What changed in this filing

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Item 1. Financial Statements

2024-11-08 compared with 2024-08-06 · 218 added, 187 removed, 561 unchanged (42% of the section changed)

4 unchanged sentences

(In thousands, except share amounts)

September 30,

Current assets

1 unchanged sentence

Restricted cash

Accounts receivable, net of allowance for credit losses of $ 5,236 and $ 3,743 at June 30, 2024 and December 31, 2023, respectively

Accounts receivable, net of allowance for credit losses of $ 5,400 and $ 3,743 at September 30, 2024 and December 31, 2023, respectively

Prepaid expenses and other assets

17 unchanged sentences

Short-term operating lease liabilities

Short-term debt, net

Total current liabilities

6 unchanged sentences

5,000,000 shares authorized;

nil and 200,000 shares issued and outstanding at June 30, 2024 and December 31, 2023, respectively

nil and 200,000 shares issued and outstanding at September 30, 2024 and December 31, 2023, respectively

Stockholders' Equity

1 unchanged sentence

100,000,000 shares authorized;

10,800,892 and 10,096,197 shares issued and outstanding at June 30, 2024 and December 31, 2023, respectively

10,990,337 and 10,096,197 shares issued and outstanding at September 30, 2024 and December 31, 2023, respectively

Additional paid-in capital

11 unchanged sentences

(In thousands, except per share data)

Three Months Ended June 30,

Six Months Ended June 30,

Three Months Ended

September 30,

Nine Months Ended

September 30,

Cost of sales:

7 unchanged sentences

Selling, general and administrative expenses

Income (loss) from operations

Income from operations

Loss from joint ventures

4 unchanged sentences

Interest expense

Income (loss) before provision for (benefit from) income taxes

Provision for (benefit from) income taxes

Net income (loss)

Income before provision for income taxes

Provision for income taxes

Net income (loss) attributable to non-controlling interests

Net income (loss) attributable to Jakks Pacific, Inc.

Net income (loss) attributable to common stockholders

Earnings (loss) per share - basic

Shares used in earnings (loss) per share - basic

Earnings (loss) per share - diluted

Shares used in earnings (loss) per share - diluted

Comprehensive income (loss)

Comprehensive income (loss) attributable to JAKKS Pacific, Inc.

Net income attributable to Jakks Pacific, Inc.

Net income attributable to common stockholders

Earnings per share - basic

Shares used in earnings per share - basic

Earnings per share - diluted

Shares used in earnings per share - diluted

Comprehensive income

Comprehensive income attributable to JAKKS Pacific, Inc.

See accompanying notes to condensed consolidated financial statements.

3 unchanged sentences

(In thousands)

Three and Six Months Ended June 30, 2024

Three and Nine Months Ended September 30, 2024

Pacific, Inc.

Stockholders'

Comprehensive

Stockholders'

Balance, December 31, 2023

11 unchanged sentences

Balance, June 30, 2024

Three and Six Months Ended June 30, 2023

Share-based compensation expense

Repurchase of common stock for employee tax withholding

Foreign currency translation adjustment

Balance, September 30, 2024

Three and Nine Months Ended September 30, 2023

Pacific, Inc.

Stockholders'

Comprehensive

Stockholders'

Balance, December 31, 2022

9 unchanged sentences

Balance, June 30, 2023

Share-based compensation expense

Repurchase of common stock for employee tax withholding

Preferred stock accrued dividends

Net income (loss)

Foreign currency translation adjustment

Balance, September 30, 2023

See accompanying notes to condensed consolidated financial statements.

3 unchanged sentences

(In thousands)

Six Months Ended June 30,

Nine Months Ended September 30,

Cash flows from operating activities

Net income (loss)

Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities:

Adjustments to reconcile net income to net cash provided by (used in) operating activities:

Provision for credit losses

5 unchanged sentences

Loss on debt extinguishment

Deferred income taxes

Change in fair value of preferred stock derivative liability

22 unchanged sentences

Net cash used in financing activities

Net decrease in cash, cash equivalents and restricted cash

Net increase (decrease) in cash, cash equivalents and restricted cash

Effect of foreign currency translation

6 unchanged sentences

Cash paid for income taxes, net

As of June 30, 2024 and 2023, there was $ 4.3 million and $ 4.7 million, respectively, of property and equipment purchases included in accounts payable.

As of September 30, 2024 and 2023, there was $ 4.1 million and $ 3.9 million, respectively, of property and equipment purchases included in accounts payable.

See Notes 5, 6 and 9 for additional supplemental information to the condensed consolidated statements of cash flows.

3 unchanged sentences

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

June 30, 2024

September 30, 2024

Note 1 — Basis of Presentation

2 unchanged sentences

However, the Company believes that the disclosures are adequate to prevent the information presented from being misleading.

These financial statements should be read in conjunction with the financial statements and the notes thereto included in the Company’s Annual Report on Form 10-K, which contains audited financial information for the three years in the period ended December 31, 2023.

The information provided in this report reflects all adjustments (consisting solely of normal recurring items) that are, in the opinion of management, necessary to present fairly the financial position and the results of operations for the periods presented.

31 unchanged sentences

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

June 30, 2024

No new additional accounting pronouncements were issued or adopted for the three and six months ended June 30, 2024 that materially impacted the Company.

September 30, 2024

No new additional accounting pronouncements were issued or adopted for the three and nine months ended September 30, 2024 that materially impacted the Company.

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

8 unchanged sentences

Results are not necessarily those which would be achieved if each segment was an unaffiliated business enterprise.

Information by segment and a reconciliation to reported amounts for the three and six months ended June 30, 2024 and 2023 and as of June 30, 2024 and December 31, 2023 are as follows (in thousands):

Information by segment and a reconciliation to reported amounts for the three and nine months ended September 30, 2024 and 2023 and as of September 30, 2024 and December 31, 2023 are as follows (in thousands):

Three Months Ended

Six Months Ended

Nine Months Ended

September 30,

Toys/Consumer Products

Three Months Ended

Six Months Ended

Income (Loss) from Operations

Nine Months Ended

September 30,

Income from Operations

Toys/Consumer Products

Three Months Ended

Six Months Ended

Nine Months Ended

September 30,

Depreciation and Amortization Expense

Toys/Consumer Products

September 30,

Toys/Consumer Products

2 unchanged sentences

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

June 30, 2024

September 30, 2024

Net revenues are categorized based upon location of the customer, while long-lived assets are categorized based upon the location of the Company’s assets.

The following tables present information about the Company by geographic area as of June 30, 2024 and December 31, 2023 and for the three and six months ended June 30, 2024 and 2023 (in thousands):

The following tables present information about the Company by geographic area as of September 30, 2024 and December 31, 2023 and for the three and nine months ended September 30, 2024 and 2023 (in thousands):

September 30,

Long-lived Assets

2 unchanged sentences

Three Months Ended

Six Months Ended

Nine Months Ended

September 30,

Net Sales by Customer Area

4 unchanged sentences

Major Customers

Net sales to major customers for the three and six months ended June 30, 2024 and 2023 were as follows (in thousands, except for percentages):

Three Months Ended June 30,

Six Months Ended June 30,

Net sales to major customers for the three and nine months ended September 30, 2024 and 2023 were as follows (in thousands, except for percentages):

Three Months Ended September 30,

Nine Months Ended September 30,

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

4 unchanged sentences

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

June 30, 2024

September 30, 2024

Note 3 — Inventory

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

September 30,

Raw materials

Finished goods

The inventory obsolescence reserve was $ 8.3 million and $ 7.7 million as of June 30, 2024 and December 31, 2023, respectively.

The inventory obsolescence reserve was $ 8.8 million and $ 7.7 million as of September 30, 2024 and December 31, 2023, respectively.

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

2 unchanged sentences

Revenue is measured as the amount of consideration the Company expects to be entitled to in exchange for those goods.

The Company’s contracts do not involve financing elements as payment terms with customers and are less than one year.

The Company’s contracts do not involve financing elements as payment terms with customers are less than one year.

Further, because revenue is recognized at the point in time goods are sold to customers, there are no contract assets or contract liability balances.

16 unchanged sentences

As a result, these costs are recorded as direct selling expenses, as incurred.

For the three and six months ended June 30, 2024 sales commissions were $ 0.3 million and $ 0.6 million, respectively.

For the three and six months ended June 30, 2023 sales commissions were $ 0.6 million and $ 1.2 million, respectively.

For the three and nine months ended September 30, 2024 sales commissions were $ 0.7 million and $ 1.3 million, respectively.

For the three and nine months ended September 30, 2023 sales commissions were $ 1.2 million and $ 2.4 million, respectively.

Shipping and handling activities are considered part of the Company’s obligation to transfer the products and therefore are recorded as direct selling expenses, as incurred.

For the three and six months ended June 30, 2024, shipping and handling costs were $ 1.4 million and $ 3.0 million, respectively.

For the three and six months ended June 30, 2023, shipping and handling costs were $ 1.7 million and $ 3.6 million, respectively.

The Company’s reserve for sales returns and allowances amounted to $ 29.5 million as of June 30, 2024, compared to $ 38.5 million as of December 31, 2023.

The Company’s net accounts receivable as of June 30, 2024 and December 31, 2023 were $ 140.0 million and $ 123.8 million, respectively.

For the three and nine months ended September 30, 2024, shipping and handling costs were $ 1.8 million and $ 4.8 million, respectively.

For the three and nine months ended September 30, 2023, shipping and handling costs were $ 2.6 million and $ 6.1 million, respectively.

The Company’s reserve for sales returns and allowances amounted to $ 40.8 million as of September 30, 2024, compared to $ 38.5 million as of December 31, 2023.

The Company’s net accounts receivable as of September 30, 2024 and December 31, 2023 were $ 290.4 million and $ 123.8 million, respectively.

JAKKS PACIFIC, INC.

1 unchanged sentence

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

June 30, 2024

September 30, 2024

Note 5 — Debt

5 unchanged sentences

On July 29, 2021, the Company terminated its Delayed Draw Term Loan option as it determined it had sufficient liquidity to fund any outstanding convertible senior notes that remained upon maturity.

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 $ 0.3 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 condensed consolidated statements of operations.

On January 3, 2023, as permitted by the terms within the 2021 BSP Term Loan Agreement, the Company had made a voluntary $ 15.0 million prepayment towards the outstanding principal amount of the 2021 BSP Term Loan and incurred a $ 0.2 million prepayment penalty and on March 3, 2023, as required by the terms within the 2021 BSP Term Loan Agreement under the Excess Cash Flow (“ECF”) Sweep provision, the Company had made a mandatory $ 23.1 million payment towards the outstanding principal amount of the 2021 BSP Term Loan.

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.

In January 2023, the Company entered into a second amendment for its 2021 BSP Term Loan Agreement, which transitioned the interest reference rate on its 2021 BSP Term Loan from LIBOR to the Secured Overnight Financing Rate (“SOFR”).

The new interest reference rate for the 2021 BSP Term Loan was effective on April 1, 2023.

In addition to the transition to SOFR, the amendment also included a constant 0.10 % spread adjustment until the maturity of the 2021 BSP Term Loan.

The 2021 BSP Term Loan Agreement contained negative covenants that, subject to certain exceptions, limited the ability of the Company and its subsidiaries to, among other things, incur additional indebtedness, make restricted payments, pledge its assets as security, make investments, loans, advances, guarantees and acquisitions, undergo fundamental changes and enter into transactions with affiliates.

7 unchanged sentences

provided however, that, the Applicable Minimum Cash Amount was in no event to be reduced below $15.0 million.

JAKKS PACIFIC, INC.

AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

June 30, 2024

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

The 2021 BSP Term Loan Agreement contained events of default that are customary for a facility of this nature, including (subject in certain cases to grace periods and thresholds) nonpayment of principal, nonpayment of interest, fees or other amounts, material inaccuracy of representations and warranties, violation of covenants, cross-default to certain other existing indebtedness, bankruptcy or insolvency events, certain judgment defaults and a change of control as specified in the 2021 BSP Term Loan Agreement.

1 unchanged sentence

The obligations under the 2021 BSP Term Loan Agreement were guaranteed by the Company, the subsidiary borrowers thereunder and certain of the other existing and future direct and indirect subsidiaries of the Company and were secured by substantially all of the assets of the Company, the subsidiary borrowers thereunder and such other subsidiary guarantors, in each case, subject to certain exceptions and permitted liens and subject to the priority lien granted under the JPMorgan ABL Credit Agreement (see Note 6 – Credit Facility).

The new interest reference rate for the 2021 BSP Term Loan was effective on April 1, 2023.

In addition to the transition to SOFR, the amendment also included a constant 0.10 % spread adjustment until the maturity of the 2021 BSP Term Loan.

JAKKS PACIFIC, INC.

AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

September 30, 2024

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 $ 0.3 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 condensed consolidated statements of operations.

The agent and Sole Lead Arranger under the 2021 BSP Term Loan were affiliates of an affiliate of the Company, which affiliate, at the time of refinancing, owned common stock, and the 3.25 % convertible senior notes due 2023 of the Company as well as the Company’s outstanding Series A Preferred Stock (see Note 16 – Related Party Transactions).

10 unchanged sentences

The JPMorgan ABL Facility matures in June 2026.

As of June 30, 2024 the weighted average interest rate on the credit facility with JPMorgan Chase Bank was 6.92 %.

As of September 30, 2024 the weighted average interest rate on the credit facility with JPMorgan Chase Bank was 7.08 %.

In March 2023, the Company entered into a first amendment for its JPMorgan ABL Credit Agreement, which transitioned the interest reference rate on its JPMorgan ABL Facility from LIBOR to the Secured Overnight Financing Rate (“SOFR”).

6 unchanged sentences

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

June 30, 2024

September 30, 2024

The JPMorgan ABL Credit Agreement contains events of default that are customary for a facility of this nature, including (subject in certain cases to grace periods and thresholds) nonpayment of principal, interest, fees or other amounts, material inaccuracy of representations and warranties, violation of covenants, cross-default to certain other existing indebtedness, bankruptcy or insolvency events, certain judgment defaults, loss of liens or guarantees and a change of control as specified in the JPMorgan ABL Credit Agreement.

1 unchanged sentence

The obligations under the JPMorgan ABL Credit Agreement are guaranteed by the Company, the subsidiary borrowers thereunder and certain of the other existing and future direct and indirect subsidiaries of the Company and are secured by substantially all of the assets of the Company, the subsidiary borrowers thereunder and such other subsidiary guarantors, in each case, subject to certain exceptions and permitted liens.

As of June 30, 2024, the amount of outstanding borrowings was $ 5.0 million and the total excess borrowing availability was $ 52.5 million.

As of August 6, 2024, the amount of outstanding borrowings was $ 34.0 million.

As of June 30, 2024, off-balance sheet arrangements include letters of credit issued by JPMorgan of $ 9.4 million.

Amortization expense classified as interest expense related to the $ 1.6 million of debt issuance costs associated with the transaction that closed on June 2, 2021 (i.e., JPMorgan ABL Credit Agreement) was $ 0.1 million for the three months ended June 30, 2024 and June 30, 2023.

As of June 30, 2024, the Company was in compliance with the financial covenants under the JPMorgan ABL Credit Agreement.

As of September 30, 2024, the amount of outstanding borrowings was nil and the total excess borrowing availability was $ 61.2 million.

As of September 30, 2024, off-balance sheet arrangements include letters of credit issued by JPMorgan of $ 4.4 million.

As of September 30, 2024, the Company was in compliance with the financial covenants under the JPMorgan ABL Credit Agreement.

Note 7 — Income Taxes

The Company’s income tax expense of $ 2.3 million for the three months ended June 30, 2024, reflects an effective tax rate of 30.2 %.

The Company’s income tax expense of $ 1.5 million for the three months ended June 30, 2023, reflects an effective tax rate of 19.3 %.

The increase in tax expense during the three months ended June 30, 2024 compared to the corresponding period in 2023 was primarily due to an increase in the forecasted annual effective tax rate which increased primarily due to non-deductible compensation and foreign inclusions.

The Company’s income tax benefit of $ 4.4 million for the six months ended June 30, 2024 reflects an effective tax (benefit) rate of 33.2 %.

The Company’s income tax expense of $ 0.1 million for the six months ended June 30, 2023 reflects an effective tax rate of 9.9 %.

The increase in tax benefit during the six months ended June 30, 2024 compared to the corresponding period in 2023 was primarily due to a decrease in income before taxes and an increase in benefits from discrete items.

The Company’s income tax expense of $ 15.4 million for the three months ended September 30, 2024, reflects an effective tax rate of 22.8 %.

The Company’s income tax expense of $ 12.4 million for the three months ended September 30, 2023, reflects an effective tax rate of 20.5 %.

The increase in tax expense during the three months ended September 30, 2024 compared to the corresponding period in 2023 was primarily due to an increase in the forecasted annual effective tax rate which increased primarily due to non-deductible compensation and foreign inclusions.

The Company’s income tax expense of $ 11.0 million for the nine months ended September 30, 2024 reflects an effective tax rate of 20.2 %.

The Company’s income tax expense of $ 12.5 million for the nine months ended September 30, 2023 reflects an effective tax rate of 20.3 %.

The decrease in tax expense during the nine months ended September 30, 2024 compared to the corresponding period in 2023 was primarily due to a larger discrete benefit from vesting of restricted shares.

From time to time, in the normal course of business, the Company may be audited by federal, state and foreign tax authorities.

4 unchanged sentences

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

June 30, 2024

Note 8 — Earnings (Loss) Per Share

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

September 30, 2024

Note 8 — Earnings Per Share

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

Three Months Ended

Six Months Ended

Earnings (loss) per share - basic and diluted

Net income (loss)

September 30,

Nine Months Ended

September 30,

Earnings per share - basic and diluted

Net income (loss) attributable to non-controlling interests

Net income (loss) attributable to JAKKS Pacific, Inc.

Net income attributable to JAKKS Pacific, Inc.

Preferred stock dividend*

Redemption of preferred stock

Net income (loss) attributable to common stockholders **

Net income attributable to common stockholders **

Weighted average common shares outstanding - basic

Earnings (loss) per share available to common stockholder- basic

Earnings per share available to common stockholder- basic

Weighted average common shares outstanding - diluted

Earnings (loss) per share available to common stockholder- diluted

* The 200,000 shares issued and outstanding as of June 30, 2023 were non-participating.

Earnings per share available to common stockholder- diluted

* The 200,000 shares issued and outstanding as of September 30, 2023 were non-participating.

A preferred dividend of $ 0.4 million was accrued for Q1 2024 and included in the preferred stock redemption.

** Net income (loss) attributable to common stockholders was computed by deducting the difference between the fair value of the consideration transferred to the holders of the preferred stock and the carrying amount of the preferred stock and fair value of the related derivative liability of $ 1.3 million for the six months ended June 30, 2024 and the preferred stock dividend of $ 0.4 million and $ 0.7 million for the three and six months ended June 30, 2023.

Basic loss per share is calculated using the weighted average number of common shares outstanding during the period.

Diluted loss per share is calculated using the weighted average number of common shares and common share equivalents outstanding during the period (which consist of restricted stock units to the extent they are dilutive).

Potentially dilutive restricted stock units of 514,687 for the six months ended June 30, 2024, were excluded from the computation of diluted loss per share since they would have been anti-dilutive.

** Net income attributable to common stockholders was computed by deducting the difference between the fair value of the consideration transferred to the holders of the preferred stock and the carrying amount of the preferred stock and fair value of the related derivative liability of $ 1.3 million for the nine months ended September 30, 2024 and the preferred stock dividend of $ 0.4 million and $ 1.1 million for the three and nine months ended September 30, 2023.

Basic earnings per share is calculated using the weighted average number of common shares outstanding during the period.

Diluted earnings per share is calculated using the weighted average number of common shares and common share equivalents outstanding during the period (which consist of restricted stock units to the extent they are dilutive).

Note 9 — Common Stock and Preferred Stock

2 unchanged sentences

Additionally, an aggregate of 34,588 shares of restricted stock granted in 2021 and 2022 with a value of approximately $ 0.6 million was forfeited during 2023.

During the six months ended June 30, 2024, certain employees, including three executive officers, surrendered an aggregate of 147,612 shares of restricted stock units for $ 5.1 million to cover income taxes due for the vesting of restricted shares.

During the nine months ended September 30, 2024, certain employees, including two executive officers, surrendered an aggregate of 211,981 shares of restricted stock units for $ 6.5 million to cover income taxes due for the vesting of restricted shares.

Additionally, an aggregate of 20,450 shares of restricted stock granted in 2020, 2022 and 2023 with a value of approximately $ 0.3 million was forfeited during 2024.

No dividend was declared or paid in the three months ended June 30, 2024 and 2023.

No dividend was declared or paid in the three months ended September 30, 2024 and 2023.

JAKKS PACIFIC, INC.

1 unchanged sentence

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

June 30, 2024

September 30, 2024

At the Market Offering

1 unchanged sentence

Riley, as agent pursuant to which the Company may, from time to time, sell shares of its common stock, up to $ 75 million of common stock, in one or more offerings in amounts, prices and at terms that the Company will determine at the time of the offering.

As of June 30, 2024, the Company did not sell any shares of common stock under the ATM Agreement.

As of September 30, 2024, the Company did not sell any shares of common stock under the ATM Agreement.

The Company has on file with the SEC an effective registration statement pursuant to which it may issue, from time to time, up to $ 150 million of securities (which will be reduced by any amount of securities sold pursuant to the ATM Agreement) consisting of, or any combination of, common stock, preferred stock, debt securities, warrants, rights and/or units, in one or more offerings in amounts, prices and at terms that the Company will determine at the time of the offering.

As of June 30, 2024, the Company has not sold any securities pursuant to its shelf registration statement.

As of September 30, 2024, the Company has not sold any securities pursuant to its shelf registration statement.

Redeemable Preferred Stock

5 unchanged sentences

No cash dividends had been declared or paid.

Prior to the redemption, for the three and six months ended June 30, 2024 the Company recorded nil and $ 0.4 million, respectively, of preferred stock dividends as an increase in the value of the Series A Preferred Stock.

For the three and six months ended June 30, 2023 the Company recorded $ 0.4 million and $ 0.7 million, respectively, of preferred stock dividends as an increase in the value of the Series A Preferred Stock.

Prior to the redemption, for the three and nine months ended September 30, 2024 the Company recorded nil and $ 0.4 million, respectively, of preferred stock dividends as an increase in the value of the Series A Preferred Stock.

For the three and nine months ended September 30, 2023 the Company recorded $ 0.4 million and $ 1.1 million, respectively, of preferred stock dividends as an increase in the value of the Series A Preferred Stock.

The Series A Preferred Stock had no stated maturity, however, the Company had the right to redeem all or a portion of the Series A Preferred Stock at its Liquidation Preference (as defined below) at any time after payment in full of the 2019 Recap Term Loan.

3 unchanged sentences

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

June 30, 2024

September 30, 2024

The Company had the right, but was not required, to repurchase all or a portion of the Series A Preferred Stock at its Liquidation Preference at any time after payment in full of the 2019 Recap Term Loan.

14 unchanged sentences

The Company considered the repurchase option to have no value as the likelihood is remote that this event, within the Company’s control, would ever occur.

The liability was accounted for at fair value, with changes in fair value recognized as other income (expense) on the Company's condensed consolidated statements of operations (see Note 15 – Fair Value Measurement).

The value of the redemption provision explicitly considered the present value of the potential premium that would be paid related to, and the probability of, an event that would trigger its payment.

1 unchanged sentence

Accordingly, these two embedded derivatives were accounted for separately from the Series A Preferred Stock at fair value.

As of June 30, 2024, the Company had redeemed all of the outstanding shares of the Series A Preferred Stock.

As of September 30, 2024, the Company had redeemed all of the outstanding shares of the Series A Preferred Stock.

As of December 31, 2023, the Series A Preferred Stock was recorded in temporary equity at the amount of accrued, but unpaid dividends of $ 6.0 million, and the redemption provision, as a bifurcated derivative, was recorded as a long-term liability with an estimated value of $ 29.9 million.

3 unchanged sentences

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

June 30, 2024

September 30, 2024

The following table provides a reconciliation of the beginning and ending balances of the Series A Preferred Stock, which is recorded in temporary equity:

6 unchanged sentences

Balance, June 30,

Preferred stock accrued dividends

Balance, September 30,

Note 10 — Joint Ventures

4 unchanged sentences

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

The non-controlling interests incurred a gain of nil and $ 0.3 million for the three and six months ended June 30, 2024, respectively.

The non-controlling interests incurred a loss of $ 0.3 million each for the three and six months ended June 30, 2023.

The non-controlling interests incurred a gain of nil and $ 0.3 million for the three and nine months ended September 30, 2024, respectively.

The non-controlling interests incurred a loss of nil and $ 0.3 million each for the three and nine months ended September 30, 2023.

Note 11 — Goodwill

1 unchanged sentence

Goodwill impairment exists when the estimated fair value of goodwill is less than its carrying value.

For the three and six months ended June 30, 2024, there were no events or circumstances that indicated that an impairment loss may have been incurred.

For the three and nine months ended September 30, 2024, there were no events or circumstances that indicated that an impairment loss may have been incurred.

Based on the Company’s April 1 annual assessment, it determined that the fair values of its reporting units were not less than the carrying amounts.

No goodwill impairment was determined to have occurred for the six months ended June 30, 2024 and June 30, 2023.

Note 12 — Comprehensive Income (Loss)

The table below presents the components of the Company’s comprehensive loss for the three and six months ended June 30, 2024 and 2023 (in thousands):

No goodwill impairment was determined to have occurred for the nine months ended September 30, 2024 and September 30, 2023.

Note 12 — Comprehensive Income

The table below presents the components of the Company’s comprehensive income for the three and nine months ended September 30, 2024 and 2023 (in thousands):

Three Months Ended

Six Months Ended

Net income (loss)

Nine Months Ended

September 30,

Other comprehensive income (loss):

Foreign currency translation adjustment

Comprehensive income (loss)

Comprehensive income

Comprehensive income (loss) attributable to non-controlling interests

Comprehensive income (loss) attributable to JAKKS Pacific, Inc.

Comprehensive income attributable to JAKKS Pacific, Inc.

JAKKS PACIFIC, INC.

1 unchanged sentence

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

June 30, 2024

September 30, 2024

Note 13 — Litigation and Contingencies

12 unchanged sentences

Shares for the restricted stock units are not issued until they vest.

The following table summarizes the total share-based compensation expense recognized for the three and six months ended June 30, 2024 and 2023 (in thousands)

The following table summarizes the total share-based compensation expense recognized for the three and nine months ended September 30, 2024 and 2023 (in thousands)

Three Months Ended

Six Months Ended

Nine Months Ended

September 30,

Share-based compensation expense

Restricted Stock Units

Restricted stock unit activity (including those with performance-based vesting criteria) for the six months ended June 30, 2024 is summarized as follows:

Restricted stock unit activity (including those with performance-based vesting criteria) for the nine months ended September 30, 2024 is summarized as follows:

Restricted Stock Units

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Outstanding, December 31, 2023

Outstanding, June 30, 2024

As of June 30, 2024, there was $ 14.5 million of total unrecognized compensation cost related to non-vested restricted stock units, which is expected to be recognized over a weighted-average period of 2.0 years.

As of June 30, 2024, the fair market value of non-vested restricted stock units was $ 20.3 million.

Outstanding, September 30, 2024

As of September 30, 2024, there was $ 12.2 million of total unrecognized compensation cost related to non-vested restricted stock units, which is expected to be recognized over a weighted-average period of 1.8 years.

As of September 30, 2024, the fair market value of non-vested restricted stock units was $ 22.6 million.

JAKKS PACIFIC, INC.

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NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

June 30, 2024

September 30, 2024

Note 15 — Fair Value Measurements

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The Company’s assessment of the significance of a particular input to the fair value measurement in its entirety requires judgment, and considers factors specific to the asset or liability.

The following tables summarize the Company's financial assets and liabilities measured at fair value on a recurring basis as of June 30, 2024 and December 31, 2023 (in thousands):

The following tables summarize the Company's financial assets and liabilities measured at fair value on a recurring basis as of September 30, 2024 and December 31, 2023 (in thousands):

Fair Value Measurements

Carrying Amount as of

As of June 30, 2024

June 30, 2024

As of September 30, 2024

September 30, 2024

Money market funds

Investments in employee deferred compensation trusts

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Extinguishment through redemption of preferred stock

Balance, June 30,

Balance, September 30,

JAKKS PACIFIC, INC.

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NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

June 30, 2024

September 30, 2024

The Company’s Series A Preferred derivative liability was classified within Level 3 of the fair value hierarchy because unobservable inputs were used in estimating the fair value.

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The carrying value of these financial instruments is a reasonable approximation of fair value due to the short-term nature of the instruments.

The carrying amount of short-term debt at June 30, 2024 approximates fair value because the interest rate approximates the current market interest rate.

The carrying amount of short-term debt at September 30, 2024 approximates fair value because the interest rate approximates the current market interest rate.

Note 16 — Related Party Transactions

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Meisheng also serves as a significant manufacturer of the Company.

For the three and six months ended June 30, 2024 the Company made inventory-related payments to Meisheng of approximately $ 13.9 million and $ 28.8 million, respectively.

For the three and six months ended June 30, 2023, the Company made inventory-related payments to Meisheng of approximately $ 19.1 million and $ 28.4 million, respectively.

As of June 30, 2024 and December 31, 2023, amounts due to Meisheng for inventory received by the Company, but not paid totaled $ 19.1 million and $ 12.3 million, respectively.

For the three and nine months ended September 30, 2024 the Company made inventory-related payments to Meisheng of approximately $ 32.0 million and $ 60.7 million, respectively.

For the three and nine months ended September 30, 2023, the Company made inventory-related payments to Meisheng of approximately $ 35.2 million and $ 65.1 million, respectively.

As of September 30, 2024 and December 31, 2023, amounts due to Meisheng for inventory received by the Company, but not paid totaled $ 35.0 million and $ 12.3 million, respectively.

As of September 30, 2024, the Company had recorded sales revenues for the three and nine months ended and had accounts receivable outstanding of $ 0.1 million from Party X People GMBH, a subsidiary of Meisheng.

JAKKS PACIFIC, INC.

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NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

June 30, 2024

September 30, 2024

Note 17 — Prepaid Expenses and Other Assets

Prepaid expenses and other assets as of June 30, 2024 and December 31, 2023 consist of the following (in thousands):

Prepaid expenses and other assets as of September 30, 2024 and December 31, 2023 consist of the following (in thousands):

September 30,

Income tax receivable

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Critical Accounting Estimates

Our critical accounting policies and estimates are included in the 2023 Annual Report on Form 10-K and did not materially change during the first six months of 2024.

Our critical accounting policies and estimates are included in the 2023 Annual Report on Form 10-K and did not materially change during the first nine months of 2024.

New Accounting Pronouncements

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

Three Months Ended June 30,

Six Months Ended June 30,

Three Months Ended

September 30,

Nine Months Ended

September 30,

Cost of sales:

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Selling, general and administrative expenses

Income (loss) from operations

Income from operations

Loss from joint ventures

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Interest expense

Income (loss) before provision for (benefit from) income taxes

Provision for (benefit from) income taxes

Net income (loss)

Income before provision for income taxes

Provision for income taxes

Net income (loss) attributable to non-controlling interests

Net income (loss) attributable to JAKKS Pacific, Inc.

Net income attributable to JAKKS Pacific, Inc.

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

Three Months Ended

Six Months Ended

Nine Months Ended

September 30,

Toys/Consumer Products

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Toys/Consumer Products

Comparison of the Three Months Ended June 30, 2024 and 2023

Comparison of the Three Months Ended September 30, 2024 and 2023

Toys/Consumer Products.

Net sales of our Toys/Consumer Products segment were $104.6 million for the three months ended June 30, 2024 compared to $117.9 million for the prior year period, representing a decrease of $13.3 million, or 11.3%.

Net sales from the Action Play & Collectibles division were down 30.5% in part due to lower net sales from the Super Mario Movie TM which was released April 2023.

Net sales of our Costumes segment were $44.0 million for the three months ended June 30, 2024 compared to $49.0 million for the prior year period, representing a decrease of $5.0 million, or 10.2%.

Net sales of our Toys/Consumer Products segment were $264.3 million for the three months ended September 30, 2024 compared to $246.0 million for the prior year period, representing an increase of $18.3 million, or 7.4%.

Net sales from the Action Play & Collectibles division were up 5.5% in part due to higher net sales from the Sonic the Hedgehog™ 3 movie and core product lines.

Net sales of our Costumes segment were $57.3 million for the three months ended September 30, 2024 compared to $63.7 million for the prior year period, representing a decrease of $6.4 million, or 10.0%.

The decrease in net sales was primarily due to reduced orders from select recurring customers informed in part by the prior year’s sell-through during the Halloween shopping season.

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Toys/Consumer Products.

Cost of sales of our Toys/Consumer Products segment was $67.5 million, or 64.5% of related net sales for the three months ended June 30, 2024 compared to $77.6 million, or 65.8% of related net sales for the prior year period, representing a decrease of $10.1 million, or 13.0%.

The decrease as a percentage of net sales was due to lower royalties as well as lower finished goods inventory reserves for product obsolescence.

Cost of sales of our Costumes segment was $33.5 million, or 76.1% of related net sales for the three months ended June 30, 2024, compared to $38.1 million, or 77.8% of related net sales for the prior year period, representing a decrease in dollars of $4.6 million, or 12.1%.

The decrease as a percentage of net sales was due to lower royalties as well as lower inventory reserves.

Cost of sales of our Toys/Consumer Products segment was $171.8 million, or 65.0% of related net sales for the three months ended September 30, 2024 compared to $156.9 million, or 63.8% of related net sales for the prior year period, representing an increase of $14.9 million, or 9.5%.

The increase as a percentage of net sales was due to higher product cost as well as slightly higher inbound duty and freight expenses.

Cost of sales of our Costumes segment was $41.0 million, or 71.6% of related net sales for the three months ended September 30, 2024, compared to $45.9 million, or 72.1% of related net sales for the prior year period, representing a decrease in dollars of $4.9 million, or 10.7%.

The decrease as a percentage of net sales was due to lower product cost.

Selling, General and Administrative Expenses

Selling, general and administrative expenses were $39.9 million for the three months ended June 30, 2024 compared to $34.8 million for the prior year period constituting 26.9% and 20.8.% of net sales, respectively.

The increase in selling, general and administrative expenses was primarily due to increased full-time staff as we expand our international presence and associated marketing and travel expenses, as well as higher costs related to warehousing.

Selling, general and administrative expenses were $40.7 million for the three months ended September 30, 2024 compared to $44.6 million for the prior year period constituting 12.6% and 14.4% of net sales, respectively.

The decrease in selling, general and administrative expenses was due to lower outbound freight and warehousing expenses.

Interest Expense

Interest expense was $0.3 million for the three months ended June 30, 2024, as compared to $1.3 million in the prior year period.

During the three months ended June 30, 2024, we incurred interest expense of $0.3 million related to our revolving credit facility.

During the three months ended June 30, 2023, we incurred interest expense of $0.7 million related to our 2021 BSP Term Loan, $0.3 million related to our revolving credit facility and $0.3 million related to other borrowing costs.

Provision For (Benefit From) Income Taxes

Our income tax expense, which includes federal, state and foreign income taxes and discrete items, was $2.3 million, or an effective tax rate of 30.2%, for the three months ended June 30, 2024.

Interest expense was $0.5 million for the three months ended September 30, 2024, as compared to $1.4 million in the prior year period.

During the three months ended September 30, 2024, we incurred interest expense of $0.5 million related to our revolving credit facility.

During the three months ended September 30, 2023, we incurred interest expense of $1.3 million related to discounting of some receivables and $0.1 million related to our revolving credit facility.

Provision For Income Taxes

Our income tax expense, which includes federal, state and foreign income taxes and discrete items, was $15.4 million, or an effective tax rate of 22.8%, for the three months ended September 30, 2024.

During the comparable period in 2023, our income tax expense was $12.4 million, or an effective tax rate of 20.5%.

The effective tax rate increased primarily due to non-deductible compensation and foreign inclusions.

Comparison of the Six Months Ended June 30, 2024 and 2023

Comparison of the Nine Months Ended September 30, 2024 and 2023

Toys/Consumer Products.

Net sales of our Toys/Consumer Products segment were $187.5 million for the six months ended June 30, 2024 compared to $215.8 million for the prior year period, representing a decrease of $28.3 million, or 13.1%.

Net sales of our Toys/Consumer Products segment were $451.8 million for the nine months ended September 30, 2024 compared to $461.8 million for the prior year period, representing a decrease of $10.0 million, or 2.2%.

Net sales from the Action Play & Collectibles division were down 8.6% due to lower net sales in part from the Super Mario Movie TM which was released April 2023.

Net sales of our Costumes segment were $51.2 million for the six months ended June 30, 2024 compared to $58.6 million for the prior year period, representing a decrease of $7.4 million, or 12.6%.

Net sales of our Costumes segment were $108.5 million for the nine months ended September 30, 2024 compared to $122.3 million for the prior year period, representing a decrease of $13.8 million, or 11.3%.

The decrease in net sales was primarily due to reduced orders from select recurring customers informed in part by the prior year’s sell-through during the Halloween shopping season.

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Toys/Consumer Products.

Cost of sales of our Toys/Consumer Products segment was $132.6 million, or 70.7% of related net sales for the six months ended June 30, 2024 compared to $146.3 million, or 67.8% of related net sales for the prior year period, representing a decrease of $13.7 million, or 9.4%.

The increase as a percentage of net sales was due to a lower share of high margin film-related product .

Cost of sales of our Costumes segment was $37.5 million, or 73.2% of related net sales for the six months ended June 30, 2024, compared to $45.5 million, or 77.6% of related net sales for the prior year period, representing a decrease in dollars of $8.0 million, or 17.6%.

The decrease in dollars was related to lower overall sales.

The decrease in as a percentage of net sales was driven by lower finished goods inventory reserves for product obsolescence.

Cost of sales of our Toys/Consumer Products segment was $304.3 million, or 67.4% of related net sales for the nine months ended September 30, 2024 compared to $303.1 million, or 65.6% of related net sales for the prior year period, representing an increase of $1.2 million, or 0.4%.

The increase as a percentage of net sales was due to higher product cost offset by lower royalties.

Cost of sales of our Costumes segment was $78.5 million, or 72.4% of related net sales for the nine months ended September 30, 2024, compared to $91.4 million, or 74.7% of related net sales for the prior year period, representing a decrease in dollars of $12.9 million, or 14.1%.

The decrease in as a percentage of net sales was driven by lower product cost.

Selling, General and Administrative Expenses

Selling, general and administrative expenses were $82.3 million for the six months ended June 30, 2024 compared to $70.6 million for the prior year period constituting 34.5% and 25.7% of net sales, respectively.

Selling, general and administrative expenses were $123.1 million for the nine months ended September 30, 2024 compared to $115.2 million for the prior year period constituting 22.0% and 19.8% of net sales, respectively.

Interest Expense

Interest expense was $0.4 million for the six months ended June 30, 2024, as compared to $4.3 million in the prior year period.

During the six months ended June 30, 2024, we incurred interest expense of $0.4 million related to our revolving credit facility.

During the six months ended June 30, 2023, we incurred interest expense of $3.2 million related to our 2021 BSP Term Loan, $0.4 million related to our revolving credit facility and $0.7 million related to other borrowing costs.

Provision for (Benefit From) Income Taxes

Our income tax benefit, which includes federal, state and foreign income taxes and discrete items, was $4.4 million benefit, or an effective tax (benefit) rate of 33.2%, for the six months ended June 30, 2024.

Interest expense was $0.9 million for the nine months ended September 30, 2024, as compared to $5.7 million in the prior year period.

During the nine months ended September 30, 2024, we incurred interest expense of $0.9 million related to our revolving credit facility.

During the nine months ended September 30, 2023, we incurred interest expense of $3.2 million related to our 2021 BSP Term Loan, $2.1 million related to discounting of some receivables and $0.4 million related to our revolving credit facility.

Provision for Income Taxes

Our income tax expense, which includes federal, state and foreign income taxes and discrete items, was $11.0 million, or an effective tax rate of 20.2%, for the nine months ended September 30, 2024.

During the comparable period in 2023, our income tax expense was $12.5 million, or an effective tax rate of 20.3%.

The effective tax rate increased primarily due to a higher expected tax rate for the year, non-deductible compensation and foreign inclusions.

The effective tax rate decreased primarily due to the impact of stock compensation.

Seasonality and Backlog

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Liquidity and Capital Resources

As of June 30, 2024, we had working capital (inclusive of cash, cash equivalents and restricted cash) of $73.9 million, compared to $106.1 million as of December 31, 2023, representing a decrease in working capital of $32.2 million during the six-month period ended June 30, 2024.

The decrease in working capital is primarily attributable to the $20.0 million cash payment made to holders for the redemption of our outstanding preferred stock.

The remaining decrease is mainly attributable to cash used in operating activities and higher working capital usage.

Operating activities used net cash of $27.7 million during the six months ended June 30, 2024, as compared to net cash provided by operating activities of $20.8 million in the prior year period.

The increase in net cash used in operating activities year-over-year is primarily due to a net loss for the six months ended June 30, 2024, an increase in cash taxes paid by $10.6 million and $23.0 million in other working capital changes.

As of September 30, 2024, we had working capital (inclusive of cash, cash equivalents and restricted cash) of $130.4 million, compared to $106.1 million as of December 31, 2023, representing an increase in working capital of $24.3 million during the nine-month period ended September 30, 2024.

The increase in working capital is primarily attributable to the seasonal increases in inventory, accounts receivables, payables and accrued expenses by $71.3 million net, offset by the $20.0 million cash payment made to holders for the redemption of our outstanding preferred stock.

The remaining decrease is mainly attributable to cash used in operating activities and other working capital usage.

Operating activities used net cash of $15.2 million during the nine months ended September 30, 2024, as compared to net cash provided by operating activities of $87.7 million in the prior year period.

The decrease in net cash used in operating activities year-over-year is primarily due to a decrease in net income for the nine months ended September 30, 2024 by $5.7 million, an increase in cash taxes paid by $11.7 million and $80.5 million in other working capital changes.

Other than open purchase orders issued in the normal course of business related to shipped product, we have no obligations to purchase inventory from our manufacturers.

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As part of our strategy to develop and market new products, we have entered into various character and product licenses with royalties/obligations generally ranging from 1% to 22% payable on net sales of such products.

As of June 30, 2024, these agreements required future aggregate minimum royalty guarantees of $60.7 million exclusive of $3.6 million in advances already paid.

As of September 30, 2024, these agreements required future aggregate minimum royalty guarantees of $77.8 million exclusive of $0.9 million in advances already paid.

Of this $77.8 million future minimum royalty guarantee, $47.8 million is due over the next twelve months.

Investing activities used net cash of $6.2 million and $4.9 million for the six months ended June 30, 2024 and 2023, respectively, and consisted primarily of cash paid for the purchase of molds and tooling used in the manufacture of our products and purchases of investments to fund our obligation to our employees stemming from our non-qualified deferred compensation plan.

Financing activities used net cash of $20.1 million and $70.4 million for the six months ended June 30, 2024 and 2023, respectively.

The cash used in financing activities during the six months ended June 30, 2024, primarily consists of $20.0 million used in the redemption of our outstanding preferred stock and $5.1 million used in the repurchase of common stock for employee tax withholdings, compensated by $5.0 million of cash provided by the draw on our senior secured revolving credit facility (the “JPMorgan ABL Facility”).

The cash used in financing activities during the six months ended June 30, 2023, primarily consists of the repayment of our 2021 BSP Term Loan of $69.2 million and the repurchase of common stock for employee tax withholding of $1.2 million.

As of June 30, 2024, we have $5.0 million outstanding indebtedness under the JPMorgan ABL Facility, aside from utilizing $9.4 million in letters of credit.

Investing activities used net cash of $9.0 million and $5.7 million for the nine months ended September 30, 2024 and 2023, respectively, and consisted primarily of cash paid for the purchase of molds and tooling used in the manufacture of our products and purchases of investments to fund our obligation to our employees stemming from our non-qualified deferred compensation plan.

Financing activities used net cash of $26.5 million and $71.7 million for the nine months ended September 30, 2024 and 2023, respectively.

The cash used in financing activities during the nine months ended September 30, 2024, primarily consists of $20.0 million used in the redemption of our outstanding preferred stock and $6.5 million used in the repurchase of common stock for employee tax withholdings.

The cash used in financing activities during the nine months ended September 30, 2023, primarily consists of the repayment of our 2021 BSP Term Loan of $69.2 million and the repurchase of common stock for employee tax withholding of $2.5 million.

As of September 30, 2024, we have no outstanding indebtedness under the JPMorgan ABL Facility, aside from utilizing $4.4 million in letters of credit.

See Note 5 – Debt and Note 6 – Credit Facilities for additional information pertaining to our Debt and Credit Facilities.

As of June 30, 2024 and December 31, 2023, we held cash and cash equivalents, including restricted cash, of $17.9 million and $72.6 million, respectively.

Cash, and cash equivalents, including restricted cash held outside of the United States in various foreign subsidiaries totaled $15.7 million and $21.5 million as of June 30, 2024 and December 31, 2023, respectively.

As of September 30, 2024 and December 31, 2023, we held cash and cash equivalents, including restricted cash, of $22.3 million and $72.6 million, respectively.

Cash, and cash equivalents, including restricted cash held outside of the United States in various foreign subsidiaries totaled $15.5 million and $21.5 million as of September 30, 2024 and December 31, 2023, respectively.

The cash and cash equivalents, including restricted cash balances in our foreign subsidiaries have either been fully taxed in the U.S.

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Changes in this area could have a material adverse impact on our liquidity.

As of June 30, 2024 off-balance sheet arrangements include letters of credit issued by JPMorgan of $9.4 million.

As of September 30, 2024 off-balance sheet arrangements include letters of credit issued by JPMorgan of $4.4 million.

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-Q

Item 1. Financial Statements