What changed in this filing

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Item 1. Business

2026-03-02 compared with 2025-03-06 · 211 added, 237 removed, 208 unchanged (68% of the section changed)

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Our products include:

Action figures and accessories, including licensed characters based on the Nintendo®, Sonic the Hedgehog®, The Simpsons TM and Apex Legends® franchises and our own proprietary brands including Creepy Crawlers®;

Action figures and accessories, including licensed characters based on the Nintendo®, Sonic the Hedgehog®, and The Simpsons® franchises and our own proprietary brands including Creepy Crawlers®;

Toy vehicles, including Xtreme Power Dozer®, Xtreme Power Dump Truck®, XPV®, Road Champs®, Fly Wheels® and AirTitans® inflatable remote-control dinosaur;

Dolls and accessories, including small dolls, large dolls, fashion dolls and baby dolls based on licenses, including Disney Wish®, Disney Encanto®, Disney Moana 2, Disney ILY 4EVER™, Disney Frozen®, Disney Princess® and Minnie Mouse®, and infant and pre-school toys based on TV shows like PBS’s Daniel Tiger’s Neighborhood® as well as in-house brands such as Perfectly Cute® and collectable plush Ami Amis®;

Dolls and accessories, including small dolls, large dolls, fashion dolls and baby dolls based on licenses, including Disney Darlings, Disney Encanto®, Disney Moana® 2, Disney ILY 4EVER®, Disney Frozen®, Disney Princess® and Minnie Mouse®, and infant and pre-school toys based on TV shows like PBS’s Daniel Tiger’s Neighborhood® as well as in-house brands such as Perfectly Cute®, Charming™, and KidTopia™;

Private label products developed exclusively for certain retail customers in various product categories;

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Indoor and outdoor kids’ furniture, activity trays and tables and room décor, seasonal and outdoor products, including those based on Disney® characters, Nickelodeon® and Hasbro® licenses;

Halloween and everyday costumes for children and in some cases teens and adults based on licensed and proprietary non-licensed brands, including Super Mario Bros.®, Microsoft’s Halo®, Disney-Pixar Toy Story®, Harry Potter®, Minions®, Sesame Street®, Power Rangers®¸ Pokemon TM , Hasbro® brands, Universal’s Wicked TM and Disney Frozen®, Disney Princess® and related Halloween accessories;

Halloween and everyday costumes for children and in some cases teens and adults based on licensed and proprietary non-licensed brands, including Super Mario Bros.®, Microsoft’s Halo®, Disney-Pixar Toy Story®, Harry Potter®, Minions®, Sesame Street®, Power Rangers®¸ Pokemon®, Hasbro® brands, Universal’s Wicked® and Disney Frozen®, Disney Princess® and related Halloween accessories;

Outdoor activity toys including ReDo Skateboard Co.® and junior sports toys including Sky Ball® hyper-charged balls, SportsZone® sport sets and Wave Hoop® toy hoops marketed under our Maui® brand;

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growth within these lines by:

creating innovative products under our established licenses and brand names;

adding new items to the branded product lines that we expect will enjoy greater popularity;

infusing innovation and technology when appropriate to make products more appealing to today’s kids;

expanding our international product offering either sold directly to retailers or via third-party distributors.

creating innovative products under our established

licenses and brand names;

adding new items to the branded product lines that

we expect will enjoy greater popularity;

infusing innovation and technology when appropriate

to make products more appealing to today’s kids;

expanding our international product offering either

sold directly to retailers or via third-party distributors.

Our Business Strategy

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By licensing IP and trademarks from

world-class brand owners and content creators, we have access to a far greater range of marks than would be available for purchase.

ultimately are responsible for the franchise management of their IP, and we by extension leverage their related investment in content

and promotion, which we hope in turn will create a robust market for our related toy, consumer products and costume product lines.

often also invest resources in engaging our largest customers directly to keep them aware of new initiatives and content to facilitate

our sell-in of product.

It also helps to credibly assure licensors that we will prioritize their brands, properties and IP rather than

explicitly competing with them with a broad range of self-developed content-led offerings.

We also license technology developed by unaffiliated

inventors and product developers to enhance the design, innovation and functionality of our products.

We sell our products through our in-house sales

staff and independent sales representatives to toy and mass-market retail chain stores, department stores, office supply stores, drug

and grocery store chains, club stores, value-oriented dollar stores, toy specialty stores and wholesalers.

Our three largest customers

are Target®, Walmart® and Amazon®, which accounted for 29.6%, 24.2% and 10.6%, respectively, of our net sales in 2024.

other customer accounted for more than 10% of our net sales in 2024.

world-class brand owners and content creators, we have potential access to a far greater range of marks than would be available for purchase.

Licensors ultimately are responsible for the franchise management of their IP, and we, by extension, leverage their related investment

in content and promotion, which we hope in turn will create a robust market for our related toy, consumer products and costume product

Licensors often also invest resources in engaging our largest customers directly to keep them aware of new initiatives and content

to facilitate our sell-in of product.

It also helps to credibly assure licensors that we will prioritize their brands, properties and

IP rather than explicitly competing with them with a broad range of self-developed content-led offerings.

We also license technology developed

by unaffiliated inventors and product developers to enhance the design, innovation and functionality of our products.

We sell our products through our in-house sales staff and independent

sales representatives to toy and mass-market retail chain stores, department stores, office supply stores, drug and grocery store chains,

club stores, value-oriented dollar stores, toy specialty stores and wholesalers.

Our two largest customers are Target® and Walmart®,

which accounted for 26.6% and 26.1%, respectively, of our net sales in 2025.

No other customer accounted for more than 10% of our net

sales in 2025.

Our Growth Strategy

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● Expand Core Product Lines.

We manage our

existing and new brands through strategic product development initiatives, including introducing new products, modifying existing

products and extending existing product lines to maximize their longevity and expand their retail channel reach.

Our marketing teams

and product designers strive to develop new products or product lines to offer added technological, aesthetic and functional

improvements to our extensive portfolio.

We manage our existing

and new brands through strategic product development initiatives, including introducing new products, modifying existing products and

extending existing product lines to maximize their longevity and expand their retail channel reach.

Our marketing teams and product designers

strive to develop new products or product lines to offer added technological, aesthetic and functional improvements to our extensive

● Enter New Product Categories.

extensive experience in the toy and other consumer product industries to evaluate products and licenses in new product categories

and to develop additional product lines.

We began marketing licensed classic video games for simple plug-in use with television sets

and expanded into several related categories by infusing additional technologies such as motion gaming and through the licensing of

this category from our current licensors, such as Disney®.

In recent years, we entered the skateboard space at a

retailer’s request and have since expanded into related protective gear and accessories.

● Acquire Additional Character and Product

We have acquired the rights to use many familiar brand and character names and logos from third parties that we

use with our primary trademarks and brands.

Currently, among others, we have license agreements with Nickelodeon®, Disney®,

Pixar®, Marvel®, NBC Universal®, Microsoft®, Sega®, Sony®, Netflix® and WarnerMedia®, as well as

with the licensors of many other popular characters.

We also license IP from other toy companies for categories in which they do not

offer products found within our core product lines.

We intend to continue to pursue new licenses from these media &

entertainment companies along with other licensors.

We also intend to continue to secure additional inventions and product concepts

through our existing network of inventors and product developers.

We use our extensive

experience in the toy and other consumer product industries to evaluate products and licenses in new product categories and to develop

additional product lines.

We began marketing licensed classic video games for simple plug-in use with television sets and expanded into

several related categories by infusing additional technologies such as motion gaming and through the licensing of this category from

our current licensors, such as Disney®.

In recent years, we entered the skateboard space at a retailer’s request and have since

expanded into related protective gear and accessories.

Acquire Additional Character and Product Licenses.

We have acquired the rights to use many familiar brand and character names and logos from third parties that we use with our primary trademarks and brands.

Currently, among others, we have license agreements with Nickelodeon®, Disney®, Pixar®, Marvel®, NBCUniversal®, Microsoft®, Sega®, Sony®, Netflix® and WarnerMedia®, as well as with the licensors of many other popular characters.

We also license IP from other toy companies for categories in which they do not offer products found within our core product lines.

We intend to continue to pursue new licenses from these media & entertainment companies along with other licensors.

We also intend to continue to secure additional inventions and product concepts through our existing network of inventors and product developers.

Expand International Sales.

We believe that non-US markets:

Europe, Australia, Canada, Latin America

and Asia, offer us significant growth opportunities.

In 2024, our sales generated outside the United States were approximately $146.0

million, or 21.1% of total net sales.

In 2020, we migrated from a distributor model to selling direct in Spain, Italy, France and Mexico.

Third-party distributors remain a core component of our international business, and we are constantly assessing how to expand our mutual

We currently utilize warehouses in the United Kingdom, the Netherlands, Italy, Belgium and Spain (the latter two opened in

2024) to support sales expansion in Europe.

Europe, Australia, Canada, Latin America and Asia, offer us significant growth opportunities.

In 2025, our sales generated outside the United States were approximately $154.1 million, or 27.0% of total net sales.

Third-party distributors remain a core component of our international business, and we are constantly assessing how to expand our mutual businesses.

We currently utilize warehouses in the United Kingdom, Germany (opened in 2025), Italy, Belgium and Spain (the latter two opened in 2024) to support sales expansion in Europe.

We also have warehouse capacity in Mexico.

● Pursue Strategic Acquisitions.

supplemented our internal growth with selected strategic acquisitions.

Most of the product lines we market today were originally

acquired via acquisition over the past 20+ years.

We have supplemented

our internal growth with selected strategic acquisitions.

Most of the product lines we market today were originally acquired via acquisition

over the past 20+ years.

● Capitalize On Our Operating Efficiencies.

We believe that our current infrastructure and operating model can accommodate growth without a proportionate increase in our

operating and administrative expenses, thereby increasing our operating margins.

The execution of our growth strategy, however, is

subject to several risks and uncertainties and we cannot assure you that we will continue to experience growth in or maintain our present

level of net sales (see “Risk Factors,” in Item 1A).

For example, our growth strategy will place additional demands upon our

management, operational capacity and financial resources and systems.

The increased demand upon management may necessitate our recruitment

and retention of additional qualified management personnel.

We cannot assure you that we will be able to recruit and retain qualified

personnel or expand and manage our operations effectively and profitably.

To effectively manage future growth, we must continue to expand

our operational, financial and management information systems and to train, motivate and manage our workforce.

While we believe that our

operational, financial and management information systems will be adequate to support our future growth, no assurance can be given they

will be adequate without significant investment in our infrastructure.

Failure to expand our operational, financial and management information

systems or to train, motivate, manage and retain employees could have a material adverse effect on our business, financial condition and

results of operations.

believe that our current infrastructure and operating model can accommodate growth without a proportionate increase in our operating

and administrative expenses, thereby increasing our operating margins.

The execution of our medium-longer-term growth

strategy, however, is subject to several risks and uncertainties, and we cannot assure you that we will experience growth in or maintain

our present level of net sales (see “Risk Factors,” in Item 1A).

For example, our growth strategy will place additional demands

upon our management, operational capacity and financial resources and systems.

The increased demand upon management may necessitate our

recruitment and retention of additional qualified management personnel.

We cannot assure you that we will be able to recruit and retain

qualified personnel or expand and manage our operations effectively and profitably.

To effectively manage future growth, we must continue

to expand our operational, financial and management information systems and to train, motivate and manage our workforce, globally.

we believe that our operational, financial and management information systems will be adequate to support our future growth, no assurance

can be given they will be adequate without significant investment in our infrastructure.

Failure to expand our operational, financial

and management information systems or to train, motivate, manage and retain employees could have a material adverse effect on our business,

financial condition and results of operations.

Moreover, implementation of our growth strategy

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receivable and inventory necessary to support our sales growth, if any.

Furthermore, we cannot assure you that we can identify

attractive acquisition candidates or negotiate acceptable acquisition terms, and our failure to do so may adversely affect the results

of our operations and our ability to sustain growth.

Furthermore, we cannot assure you that we can

identify attractive acquisition candidates or negotiate acceptable acquisition terms, and our failure to do so may adversely affect the

results of our operations and our ability to sustain growth.

Finally, our acquisition strategy involves a number

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In addition, hundreds of smaller companies compete in the design and development of new toys, the procurement

of character and product licenses, and the improvement, expansion and re-introduction of previously established products and product lines.

of character and product licenses, and the improvement, expansion and re-introduction of previously established products and product

Over the decades, the toy industry has experienced

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drug and grocery store chains, club stores, dollar stores, toy specialty stores and wholesalers.

Our three largest customers are Target®,

Walmart® and Amazon®, which accounted for 29.6%, 24.2% and 10.6%, respectively, of our net sales in 2024.

No other customer accounted

for more than 10% of our net sales in 2024.

In 2023, our three largest customers, Target®, Walmart® and Amazon®, accounted

for 30.3%, 20.8% and 10.5%, respectively, of our net sales.

Our two largest customers are Target®

and Walmart®, which accounted for 26.6% and 26.1%, respectively, of our net sales in 2025.

No other customer accounted for more than

10% of our net sales in 2025.

In 2024, our three largest customers, Target®, Walmart® and Amazon®, accounted for 29.6%, 26.2%

and 10.6%, respectively, of our net sales.

No other customer accounted for more than 10% of our net sales in 2024.

generally sell products to our customers on open account with payment terms typically varying from 30 to 90 days or, in some cases, pursuant

to letters of credit.

We generally sell products

to our customers on open account with payment terms typically varying from 30 to 90 days or, in some cases, pursuant to letters of credit.

For sales outside of the United States, we may also purchase credit insurance to mitigate the risk, if any, of non-payment.

From time to time, we allow our customers credits against future purchases from us in order to facilitate their retail markdown and sales

of slow-moving inventory.

to time, we allow our customers credits against future purchases from us in order to facilitate their retail markdown and sales of slow-moving

We also sell our products through e-commerce sites, including Walmart.com, Target.com and Amazon.com.

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which involved payments to Meisheng of approximately $75.3 million and $98.4 million for the years ended December 31, 2025 and 2024, respectively.

As of December 31, 2024, Meisheng owns 4.8% of our outstanding common stock and until our 2024 annual meeting a designee of Meisheng was

a member of our board of directors.

As of December 31, 2024, Meisheng owned 4.8% of our outstanding common stock and until our 2025 annual meeting a designee of Meisheng

was a member of our board of directors.

A portion of our sales originate in the United States, so we hold certain inventory in a US warehouse

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engaged distributors in certain foreign territories;

established direct relationships with retailers in certain foreign territories;

established direct relationships with retailers in certain foreign

opened sales offices in Canada, Europe and Mexico;

opened distribution centers in the UK, the Netherlands, Italy, Belgium, Spain and Mexico.

opened distribution centers in the UK, the Netherlands, Italy, Belgium,

Spain and Mexico.

Outside of the United States, we currently sell

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channels abroad.

We establish reserves for allowances provided to

our customers, including discounts, pricing concessions, promotional allowances and allowances for anticipated breakage or defective product,

at the time of shipment.

The reserves are determined as a percentage of sales based upon either historical experience or upon estimates

or programs agreed upon with our customers.

We establish reserves for allowances provided

to our customers, including discounts, pricing concessions, promotional allowances and allowances for anticipated breakage or defective

product, at the time of shipment.

The reserves are determined as a percentage of sales based upon either historical experience or upon

estimates or programs agreed upon with our customers.

We obtain, directly, or through our sales representatives,

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many of whom make on-site visits to customers for the purpose of showing products and soliciting orders for products.

We also retain a

number of independent sales representatives to sell and promote our products, both domestically and internationally.

Together with retailers,

we occasionally test the consumer acceptance of new products in selected markets before committing resources to large-scale production.

We publicize and advertise our products online and

on mobile devices, in trade and consumer magazines and other publications, market our products at international, national and regional

We also retain

a number of independent sales representatives to sell and promote our products, both domestically and internationally.

Together with

retailers, we occasionally test the consumer acceptance of new products in selected markets before committing resources to large-scale

We publicize and advertise our products online

and on mobile devices, in trade and consumer magazines and other publications, market our products at international, national and regional

toy and other specialty trade shows, conventions and exhibitions and carry on cooperative advertising programs with toy and mass market

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Product Development

Each of our product lines has an in-house lead responsible for product

The in-house lead identifies and evaluates inventor products and concepts and other opportunities to enhance or expand existing

product lines or to enter new product categories.

In addition, we create proprietary products to fully exploit our concept and character

Although we have the capability to create and develop products from inception to production, we also use third-parties to provide

a portion of the sculpting, sample making, illustration and package design required for our products to accommodate our increasing product

innovations and introductions as well as accelerate our speed-to-market.

Typically, the development process takes from nine to eighteen

months from concept to production and shipment to our customers, but given our Company’s size and structure, we have demonstrated

the ability to shrink that down to three to nine months successfully when the opportunity requires.

Each of our product lines has an in-house lead

responsible for product development.

The in-house lead identifies and evaluates inventor products and concepts and other opportunities

to enhance or expand existing product lines or to enter new product categories.

In addition, we create proprietary products to fully

exploit our concept and character licenses.

Although we have the capability to create and develop products from inception to production,

we also use third-parties to provide a portion of the sculpting, sample making, illustration and package design required for our products

to accommodate our increasing product innovations and introductions as well as accelerate our speed-to-market.

Typically, the development

process takes from nine to eighteen months from concept to production and shipment to our customers, but given our Company’s size

and structure, we have demonstrated the ability to shrink that down to three to nine months successfully when the opportunity requires.

We employ a staff of product designers.

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acquire other product concepts from unaffiliated third-parties.

If we accept and develop a third-party’s concept for new toys, we

generally pay a royalty on the sale of the toys developed from this concept, and may, on an individual basis, guarantee a minimum royalty.

Royalties payable to inventors and developers generally range from 1% to 5% of the wholesale sales price for each unit of a product sold

If we accept and develop a third-party’s concept for new toys,

we generally pay a royalty on the sale of the toys developed from this concept, and may, on an individual basis, guarantee a minimum

Royalties payable to inventors and developers generally range from 1% to 5% of the wholesale sales price for each unit of a

product sold by us.

We believe that utilizing experienced third-party inventors gives us access to a wide range of development talent.

work with numerous toy inventors and designers for the development of new products and the enhancement of existing products.

Safety testing of our products is done at the manufacturers’

facilities by quality control personnel employed by us or by independent third-party contractors engaged by us.

Safety testing is designed

to meet or exceed regulations imposed by federal and state, as well as applicable international governmental authorities, our retail partners,

licensors and the Toy Association.

We also closely monitor quality assurance procedures for our products for safety purposes.

independent laboratories engaged by some of our larger customers and licensors test certain of our products.

We currently work with numerous toy inventors and designers for the development of new products and the enhancement of existing products.

Safety testing of our products is done at the

manufacturers’ facilities by quality control personnel employed by us or by independent third-party contractors engaged by us.

Safety testing is designed to meet or exceed regulations imposed by federal and state, as well as applicable international governmental

authorities, our retail partners, licensors and the Toy Association.

We also closely monitor quality assurance procedures for our products

for safety purposes.

In addition, independent laboratories engaged by some of our larger customers and licensors test certain of our

Manufacturing and Supplies

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delivery schedules are subject to various factors beyond our control, and any delays in the future could adversely affect our sales.

COVID-19 pandemic created some short-term delays as manufacturing capacity both dropped during the peak of the outbreak and then

again was stretched when consumer demand for different categories of products spiked because of the unprecedented level of households

operating under confined-to-home/social distancing guidelines.

The lingering impact of the pandemic has created volatility in costs associated

with the sourcing and importation of products, in particular due to changes in factor inputs (labor, oil) and market demand for services

In addition, our third-party manufacturers have seen increases in foreign exchange rate exposure during this time.

we have ongoing relationships with over 50 different manufacturers.

We believe that alternative sources of supply are available to us

although we cannot be assured that we can obtain adequate supplies of manufactured products on short notice in a cost neutral manner.

We may also incur costs or other losses as a result of not placing orders consistent with our forecasts for products to be manufactured

by our suppliers or manufacturers for a variety of reasons including customer order cancellations or a decline in demand.

COVID-19 pandemic created some short-term delays as manufacturing capacity both dropped during the peak of the outbreak and then again

was stretched when consumer demand for different categories of products spiked because of the unprecedented level of households operating

under confined-to-home/social distancing guidelines.

Currently, we have ongoing relationships with over 50 different manufacturers.

believe that alternative sources of supply are available to us although we cannot be assured that we can obtain adequate supplies of manufactured

products on short notice in a cost neutral manner.

We may also incur costs or other losses as a result of not placing orders consistent

with our forecasts for products to be manufactured by our suppliers or manufacturers for a variety of reasons including customer order

cancellations or a decline in demand.

Although we do not conduct the day-to-day manufacturing

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Substantially all of these assets are located

across various provinces in China.

Patents, Trademarks, Copyrights and Licenses

We routinely pursue protection of our products through

some form or combination of intellectual property right(s).

We file patent applications where appropriate to protect our innovations arising

from new development and design, and as a result, possess a portfolio of issued patents in the U.S.

Most of our products are

produced and sold under trademarks owned by or licensed to us.

In recent years, our rate of filing new trademark applications has increased.

We routinely pursue protection of our products

through some form or combination of intellectual property right(s).

We file patent applications where appropriate to protect our innovations

arising from new development and design, and as a result, possess a portfolio of issued patents in the U.S.

Most of our products

are produced and sold under trademarks owned by or licensed to us.

In recent years, our rate of filing new trademark applications has

We also register certain aspects of some of our products with the U.S.

In the same vein, we enforce our rights against

infringers because we recognize our intellectual property rights are significant assets that contribute to our success.

Accordingly, while

we believe we are sufficiently protected and the duration of our rights are aligned with the lifecycle of our products, the loss of some

of these rights could have an adverse effect on our financial growth expectations and business operations.

In the same vein, we enforce our rights

against infringers because we recognize that our intellectual property rights are significant assets that contribute to our success.

while we believe we are sufficiently protected and the duration of our rights are aligned with the lifecycle of our products, the loss

of some of these rights could have an adverse effect on our financial growth expectations and business operations.

Competition in the toy industry is intense.

certain of our competitors have greater financial resources, larger sales and marketing and product development departments, stronger

name recognition, wholly-owned brands and properties with high consumer awareness and appeal, longer operating histories and benefit from

greater economies of scale.

These factors, among others, may enable our competitors to market their products at lower prices or on terms

more advantageous to customers than those we could offer for our competitive products.

Competition often extends to the procurement of

entertainment and product licenses, as well as the marketing and distribution of products and the obtaining of adequate shelf space.

may result in price reductions, reduced gross margins and loss of market share, any of which could have a material adverse effect on our

business, financial condition and results of operations.

In many of our product lines we compete directly against one or both of two of

the toy industry’s most dominant companies, Mattel® and Hasbro®.

In addition, we compete in our Halloween costume lines

with Rubies II®.

We also compete with numerous smaller domestic and foreign toy manufacturers, importers and marketers in each of our product

name recognition, wholly-owned brands and properties with high consumer awareness and appeal, longer operating histories and benefit

from greater economies of scale.

These factors, among others, may enable our competitors to market their products at lower prices or

on terms more advantageous to customers than those we could offer for our competitive products.

Competition often extends to the procurement

of entertainment and product licenses, as well as the marketing and distribution of products and the obtaining of adequate shelf space.

Competition may result in price reductions, reduced gross margins and loss of market share, any of which could have a material adverse

effect on our business, financial condition and results of operations.

In many of our product lines we compete directly against one or

both of two of the toy industry’s most dominant companies, Mattel® and Hasbro®.

In addition, we compete in our Halloween

costume lines with Rubies II®.

We also compete with numerous smaller domestic and foreign toy manufacturers, importers and marketers

in each of our product categories.

Seasonality and Backlog

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However, our outdoor/seasonal products are primarily sold in the spring and summer seasons, and

our year-round costume business does ship most of its volume focused on consumer sales taking place just before Halloween at the end of

Our results of operations may also fluctuate because of factors such as the timing of new products (and related expenses) introduced

by us or our competitors, the theatrical/entertainment-led releases of licensed brands, the advertising activities of our competitors,

delivery schedules set by our customers and the emergence of new market entrants.

We believe, however, that the low retail price of most

of our products may be less subject to seasonal fluctuations than higher-priced toy products.

our year-round costume business ships most of its volume focused on consumer sales taking place just before Halloween at the end of October.

Our results of operations may also fluctuate because of factors such as the timing of new products (and related expenses) introduced by

us or our competitors, the theatrical/entertainment-led releases of licensed brands, the advertising activities of our competitors, delivery

schedules set by our customers and the emergence of new market entrants.

We believe, however, that the low retail price of most of our

products may be less subject to seasonal fluctuations than higher-priced toy products.

We ship products in accordance with delivery schedules

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orders may be canceled at any time, often without penalty, our backlog may not accurately indicate sales for any future period.

In 2022 and 2021, a number of factors partially

attributable to the COVID-19 pandemic created significant bottlenecks and supply-demand imbalances in exporting product out of Asia into

the United States and Europe.

These factors increased the cost of ocean freight and the cost of trucking while incurring higher expenses

and penalties from product being stuck at the port awaiting inbound trucking pickup.

The unpredictability of delivery times further resulted

in higher warehouse handling costs as container arrival timelines proved less predictable sometimes requiring overtime labor and expansion

of the short-term labor pool to cope with above-average arriving volumes.

Specifically, in 2022, companies and retailers responded to

the ocean freight crisis by shifting more of their importation of product to the first half of the year.

These efforts created more volatility

in accurately forecasting market demand.

In areas where consumer demand subsequently cooled, a backlog of inventory accumulated both at

retailers and in manufacturer distribution centers.

These excesses in turn generated incremental costs as inventory levels exceeded normal

capacity levels, and temporary price reductions were utilized to accelerate consumer demand.

Finally, the longer delivery time resulted

in a slower cash conversion cycle for us as the net impact was a longer holding period for finished goods inventory between manufacture

and sale to customer.

Government and Industry Regulation

Our products are subject to the provisions of the Consumer Product

Safety Act (“CPSA”) as amended by the Consumer Product Safety Improvement Act (“CPSIA”), the Federal Hazardous

Substances Act (“FHSA”), the Flammable Fabrics Act (“FFA”) and regulations promulgated thereunder.

Additionally,

our products may be subject to various other regulations in the United States, European Union, and other jurisdictions.

The CPSIA, FHSA,

and FFA are administered by the United States Consumer Products Safety Commission (“CPSC”) which requires independent third-party

testing by accredited laboratories of products we sell in the United States.

Failure to comply with such requirements can result in the

CPSC banning such products.

The CPSC also may require the recall to repair and/or repurchase by the manufacturer of articles that

it deems noncompliant.

Our products are subject to the provisions of

the Consumer Product Safety Act (“CPSA”) as amended by the Consumer Product Safety Improvement Act (“CPSIA”),

the Federal Hazardous Substances Act (“FHSA”), the Flammable Fabrics Act (“FFA”) and regulations promulgated

Additionally, our products may be subject to various other regulations in the United States, European Union, and other jurisdictions.

The CPSIA, FHSA, and FFA are administered by the United States Consumer Products Safety Commission (“CPSC”) which requires

independent third-party testing by accredited laboratories of products we sell in the United States.

Failure to comply with such requirements

can result in the CPSC banning such products.

The CPSC also may require the recall to repair and/or repurchase by the manufacturer

of articles that it deems noncompliant.

Similar laws exist in some states and cities and in various international markets.

We maintain a quality control

program designed to reasonably ensure compliance with all applicable laws.

a quality control program designed to reasonably ensure compliance with all applicable laws.

Human Capital

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JAKKS Pacific, Inc.

continuously strives to create a safe, healthy, productive and harmonious

work environment.

continuously strives to create a safe, healthy, productive and

harmonious work environment.

As of December 31, 2025, we had approximately 652

employees (including temporary and seasonal employees) working in over 10 countries worldwide to create innovative products and experiences

that inspire, entertain, and develop children through play, with approximately 320 employees (47% of the total workforce) located outside

that inspire, entertain, and develop children through play, with 292 employees (44.8 % of the total workforce) located outside the U.S.

Employee Engagement

One of our main focuses is employee retention.

We empower our management

to identify top performers and mentor them.

We encourage all employees to take advantage of in-house and external training programs and

continuing education.

Our Human Resources department has an open-door policy that encourages employees to seek career advancement advice.

We hold various events and workshops throughout the year and employees are encouraged to voice any concerns and/or to bring forth their

ideas and suggestions.

We empower our management to identify top performers and mentor them.

We encourage all employees to take advantage of in-house and external

training programs and continuing education.

Our Human Resources department has an open-door policy that encourages employees to seek career

advancement advice.

We hold various events and workshops throughout the year, and employees are encouraged to voice any concerns and/or

to bring forth their ideas and suggestions.

Culture and Environment

We are dedicated to developing and maintaining a

workplace culture that celebrates and values the unique contributions of every individual.

We are dedicated to developing and maintaining

a workplace culture that celebrates and values the unique contributions of every individual.

Our organization’s ethos is significantly

shaped by the collective blend of distinct perspectives, life journeys, expertise, creativity, innovative thinking, self-expression, exceptional

skills, and talents that our team members bring to their roles.

shaped by the collective blend of distinct perspectives, life journeys, expertise, creativity, innovative thinking, self-expression,

exceptional skills, and talents that our team members bring to their roles.

We wholeheartedly welcome and encourage the rich

5 unchanged sentences

workforce encompass a wide range of practices and policies.

These include, but are not limited to, our approaches to recruitment and hiring,

compensation packages and benefits, professional growth opportunities and training programs, as well as our processes for internal promotions

and transfers.

These include, but are not limited to, our approaches to recruitment and

hiring, compensation packages and benefits, professional growth opportunities and training programs, as well as our processes for internal

promotions and transfers.

Training and Development

We take pride in offering the opportunity for employees

to continuously learn and to grow their careers.

Annually, employees are offered various types of training and the opportunity to continue

their education.

This includes both online and instructor-led training covering a variety of topics ranging from career-related, to federally-

and locally-mandated, to JAKKS Pacific, Inc.

We take pride in offering the opportunity for

employees to continuously learn and to grow their careers.

Annually, employees are offered various types of training and the opportunity

to continue their education.

This includes both online and instructor-led training covering a variety of topics ranging from career-related,

to federally- and locally-mandated, to JAKKS Pacific, Inc.

Company policy, to financial services and health/wellness-related.

Nearly all employees take

advantage of some if not all of these optional learning opportunities.

all employees take advantage of some if not all of these optional learning opportunities.

Health and Safety

We are committed to providing a safe, healthy and

productive working environment for all of our employees globally.

We are committed to providing a safe, healthy and productive working

environment for all our employees globally.

Environmental Issues

4 unchanged sentences

Available Information

We make available free of charge on or through our

Internet website, www.jakks.com, our annual report on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K, and amendments

to these reports filed or furnished pursuant to Section 13(a) or 15(d) of the Securities Exchange Act of 1934 as soon as reasonably practicable

after we electronically file such material with, or furnish it to, the SEC.

In addition, we have previously filed registration statements

and other documents with the SEC.

We make available free of charge on or through

our Internet website, www.jakks.com, our annual report on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K, and

amendments to these reports filed or furnished pursuant to Section 13(a) or 15(d) of the Securities Exchange Act of 1934 as soon as reasonably

practicable after we electronically file such material with, or furnish it to, the SEC.

In addition, we have previously filed registration

statements and other documents with the SEC.

Any document we file may be inspected without charge at the SEC’s website at www.sec.gov.

website addresses are not intended to function as hyperlinks, and the information contained in our website and in the SEC’s website

is not intended to be a part of this filing.)

(These website addresses are not intended to function as hyperlinks, and the information contained in our website and in the SEC’s

website is not intended to be a part of this filing.)

Our Corporate Information

6 unchanged sentences

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 1. Business