UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

(Mark one)

☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended March 31, 2026

☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from to

Commission file number: 001-35448

JAKKS Pacific, Inc.

(Exact Name of Registrant as Specified in Its Charter)

Delaware		95-4527222
(State or Other Jurisdiction of Incorporation or Organization)		(I.R.S. Employer Identification No.)

2951 28th Street Santa Monica, California		90405
(Address of Principal Executive Offices)		(Zip Code)

Registrant’s Telephone Number, Including Area Code: (424) 268-9444

Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “non-accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer ☐	Accelerated filer ☒
Non-accelerated filer ☐	Smaller reporting company ☒
Emerging growth company ☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒

Securities registered pursuant to Section 12(g) of the Act:

Title of each class		Trading Symbol(s)		Name of each exchange on which registered
Common Stock $.001 Par Value		JAKK		The NASDAQ Global Select Market

The number of shares outstanding of the issuer’s common stock is 11,444,411 as of May 1, 2026.

JAKKS PACIFIC, INC. AND SUBSIDIARIES

TABLE OF CONTENTS TO QUARTERLY REPORT ON FORM 10-Q

QUARTER ENDED MARCH 31, 2026

ITEMS IN FORM 10-Q

Part I	FINANCIAL INFORMATION
Item 1.	Financial Statements (Unaudited)	3
	Condensed Consolidated Balance Sheets	3
	Condensed Consolidated Statements of Operations and Comprehensive Loss	4
	Condensed Consolidated Statements of Stockholders’ Equity	5
	Condensed Consolidated Statements of Cash Flows	6
	Notes to Condensed Consolidated Financial Statements	7
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	18
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	21
Item 4.	Controls and Procedures	21

Part II	OTHER INFORMATION
Item 1.	Legal Proceedings	22
Item 1A.	Risk Factors	22
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	None
Item 3.	Defaults Upon Senior Securities	None
Item 4.	Mine Safety Disclosures	None
Item 5.	Other Information	None
Item 6.	Exhibits	22

Signatures		23
Exhibit 31.1
Exhibit 31.2
Exhibit 32.1
Exhibit 32.2

Table of Contents

PART I – FINANCIAL INFORMATION

Item 1. Financial Statements

JAKKS PACIFIC, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS

(In thousands, except share amounts)

	March 31,			December 31,
	2026			2025
	(Unaudited)
Assets
Current assets
Cash and cash equivalents	$	62,849		$	52,197
Restricted cash		1,132			1,869
Accounts receivable, net of allowance for credit losses of $4,956 and $5,103 at March 31, 2026 and December 31, 2025, respectively		93,244			138,341
Inventory, net		52,854			59,805
Prepaid expenses and other assets		18,749			16,873
Total current assets		228,828			269,085
Property and equipment
Office furniture and equipment		10,669			10,189
Molds and tooling		138,625			134,771
Leasehold improvements		7,282			7,264
Total		156,576			152,224
Less accumulated depreciation and amortization		135,162			133,216
Property and equipment, net		21,414			19,008
Operating lease right-of-use assets, net		43,869			46,776
Other long-term assets		1,787			2,682
Deferred income tax assets, net		69,578			69,569
Goodwill		34,970			35,077
Total assets	$	400,446		$	442,197
Liabilities and Stockholders’ Equity
Current liabilities
Accounts payable	$	39,964		$	55,558
Accrued expenses		35,709			43,076
Reserve for sales returns and allowances		26,737			33,569
Income taxes payable		509			2,119
Short-term operating lease liabilities		14,115			13,784
Total current liabilities		117,034			148,106
Long-term operating lease liabilities		35,913			39,578
Accrued expenses – long term		4,555			4,463
Income taxes payable		960			945
Total liabilities		158,462			193,092

Stockholders’ Equity
Common stock, $0.001 par value; 100,000,000 shares authorized; 11,444,411 and 11,342,981 shares issued and outstanding at March 31, 2026 and December 31, 2025, respectively		11			11
Additional paid-in capital		304,229			302,408
Accumulated deficit		(48,162	)		(41,021	)
Accumulated other comprehensive loss		(14,094	)		(12,293	)
Total stockholders’ equity		241,984			249,105
Total liabilities and stockholders’ equity	$	400,446		$	442,197

See accompanying notes to condensed consolidated financial statements.

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JAKKS PACIFIC, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS
(In thousands, except per share data)

	Three Months Ended March 31, (Unaudited)
	2026			2025
Net sales	$	106,676		$	113,253
Cost of sales:
Cost of goods		52,187			54,626
Royalty expense		16,913			18,168
Amortization of tools and molds		1,970			1,446
Cost of sales		71,070			74,240
Gross profit		35,606			39,013
Direct selling expenses		8,164			8,696
General and administrative expenses		32,864			33,961
Depreciation and amortization		152			113
Selling, general and administrative expenses		41,180			42,770
Loss from operations		(5,574	)		(3,757	)
Other income (expense), net		25			5
Interest income		480			362
Interest expense		(60	)		(155	)
Loss before benefit from income taxes		(5,129	)		(3,545	)
Benefit from income taxes		(849	)		(1,163	)
Net loss	$	(4,280	)	$	(2,382	)
Loss per share - basic and diluted	$	(0.37	)	$	(0.21	)
Shares used in loss per share - basic and diluted		11,444			11,146
Comprehensive loss	$	(6,081	)	$	(1,754	)

See accompanying notes to condensed consolidated financial statements.

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JAKKS PACIFIC, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY

(In thousands, except per share data)

Three Months Ended March 31, 2026
(Unaudited)
									Accumulated			JAKKS
			Additional						Other			Pacific, Inc.			Non-		Total
	Common		Paid-in			Accumulated			Comprehensive			Stockholders’			Controlling		Stockholders’
	Stock		Capital			Deficit			Loss			Equity			Interests		Equity
Balance, December 31, 2025	$	11	$	302,408		$	(41,021	)	$	(12,293	)	$	249,105		$	—	$	249,105
Share-based compensation expense		—		3,081			—			—			3,081			—		3,081
Repurchase of common stock for employee tax withholding		—		(1,260	)		—			—			(1,260	)		—		(1,260	)
Cash dividend declared, $0.25 per share		—		—			(2,861	)		—			(2,861	)		—		(2,861	)
Net loss		—		—			(4,280	)		—			(4,280	)		—		(4,280	)
Foreign currency translation adjustment		—		—			—			(1,801	)		(1,801	)		—		(1,801	)
Balance, March 31, 2026	$	11	$	304,229		$	(48,162	)	$	(14,094	)	$	241,984		$	—	$	241,984

Three Months Ended March 31, 2025
(Unaudited)
									Accumulated			JAKKS
			Additional						Other			Pacific, Inc.			Non-		Total
	Common		Paid-in			Accumulated			Comprehensive			Stockholders’			Controlling		Stockholders’
	Stock		Capital			Deficit			Loss			Equity			Interests		Equity
Balance, December 31, 2024	$	11	$	297,198		$	(39,692	)	$	(17,184	)	$	240,333		$	500	$	240,833
Share-based compensation expense		—		2,552			—			—			2,552			—		2,552
Repurchase of common stock for employee tax withholding		—		(3,819	)		—			—			(3,819	)		—		(3,819	)
Cash dividend declared, $0.25 per share		—		—			(2,786	)		—			(2,786	)		—		(2,786	)
Net loss		—		—			(2,382	)		—			(2,382	)		—		(2,382	)
Foreign currency translation adjustment		—		—			—			628			628			—		628
Balance, March 31, 2025	$	11	$	295,931		$	(44,860	)	$	(16,556	)	$	234,526		$	500	$	235,026

See accompanying notes to condensed consolidated financial statements.

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JAKKS PACIFIC, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(In thousands)

	Three Months Ended March 31,
	(Unaudited)
	2026			2025
Cash flows from operating activities
Net loss	$	(4,280	)	$	(2,382	)
Adjustments to reconcile net loss to net cash provided by (used in) operating activities:
Recovery of credit losses		(19	)		(11	)
Depreciation and amortization		2,122			1,559
Write-off and amortization of debt issuance costs		23			79
Share-based compensation expense		3,081			2,552
Loss on disposal of property and equipment		—			1
Deferred income taxes		(9	)		(10	)
Changes in operating assets and liabilities:
Accounts receivable		45,116			36,029
Inventory		6,951			(383	)
Prepaid expenses and other assets		(674	)		(4,727	)
Accounts payable		(14,533	)		(13,281	)
Accrued expenses		(7,221	)		(11,256	)
Reserve for sales returns and allowances		(6,832	)		(9,588	)
Income taxes payable		(1,595	)		(1,553	)
Other liabilities		(335	)		1,271
Total adjustments		26,075			682
Net cash provided by (used in) operating activities		21,795			(1,700	)
Cash flows from investing activities
Purchases of property and equipment		(5,589	)		(2,070	)
Investments in employee deferred compensation trusts		(223	)		(995	)
Net cash used in investing activities		(5,812	)		(3,065	)
Cash flows from financing activities
Repurchase of common stock for employee tax withholding		(1,260	)		(3,819	)
Cash dividend paid		(2,861	)		(2,786	)
Deferred issuance costs		(146	)		—
Net cash used in financing activities		(4,267	)		(6,605	)
Net increase (decrease) in cash, cash equivalents and restricted cash		11,716			(11,370	)
Effect of foreign currency translation		(1,801	)		628
Cash, cash equivalents and restricted cash, beginning of period		54,066			70,137
Cash, cash equivalents and restricted cash, end of period	$	63,981		$	59,395
Supplemental disclosures of cash flow information:
Cash paid for income taxes, net	$	(5,956	)	$	406
Cash paid for interest	$	2		$	0

The Company received income tax refunds of $6.9 million and nil during the three months ended March 31, 2026 and 2025.

Supplemental disclosures of non-cash activities:

During the three months ended March 31, 2026 and 2025, the lease liability increased by $0.1 million and $2.5 million respectively, with a corresponding increase to the ROU asset.

As of March 31, 2026 and 2025, there were $6.0 million and $4.7 million, respectively, of property and equipment purchases included in accounts payable.

See accompanying notes to condensed consolidated financial statements.

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JAKKS PACIFIC, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

March 31, 2026

Note 1 — Basis of Presentation

The accompanying unaudited interim condensed consolidated financial statements included herein have been prepared by the Company, without audit, pursuant to the rules and regulations of the Securities and Exchange Commission (the “SEC”). Certain information and footnote disclosures normally included in financial statements prepared in accordance with accounting principles generally accepted in the United States of America have been condensed or omitted pursuant to such rules and regulations. However, the Company believes that the disclosures are adequate to prevent the information presented from being misleading. These financial statements should be read in conjunction with the financial statements and the notes thereto included in the Company’s Annual Report on Form 10-K, which contains audited financial information for the three years in the period ended December 31, 2025.

The information provided in this report reflects all adjustments (consisting solely of normal recurring items) that are, in the opinion of management, necessary to present fairly the financial position and the results of operations for the periods presented. Interim results are not necessarily, especially given seasonality, indicative of results to be expected for a full year.

The condensed consolidated financial statements include the accounts of JAKKS Pacific, Inc. and its wholly-owned subsidiaries (collectively, “the Company”).

In November 2024, the FASB issued ASU 2024-03, “Income Statement—Reporting Comprehensive Income—Expense Disaggregation Disclosures (Subtopic 220-40): Disaggregation of Income Statement Expenses.” The new guidance improves disclosures about a public business entity’s expenses by requiring disaggregated disclosures of certain types of expenses, including purchases of inventory, employee compensation, depreciation, intangible amortization and depletion, as applicable, for each income statement caption that includes those expenses. In addition, the standard will require entities to define and disclose total selling expenses. The standard is effective for public business entities such as the Company for annual periods beginning after December 15, 2026, and interim periods beginning after December 15, 2027. Early adoption is permitted, and entities may apply the standard prospectively or retrospectively. The Company is currently evaluating the impact of adopting this standard on its condensed consolidated financial statements and related disclosures.

In July 2025, the FASB issued ASU 2025-05, “Financial Instruments—Credit Losses (Topic 326): Measurement of Credit Losses for Accounts Receivable and Contract Assets.” The new guidance provides a practical expedient in developing reasonable and supportable forecasts when estimating expected credit losses for current accounts receivable and current contract assets arising from transactions accounted for under Topic 606. Entities that elect the practical expedient may assume that current conditions as of the balance sheet date do not change for the remaining life of the respective assets. The amendments will be effective for annual reporting periods beginning after December 15, 2025, and interim reporting periods within those annual reporting periods. Early adoption was permitted in both interim and annual reporting periods in which financial statements have not yet been issued or made available for issuance. The Company adopted this standard as of January 1, 2026. The adoption of this standard did not have a material impact on its condensed consolidated financial statements and related disclosures.

In September 2025, the FASB issued ASU 2025-06, “Intangibles—Goodwill and Other—Internal-Use Software (Subtopic 350-40): Targeted Improvements to the Accounting for Internal-Use Software.” The new guidance removes all references to prescriptive and sequential software development stages (referred to as “project stages”) throughout Subtopic 350-40. Therefore, an entity is required to start capitalizing software costs when both of the following occur: 1. Management has authorized and committed to funding the software project and 2. It is probable that the project will be completed and the software will be used to perform the function intended (referred to as the “probable-to-complete recognition threshold”). In evaluating the probable-to-complete recognition threshold, an entity is required to consider whether there is significant uncertainty associated with the development activities of the software (referred to as “significant development uncertainty”). The amendments will be effective for all entities for annual reporting periods beginning after December 15, 2027, and interim reporting periods within those annual reporting periods. Early adoption is permitted as of the beginning of an annual reporting period. The Company is currently evaluating the impact of adopting this standard on its condensed consolidated financial statements and related disclosures.

No other accounting pronouncements were issued or adopted for the three months ended March 31, 2026 that materially impacted the Company.

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JAKKS PACIFIC, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

March 31, 2026

Note 2 — Business Segments, Geographic Data and Sales by Major Customers

The Company is a worldwide producer and marketer of children’s toys and other consumer products, principally engaged in the design, development, production, marketing and distribution of its diverse portfolio of products. The Company’s segments are (i) Toys/Consumer Products (“TCP”) and (ii) Costumes.

The Toys/Consumer Products segment includes action figures, vehicles, play sets, plush products, dolls, electronic products, construction toys, infant and pre-school toys, child-sized and hand-held role play toys and everyday costume play, foot-to-floor ride-on vehicles, wagons, novelty toys, seasonal and outdoor products, kids’ indoor and outdoor furniture, and related products.

The Costumes segment, under its Disguise branding, designs, develops, markets and sells a wide range of every-day and special occasion dress-up costumes and related accessories in support of Halloween, Carnival, Children’s Day, Book Day/Week, and every-day/any-day costume play.

The Company’s Chief Executive Officer and Chief Financial Officer have been identified jointly as the Chief Operating Decision Maker (“CODM”). The CODM manages and allocates resources on a segment basis. The determination of the two segments is consistent with the financial information regularly reviewed by the CODM for purposes of evaluating performance. Results are regularly reviewed in comparison with current budget, prior forecast, prior year and recent years’ performance in that quarter.

Segment performance is measured at the gross profit and operating income (loss) level. All sales are made to external customers and general corporate expenses have been attributed to the segments based upon relative sales volumes. Segment assets are primarily comprised of accounts receivable and inventories, net of applicable reserves and allowances, goodwill and other assets. Certain assets which are not tracked by operating segment and/or that benefit multiple operating segments have been allocated on the same basis.

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JAKKS PACIFIC, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

March 31, 2026

Results are not necessarily those which would be achieved if each segment was an unaffiliated business enterprise. Information by segment and a reconciliation to reported amounts for the three months ended March 31, 2026 and 2025 and as of March 31, 2026 and December 31, 2025 are as follows (in thousands):

	Three Months Ended March 31,
	2026									2025
	TCP			Costumes			Total			TCP		Costumes			Total
Net Sales	$	100,095		$	6,581		$	106,676		$	107,438	$	5,815		$	113,253
Cost of Sales ^(A)		66,113			4,957			71,070			69,239		5,001			74,240
Gross Profit		33,982			1,624			35,606			38,199		814			39,013

Direct selling expenses		6,955			1,209			8,164			7,966		730			8,696
Product development and testing expenses		2,004			138			2,142			2,015		384			2,399
Divisional general and administrative expenses ^{(A), (B)}		5,298			2,647			7,945			5,557		3,231			8,788
Allocated headquarter general & administrative expenses ^{(A), (C)}		21,431			1,498			22,929			21,740		1,147			22,887
Income (loss) from operations		(1,706	)		(3,868	)		(5,574	)		921		(4,678	)		(3,757	)
Other income (expense), net								25								5
Interest income								480								362
Interest expense								(60	)							(155	)
Income before benefit from income taxes							$	(5,129	)						$	(3,545	)

^(A) Includes depreciation and amortization

2,107

2,122

1,550

1,559

^(B)

Consist mainly of payroll and related expenses, rent, depreciation and other general and administrative expenses.

^(C)

Consist mainly of payroll related expenses, rent, depreciation and other general and administrative expenses.

	March 31,		December 31,
	2026		2025
Assets
Toys/Consumer Products	$	377,859	$	419,064
Costumes		22,587		23,133
	$	400,446	$	442,197

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JAKKS PACIFIC, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

March 31, 2026

Net revenues are categorized based upon location of the customer, while long-lived assets are categorized based upon the location of the Company’s assets. The following tables present information about the Company by geographic area as of March 31, 2026 and December 31, 2025 and for the three months ended March 31, 2026 and 2025 (in thousands):

	March 31,		December 31,
	2026		2025
Long-lived Assets
United States	$	40,535	$	42,788
China		18,735		16,659
United Kingdom		2,961		3,073
Hong Kong		1,666		1,853
Italy		654		717
Mexico		550		594
France		96		8
Canada		86		92
	$	65,283	$	65,784

	Three Months Ended
	March 31,
	2026		2025
Net Sales by Customer Area
United States	$	74,636	$	88,944
Europe		17,379		11,810
Latin America		6,962		7,459
Canada		2,992		3,279
Australia & New Zealand		2,469		613
Asia		1,935		751
Middle East & Africa		303		397
	$	106,676	$	113,253

Major Customers

Net sales to major customers globally for the three months ended March 31, 2026 and 2025 were as follows (in thousands, except for percentages):

	Three Months Ended March 31,
	2026					2025
			Percentage					Percentage
	Amount		of Net Sales			Amount		of Net Sales
Walmart (*)	$	27,107		25.4	%	$	36,679		32.4	%
Target		26,645		25.0			29,444		26.0
	$	53,752		50.4	%	$	66,123		58.4	%

(*)

During the year ended December 31, 2025, the Company determined that, in prior periods, net sales to two subsidiaries of Walmart Inc., were not aggregated with net sales to Walmart Inc. in the major customer disclosure under ASC 280-10-50-42. Because these entities are under common control, such sales should be presented as revenues from a single customer. Accordingly, prior-period amounts have been revised to aggregate these net sales amounts to Walmart Inc. and its subsidiaries. This revision affected only the major customer disclosure and had no impact on the Company’s condensed consolidated financial statements for any period presented. The Company concluded that the revision was not material to previously issued financial statements.

No other customer accounted for more than 10% of the Company’s total net sales.

The concentration of the Company’s business with a relatively small number of customers may expose the Company to material adverse effects if one or more of its large customers were to experience financial difficulty. The Company performs ongoing credit evaluations of its top customers and maintains an allowance for potential credit losses.

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JAKKS PACIFIC, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

March 31, 2026

Note 3 — Inventory

Inventory, which includes the ex-factory cost of goods, capitalized warehouse costs, and in-bound freight and duty, is valued at the lower of cost or net realizable value, net of inventory obsolescence reserve, and consists of the following (in thousands):

	March 31,		December 31,
	2026		2025
Finished goods	$	52,854	$	59,805

The inventory obsolescence reserve was $2.9 million and $2.4 million as of March 31, 2026 and December 31, 2025, respectively.

Note 4 — Revenue Recognition and Reserve for Sales Returns and Allowances

The Company’s contracts with customers only include one performance obligation (i.e., sale of the Company’s products). Revenue is recognized in the gross amount at a point in time when delivery is completed and control of the promised goods is transferred to the customers. Revenue is measured as the amount of consideration the Company expects to be entitled to in exchange for those goods. The Company’s contracts do not involve financing elements as payment terms with customers are less than one year. Further, because revenue is recognized at the point in time goods are sold to customers, there are no contract assets or contract liability balances.

The Company disaggregates its revenues from contracts with customers by reporting segment: Toys/Consumer Products and Costumes. The Company further disaggregates revenues by major geographic regions (See Note 2 - Business Segments, Geographic Data and Sales by Major Customers, for further information).

The Company offers various discounts, pricing concessions, and other allowances to customers, all of which are considered in determining the transaction price. Certain discounts and allowances are fixed and determinable at the time of sale and are recorded at the time of sale as a reduction to revenue. Other discounts and allowances can vary and are determined at management’s discretion (variable consideration). Specifically, the Company occasionally grants discretionary credits to facilitate markdowns and sales of slow-moving merchandise, and consequently accrues an allowance based on historic credits and management estimates. The Company also participates in cooperative advertising arrangements with some customers, whereby it allows a discount from invoiced product amounts in exchange for customer purchased advertising that features the Company’s products. Generally, these allowances range from 1% to 30% of gross sales and are generally based upon product purchases or specific advertising campaigns. Such allowances are accrued when the related revenue is recognized. To the extent these cooperative advertising arrangements provide a distinct benefit at fair value, they are accounted for as direct selling expenses, otherwise they are recorded as a reduction to revenue. Further, while the Company generally does not allow product returns, the Company does make occasional exceptions to this policy and consequently records a sales return allowance based upon historic return amounts and management estimates. These allowances (variable consideration) are estimated using the expected value method and are recorded at the time of sale as a reduction to revenue. The Company adjusts its estimate of variable consideration at least quarterly or when facts and circumstances used in the estimation process may change. The variable consideration is not constrained as the Company has sufficient history on the related estimates and does not believe there is a risk of significant revenue reversal.

Sales commissions are expensed when incurred as the related revenue is recognized at a point in time and therefore the amortization period is less than one year. As a result, these costs are recorded as direct selling expenses, as incurred. For the three months ended March 31, 2026 and 2025, sales commissions were $0.5 million and $0.4 million, respectively.

Shipping and handling activities are considered part of the Company’s obligation to transfer the products and therefore are recorded as direct selling expenses, as incurred. For the three months ended March 31, 2026 and 2025, shipping and handling costs were $1.7 million and $2.3 million, respectively.

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JAKKS PACIFIC, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

March 31, 2026

Note 5 — Credit Facilities

JPMorgan Chase

On June 2, 2021, the Company and certain of its subsidiaries, as borrowers, entered into a Credit Agreement (the “JPMorgan ABL Credit Agreement”) with JPMorgan Chase Bank, N.A., as agent and lender, providing a $67.5 million senior secured revolving credit facility (the “JPMorgan ABL Facility”) maturing in June 2026.

On June 24, 2025, in connection with the execution of a new credit facility with BMO Bank, N.A., the Company voluntarily terminated the JPMorgan ABL Facility. At the time of termination, there were no borrowings outstanding under the JPMorgan ABL Facility. The termination of the JPMorgan ABL Facility did not result in any prepayment penalties or early termination fees. Unamortized debt issuance costs associated with the JPMorgan ABL Facility were written off and recorded as a loss on extinguishment of debt in the amount of $0.4 million.

The JPMorgan ABL Facility was replaced with a new senior secured revolving credit facility with BMO Bank, N.A., as described below.

BMO Bank, N.A.

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. 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. Capitalized terms used below have the meanings assigned to them in the BMO Credit Agreement.

Borrowings under the Revolving Facility bear interest, at the Company’s election, either (i) the Adjusted Term Secured Overnight Financing Rate (“SOFR”) plus an applicable margin or (ii) the Base Rate plus an applicable margin. 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. The Company is also subject to a commitment fee on the unused portion of the Revolving Facility ranging from 0.20% to 0.30%, and a fee on outstanding letters of credit ranging from 1.50% to 2.00%.

The BMO Credit Agreement contains customary affirmative and negative covenants, including limitations on indebtedness, liens, investments, asset sales and dividends. Financial covenants include a minimum Consolidated Interest Coverage Ratio of 3.00 to 1.00, and maximum Total Net Leverage Ratio of 2.00 to 1.00, tested quarterly.

The obligations under the BMO Credit Agreement are guaranteed by certain of the Company’s U.S., Canadian and Hong Kong subsidiaries and are secured by substantially all of the assets of the Company and certain of its subsidiaries, including equity interests in certain subsidiaries, subject to certain customary exclusions.

As of March 31, 2026, the amount of outstanding borrowings was nil and the total excess borrowing availability was $68.3 million.

As of March 31, 2026, off-balance sheet arrangements include letters of credit issued by BMO of $1.7 million and JPMorgan of $0.9 million.

As of March 31, 2026, the Company was in compliance with the financial covenants under the BMO Credit Agreement.

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JAKKS PACIFIC, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

March 31, 2026

Note 6 — Income Taxes

The Company’s income tax benefit of $0.8 million for the three months ended March 31, 2026, reflects an effective tax rate of 16.6%. The Company’s income tax benefit of $1.2 million for the three months ended March 31, 2025, reflects an effective tax rate of 32.8%. The tax benefit for the three months ended March 31, 2026 and 2025 primarily relates to the overall worldwide loss (i.e. federal, state, and foreign) partially offset by discrete items.

From time to time, in the normal course of business, the Company may be audited by federal, state and foreign tax authorities. At this time, the Company has at least one audit underway. The Company currently cannot assess the impact of the outcome on its condensed consolidated financial statements.

Note 7 — Loss Per Share

The following table is a reconciliation of the weighted average shares used in the computation of loss per share for the periods presented (in thousands, except per share data):

	Three Months Ended March 31,
Loss per share - basic and diluted	2026			2025
Net loss	$	(4,280	)	$	(2,382	)
Weighted average common shares outstanding - basic and diluted		11,444			11,146
Loss per share available to common stockholder - basic and diluted	$	(0.37	)	$	(0.21	)

Basic loss per share is calculated using the weighted average number of common shares outstanding during the period. Diluted loss per share is calculated using the weighted average number of common shares and common share equivalents outstanding during the period (which consist of restricted stock units to the extent they are dilutive). Restricted stock units of 377,755 and 359,344 for the three months ended March 31, 2026 and 2025, respectively, were excluded from the computation of diluted loss per share. Of the RSUs excluded for 2026, 105,609 were anti-dilutive based on their terms, while 272,146 would have been dilutive if the Company had reported net income.

Note 8 — Common Stock

Common Stock

All issuances of common stock, including those issued pursuant to restricted stock or unit grants, are issued from the Company’s authorized but not issued and outstanding shares.

During 2026, certain employees, including two executive officers, surrendered an aggregate of 74,652 shares of restricted stock units for $1.3 million to cover income taxes due for the vesting of restricted shares. No forfeitures occurred during 2026.

During 2025, certain employees, including two executive officers, surrendered an aggregate of 135,672 shares of restricted stock units for $3.8 million to cover income taxes due for the vesting of restricted shares. Additionally, an aggregate of 1,357 shares of restricted stock granted in 2023 and 2024 with a value of approximately $38.1 thousand was forfeited during 2025.

A quarterly dividend of $0.25 per share for owners of record as of February 27, 2026 was declared on February 18, 2026 and paid on March 30, 2026. A quarterly dividend of $0.25 per share for owners of record as of March 3, 2025 was declared on February 18, 2025 and paid on March 31, 2025.

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JAKKS PACIFIC, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

March 31, 2026

At the Market Offering

On July 1, 2022, the Company entered into an At the Market Issuance Sales Agreement (“ATM Agreement”) with B. Riley, as agent pursuant to which the Company may, from time to time, sell shares of its common stock, up to $75.0 million of common stock, in one or more offerings in amounts, prices and at terms that the Company will determine at the time of the offering.

As of March 31, 2026, the Company did not sell any shares of common stock under the ATM Agreement.

On October 29, 2025, the Company filed with the SEC a shelf registration statement pursuant to which it may issue, from time to time, up to $150.0 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 the Company will determine at the time of the offering. This registration statement replaced an essentially similar one filed in October 2022, which expired by law on its three-year anniversary. No shares were sold under such prior registration statement.

As of March 31, 2026, the Company has not sold any securities pursuant to its shelf registration statement.

Note 9 — Goodwill

The Company applies a fair value-based impairment test to the carrying value of goodwill and indefinite-lived intangible assets on an annual basis and, on an interim basis, if certain events or circumstances indicate that an impairment loss may have been incurred. Goodwill impairment exists when the estimated fair value of goodwill is less than its carrying value. For the three months ended March 31, 2026, there were no events or circumstances that indicated that an impairment loss may have been incurred.

Note 10 — Comprehensive Loss

The table below presents the components of the Company’s comprehensive loss for the three months ended March 31, 2026 and 2025 (in thousands):

	Three Months Ended
	March 31,
	2026			2025
Net loss	$	(4,280	)	$	(2,382	)
Other comprehensive income (loss):
Foreign currency translation adjustment		(1,801	)		628
Comprehensive loss	$	(6,081	)	$	(1,754	)

Note 11 — Litigation and Contingencies

The Company is a party to, and certain of its property is the subject of, various pending claims and legal proceedings that routinely arise in the ordinary course of its business. The Company accrues for losses when the loss is deemed probable and the liability can reasonably be estimated. Where a liability is probable and there is a range of estimated loss with no best estimate in the range, the Company records the minimum estimated liability related to the claim. As additional information becomes available, the Company assesses the potential liability related to its pending litigation and revises its estimates.

In the normal course of business, the Company may provide certain indemnifications and/or other commitments of varying scope to a) its licensors, customers and certain other parties, including against third-party claims of intellectual property infringement, and b) its officers, directors and employees, including against third-party claims regarding the periods in which they serve in such capacities with the Company. The duration and amount of such obligations is, in certain cases, indefinite. The Company’s director’s and officer’s liability insurance policy may, however, enable it to recover a portion of any future payments related to its officer, director or employee indemnifications. For the past five years, costs related to director and officer indemnifications have not been significant. Other than certain liabilities recorded in the normal course of business related to royalty payments due to the Company’s licensors, no liabilities have been recorded for indemnifications and/or other commitments.

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JAKKS PACIFIC, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

March 31, 2026

Note 12 — Share-Based Payments

The Company’s 2002 Stock Award and Incentive Plan (the “Plan”), as amended, provides for the awarding of stock options, restricted stock and restricted stock units to certain key employees, executive officers and non-employee directors. Current awards under the Plan include grants to executive officers and certain key employees of restricted stock units, with vesting contingent upon the completion of specified service periods ranging from one to four years and/or (b) meeting certain financial performance and/or market-based metrics. Shares for the restricted stock units are not issued until they vest.

The following table summarizes the total share-based compensation expense recognized for the three months ended March 31, 2026 and 2025 (in thousands):

	Three Months Ended
	March 31,
	2026		2025
Share-based compensation expense	$	3,081	$	2,552

Restricted Stock Units

The following table summarizes the RSU award activity for awards with service conditions for the three months ended March 31, 2026:

	2026
	Number of Shares			Weighted Average Grant Date Fair Value
Outstanding, December 31, 2025		1,117,068		$	21.03
Granted		263,556			16.88
Vested		(176,082	)		24.86
Forfeited		—			—
Outstanding, March 31, 2026		1,204,542			19.56

The following table summarizes the RSU award activity for awards with market conditions for the three months ended March 31, 2026:

	2026
	Number of Shares		Weighted Average Grant Date Fair Value
Outstanding, December 31, 2025		112,500	$	20.79
Granted		—		—
Vested		—		—
Forfeited		—		—
Outstanding, March 31, 2026		112,500		20.79

As of March 31, 2026, there was $19.8 million of total unrecognized compensation cost related to non-vested restricted stock units, which is expected to be recognized over a weighted-average period of 2.0 years.

As of March 31, 2026, the fair market value of non-vested restricted stock units was $26.2 million.

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JAKKS PACIFIC, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

March 31, 2026

Note 13 — Fair Value Measurements

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, the Company uses various methods including market, income and cost approaches. Based upon these approaches, the Company often utilizes 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. The Company utilizes 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, the Company is required to provide information according to the fair value hierarchy. 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.
	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.

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. The Company’s 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.

The following tables summarize the Company’s financial assets and liabilities measured at fair value on a recurring basis as of March 31, 2026 and December 31, 2025 (in thousands):

	Carrying Amount as of March 31,		Fair Value Measurements As of March 31, 2026
	2026		Level 1		Level 2		Level 3
Money market funds	$	40,265	$	40,265	$	—	$	—
Investments in employee deferred compensation trusts		4,486		4,486		—		—

	Carrying Amount as of December 31,		Fair Value Measurements As of December 31, 2025
	2025		Level 1		Level 2		Level 3
Money market funds	$	33,062	$	33,062	$	—	$	—
Investments in employee deferred compensation trusts		4,467		4,467		—		—

Money market funds are included in cash and cash equivalents on the condensed consolidated balance sheets. Investments in employee deferred compensation trusts which are comprised of mutual funds are classified as trading securities are included in prepaid and other assets on the condensed consolidated balance sheets. For the three months ended March 31, 2026 and 2025, changes in the fair value of securities held in the rabbi trust and offsetting increases or decreases in the deferred compensation obligation totaled $(0.2) million and $(0.1) million, respectively, and are recognized in other general and administrative expenses in the Company’s condensed consolidated statements of operations and comprehensive income.

The Company’s cash and cash equivalents including restricted cash, accounts receivable, accounts payable, and accrued expenses represent financial instruments. The carrying value of these financial instruments is a reasonable approximation of fair value due to the short-term nature of the instruments.

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JAKKS PACIFIC, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

March 31, 2026

Note 14 — Prepaid Expenses and Other Assets

Prepaid expenses and other assets as of March 31, 2026 and December 31, 2025 consist of the following (in thousands):

	March 31, 2026		December 31, 2025
Prepaid expenses	$	7,240	$	2,126
Royalty advances (current and non-current)		4,513		1,295
Investments in employee deferred compensation trusts		4,486		4,467
Income tax receivable		2,100		8,588
Employee retention credit		285		285
Other assets		125		112
	$	18,749	$	16,873

Note 15 — Subsequent events

On April 28, 2026, the Company’s Board of Directors declared a quarterly cash dividend of $0.25 per common share. The dividend will be payable on June 30, 2026, to shareholders of record at the close of business on May 29, 2026.

On April 30, 2026 the Company filed a pre-effective amendment to its registration statement on Form S-3 (originally filed on October 29, 2025) pursuant to which it may issue, from time to time, up to $150.0 million of securities, which will be reduced by any amount of securities sold pursuant to the Company’s ATM Agreement (see Note 8 – Common Stock)

Subsequent to March 31, 2026, the U.S. government established a claims process to refund certain tariffs deemed unlawful following a Supreme Court decision. The Company believes it may be eligible for refunds related to tariffs previously paid. As of the date of issuance, the Company has submitted a claim but the timing, eligibility, and amount of any potential recovery remain subject to uncertainty and administrative review. Accordingly, no receivable or gain has been recognized as of March 31, 2026.

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Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations

The following discussion and analysis of financial condition and results of operations should be read together with our condensed consolidated financial statements and notes thereto, which appear elsewhere herein.

Disclosure Regarding Forward-Looking Statements

This Report includes “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. For example, statements included in this Report regarding our financial position, business strategy and other plans and objectives for future operations, and assumptions and predictions about future product demand, supply, manufacturing, costs, marketing and pricing factors are all forward-looking statements. When we use words like “intend,” “anticipate,” “believe,” “estimate,” “plan” or “expect,” or other words of a similar import, we are making forward-looking statements. We believe that the assumptions and expectations reflected in such forward-looking statements are reasonable, based upon information available to us on the date hereof, but we cannot assure you that these assumptions and expectations will prove to have been correct or that we will take any action that we may presently be planning. We have disclosed certain important factors (e.g., see “Risk Factors”) that could cause our actual results to differ materially from our current expectations elsewhere in this Report. You should understand that forward-looking statements made in this Report are necessarily qualified by these factors. We are not undertaking to publicly update or revise any forward-looking statement if we obtain new information or upon the occurrence of future events or otherwise.

Critical Accounting Estimates

Our critical accounting policies and estimates are included in the 2025 Annual Report on Form 10-K and did not materially change during the first three months of 2026.

New Accounting Pronouncements

See Note 1 to the condensed consolidated financial statements.

Results of Operations

The following unaudited table sets forth, for the periods indicated, certain statement of income data as a percentage of net sales:

	Three Months Ended March 31,
	(Unaudited)
	2026			2025
Net sales		100.0	%		100.0	%
Cost of sales:
Cost of goods		48.9			48.3
Royalty expense		15.9			16.0
Amortization of tools and molds		1.8			1.3
Cost of sales		66.6			65.6
Gross profit		33.4			34.4
Direct selling expenses		7.7			7.7
General and administrative expenses		30.8			29.9
Depreciation and amortization		0.1			0.1
Selling, general and administrative expenses		38.6			37.7
Loss from operations		(5.2	)		(3.3	)
Other income (expense), net		—			—
Interest income		0.4			0.3
Interest expense		—			(0.1	)
Loss before benefit from income taxes		(4.8	)		(3.1	)
Benefit from income taxes		(0.8	)		(1.0	)
Net loss		(4.0	)%		(2.1	)%

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The following unaudited table sets forth, for the periods indicated, certain statements of operations data by segment (in thousands):

	Three Months Ended March 31,
	(Unaudited)
	2026		2025
Net Sales
Toys/Consumer Products	$	100,095	$	107,438
Costumes		6,581		5,815
		106,676		113,253
Cost of Sales
Toys/Consumer Products		66,113		69,239
Costumes		4,957		5,001
		71,070		74,240
Gross Profit
Toys/Consumer Products		33,982		38,199
Costumes		1,624		814
	$	35,606	$	39,013

Comparison of the Three Months Ended March 31, 2026 and 2025

Net Sales

Toys/Consumer Products. Net sales of our Toys/Consumer Products segment were $100.1 million for the three months ended March 31, 2026 compared to $107.4 million for the prior year period, representing a decrease of $7.3 million, or 6.8%. The decrease was driven by lower sales from North American customers despite higher sales from our International regions. Dolls, Role-Play/Dress-up sales were down 32.4% versus a year ago due to lower sales related to the Moana 2 Movie product as well Disney Princess products. Net sales from the Action Play & Collectibles division were up 28.9% due to higher net sales from the Super Mario Movie 2 products.

Costumes. Net sales of our Costumes segment were $6.6 million for the three months ended March 31, 2026 compared to $5.8 million for the prior year period, representing an increase of $0.8 million, or 13.8%. The increase was primarily due to increased sales related to Nintendo costumes.

Cost of Sales

Toys/Consumer Products. Cost of sales of our Toys/Consumer Products segment was $66.1 million, or 66.0% of related net sales for the three months ended March 31, 2026 compared to $69.2 million, or 64.4% of related net sales for the prior year period, representing a decrease of $3.1 million, or 4.5%. The increase as a percentage of net sales was due to a higher cost of product and tolling amortization compared with prior year.

Costumes. Cost of sales of our Costumes segment was $5.0 million, or 75.8% of related net sales for the three months ended March 31, 2026, compared to $5.0 million, or 86.2% of related net sales for the prior year period. The decrease as a percentage of net sales was due to lower royalty expense.

Selling, General and Administrative Expenses

Selling, general and administrative expenses were $41.2 million for the three months ended March 31, 2026 compared to $42.8 million for the prior year period constituting 38.6% and 37.7% of net sales, respectively. Selling, general and administrative expenses were slightly lower year over year, led by decreases in temp help and media spend.

Benefit From Income Taxes

Our income tax benefit, which includes federal, state and foreign income taxes and discrete items, was $0.8 million, or an effective tax rate of 16.6%, for the three months ended March 31, 2026. During the comparable period in 2025, our income tax benefit was $1.2 million, or an effective tax rate of 32.8%. The decrease in the effective tax rate is primarily attributable to a decrease in discrete tax benefits and an increase in pre-tax book loss for the current period.

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Seasonality and Backlog

The retail toy industry is inherently seasonal. Generally, our sales have been highest during the second and third quarters, and collections for those sales have been highest during the succeeding fourth and first quarters. Our working capital needs have been highest during the second and third quarters as we make royalty advance payments for some of our licenses and buy and sell inventory subject to customer payment terms.

While we have taken steps to level sales over the entire year, sales are expected to remain heavily influenced by the seasonality of our toy and costume products. The result of these seasonal patterns is that operating results and the demand for working capital may vary significantly by quarter. Orders placed with us are generally cancelable until the date of shipment. The combination of seasonal demand and the potential for order cancellation makes accurate forecasting of future sales difficult and causes us to believe that backlog may not be an accurate indicator of our future sales. Similarly, financial results for a particular quarter may not be indicative of results for the entire year.

Liquidity and Capital Resources

As of March 31, 2026, we had working capital (inclusive of cash, cash equivalents and restricted cash) of $111.8 million, compared to $121.0 million as of December 31, 2025, representing a decrease in working capital of $9.2 million during the three-month period ended March 31, 2026. The decrease in working capital is mainly attributable to changes in receivables, inventory and payables, coupled with cash used in financing activities.

Operating activities provided net cash of $21.8 million during the three months ended March 31, 2026, as compared to net cash used of $1.7 million in the prior year period. The increase in net cash provided by operating activities year-over-year is primarily due to higher receivable collections, lower inventory purchases, less capital tied in prepaids and other assets, a lower cash out-flow for payables and a net refund of cash taxes paid in prior years. Other than open purchase orders issued in the normal course of business related to shipped product, we have no obligations to purchase inventory from our manufacturers. However, we may incur costs or other losses as a result of not placing orders consistent with our forecasts for product manufactured by our suppliers or manufacturers for a variety of reasons including customer order cancellations or a decline in demand. 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 March 31, 2026, these agreements required future aggregate minimum royalty guarantees of $193.4 million exclusive of $4.5 million in advances already paid. Of this $193.4 million future minimum royalty guarantee, $66.8 million is due over the next twelve months.

Investing activities used net cash of $5.8 million and $3.1 million for the three months ended March 31, 2026 and 2025, 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.

Financing activities used net cash of $4.3 million and $6.6 million for the three months ended March 31, 2026 and 2025, respectively. The cash used in financing activities during the three months ended March 31, 2026, mainly consists of $1.3 million used for the repurchase of our common stock for employee tax withholding and $2.9 million used to pay dividends. The cash used in financing activities during the three months ended March 31, 2025, consists of $3.8 million used for the repurchase of our common stock for employee tax withholding and $2.8 million used to pay dividends.

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. The prior facility had no outstanding borrowings at the time of termination. We recorded a non-cash charge of $0.3 million for the write-off of previously deferred financing costs associated with the JPMorgan facility.

On June 24, 2025, we entered into a new $70.0 million senior secured revolving credit facility with a maturity date of June 24, 2030. This facility replaces our prior facility and is expected to provide improved pricing and enhanced liquidity flexibility. Interest is payable at either SOFR plus a leverage-based margin or a Base Rate alternative and includes a commitment fee on unused amounts. The facility includes financial covenants requiring a minimum interest coverage ratio of 3.00 to 1.00 and a maximum total net leverage ratio of 2.00 to 1.00. As of March 31, 2026, we were in compliance with all financial covenants.

Availability under the revolving facility as of March 31, 2026, was $68.3 million. The facility provides the Company with flexibility to fund working capital, capital expenditures, acquisitions, and general corporate purposes.

See Note 5 – Credit Facilities for additional information pertaining to our Credit Facilities.

As of March 31, 2026 and December 31, 2025, we held cash and cash equivalents, including restricted cash, of $64.0 million and $54.1 million, respectively. Cash, and cash equivalents, including restricted cash held outside of the United States in various foreign subsidiaries totaled $20.0 million and $16.9 million as of March 31, 2026 and December 31, 2025, respectively. The cash and cash equivalents, including restricted cash balances in our foreign subsidiaries have either been fully taxed in the U.S. or tax has been accounted for in connection with the Tax Cuts and Jobs Act, or may be eligible for a full foreign dividends received deduction under such Act, and thus would not be subject to additional U.S. tax should such amounts be repatriated in the form of dividends or deemed distributions. As such, foreign withholding taxes on future repatriations are not expected to be significant.

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Our primary sources of working capital are cash flows from operations and borrowings under our credit facility (see Note 5 – Credit Facilities).

Typically, cash flows from operations are impacted by the effect on sales of (1) the appeal of our products, (2) the success of our licensed brands in motivating consumer purchase of related merchandise, (3) the highly competitive conditions existing in the toy industry and in securing commercially attractive licenses, (4) dependency on a limited set of large customers, and (5) general economic conditions. A downturn in any single factor or a combination of factors could have a material adverse impact upon our ability to generate sufficient cash flows to operate the business. In addition, our business and liquidity are dependent to a significant degree on our vendors and their financial health, as well as the ability to accurately forecast the demand for products. The loss of a key vendor, or material changes in support by them, or a significant variance in actual demand compared to the forecast, can have a material adverse impact on our cash flows and business. 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 March 31, 2026 off-balance sheet arrangements include letters of credit issued by JPMorgan of $0.9 million, temporarily secured with cash as collateral, and letters of credit issued by BMO of $1.7 million.

Item 3. Quantitative and Qualitative Disclosures about Market Risk

Interest Rate Risk

Our exposure to market risk includes interest rate fluctuations in connection with our Revolving Facility (see Note 5 – Credit Facilities). 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. 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. 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.

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. However, purchases of inventory and Hong Kong operating expenses are typically denominated in Hong Kong dollars and local operating expenses in the United Kingdom, Germany, France, the Netherlands, Italy, Canada, Mexico and China are denominated in local currency, thereby creating exposure to changes in exchange rates. Changes in the U.S. dollar exchange rates may positively or negatively affect our results of operations. We do not believe that near-term changes in these exchange rates, if any, will result in a material effect on our future earnings, fair values or cash flows. Therefore, we have chosen not to enter into foreign currency hedging transactions. We cannot assure you that this approach will be successful, especially in the event of a significant and sudden change in the value of these foreign currencies.

Item 4. Controls and Procedures

Our Chief Executive Officer and Chief Financial Officer, after evaluating the effectiveness of our disclosure controls and procedures as of the end of the period covered by this Report, have concluded that as of that date, our disclosure controls and procedures were effective. There has been no change in our internal control over financial reporting identified in connection with the evaluation required by Exchange Act Rule 13a-15(d) that occurred during the period covered by this Report that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.

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PART II – OTHER INFORMATION

Item 1. Legal Proceedings

We are a party to, and certain of our property is the subject of, various pending claims and legal proceedings that routinely arise in the ordinary course of our business. We accrue for losses when the loss is deemed probable and the liability can reasonably be estimated. Where a liability is probable and there is a range of estimated loss with no best estimate in the range, we record the minimum estimated liability related to the claim. As additional information becomes available, we assess the potential liability related to the pending litigation and revise our estimates.

In the normal course of business, we may provide certain indemnifications and/or other commitments of varying scope to a) our licensors, customers and certain other parties, including against third-party claims of intellectual property infringement, and b) our officers, directors and employees, including against third-party claims regarding the periods in which they serve in such capacities with us. The duration and amount of such obligations is, in certain cases, indefinite. Our director’s and officer’s liability insurance policy may, however, enable us to recover a portion of any future payments related to our officer, director or employee indemnifications. For the past five years, costs related to director and officer indemnifications have not been significant. Other than certain liabilities recorded in the normal course of business related to royalty payments due to our licensors, no liabilities have been recorded for indemnifications and/or other commitments.

Item 1A. Risk Factors

Risk factors with respect to us and our business are contained in “Part I, Item 1A. Risk Factors” in our Annual Report on Form 10-K for the year ended December 31, 2025. There have been no material changes from the risk factors previously disclosed in such filing. The disclosures made in this Quarterly Report should be reviewed together with the risk factors contained therein.

Item 6. Exhibits

Number		Description
31.1		Rule 13a-14(a)/15d-14(a) Certification of Chief Executive Officer (1)
31.2		Rule 13a-14(a)/15d-14(a) Certification of Chief Financial Officer (1)
32.1		Section 1350 Certification of Chief Executive Officer (1)
32.2		Section 1350 Certification of Chief Financial Officer (1)
101.INS		Inline XBRL Instance Document
101.SCH		Inline XBRL Taxonomy Extension Schema Document
101.CAL		Inline XBRL Taxonomy Extension Calculation Linkbase Document
101.DEF		Inline XBRL Taxonomy Extension Definition Linkbase Document
101.LAB		Inline XBRL Taxonomy Extension Label Linkbase Document
101.PRE		Inline XBRL Taxonomy Extension Presentation Linkbase Document
104		Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101)

(1)

Filed herewith.

Table of Contents

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

	JAKKS PACIFIC, INC.

Date: May 01, 2026	By:	/s/ John Kimble
		John Kimble
		Executive Vice President and
		Chief Financial Officer
		(Duly Authorized Officer and
		Principal Financial Officer)