related costs, foreign currency transaction gains and losses, tax receivable agreement liability adjustments and other unusual or one-time items.
We define Adjusted EBITDA as EBITDA further adjusted for non-cash charges related to equity-based compensation programs, acquisition transaction costs and other expenses, certain severance, relocation and related costs, foreign currency transaction gains and losses, tax receivable agreement liability adjustments and other unusual or one-time items.
These items include, among other things, non-cash charges related to equity-based compensation programs, loss on debt extinguishment, acquisition transaction costs and other expenses, certain severance, relocation and related costs, foreign currency transaction gains and losses, tax receivable agreement liability adjustments and the income tax expense effect of these adjustments.
These items include, among other things, non-cash charges related to equity-based compensation programs, acquisition transaction costs and other expenses, certain severance, relocation and related costs, foreign currency transaction gains and losses, tax receivable agreement liability adjustments and the income tax expense effect of these adjustments.
Our accounts receivable typically are short term and settle in approximately 30 to 90 days (average 57 days).
Our accounts receivable typically are short term and settle in approximately 30 to 90 days (average 60 days).
However, the rapid growth we have experienced in recent years may have masked the full effects of seasonal factors on our business to date, and as such, seasonality may have a greater effect on our results of operations in future periods. 79 Table of Contents Recent Accounting Pronouncements See discussion of recently adopted and recently issued accounting pronouncements in Note 2, "Significant Accounting Policies" of the Notes to Consolidated Financial Statements included in this Form 10-K.
However, the volatility in net sales we have experienced in recent years may have masked the full effects of seasonal factors on our business to date, and as such, seasonality may have a greater effect on our results of operations in future periods. 77 Table of Contents Recent Accounting Pronouncements See discussion of recently adopted and recently issued accounting pronouncements in Note 2, "Significant Accounting Policies" of the Notes to Consolidated Financial Statements included in this Form 10-K.
The Form S-3 allows us to offer and sell from time-to-time up to $100.0 million of Class A common stock, preferred stock, debt securities, warrants, purchase contracts or units comprised of any combination of these securities for our own account and allows certain selling stockholders to offer and sell 17,318,008 shares of Class A common stock in one or more offerings.
The Form S-3 allows us to offer and sell from time-to-time up to $100.0 million of Class A common stock, preferred stock, debt securities, warrants, purchase contracts or units comprised of any combination of these securities for our own account and allows certain selling stockholders to offer and sell 12,626,024 shares of Class A common stock in one or more offerings.
The majority of revenue is recognized upon shipment of products to the customer. We routinely enter into arrangements with our customers to provide sales incentives, support customer promotions, and provide allowances for returns and defective merchandise. The estimated costs of these programs reduce gross sales in the period the related sale is recognized.
We routinely enter into arrangements with our customers to provide sales incentives, support customer promotions, and provide allowances for returns and defective merchandise. The estimated costs of these programs reduce gross sales in the period the related sale is recognized.
During years ended December 31, 2024 and 2023, the Company acquired an aggregate of 1.2 million and 1.8 million common units of FAH, LLC, respectively, in connection with the redemption and/or exchange of common units, none of which resulted in an increase in the tax basis of our investment in FAH, LLC subject to the provisions of the Tax Receivable Agreement. 82 Table of Contents
During years ended December 31, 2025 and 2024, the Company acquired an aggregate of 1.3 million and 1.2 million common units of FAH, LLC, respectively, in connection with the redemption and/or exchange of common units, none of which resulted in an increase in the tax basis of our investment in FAH, LLC subject to the provisions of the Tax Receivable Agreement. 80 Table of Contents
As part of a continuing effort to reduce manufacturing costs and ensure speed to market, we have historically kept our production concentrated with a small number of manufacturers and factories even as we have grown and diversified. Our use of international manufacturers, particularly in China and Mexico, may increase the likelihood that our costs are adversely impacted by new tariffs.
As part of a continuing effort to reduce manufacturing costs and ensure speed to market, we have historically kept our production concentrated with a small number of manufacturers and factories even as we have grown and diversified. Our use of international manufacturers, may increase the likelihood that our costs are adversely impacted by additional tariffs.
Selling, general, and administrative expenses were 34.2% of sales for the year ended December 31, 2024, compared to 34.4% of sales for the year ended December 31, 2023, due to the factors noted above.
Selling, general, and administrative expenses were 37.2% of sales for the year ended December 31, 2025, compared to 34.2% of sales for the year ended December 31, 2024, due to the factors noted above.
Other drivers of the changes in net cash provided by operating activities include shipping and freight costs, selling, general and administrative expenses (including personnel expenses and commissions and rent and facilities costs) and interest payments made for our short-term borrowings and long-term debt.
Other drivers of the changes in net cash provided by operating activities include shipping, freight, duty and tariff costs, selling, general and administrative expenses (including personnel expenses and commissions and rent and facilities costs) and interest payments made for our revolving facility borrowings and term debt.
For further discussion of changes in our debt, see below, and Note 10, "Debt" of the Notes to Consolidated Financial Statements included in this Form 10-K. 78 Table of Contents Future Sources and Uses of Liquidity Sources As noted above, historically, our primary sources of cash flows have been cash flows from operating activities and borrowings under our Credit Facilities.
For further discussion of changes in our debt, see above, and Note 10, "Debt" of the Notes to Consolidated Financial Statements included in this Form 10-K. Sources As noted above, historically, our primary sources of cash flows have been cash flows from operating activities and borrowings under our Credit Facilities.
Interest Expense, Net Interest expense, net includes the cost of our short-term borrowings and long-term debt, including the amortization of debt issuance costs and original issue discounts, net of any interest income earned.
Interest Expense, Net Interest expense, net includes the cost of our revolving facility borrowings and term debt, including the amortization of debt issuance costs and original issue discounts, net of any interest income earned.
Royalty expenses for the years ended December 31, 2024, 2023 and 2022 were $168.9 million, $179.7 million and $213.1 million, respectively. Our license agreements typically grant our licensors the right to audit our compliance with the terms and conditions of such agreements.
Royalty expenses for the years ended December 31, 2025, 2024 and 2023 were $158.5 million, $168.9 million and $179.7 million, respectively. Our license agreements typically grant our licensors the right to audit our compliance with the terms and conditions of such agreements.
Inventory costs include direct product costs and freight costs. We order inventory based on assumptions of future demand and maintain reserves for excess and obsolete inventories to reflect the inventory balance at the lower of cost or net realizable value.
We order inventory based on assumptions of future demand and maintain reserves for excess and obsolete inventories to reflect the inventory balance at the lower of cost or net realizable value.
Gross margin (exclusive of depreciation and amortization), calculated as net sales less cost of sales as a percentage of sales, was 41.4% for the year ended December 31, 2024, compared to 30.4% for the year ended December 31, 2023.
Gross margin (exclusive of depreciation and amortization), calculated as net sales less cost of sales as a percentage of sales, was 38.7% for the year ended December 31, 2025, compared to 41.4% for the year ended December 31, 2024.
If we determine that it is probable that the expected revenue will not be realized, a reserve is recorded against the prepaid asset for the non-recoverable portion. As of December 31, 2024, we recorded a prepaid asset of $6.1 million , net of a reserve of $8.5 million .
If we determine that it is probable that the expected revenue will not be realized, a reserve is recorded against the prepaid asset for the non-recoverable portion. As of December 31, 2025, we recorded a prepaid asset of $18.6 million , net of a reserve of $0.8 million .
Gross margin (exclusive of depreciation and amortization) increased for the year ended December 31, 2024 compared to the year ended December 31, 2023, due to the factors noted above.
Gross margin (exclusive of depreciation and amortization) decreased for the year ended December 31, 2025 compared to the year ended December 31, 2024, due to the factors noted above.
Other expense (income), net for the years ended December 31, 2024 and 2023 was primarily related to foreign currency gains and losses relating to transactions denominated in currencies other than the U.S. dollar. Income Tax Expense Income tax expense was $4.6 million for the year ended December 31, 2024, compared to $132.5 million for the year ended December 31, 2023.
Other (income) expense, net for the years ended December 31, 2025 and 2024 was primarily related to foreign currency gains and losses relating to transactions denominated in currencies other than the U.S. dollar. 67 Table of Contents Income Tax Expense Income tax expense was $4.4 million for the year ended December 31, 2025, compared to $4.6 million for the year ended December 31, 2024.
As of December 31, 2023, we recorded a prepaid asset of $25.1 million, net of a reserve of $4.5 million. We record a royalty liability as revenues are recognized based on the terms of the licensing agreement.
As of December 31, 2024, we recorded a prepaid asset of $6.1 million, net of a reserve of $8.5 million. We record a royalty liability as revenues are recognized based on the terms of the licensing agreement.
Depreciation and Amortization Depreciation and amortization expense was $62.6 million for the year ended December 31, 2024, compared to $59.8 million for the year ended December 31, 2023, primarily driven by the type and timing of assets placed into service.
Depreciation and Amortization Depreciation and amortization expense was $59.1 million for the year ended December 31, 2025, a decrease of 5.6%, compared to $62.6 million for the year ended December 31, 2024, primarily driven by the type and timing of assets placed into service.
For the year ended December 31, 2024, net cash used in financing activities was $99.2 million, primarily related to net repayments on the Revolving Line of Credit of $60.5 million, payments under the Term Loan and Equipment Financing Loan of $31.1 million and payments to TRA parties of $9.0 million. 76 Table of Contents For the year ended December 31, 2023, net cash provided by financing activities was $25.6 million, primarily related to proceeds from net borrowings on the Revolving Line of Credit of $50.5 million, partially offset by payments under the Term Loan and Equipment Financing Loan of $22.6 million.
For the year ended December 31, 2025, net cash provided by financing activities was $42.0 million, primarily related to proceeds from net borrowings on the Revolving Line of Credit of $65.0 million, offset by payments under the Term Loan and Equipment Financing Loan of $23.1 million. 74 Table of Contents For the year ended December 31, 2024, net cash used in financing activities was $99.2 million, primarily related to net repayments on the Revolving Line of Credit of $60.5 million, payments under the Term Loan and Equipment Financing Loan of $31.1 million and payments to TRA parties of $9.0 million.
If we determine we will not be able to fully utilize all or part of these deferred tax assets, we would record a valuation allowance through earnings in the period the determination was made, as we did during the year ended December 31, 2023.
If we determine we will not be able to fully utilize all or part of these deferred tax assets, we would record a valuation allowance through earnings in the period the determination was made.
Interest Expense, Net Interest expense, net was $20.6 million for the year ended December 31, 2024, a decrease of 26.4%, compared to $28.0 million for the year ended December 31, 2023. The decrease in interest expense, net was due to lower average balances of debt outstanding during the year ended December 31, 2024.
Interest Expense, Net Interest expense, net was $19.2 million for the year ended December 31, 2025, a decrease of 6.8%, compared to $20.6 million for the year ended December 31, 2024. The decrease in interest expense, net was primarily due to lower average balances of debt outstanding during the year ended December 31, 2025.
Cost of Sales and Gross Margin (exclusive of depreciation and amortization) Cost of sales (exclusive of depreciation and amortization) was $615.3 million for the year ended December 31, 2024, a decrease of 19.4%, compared to $763.1 million for the year ended December 31, 2023.
Cost of Sales and Gross Margin (exclusive of depreciation and amortization) Cost of sales (exclusive of depreciation and amortization) was $556.9 million for the year ended December 31, 2025, a decrease of 9.5%, compared to $615.3 million for the year ended December 31, 2024.
However, we cannot assure you that our cash provided by operating activities, cash and cash equivalents or cash available under our Revolving Credit Facility will be sufficient to meet our future needs.
Financial Condition We cannot assure you that our cash provided by operating activities and cash and cash equivalents will be sufficient to meet our future needs. The current no availability under our Revolving Credit Facility.
In particular, though we were in compliance with the financial and other covenants under the Credit Agreement as of December 31, 2024, we cannot assure you that we will be able to maintain compliance with our financial covenants, or that we will be able to further amend the Credit Agreement should circumstances arise in the future.
As of December 31, 2025, the Credit Agreement Parties were in compliance with all of the covenants then in effect and required to be tested under the Credit Agreement, however, we cannot assure you that we will be able to maintain compliance with the Financial Covenants, or that we will be able to further amend the Credit Agreement should circumstances arise in the future.
The decrease in net loss was primarily the result of lower net sales, offset by the nonrecurring events for the year ended December 31, 2023, as discussed above. 70 Table of Contents Non-GAAP Financial Measures EBITDA, Adjusted EBITDA, Adjusted Net Income (Loss) and Adjusted Earnings (Loss) per Diluted Share (collectively the “Non-GAAP Financial Measures”) are supplemental measures of our performance that are not required by, or presented in accordance with, U.S.
The increase in net loss was primarily due to the decrease in net sales outpacing the decrease in operating expenses as compared to the year ended December 31, 2024. 68 Table of Contents Non-GAAP Financial Measures EBITDA, Adjusted EBITDA, Adjusted Net (Loss) Income and Adjusted (Loss) Earnings per Diluted Share (collectively the “Non-GAAP Financial Measures”) are supplemental measures of our performance that are not required by, or presented in accordance with, U.S.
As of December 31, 2024 and 2023 , we had a reserve of $23.5 million and $18.1 million, respectively, related to ongoing and future royalty audits, based on estimates of the costs we expect to incur. 80 Table of Contents Inventory.
As of December 31, 2025 and 2024 , we had an accrual of $29.6 million and $23.5 million, respectively, related to ongoing and future royalty audits, based on estimates of the costs we expect to incur. 78 Table of Contents Inventory.
Working capital is impacted by seasonal trends of our business and the timing of new product releases, as well as our current portion of long-term debt and draw downs on our line of credit.
Working capital is impacted by seasonal trends of our business and the timing of new product releases, as well as our current portion of long-term debt and any availability under our Revolving Credit Facility, which current availability under our Revolving Credit Facility is $0.
Selling, General, and Administrative Expenses Selling, general, and administrative expenses were $359.0 million for the year ended December 31, 2024, a decrease of 4.8%, compared to $377.1 million for the year ended December 31, 2023.
Selling, General, and Administrative Expenses Selling, general, and administrative expenses were $337.7 million for the year ended December 31, 2025, a decrease of 5.9%, compared to $359.0 million for the year ended December 31, 2024.
Year Ended December 31, 2024 2023 (in thousands) Net sales $ 1,049,850 $ 1,096,086 Net loss $ (15,070) $ (164,438) EBITDA (1) $ 72,652 $ 55,792 Adjusted EBITDA (1) (2) $ 94,741 $ (11,822) (1) Earnings before interest, taxes, depreciation and amortization (“EBITDA”) and Adjusted EBITDA are financial measures not calculated in accordance with U.S. GAAP.
Year Ended December 31, 2025 2024 (in thousands) Net sales $ 908,209 $ 1,049,850 Net loss $ (68,295) $ (15,070) EBITDA (1) $ 14,339 $ 72,652 Adjusted EBITDA (1) $ 26,580 $ 94,741 (1) Earnings before interest, taxes, depreciation and amortization (“EBITDA”) and Adjusted EBITDA are financial measures not calculated in accordance with U.S. GAAP.
Selling, General and Administrative Expenses Selling, general and administrative expenses are primarily driven by wages, commissions and benefits, warehouse, fulfillment (internal and external), rent and facilities costs, infrastructure and technology costs, advertising and marketing expenses, including the costs to participate at specialty licensing and comic book conventions and exhibitions, as well as costs to develop promotional video and other online content created for advertising purposes.
We anticipate inflationary pressures throughout our supply chain in future periods, specific to freight, duty and tariff costs and, to a lesser extent, product costs. 65 Table of Contents Selling, General and Administrative Expenses Selling, general and administrative expenses are primarily driven by wages, commissions and benefits, warehouse, fulfillment (internal and external), rent and facilities costs, infrastructure and technology costs, advertising and marketing expenses, including the costs to participate at specialty licensing and comic book conventions and exhibitions, as well as costs to develop promotional video and other online content created for advertising purposes.
GAAP financial performance measure, which is net loss, for the periods presented: Year Ended December 31, 2024 2023 (in thousands, except per share data) Net loss attributable to Funko, Inc. $ (14,718) $ (154,079) Reallocation of net loss attributable to non-controlling interests from the assumed exchange of common units of FAH, LLC for Class A common stock (1) (352) (10,359) Equity-based compensation (2) 13,602 10,534 Acquisition transaction costs and other expenses (3) 3,449 14,241 Certain severance, relocation and related costs (4) 2,093 6,486 Loss on extinguishment of debt (5) — 494 Foreign currency transaction loss (6) 2,398 854 Tax receivable agreement liability adjustments (7) 547 (100,223) Income tax expense (8) 1,668 157,386 Adjusted net income (loss) (9) $ 8,687 $ (74,666) Weighted-average shares of Class A common stock outstanding-basic 52,043 48,332 Equity-based compensation awards and common units of FAH, LLC that are convertible into Class A common stock 2,049 4,021 Adjusted weighted-average shares of Class A stock outstanding-diluted 54,092 52,353 Loss per diluted share $ (0.28) $ (3.19) Adjusted earnings (loss) per diluted share $ 0.16 $ (1.43) Year Ended December 31, 2024 2023 (in thousands) Net loss $ (15,070) $ (164,438) Interest expense, net 20,575 27,970 Income tax expense 4,564 132,497 Depreciation and amortization 62,583 59,763 EBITDA $ 72,652 $ 55,792 Adjustments: Equity-based compensation (2) 13,602 10,534 Acquisition transaction costs and other expenses (3) 3,449 14,241 Certain severance, relocation and related costs (4) 2,093 6,486 Loss on extinguishment of debt (5) — 494 Foreign currency transaction loss (6) 2,398 854 Tax receivable agreement liability adjustments (7) 547 (100,223) Adjusted EBITDA (9) $ 94,741 $ (11,822) 73 Table of Contents (1) Represents the reallocation of net loss attributable to non-controlling interests from the assumed exchange of common units of FAH, LLC in periods in which income was attributable to non-controlling interests.
GAAP financial performance measure, which is net loss, for the periods presented: Year Ended December 31, 2025 2024 (in thousands, except per share data) Net loss attributable to Funko, Inc. $ (67,360) $ (14,718) Reallocation of net loss attributable to non-controlling interests from the assumed exchange of common units of FAH, LLC for Class A common stock (1) (935) (352) Equity-based compensation (2) 11,536 13,602 Acquisition transaction costs and other expenses (3) 727 3,449 Certain severance, relocation and related costs (4) — 2,093 Foreign currency transaction loss (5) 405 2,398 Tax receivable agreement liability adjustments (6) (427) 547 Income tax effect of adjustments and valuation allowance reversal (7) 17,281 1,668 Adjusted net (loss) income $ (38,773) $ 8,687 Weighted-average shares of Class A common stock outstanding-basic 54,387 52,043 Equity-based compensation awards and common units of FAH, LLC that are convertible into Class A common stock 768 2,049 Adjusted weighted-average shares of Class A stock outstanding-diluted 55,155 54,092 Loss per diluted share $ (1.24) $ (0.28) Adjusted (loss) earnings per diluted share $ (0.70) $ 0.16 Year Ended December 31, 2025 2024 (in thousands) Net loss $ (68,295) $ (15,070) Interest expense, net 19,181 20,575 Income tax expense 4,356 4,564 Depreciation and amortization 59,097 62,583 EBITDA $ 14,339 $ 72,652 Adjustments: Equity-based compensation (2) 11,536 13,602 Acquisition transaction costs and other expenses (3) 727 3,449 Certain severance, relocation and related costs (4) — 2,093 Foreign currency transaction loss (5) 405 2,398 Tax receivable agreement liability adjustments (6) (427) 547 Adjusted EBITDA $ 26,580 $ 94,741 71 Table of Contents (1) Represents the reallocation of net loss attributable to non-controlling interests from the assumed exchange of common units of FAH, LLC in periods in which income was attributable to non-controlling interests.
We expect these sources of liquidity to continue to be our primary sources of liquidity. Credit Facilities . On September 17, 2021, the Company entered into the Credit Facilities, which mature in September 2026. For a discussion of our Credit Facilities, see Note 10, "Debt" of the Notes to Consolidated Financial Statements included in this Form 10-K.
We expect cash flows from operations to continue to be our primary sources of liquidity. For a discussion of our Credit Facilities, see Note 10, "Debt" of the Notes to Consolidated Financial Statements included in this Form 10-K.
We believe our ability to help maximize the value and extend the relevance of our content providers’ properties has allowed us to benefit from this trend.
We believe there is a trend of content providers consolidating their relationships to do more business with fewer licensees. We believe our ability to help maximize the value and extend the relevance of our content providers’ properties has allowed us to benefit from this trend.
Net sales of Loungefly branded products decreased 19.9% to $171.8 million in the year ended December 31, 2024 as compared to $214.5 million in the year ended December 31, 2023. Net sales of other products decreased 6.1% to $73.6 million in the year ended December 31, 2024 as compared to $78.4 million in the year ended December 31, 2023.
Net sales of Loungefly branded products decreased 9.8% to $155.0 million in the year ended December 31, 2025 as compared to $171.8 million in the year ended December 31, 2024.
Net cash provided by operating activities was $123.5 million for the year ended December 31, 2024, compared to $30.9 million for the year ended December 31, 2023. Changes in net cash provided by operating activities resulted primarily from cash received from net sales and cash payments for product costs and royalty expenses paid to our licensors.
Changes in net cash (used in) provided by operating activities resulted primarily from cash received from net sales and cash payments for product costs and royalty expenses paid to our licensors.
The increase for the year ended December 31, 2024 compared to the year ended December 31, 2023 was primarily due to changes in net loss of $149.4 million, offset by changes in certain non-cash items, including depreciation and amortization, equity-based compensation, tax receivable liability adjustments and deferred tax expense of $16.8 million and changes in working capital of $39.9 million, which decreased net cash provided by operating activities.
The decrease for the year ended December 31, 2025 compared to the year ended December 31, 2024 was primarily due to changes in net loss of $53.2 million, changes in certain non-cash items, including depreciation and amortization, equity-based compensation, and other, net of $11.1 million and changes in working capital of $64.3 million, which decreased net cash provided by operating activities.
Working capital changes were primarily due to increases in inventory of $96.3 million and accounts receivable of $30.9 million, offset by increases in accounts payable of $27.2 million, accrued royalties of $21.7 million and accrued expenses and other liabilities of $19.9 million and a decrease to prepaid expenses and other assets of $19.0 million. Investing Activities .
Working capital changes were primarily due to increases in accrued expenses and other liabilities of $8.9 million, accounts payable of $8.9 million, accrued royalties of $8.5 million, and decreases to inventory of $14.4 million, prepaid expenses and other assets of $20.5 million and accounts receivable of $3.4 million. Investing Activities .
For a reconciliation of EBITDA and Adjusted EBITDA to net loss, the most closely comparable U.S. GAAP financial measure, see “Non-GAAP Financial Measures” in this item.
For a reconciliation of EBITDA and Adjusted EBITDA to net loss, the most closely comparable U.S. GAAP financial measure, see “Non-GAAP Financial Measures” in this item . Factors Affecting our Business Growth in the Market for Pop Culture Consumer Products Our operating results and prospects are impacted by developments in the market for pop culture consumer products.
Our content provider relationships are highly diversified, allowing us to license a wide array of properties and thereby reduce our exposure to any individual property or license. We believe there is a trend of content providers consolidating their relationships to do more business with fewer licensees.
We have strong relationships with many established content providers and seek to establish licensing relationships with newer content providers. Our content provider relationships are highly diversified, allowing us to license a wide array of properties and thereby reduce our exposure to any individual property or license.
In addition, despite our efforts to diversify the properties on which we base our products, if the performance of one or more of these properties fail to meet expectations or are delayed in their release, our operating results could be adversely affected. 65 Table of Contents Inventory Management Inventory consists primarily of figures, plush, apparel, homewares, accessories and other finished goods, and is accounted for using the first-in, first-out (“FIFO”) method.
In addition, despite our efforts to diversify the properties on which we base our products, if the performance of one or more of these properties fail to meet expectations or are delayed in their release, our operating results could be adversely affected.
Taxation and Expenses We are subject to U.S. federal, state and local income taxes with respect to our allocable share of any taxable income of FAH, LLC, and we are taxed at the prevailing corporate tax rates. In addition to tax expenses, we incur expenses related to our operations, as well as payments under the Tax Receivable Agreement.
We may from time to time, liquidate and/or dispose of inventory to increase warehouse operating efficiency. Taxation and Expenses We are subject to U.S. federal, state and local income taxes with respect to our allocable share of any taxable income of FAH, LLC, and we are taxed at the prevailing corporate tax rates.
The Form S-3 was declared effective by the SEC on July 26, 2022 and will remain effective until through July 25, 2025.
Form S-3 Registration Statement Our registration statement on Form S-3 was declared effective by the SEC on August 15, 2025 and will remain effective through August 15, 2028.
For the year ended December 31, 2023, net cash used in investing activities was $39.8 million and was primarily related to purchases of tooling and molds used in our production product lines and for the acquisition of MessageMe, Inc. (d/b/a HipDot). Financing Activities .
Our net cash used in investing activities primarily relates to the purchase of property and equipment and acquisitions, net of cash acquired. For the year ended December 31, 2025, net cash used in investing activities was $31.9 million, which was primarily related to purchases of tooling and molds used for production of our product lines.
Sales terms typically do not allow for a right of return except in relation to a manufacturing defect and certain products purchased through our website.
We evaluate the need for price increases along with other incentive arrangements and cost of product to help manage gross margins. In 2025, we instituted price increases for certain of our products. Sales terms typically do not allow for a right of return except in relation to a manufacturing defect and certain products purchased through our website.
Notwithstanding the growth of our direct-to-consumer business, we continue to depend on retailers and, in particular, rely on retailers to provide adequate and attractive space for our products and point of purchase displays in their stores.
During the years ended December 31, 2025 and 2024, we saw shifts in our client mix as a direct result of our growing direct-to-consumer business and enhanced online presence of our top customers. 63 Table of Contents Notwithstanding the growth of our direct-to-consumer business, we continue to depend on retailers and, in particular, rely on retailers to provide adequate and attractive space for our products and point of purchase displays in their stores.
(6) Represents both unrealized and realized foreign currency losses (gains) on transactions other than in U.S. dollars. (7) Represents recognized adjustments to the tax receivable agreement liability.
(4) For the year ended December 31, 2024, includes severance and benefit costs related to certain management departures of $2.1 million. (5) Represents both unrealized and realized foreign currency losses (gains) on transactions other than in U.S. dollars. (6) Represents recognized adjustments to the tax receivable agreement liability.
Inability to license newer pop culture properties, the termination or lack of renewal of one or more of our license agreements, or the renewal of a license agreement on less favorable terms, including as a result of members of our senior management team departing the Company, could adversely affect our business. 64 Table of Contents Retail Industry Dynamics; Relationships with Retail Customers Historically, substantially all of our sales have been derived from our retail customers and distributors, upon which we rely to reach the consumers who are the ultimate purchasers of our products.
Inability to license newer pop culture properties, the termination or lack of renewal of one or more of our license agreements, or the renewal of a license agreement on less favorable terms, including as a result of members of our senior management team departing the Company, could adversely affect our business.
(2) Represents non-cash charges related to equity-based compensation programs, which vary from period to period depending on timing of awards.
(2) Represents non-cash charges related to equity-based compensation programs, which vary from period to period depending on timing of awards. (3) For the year ended December 31, 2025, includes charges related to fair market value adjustments for certain assets held for sale.
In addition, we have been and continue to be operating in a challenging retail environment where retailers have slowed their restocking, prioritized lower inventory levels and, in some cases, have canceled their orders. This has had an impact across our brands and geographies of reducing our net sales, gross margin and net income.
In addition, we have been and continue to be operating in a challenging retail environment where retailers have slowed their restocking, prioritized lower inventory levels and, in some cases, have negotiated additional discounting for sell-through or canceled their orders.
On a geographical basis, net sales in the United States decreased 9.7% to $682.0 million in the year ended December 31, 2024 as compared to $755.6 million in the year ended December 31, 2023, net sales in Europe increased 5.7% to $283.8 million in the year ended December 31, 2024 from $268.5 million in the year ended December 31, 2023 and net sales in other international locations increased 16.8% to $84.1 million in the year ended December 31, 2024 from $72.0 million in the year ended December 31, 2023. 68 Table of Contents On a product category basis, net sales of Core Collectible branded products increased 0.2% to $804.4 million in the year ended December 31, 2024 as compared to $803.2 million in the year ended December 31, 2023.
Our top ten wholesale customers represented approximately 31% of our sales for both the years ended December 31, 2025 and 2024. 66 Table of Contents On a geographical basis, net sales in the United States decreased 19.9% to $546.3 million in the year ended December 31, 2025 as compared to $682.0 million in the year ended December 31, 2024, net sales in Europe increased 1.6% to $288.3 million in the year ended December 31, 2025 from $283.8 million in the year ended December 31, 2024 and net sales in other international locations decreased 12.5% to $73.5 million in the year ended December 31, 2025 from $84.1 million in the year ended December 31, 2024.
To the extent we are unable to offer products that appeal to consumers, our operating results will be adversely affected.
To the extent we are unable to offer products that appeal to consumers, our operating results will be adversely affected. Relationships with Content Providers We generate a majority of our net sales from products based on intellectual property we license from others.
As a result of the full valuation allowance on the deferred tax assets, and projected inability to fully utilize all or part of the related tax benefits, the Company determined that certain payments to the TRA Parties related to unrealized tax benefits under the TRA are no longer probable and estimable.
Based on the Company's assessment as of December 31, 2025 and 2024, the Company determined that based on all the available evidence, including the Company’s three-year cumulative pre-tax loss position, it is not more likely than not that the results of operations will generate sufficient taxable income to realize its deferred tax assets and retained a full valuation allowance. 64 Table of Contents As a result of the full valuation allowance on the deferred tax assets, and projected inability to fully utilize all or part of the related tax benefits, the Company determined that certain payments to the TRA Parties related to unrealized tax benefits under the TRA are no longer probable and estimable.
The Form S-3 allows us to offer and sell from time-to-time up to $100.0 million of Class A common stock, preferred stock, debt securities, warrants, purchase contracts or units comprised of any combination of these securities for our own account and allows certain selling stockholders to offer and sell 17,318,008 shares of Class A common stock in one or more offerings.
In addition, as described above, on August 15, 2025, we filed a registration statement on Form S-3 for the sale from time-to-time of up to $100.0 million of certain of our securities and for certain selling stockholders to offer and sell shares of Class A common stock in one or more offerings.
We also sell our products directly to consumers through our e-commerce operations, our retail stores and, to a lesser extent, at specialty licensing and comic book conventions and exhibitions. 66 Table of Contents Revenue from the sale of our products is recognized when control of the goods is transferred to the customer, which is upon shipment or upon receipt of finished goods by the customer, depending on the contract terms.
Revenue from the sale of our products is recognized when control of the goods is transferred to the customer, which is upon shipment or upon receipt of finished goods by the customer, depending on the contract terms. The majority of revenue is recognized upon shipment of products to the customer.
The terms of any future offering under the shelf registration statement will be established at the time of such offering and will be described in a prospectus supplement filed with the SEC prior to the completion of any such offering. 75 Table of Contents Liquidity and Capital Resources The following table shows summary cash flow information for the years ended December 31, 2024 and 2023 (in thousands): Year Ended December 31, 2024 2023 Net cash provided by operating activities $ 123,524 $ 30,935 Net cash used in investing activities (25,228) (39,796) Net cash (used in) provided by financing activities (99,242) 25,596 Effect of exchange rates on cash and cash equivalents (852) 518 Net change in cash and cash equivalents $ (1,798) $ 17,253 Operating Activities.
Liquidity and Capital Resources The following table shows summary cash flow information for the years ended December 31, 2025 and 2024 (in thousands): Year Ended December 31, 2025 2024 Net cash (used in) provided by operating activities $ (5,120) $ 123,524 Net cash used in investing activities (31,902) (25,228) Net cash provided by (used in) financing activities 42,037 (99,242) Effect of exchange rates on cash and cash equivalents 2,478 (852) Net change in cash and cash equivalents $ 7,493 $ (1,798) Operating Activities.

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Item 7A. Quantitative and Qualitative Disclosures About Market Risk

Market Risk — interest-rate, FX, commodity exposure

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Biggest changeAs of December 31, 2024 , we had $172.2 million of variable rate debt outstanding under our Credit Facilities, consisting of $112.2 million outstanding under the Term Loan Facility (net of unamortized discount of $1.0 million) in outstanding variable rate borrowings. We had $60.0 million outstanding variable rate borrowings under our Revolving Credit Facility.
Biggest changeAs of December 31, 2025 , we had $219.9 million of variable rate debt outstanding under our Credit Facilities, consisting of $94.9 million outstanding under the Term Loan Facility (net of unamortized discount of $0.4 million) in outstanding variable rate borrowings. We had $125.0 million outstanding variable rate borrowings under our Revolving Credit Facility.
We cannot assure you, however, that our results of operations and financial condition will not be materially impacted by inflation in the future. 83 Table of Contents
We cannot assure you, however, that our results of operations and financial condition will not be materially impacted by inflation in the future. 81 Table of Contents
Based upon a sensitivity analysis of our debt levels on December 31, 2024 , an increase or decrease of 1% in the effective interest rate would cause an increase or decrease in interest expense of approximately $1.1 million over the next 12 months.
Based upon a sensitivity analysis of our debt levels on December 31, 2025 , an increase or decrease of 1% in the effective interest rate would cause an increase or decrease in interest expense of approximately $2.3 million over the next 12 months.

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