Funko, Inc. 10-K

ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA FUNKO, INC. AND SUBSIDIARIES CONSOLIDATED FINANCIAL STATEMENTS YEARS ENDED DECEMBER 31, 2025, 2024 AND 2023 CONTENTS Report of Independent Registered Public Accounting Firm (PCAOB ID: 238 ) 83 Report of Independent Registered Public Accounting Firm (PCAOB ID: 42) 86 Consolidated Financial Statements: Consolidated Statements of Operations 87 Consolidated Statements of Comprehensive Loss 88 Consolidated Balance Sheets 89 Consolidated Statements of Stockholders’ Equity 90 Consolidated Statements of Cash Flows 91 Notes to Consolidated Financial Statements 92 Financial Statement Schedules: Schedule I: Condensed Financial Information of Registrant as of December 31, 2025 and 2024 and for each of the three years in the period ended December 31, 2025 119 82 Table of Contents Report of Independent Registered Public Accounting Firm To the Board of Directors and Stockholders of Funko, Inc. Opinions on the Financial Statements and Internal Control over Financial Reporting We have audited the accompanying consolidated balance sheets of Funko, Inc. and its subsidiaries (the “Company”) as of December 31, 2025 and 2024, and the related consolidated statements of operations, of comprehensive loss, of stockholders’ equity and of cash flows for the years then ended, including the related notes and financial statement schedule as of December 31, 2025 and 2024 and for the years then ended listed in the accompanying index (collectively referred to as the “consolidated financial statements”). We also have audited the Company's internal control over financial reporting as of December 31, 2025, based on criteria established in Internal Control - Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of the Company as of December 31, 2025 and 2024, and the results of its operations and its cash flows for the years then ended in conformity with accounting principles generally accepted in the United States of America. Also in our opinion, the Company did not maintain, in all material respects, effective internal control over financial reporting as of December 31, 2025, based on criteria established in Internal Control - Integrated Framework (2013) issued by the COSO because material weaknesses in internal control over financial reporting existed as of that date as the Company did not design and maintain effective controls (i) related to the order-to-cash business process, as well as controls related to the preparation and review of journal entries at a foreign subsidiary; (ii) to verify appropriate segregation of duties; and (iii) over certain information technology general controls for certain information systems that are relevant to the preparation of the financial statements, specifically related to program change management controls and user access controls. 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 annual or interim financial statements will not be prevented or detected on a timely basis. The material weaknesses referred to above are described in Management's Report on Internal Control Over Financial Reporting appearing under Item 9A. We considered these material weaknesses in determining the nature, timing, and extent of audit tests applied in our audit of the 2025 consolidated financial statements, and our opinion regarding the effectiveness of the Company’s internal control over financial reporting does not affect our opinion on those consolidated financial statements. Basis for Opinions The Company's management is responsible for these consolidated financial statements, for maintaining effective internal control over financial reporting, and for its assessment of the effectiveness of internal control over financial reporting included in management's report referred to above. Our responsibility is to express opinions on the Company’s consolidated financial statements and on the Company's internal control over financial reporting based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB. PricewaterhouseCoopers LLP, 1420 Fifth Avenue, Suite 2800, Seattle, Washington 98101 T: (206) 398 3000, www.pwc.com/us 83 Table of Contents We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audits to obtain reasonable assurance about whether the consolidated financial statements are free of material misstatement, whether due to error or fraud, and whether effective internal control over financial reporting was maintained in all material respects. Our audits of the consolidated financial statements included performing procedures to assess the risks of material misstatement of the consolidated financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the consolidated financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the consolidated financial statements. Our audit of internal control over financial reporting included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, and testing and evaluating the design and operating effectiveness of internal control based on the assessed risk. Our audits also included performing such other procedures as we considered necessary in the circumstances. We believe that our audits provide a reasonable basis for our opinions. Emphasis of Matter As discussed in Note 2 to the consolidated financial statements, the Company has had net losses, there is no remaining borrowing availability under the Company’s revolving credit facility, and the amended credit agreement has a maturity date of December 31, 2027. Management’s evaluation of the events and conditions, and management's plans to mitigate these matters are also described in Note 2. Definition and Limitations of Internal Control over Financial Reporting A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company’s internal control over financial reporting includes those policies and procedures that (i) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (ii) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (iii) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the financial statements. Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate. 84 Table of Contents Critical Audit Matters The critical audit matter communicated below is a matter arising from the current period audit of the consolidated financial statements that was communicated or required to be communicated to the audit committee and that (i) relates to accounts or disclosures that are material to the consolidated financial statements and (ii) involved our especially challenging, subjective, or complex judgments. The communication of critical audit matters does not alter in any way our opinion on the consolidated financial statements, taken as a whole, and we are not, by communicating the critical audit matter below, providing a separate opinion on the critical audit matter or on the accounts or disclosures to which it relates. Revenue Recognition – Certain Products As described in Note 2 to the consolidated financial statements, revenue from the sale of Company products is recognized when control of the goods is transferred to the customer, which is upon shipment or upon receipt of finished goods by the customer, depending on the contract terms. The Company routinely enters into arrangements with its customers to provide sales incentives, support customer promotions, and provide allowances for returns and defective merchandise. The costs of these programs reduce gross sales in the period the related sale is recognized. The Company’s net sales were $908.2 million for the year ended December 31, 2025, of which a significant portion relates to certain products. The principal consideration for our determination that performing procedures relating to revenue recognition from certain products is a critical audit matter is a high degree of auditor effort in performing procedures related to the Company’s revenue recognition from certain products. As described in the “Opinions on the Financial Statements and Internal Control over Financial Reporting” section, a material weakness was identified related to this matter. Addressing the matter involved performing procedures and evaluating audit evidence in connection with forming our overall opinion on the consolidated financial statements. These procedures included, among others (i) testing revenue recognized, on a sample basis, by obtaining and inspecting source documents, such as contracts, purchase orders, invoices, proof of transfer of control, and cash receipts net of credit memos and discounts; (ii) testing outstanding customer invoice balances as of December 31, 2025, on a sample basis, by obtaining and inspecting source documents, such as contracts, invoices, proof of transfer of control, and subsequent cash receipts; (iii) testing the timing of revenue recognition, on a sample basis, for revenue transactions that occurred near period end by obtaining and inspecting source documents, such as contracts, purchase orders, invoices, and proof of transfer of control; (iv) testing the issuance of credit memos, on a sample basis, by obtaining and inspecting source documents, such as contracts, credit memos, and original invoices; (v) testing sales incentives, on a sample basis, by obtaining contracts with customers and recalculating the sales incentives; and (vi) testing the completeness of the sales allowances by considering whether contrary evidence exists. /s/ PricewaterhouseCoopers LLP Seattle, Washington March 12, 2026 We have served as the Company’s auditor since 2024. 85 Table of Contents REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM To the Shareholders and the Board of Directors of Funko, Inc. Opinion on the Financial Statements We have audited the accompanying consolidated statement of operations, comprehensive loss, stockholders’ equity and cash flows of Funko, Inc. (the Company) for the year ended December 31, 2023, and the related notes and financial statement schedule listed in Item 15(a)(2) (collectively referred to as the “consolidated financial statements”). In our opinion, the consolidated financial statements present fairly, in all material respects, the results of its operations and its cash flows for the year ended December 31, 2023, in conformity with U.S. generally accepted accounting principles. Basis for Opinion These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on the Company’s financial statements based on our audit. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB. We conducted our audit in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. Our audit included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audit also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audit provides a reasonable basis for our opinion. /s/ Ernst & Young LLP We served as the Company’s auditor from 2015 to 2024 Seattle, Washington March 7, 2024 86 Table of Contents FUNKO, INC. CONSOLIDATED STATEMENTS OF OPERATIONS Year Ended December 31, 2025 2024 2023 (in thousands, except per share data) Net sales $ 908,209 $ 1,049,850 $ 1,096,086 Cost of sales (exclusive of depreciation and amortization) 556,940 615,318 763,085 Selling, general, and administrative expenses 337,715 358,958 377,065 Depreciation and amortization 59,097 62,583 59,763 Total operating expenses 953,752 1,036,859 1,199,913 (Loss) income from operations ( 45,543 ) 12,991 ( 103,827 ) Interest expense, net 19,181 20,575 27,970 Loss on extinguishment of debt — — 494 Gain on tax receivable agreement liability adjustment — — ( 100,223 ) Other (income) expense, net ( 785 ) 2,922 ( 127 ) Loss before income taxes ( 63,939 ) ( 10,506 ) ( 31,941 ) Income tax expense 4,356 4,564 132,497 Net loss ( 68,295 ) ( 15,070 ) ( 164,438 ) Less: net loss attributable to non-controlling interests ( 935 ) ( 352 ) ( 10,359 ) Net loss attributable to Funko, Inc. $ ( 67,360 ) $ ( 14,718 ) $ ( 154,079 ) Loss per share of Class A common stock: Basic $ ( 1.24 ) $ ( 0.28 ) $ ( 3.19 ) Diluted $ ( 1.24 ) $ ( 0.28 ) $ ( 3.19 ) Weighted average shares of Class A common stock outstanding: Basic 54,387 52,043 48,332 Diluted 54,387 52,043 48,332 See accompanying notes to consolidated financial statements. 87 Table of Contents FUNKO, INC. CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS Year Ended December 31, 2025 2024 2023 (in thousands) Net loss $ ( 68,295 ) $ ( 15,070 ) $ ( 164,438 ) Other comprehensive income (loss): Foreign currency translation gain (loss), net of tax effect of $ 0 , $ 0 and $( 770 ) for the years ended December 31, 2025, 2024 and 2023, respectively 6,366 ( 1,541 ) 2,617 Comprehensive loss ( 61,929 ) ( 16,611 ) ( 161,821 ) Less: Comprehensive loss attributable to non-controlling interests ( 866 ) ( 397 ) ( 10,165 ) Comprehensive loss attributable to Funko, Inc. $ ( 61,063 ) $ ( 16,214 ) $ ( 151,656 ) See accompanying notes to consolidated financial statements. 88 Table of Contents FUNKO, INC. CONSOLIDATED BALANCE SHEETS December 31, 2025 2024 (in thousands, except per share data) Assets Current assets: Cash and cash equivalents $ 42,148 $ 34,655 Accounts receivable, net 117,018 119,882 Inventories 83,136 92,580 Prepaid expenses and other current assets 48,094 39,942 Total current assets 290,396 287,059 Property and equipment, net 68,679 78,357 Operating lease right-of-use assets, net 46,928 52,846 Goodwill 133,900 133,652 Intangible assets, net 135,826 151,547 Other assets 9,505 3,793 Total assets $ 685,234 $ 707,254 Liabilities and Stockholders' Equity Current liabilities: Current portion of revolving credit facility $ 1,125 $ 60,000 Current portion of term debt 21,932 22,512 Current portion of operating lease liabilities 18,792 17,102 Accounts payable 64,748 63,130 Accrued royalties 59,821 61,362 Accrued expenses and other current liabilities 77,499 81,688 Total current liabilities 243,917 305,794 Long-term debt 202,246 100,303 Operating lease liabilities 48,680 60,390 Other long-term liabilities 4,261 4,414 Commitments and contingencies (Note 14) Stockholders' equity: Class A common stock, par value $ 0.0001 per share, 200,000 shares authorized; 55,327 shares and 52,967 shares issued and outstanding as of December 31, 2025 and 2024, respectively 5 5 Class B common stock, par value $ 0.0001 per share, 50,000 shares authorized; 91 shares and 1,430 shares issued and outstanding as of December 31, 2025 and 2024, respectively — — Additional paid-in-capital 357,330 343,472 Accumulated other comprehensive income (loss) 4,621 ( 1,676 ) Accumulated deficit ( 176,142 ) ( 108,782 ) Total stockholders' equity attributable to Funko, Inc. 185,814 233,019 Non-controlling interests 316 3,334 Total stockholders' equity 186,130 236,353 Total liabilities and stockholders' equity $ 685,234 $ 707,254 See accompanying notes to consolidated financial statements. 89 Table of Contents FUNKO, INC. CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY (in thousands) Class A Common Stock Class B Common Stock Additional Paid-In Capital Accumulated Other Comprehensive (Loss) Income Retained Earnings (Accumulated Deficit) Non- Controlling Interests Total Shares Amount Shares Amount Period ended December 31, 2022 47,192 $ 5 3,293 $ — $ 310,807 $ ( 2,603 ) $ 60,015 $ 21,465 $ 389,689 Distribution to continuing equity owners — — — — — — — ( 1,118 ) ( 1,118 ) Equity-based compensation — — — — 10,534 — — — 10,534 Activity under equity-based compensation plans 1,601 — — — 756 — — — 756 Cumulative translation adjustment, net of tax — — — — — 2,423 — 194 2,617 Redemption of common units of FAH, LLC 1,756 — ( 1,016 ) — 4,083 — — ( 4,083 ) — Net loss — — — — — — ( 154,079 ) ( 10,359 ) ( 164,438 ) Period ended December 31, 2023 50,549 $ 5 2,277 $ — $ 326,180 $ ( 180 ) $ ( 94,064 ) $ 6,099 $ 238,040 Distribution to continuing equity owners — — — — — — — ( 88 ) ( 88 ) Equity-based compensation — — — — 13,602 — — — 13,602 Activity under equity-based compensation plans 1,224 — — — 1,410 — — — 1,410 Cumulative translation adjustment, net of tax — — — — — ( 1,496 ) — ( 45 ) ( 1,541 ) Redemption of common units of FAH, LLC 1,194 — ( 847 ) — 2,280 — — ( 2,280 ) — Net loss — — — — — — ( 14,718 ) ( 352 ) ( 15,070 ) Period ended December 31, 2024 52,967 $ 5 1,430 $ — $ 343,472 $ ( 1,676 ) $ ( 108,782 ) $ 3,334 $ 236,353 Distribution to continuing equity owners — — — — — — — ( 35 ) ( 35 ) Equity-based compensation — — — — 11,536 — — — 11,536 Activity under equity-based compensation plans 1,016 — — — 227 — — — 227 Cumulative translation adjustment, net of tax — — — — — 6,297 — 69 6,366 Redemption of common units of FAH, LLC 1,344 — ( 1,339 ) — 2,117 — — ( 2,117 ) — Other — — — — ( 22 ) — — — ( 22 ) Net loss — — — — — — ( 67,360 ) ( 935 ) ( 68,295 ) Period ended December 31, 2025 55,327 $ 5 91 $ — $ 357,330 $ 4,621 $ ( 176,142 ) $ 316 $ 186,130 See accompanying notes to consolidated financial statements. 90 Table of Contents FUNKO, INC. CONSOLIDATED STATEMENTS OF CASH FLOWS Year Ended December 31, 2025 2024 2023 (in thousands) Operating Activities Net loss $ ( 68,295 ) $ ( 15,070 ) $ ( 164,438 ) Adjustments to reconcile net income to net cash (used in) provided by operating activities: Depreciation and amortization 59,097 62,583 57,389 Equity-based compensation 11,536 13,602 10,534 Loss on debt extinguishment — — 494 Gain on tax receivable agreement liability adjustment — — ( 100,223 ) Deferred tax (benefit) expense — ( 57 ) 123,124 Other, net ( 1,877 ) 3,722 5,364 Changes in operating assets and liabilities, net of amounts acquired: Accounts receivable, net 6,192 9,624 40,513 Inventories 11,812 26,216 122,479 Prepaid expenses and other assets ( 3,437 ) 17,076 ( 1,969 ) Accounts payable 426 9,280 ( 17,968 ) Income taxes payable ( 274 ) ( 597 ) 75 Accrued royalties ( 1,542 ) 6,987 ( 14,723 ) Accrued expenses and other liabilities ( 18,758 ) ( 9,842 ) ( 29,716 ) Net cash (used in) provided by operating activities ( 5,120 ) 123,524 30,935 Investing Activities Purchase of property and equipment ( 32,965 ) ( 32,791 ) ( 35,131 ) Acquisitions of business and intangible assets, net of cash acquired — — ( 5,364 ) Sale of Funko Games inventory and certain intellectual property — 6,754 — Other, net 1,063 809 699 Net cash used in investing activities ( 31,902 ) ( 25,228 ) ( 39,796 ) Financing Activities Borrowings on revolving credit facility 85,000 40,000 71,000 Payments on revolving credit facility ( 20,000 ) ( 100,500 ) ( 20,500 ) Payment of term debt ( 23,134 ) ( 31,104 ) ( 22,581 ) Distributions to continuing equity owners — — ( 1,118 ) Payments under tax receivable agreement — ( 8,960 ) ( 4 ) Other, net 171 1,322 ( 1,201 ) Net cash provided by (used in) financing activities 42,037 ( 99,242 ) 25,596 Effect of exchange rates on cash and cash equivalents 2,478 ( 852 ) 518 Net change in cash and cash equivalents 7,493 ( 1,798 ) 17,253 Cash and cash equivalents at beginning of period 34,655 36,453 19,200 Cash and cash equivalents at end of period $ 42,148 $ 34,655 $ 36,453 Supplemental Cash Flow Information Cash paid for interest $ 18,343 $ 20,953 $ 24,635 Income tax payments 5,355 3,899 1,059 Establishment of liabilities under tax receivable agreement — 547 — See accompanying notes to consolidated financial statements. 91 Table of Contents FUNKO, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 1. Basis of Presentation and Description of Business The consolidated financial statements include Funko, Inc. and its subsidiaries (together with its subsidiaries, the “Company”) and have been prepared in accordance with U.S. generally accepted accounting principles (“U.S. GAAP”). All intercompany balances and transactions have been eliminated. The Company was formed as a Delaware corporation on April 21, 2017. The Company was formed for the purpose of completing an initial public offering (“IPO”) of its Class A common stock and related transactions in order to carry on the business of Funko Acquisition Holdings, L.L.C. (“FAH, LLC”) and its subsidiaries. FAH, LLC owns 100 % of Funko Holdings LLC ("FHL") and FHL owns 100 % of Funko, LLC, a limited liability company formed in the state of Washington, which is its operating entity. The Company is a leading pop culture consumer products company that designs, sources, and distributes licensed pop culture products. The Company is headquartered in Everett, Washington. Funko, Inc. operates and controls all of FAH, LLC’s operations and, through FAH, LLC and its subsidiaries, conducts FAH, LLC’s business, as the sole managing member. Accordingly, the Company consolidates the financial results of FAH, LLC and reports a non-controlling interest in its consolidated financial statements representing the FAH, LLC interests held by certain holders of common units in FAH, LLC (the "Continuing Equity Owners"). 2. Significant Accounting Policies Certain of the significant accounting policies are discussed within the note to which they specifically relate. Certain prior-year amounts have been reclassified to conform to the current year presentation. Use of Estimates The preparation of the Company’s consolidated financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities at the date of the consolidated financial statements as well as the reported amounts of revenues and expenses during the reporting period. Actual results could differ from these estimates and assumptions. Cash Equivalents Cash equivalents include amounts due from third-party financial institutions for credit and debit card transactions, that typically settle in less than 5 days. Cash equivalents also include short-term investments, which are highly liquid investments with maturities of three months or less when purchased. Concentrations of Business and Credit Risk The Company grants credit to its customers on an unsecured basis. The Company monitors the financial health of its customers and will take actions to mitigate a customer's credit risk if a negative financial forecast is expected. As of December 31, 2025 and 2024, the balance of accounts receivable consisted of 8 % and 6 %, respectively, of amounts owed from the largest customer for the given period. The collection of these receivables has been within the terms of the associated customer agreement. For the years ended December 31, 2025, 2024 and 2023, there was no individual customer that generated over 10% of net sales. For both the years ended December 31, 2025, 2024 and 2023, no individual license agreement accounted for more than 10% of sales. The Company maintains its cash within bank deposit accounts at high quality, accredited financial institutions. These amounts at times may exceed federally insured limits. The Company has not experienced any credit losses in such accounts and does not believe it is exposed to significant credit risk on cash. 92 Table of Contents Inventories Inventories consist primarily of figures, plush, apparel, homewares, accessories and other finished goods, and is accounted for using the first-in, first-out (“FIFO”) method. Inventory costs include direct product costs, freight and duty costs. Inventories are stated at the lower of cost or net realizable value. The Company estimates obsolescence based on assumptions regarding future demand. This valuation requires us to make judgments, based on currently available information, about the likely method of disposition, such as through sales to customers, or liquidation, and expected recoverable value of each disposition category. Reserves for excess and obsolete inventories were $ 11.0 million and $ 11.8 million as of December 31, 2025 and 2024, respectively. During the year ended December 31, 2023, the Company approved an inventory reduction plan to improve U.S. warehouse operational efficiency. The Company recorded a $ 30.3 million inventory write-down included in cost of sales as presented in the consolidated statements of operations. The units were identified and recorded based on an estimate of product costs, associated capitalized freight, net of allocated inventory reserves of the identified units and an estimate of physical destruction costs, during the quarter ended March 31, 2023. The physical destruction plan was completed during the third quarter of 2023. Property and Equipment and Long-Lived Assets Property and equipment is stated at historical cost, net of accumulated depreciation, and, if applicable, impairment charges. Depreciation of property and equipment is recorded using the straight-line method over the shorter of the estimated useful life of the asset or the lease term. The estimated useful lives of our property and equipment are generally as follows: Asset Lives (in years) Tooling and molds 2 Furniture, fixtures, and warehouse equipment 2 to 7 Computer equipment, software and other 3 to 5 Leasehold improvements Lesser of useful life or term of lease The Company monitors long-lived assets for impairment indicators on an ongoing basis in accordance with U.S. GAAP. Conditions that would necessitate an impairment assessment include a significant decline in the observable market value of an asset (or asset group), a significant change in the extent or manner in which an asset (or asset group) is used, or any other significant adverse change that would indicate that the carrying amount of an asset or group of assets may not be recoverable. If impairment indicators exist, the Company will perform the required impairment analysis by comparing the undiscounted cash flows expected to be generated from the underlying asset groups to the related net book values. If the net book value exceeds the undiscounted cash flows, an impairment loss is measured and recognized. An impairment loss is measured as the difference between the net book value and the fair value of the long-lived assets. Fair value is estimated based upon a combination of market and cost approaches, as appropriate. Changes in economic or operating conditions impacting these estimates and assumptions could result in the impairment of the Company's long-lived assets. Other Assets Other assets primarily comprise capitalized implementation costs from cloud computing arrangements and security deposits. The Company capitalizes eligible costs associated with cloud computing arrangements over the term of the arrangement, plus reasonably certain renewals, and intends to recognize those costs on a straight-line basis in the same line item in the consolidated statement of operations as the expense for fees associated with the cloud computing arrangement once the capitalized project is ready for intended use. Capitalized cloud computing arrangement costs and amortization expense were immaterial for the periods presented. 93 Table of Contents Revenue Recognition and Sales Allowance Revenue from the sale of Company products is recognized when control of the goods is transferred to the customer, which is upon shipment or upon receipt of finished goods by the customer, depending on the contract terms. Deferred revenue is recognized when the Company collects cash from the customer and had not yet filled its obligation for delivery of product or service. Deferred revenue was $ 17.6 million and $ 13.3 million as of December 31, 2025 and 2024, respectively, and is recorded within accrued expenses and other current liabilities on the Company's consolidated balance sheets. The Company expects to recognize revenue under these performance obligations over the next 12 months. The Company routinely enters into arrangements with its customers to provide sales incentives, support customer promotions, and provide allowances for returns and defective merchandise. These sales adjustments require management to make estimates. In making these estimates, management considers all available information including the overall business environment, historical trends and information from customers, such as agreed upon customer contract terms as well as historical experience from the customer. The costs of these programs reduce gross sales in the period the related sale is recognized. The Company adjusts its estimates at least quarterly or when facts and circumstances used in the estimate process change. As of December 31, 2025 and 2024, the Company had sales allowances of $ 39.8 million and $ 42.2 million, respectively. The Company has made an accounting policy election to exclude from revenue, all taxes assessed by a governmental authority that are both imposed on and concurrent with a specific revenue-producing transaction and collected by the Company from a customer (for example, sales, use, value-added, and certain excise taxes). The Company has elected to account for shipping and handling activities that occur after control of the related good transfers as fulfillment activities instead of assessing such activities as performance obligations. Accordingly, shipping and handling activities that are performed by the Company, after a customer has obtained control of the products, are considered fulfillment costs and are included within cost of sales when related revenues are recognized. Shipping fees billed to customers are included in net sales. The Company has elected the practical expedient to not recognize a significant financing component for contracts that include payments terms of one year or less. The Company has also elected the practical expedient permitting expensing of costs to obtain a contract when the expected amortization period is one year or less. Royalties The Company enters into agreements for rights to licensed trademarks, copyrights and likenesses for use in our products. These licensing agreements require the payment of royalty fees to the licensor based on a percentage of revenue. Many licensing agreements also require minimum royalty commitments. When royalty fees are paid in advance, the Company records these payments as a prepaid asset. If the Company determines that it is probable that the expected revenue will not be realized, a reserve is recorded against the prepaid asset for the non-recoverable portion. As of December 31, 2025 , the Company recorded a prepaid asset of $ 18.6 million, net of a reserve of $ 0.8 million. As of December 31, 2024, the Company recorded a prepaid asset of $ 6.1 million, net of a reserve of $ 8.5 million. The Company records a royalty liability as revenues are earned based on the terms of the licensing agreement. In situations where a minimum commitment is not expected to be met based on expected revenues, the Company will accrue up to the minimum amount when it is reasonably certain that revenues generated will not meet the minimum commitment. Our license agreements typically grant our licensors the right to audit our compliance with the terms and conditions of such agreements. Any such audit could result in a dispute over whether the Company has paid the proper royalties and a requirement that the Company pay additional royalties. As of December 31, 2025 and 2024 , the Company had an accrual of $ 29.6 million and $ 23.5 million, respectively, related to ongoing and future royalty audits, based on estimates of the costs the Company expects to incur. Royalty and license expense is recorded within cost of sales on the consolidated statements of operations. Royalty expenses for the years ended December 31, 2025 , 2024 and 2023, were $ 158.5 million, $ 168.9 million and $ 179.7 million, respectively. 94 Table of Contents Advertising and Marketing Costs Advertising and marketing costs are expensed when the advertising or marketing event takes place. These costs include the fees to participate in trade shows and Comic-Cons, as well as costs to develop promotional video and other online content created for advertising purposes. These costs are included in selling, general and administrative expenses and for the years ended December 31, 2025 , 2024 and 2023 were $ 51.5 million, $ 51.6 million, and $ 31.3 million, respectively. The Company enters into cooperative advertising arrangements with customers. The fees related to these arrangements are recorded as a reduction of net sales in the accompanying consolidated statements of operations because the Company has determined it does not receive an identifiable benefit and cannot reasonably estimate the fair value of these arrangements. Product Design and Development Costs Product design and development costs are recognized in selling, general and administrative expenses in the consolidated statements of operations as incurred. Product design and development costs, excluding personnel costs for the years ended December 31, 2025, 2024 and 2023, were $ 5.7 million, $ 6.8 million, and $ 8.0 million, respectively. Foreign Currency The Company has international sales and operating expenses that are denominated in local functional currencies. The functional currency of our international subsidiaries is the same as the local currency. Assets and liabilities of these subsidiaries are translated into U.S. dollars at period-end foreign exchange rates, and revenues and expenses are translated at average rates prevailing throughout the period. Translation adjustments are included in other comprehensive income (loss) on the consolidated statements of comprehensive loss. Transaction gains and losses including intercompany transactions denominated in a currency other than the functional currency of Funko, Inc. are included in other (income) expense, net on our consolidated statements of operations. There were no material gains (losses) recognized In connection with the settlement and remeasurement of intercompany balances for the years ended December 31, 2025, 2024 and 2023. The income tax effects related to the unrealized foreign currency component of other comprehensive income (loss) are reclassified to earnings only when the net investment is sold, or when a liquidation of the respective net investment in the foreign entity is substantially completed. Deferred Tax Assets and Tax Receivable Agreement During the year ended December 31, 2023, the Company determined that based on all the available evidence, including the Company’s three-year cumulative pre-tax loss position, it is not more likely than not that the results of operations will generate sufficient taxable income to realize its deferred tax assets. Consequently, the Company established a full valuation allowance of $ 123.2 million against its deferred tax assets, thus reducing the carrying balance to $ 0 , and recognized a corresponding increase to tax expense in the consolidated statements of operations and comprehensive loss in the year ended December 31, 2023. Future changes to the balances of these valuation allowances, as a result of this continued review and analysis by the Company, could impact the financial statements within the period of change. Based on the Company's assessment as of December 31, 2025, a full valuation allowance on its deferred tax assets remains appropriate. As a result of the full valuation allowance on the deferred tax assets, and projected inability to fully utilize all or part of the related tax benefits, the Company determined that certain payments to the TRA Parties related to unrealized tax benefits under the TRA are no longer probable and estimable. Based on this assessment, the Company reduced its TRA Liability as of June 30, 2023, to $ 9.6 million, and recognized a gain of $ 99.6 million within the accompanying consolidated statements of operations and comprehensive loss. The Company performed a true-up in the fourth quarter of 2023 based on the filed 2022 consolidated tax return and recognized a further reduction in TRA liability and corresponding $ 603 thousand gain within the accompanying consolidated statements of operations and comprehensive loss. The Company estimated a TRA liability for the year ended December 31, 2025 and 2024 of $ 120 thousand and $ 547 thousand, respectively, as utilization of certain portions of the deferred tax assets subject to the TRA were more likely than not to be recognized. 95 Table of Contents Assets Held-for-Sale The Company evaluates the held-for-sale criteria under ASC 360 when it commits to a plan to sell an asset or disposal group. Assets that qualify as held-for-sale are reported at the lower of its carrying value or its fair value less cost to sell. Assets held-for-sale were included within prepaid expenses and other current assets on the Company's consolidated balance sheets. Liquidity During the fiscal years ended December 31, 2025, 2024 and 2023, the Company recorded net losses of $ 67.4 million, $ 14.7 million and $ 154.1 million, respectively. The Company’s annual revenues decreased from $ 1.1 billion in 2023 to $ 1.0 billion in 2024 and to $ 908.2 million in 2025. The Company’s principal sources of liquidity are existing cash and cash equivalents and cash flows from operating activities. There is no remaining borrowing availability under the Company's Revolving Credit Facility, as defined below, and the amended Credit Agreement, as defined below, requires that cash in excess of $ 50.0 million be used for prepayment of the Revolving Credit Facility, which prepayments permanently reduce the revolving commitments. Cash used for operating activities for the fiscal year ended December 31, 2025 was $ 5.1 million, which included $ 18.3 million of interest payments. As of December 31, 2025, the Company held cash and cash equivalents of $ 42.1 million and total debt under the Credit Agreement, of $ 219.9 million (net of $ 0.4 million in unamortized debt issuance costs), with a maturity date of December 31, 2027, which is beyond one year from the date that the financial statements are issued or available to be issued. The Company sources, procures and assembles inventory, primarily out of Vietnam, Cambodia, China and Mexico. The effects of tariffs imposed in 2025, and the potential imposition of modified or additional tariffs or export controls by other countries, could continue to have an adverse effect on future net sales, margins, profitability and cash flows. The Company anticipates it may face continued supply chain challenges, cost volatility, and consumer and economic uncertainty due to these ongoing changes in global trade policies. The Company has continued to benefit from 2025 price increases and realized certain cost-savings of shifting production into lower tariff countries, overhead reductions and capital expenditures and entered into the Fifth Amendment to the Credit Agreement, to proactively manage the Company’s liquidity. On February 13, 2026, the Credit Parties entered into the Fifth Amendment of the Credit Agreement to, among other things, amend the Prior Credit Agreement to (i) extend the maturity date of the loans from September 17, 2026 to December 31, 2027, and (ii) amend the financial covenants applicable to FAH, LLC and its subsidiaries under the Prior Credit Agreement to, among other things, (a) waive the minimum Fixed Charge Coverage Ratio financial covenant for the fiscal quarter ended December 31, 2025 and the fiscal quarters ending March 31, 2026 and June 30, 2026, (b) provide FAH, LLC additional cushion with respect to the minimum Fixed Charge Coverage Ratio financial covenant for the fiscal quarters ending September 30, 2026, December 31, 2026 and March 31, 2027 relative to the minimum Fixed Charge Coverage Ratio covenant set forth in the Prior Credit Agreement, (c) introduce a minimum Consolidated EBITDA covenant for the six-month period ending June 30, 2026, (d) waive the maximum Net Leverage Ratio covenant for the fiscal quarter ended December 31, 2025 and the fiscal quarters ending March 31, 2026, June 30, 2026 and September 30, 2026, (e) subject to certain usage restrictions, permit FAH, LLC to forego testing of certain Financial Covenants for any test period (to the extent required to be tested in such test period and not in two consecutive quarters) if FAH, LLC makes a voluntary permanent prepayment of the loans under the Credit Agreement in an amount not less than $ 10.0 million prior to the delivery of a compliance certificate for such test period, (f) requiring amortization payments on the outstanding revolving loans, with each such amortization payment in respect of the outstanding revolving loans permanently reducing the revolving commitments and (g) requiring quarterly mandatory prepayment of the revolving loans with cash (subject to certain exceptions) and cash equivalents in excess of $ 50.0 million, with each such prepayment permanently reducing the revolving commitments. Consistent with the Prior Credit Agreement, the Credit Parties are subject to a covenant to hold no less than $ 10.0 million of Qualified Cash at any time. 96 Table of Contents As a result of the Fifth Amendment of the Credit Agreement, the Company expects that its existing resources and future cash flows from operations and cash and cash equivalents, will provide it with sufficient liquidity to meet its obligations for at least the next twelve months from the issuance date of these financial statements, including compliance with all covenants under the Credit Agreement. As the Company's financial condition continues to improve as a result of the initiatives referred to above, the Company plans to either amend the Credit Agreement to further extend the maturity, seek alternative financing arrangements prior to the maturity of the debt, or opportunistically pursue other business opportunities or strategic transactions with the assistance of financial advisors. However, there can be no assurance these plans will be completed. If the Company is unable to complete these plans before the end of the fiscal year December 31, 2026, the debt would then be reclassified from a long-term liability to a current liability. If the Credit Agreement is not refinanced before its maturity date of December 31, 2027 on terms that are acceptable to the Company or, if the Company does not successfully enter into a transaction(s) to strengthen its balance sheet and increase its financial flexibility, the Company’s liquidity, results of operations, cash flows and financial condition would be materially adversely impacted. Recently Adopted Accounting Standards In December 2023, the Financial Accounting Standards Board issued ASU 2023-09, Income Taxes (Topic 740): Improvements to Income Tax Disclosures. ASU 2023-09 amends existing income tax disclosure guidance, primarily requiring more detailed disclosure for income taxes paid by jurisdiction and the effective tax rate reconciliation. The Company adopted the ASU for the year ended December 31, 2025, on a prospective basis. Refer to Note 12, "Income Taxes" for further information on the Company's enhanced disclosures. Accounting Pronouncements Not Yet Adopted In November 2024, the Financial Accounting Standards Board issued ASU 2024-03, Income Statement - Reporting Comprehensive Income - Expense Disaggregation Disclosures (Subtopic 220-40): Disaggregation of Income Statement Expenses for public business entities. ASU 2024-03 requires that an entity disclose in the notes to the financial statements specified information about certain costs and expenses, including the amounts of (a) purchases of inventory, (b) employee compensation, (c) depreciation, (d) intangible asset amortization, and (e) other amounts of depletion expense included in each relevant expense caption presented on the statement of operations. The standard also requires disclosure of a qualitative description of the amounts remaining in relevant expense captions that are not separately disaggregated quantitatively, as well as the total amount of selling expenses and an entity’s definition of selling expenses. The ASU was clarified in January 2025 and is effective for annual reporting periods beginning after December 15, 2026 and interim periods within annual reporting periods beginning after December 15, 2027, with early adoption permitted and it can be applied on either a prospective or retroactive basis. The Company is currently evaluating the ASU to determine its impact on income statement presentation and enhanced footnote disclosures. 3. Acquisitions On January 19, 2023, the Company acquired 100 % of the stock outstanding in MessageMe, Inc. (d/b/a HipDot), a cosmetics company with innovative licensed collaborations in unique form factors. The final purchase consideration was $ 6.0 million in cash. The Company recognized an intangible asset of $ 1.8 million, with a useful life of 10 years for the HipDot trade name, cash of $ 0.6 million, liabilities of $ 0.5 million and the remaining $ 4.1 million was allocated to Goodwill. 4. Goodwill and Intangible Assets Goodwill represents the excess of the purchase price over the net amount of identifiable assets acquired and liabilities assumed in a business combination measured at fair value. The Company evaluates goodwill for impairment annually on October 1 of each year and upon the occurrence of triggering events or substantive changes in circumstances that could indicate a potential impairment by assessing qualitative factors or performing a quantitative analysis in determining whether it is more likely than not that the fair value of the net assets is below their carrying amounts. The Company has determined that it has one reporting unit for which discrete financial information is available and results are regularly reviewed by management. 97 Table of Contents The Company determined as of its annual October 1, 2025 goodwill impairment assessment, it was more likely than not that the fair value of the reporting unit was above the carrying value of the net assets. During the year ended December 31, 2025, the Company observed a significant decline in the market valuation of the Company’s Class A common stock along with a volatile macroeconomic environment. As a result, the Company has evaluated potential goodwill impairment triggering events as of December 31, 2025, and determined it was more likely than not that the fair value of the reporting unit was above carrying value of the net assets. However, the Company will continue to evaluate for impairment triggering events due to the substantive changes in circumstances, such as market capitalization, which could indicate a potential impairment and the need to record a material, non-cash charge in a future period. The Company will continue to monitor conditions that may indicate the need for a recoverability assessment of the carrying value of the identified intangible and other long-lived assets. No impairment charges relating to goodwill were recorded in the years ended December 31, 2025, 2024 and 2023. The following table presents the balances of goodwill as of 2025 and 2024 (in thousands): Goodwill Balance as of January 1, 2024 $ 133,795 Reclassification to assets held-for-sale ( 87 ) Foreign currency remeasurement ( 56 ) Balance as of December 31, 2024 $ 133,652 Foreign currency remeasurement 248 Balance as of December 31, 2025 $ 133,900 Intangible assets acquired in a business combination are recognized separately from goodwill and are initially recognized at their fair value at the acquisition date. Intangible assets acquired include intellectual property (product design), customer and licensor relationships, and trade names. These are definite-lived assets and are amortized on a straight-line basis over their estimated useful lives. As of December 31, 2025 and 2024, there were also immaterial indefinite-lived assets not subject to amortization but tested for impairment. There were immaterial impairment charges relating to indefinite-lived intangible assets recorded in the years ended December 31, 2025, 2024 and 2023, respectively. The following table provides the details of remaining identified intangible assets, by major class, for the periods indicated (in thousands): December 31, 2025 December 31, 2024 Estimated Useful Life (Years) Gross Carrying Amount Accumulated Amortization Intangible Assets, Net Gross Carrying Amount Accumulated Amortization Intangible Assets, Net Intangible assets subject to amortization: Intellectual property 3 - 20 $ 114,611 $ ( 58,359 ) $ 56,252 $ 114,611 $ ( 52,638 ) $ 61,973 Trade names 10 - 20 92,528 ( 46,161 ) 46,367 92,528 ( 40,977 ) 51,551 Customer relationships 3 - 20 69,092 ( 37,479 ) 31,613 68,821 ( 33,490 ) 35,331 Licensor relationships 10 - 20 11,258 ( 9,680 ) 1,578 11,074 ( 8,409 ) 2,665 Total $ 287,489 $ ( 151,679 ) $ 135,810 $ 287,034 $ ( 135,514 ) $ 151,520 98 Table of Contents Amortization expense for the years ended December 31, 2025, 2024 and 2023 was $ 15.8 million, respectively. The future five-year amortization of intangibles subject to amortization at December 31, 2025 was as follows (in thousands): Amortization 2026 $ 15,641 2027 14,535 2028 13,862 2029 13,862 2030 13,862 Thereafter 64,048 Total $ 135,810 5. Accounts Receivable, Net Accounts receivable, net, primarily represent customer receivables, recorded at invoiced amount, net of a sales allowance and an allowance for credit losses. A sales allowance is determined based on various factors, including the overall business environment, historical trends and information from customers, such as agreed upon customer contract terms as well as historical experience from the customer. An allowance for credit losses is determined based on various factors, including specific identification of balances at risk for not being collected, historical experience, existing economic conditions and supportable forecasted changes. Credit limits and payment terms are established based on evaluations made on an ongoing basis throughout the fiscal year of the financial performance, cash generation, financing availability, and liquidity status of each customer. Customers are reviewed at least annually, with more frequent reviews performed as necessary, based on the customers' financial condition and the level of credit being extended. For customers who are experiencing financial difficulties, management performs additional financial analyses before shipping to those customers on credit. The Company uses a variety of financial arrangements to ensure collectability of accounts receivable of customers, including requiring letters of credit, purchasing various forms of credit insurance with unrelated third parties, or requiring cash in advance of shipment, where applicable. The Company evaluates its general portion of the allowance for credit losses based on historical loss information and applies reserve percentages based on aging schedule. Days past due is calculated from contractual due date of the trade receivable contract. The composition of the trade receivables is consistent with that used in developing the historical credit-loss percentages and evaluated to reflect current conditions and supportable forecasted changes. The trade receivables are generally due in 30 to 90 days, average of 60 days at December 31, 2025. In addition to the general portion of the allowance for credit losses, certain doubtful accounts are evaluated for a specific reserve. These accounts generally include significantly past due or other factors known where a substantial portion or all of the balance is deemed to be uncollectible. Receivables are written-off when all reasonable collection efforts have been exhausted and it is probable the balance will not be collected. Accounts receivable, net consisted of the following (in thousands): December 31, 2025 2024 Accounts receivable $ 157,410 $ 165,829 Less: Allowance for sales discounts ( 39,759 ) ( 42,245 ) Less: Allowance for credit losses ( 633 ) ( 3,702 ) Accounts receivable, net $ 117,018 $ 119,882 Bad debt (recovery) expense, net was $( 0.6 ) million, $ 1.5 million and $ 0.3 million for the years ended December 31, 2025, 2024 and 2023, respectively. 99 Table of Contents Activity in our allowance for credit losses was as follows (in thousands): December 31, 2025 2024 2023 Allowance for credit losses- beginning $ 3,702 $ 5,048 $ 7,589 (Recovery of) amounts charged to costs ( 635 ) 1,529 294 Write offs ( 2,434 ) ( 2,875 ) ( 2,835 ) Allowance for credit losses - ending $ 633 $ 3,702 $ 5,048 6. Prepaid Expenses and Other Current Assets Prepaid expenses and other current assets consisted of the following (in thousands): December 31, 2025 2024 Prepaid deposits for inventory and molds $ 2,286 $ 1,839 Prepaid royalties, net 18,605 6,115 Assets held-for-sale — 1,682 Other prepaid expenses and current assets 27,203 30,306 Prepaid expenses and other current assets $ 48,094 $ 39,942 In January 2024, the Company sold all outstanding inventory and certain intellectual property marketed under and related to Funko Games, to an independent third-party. The Company also entered into a multi-year exclusive worldwide license and distribution agreement with the purchaser, whereby the Company will earn minimum guaranteed royalty payments for the continued use of the Funko brand. Proceeds from the transaction were utilized to pay down a portion of the outstanding balance of the Term Loan Facility (as defined below). 7. Property and Equipment, Net Property and equipment, net consisted of the following (in thousands): December 31, 2025 2024 Tooling and molds $ 134,420 $ 169,070 Leasehold improvements 69,416 68,404 Computer equipment, software and other 11,294 11,421 Furniture, fixtures and warehouse equipment 28,546 27,539 Construction in progress 16 121 $ 243,692 $ 276,555 Less: Accumulated depreciation ( 175,013 ) ( 198,198 ) Property and equipment, net $ 68,679 $ 78,357 Depreciation expense for the years ended December 31, 2025, 2024 and 2023 was $ 43.3 million, $ 46.8 million, and $ 44.0 million, respectively. 100 Table of Contents 8. Accrued Expenses and Other Current Liabilities Accrued expenses and other current liabilities consisted of the following (in thousands): December 31, 2025 2024 Accrued payroll and compensation $ 20,505 $ 17,572 Accrued shipping & freight costs 11,692 7,510 Accrued sales taxes 1,849 1,815 Current liabilities under tax receivable agreement 120 547 Deferred revenue 17,636 13,265 Other current liabilities 25,697 40,979 Accrued liabilities and other current liabilities $ 77,499 $ 81,688 Deferred Revenue For the years ended December 31, 2025, 2024 and 2023, the Company recognized substantially all of revenue that was included in the deferred revenue balances at the beginning of the respective periods and primarily related to fulfillment of customer pre-orders. The Company expects to recognize the outstanding deferred revenue as of December 31, 2025, within the next 12 months. 9. Fair Value Measurements The Company’s financial instruments, other than those discussed below, include cash, accounts receivable, accounts payable, and accrued liabilities. The carrying amount of these financial instruments approximate fair value due to the short-term nature of these instruments. For financial instruments measured at fair value on a recurring basis, the Company prioritizes the inputs used in measuring fair value according to a three-tier fair value hierarchy defined by U.S. GAAP. These tiers include Level 1, defined as observable inputs such as quoted prices in active markets; Level 2, defined as inputs other than quoted prices in active markets that are either directly or indirectly observable; and Level 3, defined as unobservable inputs that reflect the Company’s own assumptions about the assumptions market participants would use in pricing the asset or liability. Cash equivalents. As of December 31, 2025 and 2024, cash equivalents included $ 16.6 million and $ 1.5 million, respectively, of highly liquid money market funds, which are classified as Level 1 within the fair value hierarchy. Debt. The estimated fair values of the Company’s debt instruments, which are classified as Level 3 financial instruments, at December 31, 2025 and 2024, was approximately $ 100.7 million and $ 123.8 million, respectively. The carrying values of the Company’s debt instruments at December 31, 2025 and 2024, were $ 100.3 million and $ 122.8 million, respectively. The estimated fair value of the Company’s debt instruments primarily reflects assumptions regarding credit spreads for similar floating-rate instruments with similar terms and maturities and the Company's standalone credit risk. 101 Table of Contents 10. Debt Debt consists of the following (in thousands): December 31, 2025 2024 Revolving Credit Facility $ 125,000 $ 60,000 Term Loan Facility 95,246 113,246 Equipment Finance Loan 5,435 10,569 Debt issuance costs ( 378 ) ( 1,000 ) Total term debt 100,303 122,815 Less: current portion of revolving credit facility and term debt 23,057 82,512 Long-term debt, net $ 202,246 $ 100,303 Maturities of long-term debt are as follows (in thousands): Credit Facilities 2026 $ 23,435 2027 202,246 Total $ 225,681 Credit Facilities On September 17, 2021 (the "Original Closing Date"), FAH, LLC and certain of its material domestic subsidiaries from time to time (the “Credit Agreement Parties”) entered into a credit agreement (as amended, restated, amended and restated, supplemented, waived or otherwise modified from time to time, the “Credit Agreement”) with JPMorgan Chase Bank, N.A., PNC Bank, National Association, KeyBank National Association, Citizens Bank, N.A., Bank of the West, HSBC Bank USA, National Association, Bank of America, N.A., U.S. Bank National Association, MUFG Union Bank, N.A., and Wells Fargo Bank, National Association (collectively, the “Initial Lenders”) and JPMorgan Chase Bank, N.A. as administrative agent, providing for a term loan facility in the amount of $ 180.0 million (the “Term Loan Facility”) and a revolving credit facility in the amount of $ 100.0 million (the “Revolving Credit Facility”) (together the “Credit Facilities”). Proceeds from the Credit Facilities on the Original Closing Date were primarily used to repay the Company's former credit facilities. On April 26, 2022, the Credit Agreement Parties entered into Amendment No. 1 to the Credit Agreement (the “First Amendment”) with the Initial Lenders and JPMorgan Chase Bank, N.A. as administrative agent, which allows for additional Restricted Payments (as defined in the First Amendment) using specified funding sources. On July 29, 2022, the Credit Agreement Parties entered into Amendment No. 2 to the Credit Agreement (the “Second Amendment”) with the Initial Lenders and Goldman Sachs Bank USA (collectively, the “Lenders”) and JPMorgan Chase Bank, N.A. as administrative agent, which increased the Revolving Credit Facility to $ 215.0 million and converted the Credit Facility interest rate index from LIBOR to SOFR. 102 Table of Contents On February 28, 2023, the Credit Agreement Parties entered into an Amendment No. 3 (the “Third Amendment”) to the Credit Agreement to, among other things, (i) modify the then applicable financial covenants under the Credit Agreement in effect prior to the Third Amendment for the period beginning on the date of the Third Amendment through the fiscal quarter ended December 31, 2023 (the “Waiver Period”), (ii) reduce the size of the Revolving Credit Facility from $ 215.0 million to $ 180.0 million as of the date of the Third Amendment and thereafter to $ 150.0 million on December 31, 2023, which reduction is permanent after the Waiver Period, (iii) restrict the ability to draw on the Revolving Credit Facility during the Waiver Period in excess of the amount outstanding on the date of the Third Amendment, (iv) increase the margin payable under the Credit Facilities during the Waiver Period to (a) 4.00 % per annum with respect to any Term Benchmark Loan or RFR Loan (each as defined in the Credit Agreement), and (b) 3.00 % per annum with respect to any Canadian Prime Loan or ABR Loan (as defined in the Credit Agreement), (v) allow that any calculation of Consolidated EBITDA (as defined in the Credit Agreement) that includes the fiscal quarters during the Waiver Period may include certain agreed upon amounts for certain addbacks, (vi) further limit our ability to make certain restricted payments, including the ability to pay dividends or make other distributions on equity interests, or redeem, repurchase or retire equity interests, incur additional indebtedness, incur additional liens, enter into sale and leaseback transactions or issue additional equity interests or securities convertible into or exchange for equity interests (other than the issuance of common stock) during the Waiver Period, (vii) require a minimum Qualified Cash (as defined in the Credit Agreement) covenant of at least $ 10.0 million and (viii) require a mandatory prepayment of the Revolving Credit Facility during the Waiver Period with any Qualified Cash proceeds in excess of $ 25.0 million. Beginning in the fiscal quarter ended March 31, 2024, the Third Amendment reset the maximum Net Leverage Ratio and the minimum Fixed Charge Coverage Ratio (each as defined in the Credit Agreement) that must be maintained by the Credit Agreement Parties to 2.50 :1.00 and 1.25 :1.00, respectively, which were the ratios in effect under the Credit Agreement prior to the Third Amendment. On June 11, 2024 (the “Consent Effective Date"), the Credit Agreement Parties entered into that certain Limited Waiver and Limited Consent (the “Limited Waiver and Limited Consent”), with the lenders party thereto (the “Required Lenders”) and the Administrative Agent. Pursuant to the Limited Waiver and Limited Consent, the Administrative Agent and the Required Lenders agreed to irrevocably and permanently waive, from any time prior to or after the Consent Effective Date, the Credit Agreement Parties’ compliance with the covenant to maintain a minimum threshold of Qualified Cash. On July 16, 2025, the Credit Agreement Parties entered into an Amendment No. 4 (the “Fourth Amendment”) to the Credit Agreement to, among other things, (i) waive compliance with (x) the maximum Net Leverage Ratio and (y) the minimum Fixed Charge Coverage Ratio financial covenants under the Credit Agreement, in each case, for the fiscal quarters ended June 30, 2025 and September 30, 2025; (ii) permanently reduce the revolving commitments (x) from $ 150.0 million to $ 135.0 million as of the effective date of the Fourth Amendment and (y) from $ 135.0 million to $ 125.0 million as of December 31, 2025; (iii) increase the applicable margin on all outstanding loans to 4.00 % per annum until the Credit Facilities are paid in full; (iv) modify certain financial reporting obligations of the Credit Agreement Parties; (v) add additional affirmative covenants applicable to the Credit Agreement Parties and their subsidiaries; (vi) amend certain negative covenants applicable to the Credit Agreement Parties and their subsidiaries, including to add a covenant to hold no less than $ 10.0 million of Qualified Cash at any time following the date of the Fourth Amendment; (vii) modify thresholds and grace periods for certain events of default; (viii) add certain new event of default triggers; and (ix) amend a covenant that the Company will not have a going concern or similar qualification to the Company’s annual audited financial statements to begin with the year ending December 31, 2025. 103 Table of Contents On February 13, 2026, the Credit Agreement Parties entered into an Amendment No. 5 (the "Fifth Amendment") to the Credit Agreement to, among other things, amend the Credit Agreement in effect prior to the Fifth Amendment (the " Prior Credit Agreement") to, among other things (i) extend the maturity date of the loans from September 17, 2026 to December 31, 2027 and, (ii) amend the financial covenants applicable to FAH, LLC and its subsidiaries under the Prior Credit Agreement to, among other things, (a) waive the minimum Fixed Charge Coverage Ratio financial covenant for the fiscal quarter ended December 31, 2025 and the fiscal quarters ending March 31, 2026 and June 30, 2026, (b) provide FAH, LLC additional cushion with respect to the minimum Fixed Charge Coverage Ratio financial covenant for the fiscal quarters ending September 30, 2026, December 31, 2026 and March 31, 2027 relative to the minimum Fixed Charge Coverage Ratio covenant set forth in the Prior Credit Agreement, (c) introduce a minimum Consolidated EBITDA covenant for the six-month period ending June 30, 2026, (d) waive the maximum Net Leverage Ratio covenant for the fiscal quarter ended December 31, 2025 and the fiscal quarters ending March 31, 2026, June 30, 2026 and September 30, 2026 and (e) subject to certain usage restrictions, permit FAH, LLC to forego testing of certain financial covenants for any test period (to the extent required to be tested in such test period) if the Company makes a voluntary prepayment of the loans under the Credit Agreement in an amount not less than $ 10.0 million prior to the delivery of a compliance certificate for such test period. The Fifth Amendment also includes certain other modifications, including (i)(x) increasing the applicable margin on all outstanding SOFR loans to 4.50 % per annum effective on the closing date of the Fifth Amendment, with subsequent increases to the applicable margin as set forth in the Credit Agreement and (y) removing the 0.1 % per annum credit spread adjustment applicable to SOFR loans; (ii) modifying the amortization payment on the term loans and requiring amortization payments on the outstanding revolving loans, with each such amortization payment in respect of the outstanding revolving loans permanently reducing the revolving commitments; (iii) requiring quarterly mandatory prepayment of the revolving loans with cash (subject to certain exceptions) and cash equivalents in excess of $ 50.0 million, with each such prepayment permanently reducing the revolving commitments; (iv) modifying certain financial reporting obligations of FAH, LLC and adding certain new affirmative covenants applicable to FAH, LLC and its subsidiaries; and (v) adding certain additional events of default. The Credit Facilities under the Credit Agreement will mature on December 31, 2027 (the “Maturity Date”). On March 31, 2026, an amortization payment in an amount equal to $ 4,500,000 is due with respect to the Term Loan Facility. At the end of each fiscal quarter thereafter, commencing with the fiscal quarter ending June 30, 2026, (i) the Term Loan Facility will amortize in quarterly installments equal to $ 4,125,000 , with any outstanding balance due and payable on the Maturity Date and (ii) the Revolving Credit Facility will amortize in quarterly installments equal to $ 375,000 (accompanied with permanent commitment reductions), with any outstanding balance due and payable on the Maturity Date. Loans under the Credit Facilities currently bear interest at SOFR plus 4.50 % per annum. On the first day of each fiscal quarter, commencing with April 1, 2027, an additional 0.25 % per annum will be added to the interest rate applicable to the loans under the Credit Facilities. SOFR rate is subject to a 0 % floor. For loans based on SOFR, interest payments are due at the end of each applicable interest period and in the case of loans based on SOFR with an interest period of more than three months’ duration, on each day prior to the last day of such interest period that occurs at intervals of three months’ duration after the first day of such interest period. In addition, the Credit Agreement requires FAH, LLC and its subsidiaries to, subject to the proviso at the end of this paragraph, comply with the following Financial Covenants: (i) on a quarterly basis, commencing with the fiscal quarter ending December 31, 2026, a maximum Net Leverage Ratio of 2.50 :1.00, (ii) on a quarterly basis, commencing with the fiscal quarter ending September 30, 2026, a minimum Fixed Charge Coverage Ratio of (a) 0.75 :1.00 with respect to the fiscal quarter ending September 30, 2026, (b) 0.85 :1.00 with respect to the fiscal quarter ending December 31, 2026, (c) 1.00 :1.00 with respect to the fiscal quarter ending March 31, 2027, and (d) 1.25 :1.00 with respect to the fiscal quarter ending June 30, 2027 and each fiscal quarter thereafter, (iii) at all times, a minimum Qualified Cash covenant of $ 10.0 million, and (iv) for the six-month period ending June 30, 2026, a minimum Consolidated EBITDA covenant of $ 15.1 million; provided that if, in any fiscal quarter, FAH, LLC voluntarily prepays, prior to the date on which a compliance certificate is required to be delivered in respect of such fiscal quarter, more than $ 10.0 million of principal of then-outstanding loans, then all of the applicable Financial Covenants (other than the minimum Qualified Cash covenant), to the extent required to be tested in such fiscal quarter, will be deemed waived for such fiscal quarter (the “Covenant Cure Right”); provided, further, that (x) the Covenant Cure Right is not permitted to be exercised in two (2) consecutive fiscal quarters, and (y) if the Cure Right is to be exercised in any fiscal quarter, FAH, LLC needs to have complied with the maximum Fixed Charge Coverage Ratio required in respect of the preceding fiscal quarter. 104 Table of Contents The Credit Facilities are secured by substantially all of the assets of the Credit Agreement Parties, subject to customary exceptions. As of December 31, 2025, the Credit Agreement Parties were in compliance with all of the covenants then in effect and required to be tested under the Credit Agreement after execution of the Fifth Amendment. The Credit Agreement Parties were also in compliance with all of the covenants then in effect under the Credit Agreement as of December 31, 2024. At December 31, 2025 and 2024, the Credit Agreement Parties had $ 95.2 million and $ 113.2 million of borrowings outstanding under the Term Loan Facility, respectively, and $ 125.0 million and $ 60.0 million outstanding borrowings under the Revolving Credit Facility, respectively. Interest rates on the outstanding borrowings under the Revolving Credit Facility at December 31, 2025 are reset every 30 days and can be repaid up until the maturity date. The weighted average rate on outstanding borrowings under Revolving Credit Facility as of December 31, 2025 and 2024 was 7.83 % and 6.71 %, respectively. At December 31, 2025 and 2024, the Company had $ 0.0 million and $ 90.0 million available under the Revolving Credit Facility, respectively. There were no outstanding letters of credit as of December 31, 2025 and 2024. Equipment Finance Loan On November 25, 2022, Funko, LLC, Funko Games, LLC, Funko Acquisition Holdings, L.L.C., Funko Holdings LLC and Loungefly, LLC, (collectively, "Equipment Finance Credit Parties"), entered into a $ 20.0 million equipment finance agreement ("Equipment Finance Loan") with Wells Fargo Equipment Finance, Inc. The loan is to be repaid in 48 monthly equal installments starting January 15, 2023 utilizing an annual fixed interest rate of 5.71 %. The Equipment Finance Loan is secured by certain identified assets held within our Buckeye, Arizona warehouse. At December 31, 2025 and 2024, the Company had $ 5.4 million and $ 10.6 million outstanding under the Equipment Finance Loan, respectively. 11. Leases The Company has entered into non-cancellable operating leases for office, warehouse, and distribution facilities, with original lease periods expiring through 2032. Leases with an initial term of 12 months or less are not recorded on the consolidated balance sheets; the Company recognizes lease expense for these leases on a straight-line basis over the lease term. The Company combines lease and non-lease components for new and reassessed leases. Excluded from the measurement of operating lease liabilities and operating lease right-of-use assets were certain warehouse and distribution contracts that either qualify for the short-term lease recognition exception and/or do not give the Company the right to control the warehouse and/or distribution facilities underlying the contract. Some operating leases also contain the option to renew for five year periods at prevailing market rates at the time of renewal. In addition to minimum rent, certain of the leases require payment of real estate taxes, insurance, common area maintenance charges, and other executory costs. For certain leases the Company receives lease incentives, such as tenant improvement allowances, and records those as adjustments to operating lease right-of-use assets and operating leases liabilities on the consolidated balance sheets and amortize the lease incentives on a straight-line basis over the lease term as an adjustment to rent expense. Rent expense, included in selling, general and administrative expenses on the consolidated statements of operations, was $ 18.1 million, $ 24.6 million and $ 29.4 million for the years ended December 31, 2025, 2024 and 2023, respectively. Variable expenses, such as common area maintenance and property taxes related to the lease agreements, included in selling, general and administrative expenses on the consolidated statements of operations, was $ 7.4 million, $ 6.9 million and $ 7.5 million for the years ended December 31, 2025, 2024 and 2023. During the year ended December 31, 2023, the Company terminated an agreement for a lease that had not commenced and incurred a charge of approximately $ 4.2 million. During the years ended December 31, 2025, 2024 and 2023, operating cash outflows relating to operating lease liabilities were $ 18.2 million, $ 18.2 million and $ 19.5 million, respectively. Operating lease right-of-use assets obtained in exchange for new operating lease obligations was $ 1.8 million, $ 3.2 million and $ 0.9 million, during the years ended December 31, 2025, 2024 and 2023, respectively. As of December 31, 2025 and 2024, the Company’s operating leases had a weighted-average remaining term of 5.2 years and 6.0 years, respectively, and weighted-average discount rates of 5.67 % and 5.76 %, respectively. 105 Table of Contents In January 2020, the Company entered into a non-cancellable operating sub-lease for office space that expired December 2024. Rental income recognized for the years ended December 31, 2024 and 2023 was $ 0.3 million and $ 0.6 million, respectively, included as a reduction of selling, general and administrative expenses on the consolidated statements of operations. The future payments on the Company’s operating lease liabilities as of December 31, 2025 were as follows (in thousands): 2026 $ 19,033 2027 14,105 2028 12,897 2029 10,868 2030 7,465 Thereafter 11,828 Total lease payments 76,196 Less: imputed interest ( 8,724 ) Total $ 67,472 12. Income Taxes Loss before income taxes consisted of (in thousands): Year Ended December 31, 2025 2024 2023 Domestic $ ( 80,825 ) $ ( 25,933 ) $ ( 46,847 ) Foreign 16,886 15,427 14,906 Loss before income taxes $ ( 63,939 ) $ ( 10,506 ) $ ( 31,941 ) Income Tax Expense Funko, Inc. is taxed as a corporation and pays corporate federal, state and local taxes on income allocated to it from FAH, LLC based upon Funko, Inc.’s economic interest held in FAH, LLC. FAH, LLC is treated as a pass-through partnership for income tax reporting purposes. FAH, LLC’s members, including the Company, are liable for federal, state and local income taxes based on their share of FAH, LLC’s pass-through taxable income and loss. The components of the Company’s income tax expense consisted of the following (in thousands): Year Ended December 31, 2025 2024 2023 Current income taxes: Federal $ — $ — $ 5,574 State and local 170 94 71 Foreign 4,186 4,771 3,728 Current income taxes 4,356 4,865 9,373 Deferred income taxes: Federal — ( 57 ) 105,236 State and local — — 17,888 Foreign — ( 244 ) — Deferred income taxes — ( 301 ) 123,124 Total income taxes: Federal — ( 57 ) 110,810 State and local 170 94 17,959 Foreign 4,186 4,527 3,728 Income tax expense $ 4,356 $ 4,564 $ 132,497 106 Table of Contents The following table presents required disclosures pursuant to ASU 2023-09 and reconciles the provision computed at the U.S. federal statutory income tax rate to the provision for income taxes for 2025: Year Ended December 31, 2025 Amount (in thousands) Percent Expected U.S. federal income taxes at statutory rate $ ( 13,427 ) 21.0 % State and local income taxes, net of federal income tax effect (1) 170 ( 0.3 ) Foreign tax effects United Kingdom 3,518 ( 5.5 ) Other foreign jurisdictions 525 ( 0.8 ) Effect of cross-border tax laws 124 ( 0.2 ) Changes in valuation allowance 12,283 ( 19.2 ) Nontaxable or nondeductible Items 966 ( 1.4 ) Other adjustments 197 ( 0.4 ) Effective tax rate $ 4,356 ( 6.8 ) % (1) In 2025, state and local taxes in Texas comprise the majority of the state and local taxes, net of federal effect category. The following table presents the required disclosures prior to the adoption of ASU 2023-09 and reconciles the provision computed at the U.S. federal statutory income tax rate to the provision for income taxes for 2024 and 2023: Year Ended December 31, 2024 2023 Expected U.S. federal income taxes at statutory rate 21.0 % 21.0 % State and local income taxes, net of federal benefit ( 3.5 ) ( 56.2 ) Foreign taxes ( 34.2 ) ( 9.3 ) Non-deductible expenses ( 4.7 ) ( 0.9 ) Change in valuation allowance ( 3.9 ) ( 340.5 ) Non-controlling interest ( 0.7 ) ( 6.8 ) Share-based compensation ( 11.0 ) ( 1.6 ) Return to provision 1.0 ( 23.8 ) Other, net ( 7.4 ) 3.3 Income tax expense ( 43.4 ) % ( 414.8 ) % The Company's annual effective tax rate in 2025 is different than the statutory rate of 21% due to the valuation allowance and foreign taxes. The Company’s annual effective tax rate in 2024 is different than the statutory rate of 21% due to the valuation allowance and foreign taxes. The Company's annual effective tax rate for 2023 is different than the statutory rate of 21%, due to the valuation allowance. 107 Table of Contents Deferred Income Taxes The significant items comprising deferred tax assets and liabilities is as follows (in thousands): December 31, 2025 2024 Deferred tax assets: Investment in partnership $ 68,334 $ 82,486 Tax receivable agreement liability 29 — Stock-based compensation 8,019 7,266 Foreign tax credit 62 62 Section 163(j) interest 15,281 9,149 Other carryforwards 238 218 Net operating loss carryforward 56,066 33,424 Gross deferred tax assets 148,029 132,605 Valuation allowance ( 148,029 ) ( 132,605 ) Deferred tax assets, net of valuation allowance — — Deferred tax liabilities: Property and equipment ( 584 ) ( 542 ) Gross deferred tax liabilities ( 584 ) ( 542 ) Net deferred tax assets $ ( 584 ) $ ( 542 ) The Company's federal net operating loss carryforward of $ 48.2 million at December 31, 2025 is indefinite. The Company's state net operating loss carryforward of $ 7.9 million at December 31, 2025, have various expiration dates based on jurisdiction, ranging from tax years ending 2033 to 2044. The Company's other carryforwards, primarily related to charitable contributions at December 31, 2025, expire in the tax years ending 2028 to 2030. The Company evaluates its ability to realize deferred tax assets on a quarterly basis and establishes a valuation allowance when it is more likely than not that all or a portion of a deferred tax asset may not be realized. Based on the Company's assessment as of December 31, 2025 and 2024, the Company determined that based on all the available evidence, including the Company’s three-year cumulative pre-tax loss position, it is not more likely than not that the results of operations will generate sufficient taxable income to realize its deferred tax assets and retained a full valuation allowance. During the year ended December 31, 2023, the Company established a full valuation allowance of $ 123.2 million against its deferred tax assets and recognized a corresponding increase to tax expense in the consolidated statements of operations and comprehensive loss in the year ended December 31, 2023. As required under ASU 2023-09, the Company has included only the portion of the valuation allowance related to federal deferred tax assets in the "change in valuation allowance" line of the rate reconciliation. The following table presents a reconciliation of the total change in the valuation allowance for the year ended December 31, 2025 (in thousands): Beginning balance $ ( 132,605 ) Change charged to income tax expense ( 14,333 ) Changes charged to additional paid-in-capital ( 1,091 ) Ending balance $ ( 148,029 ) Uncertain Tax Positions The Company regularly evaluates the likelihood of realizing the benefit from income tax positions that the Company has taken in various federal, state and foreign filings by considering all relevant facts, circumstances and information available. If the Company determines it is more likely than not that the position will be sustained, a benefit will be recognized at the largest amount that the Company believes is cumulatively greater than 50% likely to be realized. 108 Table of Contents There are no unrecognized tax benefits for uncertain tax positions for the three years ended December 31, 2025, 2024 and 2023. Interest and penalties related to income tax matters are classified as a component of income tax expense (benefit). As of December 31, 2025, and 2024, the Company has not recorded any interest or penalties as the amounts were not material. Unrecognized tax benefits are recorded in other long-term liabilities on the consolidated balance sheets. Income Taxes Paid Year Ended December 31, 2025 (in thousands) U.S. federal $ — U.S. state 182 Foreign United Kingdom 4,124 Spain 1,049 Total Foreign $ 5,173 Total income taxes $ 5,355 Income taxes paid, net, for the periods ended December 31, 2024 and 2023 were $ 3.9 million and $ 1.1 million, respectively. Other Matters The Company files income tax returns in the U.S. federal jurisdiction and various state and foreign jurisdictions. The Company is subject to U.S. federal, state, and local income tax examinations for tax years 2022 and forward and subject to examination for all foreign income tax returns for fiscal 2025 and 2024. There were no open tax examinations at December 31, 2025. Tax Receivable Agreement The Company is party to the Tax Receivable Agreement with FAH, LLC and each of the Continuing Equity Owners and certain transferees of the Continuing Equity Owners that have been joined as parties to the Tax Receivable Agreement (such parties, "TRA Parties") that provides for the payment by the Company to the Continuing Equity Owners under certain circumstances. See Note 13, "Liabilities under Tax Receivable Agreement." 13. Liabilities under Tax Receivable Agreement The Company is party to the Tax Receivable Agreement with FAH, LLC and each of the TRA Parties that provides for the payment by the Company to the TRA Parties of 85 % of the amount of tax benefits, if any, that it realizes, or in some circumstances, is deemed to realize, as a result of (i) future redemptions funded by the Company or exchanges, or deemed exchanges in certain circumstances, of common units for Class A common stock or cash, and (ii) certain additional tax benefits attributable to payments made under the Tax Receivable Agreement. FAH, LLC will have in effect an election under Section 754 of the Internal Revenue Code effective for each taxable year in which a redemption or exchange (including deemed exchange) of common units for cash or stock occurs. These tax benefit payments are not conditioned upon one or more of the TRA Parties maintaining a continued ownership interest in FAH, LLC. In general, the TRA Parties’ rights under the Tax Receivable Agreement are assignable, including to transferees of common units in FAH, LLC (other than the Company as transferee pursuant to a redemption or exchange of common units in FAH, LLC). The Company may benefit from the remaining 15 % of the tax benefits, if any, that the Company may realize. 109 Table of Contents The Company is generally not obligated to make any payments under the Tax Receivable Agreement until the tax benefits associated with a relevant transaction are realized (as determined in accordance with the terms of the Tax Receivable Agreement). Amounts payable under the Tax Receivable Agreement are contingent upon, among other things, (i) the generation of future taxable income over the term of the Tax Receivable Agreement and (ii) future changes in tax laws. If the Company does not generate sufficient taxable income in the aggregate over the term of the Tax Receivable Agreement to utilize the tax benefits, then it generally would not be required to make the related Tax Receivable Agreement payments. During years ended December 31, 2025 and 2024, the Company acquired an aggregate of 1.3 million and 1.2 million common units of FAH, LLC, respectively, in connection with the redemption and/or exchange of common units, none of which resulted in a material increase in the tax basis of our investment in FAH, LLC subject to the provisions of the Tax Receivable Agreement. The Company estimated a TRA liability for the year ended December 31, 2025 and 2024 of $ 120 thousand and $ 547 thousand, respectively, as utilization of certain portion of the deferred tax assets subject to the TRA were more likely than not to be recognized. As a result of the full valuation allowance on the deferred tax assets, and projected inability to fully utilize all or part of the related tax benefits, the Company determined that certain payments to the TRA Parties related to unrealized tax benefits under the TRA were no longer probable. Based on this assessment, the Company reduced its TRA Liability as of June 30, 2023, to $ 9.6 million, and recognized a gain of $ 99.6 million within the accompanying consolidated statements of operations and comprehensive loss. The Company performed a true-up in the fourth quarter of 2023 based on the filed 2022 consolidated tax return and recognized a further reduction in TRA liability and corresponding $ 603 thousand gain for the year ended December 31, 2023. There were no transactions subject to the Tax Receivable Agreement for which the Company did not recognize the related liability during the years ended December 31, 2025, 2024 and 2023, as the Company concluded at such time that it was probable that the Company would have sufficient future taxable income to utilize all of the related tax benefits. The estimated gross outstanding balance of the TRA liability as of December 31, 2025 and 2024 was $ 102.5 million and $ 99.6 million, respectively. The following table summarizes changes in the amount of the Company’s Tax Receivable Agreement liability (in thousands): Year Ended December 31, 2025 2024 2023 Beginning Balance $ 547 $ 8,960 $ 109,187 Additional liabilities for exchanges 3,284 — — Adjustment to remeasurement of liabilities ( 3,711 ) 547 ( 100,223 ) Payments under tax receivable agreement — ( 8,960 ) ( 4 ) Ending balance $ 120 $ 547 $ 8,960 14. Commitments and Contingencies License Agreements The Company enters into license agreements with various licensors of copyrighted and trademarked characters and design in connection with the products that it sells. The agreements generally require royalty payments based on product sales and in some cases may require minimum royalty and other related commitments. The Company is expected to incur $ 128.2 million in minimum guaranteed royalty payments under licensing arrangements, including $ 40.6 million for the year ended December 31, 2026, $ 49.9 million for the year ended December 31, 2027 and $ 37.7 million for the year ended December 31, 2028. Our license agreements typically grant our licensors the right to audit our compliance with the terms and conditions of such agreements. Any such audit could result in a dispute over whether the Company has paid the proper royalties and a requirement that the Company pay additional royalties. As of December 31, 2025, the Company had an accrual of $ 29.6 million, related to ongoing and future royalty audits, based on estimates of the costs the Company expects to incur. 110 Table of Contents Pre-Production Costs and Inventory The Company routinely enters into purchase commitments for tooling and molds and pre-production costs related to inventory. The Company bases production schedules for products on internal forecasts, taking into account historical trends of similar products and properties, current market information and communications with customers. Employment Agreements The Company has employment agreements with certain officers. The agreements include, among other things, an annual bonus based on certain performance metrics of the Company, as defined by the board of directors (the "Board"), and up to two years ' salary severance pay beyond termination date. Debt The Company has entered into a Credit Facility which includes a term loan facility and a revolving credit facility. The Company has also entered into an Equipment Finance Loan. See Note 10, "Debt". Leases The Company has entered into non-cancellable operating leases for office, warehouse, and distribution facilities, with original lease periods expiring through 2032. Some operating leases also contain the option to renew for five-year periods at prevailing market rates at the time of renewal. In addition to minimum rent, certain of the leases require payment of real estate taxes, insurance, common area maintenance charges, and other executory costs. See Note 11, "Leases". Liabilities under Tax Receivable Agreement The Company is party to the Tax Receivable Agreement with FAH, LLC and each of the TRA Parties that provides for the payment by the Company to the TRA Parties under certain circumstances. See Note 13, "Liabilities under Tax Receivable Agreement". Legal Contingencies The Company is involved in claims and litigation in the ordinary course of business, some of which seek monetary damages, including claims for punitive damages, which are not covered by insurance. For certain pending matters, accruals have not been established because such matters have not progressed sufficiently through discovery, and/or development of important factual information and legal information is insufficient to enable the Company to estimate a range of possible loss, if any. An adverse determination in one or more of these pending matters could have an adverse effect on the Company’s consolidated financial position, results of operations or cash flows. The Company is, and may in the future become, subject to various legal proceedings and claims that arise in or outside the ordinary course of business. For example, between November 16, 2017 and June 12, 2018, seven purported stockholders of the Company filed putative class action lawsuits in the Superior Court of Washington in and for King County against the Company, certain of its officers and directors, ACON, Fundamental Capital, the underwriters of its IPO, and certain other defendants. On July 2, 2018, the suits were ordered consolidated for all purposes into one action under the title In re Funko, Inc. Securities Litigation . On August 1, 2018, plaintiffs filed a consolidated complaint against the Company, certain of its officers and directors, ACON, Fundamental, and certain other defendants. The Company moved to dismiss twice, and the Court twice granted the Company’s motions to dismiss, the second time with prejudice. Plaintiffs appealed, and on November 1, 2021, the Court of Appeals reversed the trial court’s dismissal decision in most respects. On May 4, 2022, the Washington State Supreme Court denied the Company’s petition, and the case was remanded to the Superior Court for further proceedings. The Company filed its answer on September 19, 2022 and the Court certified the case as a class action on November 6, 2023. 111 Table of Contents The consolidated complaint alleged that the Company violated Sections 11, 12, and 15 of the Securities Act of 1933, as amended (“Securities Act”), by making allegedly materially misleading statements in documents filed with the SEC in connection with the Company’s IPO and by omitting material facts necessary to make the statements made therein not misleading. The lawsuits sought, among other things, compensatory statutory damages and rescissory damages in account of the consideration paid for the Company’s Class A common stock by the plaintiffs and members of the putative class, as well as attorneys’ fees and costs. On October 21, 2024, the parties agreed to a settlement in principle, and on October 29, 2024 notified the Court of a proposed class settlement. The Court preliminarily approved the settlement of $ 14.75 million on February 12, 2025 and the settlement was paid on February 25, 2025, directly by the Company’s applicable insurance policies. The Court issued final approval of the settlement and dismissed the litigation on June 6, 2025. On January 18, 2022, a purported stockholder filed a putative class action lawsuit in the Court of Chancery of the State of Delaware, captioned Shumacher v. Mariotti, et al. , relating to the Company’s corporate “Up-C” structure and bringing direct claims for breach of fiduciary duties against certain current and former officers and directors, seeking declaratory, monetary, and injunctive relief. On March 31, 2022, the defendants moved to dismiss the action. In response to defendants’ motion to dismiss, Plaintiff filed an Amended Complaint on May 25, 2022. The amendment did not materially change the claims at issue, and the Defendants again moved to dismiss on August 12, 2022. On December 15, 2022, Plaintiff opposed the Defendants’ motion to dismiss, and also moved for attorneys’ fees. On December 18, 2023, the Court denied Defendants’ motion to dismiss and denied Plaintiffs’ application for an interim fee. On March 13, 2024, the representative plaintiff moved to withdraw as a plaintiff in the action, and another purported stockholder moved to intervene as representative plaintiff. On October 28, 2024, the Court granted the plaintiff’s motion to withdraw and granted the new representative plaintiff’s motion to intervene. As a result, the litigation is now captioned Lynch vs. Mariotti, et al . In October 2025, the parties participated in a mediation to resolve the litigation. On February 18, 2026, the parties executed a settlement agreement pursuant to which the Company agreed, through its insurers, to resolve the remaining claims for $ 5.4 million, and to pay plaintiff’s counsel a mootness fee of $ 3.0 million. The parties have submitted the settlement agreement to the Court of Chancery for approval. On June 2, 2023, a purported stockholder filed a putative class action lawsuit in the United States District Court for the Western District of Washington, captioned Studen v. Funko, Inc., et al. On August 17, 2023, the Court appointed two lead plaintiffs, and, those lead plaintiffs filed an amended complaint on October 19, 2023. The amended complaint alleges that the Company and certain individual defendants violated Sections 10(b) and 20(a) of the Securities and Exchange Act of 1934, as amended (the “Exchange Act”), as well as Rule 10b-5 promulgated thereunder by making allegedly materially misleading statements in documents filed with the SEC, as well as in earnings calls and presentations to investors, regarding a planned upgrade to its enterprise resource planning system and the relocation of a distribution center, as well as by omitting material facts about the same subjects necessary to make the statements made therein not misleading. Plaintiffs seek to represent a putative class of investors who purchased or acquired Funko common stock between March 3, 2022 and March 1, 2023, and seek, among other things, compensatory damages and attorneys' fees and costs. On May 16, 2024, the Court granted the Company’s motion to dismiss with leave for Plaintiffs to file a second amended complaint. On July 1, 2024, Plaintiffs notified the Court of their decision to not amend their complaint, and the Court dismissed the complaint with prejudice on July 8, 2024. Plaintiffs filed a Notice of Appeal to the United States Court of Appeals for the Ninth Circuit on August 6, 2024, under the amended caption Construction Laborers Pension Trust of Greater St. Louis v. Funko, Inc., et al. Plaintiffs’ opening brief was filed on October 21, 2024, and briefing was completed on February 10, 2025. Oral argument was held on May 23, 2025. On February 4, 2026, the Court of Appeals affirmed in part and reversed in part the District Court’s decision. Specifically, it affirmed the dismissal of all claims based on statements made on earnings calls and presentations to investors, but reversed the dismissal of claims based on certain risk factor disclosures made in the Company’s SEC filings. On April 12, 2024, a former employee of the Company filed a putative class action in San Diego Superior Court, seeking to represent all non-exempt workers of the Company in the State of California. The complaint alleges various wage and hour violations under the California Labor Code and related statutes. Plaintiff has also served a Private Attorneys General Act notice for the same alleged wage and hour violations. The claims predominantly relate to alleged unpaid wages (overtime) and missed meal and rest breaks. The lawsuit seeks, among other things, compensatory damages, statutory penalties, attorneys’ fees and costs. On May 20, 2025, the parties participated in mediation and reached an immaterial monetary settlement in exchange for a release of all claims that were or could have been asserted in the complaint for the period from April 12, 2020 through July 19, 2025. In January 2026, the Court granted preliminary approval of the class action settlement. The settlement administrator mailed class notices to the class members in February 2026. The final approval hearing is scheduled for May 1, 2026. 112 Table of Contents On March 2, 2026, a purported stockholder filed a derivative lawsuit on behalf of the Company as a nominal defendant against certain of our current and former directors in the District Court for the Western District of Washington, captioned Marconi v. Perlmutter et al. The derivative complaint alleges breach of fiduciary duty, gross mismanagement, corporate waste, and unjust enrichment claims, as well as a violation of Section 14(a) of the Exchange Act, arising from substantially similar factual predicate as alleged in the Studen v. Funko, Inc. matter discussed above and seeks monetary damages, attorneys’ fees and costs and corporate governance reforms. This matter is currently in the early stages of litigation. The Company is party to additional legal proceedings incidental to its business. While the outcome of these additional matters could differ from management’s expectations, the Company does not believe that the resolution of such matters is reasonably likely to have a material effect on its results of operations or financial condition. 15. Segments The Company identifies its segments according to how the business activities are managed and evaluated and for which discrete financial information is available and regularly reviewed by its Chief Operating Decision Maker (“CODM”) to allocate resources and assess performance. The Company’s current CODM is our Chief Executive Officer, Josh Simon. Because the CODM reviews financial performance and allocates resources at a consolidated level on a regular basis, the Company has one segment. The segment derives revenue from customers by providing a wide variety of branded categories, including Core Collectible (predominately figures), Loungefly (predominately softlines including bags, wallets, backpacks and accessories) and Other (predominately Mondo and other emerging brands). All product lines, designs, licenses, and marketing/sales strategies are centrally managed as a single operating entity rather than at a geographic or subsidiary level. The accounting policies of the segment are the same as those described in the summary of significant accounting policies above. The CODM assesses performance for the segment and decides how to allocate resources (including employees, property, financial, and capital resources) based on consolidated net loss that also is reported on the Company's consolidated statements of operations. The CODM uses consolidated net loss to monitor budget-to-actual results on a monthly basis. During the monthly finance review, consolidated net income (loss) along with other finance metrics are presented to the CODM to understand how branded categories are tracking to budget, specific to net sales. During the year ended December 31, 2025, there were no changes to the measures used for finance metrics utilized, other than product costs are now reported inclusive of all inventoriable costs. The following table sets forth segment information for revenue, segment net loss and significant expenses: Year Ended December 31, 2025 2024 2023 (in thousands, except per share data) Net sales $ 908,209 $ 1,049,850 $ 1,096,086 Less (add): Product, freight, duties, shipping and other inventoriable costs 398,473 446,435 583,371 License and royalty costs 158,467 168,883 179,714 Salaries, benefits, incentive and stock compensation 145,687 145,593 157,940 Warehouse labor and third-party logistics fees 36,934 52,244 62,416 Advertising and marketing 51,547 51,567 31,256 Other selling, general and administrative fees 103,547 109,554 125,453 Depreciation and amortization 59,097 62,583 59,763 Other expense (income) 18,396 23,497 ( 71,886 ) Income tax expense 4,356 4,564 132,497 Net loss $ ( 68,295 ) $ ( 15,070 ) $ ( 164,438 ) 113 Table of Contents The following table presents summarized product information: Year ended December 31, 2025 2024 2023 Core Collectible $ 723,327 $ 804,407 $ 803,181 Loungefly 155,031 171,833 214,523 Other 29,851 73,610 78,382 Total net sales $ 908,209 $ 1,049,850 $ 1,096,086 The following tables present summarized geographical information, shipped to (net sales) and used in (long-term assets) (in thousands): Year ended December 31, 2025 2024 2023 Net sales: United States $ 546,328 $ 681,986 $ 755,620 Europe 288,348 283,792 268,496 Other International 73,533 84,072 71,970 Total net sales $ 908,209 $ 1,049,850 $ 1,096,086 December 31, 2025 2024 Long-lived assets: United States $ 79,773 $ 88,705 Europe 13,086 15,055 Other International 32,253 31,236 Total long-lived assets $ 125,112 $ 134,996 16. Related Party Transactions The Company sells products to Forbidden Planet, a U.K. retailer through its wholly owned subsidiary Funko UK, Ltd. One of the investors in Forbidden Planet is an employee of Funko UK, Ltd. and an executive officer. For the years ended December 31, 2025, 2024 and 2023, the Company recorded approximately $ 3.5 million, $ 3.1 million and $ 2.5 million, respectively, in net sales from business with Forbidden Planet. At December 31, 2025 and 2024, accounts receivable from Forbidden Planet were $ 0.7 million and $ 0.4 million on the consolidated balance sheets, respectively. 17. Employee Benefit Plans The Company currently maintains the Funko 401(k) Plan, a defined contribution retirement and savings plan, for the benefit of our employees, including our named executive officers, who satisfy certain eligibility requirements. The Company's named executive officers are eligible to participate in the 401(k) Plan on the same terms as other full-time employees. The Code allows eligible employees to defer a portion of their compensation, within prescribed limits, on a pre-tax basis through contributions to the 401(k) Plan. Currently, the Company matches contributions made by participants in the 401(k) Plan up to 4 % of the employee earnings, and these matching contributions are fully vested as of the date on which the contribution is made. The Company believes that providing a vehicle for tax-deferred retirement savings through our 401(k) Plan, and making fully vested matching contributions, adds to the overall desirability of the Company's compensation package and further incentivizes employees, including named executive officers, in accordance with the Company's compensation policies. The Company’s employer matching contributions were $ 2.9 million, $ 3.1 million and $ 3.3 million for the years ended December 31, 2025, 2024 and 2023, respectively. 114 Table of Contents 18. Stockholders’ Equity The Amended and Restated Certificate of Incorporation authorizes the issuance of up to 200,000,000 shares of Class A common stock, up to 50,000,000 shares of Class B common stock and 20,000,000 shares of preferred stock, each having a par value of $ 0.0001 per share. Shares of Class A common stock have both economic and voting rights. Shares of Class B common stock have no economic rights, but do have voting rights. Holders of shares of Class A common stock and Class B common stock are entitled to one vote per share on all matters presented to stockholders. The Company’s board of directors has the discretion to determine the rights, preferences, privileges, restrictions and liquidation preferences of any series of preferred stock. FAH, LLC Recapitalization The FAH LLC Agreement, among other things, appointed the Company as FAH, LLC’s sole managing member and reclassified all outstanding membership interests in FAH, LLC as non-voting common units. As the sole managing member of FAH, LLC, the Company controls the management of FAH, LLC. As a result, the Company consolidates FAH, LLC’s financial results and reports a non-controlling interest related to the economic interest of FAH, LLC held by the Continuing Equity Owners. The Amended and Restated Certificate of Incorporation and the FAH LLC Agreement requires FAH, LLC and the Company to, at all times, maintain (i) a one -to-one ratio between the number of shares of Class A common stock issued by the Company and the number of common units owned by the Company and (ii) a one -to-one ratio between the number of shares of Class B common stock owned by the Continuing Equity Owners and the number of common units owned by the Continuing Equity Owners (other than common units issuable upon the exercise of options and common units that are subject to time-based vesting requirements (the “Excluded Common Units”)). The Company may issue shares of Class B common stock only to the extent necessary to maintain the one -to-one ratio between the number of common units of FAH, LLC held by the Continuing Equity Owners (other than the Excluded Common Units) and the number of shares of Class B common stock issued to the Continuing Equity Owners. Shares of Class B common stock are transferable only together with an equal number of common units of FAH, LLC. Only permitted transferees of common units held by the Continuing Equity Owners will be permitted transferees of Class B common stock. The Continuing Equity Owners may from time to time at each of their options (subject, in certain circumstances, to time-based vesting requirements) require FAH, LLC to redeem all or a portion of their common units in exchange for, at the Company’s election, newly-issued shares of our Class A common stock on a one -for-one basis or a cash payment equal to a volume weighted average market price of one share of Class A common stock for each common unit redeemed, in each case in accordance with the terms of the FAH LLC Agreement; provided that, at the Company’s election, the Company may effect a direct exchange of such Class A common stock or such cash, as applicable, for such common units. The Continuing Equity Owners may exercise such redemption right for as long as their common units remain outstanding. Simultaneously with the payment of cash or shares of Class A common stock, as applicable, in connection with a redemption or exchange of common units pursuant to the terms of the FAH LLC Agreement, a number of shares of our Class B common stock registered in the name of the redeeming or exchanging Continuing Equity Owner will be cancelled for no consideration on a one -for-one basis with the number of common units so redeemed or exchanged. Equity-Based Compensation Funko, Inc. 2017 Incentive Award Plan . On October 23, 2017, the Company adopted the Funko, Inc. 2017 Incentive Award Plan (the “2017 Plan”). The Company reserved a total of 5,518,518 shares of Class A common stock for issuance pursuant to the 2017 Plan. Funko, Inc. 2019 Incentive Award Plan . Effective April 18, 2019, the Company adopted the Funko, Inc. 2019 Incentive Award Plan (the "2019 Plan"). The Company reserved for issuance an aggregate number of shares under the 2019 Plan equal to the sum of (i) 3,000,000 shares of Class A common stock and (ii) an annual increase 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. Total shares reserved for issuance under the 2019 Plan was 10,077,523 as of December 31, 2025. 115 Table of Contents Funko, Inc. 2024 Inducement Award Plan. Effective May 8, 2024, the Company adopted the Funko, Inc. 2024 Inducement Award Plan (the "2024 Plan"). The Company reserved for issuance 1,500,000 shares of Class A common stock under the 2024 Plan. The number of unissued common shares reserved for future grants under the 2017 Plan, 2019 Plan and 2024 Plan was 1,083,078 , 3,480,715 , and 243,195 , respectively as of December 31, 2025. A summary of stock option activity for the year ended December 31, 2025 is as follows: Funko, Inc. Stock Options Weighted Average Exercise Price Aggregate Intrinsic Value Remaining Contractual Life (in thousands) (in thousands) (years) Outstanding at December 31, 2024 2,971 $ 11.82 $ 10,094 7.27 Granted 524 6.83 — Exercised ( 41 ) 5.51 69 Forfeited ( 776 ) 11.26 31 Outstanding at December 31, 2025 2,678 11.10 — 6.73 Options exercisable at December 31, 2025 1,743 $ 13.41 $ — 5.70 Stock options awarded to employees under the 2017 Plan and 2019 Plan are generally granted with an exercise price equal to the closing market price of the Company’s common stock at the date of grant, vest over four years , and have ten year contractual terms. A summary of performance stock option activity for the year ended December 31, 2025 is as follows: Funko, Inc. Performance Stock Options Weighted Average Exercise Price Aggregate Intrinsic Value Remaining Contractual Life (in thousands) (years) Outstanding at December 31, 2024 298 $ 8.39 $ 1,490 9.38 Forfeited ( 298 ) 8.39 — Outstanding at December 31, 2025 — — — 0.00 Options exercisable at December 31, 2025 — $ — $ — 0.00 Performance stock options awarded to employees under the 2024 Plan are granted with an exercise price equal to the closing market price of the Company’s common stock at the date of grant. The awards were eligible to vest based on the achievement of a stock price hurdle equal to three times the Exercise Price (the “Vesting Price”), measured based on the average of the Company’s closing share price over a 90 trading day trailing average, prior to the fourth anniversary of May 20, 2024 and subject to Employee’s continued employment with the Company; provided, that, notwithstanding the foregoing, such Stock Option Grant shall not be eligible to vest until at least the second anniversary of the date of grant regardless of whether such stock price hurdle has been achieved. The awards have ten year contractual terms. All performance stock options outstanding at December 31, 2024 were forfeited during the year ended December 31, 2025. A summary of restricted stock unit activity for the year ended December 31, 2025 is as follows: Funko, Inc. Restricted Stock Units Weighted Average Grant Date Fair Value Remaining Contractual Life (in thousands) (years) Unvested at December 31, 2024 2,632 $ 9.10 2.76 Granted 2,459 5.01 Vested ( 978 ) 7.05 Forfeited ( 978 ) 5.64 Unvested at December 31, 2025 3,135 $ 6.80 2.67 116 Table of Contents A summary of performance stock unit activity for the year ended December 31, 2025 is as follows: Funko, Inc. Performance Stock Units Weighted Average Grant Date Fair Value Remaining Contractual Life (in thousands) (years) Unvested at December 31, 2024 42 $ 12.89 1.00 Granted 750 3.46 Vested ( 3 ) 17.09 Forfeited ( 15 ) 17.09 Unvested at December 31, 2025 774 $ 3.66 5.39 The number of units subject to future vesting is based on annual Company achieved factors, such as Net Sales and Adjusted EBITDA Margin and achievement is at the direction of the Compensation Committee of the board of directors. Unvested units are expected to vest at the determination date of December 31, 2025, depending on the grant. For awards granted during the year ended December 31, 2025 to our Chief Executive Officer, future vesting is based on: (A) 1/3 of the restricted stock units over three years in three equal annual installments on each of the first three anniversaries of September 1, 2025, (B) 1/3 of the restricted stock units based on the achievement of a stock price hurdle equal to or greater than $ 8.00 per share based on (I) the average of the Company’s closing share price over a 45 trading day trailing average or (II) the price received by holders of Class A common stock in connection with a change in control for each share of Class A common stock held on the date of such change in control, and (C) the remaining 1/3 of the restricted stock units subject to the Inducement Grant based on the achievement of a stock price hurdle equal to or greater than $ 20.00 per share based on (I) the average of the Company’s closing share price over a 45 trading day trailing average or (II) the price received by holders of Class A common stock in connection with a change in control for each share of Class A common stock held on the date of such change in control, which stock price hurdles must be achieved prior to the seventh anniversary of September 1, 2025, and in each case subject to the grantee's continued service through the applicable vesting dates. Achievement is estimated at a weighted average 97.9 % of the units granted as of December 31, 2025. The following table presents information on stock option exercises (in thousands): Year ended December 31, 2025 2024 2023 Cash received for exercise price $ 227 $ 1,410 $ 756 Intrinsic value 69 915 559 Equity-based compensation expense . The Company measures and recognizes expense for its equity-based compensation granted to employees and directors based on the fair value of the awards on the grant date. The fair value of restricted stock units is based on the market price of Class A common stock on the date of grant. The fair value of option awards is estimated at the grant date using the Black-Scholes option pricing model that requires management to apply judgment and make estimates, including: • Volatility —this is estimated based primarily on the Company's historical daily volatility over the same time period as the calculated expected term of the award • Risk-free interest rate —this is the U.S. Treasury rate as of the grant date having a term equal to the expected term of the award • Expected term —represents the estimated period of time until an award is exercised and was calculated based on the simplified method • Dividend yield —the Company does not plan to pay dividends in the foreseeable future 117 Table of Contents For each of the options granted under the 2017 Plan and 2019 Plan, the following were the weighted-average of the option pricing model inputs: Year ended December 31, 2025 2024 2023 Expected term (years) 5.85 6.00 6.01 Expected volatility 80.8 % 80.2 % 76.7 % Risk-free interest rate 4.1 % 4.2 % 4.1 % Dividend yield — % — % — % The weighted-average fair value of stock options granted for the years ended December 31, 2025, 2024 and 2023 was $ 4.84 , $ 4.90 and $ 6.71 per share, respectively. Equity-based compensation expense is recognized on a straight-line basis over the vesting period of the award. The Company records equity-based compensation to selling, general and administrative expense on the consolidated statements of operations. Equity-based compensation for the years ended December 31, 2025, 2024 and 2023 was $ 11.5 million, $ 13.6 million and $ 10.5 million, respectively. As of December 31, 2025, there was $ 20.1 million of total unrecognized equity-based compensation expense that the Company expected to recognize over a remaining weighted-average period of 2.9 years. 19. Non-controlling Interests The Company is the sole managing member of FAH, LLC and as a result consolidates the financial results of FAH, LLC. The Company reports a non-controlling interest representing the common units of FAH, LLC held by the Continuing Equity Owners. Changes in Funko, Inc.’s ownership interest in FAH, LLC while Funko, Inc. retains its controlling interest in FAH, LLC will be accounted for as equity transactions. As such, future redemptions or direct exchanges of common units of FAH, LLC by the Continuing Equity Owners will result in a change in ownership and reduce or increase the amount recorded as non-controlling interest and increase or decrease additional paid-in capital when FAH, LLC has positive or negative net assets, respectively. Net loss and comprehensive loss are attributed between Funko, Inc. and noncontrolling interest holders based on each party’s relative economic ownership interest in FAH, LLC. As of December 31, 2025, 2024 and 2023, Funko, Inc. owned 55.3 million, 53.0 million and 50.5 million of FAH, LLC common units, respectively, representing a 99.7 %, 97.2 % and 94.9 % economic ownership interest in FAH, LLC, respectively. Net loss and comprehensive loss of FAH, LLC excludes certain activity attributable to Funko, Inc., including $ 11.5 million, $ 13.6 million and $ 10.5 million of equity-based compensation expense for share-based compensation awards issued by Funko, Inc. for the years ended December 31, 2025, 2024 and 2023, respectively, and $ 0.0 million, $ 0.1 million and $ 128.7 million of income tax expense for corporate, federal, state and local taxes attributable to Funko, Inc. for the years ended December 31, 2025, 2024 and 2023, respectively. 20. Loss per Share Basic and Diluted Loss per Share Basic loss per share of Class A common stock is computed by dividing net loss available to Funko, Inc. by the weighted-average number of shares of Class A common stock outstanding during the period. Diluted loss per share of Class A common stock is computed by dividing net loss available to Funko, Inc. by the weighted-average number of shares of Class A common stock outstanding adjusted to give effect to potentially dilutive securities. 118 Table of Contents The following table sets forth reconciliations of the numerators and denominators used to compute basic and diluted loss per share of Class A common stock: Year ended December 31, 2025 2024 2023 (in thousands, except per share data) Numerator: Net loss $ ( 68,295 ) $ ( 15,070 ) $ ( 164,438 ) Less: net loss income attributable to non-controlling interests ( 935 ) ( 352 ) ( 10,359 ) Net loss attributable to Funko, Inc. — basic $ ( 67,360 ) $ ( 14,718 ) $ ( 154,079 ) Net loss attributable to Funko, Inc. — diluted $ ( 67,360 ) $ ( 14,718 ) $ ( 154,079 ) Denominator: Weighted-average shares of Class A common stock outstanding — basic 54,386,924 52,043,490 48,332,401 Weighted-average shares of Class A common stock outstanding — diluted 54,386,924 52,043,490 48,332,401 Loss per share of Class A common stock — basic $ ( 1.24 ) $ ( 0.28 ) $ ( 3.19 ) Loss per share of Class A common stock — diluted $ ( 1.24 ) $ ( 0.28 ) $ ( 3.19 ) For the years ended December 31, 2025, 2024 and 2023 an aggregate of 6.2 million, 6.3 million and 9.9 million of potentially dilutive securities, respectively, were excluded from the weighted-average in the computation of diluted loss per share of Class A common stock because the effect would have been anti-dilutive. For the years ended December 31, 2025, 2024 and 2023 anti-dilutive securities included 0.8 million, 2.0 million and 4.0 million of common units of FAH, LLC that are convertible into Class A common stock, but were excluded from the computations of diluted loss per share because the effect would have been anti-dilutive under the if-converted method. Shares of the Company’s Class B common stock do not participate in the earnings or losses of the Company and are therefore not participating securities. As such, separate presentation of basic and diluted loss per share of Class B common stock under the two-class method has not been presented. 119 Table of Contents Schedule I: Condensed Financial Information of Registrant FUNKO, INC. CONDENSED STATEMENTS OF OPERATIONS (PARENT COMPANY ONLY) Year Ended December 31, 2025 2024 2023 (in thousands) Intercompany revenue $ — $ 148 $ 226 Selling, general, and administrative expenses 11,737 13,803 10,812 Total operating expenses 11,737 13,803 10,812 Loss from operations ( 11,737 ) ( 13,655 ) ( 10,586 ) Interest expense, net 103 ( 387 ) ( 321 ) Tax receivable agreement liability adjustment 427 ( 547 ) 100,223 Equity in net loss of subsidiaries ( 56,153 ) ( 186 ) ( 114,697 ) Loss before income taxes ( 67,360 ) ( 14,775 ) ( 25,381 ) Income tax (benefit) expense — ( 57 ) 128,698 Net loss $ ( 67,360 ) $ ( 14,718 ) $ ( 154,079 ) See accompanying notes to condensed financial information. 120 Table of Contents Schedule I: Condensed Financial Information of Registrant (continued) FUNKO, INC. CONDENSED STATEMENTS OF COMPREHENSIVE LOSS (PARENT COMPANY ONLY) Year Ended December 31, 2025 2024 2023 (in thousands) Net loss $ ( 67,360 ) $ ( 14,718 ) $ ( 154,079 ) Other comprehensive income (loss): Foreign currency translation (loss) gain, net of tax effect of $ 0 , $ 0 and $( 770 ) for the years ended December 31, 2025, 2024 and 2023, respectively 6,297 ( 1,496 ) 2,423 Comprehensive loss attributable to Funko, Inc. $ ( 61,063 ) $ ( 16,214 ) $ ( 151,656 ) See accompanying notes to condensed financial information. 121 Table of Contents Schedule I: Condensed Financial Information of Registrant (continued) FUNKO, INC. CONDENSED BALANCE SHEETS (PARENT COMPANY ONLY) December 31, 2025 2024 (in thousands, except per share data) Assets Current assets: Cash and cash equivalents $ 3,486 $ 1,258 Income tax receivable 202 202 Total current assets 3,688 1,460 Intercompany receivable 110,887 113,009 Investment in subsidiaries 71,359 119,097 Total assets $ 185,934 $ 233,566 Liabilities and Stockholders' Equity Current liabilities: Current portion of liabilities under tax receivable agreement $ 120 $ 547 Total current liabilities 120 547 Commitments and contingencies Stockholders' equity: Class A common stock, par value $ 0.0001 per share, 200,000 shares authorized; 55,327 shares and 52,967 shares issued and outstanding as of December 31, 2025 and 2024, respectively 5 5 Class B common stock, par value $ 0.0001 per share, 50,000 shares authorized; 91 shares and 1,430 shares issued and outstanding as of December 31, 2025 and 2024, respectively — — Additional paid-in-capital 357,330 343,472 Accumulated other comprehensive income (loss) 4,621 ( 1,676 ) Accumulated deficit ( 176,142 ) ( 108,782 ) Total stockholders' equity 185,814 233,019 Total liabilities and stockholders' equity $ 185,934 $ 233,566 See accompanying notes to condensed financial information. 122 Table of Contents Schedule I: Condensed Financial Information of Registrant (continued) FUNKO, INC. CONDENSED STATEMENTS OF CASH FLOWS (PARENT COMPANY ONLY) Year Ended December 31, 2025 2024 2023 (in thousands) Operating Activities Net loss $ ( 67,360 ) $ ( 14,718 ) $ ( 154,079 ) Adjustments to reconcile net loss to net cash provided by (used in) operating activities: Equity in net loss of subsidiaries 56,153 186 114,697 Equity-based compensation 11,536 13,602 10,534 Deferred tax (benefit) expense — ( 57 ) 123,124 Tax receivable liability adjustment ( 427 ) 547 ( 100,223 ) Changes in operating assets and liabilities, net of amounts acquired: Income tax receivable — 110 7,219 Due from related parties, net 2,121 5,778 436 Accrued expenses and other liabilities — ( 374 ) 370 Net cash provided by operating activities 2,023 5,074 2,078 Investing Activities Net cash used in investing activities — — — Financing Activities Tax receivable agreement payments — ( 8,960 ) ( 4 ) Proceeds from exercise of equity-based options 227 1,410 749 Other ( 22 ) — — Net cash provided by (used in) financing activities 205 ( 7,550 ) 745 Net change in cash and cash equivalents 2,228 ( 2,476 ) 2,823 Cash and cash equivalents at beginning of period 1,258 3,734 911 Cash and cash equivalents at end of period $ 3,486 $ 1,258 $ 3,734 Supplemental Cash Flow Information Establishment of liabilities under tax receivable agreement — 547 — See accompanying notes to condensed financial information. 123 Table of Contents Schedule I: Condensed Financial Information of Registrant (continued) FUNKO, INC. NOTES TO CONDENSED FINANCIAL INFORMATION (PARENT COMPANY ONLY) December 31, 2025 1. Organization Funko, Inc. (the “Parent Company”) was formed on April 21, 2017 as a Delaware corporation and is a holding company with no direct operations. The Parent Company's assets consist primarily of cash and cash equivalents, its equity interest in FAH, LLC, and certain deferred tax assets, net of valuation allowance. The Parent Company's cash inflows are primarily from distributions and other transfers from FAH, LLC. The amounts available to the Parent Company to fulfill cash commitments are subject to certain restrictions in FAH, LLC’s Credit Facilities. See Note 10, "Debt" to the Funko, Inc. Consolidated Financial Statements, appearing elsewhere in this Form 10-K. 2. Basis of Presentation These condensed Parent Company financial statements should be read in conjunction with the consolidated financial statements of Funko, Inc. and the accompanying notes thereto, included in this Form 10-K. For purposes of this condensed financial information, the Parent Company's interest in FAH, LLC is recorded based upon its proportionate share of FAH, LLC's net assets (similar to presenting them on the equity method). The net assets of the consolidated subsidiaries exceed 25 percent of consolidated net assets, therefore requiring Schedule I. The Parent Company is the sole managing member of FAH, LLC, and pursuant to the Amended and Restated LLC Agreement of FAH, LLC (the “LLC Agreement”), receives compensation in the form of reimbursements for all costs associated with being a public company. Intercompany revenue consists of these reimbursement payments and is recognized when the corresponding expense to which it relates is recognized. Certain intercompany balances presented in these condensed Parent Company financial statements are eliminated in the consolidated financial statements. For the years ended December 31, 2025, 2024, and 2023, the full amounts of intercompany revenue and equity in net income (loss) of subsidiaries in the Parent Company Statements of Operations were eliminated in consolidation. An intercompany receivable was owed to the Parent Company by FAH, LLC of $ 110.9 million and $ 113.0 million as of December 31, 2025 and 2024, respectively. Related party amounts that were not eliminated in the consolidated financial statements include the Parent Company's liabilities under the tax receivable agreement, which totaled $ 0.1 million and $ 0.5 million as of December 31, 2025 and 2024, respectively. 3. Commitments and Contingencies The Parent Company is party to a tax receivable agreement that provides for the payment by the Parent Company to the TRA Parties of 85 % of the amount of any tax benefits that the Parent Company actually realizes, or in some cases is deemed to realize, as a result of certain transactions. See Note 13, "Liabilities under Tax Receivable Agreement," to the Funko, Inc. consolidated financial statements, appearing elsewhere in this Form 10-K, for more information regarding the Parent Company's tax receivable agreement. As described in Note 13, "Liabilities under Tax Receivable Agreement," to the Funko, Inc. consolidated financial statements, appearing elsewhere in the Form 10-K, amounts payable under the tax receivable agreement are contingent upon, among other things, (i) generation of future taxable income of Funko, Inc. over the term of the tax receivable agreement and (ii) future changes in tax laws. As of December 31, 2025 and 2024, liabilities under the tax receivable agreement totaled $ 0.1 million and $ 0.5 million, respectively. See Note 14, "Commitments and Contingencies," to the Funko, Inc. consolidated financial statements, appearing elsewhere in this Form 10-K, for information regarding pending and threatened litigation. Pursuant to the LLC Agreement, the Parent Company receives reimbursements for all costs associated with being a public company, which includes costs of litigation. 124 Table of Contents ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE None.