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Item 9A. Controls and Procedures

2024-03-15 compared with 2023-04-14 · 213 added, 129 removed, 812 unchanged (30% of the section changed)

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We believe that, as of December 31, 2023, our internal control over financial reporting was effective based upon those criteria.

Report of Independent Registered Public Accounting Firm

Shareholders and Board of Directors

JAKKS Pacific, Inc.

Santa Monica, CA

Opinion on Internal Control over Financial Reporting

We have audited JAKKS Pacific, Inc.’s (the “Company’s”) internal control over financial reporting as of December 31, 2023, based on criteria established in Internal Control – Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission (the “COSO criteria”).

In our opinion, the Company maintained, in all material respects, effective internal control over financial reporting as of December 31, 2023, based on the COSO criteria .

We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (“PCAOB”), the consolidated balance sheets of the Company as of December 31, 2023 and 2022, the related consolidated statements of operations, comprehensive income (loss), stockholders’ equity, and cash flows for each of the three years in the period ended December 31, 2023, and the related notes and our report dated March 15, 2024, expressed an unqualified opinion thereon.

Basis for Opinion

The Company’s management is responsible for maintaining effective internal control over financial reporting and for its assessment of the effectiveness of internal control over financial reporting, included in the accompanying Item 9A, Management’s Annual Report on Internal Control over Financial Reporting.

Our responsibility is to express an opinion on the Company’s internal control over financial reporting based on our audit.

We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with U.S.

federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audit of internal control over financial reporting in accordance with the standards of the PCAOB.

Those standards require that we plan and perform the audit to obtain reasonable assurance about whether effective internal control over financial reporting was maintained in all material respects.

Our audit 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 audit also included performing such other procedures as we considered necessary in the circumstances.

We believe that our audit provides a reasonable basis for our opinion.

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 (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company;

(2) 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 (3) 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.

/s/ BDO USA, P.C.

Los Angeles, California

March 15, 2024

Other Information

Disclosure Regarding Foreign Jurisdictions that Prevent Inspections

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Executive Vice President and Chief Financial Officer

Chief Operating Officer

Zhao Xiaoqiang

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In August 2019 the Capital Allocation Committee, which was established as a standing committee in February 2016, was dissolved.

In the first quarter of 2024 we formed a Cybersecurity Oversight Committee.

Audit Committee .

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The Company provides the appropriate funding to such persons as determined by the Compensation Committee, which also conducts an independence assessment of its outside advisors using the six factors contained in Exchange Act Rule 10C-1.

The Compensation Committee historically receives legal advice from our outside general counsel and has retained Willis Towers Watson (“WTW”), a compensation consulting firm, to directly advise the Compensation Committee from time to time.

The Compensation Committee historically receives legal advice from our outside general counsel and has retained Willis Towers Watson, a compensation consulting firm, to directly advise the Compensation Committee from time to time.

The Compensation Committee also annually reviews the overall compensation of our executive officers to determine whether discretionary bonuses should be granted.

In 2015, Lipis Consulting, Inc.

(“LCI”), a compensation consulting firm, presented a report to the Compensation Committee comparing our performance, size and executive compensation levels to those of peer group companies.

LCI also reviewed with the Compensation Committee the base salaries, annual bonuses, total cash compensation, long-term compensation and total compensation of our senior executive officers relative to those companies.

In 2023, Frederic W.

(FW Cook), a compensation consulting firm, presented a report to the Compensation Committee comparing our performance, size and executive compensation levels to those of peer group companies.

FW Cook also reviewed with the Compensation Committee the base salaries, annual bonuses, total cash compensation, long-term compensation and total compensation of our senior executive officers relative to those companies.

The performance comparison presented to the Compensation Committee each year includes a comparison of our total shareholder return, earnings per share growth, sales, net income (and one-year growth of both measures) to the peer group companies.

The Compensation Committee reviews this information along with details about the components of each executive officer’s compensation.

A compensation consultant was not consulted during 2022.

Nominating Committee .

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This procedure was implemented following our 2016 Annual Meeting of Stockholders.

Cybersecurity Oversight Committee.

The Cybersecurity Oversight Committee is responsible for oversight of our risk assessment, risk management, disaster recovery procedures and cybersecurity risks.

It is anticipated that the Committee will meet at least quarterly with management and outside cybersecurity experts to discuss cybersecurity-related news events and discuss any updates to our cybersecurity risk management and strategy programs.

Levine and Ms.

MacPherson are the members of the Committee.

The Board has determined that each of them is “independent,” as defined under the applicable rules of Nasdaq.

Special Committees.

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See above for biographical information about this officer.

The other current executive officers are John L.

Kimble, our Executive Vice President and Chief Financial Officer and John (Jack) McGrath, our Chief Operating Officer.

(Jack) McGrath has served as our Chief Operating Officer since 2011 and is responsible for the Company’s global operations.

He brings more than 24 years of experience, having served as our Executive Vice President of Operations from December 2007 until August 2011 when he became our Chief Operating Officer.

McGrath was our Vice President of Marketing from 1999 to August 2003 and Senior Vice President of Operations until 2007.

Prior to joining the Company, Mr.

McGrath was a Brand Marketer for Hot Wheels® at Mattel Inc.

and part of its Asia Pacific marketing team.

McGrath served honorably in the U.S.

Army and holds a Bachelor of Science degree in Marketing.

The other current executive officer is John L.

Kimble, our Executive Vice President and Chief Financial Officer.

Kimble became our Executive Vice President and Chief Financial Officer on November 20, 2019.

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where he served in various positions and concluded his career there as VP/Head of Corporate Development - Licensing Acquisitions - M&A.

In between his service at Disney and Mattel, he spent a couple of years as an entrepreneur at a start-up gaming company.

In between his service at Disney and Mattel, he spent two years as an entrepreneur at a start-up gaming company.

He began his career as a consultant for Mars & Co., a global strategy consulting firm.

Kimble received his Bachelor’s Degree in Management Science, Concentration in Finance, Minor in Economics from the Sloan School, Massachusetts Institute of Technology (M.I.T.) and has a Master of Business Administration (MBA) from the Wharton School of the University of Pennsylvania.

During 2023, John J.

(Jack) McGrath served as our Chief Operating Officer, a position he has held since 2011, and was responsible for the Company’s global operations.

He brought more than 24 years of experience, having served as our Executive Vice President of Operations from December 2007 until August 2011 when he became our Chief Operating Officer.

McGrath was our Vice President of Marketing from 1999 to August 2003 and Senior Vice President of Operations until 2007.

Effective January 1, 2004, Mr.

McGrath will be assigned to, and work out of, our United Kingdom office as President European Operations and he will no longer be Executive Vice President & Chief Operating Officer of the Company.

Prior to joining the Company, Mr.

McGrath was a Brand Marketer for Hot Wheels® at Mattel Inc.

and part of its Asia Pacific marketing team.

McGrath served honorably in the U.S.

Army and holds a Bachelor of Science degree in Marketing.

Section 16(a) Beneficial Ownership Reporting Compliance

Based solely upon a review of Forms 3, 4 and 5 and amendments thereto furnished to us during and for 2022, all Forms 3, 4 and 5 required to be filed during 2022 by our Directors and executive officers were timely filed, except for one Form 4 filed late by our CFO and two Forms 4 filed by our CEO.

Based solely upon a review of Forms 3, 4 and 5 and amendments thereto furnished to us during and for 2023, all Forms 3, 4 and 5 required to be filed during 2023 by our Directors and executive officers were timely filed, except for one Form 4 filed one day late by each of our executive officers.

Stockholder Communications

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This Code was filed as an exhibit to our Annual Report on Form 10-K for the fiscal year ended December 31, 2003.

We have posted on our website, www.jakks.com, the full text of such Code.

During 2023 the Code was updated and we have posted on our website, www.jakks.com, the full text of such updated Code.

We will disclose when there have been waivers of, or amendments to, such Code, as required by the rules and regulations promulgated by the SEC and/or Nasdaq.

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We also believe that our people are our most important resource.

While some companies may enjoy an exclusive or limited franchise or are able to exploit unique assets or proprietary technology, we depend fundamentally on the skills, energy and dedication of our employees to drive our business.

While some companies may enjoy an exclusive or limited franchise or are able to exploit unique assets or proprietary technology, we depend fundamentally on the skills, relationships, energy and dedication of our employees to drive our business.

It is only through their constant efforts that we are able to innovate through the creation of new products and the continual rejuvenation of our product lines, to maintain operating efficiencies, and to develop and exploit marketing channels.

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Historically, the base salary, bonus structure and long-term equity compensation of our executive officers are governed by the terms of their individual employment agreements (see “Employment Agreements and Termination of Employment Arrangements”) and we expect that to continue in the future.

Factors given considerable weight in establishing bonus performance criteria are Net Sales, Adjusted EPS, which is the net earnings per share of our common stock calculated on a fully-diluted basis in accordance with GAAP, and Adjusted EBITDA applied on a basis consistent with past periods, as adjusted in the sole discretion of the Compensation Committee to take account of extraordinary or special items.

The Compensation Committee receives legal advice from our outside general counsel and in previous years has retained a compensation consulting firm, such as Willis Towers Watson and Lipis Consulting, Inc., which provided advice directly to the Compensation Committee.

Historically, factors given considerable weight in establishing bonus performance criteria are Net Sales, Adjusted EPS, which is the net earnings per share of our common stock calculated on a fully-diluted basis in accordance with GAAP, and Adjusted EBITDA applied on a basis consistent with past periods, as adjusted in the sole discretion of the Compensation Committee to take account of extraordinary or special items.

The current employment agreements with our named executive officers also give the Compensation Committee the authority to award additional compensation to each of them as it determines in the Committee’s sole discretion based upon criteria it establishes.

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Kimble became an executive officer when he entered into a letter employment agreement on November 20, 2019.

Pursuant to the terms of Mr.

Berman’s employment agreement in effect as of January 1, 2023, Mr.

Berman receives a base salary which is increased automatically each year by at least $25,000.

Pursuant to the terms of the employment agreements for Messrs.

Berman and McGrath in effect as of January 1, 2023, they each receive a base salary which is increased automatically each year by at least $25,000 and $15,000, respectively.

The employment agreement for Mr.

Kimble provides for an automatic 4% annual increases in base salary.

Kimble provides for an automatic 4% annual increase in base salary.

Any increase or further increase in base salary, as the case may be above the contractually required minimum increase, is determined by the Compensation Committee.

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This bonus, if earned, is payable partially in cash and partially in shares of restricted common stock.

Berman and McGrath earned 75% of the bonus based upon EBITDA criteria for 2020;

and, along with Mr.

Berman, McGrath and Mr.

Kimble, earned 100% of the bonus based on Total Shareholders Return, EBITDA, and 50% of the bonus based on Net Revenue in 2022, and 75% of the bonus based upon EBITDA criteria for 2021.

In 2023 Messrs.

Berman, McGrath and Mr.

Kimble, earned 100% of the cash-payable bonus based on Total Shareholders Return, EBITDA, and 50% of the bonus based on Net Revenue in 2023.

In 2023 only Mr.

Kimble had unvested performance-based RSUs outstanding and earned 100% of the bonus based on Total Shareholders Return.

On September 27, 2021, we amended the employment agreements of all of our executive officers, to change the issuance, past and future, of all restricted stock awards to restricted stock units.

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Berman’s, McGrath's and Kimble’s employment agreement also provide for an additional bonus solely in the discretion of the Compensation Committee.

After a review of all of the factors discussed above, the Compensation Committee determined that, in keeping with our compensation objectives.

Kimble received a nil, $284,685 and $100,000 discretionary bonus for 2022, 2021 and 2020, respectively.

After a review of all of the factors discussed above, the Compensation Committee determined that, in keeping with our compensation objectives, Messrs.

Berman and McGrath were not awarded any discretionary cash bonuses for 2023, 2022 or 2021.

Kimble received a nil, nil, and $284,685 discretionary bonus for 2023, 2022 and 2021, respectively.

Our executive officers participate in the health and dental coverage, life insurance, paid vacation and holidays, 401(k) retirement savings plans and other programs that are generally available to all of the Company’s employees.

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Berman for 2023 and 2022, respectively, $14,400 for Mr.

McGrath for 2022 and 2021, respectively, and $13,000 and $12,000 for Mr.

McGrath for both 2023 and 2022, and $18,000 and $13,000 for Mr.

Kimble for 2023 and 2022, respectively.

The amounts include matching contributions made by us to the Named Executive Officer’s 401(k) defined contribution plan in the amount of $18,150 and $15,250, respectively, for 2023 and 2022, for Mr.

The amounts include matching contributions made by us to the Named Executive Officer’s 401(k) defined contribution plan in the amount of $15,250 and $14,500, respectively, for 2022 and 2021, for Mr.

McGrath and Mr.

The amounts include $7,985 and $25,265 related to a life insurance policy for Mr.

Berman in 2023 and 2022, respectively.

See “Employee Pension Plan.”

The following table sets forth certain information regarding all equity-based compensation awards outstanding as of December 31, 2023 by the Named Officers:

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The product of (x) $35.55 (the closing sale price of the common stock on December 31, 2023) multiplied by (y) the number of unvested restricted shares or units outstanding.

These units of stock vest annually until 2026.

The following table sets forth certain information regarding amount realized upon the vesting and exercise of any equity-based compensation awards during 2023 by the Named Executive Officers:

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Berman is terminated without “Cause” or quits for “Good Reason,” then he has the right to receive a payment equal to 2.99 times his then current base amount as defined in section 280(G) of the Code (which was $5,985,045 in 2023) and continued health care coverage.

Termination For

In Connection

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McGrath is terminated without “Cause” or quits for “Good Reason”, then he has the right to receive a payment equal to the greater of two times his then current base salary or the payments due for the remainder of the term of his employment agreement.

Termination For

In Connection

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Pension Value

Incentive ($)

Alexander Shoghi

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Berman, our Chairman, CEO and President, and entered into Amendment Number Two to Mr.

Berman’s Second Amended and Restated Employment Agreement dated November 11, 2010 (the “Employment Agreement”).

The terms of Mr.

Berman’s Employment Agreement have been amended as follows:

Berman’s Second Amended and Restated Employment Agreement dated November 11, 2010 (the “Berman Employment Agreement”).

The terms of the Berman’s Employment Agreement have been amended as follows:

(i) extension of the term until December 31, 2020;

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payment is based upon performance at the close of the three year performance period), with vesting of each Annual Stock Grant determined by the following performance measures:

(a) total shareholder return as compared to the Russell 2000 Index (weighted 50%), (b) net revenue growth as compared to our peer group (weighted 25%) and (c) EBITDA growth as compared to our peer group (weighted 25%);

(iv) modification of the performance measures for award of the Annual Performance Bonus equal to up to 300% of Base Salary (“Annual Bonus”) provided for under Section 3(d) of the Employment Agreement, effective as of January 1, 2017, so that the performance measures will be based only upon net revenues and EBITDA, each performance measure weighted 50%, and with the specific performance criteria applicable to each Annual Bonus determined by the Compensation Committee during the first quarter of each fiscal year;

(a) total shareholder return as compared to the Russell 2000 Index (weighted 50%), (b) net revenue growth as compared to our peer group (weighted 25%) and (c) growth in Earnings Before Interest, Taxes, Depreciation and Amortization (“EBITDA”) as compared to our peer group (weighted 25%);

(iv) modification of the performance measures for award of the Annual Performance Bonus equal to up to 300% of Base Salary (“Annual Bonus”) provided for under Section 3(d) of the Berman Employment Agreement, effective as of January 1, 2017, so that the performance measures will be based only upon net revenues and EBITDA, each performance measure weighted 50%, and with the specific performance criteria applicable to each Annual Bonus determined by the Compensation Committee during the first quarter of each fiscal year;

and (v) provision of health and dental insurance coverage for Mr.

Berman’s children in the event of his death during the term of the Employment Agreement.

On August 9, 2019, we further amended Mr.

Berman’s Employment Agreement as follows:

Berman’s children in the event of his death during the term of the Berman Employment Agreement.

On August 9, 2019, we further amended the Berman Employment Agreement as follows:

(i) increase of Mr.

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(iii) addition of a special sale transaction bonus equal to $1,000,000 if we enter into and consummate a Sale Transaction on or before February 15, 2020, subject to additional terms and conditions as set forth therein;

(iv) modification of the Berman Annual Stock Grant provided for under section 3(b) of the Employment Agreement, effective as of January 2020, so that the number of shares of Restricted Stock granted pursuant to the Berman Annual Stock Grant equal the lesser of (a) $3,500,000 in value (based on the closing price of a share of Common Stock on December 31, 2019), or (b) 1.5% of outstanding shares of Common Stock, which shall vest in four equal installments on each anniversary of grant;

(v) waiver of certain “Change of Control”, Liquidity Event, and other provisions under the Employment Agreement with respect to certain Specified Transactions;

(iv) modification of the Berman Annual Stock Grant provided for under section 3(b) of the Berman Employment Agreement, effective as of January 2020, so that the number of shares of Restricted Stock granted pursuant to the Berman Annual Stock Grant equal the lesser of (a) $3,500,000 in value (based on the closing price of a share of Common Stock on December 31, 2019), or (b) 1.5% of outstanding shares of Common Stock, which shall vest in four equal installments on each anniversary of grant;

(v) waiver of certain “Change of Control”, Liquidity Event, and other provisions under the Berman Employment Agreement with respect to certain Specified Transactions;

and (vi) modification of the definition of “Good Reason Event” to include a change in membership of the Board such that following such change, a majority of the directors are not Continuing Directors.

All capitalized terms used but not defined in the previous sentence have the meanings ascribed thereto in the Employment Agreement, as amended by the third amendment.

On November 18, 2019, we further amended Mr.

Berman’s Employment Agreement as follows:

(i) to extend the term of the Employment Agreement for an additional year through December 31, 2021;

All capitalized terms used but not defined in the previous sentence have the meanings ascribed thereto in the Berman Employment Agreement, as amended by the third amendment.

On November 18, 2019, we further amended the Berman Employment Agreement as follows:

(i) to extend the term of the Berman Employment Agreement for an additional year through December 31, 2021;

(ii) addition of a 2021 performance bonus opportunity in a range between twenty-five percent (25%) and three hundred percent (300%) of Base Salary, based upon the level of EBITDA achieved for the fiscal year, as determined by the Compensation Committee, which shall be payable in cash and is subject to additional terms and conditions as set forth therein;

(iii) modification of the Berman Annual Stock Grant provided for under section 3(b) of the Employment Agreement, effective as of January 2020, so that the number of shares of Restricted Stock granted pursuant to the Berman Annual Stock Grant equal the lesser of (a) $3,500,000 in value (based on the closing price of a share of Common Stock on the last business day of the prior year), or (b) 1.5% of outstanding shares of Common Stock, which shall vest in four equal installments on each anniversary of grant, provided, that no such award under (a) or (b) above shall be made to Executive (and no cash substitute shall be provided to Executive) to the extent shares are not available for grant under the Company’s 2002 Plan as of such date;

(iii) modification of the Berman Annual Stock Grant provided for under section 3(b) of the Berman Employment Agreement, effective as of January 2020, so that the number of shares of Restricted Stock granted pursuant to the Berman Annual Stock Grant equal the lesser of (a) $3,500,000 in value (based on the closing price of a share of Common Stock on the last business day of the prior year), or (b) 1.5% of outstanding shares of Common Stock, which shall vest in four equal installments on each anniversary of grant, provided, that no such award under (a) or (b) above shall be made to Executive (and no cash substitute shall be provided to Executive) to the extent shares are not available for grant under the Company’s 2002 Plan as of such date;

and, provided, further, that we shall not be obligated to amend the 2002 Plan and/or seek shareholder approval of any amendment to increase the amount of available shares under the 2002 Plan.

All capitalized terms used but not defined in the previous sentence have the meanings ascribed thereto in the Employment Agreement, as amended by the fourth amendment.

On February 18, 2021, we further amended Mr.

Berman’s Employment Agreement as follows:

(i) to extend the Term of the Employment Agreement for an additional three years through December 31, 2024;

All capitalized terms used but not defined in the previous sentence have the meanings ascribed thereto in the Berman Employment Agreement, as amended by the fourth amendment.

On February 18, 2021, we further amended the Berman Employment Agreement as follows:

(i) to extend the Term of the Berman Employment Agreement for an additional three years through December 31, 2024;

(ii) addition of a performance bonus opportunity for 2022 – 2024 in a range between twenty-five percent (25%) and three hundred percent (300%) of Base Salary, based upon the level of EBITDA achieved by the Company for the fiscal year, as determined by the Compensation Committee, which shall be payable in cash and is subject to additional terms and conditions as set forth therein;

and (iii) modification of the Annual Restricted Stock Grant provided for under section 3(b) of the Employment Agreement, effective as of January 2022, so that the number of shares of Restricted Stock granted pursuant to such Annual Restricted Stock Grant equal the lesser of (a) $3,500,000 in value (based on the closing price of a share of Common Stock on the last business day of the prior year), or (b) 2.25% of outstanding shares of Common Stock, which shall vest in three equal installments on each anniversary of grant, provided, that no such award under (a) or (b) above shall be made to Mr.

and (iii) modification of the Annual Restricted Stock Grant provided for under section 3(b) of the Berman Employment Agreement, effective as of January 2022, so that the number of shares of Restricted Stock granted pursuant to such Annual Restricted Stock Grant equal the lesser of (a) $3,500,000 in value (based on the closing price of a share of Common Stock on the last business day of the prior year), or (b) 2.25% of outstanding shares of Common Stock, which shall vest in three equal installments on each anniversary of grant, provided, that no such award under (a) or (b) above shall be made to Mr.

Berman (and no cash substitute shall be provided to Mr.

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and, provided, further, that the Company shall not be obligated to amend the Plan and/or seek shareholder approval of any amendment to increase the amount of available shares under the Plan.

All capitalized terms used but not defined in the previous sentence have the meanings ascribed thereto in the Employment Agreement, as amended by the fifth amendment.

On September 29, 2016, we entered into a Fourth Amendment to the employment agreement between us and Mr.

McGrath, dated March 4, 2010 (which was effective January 1, 2010) (the “Employment Agreement”).

The terms of Mr.

McGrath’s Employment Agreement were amended as follows:

All capitalized terms used but not defined in the previous sentence have the meanings ascribed thereto in the Berman Employment Agreement, as amended by the fifth amendment.

On September 29, 2016, the Company amended the employment agreement between the Company and Mr.

John (a/k/a Jack) McGrath, our Chief Operating Officer, and entered into Amendment No.

McGrath’s Employment Agreement, dated March 4, 2010 which was effective January 1, 2010 (the “McGrath Employment Agreement”).

The terms of the McGrath Employment Agreement were amended as follows:

(i) extension of the term until December 31, 2020;

(ii) modification of the performance and vesting standards for each Annual Restricted Stock Grant (“Annual Stock Grant”) provided for under Section 3(d) of the Employment Agreement, effective as of January 1, 2017, as follows:

(ii) modification of the performance and vesting standards for each Annual Restricted Stock Grant (“Annual Stock Grant”) provided for under Section 3(d) of the McGrath Employment Agreement, effective as of January 1, 2017, as follows:

each Annual Stock Grant will be equal to $1 million, and 40% ($0.4 million) of each Annual Stock Grant will be subject to time vesting in four equal annual installments over four years, and 60% ($0.6 million) of each Annual Stock Grant will be subject to three year “cliff vesting” (i.e.

vesting is based upon satisfaction of the performance measures at the close of the three year performance period), determined by the following performance measures:

(A) total shareholder return as compared to the Russell 2000 Index (weighted 50%), (B) net revenue growth as compared to our peer group (weighted 25%) and (C) growth in Earnings Before Interest, Taxes, Depreciation and Amortization (“EBITDA”) as compared to our peer group (weighted 25%);

and (iii) modification of the Annual Performance Bonus (“Annual Bonus”) provided for under Section 3(e) of the Employment Agreement, effective as of January 1, 2017, as follows:

(A) total shareholder return as compared to the Russell 2000 Index (weighted 50%), (B) net revenue growth as compared to our peer group (weighted 25%) and (C) growth in EBITDA as compared to our peer group (weighted 25%);

and (iii) modification of the Annual Performance Bonus (“Annual Bonus”) provided for under Section 3(e) of the McGrath Employment Agreement, effective as of January 1, 2017, as follows:

the Annual Bonus will be equal to up to 125% of Base Salary, and the actual amount will be determined by performance measures based upon net revenues and EBITDA, each performance measure weighted 50%, and with the specific performance criteria applicable to each Annual Bonus determined by the Compensation Committee during the first quarter of each fiscal year, and payable in cash (up to 100% of Base Salary) and shares of our common stock (any excess over 100% of Base Salary) with the shares of stock vesting over three years in equal quarterly installments.

Effective February 28, 2018, we entered into a Fifth Amendment to Mr.

McGrath’s Employment Agreement, to provide that if a change of control occurs and within one year thereafter Mr.

Effective February 28, 2018, we entered into a Fifth Amendment to the McGrath Employment Agreement, to provide that if a change of control occurs and within one year thereafter Mr.

McGrath is terminated without “Cause” or quits with “Good Reason”, then he has the right to receive a payment equal to the greater of two times his then current base salary or the payments due for the remainder of the term of his Employment Agreement.

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McGrath’s employment resulting from any action or failure to act by the Company.

Effective December 31, 2019 we amended Mr.

McGrath’s employment agreement as follows:

(i) to extend the term of the employment agreement for an additional year through December 31, 2021;

Effective December 31, 2019 we amended the McGrath Employment Agreement as follows:

(i) to extend the term of the McGrath Employment Agreement for an additional year through December 31, 2021;

(ii) a 2020 and 2021 performance bonus opportunity in a range between twenty-five percent (25%) and one hundred twenty-five percent (125%) of Base Salary, based upon the level of EBITDA achieved for the fiscal year, as determined by the Compensation Committee, which shall be payable in cash and is subject to additional terms and conditions as set forth therein;

(iii) modification of the McGrath Annual Stock Grant provided for under section 3(d) of his Employment Agreement, effective as of January 2020, so that the number of shares of Restricted Stock granted pursuant to the McGrath Annual Stock Grant equal the lesser of (a) $1,000,000 in value (based on the closing price of a share of Common Stock on the last business day of the prior year), or (b) 0.5% of outstanding shares of Common Stock, which shall vest in four equal installments on each anniversary of grant, provided, that no such award under (a) or (b) above shall be made to Executive (and no cash substitute shall be provided to Executive) to the extent shares are not available for grant under the 2002 Plan as of such date;

(iii) modification of the McGrath Annual Stock Grant provided for under section 3(d) of the McGrath Employment Agreement, effective as of January 2020, so that the number of shares of Restricted Stock granted pursuant to the McGrath Annual Stock Grant equal the lesser of (a) $1,000,000 in value (based on the closing price of a share of Common Stock on the last business day of the prior year), or (b) 0.5% of outstanding shares of Common Stock, which shall vest in four equal installments on each anniversary of grant, provided, that no such award under (a) or (b) above shall be made to Executive (and no cash substitute shall be provided to Executive) to the extent shares are not available for grant under the 2002 Plan as of such date;

and, provided, further, that we shall not be obligated to amend the 2002 Plan and/or seek shareholder approval of any amendment to increase the amount of available shares under the 2002 Plan.

All capitalized terms used but not defined in the previous sentence have the meanings ascribed thereto in the Employment Agreement, as amended by such amendment.

On June 18, 2021, the Company amended the employment agreement between the Company and Mr.

John (a/k/a Jack) McGrath, our Chief Operating Officer, and entered into Amendment No.

McGrath’s Employment Agreement, dated March 4, 2010 which was effective January 1, 2010 (the “McGrath Employment Agreement”).

The terms of Mr.

McGrath’s Employment Agreement have been amended as follows:

All capitalized terms used but not defined in the previous sentence have the meanings ascribed thereto in the McGrath Employment Agreement, as amended by such amendment.

On June 18, 2021, the Company amended the McGrath Employment Agreement as follows:

(i) to extend the Term of the McGrath Employment Agreement for an additional two years through December 31, 2023;

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The number of Shares in each annual grant of Restricted Stock Units will be determined by the closing price of a share of the Company's common stock on December 31, 2021 with respect to the 2022 award, and December 31, 2022 with respect to the 2023 award.

On March 7, 2023 the Company amended the McGrath Employment Agreement and entered into a Letter Agreement with Mr.

McGrath (the “Letter Agreement”).

The two Agreements amend the McGrath Employment Agreement as follows:

(i) extend the term of the McGrath Employment Agreement for an additional two years through December 31, 2025;

(ii) change his title and responsibilities to be that of President European Operations, (iii) set the Base Salary, effective January 1, 2024, at the rate of $500,000 per annum;

and (iv) make any performance bonus discretionary.

Effective November 20, 2019, we entered into a letter agreement with John L.

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Berman, Chief Executive Officer and President, and entered into Amendment NO.

Berman’s Second Amended and Restated Employment Agreement, dated as of November 11, 2010 (the “Berman Agreement”).

The terms of Mr.

Berman’s Employment Agreement have been amended as follows:

7 to the Berman Employment Agreement.

The terms of the Berman’s Employment Agreement have been amended as follows:

(i) to extend the terms of the Berman Employment Agreement for an additional two years through December 31, 2026;

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Kimble, Chief Financial Officer and Executive Vice President, and entered into Amendment No.

Kimble’s Letter Employment Agreement, dated as of November 18, 2019 (the “Kimble Employment Agreement”).

The terms of Mr.

Kimble’s Employment Agreement have been amended as follows:

1 to the Kimble Employment Agreement.

The terms of the Kimble Employment Agreement have been amended as follows:

(i) ) to extend the Term of the Kimble Employment Agreement for an additional two years through December 31, 2026;

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Berman, Chief Executive Officer and President, and entered into Amendment No.

8 to the Berman Agreement.

The terms of Mr.

Berman’s Employment Agreement have been amended to increase Mr.

8 to the Berman Employment Agreement.

The terms of the Berman Employment Agreement have been amended to increase Mr.

Berman’s Base Salary to an annual rate of $1,800,000, effective January 1, 2023, and for each subsequent calendar year during the Term at an annual rate to be determined by the Compensation Committee of the Company’s Board of Directors, but is at least $25,000 more than the annual rate in the immediately preceding year.

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Employee Benefits Plan

We sponsor for all of our U.S.

employees a defined contribution plan under Section 401(k) of the Internal Revenue Code that provides that employees may defer a portion of their annual compensation subject to annual dollar limitations, and that we will make a matching contribution equal to 100% of each employee’s deferral, up to 5% of the employee’s annual compensation and further subject to federal limitations.

We eliminated the match on March 31, 2019.

Company matching contributions, which vested immediately, totaled $2.1 million, $1.9 million, and nil for the year ended December 31, 2022, 2021 and 2020, respectively.

The Company resumed the match on contributions effective January 1, 2021.

We sponsored for our U.S.

employees, a defined contribution plan under Section 401(k) of the Internal Revenue Code.

The Plan provided that employees may defer up to 50% of their annual compensation subject to annual dollar limitations, and that the Company would make a matching contribution equal to 100% of each employee’s deferral, up to 5% of the employee’s annual compensation.

Company-matching contributions, which vest immediately, totaled $1.5 million, $2.1 million and $1.9 million for the year ended December 31, 2023, 2022 and 2021, respectively.

Starting December 2023, we sponsored for certain of our U.S.

based senior employees, a nonqualified deferred compensation plan which includes provisions for salary deferrals and discretionary contributions on a deferred tax basis.

As of December 31, 2023 we have not made any discretionary matching contributions to the plan.

Employees direct the investment of their account balances, and we invest amounts held in the associated investment trust consistent with these directions.

The value of the assets held in trust by the nonqualified plan was $41 thousand of December 31, 2023.

The Company has statutory benefit plans outside the U.S., which are not material.

Compensation Committee Interlocks and Insider Participation

None of our executive officers has served as a director or member of a compensation committee (or other Board committee performing equivalent functions) of any other entity, one of whose executive officers served as a director or a member of our Compensation Committee.

In accordance with rules adopted by the SEC pursuant to the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010, we provide the following information about the relationship between executive compensation for our principal executive officers (“PEOs”) and non-PEO named executive officers (“NEOs”) as well as certain financial performance of the Company.

The following table sets forth additional compensation information for our principal executive officer (PEO) and our non-PEO named executive officers (“Non-PEO NEOs”), calculated in accordance with Item 402(v) of Regulation S-K, for fiscal years 2023 and 2022.

Average Summary

Value of Initial

Compensation Table

Fixed $100 Investment

Actually Paid

Actually Paid to

Based on Total

Non-PEO NEOs (3)

Non-PEO NEOs (4)

Non-PEO NEOs (5)

(in millions)

The dollar amounts reported are the amounts of total compensation reported for our PEO, Stephen G.

Berman, in the Summary Compensation Table of our 10-K for fiscal years 2023 and 2022.

The dollar amounts reported represent the amount of “compensation actually paid”, as computed in accordance with SEC rules.

The dollar amounts reported are the amounts of total compensation reported for Mr.

Berman during the applicable year, but also include (i) the year-end value of equity awards granted during the reported year, (ii) the change in the value of equity awards that were unvested at the end of the prior year, measured through the date the awards vested, or through the end of the reported fiscal year, (iii) value of equity awards issued and vested during the reported fiscal year, and (iv) reduced by the value of equity awards granted in prior years that were forfeited in subsequent years.

The dollar amounts reported are the average of the total compensation reported for our NEOs, other than our PEO, namely Messrs.

Kimble and McGrath for fiscal years 2023 and 2022.

The dollar amounts reported represent the average amount of “compensation actually paid”, as computed in accordance with SEC rules, for our NEOs, other than our PEO.

The dollar amounts reported are the average of the total compensation reported for our NEOs, other than our PEO in the Summary Compensation Table for fiscal years 2023 and 2022, but also include (i) the year-end value of equity awards granted during the reported year, (ii) the change in the value of equity awards that were unvested at the end of the prior year, measured through the date the awards vested, or through the end of the reported fiscal year, (iii) value of equity awards issued and vested during the reported fiscal year, and (iv) reduced by the value of equity awards granted in prior years that were forfeited in subsequent years.

Assumes an investment of $100 for the period starting on January 1, 2022 through the end of the listed fiscal year.

The closing prices of the Company’s common stock as reported on Nasdaq, as applicable, on the following trading days were:

(i) $10.16 on December 31, 2021;

(ii) $17.49 on December 31, 2022;

and (iii) $35.55 on December 31, 2023.

The following table details the adjustments to the Summary Compensation Table to determine average “compensation actually paid” for the PEO and NEOs (other than the PEO), as computed in accordance with SEC Item 402(v).

Amounts do not reflect the actual compensation earned by or paid to our PEO and NEOs during the applicable year.

Total Compensation (Per Comp Table)

Grant date FV of RSUs on Summary Compensation Table

YE FV of RSUs granted in CY and unvested in CY

Change in FV of unvested awards granted in PY

Change in FV from PY to vesting date of awards granted in PY that vested in CY

Performance-based shares forfeited in CY (FV @ end of PY YE)

Average compensation actually paid

In accordance with Item 402(v) requirements, the fair values of unvested and outstanding equity awards were remeasured as of the end of each fiscal year, and as of each vesting date, during the years displayed in the table above.

Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters

The following table sets forth certain information as of April 14, 2023 with respect to the beneficial ownership of our common stock by (1) each person known by us to own beneficially more than 5% of the outstanding shares of our common stock, (2) each of our directors, (3) each of our named executive officers, and (4) all our directors and executive officers as a group.

The following table sets forth certain information as of March 1, 2024 with respect to the beneficial ownership of our common stock by (1) each person known by us to own beneficially more than 5% of the outstanding shares of our common stock, (2) each of our directors, (3) each of our named executive officers, and (4) all our directors and executive officers as a group.

Name and Address of

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Under such rules, beneficial ownership includes any shares as to which the person or entity has sole or shared voting power or investment power.

The percentage of our outstanding shares is calculated by including among the shares owned by such person any shares which such person or entity has the right to acquire within 60 days after April 14, 2023.

The inclusion herein of any shares deemed beneficially owned does not constitute an admission of beneficial ownership of such shares.

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All share amounts have been adjusted to reflect the 1-10 reverse split effective July 9, 2020.

Based upon 9,870,927 shares outstanding on April 14, 2023.

Based upon 10,216,235 shares outstanding on March 1, 2024.

Does not include, unless noted otherwise, any shares of common stock issuable upon the conversion of any Restricted Stock Units (“RSUs”).

The address of Hong Kong Meisheng Culture Company Ltd is Room 1901, 19/F, Lee Garden One, 33 Hysan Avenue, Causeway Bay, Hong Kong.

Zhao Xiaoqiang, executive director of this entity, is a director of the Company.

Possesses shared voting and dispositive power with respect to all of such shares.

All the information presented in this Item with respect to this beneficial owner was extracted solely from the Schedule 13D/A filed on January 26, 2018.

The address of Mr.

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Possesses shared voting and dispositive power with respect to all of such shares.

All the information presented in this Item with respect to this beneficial owner was extracted solely from a Form 5 filed on January 26, 2023.

All the information presented in this Item with respect to this beneficial owner was extracted solely from a Schedule 13D/A filed on February 9, 2023.

The address of Hong Kong Meisheng Culture Company Ltd is Room 1901, 19/F, Lee Garden One, 33 Hysan Avenue, Causeway Bay, Hong Kong.

Zhao Xiaoqiang, executive director of this entity, is a director of the Company.

Possesses shared voting and dispositive power with respect to all of such shares.

All the information presented in this Item with respect to this beneficial owner was extracted solely from the Schedule 13D/A filed on January 26, 2018.

Does not include an aggregate of 508,371 shares of common stock underlying unvested RSUs issued pursuant to the terms of Mr.

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Certain of these shares may be restricted from transfer pursuant to the minimum stock ownership provisions adopted by the Company's Board of Directors.

Effective January 1, 2024, Mr.

McGrath is no longer an executive officer.

Consists of 12,564 shares of common stock issued pursuant to our 2002 Stock Award and Incentive Plan (the “2002 Plan”).

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Does not include the 523,954 shares owned by Hong Kong Meisheng Cultural Company Limited reported above, of which entity Zhao Xiaoqiang is executive director.

Does not include 145,788 shares of preferred stock owned by entities controlled, directly or indirectly, by Mr.

Does not include 145,788 shares of preferred stock owned, as of March 1, 2024, by entities controlled, directly or indirectly, by Mr.

Does not include any shares underlying RSUs.

Does not include the 523,954 shares owned by Hong Kong Meisheng Cultural Company Limited reported above, of which entity Zhao Xiaoqiang is executive director.

Does not include the 523,954 shares owned by Hong Kong Meisheng Cultural Company Limited reported above, of which entity Zhao Xiaoqiang is executive director or the 75,025 shares owned by Mr.

Certain Relationships and Related Transactions, and Director Independence

(a) Transactions with Related Persons

In November 2014, the Company entered into a joint venture with Meisheng Cultural & Creative Corp., Ltd., (“MC&C”) for the purpose of providing certain JAKKS licensed and non-licensed toys and consumer products to agreed-upon territories of the People’s Republic of China.

The joint venture includes a subsidiary in the Shanghai Free Trade Zone that sells, distributes and markets these products, which include dolls, plush, role play products, action figures, costumes, seasonal items, technology and app-enhanced toys, based on top entertainment licenses and JAKKS’ own proprietary brands.

The Company owns fifty-one percent of the joint venture and consolidates the joint venture since control rests with the Company.

The non-controlling interest’s share of the income (loss) from the joint venture for the year ended December 31, 2022, 2021 and 2020 was ($330,000), $120,000 and $130,000, respectively.

In November 2014, the Company entered into a joint venture with Meisheng Culture & Creative Corp.

Ltd., (“MC&C”), for the purpose of providing certain JAKKS licensed and non-licensed toys and consumer products to agreed-upon territories of the People’s Republic of China.

On May 10, 2023, the Company dissolved the joint venture with MC&C.

Prior to the dissolution, the Company owned fifty-one percent of the joint venture.

The results of operations of the joint venture are consolidated with the Company's results.

The non-controlling interest’s share of the income (loss) from the joint venture for the years ended December 31, 2023, 2022 and 2021 was ($293,000), ($330,000) and $120,000, respectively.

In October 2016, the Company entered into a joint venture with Hong Kong Meisheng Cultural Company Limited ("Meisheng"), a Hong Kong-based subsidiary of Meisheng Culture & Creative Corp., for the purpose of creating and developing original, multiplatform content for children including new short-form series and original shows.

JAKKS and Meisheng each own fifty percent of the joint venture and will jointly own the content.

JAKKS will retain merchandising rights for kids’ consumer products in all markets except China, which Meisheng Culture & Creative Corp.

will oversee through the Company’s existing distribution joint venture.

On December 1, 2023, the Company dissolved the joint venture with Meisheng.

Prior to the dissolution, JAKKS and Meisheng each owned fifty percent of the joint venture.

The results of operations of the joint venture are consolidated with the Company's results.

The non-controlling interest’s share of the income (loss) from the joint venture for the years ended December 31, 2023, 2022 and 2021 was nil.

MC&C is an affiliate of Meisheng and Meisheng holds shares of the Company’s outstanding common stock.

In March 2017, the Company entered into an agreement with a Hong Kong affiliate of its China joint venture partner.

After their shareholder and China regulatory approval, the transaction closed on April 27, 2017.

In 2018, the Company issued 4,158 shares of restricted stock at a value of $0.1 million to the non-employee director, which vested in January 2019.

In 2019, the Company issued 5,471 shares of restricted stock at a value of $0.1 million to the non-employee director, which vested in January 2020.

In March 2017, the Company entered into an equity purchase agreement with Meisheng which provided, among other things, that as long as Meisheng and its affiliates hold 10% or more of the issued and outstanding shares of common stock of the Company, Meisheng shall have the right from time to time to designate a nominee (who currently is Mr.

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Meisheng also serves as a significant manufacturer of the Company.

For the year ended December 31, 2022, 2021 and 2020, the Company made inventory-related payments to Meisheng of approximately $120.5 million, $77.7 million and $64.8 million respectively.

For the years ended December 31, 2023, 2022 and 2021, the Company made inventory, molds and tooling related payments to Meisheng of approximately $75.7 million, $120.5 million and $77.7 million respectively.

As of December 31, 2023 and 2022, amounts due to Meisheng for inventory received by the Company, but not paid totaled $12.3 million and $9.8 million, respectively.

A director of the Company is a portfolio manager at Oasis Management.

(see Item 8 “Consolidated Financial Statements and Supplementary Data Note 10 - Debt”)

A director of the Company is a director at Benefit Street Partners, who owns 145,788 shares of the Series A Preferred Stock (see Item 8 “Consolidated Financial Statements and Supplementary Data Note 9 - Debt”).

Amounts outstanding under the 2021 BSP Term Loan will bear interest at either (i) LIBOR plus 6.50% - 7.00% (determined by reference to a net leverage pricing grid), subject to a 1.00% LIBOR floor, or (ii) base rate plus 5.50% - 6.00% (determined by reference to a net leverage pricing grid), subject to a 2.00% base rate floor.

The 2021 BSP Term Loan matures in June 2027.

The 2021 BSP Term Loan Agreement contains negative covenants, events of default, and the obligations under the 2021 BSP Term Loan Agreement are guaranteed by the Company.

Amounts outstanding under the 2021 BSP Term Loan bore interest at either (i) LIBOR plus 6.50% - 7.00% (determined by reference to a net leverage pricing grid), subject to a 1.00% LIBOR floor, or (ii) base rate plus 5.50% - 6.00% (determined by reference to a net leverage pricing grid), subject to a 2.00% base rate floor.

The 2021 BSP Term Loan was termed to mature in June 2027.

The 2021 BSP Term Loan Agreement contained negative covenants, events of default, and the obligations under the 2021 BSP Term Loan Agreement were guaranteed by the Company.

The terms, covenants, events of default, and Company obligations are described in more detail in Note 9 – Debt, as well as in the 2021 BSP Term Loan Agreement.

As of December 31, 2022, Benefit Street Partners held $68.9 million in principal amount of the 2021 BSP Term Loan.

On June 5, 2023, the Company paid in full the 2021 BSP Term Loan and terminated the 2021 BSP Term Loan Agreement by making a $30.2 million prepayment towards the outstanding principal amount.

Additionally, the Company made a $0.4 million payment towards the outstanding accrued interest, and a $0.2 million payment for the prepayment penalty and other related fees.

In connection with this transaction, the Company recognized a loss on debt extinguishment of $1.0 million on its consolidated statements of operations.

(b) Review, Approval or Ratification of Transactions with Related Persons

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Before our principal accountant is engaged by us to render audit or non-audit services, as required by the rules and regulations promulgated by the Securities and Exchange Commission and/or Nasdaq, such engagement is approved by the Audit Committee.

The following are the fees of BDO USA, LLP, our principal accountant (PCAOB ID:

The following are the fees of BDO USA, P.C., our principal accountant (PCAOB ID:

243 ), for the two years ended December 31, 2023, for services rendered in connection with the audit for those respective years (all of which have been pre-approved by the Audit Committee):

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Third Amended and Restated By-Laws of the Company (42)

Amendment No.

1 to Third Amended and Restated By-Laws of the Company (**)

Indenture dated July 24, 2013 by and between the Registrant and Wells Fargo Bank, N.A (3)

21 unchanged sentences

2021 Amendment to 2002 Stock Award and Incentive Plan (38)

2023 Amendment to 2002 Stock award and Incentive plan (47)

Second Amended and Restated Employment Agreement between the Company and Stephen G.

16 unchanged sentences

Berman’s Second Amended and Restated Employment Agreement (43)

Amendment Number Eight dated March 30, 2023 to Mr.

Berman’s Second Amended and Restated Employment Agreement (48)

Office Lease dated November 18, 1999 between the Company and Winco Maliview Partners (14)

17 unchanged sentences

Eighth Amendment to Employment Agreement between the Company and John a/k/a Jack McGrath, dated September 27, 2021 (39)

Eighth Amendment to Employment Agreement between the Company and John a//k/a Jack McGrath, dated March 7, 2023 (49)

Assignment Agreement dated March 7, 2023 with John a/k/a Jack McGrath (50)

Exchange Agreement dated November 7, 2017 between the Company and Oasis Investments II Master Fund Ltd.

38 unchanged sentences

Subsidiaries of the Company (**)

Consent of BDO USA, LLP (**)

Consent of BDO USA, P.C.

Rule 13a-14(a)/15d-14(a) Certification of Stephen G.

58 unchanged sentences

Filed previously as an exhibit to the Company’s Registration Statement on Form S-3/A filed on October 27, 2022 and incorporated herein by reference.

Filed previously as an annex to the Company’s Revised Schedule 14A filed November 9, 2023 and incorporated herein by reference.

Filed previously as an exhibit to the Company’s Current Report on Form 8-K filed March 31, 2023 and incorporated herein by reference.

Filed previously as an exhibit to the Company’s Current Report on Form 8-K filed March 10, 2023 and incorporated herein by reference.

Certain schedules have been omitted pursuant to Item 601(a)(5) of Regulation S-K under the Securities Act.

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Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

April 14, 2023

March 15, 2024

JAKKS PACIFIC, INC.

3 unchanged sentences

/s/ STEPHEN G.

April 14, 2023

March 15, 2024

Chief Executive Officer

1 unchanged sentence

(Principal Financial Officer and

April 14, 2023

March 15, 2024

Principal Accounting Officer)

/s/ CAROLE LEVINE

April 14, 2023

March 15, 2024

Carole Levine

/s/ JOSHUA CASCADE

April 14, 2023

March 15, 2024

Joshua Cascade

/s/ MATTHEW WINKLER

April 14, 2023

March 15, 2024

Matthew Winkler

/s/ ALEXANDER SHOGHI

April 14, 2023

March 15, 2024

Alexander Shoghi

/s/ LORI MACPHERSON

April 14, 2023

March 15, 2024

Lori MacPherson

/s/ ZHAO XIAOQIANG

April 14, 2023

March 15, 2024

Zhao Xiaoqiang

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-K

Item 9A. Controls and Procedures