Item 9A. Controls and Procedures
ITEM 9A. CONTROLS AND PROCEDURES
Evaluation of Disclosure Controls and Procedures
Our management, with the participation of our principal executive officer and principal financial officer, has evaluated, as of December 31, 2024, our disclosure controls and procedures (as such term is defined in Rules 13a-15(e) and 15d-15(e) under the Securities and Exchange Act of 1934, as amended (the “Exchange Act”)). Based on this evaluation, our principal executive officer and principal financial officer have concluded that as of December 31, 2024, our disclosure controls and procedures were not effective as of such date because of material weaknesses in our internal control over financial reporting, as further described below.
In designing and evaluating our disclosure controls and procedures, management recognizes that any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving the desired control objectives. In addition, the design of disclosure controls and procedures must reflect that there are resource constraints and that management is required to apply judgment in evaluating the benefits of possible controls and procedures relative to their costs.
Management's Report on Internal Control Over Financial Reporting
Management is responsible for establishing and maintaining adequate internal control over financial reporting, as such term is defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act. Our management, under the supervision and with the participation of our principal executive officer and principal financial officer, conducted an assessment of the effectiveness of our internal control over financial reporting as of December 31, 2024, based on the framework and criteria established in Internal Control - Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission. Based on this assessment, management concluded that, as of December 31, 2024, our internal control over financial reporting was not effective due to the material weaknesses described below.
A material weakness is a deficiency, or a combination of deficiencies, in internal control over financial reporting, such that there is a reasonable possibility that a material misstatement of the company’s annual or interim financial statements will not be prevented or detected on a timely basis.
The following material weaknesses were identified as of December 31, 2024:
• We did not design and maintain effective controls related to the order-to-cash and income taxes business processes, as well as controls related to the preparation and review of journal entries at a foreign subsidiary.
• We did not design and maintain effective controls to verify appropriate segregation of duties, including assessment of incompatible duties, identification of instances where incompatible duties were assigned to an individual, and addressing conflicts on a timely basis.
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• We did not design and maintain effective controls over certain information technology (“IT”) general controls for certain information systems that are relevant to the preparation of our financial statements. Specifically, we did not design and maintain: (i) program change management controls to ensure that program and data changes are identified, tested, authorized and implemented appropriately and (ii) user access controls to ensure appropriate segregation of duties and to adequately restrict user and privileged access to appropriate personnel.
The material weakness related to income taxes resulted in an immaterial corrected error in the disclosure of deferred income taxes included in the income taxes footnote as of December 31, 2024. Additionally, the material weaknesses could result in misstatements to the consolidated financial statements that would result in a material misstatement of the annual or interim consolidated financial statements that would not be prevented or detected.
The effectiveness of our internal control over financial reporting as of December 31, 2024, has been audited by PricewaterhouseCoopers LLP, an independent registered public accounting firm, as stated in their report which is included in Item 8.
Remediation Efforts and Status of Remaining Material Weaknesses
During fiscal 2024, with the oversight of the Audit Committee of the Board of Directors, management has been executing and remains committed to implementing measures designed to ensure that the control deficiencies contributing to the ongoing material weaknesses are remediated, such that these controls are designed, implemented and operating effectively. The following activities are ongoing to remediate the remaining material weaknesses:
• We have prepared a remediation plan for each of the material weaknesses and begun training process owners, developing new controls, enhancing existing controls, evaluating process adoption and monitoring results;
• We have engaged third party consultants to advise management in connection with the remediation of the material weaknesses;
• We are in the process of redesigning, enhancing and implementing control activities to address relevant risks at the appropriate level of precision for the order-to-cash and income taxes business processes as well as controls over preparation and review of journal entries at a foreign subsidiary;
• We are in the process of designing and implementing segregation of duties monitoring controls related to all systems relevant to financial reporting;
• We are in the process of designing and implementing controls addressing the reliability of relevant systems and relevant information; and
• We are in the process of training control owners concerning control requirements related to user access and change management over IT systems impacting financial reporting.
Our remediation efforts are expected to continue throughout fiscal 2025 and we cannot provide assurance as to when our remediation activities will be complete. The material weaknesses cannot be considered remediated until the applicable controls have operated for a sufficient period of time and management has concluded, through testing, that these controls are operating effectively.
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Remediation of Previously Identified Material Weaknesses
Other than the material weaknesses which remain unremediated as of December 31, 2024 as described above, material weaknesses in our internal control over financial reporting that were previously identified as of December 31, 2023 have been remediated by completing the following measures:
• We implemented procedures to identify and evaluate changes in our business and the impact on our controls;
• We completed the identification and alignment of relevant risks to controls and control deficiencies;
• We designed and implemented control activities in response to the identified risks related to the following business processes: cash and cash equivalents, inventory, property, plant & equipment, leases, goodwill and intangible assets, purchases, payables and accrued liabilities, debt, equity and share-based compensation, payroll and period-end financial reporting;
• We completed the hiring and training of key personnel to allow for the implementation of more timely and thorough monitoring activities to ascertain whether the components of internal control are present and functioning; and
• We maintained a SOX Steering Committee to monitor the effectiveness of our internal controls and communicate the importance of internal controls, and to report regularly to the Company’s Audit Committee.
During the quarter ended December 31, 2024, we completed our testing and evaluation of the newly designed and implemented controls and determined that as of December 31, 2024, the newly designed and implemented controls have operated effectively for a sufficient period for management to conclude the material weaknesses have been remediated.
Changes in Internal Control Over Financial Reporting
There have been no changes in internal control over financial reporting that occurred during the quarter ended December 31, 2024, that have materially affected, or are reasonably likely to materially affect, the Company’s internal control over financial reporting.
Item 9B. OTHER INFORMATION
(a) None .
(b) On December 13, 2024 , Yves Le Pendeven , Chief Financial Officer , adopted a trading plan intended to satisfy Rule 10b5-1(c) to sell up to 34,079 shares of the Company’s Class A common stock between March 14, 2025 and August 29, 2025 , subject to certain conditions.
On December 12, 2024 , Tracy Daw , Chief Legal Officer and Secretary , adopted a trading plan intended to satisfy Rule 10b5-1(c) to sell up to 43,025 shares of the Company’s Class A common stock between March 13, 2025 and June 30, 2025 , subject to certain conditions.
Item 9C. DISCLOSURE REGARDING FOREIGN JURISDICTIONS THAT PREVENT INSPECTIONS
Not applicable.
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PART III
ITEM 10. DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE
Code of Ethics
Our Code of Business Conduct and Ethics (the “Code of Conduct”) applies to all of our officers, directors and employees, including our principal executive officer, principal financial officer and principal accounting officer. The Code of Conduct is publicly available on our Internet website at www.funko.com. We intend to satisfy the disclosure required by law or Nasdaq Stock Market listing standards regarding any amendment to, or waiver from, a provision of the Code of Conduct by posting such information on our website at www.funko.com.
Executive Officers and Directors
Pursuant to General Instruction G(3) to Form 10-K and Instruction 3 to Item 401(b) of Regulation S-K, information regarding our executive officers and directors is provided in Item 1 of this Annual Report on Form 10-K under the caption “Information about our Executive Officers and Board of Directors,” and will also appear in our definitive proxy statement for our 2025 Annual Meeting of Stockholders. The remaining information required by this item will be included under the headings “Election of Directors,” “Corporate Governance,” “Delinquent Section 16(a) Reports” (if applicable), and " Insider Trading Policies " in our definitive proxy statement for our 2025 Annual Meeting of Stockholders, and such required information is incorporated herein by reference.
ITEM 11. EXECUTIVE COMPENSATION
The information required by this item will be included under the headings “Executive Compensation” and “Compensation Committee Interlocks and Insider Participation” (if applicable) in our definitive proxy statement for our 2025 Annual Meeting of Stockholders, and such information is incorporated herein by reference.
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS
Securities Authorized for Issuance Under Equity Compensation Plans (as of December 31, 2024)
Plan category: Number of Securities to be Issued Upon Exercise of Outstanding Options, Warrants, and Rights Weighted-Average Exercise Price of Outstanding Options, Warrants, and Rights Number of Securities Available for Future Issuance Under Equity Compensation Plans (Excludes Securities Reflected in First Column)
Equity compensation plans approved by security holders (1)
Stock Options 2,970,647 $ 11.82 —
Restricted Stock Units 2,150,403 — —
Performance Stock Units (based on target performance) 42,393 — —
Equity compensation plans not approved by security holders (2)
Performance Stock Options (based on target performance) 297,974 $ 8.39 —
Restricted Stock Units 481,510 $ — —
Total 5,942,927 $ 11.51 —
(1) Includes 1,672,523 shares of Class A common stock available for issuance under our 2017 Incentive Award Plan, 1,709,768 shares of Class A common stock available for issuance under our 2019 Incentive Award Plan. The number of shares authorized under our 2019 Incentive Award Plan increases on the first day of each calendar year beginning on January 1, 2020 and ending on and including January 1, 2029, equal to the lesser of (A) 2% of the shares of Class A Common Stock outstanding as of the last day of the immediately preceding fiscal year on a fully-diluted basis and (B) such lesser number of shares of Class A common stock as determined by our board of directors.
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(2) On May 8, 2024, the board of directors adopted the Funko, Inc. 2024 Inducement Award Plan (the “2024 Inducement Award Plan”). The terms of the 2024 Inducement Award Plan are substantially similar to the terms of the Company’s 2019 Incentive Award Plan, though incentive stock options may not be issued under the 2024 Inducement Award Plan and awards under the 2024 Inducement Award Plan may only be issued to eligible recipients under the applicable listing rules of the Nasdaq Stock Market LLC. Includes 720,516 shares of Class A common stock available for issuance under our 2024 Inducement Award Plan. For additional information, see Note 18, “Stockholders’ Equity” in the Notes to Consolidated Financial Statements included in this Form 10-K.
Other
The remaining information required by this item will be included under the heading “Security Ownership of Certain Beneficial Owners and Management” in our definitive proxy statement for our 2025 Annual Meeting of Stockholders, and such required information is incorporated herein by reference.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE
The information required by this item will be included under the headings “Certain Relationships and Related Person Transactions,” “Corporate Governance” and “Director Independence” in our definitive proxy statement for our 2025 Annual Meeting of Stockholders, and such information is incorporated herein by reference.
ITEM 14. PRINCIPAL ACCOUNTANT FEES AND SERVICES
The information required by this item will be included under the heading “Independent Registered Public Accounting Firm Fees and Other Matters” in our definitive proxy statement for our 2025 Annual Meeting of Stockholders, and such information is incorporated herein by reference.
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PART IV
ITEM 15. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES
(a) Documents filed as part of this report:
1. Financial Statements
The consolidated financial statements of the Company are listed in the index under Part II, Item 8, of this Annual Report on Form 10-K.
2. Financial Statement Schedules
Schedule I: Condensed Financial Information of Registrant as of December 31, 2024 and 2023 and for each of the three years in the period ended December 31, 2024 are included under Part II, Item 8.
All other schedules are omitted because they are not applicable, not required or the required information is shown in the consolidated financial statements or notes thereto.
3. List of Exhibits
EXHIBIT INDEX
Exhibit
Number
Exhibit Description
Incorporated by Reference
Form
File No.
Exhibit
Filing
Date
Filed/
Furnished
Herewith
3.1 Amended and Restated Certificate of Incorporation of Funko, Inc.
S-8
333-221390
4.1 11/7/2017
3.2 Certificate of Amendment to Amended and Restated Certificate of Incorporation of Funko, Inc.
10-Q 001-38274 3.2 8/3/2023
3.3 Amended and Restated Bylaws of Funko, Inc.
8-K 001-38274 3.1 12/26/2023
4.1 Specimen Stock Certificate evidencing the shares of Class A common stock
S-1/A 333-220856
4.1 10/23/2017
4.2 Description of Securities
10-K 001-38274 4.2 3/7/2024
10.1 †
2017 Incentive Award Plan, dated October 23, 2017.
10-K
001-38274
10.3 3/19/2018
10.2 †
Form of Stock Option Agreement under 2017 Incentive Award Plan.
S-1/A
333-220856
10.19 10/23/2017
10.3 †
Form of Restricted Stock Unit Award Agreement under 2017 Incentive Award Plan
10-Q 001-38274 10.1 8/10/2018
10.4 †
2017 Executive Annual Incentive Plan, dated October 23, 2017.
10-K
001-38274
10.5 3/19/2018
10.5 †
Employment Agreement, dated January 3, 2022, between the Company and Brian Mariotti.
8-K 001-38274 10.2 1/7/2022
10.6 †
Amendment to Employment Agreement, by and between the Company and Brian Mariotti, dated December 5, 2022.
8-K 001-38274 10.3 12/9/2022
10.7 †
Amended and Restated Employment Agreement, dated April 19, 2023, by and between the Company and Tracy Daw.
10-Q 001-38274 10.3 5/4/2023
10.8 †
Amended and Restated Employment Agreement, dated January 3, 2022, between the Company and Andrew Perlmutter.
8-K 001-38274 10.1 1/7/2022
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Exhibit
Number
Exhibit Description
Incorporated by Reference
Form
File No.
Exhibit
Filing
Date
Filed/
Furnished
Herewith
10.9 †
Amendment to Amended and Restated Employment Agreement, by and between the Company and Andrew Perlmutter, dated as of December 5, 2022.
8-K 001-38274 10.2 12/9/2022
10.10 †
Second Amendment to Amended and Restated Employment Agreement, by and between the Company and Andrew Perlmutter, dated August 15, 2023.
8-K 001-38274 10.1 8/15/2023
10.11 †
Form of Indemnification Agreement for Directors and Officers.
S-1/A 333-220856 10.27 10/12/2017
10.12 †
Non-Employee Director Compensation Policy, dated August 22, 2022.
10-Q 001-38274 10.2 11/3/2022
10.13 Tax Receivable Agreement, dated as of November 1, 2017, between Funko, Inc., Funko Acquisition Holdings, L.L.C., the Members of the LLC, and Tax Receivable Agreement, dated as of November 1, 2017, between Funko, Inc., Funko Acquisition Holdings, L.L.C., the Members of the LLC, and the Management Representative. Management Representative.
10-K 001-38274 10.25 3/19/2018
10.14 Stockholders Agreement, dated as of May 3, 2022, between the Company and TCG 3.0 Fuji, LP
10-Q 001-38274 10.2 5/5/2022
10.15 Second Amended and Restated LLC Agreement of Funko Acquisition Holdings, L.L.C., dated as of November 1, 2017.
10-K 001-38274 10.27 3/19/2018
10.16 Amendment No. 1 to Second Amended and Restated Limited Liability Company Agreement of Funko Acquisition Holdings L.L.C., dated as of May 10, 2018.
10-Q 001-38274 10.2 5/11/2018
10.17 Registration Rights Agreement, dated as of November 1, 2017, between Funko, Inc., ACON Funko Investors, L.L.C. and related entities, Fundamental Capital, LLC, Funko International, LLC, Brian Mariotti, Tracy Daw, The Jon P. and Trishawn P. Kipp Children’s Trust uad 5/31/14, Russell Nickel, and Andrew Perlmutter.
10-K 001-38724 10.28 3/19/2018
10.18 Registration Rights Agreement Joinder and Amendment, dated May 3, 2022, between TCG 3.0 Fuji, LP and the Company.
10-Q 001-38724 10.3 5/5/2022
10.19 Credit Agreement dated September 17, 2021, among Funko Acquisition Holdings, L.L.C., Funko Holdings LLC, Funko, LLC, Loungefly, LLC and Funko Games, LLC, JPMorgan Chase Bank, N.A., as Administrative Agent, and each other financial institution from time to time party thereto.
8-K 001-38274 10.1 9/22/2021
10.20 Amendment No. 1, dated as of April 26, 2022, to Credit Agreement by and between Funko Acquisition Holdings, L.L.C., subsidiary borrowers party thereto, lenders party thereto and JPMorgan Chase Bank, N.A. as administrative agent.
10-Q 001-38274 10.1 5/5/2022
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Exhibit
Number
Exhibit Description
Incorporated by Reference
Form
File No.
Exhibit
Filing
Date
Filed/
Furnished
Herewith
10.21 Amendment No. 2, dated as of July 29, 2022, to Credit Agreement by and between Funko Acquisition Holdings, L.L.C., subsidiary borrowers party thereto, lenders party thereto and JPMorgan Chase Bank, N.A. as administrative agent.
10-Q 001-38274 10.6 8/4/2022
10.22 Amendment No. 3, dated as of February 28, 2023, to Credit Agreement by and between Funko Acquisition Holdings, L.L.C., subsidiary borrowers party thereto, lenders party thereto and JPMorgan Chase Bank, N.A. as administrative agent .
10-K 001-38274 10.23 3/1/2023
10.23 Limited Waiver and Limited Consent, dated June 11, 2024, between Funko Acquisition Holdings, L.L.C., subsidiary borrowers party thereto, lenders party thereto and JPMorgan Chase Bank, N.A., as administrative agent.
10-Q 001-38274 10.6 8/8/2024
10.24 † Funko, Inc. 2019 Incentive Award Plan.
8-K 001-38274 10.1 6/27/2019
10.25 † Form of Option Award Agreement under the Funko, Inc. 2019 Incentive Award Plan.
10-Q 001-38274 10.1 8/5/2021
10.26 † Form of Restricted Stock Unit Award Agreement under the Funko, Inc. 2019 Incentive Award Plan.
10-Q 001-38274 10.2 8/5/2021
10.27 † Form of Director Option Award Agreement under the Funko, Inc. 2019 Incentive Award Plan.
10-Q 001-38274 10.3 8/5/2021
10.28 † Form of Director Restricted Stock Unit Award Agreement under the Funko, Inc. 2019 Incentive Award Plan.
10-Q 001-38274 10.4 8/5/2021
10.29 † Form of Restricted Stock Unit Award Agreement for U.K. Employees under the Funko, Inc. 2019 Incentive Award Plan.
10-Q 001-38274 10.4 8/4/2022
10.30 † Form of Option Award Agreement for U.K. Employees under the Funko, Inc. 2019 Incentive Award Plan.
10-Q 001-38274 10.5 8/4/2022
10.31 † Form of Performance Stock Unit Award Agreement under the Funko, Inc. 2019 Incentive Award Plan
10-K 001-38274 10.33 3/1/2023
10.32 † Form of Performance Stock Unit Award Agreement for UK Employees under the Funko, Inc. 2019 Incentive Award Plan
10-K 001-38274 10.34 3/1/2023
10.33 † Employment Agreement, by and between the Company and Steve Nave, dated February 27, 2023.
10-K 001-38274 10.35 3/1/2023
10.34 † Separation and Release of Claims Agreement between the Company and Steve Nave, dated March 6, 2024.
8-K 001-38274 10.2 3/7/2024
10.35 † Letter between the Company and Michael Lunsford, dated July 13, 2023
8-K 001-38274 10.1 7/18/2023
10.36 † Letter Agreement, dated July 17, 2024, between the Company and Michael Lunsford.
10-Q 001-38274 10.5 8/8/2024
10.37 † Employment Agreement, dated as of August 8, 2024, between the Company and Yves Le Pendeven.
10-Q 001-38274 10.7 8/8/2024
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Exhibit
Number
Exhibit Description
Incorporated by Reference
Form
File No.
Exhibit
Filing
Date
Filed/
Furnished
Herewith
10.38 † Service Agreement Amendment between the Company and Andrew Oddie, dated May 1, 2024.
10-Q 001-38274 10.3 5/9/2024
10.39 † Letter Agreement between Funko, Inc., Funko UK, Ltd and Andrew Oddie, dated September 9, 2024.
8-K 001-38274 10.1 9/12/2024
10.40 † Employment Agreement between the Company and Cynthia Williams, effective May 20, 2024.
8-K 001-38274 10.1 5/9/2024
10.41 † Funko, Inc. 2024 Inducement Award Plan.
8-K 001-38274 10.2 5/9/2024
10.42 † Form of Stock Option Grant Notice and Stock Option Agreement under 2024 Inducement Award Plan.
8-K 001-38274 10.3 5/9/2024
10.43 † Form of Restricted Stock Unit Grant Notice under 2024 Inducement Award Plan.
8-K 001-38274 10.4 5/9/2024
16.1 Letter from Ernst & Young LLP dated May 9, 2024
8-K 001-38274 16.1 5/9/2024
19.1 Insider Trading Compliance Policy
*
21.1 List of Subsidiaries
*
23.1 Consent of Independent Registered Public Accounting Firm
*
23.2 Consent of Independent Registered Public Accounting Firm
*
31.1 Certification of Chief Executive Officer pursuant to Rules 13a-14(a)/15d-14(a) under the Securities Exchange Act of 1934, as amended.
*
31.2 Certification of Chief Financial Officer pursuant to Rules 13a-14(a)/15d-14(a) under the Securities Exchange Act of 1934, as amended.
*
32.1 Certification of Chief Executive Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
**
32.2 Certification of Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
**
97.1 Policy for Recovery of Erroneously Awarded Compensation
10-K 001-38274 97.1 3/7/2024
101.INS Inline XBRL Instance Document - the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document.
***
101.SCH Inline XBRL Taxonomy Extension Schema Document. ***
101.CAL Inline XBRL Taxonomy Extension Calculation Linkbase Document. ***
101.DEF Inline XBRL Taxonomy Definition Linkbase Document. ***
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Exhibit
Number
Exhibit Description
Incorporated by Reference
Form
File No.
Exhibit
Filing
Date
Filed/
Furnished
Herewith
101.LAB Inline XBRL Taxonomy 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) ***
* Filed herewith
** Furnished herewith
*** Submitted electronically herewith
† Management contract or compensation plan or arrangement
ITEM 16. FORM 10-K SUMMARY
None.
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SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) 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.
FUNKO, INC. (Registrant)
Date: March 13, 2025 By: /s/ Yves Le Pendeven
Chief Financial Officer (Principal Financial Officer)
Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of Registrant and in the capacities and on the dates indicated.
Signature Title Date
/s/ Cynthia Williams Chief Executive Officer and Director
(Principal Executive Officer) March 13, 2025
Cynthia Williams
/s/ Yves Le Pendeven Chief Financial Officer
(Principal Financial and Accounting Officer) March 13, 2025
Yves Le Pendeven
/s/ Charles Denson Chairman of the Board March 13, 2025
Charles Denson
/s/ Trevor Edwards Director March 13, 2025
Trevor Edwards
/s/ Jason Harinstein Director March 13, 2025
Jason Harinstein
/s/ Diane Irvine Director March 13, 2025
Diane Irvine
/s/ Jesse Jacobs Director March 13, 2025
Jesse Jacobs
/s/ Michael Kerns Director March 13, 2025
Michael Kerns
/s/ Sarah Kirshbaum Levy Director March 13, 2025
Sarah Kirshbaum Levy
/s/ Michael Lunsford Director March 13, 2025
Michael Lunsford
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