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What changed in JAKKS PACIFIC INC's 10-K — 2024 vs 2025

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Paragraph-level year-over-year comparison of JAKKS PACIFIC 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.

+160 added−188 removedSource: 10-K (2026-03-02) vs 10-K (2025-03-06)

Top changes in JAKKS PACIFIC INC's 2025 10-K

160 paragraphs added · 188 removed · 132 edited across 7 sections

Item 1. Business

Business — how the company describes what it does

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Biggest changeFinally, the longer delivery time resulted in a slower cash conversion cycle for us as the net impact was a longer holding period for finished goods inventory between manufacture and sale to customer. 9 Table of Contents Government and Industry Regulation Our products are subject to the provisions of the Consumer Product Safety Act (“CPSA”) as amended by the Consumer Product Safety Improvement Act (“CPSIA”), the Federal Hazardous Substances Act (“FHSA”), the Flammable Fabrics Act (“FFA”) and regulations promulgated thereunder.
Biggest changeBecause customer orders may be canceled at any time, often without penalty, our backlog may not accurately indicate sales for any future period. 9 Table of Contents Government and Industry Regulation Our products are subject to the provisions of the Consumer Product Safety Act (“CPSA”) as amended by the Consumer Product Safety Improvement Act (“CPSIA”), the Federal Hazardous Substances Act (“FHSA”), the Flammable Fabrics Act (“FFA”) and regulations promulgated thereunder.
We also register certain aspects of some of our products with the U.S. Copyright Office. In the same vein, we enforce our rights against infringers because we recognize our intellectual property rights are significant assets that contribute to our success.
We also register certain aspects of some of our products with the U.S. Copyright Office. In the same vein, we enforce our rights against infringers because we recognize that our intellectual property rights are significant assets that contribute to our success.
Health and Safety We are committed to providing a safe, healthy and productive working environment for all of our employees globally. Environmental Issues We may be subject to legal and financial obligations under environmental, health and safety laws in the United States and in other jurisdictions where we operate.
Health and Safety We are committed to providing a safe, healthy and productive working environment for all our employees globally. Environmental Issues We may be subject to legal and financial obligations under environmental, health and safety laws in the United States and in other jurisdictions where we operate.
To effectively manage future growth, we must continue to expand our operational, financial and management information systems and to train, motivate and manage our workforce. While we believe that our operational, financial and management information systems will be adequate to support our future growth, no assurance can be given they will be adequate without significant investment in our infrastructure.
To effectively manage future growth, we must continue to expand our operational, financial and management information systems and to train, motivate and manage our workforce, globally. While we believe that our operational, financial and management information systems will be adequate to support our future growth, no assurance can be given they will be adequate without significant investment in our infrastructure.
By licensing IP and trademarks from world-class brand owners and content creators, we have access to a far greater range of marks than would be available for purchase.
By licensing IP and trademarks from world-class brand owners and content creators, we have potential access to a far greater range of marks than would be available for purchase.
No other customer accounted for more than 10% of our net sales in 2023. We generally sell products to our customers on open account with payment terms typically varying from 30 to 90 days or, in some cases, pursuant to letters of credit.
No other customer accounted for more than 10% of our net sales in 2024. We generally sell products to our customers on open account with payment terms typically varying from 30 to 90 days or, in some cases, pursuant to letters of credit.
Our telephone number is (424) 268-9444 and our Internet Website address is www.jakks.com. The contents of our website are not incorporated in or deemed to be a part of this Annual Report on Form 10-K. 11 Table of Contents
Our telephone number is (424) 268-9444 and our Internet Website address is www.jakks.com. The contents of our website are not incorporated in or deemed to be a part of this Annual Report on Form 10-K.
Our products include: ● Action figures and accessories, including licensed characters based on the Nintendo®, Sonic the Hedgehog®, The Simpsons TM and Apex Legends® franchises and our own proprietary brands including Creepy Crawlers®; ● Toy vehicles, including Xtreme Power Dozer®, Xtreme Power Dump Truck®, XPV®, Road Champs®, Fly Wheels® and AirTitans® inflatable remote-control dinosaur; ● Dolls and accessories, including small dolls, large dolls, fashion dolls and baby dolls based on licenses, including Disney Wish®, Disney Encanto®, Disney Moana 2, Disney ILY 4EVER™, Disney Frozen®, Disney Princess® and Minnie Mouse®, and infant and pre-school toys based on TV shows like PBS’s Daniel Tiger’s Neighborhood® as well as in-house brands such as Perfectly Cute® and collectable plush Ami Amis®; ● Private label products developed exclusively for certain retail customers in various product categories; ● Foot-to-floor ride-on products, including those based on BBC’s Bluey, Fisher-Price®, Nickelodeon®, and Hasbro® licenses and inflatable play environments, tents and wagons; ● Role play, dress-up, pretend play and novelty products for boys and girls based on well-known brands and entertainment properties such as Disney Frozen® , Black & Decker® , Disney Princess®, and Disney Encanto®, as well as those based on our own proprietary brands; ● Indoor and outdoor kids’ furniture, activity trays and tables and room décor, seasonal and outdoor products, including those based on Disney® characters, Nickelodeon® and Hasbro® licenses; ● Halloween and everyday costumes for children and in some cases teens and adults based on licensed and proprietary non-licensed brands, including Super Mario Bros.®, Microsoft’s Halo®, Disney-Pixar Toy Story®, Harry Potter®, Minions®, Sesame Street®, Power Rangers®¸ Pokemon TM , Hasbro® brands, Universal’s Wicked TM and Disney Frozen®, Disney Princess® and related Halloween accessories; ● Outdoor activity toys including ReDo Skateboard Co.® and junior sports toys including Sky Ball® hyper-charged balls, SportsZone™ sport sets and Wave Hoop® toy hoops marketed under our Maui® brand; and ● Board games under the brand JAKKS Wild Games®, including Temple Raider®, K.O.
Our products include: ● Action figures and accessories, including licensed characters based on the Nintendo®, Sonic the Hedgehog®, and The Simpsons® franchises and our own proprietary brands including Creepy Crawlers®; ● Toy vehicles, including Xtreme Power Dozer®, Xtreme Power Dump Truck®, XPV®, Road Champs®, Fly Wheels® and AirTitans® inflatable remote-control dinosaur; ● Dolls and accessories, including small dolls, large dolls, fashion dolls and baby dolls based on licenses, including Disney Darlings, Disney Encanto®, Disney Moana® 2, Disney ILY 4EVER®, Disney Frozen®, Disney Princess® and Minnie Mouse®, and infant and pre-school toys based on TV shows like PBS’s Daniel Tiger’s Neighborhood® as well as in-house brands such as Perfectly Cute®, Charming™, and KidTopia™; ● Private label products developed exclusively for certain retail customers in various product categories; ● Foot-to-floor ride-on products, including those based on BBC’s Bluey®, Fisher-Price®, Nickelodeon®, and Hasbro® licenses and inflatable play environments, tents and wagons; ● Role play, dress-up, pretend play and novelty products for boys and girls based on well-known brands and entertainment properties such as Disney Frozen® , Black & Decker® , Disney Princess®, and Disney Encanto®, as well as those based on our own proprietary brands; ● Indoor and outdoor kids’ furniture, activity trays and tables and room décor, seasonal and outdoor products, including those based on Disney® characters, Nickelodeon® and Hasbro® licenses; ● Halloween and everyday costumes for children and in some cases teens and adults based on licensed and proprietary non-licensed brands, including Super Mario Bros.®, Microsoft’s Halo®, Disney-Pixar Toy Story®, Harry Potter®, Minions®, Sesame Street®, Power Rangers®¸ Pokemon®, Hasbro® brands, Universal’s Wicked® and Disney Frozen®, Disney Princess® and related Halloween accessories; ● Outdoor activity toys including ReDo Skateboard Co.® and junior sports toys including Sky Ball® hyper-charged balls, SportsZone® sport sets and Wave Hoop® toy hoops marketed under our Maui® brand; and ● Board games under the brand JAKKS Wild Games®, including Temple Raider®, K.O.
Currently, among others, we have license agreements with Nickelodeon®, Disney®, Pixar®, Marvel®, NBC Universal®, Microsoft®, Sega®, Sony®, Netflix® and WarnerMedia®, as well as with the licensors of many other popular characters. We also license IP from other toy companies for categories in which they do not offer products found within our core product lines.
Currently, among others, we have license agreements with Nickelodeon®, Disney®, Pixar®, Marvel®, NBCUniversal®, Microsoft®, Sega®, Sony®, Netflix® and WarnerMedia®, as well as with the licensors of many other popular characters. We also license IP from other toy companies for categories in which they do not offer products found within our core product lines.
Generally, our license agreements for products and concepts call for royalties ranging from 1% to 25% of net sales, and some may require minimum royalty guarantees and up-front or advanced royalty payments against those guarantees.
Generally, our license agreements for products and concepts call for royalties ranging from 1% to 22% of net sales, and some may require minimum royalty guarantees and up-front or advanced royalty payments against those guarantees.
We believe that our current infrastructure and operating model can accommodate growth without a proportionate increase in our operating and administrative expenses, thereby increasing our operating margins. 5 Table of Contents The execution of our growth strategy, however, is subject to several risks and uncertainties and we cannot assure you that we will continue to experience growth in or maintain our present level of net sales (see “Risk Factors,” in Item 1A).
We believe that our current infrastructure and operating model can accommodate growth without a proportionate increase in our operating and administrative expenses, thereby increasing our operating margins. 5 Table of Contents The execution of our medium-longer-term growth strategy, however, is subject to several risks and uncertainties, and we cannot assure you that we will experience growth in or maintain our present level of net sales (see “Risk Factors,” in Item 1A).
As of December 31, 2024, Meisheng owns 4.8% of our outstanding common stock and until our 2024 annual meeting a designee of Meisheng was a member of our board of directors. A portion of our sales originate in the United States, so we hold certain inventory in a US warehouse and fulfillment facility.
As of December 31, 2024, Meisheng owned 4.8% of our outstanding common stock and until our 2025 annual meeting a designee of Meisheng was a member of our board of directors. A portion of our sales originate in the United States, so we hold certain inventory in a US warehouse and fulfillment facility.
We currently utilize warehouses in the United Kingdom, the Netherlands, Italy, Belgium and Spain (the latter two opened in 2024) to support sales expansion in Europe. We also have warehouse capacity in Mexico. ● Pursue Strategic Acquisitions. We have supplemented our internal growth with selected strategic acquisitions.
We currently utilize warehouses in the United Kingdom, Germany (opened in 2025), Italy, Belgium and Spain (the latter two opened in 2024) to support sales expansion in Europe. We also have warehouse capacity in Mexico. ● Pursue Strategic Acquisitions. We have supplemented our internal growth with selected strategic acquisitions.
However, our outdoor/seasonal products are primarily sold in the spring and summer seasons, and our year-round costume business does ship most of its volume focused on consumer sales taking place just before Halloween at the end of October.
However, our outdoor/seasonal products are primarily sold in the spring and summer seasons, and our year-round costume business ships most of its volume focused on consumer sales taking place just before Halloween at the end of October.
Substantially all of these assets are located in China. 8 Table of Contents Patents, Trademarks, Copyrights and Licenses We routinely pursue protection of our products through some form or combination of intellectual property right(s).
Substantially all of these assets are located across various provinces in China. 8 Table of Contents Patents, Trademarks, Copyrights and Licenses We routinely pursue protection of our products through some form or combination of intellectual property right(s).
Industry Overview According to Toy Association, Inc., the leading toy industry trade group, the United States is the world’s largest toy market, followed by China, Japan and Western Europe. Total retail sales of toys, excluding video games, in the United States, were approximately $28.3 billion in 2024.
Industry Overview According to Toy Association, Inc., the leading toy industry trade group, the United States is the world’s largest toy market, followed by China, Japan and Western Europe. Total retail sales of toys, excluding video games, in the United States, were approximately $30.3 billion in 2025.
We also contract the manufacture of certain products from Hong Kong Meisheng Cultural Company Limited (“Meisheng”), which involved payments to Meisheng of approximately $98.4 million and $75.7 million for the years ended December 31, 2024 and 2023, respectively.
We also contract the manufacture of certain products from Hong Kong Meisheng Cultural Company Limited (“Meisheng”), which involved payments to Meisheng of approximately $75.3 million and $98.4 million for the years ended December 31, 2025 and 2024, respectively.
In addition, we compete in our Halloween costume lines with Rubies II®. We also compete with numerous smaller domestic and foreign toy manufacturers, importers and marketers in each of our product categories. Seasonality and Backlog In 2024, 68.0% of our net sales were made in the second and third quarters.
In addition, we compete in our Halloween costume lines with Rubies II®. We also compete with numerous smaller domestic and foreign toy manufacturers, importers and marketers in each of our product categories. Seasonality and Backlog In 2025, 57.9% of our net sales were made in the second and third quarters.
As of December 31, 2024, we had approximately 680 employees (including temporary and seasonal employees) working in over 10 countries worldwide to create innovative products and experiences that inspire, entertain, and develop children through play, with approximately 320 employees (47% of the total workforce) located outside the U.S. Employee Engagement One of our main focuses is employee retention.
As of December 31, 2025, we had approximately 652 employees (including temporary and seasonal employees) working in over 10 countries worldwide to create innovative products and experiences that inspire, entertain, and develop children through play, with 292 employees (44.8 % of the total workforce) located outside the U.S. Employee Engagement One of our main focuses is employee retention.
Tools, dies and molds represent a substantial portion of our property and equipment with a net book value of $13.5 million and $13.7 million as of December 31, 2024, and 2023, respectively.
Tools, dies and molds represent a substantial portion of our property and equipment with a net book value of $16.6 million and $13.5 million as of December 31, 2025, and 2024, respectively.
The COVID-19 pandemic created some short-term delays as manufacturing capacity both dropped during the peak of the outbreak and then again was stretched when consumer demand for different categories of products spiked because of the unprecedented level of households operating under confined-to-home/social distancing guidelines.
The COVID-19 pandemic created some short-term delays as manufacturing capacity both dropped during the peak of the outbreak and then again was stretched when consumer demand for different categories of products spiked because of the unprecedented level of households operating under confined-to-home/social distancing guidelines. Currently, we have ongoing relationships with over 50 different manufacturers.
Outside of the United States, we currently sell our products primarily in Europe, Australia, Canada, Latin America and Asia. Sales of our products abroad accounted for approximately $146.0 million, or 21.1% of our net sales in 2024 and approximately $153.7 million, or 21.6% of our net sales in 2023.
Outside of the United States, we currently sell our products primarily in Europe, Australia, Canada, Latin America and Asia. Sales of our products abroad accounted for approximately $154.1 million, or 27.0% of our net sales in 2025 and approximately $146.0 million, or 21.1% of our net sales in 2024.
Currently, we have ongoing relationships with over 50 different manufacturers. 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 short notice in a cost neutral manner.
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 short notice in a cost neutral manner.
Our three largest customers are Target®, Walmart® and Amazon®, which accounted for 29.6%, 24.2% and 10.6%, respectively, of our net sales in 2024. No other customer accounted for more than 10% of our net sales in 2024. Our Growth Strategy Key elements of our growth strategy include: ● Expand Core Product Lines.
Our two largest customers are Target® and Walmart®, which accounted for 26.6% and 26.1%, respectively, of our net sales in 2025. No other customer accounted for more than 10% of our net sales in 2025. Our Growth Strategy Key elements of our growth strategy include: ● Expand Core Product Lines.
Our three largest customers are Target®, Walmart® and Amazon®, which accounted for 29.6%, 24.2% and 10.6%, respectively, of our net sales in 2024. No other customer accounted for more than 10% of our net sales in 2024. In 2023, our three largest customers, Target®, Walmart® and Amazon®, accounted for 30.3%, 20.8% and 10.5%, respectively, of our net sales.
Our two largest customers are Target® and Walmart®, which accounted for 26.6% and 26.1%, respectively, of our net sales in 2025. No other customer accounted for more than 10% of our net sales in 2025. In 2024, our three largest customers, Target®, Walmart® and Amazon®, accounted for 29.6%, 26.2% and 10.6%, respectively, of our net sales.
In 2024, our sales generated outside the United States were approximately $146.0 million, or 21.1% of total net sales. In 2020, we migrated from a distributor model to selling direct in Spain, Italy, France and Mexico. Third-party distributors remain a core component of our international business, and we are constantly assessing how to expand our mutual businesses.
In 2025, our sales generated outside the United States were approximately $154.1 million, or 27.0% of total net sales. Third-party distributors remain a core component of our international business, and we are constantly assessing how to expand our mutual businesses.
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The lingering impact of the pandemic has created volatility in costs associated with the sourcing and importation of products, in particular due to changes in factor inputs (labor, oil) and market demand for services (transport). In addition, our third-party manufacturers have seen increases in foreign exchange rate exposure during this time.
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Because customer orders may be canceled at any time, often without penalty, our backlog may not accurately indicate sales for any future period. In 2022 and 2021, a number of factors partially attributable to the COVID-19 pandemic created significant bottlenecks and supply-demand imbalances in exporting product out of Asia into the United States and Europe.
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These factors increased the cost of ocean freight and the cost of trucking while incurring higher expenses and penalties from product being stuck at the port awaiting inbound trucking pickup.
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The unpredictability of delivery times further resulted in higher warehouse handling costs as container arrival timelines proved less predictable sometimes requiring overtime labor and expansion of the short-term labor pool to cope with above-average arriving volumes.
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Specifically, in 2022, companies and retailers responded to the ocean freight crisis by shifting more of their importation of product to the first half of the year. These efforts created more volatility in accurately forecasting market demand. In areas where consumer demand subsequently cooled, a backlog of inventory accumulated both at retailers and in manufacturer distribution centers.
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These excesses in turn generated incremental costs as inventory levels exceeded normal capacity levels, and temporary price reductions were utilized to accelerate consumer demand.

Item 1A. Risk Factors

Risk Factors — what could go wrong, per management

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Biggest changeOur inability to redesign, restyle and extend our existing core products and product lines as consumer preferences evolve, and to develop, introduce and gain customer acceptance of new products and product lines, may materially and adversely impact our business, financial condition and results of operations. Our business and operating results depend largely upon the appeal of our products.
Biggest changeWe undertake no obligation to make any revisions to the forward-looking statements contained in this Annual Report on Form 10-K to reflect events or circumstances occurring after the date of the filing of this report. 11 Table of Contents Our inability to redesign, restyle and extend our existing core products and product lines as consumer preferences evolve, and to develop, introduce and gain customer acceptance of new products and product lines, may materially and adversely impact our business, financial condition and results of operations.
Our continued success will substantially depend upon our ability to maintain existing relevant and obtain new additional licenses. Intense competition exists for desirable licenses in our industry. We cannot assure you that we will be able to secure or renew significant licenses on terms acceptable to us.
Our continued success will substantially depend upon our ability to maintain existing relevant licenses and obtain new additional licenses. Intense competition exists for desirable licenses in our industry. We cannot assure you that we will be able to secure or renew significant licenses on terms acceptable to us.
Additionally, we use third-party manufacturers, located principally in China, and are subject to the risks normally associated with operations, including: ● currency conversion risks and currency fluctuations; ● limitations, including taxes, on the repatriation of earnings; ● political instability, including wars and civil unrest, and economic instability; ● greater difficulty enforcing intellectual property rights and weaker laws protecting such rights; ● complications in complying with laws in varying jurisdictions and changes in governmental policies; ● greater difficulty and expenses associated with recovering from natural disasters, such as earthquakes, hurricanes and floods; ● transportation delays and interruption, inclusive of raw material ’ s sourcing to our third-party manufacturers as well as finished goods delivery through to our customers and ultimate consumers; ● work stoppages; ● trade wars in general and the potential imposition of tariffs specifically; and ● the pricing of intercompany transactions may be challenged by taxing authorities in both foreign jurisdictions and the United States, with potential increases in income and other taxes.
Additionally, we use third-party manufacturers, located principally in China, and are subject to the risks normally associated with operations, including: ● currency conversion risks and currency fluctuations; ● limitations, including taxes, on the repatriation of earnings; ● political instability, including wars and civil unrest, and economic instability; ● greater difficulty enforcing intellectual property rights and weaker laws protecting such rights; ● complications in complying with laws in varying jurisdictions and changes in governmental policies; ● greater difficulty and expenses associated with recovering from natural disasters, such as earthquakes, hurricanes and floods; ● transportation delays and interruption, inclusive of raw material ’ s sourcing to our third-party manufacturers as well as finished goods delivery through to our customers and ultimate consumers; ● work stoppages; ● trade wars in general and the imposition or potential imposition of tariffs specifically; and ● the pricing of intercompany transactions may be challenged by taxing authorities in both foreign jurisdictions and the United States, with potential increases in income and other taxes.
Globally, certain of our competitors have financial and strategic advantages over us, including: ● greater financial resources; ● larger sales, marketing and product development departments; ● stronger brand name recognition and/or well-established owned brands/trademark; ● broader international sales and marketing infrastructure; ● greater financial resources derived by higher-margin, higher-growth ancillary (non-toy) businesses; ● lower overhead costs due to operating as a privately-owned company; ● longer operating histories; and ● greater economies of scale, inclusive of purchasing power and leverage of their investments across a range of areas, inclusive but not limited to research, technology, data analytics and strategic sourcing.
Globally, certain of our competitors have financial and strategic advantages over us, including: ● greater financial resources; ● larger sales, marketing and product development departments; ● stronger brand name recognition and/or well-established owned brands/trademark; ● broader international sales and marketing infrastructure; ● greater financial resources derived by higher-margin, higher-growth ancillary (non-toy) businesses; ● lower overhead costs due to operating as a privately-owned company; ● longer operating histories; and ● greater economies of scale, inclusive of purchasing power and leverage of their investments across a range of areas, including but not limited to research, technology, data analytics, logistics and strategic sourcing.
Our licensing agreements include other restrictive provisions, such as limitations of the time period in which we have to sell existing inventory upon expiration of the license, requiring licensor approval of contract manufacturers and approval of marketing and promotional materials, limitations on channels of distribution, including internet sales, change of ownership clauses that require licensor approval of such change and may require a fee to be paid under certain circumstances and various other provisions that may have an adverse impact on our business, results of operations and financial condition. ● New licenses can be difficult and expensive to obtain and, in some cases, retain.
Our licensing agreements include other restrictive provisions, such as limitations of the time period in which we have to sell existing inventory upon expiration of the license, requiring licensor approval of contract manufacturers and approval of marketing and promotional materials, limitations on channels of distribution, including online sales, change of ownership clauses that require licensor approval of such change and may require a fee to be paid under certain circumstances and various other provisions that may have an adverse impact on our business, results of operations and financial condition. ● New licenses can be difficult and expensive to obtain and, in some cases, retain.
Any (i) failure by us to comply with the covenants or other provisions of the credit line (ii) difficulty in securing any required future financing, or (iii) any such seizure or attachment of assets could have a material adverse effect on our business and financial condition. Our revolving credit line matures in June 2026.
Any (i) failure by us to comply with the covenants or other provisions of the credit line (ii) difficulty in securing any required future financing, or (iii) any such seizure or attachment of assets could have a material adverse effect on our business and financial condition. Our revolving credit line matures in June 2030.
As a result, sudden shocks to the market, such as has been the case with COVID-19 or when a foundational retailer goes bankrupt, might leave us with these fixed expenses unless licensors are willing to renegotiate terms in consideration for the unexpected nature of the shock.
As a result, sudden shocks to the market, such as has been the case with COVID-19, trade wars or when a foundational retailer goes bankrupt, might leave us with these fixed expenses unless licensors are willing to renegotiate terms in consideration for the unexpected nature of the shock.
Goodwill is the amount by which the cost of an acquisition exceeds the fair value of the net assets we acquire. Goodwill is not amortized and is required to be evaluated for impairment at least annually. At December 31, 2024, $35.1 million, or 7.9% of our total assets represented goodwill.
Goodwill is the amount by which the cost of an acquisition exceeds the fair value of the net assets we acquire. Goodwill is not amortized and is required to be evaluated for impairment at least annually. At December 31, 2025, $35.1 million, or 7.9% of our total assets represented goodwill.
We have entered into an At the Market Issuance Sales Agreement (“ATM Agreement”), pursuant to which we may issue, from time to time, up to $75.0 million of common stock, in one or more offerings in amounts, prices and at terms that we will determine at the time of the offering.
We have an At the Market Issuance Sales Agreement (“ATM Agreement”), pursuant to which we may issue, from time to time, up to $75.0 million of common stock, in one or more offerings in amounts, prices and at terms that we will determine at the time of the offering.
Declines in our profitability may impact the fair value of our reporting units, which could result in a write-down of our goodwill and consequently harm the results of our operations. We did not record any goodwill impairment charges during 2024, 2023 or 2022.
Declines in our profitability may impact the fair value of our reporting units, which could result in a write-down of our goodwill and consequently harm the results of our operations. We did not record any goodwill impairment charges during 2025, 2024 or 2023.
We have on file with the SEC an effective registration statement pursuant to which we may issue, from time to time, up to $150 million of securities (which will be reduced by any amount of securities sold pursuant to the ATM Agreement) consisting of, or any combination of, common stock, preferred stock, debt securities, warrants, rights and/or units, in one or more offerings in amounts, prices and at terms that we will determine at the time of the offering.
We expect to file with the SEC an effective registration statement pursuant to which we may issue, from time to time, up to $150 million of securities (which will be reduced by any amount of securities sold pursuant to the ATM Agreement) consisting of, or any combination of, common stock, preferred stock, debt securities, warrants, rights and/or units, in one or more offerings in amounts, prices and at terms that we will determine at the time of the offering.
In the event that some unexpected shock to the market (like the COVID-19 pandemic or a sudden trade war) were to suddenly drastically change demand or costing for product anticipated to be procured from our third-party manufacturers, we may incur some costs relating to raw materials they have ordered on our behalf, and/or finished goods that were not shipped due to last-minute cancelled orders from our customers buying FOB from China.
In the event that some unexpected shock to the market (like the COVID-19 pandemic, a sudden trade war, or a flare up in a shooting war in a sensitive area) were to suddenly drastically change demand or costing for product anticipated to be procured from our third-party manufacturers, we may incur some costs relating to raw materials they have ordered on our behalf, and/or finished goods that were not shipped due to last-minute cancelled orders from our customers buying FOB from China.
By extension, any sudden disruption in that calendar can have negative repercussions for our business, both in terms of recouping our investments to date, as well as monetizing those investments at the profit margins we have planned.
By extension, any sudden disruption in that third party’s release calendar can have negative repercussions for our business, both in terms of recouping our investments to date, as well as monetizing those investments at the profit margins we have planned.
Although all employees are required to use work infrastructure and our secure VPN, we cannot be completely certain that we will not have increased exposure to security considerations in this environment. 22 Table of Contents If we are unable to acquire and integrate companies and new product lines successfully, we will be unable to implement a significant component of our growth strategy.
Although all employees are required to use work infrastructure and our secure VPN, we cannot be completely certain that we will not have increased exposure to security considerations in this environment. 22 Table of Contents If we are unable to acquire and integrate companies and new product lines successfully, we will be unable to implement a meaningful path to growth.
We have entered into an At the Market Issuance Sales Agreement, pursuant to which we may offer and sell, from time to time, shares of our common stock, which may adversely affect the price of our Common Stock.
We may enter into an At the Market Issuance Sales Agreement, pursuant to which we may offer and sell, from time to time, shares of our common stock, which may adversely affect the price of our Common Stock.
The success of many of our character-related and theme-related products depends upon the popularity of characters in movies, television programs, live sporting exhibitions, and other media and events.
The success of many of our character-related and theme-related products depends upon the popularity of characters in books, movies, television programs, video games, live sporting exhibitions, and other media and events.
We cannot provide assurance that we will not be a party to additional legal proceedings in the future.
We cannot provide assurance that we will not be a party to material legal proceedings in the future.
Our growth strategy depends, in part, upon our ability to acquire companies and new product lines.
Our growth depends, in part, upon our ability to acquire companies and new licenses and product lines.
Our continued success in the toy industry will depend upon our ability to redesign, restyle and extend our existing core products and product lines as consumer preferences evolve, and to develop, introduce and gain customer acceptance of new products and product lines.
Our business and operating results depend largely upon the appeal of our products. Our continued success in the toy industry will depend upon our ability to redesign, restyle and extend our existing core products and product lines as consumer preferences evolve, and to develop, introduce and gain customer acceptance of new products and product lines.
We sell products and operate facilities in numerous countries outside the United States. Sales to our international customers comprised approximately 21.1% of our net sales for the year ended December 31, 2024, and approximately 21.6% of our net sales for year ended December 31, 2023.
We sell products and operate facilities in numerous countries outside the United States. Sales to our international customers comprised approximately 27.0% of our net sales for the year ended December 31, 2025, and approximately 21.1% of our net sales for year ended December 31, 2024.
Our reliance upon external sources of manufacturing can be shifted, over a period of time, to alternative sources of supply, should such changes be necessary, but not in a cost-neutral manner.
Our reliance upon external sources of manufacturing can be shifted, over a period of time, to alternative sources of supply, should such changes be necessary, but cannot be done so quickly in a cost-neutral manner.
In June 2021, we entered into and consummated a binding definitive agreement with JPMorgan Chase (for an asset-based credit line) with the objective of increasing our overall liquidity. 14 Table of Contents All outstanding borrowings under the revolving credit line are accelerated and become immediately due and payable (and the revolving credit line terminates) in the event of a default, which includes, among other things, failure to comply with certain financial covenants or breach of representations contained in the credit line documents, defaults under other loans or obligations, involvement in bankruptcy proceedings, an occurrence of a change of control or an event constituting a material adverse effect on us (as such terms are defined in the credit line documents).
(for a revolving credit facility) with the objective of increasing our overall liquidity. 14 Table of Contents All outstanding borrowings under the revolving credit line are accelerated and become immediately due and payable (and the revolving credit line terminates) in the event of a default, which includes, among other things, failure to comply with certain financial covenants or breach of representations contained in the credit line documents, defaults under other loans or obligations, involvement in bankruptcy proceedings, an occurrence of a change of control or an event constituting a material adverse effect on us (as such terms are defined in the credit line documents).
As a result, any difficulties encountered by the third-party manufacturers that result in product defects, production delays, cost overruns or the inability to fulfill orders on a timely basis, could adversely affect our business, results of operations and financial condition.
As a result, any difficulties encountered by the third-party manufacturers that result in product defects, production delays, cost overruns or the inability to fulfill orders on a timely basis, could adversely affect our business, results of operations and financial condition. We do not have long-term contracts with our third-party manufacturers.
We depend upon many third-party manufacturers who develop, provide and use the tools, dies and molds that we generally own to manufacture our products. However, we have limited control over the manufacturing processes themselves.
We depend upon many third-party manufacturers who develop, provide and use the tools, dies and molds that we generally own to manufacture our products, many of which we have successfully work with for decades. However, we have limited control over the manufacturing processes themselves.
Also, the imposition of trade sanctions by the United States against a class of products imported by us from, or the loss of “normal trade relations” status by China could significantly increase our cost of products imported from that nation.
Also, the imposition of trade sanctions by the United States or another major market where we sell product against a class of products imported by us from, or the loss of “normal trade relations” status by China could significantly increase our cost of products imported from that nation.
In addition, as a result of the seasonal nature of our business, we would be significantly and adversely affected, in a manner disproportionate to the impact on a company with sales spread more evenly throughout the year, by unforeseen events such as a terrorist attack or economic shock that harm the retail environment or consumer buying patterns during our key selling season, or by events such as strikes or port delays that interfere with the shipment of goods, during the critical months leading up to the holiday shopping season.
In addition, as a result of the seasonal nature of our business, we would be significantly and adversely affected, in a manner disproportionate to the impact on a company with sales spread more evenly throughout the year, by unforeseen events such as a terrorist attack or economic shock that harm the retail environment or consumer buying patterns during our key selling season, or by events such as strikes or port delays that interfere with the shipment of goods, during the critical months leading up to the holiday shopping season. 16 Table of Contents Our Costume (Disguise) business is even more seasonal than our core Toy/Consumer Products business as Halloween remains the primary purchase occasion for our costumes.
Our tools, dies and molds are located at the facilities of our third-party manufacturers. Although we own the majority of those tools, dies and molds, our ability to retrieve them and move them to a new manufacturer in a cost-neutral manner might be limited by lack of manufacturing equipment compatibility.
Although we own the majority of those tools, dies and molds, our ability to retrieve them and move them to a new manufacturer in a cost-neutral manner might be limited by lack of manufacturing equipment compatibility or government regulation.
Continuation of such a weakened economic and business climate, as well as consumer uncertainty created by such a climate, could further adversely affect our sales and profitability. Other conditions, such as the unavailability of electronic components or other raw materials, for example, may impede our ability to manufacture, source and ship new and continuing products on a timely basis.
Other conditions, such as the unavailability of electronic components or other raw materials, for example, may impede our ability to manufacture, source and ship new and continuing products on a timely basis.
In addition, general economic conditions were significantly and negatively affected by the September 11th terrorist attacks and could be similarly affected by any future attacks. The COVID-19 pandemic had a negative impact to our business in 2020 by disrupting consumer behavior, spending patterns and ultimately the play patterns and events that often motivate purchases of our products.
The COVID-19 pandemic had a negative impact to our business in 2020 by disrupting consumer behavior, spending patterns and ultimately the play patterns and events that often motivate purchases of our products.
We have an effective shelf registration statement pursuant to which we may offer and sell, from time to time , securities, which may adversely affect the price of our Common Stock.
Any such sale of common stock will dilute our other equity holders and may adversely affect the market price of the common stock. We expect to file a shelf registration statement pursuant to which we may offer and sell, from time to time , securities, which may adversely affect the price of our Common Stock.
A significant drop in the price of our stock could expose us to the risk of securities class action lawsuits, which could result in substantial costs and divert management’s attention and resources, adversely affecting our business. We have a valuation allowance on a portion of the deferred taxes on our books since their future realization is uncertain.
A significant drop in the price of our stock could expose us to the risk of securities class action lawsuits, which could result in substantial costs and divert management’s attention and resources, adversely affecting our business. We have a material amount of goodwill which, if it becomes impaired, would result in a reduction in our net earnings.
Significant outbreaks of contagious diseases, and other adverse public health developments, could have a material impact on our business operations and operating results. In December 2019, a strain of Novel Coronavirus causing respiratory illness and death emerged in the city of Wuhan in the Hubei province of China.
Significant outbreaks of contagious diseases, and other adverse public health developments, could have a material impact on our business operations and operating results.
Restrictions under or the loss of availability under our revolving credit line could adversely impact our business and financial condition .
Restrictions under or the loss of availability under our revolving credit line could adversely impact our business and financial condition . In June 2025, we entered into and consummated a binding definitive agreement with BMO Bank N.A.
Market conditions and other third-party conduct could negatively impact our margins and the implementation of other business initiatives. Economic conditions, such as decreased consumer confidence, inflation or a recession, may adversely impact our business, results of operations and financial condition.
Berman should the need arise, and any loss or interruption of the services of Mr. Berman could adversely affect our business, results of operations and financial condition. Market conditions and other third-party conduct could negatively impact our margins and the implementation of other business initiatives.
Any such sale of stock or convertible securities will, or have the potential to, dilute our other equity holders and may adversely affect the market price of the common stock. As of March 6, 2025, we have not sold any securities pursuant to our shelf registration statement.
Any such sale of stock or convertible securities will, or have the potential to, dilute our other equity holders and may adversely affect the market price of the common stock. We depend upon our Chief Executive Officer and any loss or interruption of his services could adversely affect our business, results of operations and financial condition.
Our three largest customers, Target®, Walmart® and Amazon®, accounted for 64.4% of our net sales in 2024.
Our two largest customers are Target® and Walmart®, which accounted for 26.6% and 26.1%, respectively, of our net sales in 2025.
Berman is under contract through March 2029, we cannot assure you that we would be able to find an appropriate replacement for Mr. Berman should the need arise, and any loss or interruption of the services of Mr. Berman could adversely affect our business, results of operations and financial condition.
Our success has been largely dependent upon the experience and continued services of Stephen G. Berman, our Chairman and Chief Executive Officer. Though Mr. Berman is under contract through March 2029, we cannot assure you that we would be able to find an appropriate replacement for Mr.
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We undertake no obligation to make any revisions to the forward-looking statements contained in this Annual Report on Form 10-K to reflect events or circumstances occurring after the date of the filing of this report.
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Economic conditions, such as decreased consumer confidence, inflation or a recession, may adversely impact our business, results of operations and financial condition. In addition, general economic conditions were significantly and negatively affected by the September 11th terrorist attacks and could be similarly affected by any future attacks.
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Any such sale of common stock will dilute our other equity holders and may adversely affect the market price of the common stock. Under our currently existing ATM Agreement with B. Riley, as of March 6, 2025, we have not sold any shares of our common stock.
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The sudden imposition of tariffs in 2025 in the US on products sourced from China similarly reduced customer demand for our product in reaction to the increased cost per unit, while similarly increasing our cost base for product we import for sale in the US out of our US warehouse location.
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We depend upon our Chief Executive Officer and any loss or interruption of his services could adversely affect our business, results of operations and financial condition. Our success has been largely dependent upon the experience and continued services of Stephen G. Berman, our Chairman and Chief Executive Officer. Though Mr.
Added
While a few of our manufactures supply a meaningful volume of our products, we are constantly evaluating new manufacturing sources to ensure we are maintaining product quality and innovation, source flexibility and market-appropriate pricing. Our tools, dies and molds are located at the facilities of our third-party manufacturers.
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Furthermore, restrictions on nearly all of our customers’ operating hours in 2020 at one point in the year or another limited consumers’ ability to discover our products through traditional in-store browsing and unplanned purchases.
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The Chinese government took certain emergency measures to combat the spread of the virus, including extension of the Lunar New Year holiday, implementation of travel bans and closure of factories and businesses. The majority of our materials and products are sourced from suppliers located in China.
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The COVID-19 pandemic has also accelerated consumers’ shift to e-commerce transactions with traditional brick & mortar retailers. Some of these transactions are for “ship-to-home” purchases and some are for local pick-up by the consumer at the brick-and-mortar location. In either case, the consumer’s path to discovery of new items changes to a digital medium.
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It remains to be seen whether this change has a negative adverse impact on consumers’ ability to discover the breadth and depth of our product range or whether it discourages adding incremental unplanned purchases to the shopping cart.
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Either scenario could have a negative impact on our overall business performance. 16 Table of Contents Our Costume (Disguise) business is even more seasonal than our core Toy/Consumer Products business as Halloween remains the primary purchase occasion for our costumes.
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The continuing conflict in the Middle East and its impact on the Red Sea shipping routes, as well as the climate driven transit disruptions at the Panama Canal in Middle America, may ultimately negatively impact the global flow of goods with increasing transit times and cost, which could adversely affect our ability to deliver our products in a timely manner and maintain our expected cost structure.
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We do not have long-term contracts with our third-party manufacturers.
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Deferred tax assets are realized by prior and future taxable income of appropriate character. Current accounting standards require that a valuation allowance be recorded if it is not likely that sufficient taxable income of appropriate character will be generated to realize the deferred tax assets.
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We currently believe that based on the available information, it is more likely than not that a portion of the deferred tax assets, related to capital losses, will not be realized. We have a material amount of goodwill which, if it becomes impaired, would result in a reduction in our net earnings.

Item 1C. Cybersecurity

Cybersecurity — threats and controls disclosure

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Biggest changeA summary of the principal activities JAKKS has undertaken to strengthen its cybersecurity posture and mitigate its cybersecurity risks: ● A subcommittee of the Board of Directors has been established to oversee and manage the company’s risk, response, and recovery policies, processes, and procedures related to, and stemming from, cyber-related issues; ● Purchased cybersecurity risk insurance to protect against potential losses arising from a cybersecurity incident; ● Implementation of quarterly vulnerability and penetration tests to identify, and if necessary, remediate, any potential risk to the organization; ● Engaged two (2) third-party service providers to continuously monitor JAKKS systems for anomalous activity (24 hours a day, 365 days a year); ● Conduct disaster recovery exercise on a yearly basis; ● Implemented a revised and updated phishing email training program; and ● Retained a consultant to act as the Company’s Virtual Chief Information Security Officer (VCISO), who has more than 20 years of experience in various cybersecurity roles (e.g., managing information security, developing cybersecurity strategies, implementing cybersecurity and incident response programs, etc.) to oversee the implementation and performance of the Company’s cybersecurity program.
Biggest changeA summary of the principal activities JAKKS has undertaken to strengthen its cybersecurity posture and mitigate its cybersecurity risks: ● A subcommittee of the Board of Directors has been established to oversee and manage the company’s risk, response, and recovery policies, processes, and procedures related to, and stemming from, cyber-related issues; ● Purchased cybersecurity risk insurance to protect against potential losses arising from a cybersecurity incident; ● Implementation of weekly vulnerability and semi-annual penetration tests to identify, and if necessary, remediate, any potential risk to the organization; ● Maintain and review annually a Business Continuity Plan and Cyber Attack Plan ; ● Implemented a revised and updated phishing email training program semi-annually; and As part of our cybersecurity program, the Senior Vice President of Operations and Vice President of Information Technology, collectively referred to as our “Cybersecurity Team,” reviews our cybersecurity posture, identifies areas in need of improvement, and helps foster a culture of compliance (including training of all employees).
Our Vice President of Information Technology has over 20 years of experience in various roles involving managing information security, developing cybersecurity strategy, and implementing cybersecurity program.
Our Vice President of Information Technology has over 25 years of experience in various roles involving managing information security, developing cybersecurity strategy, and implementing cybersecurity program.
In December 2022, the Company learned of a cybersecurity threat to its information technology system (“IT System”), and that certain data, including personal data of employees, had been extracted from the Company’s IT System.
Risk Factors” in this Form 10-K. 25 Table of Contents In December 2022, the Company learned of a cybersecurity threat to its information technology system (“IT System”), and that certain data, including personal data of employees, had been extracted from the Company’s IT System.
The Company has not identified any material damage suffered from the incident. 25 Table of Contents
The Company has not identified any material damage suffered from the incident.
For further discussion of the risks associated with cybersecurity incidents, see the cybersecurity risk factors beginning on page 22 of the section entitled “Item 1A. Risk Factors” in this Form 10-K.
For further discussion of the risks associated with cybersecurity incidents, see the cybersecurity risk factors beginning on page 11 of the section entitled “Item 1A.
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As part of our cybersecurity program, the Company’s VCISO, Senior Vice President of Operations and Vice President of Information Technology, collectively referred to as our “Cybersecurity Team,” reviews our cybersecurity posture, identifies areas in need of improvement, and helps foster a culture of compliance (including training of all employees).

Item 2. Properties

Properties — owned and leased real estate

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Biggest changeProperties The following is a listing of the principal leased offices maintained by us as of March 6, 2025 Approximate Lease Expiration Property Location Square Feet Date US Distribution Center City of Industry, California 800,000 August 31, 2029 Disguise Office Poway, California 24,200 June 30, 2028 Corporate Headquarters/Showroom Santa Monica, California 65,858 January 31, 2029 International Europe Office Bracknell, United Kingdom 8,957 January 19, 2027 Hong Kong Headquarters Kowloon, Hong Kong 18,500 June 30, 2025 Italy Office and Warehouse Piacenza, Italy 26,189 August 31, 2029 We believe our facilities are suitable for their intended uses and, in conjunction with our third-party contract manufacturing agreements, provide adequate capacity and are sufficient to meet our expected needs.
Biggest changeProperties The following is a listing of the principal leased offices maintained by us as of March 2, 2026 Approximate Lease Expiration Property Location Square Feet Date US Distribution Center City of Industry, California 800,000 August 31, 2029 Disguise Office Poway, California 24,200 June 30, 2028 Corporate Headquarters/Showroom Santa Monica, California 65,858 January 31, 2029 International Europe Office Bracknell, United Kingdom 8,957 January 19, 2036 Hong Kong Headquarters Kowloon, Hong Kong 18,500 June 30, 2028 Italy Office and Warehouse Piacenza, Italy 26,189 August 31, 2029 In addition to the above, we also maintain leases for various sales offices in the U.S. and internationally.
Added
We believe our facilities are suitable for their intended uses and, in conjunction with our third-party contract manufacturing agreements, provide adequate capacity and are sufficient to meet our expected needs.

Item 5. Market for Registrant's Common Equity

Market for Common Equity — stock, dividends, buybacks

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Biggest changeDividends The payment of dividends on common stock is at the discretion of the Board of Directors and is subject to customary limitations and may be subject to certain restrictions under our credit facility. No dividends were declared or paid in 2024.
Biggest changeDividends The payment of dividends on common stock is at the discretion of the Board of Directors and is subject to customary limitations and may be subject to certain restrictions under our credit facility. Quarterly cash dividends of $0.25 per common share were paid on March 31, June 27, September 30 and December 29, 2025.
Compensation Plan Information The table below sets forth the following information as of the year ended December 31, 2024, for (i) all compensation plans previously approved by our stockholders and (ii) all compensation plans not previously approved by our stockholders, if any: (a) the number of securities to be issued upon the exercise of outstanding options, warrants and rights; (b) the weighted-average exercise price of such outstanding options, warrants and rights; and (c) other than securities to be issued upon the exercise of such outstanding options, warrants and rights, the number of securities remaining available for future issuance under the plans.
Compensation Plan Information The table below sets forth the following information as of the year ended December 31, 2025, for (i) all compensation plans previously approved by our stockholders and (ii) all compensation plans not previously approved by our stockholders, if any: (a) the number of securities to be issued upon the exercise of outstanding options, warrants and rights; (b) the weighted-average exercise price of such outstanding options, warrants and rights; and (c) other than securities to be issued upon the exercise of such outstanding options, warrants and rights, the number of securities remaining available for future issuance under the plans.
Additionally, no shares subject to restricted stock awards and no stock options remained unvested and no restricted stock awards and no stock options have been issued as of December 31, 2024. Disclosures with respect to equity issuable to certain of our executive officers pursuant to the terms of their employment agreements are disclosed below under Item 11.
Additionally, no shares subject to restricted stock awards and no stock options remained unvested and no restricted stock awards and no stock options have been issued as of December 31, 2025. Disclosures with respect to equity issuable to certain of our executive officers pursuant to the terms of their employment agreements are disclosed below under Item 11.
Plan Category Number of Securities to be Issued Upon Exercise of Outstanding Options, Warrants and Rights (a) Weighted- Average Exercise Price of Outstanding Options, Warrants and Rights (b) Number of Securities Remaining Available for Future Issuance Under Equity Compensation Plans, Excluding Securities Reflected in Column (c) Equity compensation plans approved by security holders — — 1,793,551 Equity compensation plans not approved by security holders — — — Total — — 1,793,551 Equity compensation plans approved by our stockholders consist of the 2002 Stock Award and Incentive Plan.
Plan Category Number of Securities to be Issued Upon Exercise of Outstanding Options, Warrants and Rights (a) Weighted- Average Exercise Price of Outstanding Options, Warrants and Rights (b) Number of Securities Remaining Available for Future Issuance Under Equity Compensation Plans, Excluding Securities Reflected in Column (c) Equity compensation plans approved by security holders — — 1,257,576 Equity compensation plans not approved by security holders — — — Total — — 1,257,576 Equity compensation plans approved by our stockholders consist of the 2002 Stock Award and Incentive Plan.
Issuer Purchases of Equity Securities There were no issuer purchases of equity securities in the fourth quarter of 2024. Issuer Unregistered Sale of Equity Securities There were no issuer sales of unregistered equity securities in the fourth quarter of 2024.
Issuer Purchases of Equity Securities There were no issuer purchases of equity securities in the fourth quarter of 2025. Issuer Unregistered Sale of Equity Securities There were no issuer sales of unregistered equity securities in the fourth quarter of 2025.
Item 5. Market for Registrant ’ s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities Market Information Our common stock is traded on the Nasdaq Global Select exchange under the symbol “JAKK.” Security Holders To the best of our knowledge, as of February 18, 2025, there were 48 holders of record of our common stock.
Item 5. Market for Registrant ’ s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities Market Information Our common stock is traded on the Nasdaq Global Select exchange under the symbol “JAKK.” Security Holders To the best of our knowledge, as of February 13, 2026, there were 145 holders of record of our common stock.
However, on February 20, 2025, we issued a press release announcing that our Board of Directors declared a quarterly cash dividend of $0.25 per common share. The dividend will be payable on March 31, 2025 to shareholders of record at the close of business on March 3, 2025.
On February 19, 2026, we issued a press release to announce that our Board of Directors declared a quarterly cash dividend of $0.25 per common share. The dividend will be payable on March 30, 2026 to shareholders of record at the close of business on February 27, 2026.

Item 7. Management's Discussion & Analysis

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

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Biggest changeThe seasonality of our business is reflected in this quarterly presentation. 2024 2023 First Second Third Fourth First Second Third Fourth (Unaudited) Quarter Quarter Quarter Quarter Quarter Quarter Quarter Quarter Net Sales $ 90,076 $ 148,619 $ 321,606 $ 130,741 $ 107,484 $ 166,933 $ 309,744 $ 127,396 As a % of full year 13.0 % 21.6 % 46.5 % 18.9 % 15.1 % 23.5 % 43.5 % 17.9 % Gross profit $ 21,052 $ 47,585 $ 108,831 $ 35,553 $ 31,437 $ 51,198 $ 106,985 $ 33,733 As a % of full year 9.9 % 22.3 % 51.1 % 16.7 % 14.1 % 22.9 % 47.9 % 15.1 % As a % of net sales 23.4 % 32.0 % 33.8 % 27.2 % 29.2 % 30.7 % 34.5 % 26.5 % Income (loss) from operations $ (21,324 ) $ 7,643 $ 68,083 $ (14,718 ) $ (4,400 ) $ 16,448 $ 62,399 $ (15,340 ) As a % of full year (53.7 )% 19.2 % 171.6 % (37.1 )% (7.4 )% 27.8 % 105.6 % (26.0 )% As a % of net sales (23.7 )% 5.1 % 21.2 % (11.3 )% (4.1 )% 9.9 % 20.1 % (12.0 )% Income (loss) before provision for (benefit from) income taxes $ (20,953 ) $ 7,547 $ 67,697 $ (14,559 ) $ (6,701 ) $ 7,660 $ 60,502 $ (16,515 ) As a % of net sales (23.3 )% 5.0 % 21.0 % (11.2 )% (6.3 )% 4.6 % 19.5 % (13.0 )% Net income (loss) $ (14,225 ) $ 5,266 $ 52,272 $ (9,113 ) $ (5,318 ) $ 6,182 $ 48,121 $ (10,872 ) As a % of net sales (15.8 )% 3.5 % 16.3 % (7.0 )% (5.0 )% 3.7 % 15.5 % (8.5 )% Net income (loss) attributable to non-controlling interests $ 280 $ — $ — $ — $ (5 ) $ (273 ) $ (11 ) $ (4 ) As a % of net sales 0.3 % — % — % — % — % (0.2 )% — % — % Net income (loss) attributable to JAKKS Pacific, Inc. $ (14,505 ) $ 5,266 $ 52,272 $ (9,113 ) $ (5,313 ) $ 6,455 $ 48,132 $ (10,868 ) As a % of net sales (16.1 )% 3.5 % 16.3 % (7.0 )% (5.0 )% 3.9 % 15.5 % (8.5 )% Net income (loss) attributable to common stockholders $ (13,175 ) $ 5,266 $ 52,272 $ (9,113 ) $ (5,680 ) $ 6,082 $ 47,754 $ (11,252 ) As a % of net sales (14.6 )% 3.5 % 16.3 % (7.0 )% (5.3 )% 3.6 % 15.4 % (8.8 )% Diluted earnings (loss) per share $ (1.27 ) $ 0.47 $ 4.64 $ (0.83 ) $ (0.58 ) $ 0.58 $ 4.53 $ (1.12 ) Weighted average shares and equivalents outstanding 10,354 11,245 11,275 11,008 9,871 10,532 10,542 10,084 Quarterly and year-to-date computations of income (loss) per share amounts are made independently.
Biggest changeThe seasonality of our business is reflected in this quarterly presentation. 2025 2024 First Second Third Fourth First Second Third Fourth (Unaudited) Quarter Quarter Quarter Quarter Quarter Quarter Quarter Quarter Net Sales $ 113,253 $ 119,094 $ 211,210 $ 127,114 $ 90,076 $ 148,619 $ 321,606 $ 130,741 As a % of full year 19.8 % 20.9 % 37.0 % 22.3 % 13.0 % 21.6 % 46.5 % 18.9 % Gross profit $ 39,013 $ 39,023 $ 67,643 $ 39,401 $ 21,052 $ 47,585 $ 108,831 $ 35,553 As a % of full year 21.1 % 21.1 % 36.5 % 21.3 % 9.9 % 22.3 % 51.1 % 16.7 % As a % of net sales 34.4 % 32.8 % 32.0 % 31.0 % 23.4 % 32.0 % 33.8 % 27.2 % Income (loss) from operations $ (3,757 ) $ (2,783 ) $ 29,363 $ (8,605 ) $ (21,324 ) $ 7,643 $ 68,083 $ (14,718 ) As a % of full year (26.4 )% (19.6 )% 206.5 % (60.5 )% (53.7 )% 19.2 % 171.6 % (37.1 )% As a % of net sales (3.3 )% (2.3 )% 13.9 % (6.8 )% (23.7 )% 5.1 % 21.2 % (11.3 )% Income (loss) before provision for (benefit from) income taxes $ (3,545 ) $ (2,925 ) $ 29,723 $ (8,488 ) $ (20,953 ) $ 7,547 $ 67,697 $ (14,559 ) As a % of net sales (3.1 )% (2.5 )% 14.1 % (6.7 )% (23.3 )% 5.0 % 21.0 % (11.2 )% Net income (loss) $ (2,382 ) $ (2,319 ) $ 19,892 $ (5,320 ) $ (14,225 ) $ 5,266 $ 52,272 $ (9,113 ) As a % of net sales (2.1 )% (1.9 )% 9.4 % (4.2 )% (15.8 )% 3.5 % 16.3 % (7.0 )% Net income (loss) attributable to non-controlling interests $ — $ — $ — $ — $ 280 $ — $ — $ — As a % of net sales — % — % — % — % 0.3 % — % — % — % Net income (loss) attributable to JAKKS Pacific, Inc. $ (2,382 ) $ (2,319 ) $ 19,892 $ (5,320 ) $ (14,505 ) $ 5,266 $ 52,272 $ (9,113 ) As a % of net sales (2.1 )% (1.9 )% 9.4 % (4.2 )% (16.1 )% 3.5 % 16.3 % (7.0 )% Net income (loss) attributable to common stockholders $ (2,382 ) $ (2,319 ) $ 19,892 $ (5,320 ) $ (13,175 ) $ 5,266 $ 52,272 $ (9,113 ) As a % of net sales (2.1 )% (1.9 )% 9.4 % (4.2 )% (14.6 )% 3.5 % 16.3 % (7.0 )% Diluted earnings (loss) per share $ (0.21 ) $ (0.21 ) $ 1.74 $ (0.47 ) $ (1.27 ) $ 0.47 $ 4.64 $ (0.83 ) Weighted average shares and equivalents outstanding 11,146 11,146 11,423 11,282 10,354 11,245 11,275 11,008 Quarterly and year-to-date computations of income (loss) per share amounts are made independently.
We cannot quantify the extent that any new outbreak might have on our sales, net income and cash flows, but it could be significant. In the first quarter of 2022, Russia and Ukraine engaged in an armed conflict that continues. We cannot predict at this time the length of this conflict and if it will spread to other countries.
We cannot quantify the extent that any new outbreak might have on our sales, net income and cash flows, but it could be significant. In the first quarter of 2022, Russia and Ukraine engaged in an armed conflict that continues. We cannot predict at this time if the conflict will spread to other countries.
You should read this section in conjunction with our consolidated financial statements and the related notes included in Item 8 “ Consolidated Financial Statements and Supplementary Data. ” Critical Accounting Estimates The accompanying consolidated financial statements and supplementary information were prepared in accordance with accounting principles generally accepted in the United States of America.
You should read this section in conjunction with our consolidated financial statements and the related notes included in Item 8 “ Consolidated Financial Statements and Supplementary Data. ” Critical Accounting Policies and Estimates The accompanying consolidated financial statements and supplementary information were prepared in accordance with accounting principles generally accepted in the United States of America.
The decrease in cash flows provided by operating activities, year-over-year, was primarily due to a lower net income and higher working capital usage, partially offset by higher non-cash charges related to valuation adjustments for our preferred stock derivative liability and an increase in deferred income tax assets due to inventory cost and other expense capitalization matters, both in 2023.
The decrease in cash flows provided by operating activities, year-over-year, was primarily due to a lower net income and higher working capital usage, partially offset by higher non-cash charges related to valuation adjustments for our preferred stock derivative liability and an increase in deferred income tax assets due to inventory cost and other expense capitalization matters, both in 2024.
Based on our evaluation of all positive and negative evidence, as of December 31, 2024, a valuation allowance of $0.7 million has been recorded against the deferred tax assets that more likely than not will not be realized.
Based on our evaluation of all positive and negative evidence, as of December 31, 2025, a valuation allowance of $0.7 million has been recorded against the deferred tax assets that more likely than not will not be realized.
Although royalty rates were lower year-over-year, the increase in the cost of sales percentage of net sales, year-over-year is due to higher inventory obsolescence costs. Costumes.
Although royalty rates were higher year-over-year, the decrease in the cost of sales percentage of net sales, year-over-year is due to lower inventory obsolescence costs. Costumes.
A discussion of the operating results for 2023 can be found in our Annual Report on Form 10-K for the year ended December 31, 2023, as filed with the SEC on March 15, 2024, in Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations – Results of Operations.
A discussion of the operating results for 2024 can be found in our Annual Report on Form 10-K for the year ended December 31, 2024, as filed with the SEC on March 6, 2025, in Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations – Results of Operations.
Item 7. Management ’ s Discussion and Analysis of Financial Condition and Results of Operations The following Management ’ s Discussion and Analysis of Financial Condition and Results of Operations contains forward-looking statements that involve risks and uncertainties. Our actual results could differ materially from those anticipated in these forward-looking statements as a result of various factors.
Item 7. Management ’ s Discussion and Analysis of Financial Condition and Results of Operations The following Management ’ s Discussion and Analysis of Financial Condition and Results of Operations contains forward-looking statements that involve risks and uncertainties. Our actual results could differ materially from those anticipated in these forward-looking statements because of various factors.
Any such repatriation may result in foreign withholding taxes, which we expect would not be significant as of December 31, 2024. 35 Table of Contents Our primary sources of working capital are cash flows from operations and borrowings under our JPMorgan ABL Facility (See Item 8 “Consolidated Financial Statements and Supplementary Data Note 10 – Credit Facilities”).
Any such repatriation may result in foreign withholding taxes, which we expect would not be significant as of December 31, 2025. 35 Table of Contents Our primary sources of working capital are cash flows from operations and borrowings under our credit facility (See Item 8 “Consolidated Financial Statements and Supplementary Data Note 9 – Credit Facilities”).
Absent these discrete tax benefits, our effective tax rate for 2023 was 21.3%, primarily due to taxes on federal, state, and foreign income. We assess the available positive and negative evidence to estimate if sufficient future taxable income will be generated to use the existing deferred tax assets by jurisdiction.
Absent these discrete tax benefits, our effective tax rate for 2024 was 17.4%, primarily due to taxes on federal, state, and foreign income. We assess the available positive and negative evidence to estimate if sufficient future taxable income will be generated to use the existing deferred tax assets by jurisdiction.
It also increases the possibility that markets outside the U.S. could institute retaliatory tariffs that would ultimately increase the cost of our doing business in those markets where we import product. In addition, our customer base may face significant increased costs in importing our product from Hong Kong into their home markets.
It also increased the possibility that markets outside the U.S. could institute retaliatory tariffs that would ultimately increase the cost of our doing business in those markets where we import product. In addition, our customer base has faced increased costs in importing our product from Hong Kong into their home markets.
(See Item 8 “Consolidated Financial Statements and Supplementary Data, Note 9 – Debt and Note 10 – Credit Facilities” for additional information pertaining to our Debt and Credit Facilities.) As of December 31, 2024 and 2023, we held cash and cash equivalents, including restricted cash, of $70.1 million and $72.6 million, respectively.
(See Item 8 “Consolidated Financial Statements and Supplementary Data, Note 8 – Debt and Note 9 – Credit Facilities” for additional information pertaining to our Debt and Credit Facilities.) As of December 31, 2025, and 2024, we held cash and cash equivalents, including restricted cash, of $54.1 million and $70.1 million, respectively.
Cash, and cash equivalents, including restricted cash held outside of the United States, in various foreign subsidiaries totaled $16.5 million and $21.5 million as of December 31, 2024 and 2023, respectively.
Cash, and cash equivalents, including restricted cash held outside of the United States, in various foreign subsidiaries totaled $16.9 million and $16.5 million as of December 31, 2025, and 2024, respectively.
The net deferred tax asset change of $2.3 million consists of the net deferred tax asset changes in the US and foreign jurisdictions, where we are in a cumulative income position.
The net deferred tax asset change of $0.8 million consists of the net deferred tax asset changes in the US and foreign jurisdictions, where we are in a cumulative income position.
Therefore, the sum of the per share amounts for the quarters may not agree with the per share amounts for the year. 33 Table of Contents Liquidity and Capital Resources As of December 31, 2024, we had working capital of $119.3 million compared to $106.1 million as of December 31, 2023.
Therefore, the sum of the per share amounts for the quarters may not agree with the per share amounts for the year. 33 Table of Contents Liquidity and Capital Resources As of December 31, 2025, we had working capital of $121.0 million compared to $119.3 million as of December 31, 2024.
Interest Income Interest Income was $0.8 million for the year ended December 31, 2024, as compared to $1.3 million in the prior year period. Interest income earned is primarily due to the Company’s money market investments. Interest Expense Interest expense was $1.1 million for the year ended December 31, 2024, as compared to $6.5 million in the prior year period.
Interest Income Interest Income was $1.0 million for the year ended December 31, 2025, as compared to $0.8 million in the prior year period. Interest income earned is primarily due to the Company’s money market investments.
Year Ended December 31, 2024 2023 Net sales 100.0 % 100.0 % Less: Cost of sales Cost of goods 52.3 50.9 Royalty expense 15.5 16.5 Amortization of tools and molds 1.4 1.2 Cost of sales 69.2 68.6 Gross profit 30.8 31.4 Direct selling expenses 5.8 5.2 General and administrative expenses 19.2 17.8 Depreciation and amortization 0.1 0.1 Selling, general and administrative expenses 25.1 23.1 Income from operations 5.7 8.3 Loss from joint ventures — (0.1 ) Other income (expense), net 0.1 0.1 Change in fair value of preferred stock derivative liability — (1.1 ) Loss on debt extinguishment — (0.1 ) Interest income 0.1 0.2 Interest expense (0.2 ) (0.9 ) Income before provision for income taxes 5.7 6.4 Provision for income taxes 0.8 1.0 Net income 4.9 5.4 Net income attributable to JAKKS Pacific, Inc. 4.9 % 5.4 % Net income attributable to common stockholders 5.1 % 5.2 % The following table summarizes, for the periods indicated, certain statement of operations data by segment (in thousands).
Year Ended December 31, 2025 2024 Net sales 100.0 % 100.0 % Less: Cost of sales Cost of goods 49.7 52.3 Royalty expense 16.2 15.5 Amortization of tools and molds 1.7 1.4 Cost of sales 67.6 69.2 Gross profit 32.4 30.8 Direct selling expenses 6.4 5.8 General and administrative expenses 23.4 19.2 Depreciation and amortization 0.1 0.1 Selling, general and administrative expenses 29.9 25.1 Income from operations 2.5 5.7 Other income (expense), net 0.1 0.1 Loss on debt extinguishment (0.1 ) — Interest income 0.2 0.1 Interest expense (0.1 ) (0.2 ) Income before provision for income taxes 2.6 5.7 Provision for income taxes 0.9 0.8 Net income 1.7 4.9 Net income attributable to JAKKS Pacific, Inc. 1.7 % 4.9 % Net income attributable to common stockholders 1.7 % 5.1 % The following table summarizes, for the periods indicated, certain statement of operations data by segment (in thousands).
As part of our strategy to develop and market new products, we have entered into various character and product licenses with royalties/obligations generally ranging from 1% to 25% payable on net sales of such products. As of December 31, 2024, these agreements required future aggregate minimum royalty guarantees of $74.6 million, exclusive of $0.9 million in advances already paid.
As part of our strategy to develop and market new products, we have entered into various character and product licenses with royalties/obligations generally ranging from 1% to 22% payable on net sales of such products. As of December 31, 2025, these agreements required future aggregate minimum royalty guarantees of $189.8 million, exclusive of $2.3 million in advances already paid.
The decrease in percent of net sales is attributable lower royalty expense due to lower royalty guarantee shortfalls and marginal improvements in product cost of goods attributable to mix and design for improved margin.
The increase in percent of net sales is attributable higher royalty expense due to higher royalty guarantee shortfalls offset by improvements in product cost of goods attributable to mix and design for improved margin.
Significant judgment is required in interpreting tax regulations in the U.S. and foreign jurisdictions, and in evaluating worldwide uncertain tax positions. Actual results could differ materially from those judgments, and changes from such judgments could materially affect our consolidated financial statements. Income taxes. We do not file a consolidated return for our foreign subsidiaries.
Significant judgment is required in interpreting tax regulations in the U.S. and foreign jurisdictions, and in evaluating worldwide uncertain tax positions. Actual results could differ materially from those judgments, and changes from such judgments could materially affect our consolidated financial statements.
Management believes that the accounting estimates related to sales adjustments are “critical accounting policies” because significant judgment is required to estimate related accruals, such as estimating volumes of defective products to support reserves for defective merchandise and estimating future customer performance and consumer preferences that could impact the discretionary sales promotions.
The accounting estimate related to sales adjustments requires significant judgment to estimate related accruals, such as estimating volumes of defective products to support reserves for defective merchandise and estimating future customer performance and consumer preferences that could impact the discretionary sales promotions.
Management’s estimates are monitored on a quarterly basis, and a further adjustment to reduce inventory to its net realizable value is recorded as an increase in the cost of sales when deemed necessary under the lower of cost or net realizable value standard.
Furthermore, significant changes in demand for our products would impact management’s estimates in establishing our inventory provision. Management’s estimates are monitored on a quarterly basis, and a further adjustment to reduce inventory to its net realizable value is recorded as an increase in the cost of sales when deemed necessary under the lower of cost or net realizable value standard.
Financing activities used net cash of $26.9 million in 2024 and $72.3 million in 2023. The cash used in 2024 primarily consists of the cash portion for the redemption of the Series A Preferred stock of $20 million and the repurchase of common stock for employee tax withholding of $6.9 million.
The cash used in 2024 primarily consists of the cash portion for the redemption of the Series A Preferred stock of $20.0 million and the repurchase of common stock for employee tax withholding of $6.9 million.
On July 1, 2022, we entered into an ATM Agreement with B. Riley, as agent pursuant to which we may, from time to time, sell shares of our common stock, up to $75 million in common stock, in one or more offerings in amounts, at prices and in the terms that we will determine at the time of the offering.
Riley, as agent pursuant to which we may, from time to time, sell shares of our common stock, up to $75 million in common stock, in one or more offerings in amounts, at prices and in the terms that we will determine at the time of the offering.
Currency exchange can also create a degree of volatility, although the majority of our products are sourced in USD or Hong Kong dollars. Increased volumes ideally generate increased scale at various points in the value chain.
The costing of the plastic components of our toys can be sensitive to sudden swings in oil prices. Currency exchange can also create a degree of volatility, although the majority of our products are sourced in USD or Hong Kong dollars. Increased volumes ideally generate increased scale at various points in the value chain.
As of December 31, 2024, our income tax reserves were approximately $3.2 million and relate to federal and state income taxes.
As of December 31, 2025, our income tax reserves were approximately $0.8 million and relate to federal and state income taxes.
The 2024 tax expense included a discrete tax benefit of $1.4 million primarily comprised of return to provision adjustments. Absent these discrete tax benefits, our effective tax rate for 2024 was 17.4%, primarily due to taxes on federal, state, and foreign income.
The 2025 tax expense included a discrete tax benefit of $0.2 million primarily related to adjustments to uncertain tax positions and to return to provision adjustments. Absent these discrete tax benefits, our effective tax rate for 2025 was 34.4%, primarily due to taxes on federal, state, and foreign income.
Cost of sales of our Costumes segment was $88.5 million, or 73.1% of related net sales for 2024 compared to $99.9 million, or 76.3% of related net sales for 2023 representing a decrease of $11.4 million, or 11.4%. The year-over-year decrease in dollars is directly attributable to lower volume.
Cost of sales of our Costumes segment was $81.3 million, or 74.8% of related net sales for 2025 compared to $88.5 million, or 73.1% of related net sales for 2024 representing a decrease of $7.2 million, or 8.1%. The year-over-year decrease in dollars is directly attributable to lower volume.
Significant changes in the assumptions used to develop the estimates could materially affect key financial measures, such as net sales, gross profit, net income, and reserve for sales returns and allowances. Income Allocation for Income Taxes .
Significant changes in the assumptions used to develop the estimates could materially affect key financial measures, such as net sales, gross profit, net income, and reserve for sales returns and allowances. Income taxes. We do not file a consolidated return for our foreign subsidiaries.
During 2023, our income tax expense, which includes federal, state and foreign income taxes and discrete items, was $6.8 million, or an effective tax rate of 15.2%. The 2023 tax expense included a discrete tax benefit of $2.7 million primarily comprised of valuation allowance adjustments.
During 2024, our income tax expense, which includes federal, state and foreign income taxes and discrete items, was $5.5 million, or an effective tax rate of 13.9%. The 2024 tax expense included a discrete tax benefit of $1.4 million primarily comprised of valuation allowance adjustments.
Given the conditions in the toy industry environment in general, vendors, including licensors, may seek further assurances or take actions to protect against non-payment of amounts due to them. Changes in this area could have a material adverse impact on our liquidity. As of December 31, 2024, off-balance sheet arrangements include letters of credit issued by JPMorgan of $4.4 million.
Given the conditions in the toy industry environment in general, vendors, including licensors, may seek further assurances or take actions to protect against non-payment of amounts due to them. Changes in this area could have a material adverse impact on our liquidity.
If our actual revenue generated differs from our projections, the recoverability of our minimum guarantees would be impacted and could materially affect key financial measures, including gross profit, net income and prepaid assets. Fair value measurements.
If our actual revenue generated differs from our projections, the recoverability of our minimum guarantees would be impacted and could materially affect key financial measures, including gross profit, net income and prepaid assets. 28 Table of Contents Reserve for Inventory Obsolescence. We value our inventory at the lower of cost or net realizable value.
Operating activities provided net cash of $38.9 million in 2024 and $66.4 million in 2023.
Operating activities provided net cash of $8.5 million in 2025 and $38.9 million in 2024.
Deferred tax assets and liabilities are adjusted for the effects of changes in tax laws and rates on the date of enactment. We must assess the likelihood that we will be able to recover our deferred tax assets.
Deferred tax assets and liabilities are adjusted for the effects of changes in tax laws and rates on the date of enactment.
Net sales of our Costumes segment were $121.0 million in 2024, compared to $130.9 million in 2023, representing a decrease of $9.9 million, or 7.6%. The decrease in net sales was primarily driven by US customers recalibrating their order levels down based on Halloween 2023 sell-through.
The Seasonal Division was down 8.8% from 2024. Costumes. Net sales of our Costumes segment were $108.7 million in 2025, compared to $121.0 million in 2024, representing a decrease of $12.3 million, or 10.2%. The decrease in net sales was primarily driven by US customers lowering their order levels based on tariffs.
We value our inventory at the lower of cost or net realizable value. Based upon consideration of quantities on hand, actual and projected sales volume, anticipated product selling prices and product lines planned to be discontinued, slow-moving and obsolete inventory is written down to its net realizable value.
Based upon consideration of quantities on hand, actual and projected sales volume, anticipated product selling prices and product lines planned to be discontinued, slow-moving and obsolete inventory is written down to its net realizable value. Failure to accurately predict and respond to consumer demand could result in us under-producing popular items or over-producing less popular items.
Selling, General and Administrative Expenses Selling, general and administrative expenses were $173.3 million in 2024 and $164.2 million in 2023, constituting 25.1% and 23.1% of net sales, respectively. Selling, general and administrative expenses increased from the prior year primarily driven by higher media costs, product development expenses and employee compensation.
Selling, General and Administrative Expenses Selling, general and administrative expenses were $170.9 million in 2025 and $173.3 million in 2024, constituting 29.9% and 25.1% of net sales, respectively. Selling, general and administrative expenses decreased from the prior year by $2.4 million or 1.4% primarily driven by lower media costs and lower temporary labor costs.
On July 1, 2022, we filed a Form S-3 shelf registration statement (File No. 333-266009) with the SEC. On Aug 1, 2022, the SEC declared the Form S-3 shelf registration statement filed by us to be effective. As of March 6, 2025, we have not sold any shares of common stock under the ATM Agreement.
On July 1, 2022, we filed a Form S-3 shelf registration statement (File No. 333-266009) with the SEC. On Aug 1, 2022, the SEC declared the Form S-3 shelf registration statement filed by us to be effective. In 2025, the registration statement expired by law on its third anniversary.
Management believes the accounting estimate related to the allowance for current expected credit losses is a “critical accounting policy” because judgement is required in the establishment of pools based on customer risk profile characteristics and the historical loss rates applied to each pool.
The allowance for current expected credit losses requires judgement related to the establishment of pools based on customer risk profile characteristics and the historical loss rates applied to each pool and requires judgement since it involves estimation of the impact of both current and future economic factors in relation to its customers’ risk profile characteristics.
The following is a summary of our significant contractual cash obligations for the periods indicated that existed as of December 31, 2024 and is based upon information appearing in the notes to the consolidated financial statements (in thousands): 2025 2026 2027 2028 2029 Thereafter Total Operating leases $ 11,702 $ 15,935 $ 15,832 $ 15,823 $ 6,715 $ 36 $ 66,043 Minimum guaranteed license/royalty payments 53,682 18,757 2,170 — — — 74,609 Employment contracts 6,864 4,406 — — — — 11,270 Total contractual cash obligations $ 72,248 $ 39,098 $ 18,002 $ 15,823 $ 6,715 $ 36 $ 151,922 The above table excludes any potential uncertain income tax liabilities that may become payable upon examination of our income tax returns by taxing authorities.
The following is a summary of our significant contractual cash obligations for the periods indicated that existed as of December 31, 2025 and is based upon information appearing in the notes to the consolidated financial statements (in thousands): 2026 2027 2028 2029 2030 Thereafter Total Operating leases $ 16,936 $ 17,177 $ 16,757 $ 7,106 $ 426 $ 2,171 $ 60,573 Minimum guaranteed license/royalty payments 57,374 49,070 46,474 36,862 — — 189,780 Employment contracts 6,431 5,355 2,609 665 — — 15,060 Total contractual cash obligations $ 80,741 $ 71,602 $ 65,840 $ 44,633 $ 426 $ 2,171 $ 265,413 The above table excludes any potential uncertain income tax liabilities that may become payable upon examination of our income tax returns by taxing authorities.
Year Ended December 31, 2024 2023 Net Sales Toys/Consumer Products $ 570,018 $ 580,686 Costumes 121,024 130,871 691,042 711,557 Cost of Sales Toys/Consumer Products 389,534 388,260 Costumes 88,487 99,944 478,021 488,204 Gross Profit Toys/Consumer Products 180,484 192,426 Costumes 32,537 30,927 $ 213,021 $ 223,353 30 Table of Contents Comparison of the Years Ended December 31, 2024 and 2023 Net Sales Toys/Consumer Products.
Year Ended December 31, 2025 2024 Net Sales Toys/Consumer Products $ 461,937 $ 570,018 Costumes 108,734 121,024 570,671 691,042 Cost of Sales Toys/Consumer Products 304,333 389,534 Costumes 81,258 88,487 385,591 478,021 Gross Profit Toys/Consumer Products 157,604 180,484 Costumes 27,476 32,537 $ 185,080 $ 213,021 30 Table of Contents Comparison of the Years Ended December 31, 2025 and 2024 Net Sales Toys/Consumer Products.
In 2023, we recorded interest expense of $3.2 million related to our 2021 BSP Term Loan, $0.7 million related to our revolving credit facility and $2.6 million related to other borrowing costs. 31 Table of Contents Provision for Income Taxes During 2024, our income tax expense, which includes federal, state and foreign income taxes and discrete items, was $5.5 million, or an effective tax rate of 13.9%.
Interest Expense Interest expense was $0.5 million for the year ended December 31, 2025, as compared to $1.1 million in the prior year period, both related to borrowings from our revolving credit facilities. 31 Table of Contents Provision for Income Taxes During 2025, our income tax expense, which includes federal, state and foreign income taxes and discrete items, was $4.9 million, or an effective tax rate of 33.1%.
Cost of sales of our Toys/Consumer Products segment was $389.5 million, or 68.3% of related net sales in 2024 compared to $388.3 million, or 66.9% of related net sales in 2023 representing an increase of $1.2 million or 0.3%.
Despite the lower sales in the US, our International sales grew in 2025 its highest level. Cost of Sales Toys/Consumer Products. Cost of sales of our Toys/Consumer Products segment was $304.3 million, or 65.9% of related net sales in 2025 compared to $389.5 million, or 68.3% of related net sales in 2024 representing a decrease of $85.2 million or 21.9%.
Such amounts and periods of payment cannot be reliably estimated (see Item 8 “Consolidated Financial Statements and Supplementary Data Note 12 - Income Taxes” for further explanation of our uncertain tax positions).
Such amounts and periods of payment cannot be reliably estimated (see Item 8 “Consolidated Financial Statements and Supplementary Data Note 11 - Income Taxes” for further explanation of our uncertain tax positions). In June 2025, we terminated our existing $67.5 million JPMorgan ABL revolving credit facility in connection with entering into a new senior secured facility with BMO Bank, N.A.
Net sales of our Toys/Consumer Products segment were $570.0 million in 2024, compared to $580.7 million in 2023, representing a decrease of $10.7 million, or 1.8%. The decrease in net sales was primarily due to lower sales in the 1-2% range in each of our Dolls, Role Play and Dress Up Division, Action Play & Collectibles Division and Seasonal Division.
Net sales of our Toys/Consumer Products segment were $461.9 million in 2025, compared to $570.0 million in 2024, representing a decrease of $108.1 million, or 19.0%. The decrease in net sales was primarily due to lower sales North America, down 24.0%, while International sales grew 2.7%.
Our products are manufactured by third-party vendors who deal with increases in labor rates as a normal course of their respective businesses. The costing of the plastic components of our toys can be sensitive to sudden swings in oil prices.
The nature of our business is several factors influence the price we offer product to our customers, and by extension they sell to our end customer. Our products are manufactured by third-party vendors who deal with increases in labor rates as a normal course of their respective businesses.
Of this $74.6 million future minimum royalty guarantee, $53.7 million is due over the next twelve months. Investing activities used net cash of $12.9 million and $8.9 million for the years ended December 31, 2024 and 2023, respectively, and consisted primarily of cash paid for the purchase of molds and tooling used in the manufacture of our products.
Investing activities used net cash of $12.3 million and $12.9 million for the years ended December 31, 2025 and 2024, respectively, and consisted primarily of cash paid for the purchase of molds and tooling used in the manufacture of our products and purchases of investments to fund our obligation to our employees stemming from our non-qualified deferred compensation plan.
The cash used in 2023 primarily consists of the repayment of our 2021 BSP Term Loan of $69.2 million and the repurchase of common stock for employee tax withholding of $3.1 million.
Financing activities used net cash of $17.1 million in 2025 and $26.9 million in 2024. The cash used in 2025 primarily consists of the quarterly cash dividends paid to holders of our common stock of $11.2 million and the repurchase of common stock for employee tax withholding of $5.7 million.
Accordingly, we cannot quantify at this time if, or the extent, this conflict will adversely impact our business operations. The suggestion that the U.S. will take unilateral action to impose tariffs on products imported from China creates significant uncertainty about our ability to source products with a cost structure consistent with our recent history.
The U.S. taking unilateral action to impose tariffs on products imported from China and adopting an approach to deploy tariffs with no advance notice or feedback mechanism has created across markets has created uncertainty about our ability to source products with a cost structure consistent with our recent history.
In addition, the allowance requires judgement since it involves estimation of the impact of both current and future economic factors in relation to its customers’ risk profile characteristics. Changes in the assumptions used to develop the estimates could materially affect key financial measures, including other selling and administrative expenses, net income and accounts receivable. Royalties.
Changes in the assumptions used to develop the estimates could materially affect key financial measures, including other selling and administrative expenses, net income and accounts receivable. Goodwill . Goodwill represents the excess of the purchase price over the fair values of the underlying net assets acquired in an acquisition.
We enter into license agreements with strategic partners, inventors, designers and others for the use of intellectual properties in its products. These agreements may call for payment in advance or future payment of minimum guaranteed amounts.
As of December 31, 2025, all our Goodwill of $35.1 million related to our Toys/Consumer Products reporting unit. Royalties. We enter into license agreements with strategic partners, inventors, designers and others for the use of intellectual properties in our products.
Removed
Amounts paid in advance are recorded as an asset and charged to expense when the related revenue is recognized in the consolidated statements of operations.
Added
Goodwill is not amortized but tested for impairment at least annually at the reporting unit level and asset level. The annual goodwill test is performed in the second quarter and whenever events or changes in circumstances indicate that the carrying amount of a reporting unit may exceed its fair value, we may assess goodwill for impairment using a qualitative assessment.
Removed
If all or a portion of the minimum guaranteed amounts appear not to be recoverable through future use of the rights obtained under the license, the non-recoverable portion of the guaranty is charged to expense at that time.
Added
Qualitative factors and their impact on critical inputs are assessed to determine whether it is more likely than not that the fair value of a reporting unit is less than its carrying value. If we determine that a reporting unit has an indication of impairment based on the qualitative assessment, it is required to perform a quantitative assessment.
Removed
On a quarterly basis, we evaluate the recoverability of minimum guarantee amounts based on forecast revenues to be received for the products and record a shortfall reserve for expected unrecoverable amounts.
Added
We may bypass the qualitative assessment and perform a quantitative assessment. Impairment is recognized in the amount by which, if any, the carrying value of the reporting unit exceeds the fair value, not to exceed the carrying value of goodwill. We evaluate fair value recoverability using both objective and subjective factors.
Removed
Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. In determining fair value, we use various methods including market, income and cost approaches.
Added
Objective factors include cash flows and analysis of recent sales and earnings trends. Subjective factors include our best estimates of projected future earnings and competitive analysis and the Company’s strategic focus. We performed a quantitative assessment for Toys/Consumer Products reporting unit during Q2 2025, the fair value of which exceeded its carrying amount by 26%.
Removed
Based upon these approaches, we often utilize certain assumptions that market participants would use in pricing the asset or liability, including assumptions about risk and/or the risks inherent in the inputs to the valuation technique. These inputs can be readily observable, market-corroborated, or unobservable inputs.
Added
These agreements generally require a percentage of sales (as defined by the respective agreements) be paid to third parties as royalties. They also often require a fixed minimum dollar amount of royalties to be paid regardless of what level of sales are achieved during the term of the agreement.
Removed
We utilize valuation techniques that maximize the use of observable inputs and minimize the use of unobservable inputs. Based upon observable inputs used in the valuation techniques, we are required to provide information according to the fair value hierarchy.
Added
Payment timing varies across agreements and may precede any sales or collections of monies related to such sales. We recognize royalty expenses in the period in which sales are made.
Removed
The fair value hierarchy ranks the quality and reliability of the information used to determine fair values into three broad levels as follows: Level 1: Valuations for assets and liabilities traded in active markets from readily available pricing sources for market transactions involving identical assets or liabilities.
Added
In addition, we assess whether forecasted revenue under any agreement is likely to be sufficient to cover the minimum royalty guarantee, and if not a royalty shortfall reserve and associated royalty expense is recorded at that time.
Removed
Level 2: Valuations for assets and liabilities traded in less active dealer or broker markets. Valuations are obtained from third-party pricing services for identical or similar assets or liabilities. Level 3: Valuations incorporate certain assumptions and projections in determining the fair value assigned to such assets or liabilities.
Added
The Dolls, Role Play and Dress Up Division decreased 22.6% year over year, mainly due to limited theatrical releases and lower sales within the Disney Princess and Style Collection businesses. Within the Action Play & Collectibles Division, down 15.6%, Sonic the Hedgehog 3 and the Sonic/DC collaboration added incremental year over year sales, while lower Nintendo sales offset those gains.
Removed
In instances where the determination of the fair value measurement is based upon inputs from different levels of the fair value hierarchy, the level in the fair value hierarchy within which the entire fair value measurement falls is based upon the lowest level input that is significant to the fair value measurement in its entirety.
Added
Loss on Debt Extinguishment In 2025, we recognized a loss on debt extinguishment of $0.4 million in connection with the early termination our existing $67.5 million JPMorgan ABL revolving credit facility in connection with entering into a new senior secured facility with BMO Bank, N.A.
Removed
Our assessment of the significance of a particular input to the fair value measurement in its entirety requires judgment and considers factors specific to the asset or liability (see Item 8 “Consolidated Financial Statements and Supplementary Data Note 15 - Fair Value Measurements” for further information). 28 Table of Contents Reserve for Inventory Obsolescence.
Added
Accordingly, we cannot quantify at this time if, or the extent, this conflict will adversely impact our business operations.
Removed
Failure to accurately predict and respond to consumer demand could result in us under-producing popular items or over-producing less popular items. Furthermore, significant changes in demand for our products would impact management’s estimates in establishing our inventory provision.
Added
Of this $189.8 million future minimum royalty guarantee, $57.4 million is due over the next twelve months.
Removed
Deferred tax assets are reduced by a valuation allowance, if, based upon the weight of available evidence, it is more likely than not that we will not realize some portion or all of the deferred tax assets. We consider all available positive and negative evidence when assessing whether it is more likely than not that deferred tax assets are recoverable.
Added
The prior facility had no outstanding borrowings at the time of termination.
Removed
We consider evidence such as our past operating results, the existence of cumulative losses or cumulative income in previous periods and our forecast of future taxable income.
Added
We recorded a non-cash charge of $0.3 million for the write-off of previously deferred financing costs associated with the JPMorgan facility. 34 Table of Contents On June 24, 2025, the Company and certain of its subsidiaries entered into a new Credit Agreement (the “BMO Credit Agreement”) with BMO Bank, N.A., as administrative agent, and a syndicate of lenders.
Removed
We believe this to be a critical accounting policy because should there be a change in our ability to recover our deferred tax assets, our tax provision would increase in the period in which we determine that the recovery is not likely, as well as decrease in the period in which the assessment of the recoverability of the deferred tax assets reverses, which could have a material impact on our results of operations.
Added
The BMO Credit Agreement provides for a senior secured revolving credit facility (the “Revolving Facility”) with aggregate commitments of up to $70.0 million, including a $10.0 million sublimit for swingline loans and a $25.0 million sublimit for letters of credit. The Revolving Facility matures on June 24, 2030, unless extended pursuant to its terms.
Removed
Movie properties such as Sonic the Hedgehog 3 and Disney’s Moana 2 helped sales in 2024, but were offset by lower shipping from prior year movie properties such as The Super Mario Bros. Movie, Disney’s The Little Mermaid, Disney’s Wish and Disney’s Encanto. Costumes.

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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 changeBorrowings under the JPMorgan ABL Facility are therefore subject to risk based upon prevailing market interest rates. Interest rate risk may result from many factors, including governmental monetary and tax policies, domestic and international economic and political considerations and other factors that are beyond our control.
Biggest changeInterest rate risk may result from many factors, including governmental monetary and tax policies, domestic and international economic and political considerations and other factors that are beyond our control. During the twelve-month period ended December 31, 2025, the maximum amount borrowed under the revolving credit facility was $8 million and the average amount of borrowings outstanding was $0.9 million.
While we believe that, should such events occur we would be able to find alternative sources of inventory at competitive prices, we cannot assure you that we would be able to do so. These exposures are directly related to our normal operating and funding activities.
While we believe that, should such events occur, we would be able to find alternative sources of inventory at competitive prices and quality, we cannot assure you that we would be able to do so. These exposures are directly related to our normal operating and funding activities.
We purchase substantially all of our inventory from companies in China, and, therefore, we are subject to the risk that such suppliers will be unable to provide inventory at competitive prices.
We purchase substantially all of our inventory from companies in China, and, therefore, we are subject to the risk that such suppliers will be unable to provide inventory at competitive prices and quality.
Foreign Currency Risk We have wholly-owned subsidiaries in Hong Kong, China, the United Kingdom, Germany, France, the Netherlands, Italy, Canada and Mexico. Sales are generally made by these operations on FOB China or Hong Kong terms and are denominated in U.S. dollars.
As of December 31, 2025, the amount of total borrowings outstanding under the revolving credit facility was nil. Foreign Currency Risk We have wholly-owned subsidiaries in Hong Kong, China, the United Kingdom, Germany, France, the Netherlands, Italy, Canada and Mexico. Sales are generally made by these operations on FOB China or Hong Kong terms and are denominated in U.S. dollars.
To date, we have not used derivative instruments or engaged in hedging activities to minimize our market risk. Interest Rate Risk Our exposure to market risk includes interest rate fluctuations in connection with our JPMorgan ABL Facility (see Item 8 “Consolidated Financial Statements and Supplementary Data, Note 10 – Credit Facilities).
To date, we have not used derivative instruments or engaged in hedging activities to minimize our market risk. Interest Rate Risk Our exposure to market risk includes interest rate fluctuations in connection with our Revolving Facility (see Note 9 – Credit Facilities).
Removed
In Q1 2023, we entered into an amendment to our JPMorgan ABL Credit Agreement which changed the interest reference rate on our revolving line of credit from LIBOR to the Secured Overnight Financing Rate (“SOFR”).
Added
As detailed in the BMO Credit Agreement, borrowings under the Revolving Facility bear interest, at the Company’s election, at either (i) the Adjusted Term SOFR plus an applicable margin or (ii) the Base Rate plus an applicable margin.
Removed
Effective March 16, 2023, borrowings under our JPMorgan ABL Facility bear interest at either (i) SOFR plus 1.50% - 2.00% (determined by reference to an excess availability pricing grid) or (ii) Alternate Base Rate plus 0.50% - 1.00% (determined by reference to an excess availability pricing grid and base rate subject to a 1.00% floor).
Added
The applicable margin varies based on the Company’s Total Net Leverage Ratio and ranges from 1.50% to 2.00% for SOFR loans and from 0.50% to 1.00% for Base Rate loans. Borrowings under the Revolving Facility are therefore subject to risk based upon prevailing market interest rates.
Removed
During the twelve-month period ended December 31, 2024, the maximum amount borrowed under the revolving credit facility was $36 million and the average amount of borrowings outstanding was $5.6 million. As of December 31, 2024, the amount of total borrowings outstanding under the revolving credit facility was nil.

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