What changed in this filing

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Item 1A. Risk Factors

2026-03-02 compared with 2025-03-06 · 291 added, 300 removed, 340 unchanged (63% of the section changed)

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and our filings with the Securities and Exchange Commission, such as on Forms 8-K, 10-Q and 10-K.

We undertake no obligation to make any

revisions to the forward-looking statements contained in this Annual Report on Form 10-K to reflect events or circumstances occurring

We undertake no obligation to make

any revisions to the forward-looking statements contained in this Annual Report on Form 10-K to reflect events or circumstances occurring

after the date of the filing of this report.

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Several trends in recent years have presented challenges for the toy industry, including:

the phenomenon of children outgrowing toys at younger ages, particularly in favor of interactive and high technology products;

increasing use of technology, broadly, be it taking share of children ’ s discretionary time or otherwise;

the phenomenon of children outgrowing toys at younger ages, particularly in favor of interactive

and high technology products;

increasing use of technology, broadly, be it taking share of children ’ s discretionary

time or otherwise;

shorter life cycles for individual products;

higher consumer expectations for product quality, functionality, price-value and environmental-impact;

a wider array of content offerings and platforms attracting a viable audience that enables a meaningful consumer products opportunity, and our ability to effectively predict those platforms and offerings given the increasingly fragmented content distribution marketplace;

the evolving media landscape increases the cost and complexity of advertising our products directly to end-consumers, and similarly our ability to effectively predict the most effective advertising platforms could adversely impact our ability to introduce and sell our product lines at planned levels or better;

a wider array of content offerings and platforms attracting a viable audience that enables a

meaningful consumer products opportunity, and our ability to effectively predict those platforms and offerings given the increasingly

fragmented content distribution marketplace;

the evolving media landscape increases the cost and complexity of

advertising our products directly to end-consumers, and similarly our ability to effectively predict the most effective advertising

platforms could adversely impact our ability to introduce and sell our product lines at planned levels or better;

consumer shopping habits migrating from traditional “ brick

& mortar ” retailer browsing to more online experiences.

We cannot be assured that this change will not

adversely impact our historical ability to have our newest product offerings discovered, evaluated and appreciated sufficiently to

motivate purchase and ultimately build word-of-mouth endorsement about the value of our offerings.

We cannot be assured that this change will not adversely

impact our historical ability to have our newest product offerings discovered, evaluated and appreciated sufficiently to motivate

purchase and ultimately build word-of-mouth endorsement about the value of our offerings.

We cannot assure you that:

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the products that we introduce will achieve any significant degree of market acceptance;

our support of customers with an online shopping proposition is expected to lead to a comparable degree of sales or margins through the offline shopping experience should consumer behavior migrate more of our business in that direction;

the life cycles of our products will be sufficient to permit us to recover our inventory costs, and licensing, design, manufacturing, marketing and other costs associated with those products;

we will be able to manufacture and distribute new or current products in a timely manner to meet demand;

our support of customers with an online shopping proposition is expected to lead to a comparable

degree of sales or margins through the offline shopping experience should consumer behavior migrate more of our business in that

the life cycles of our products will be sufficient to permit us to recover our inventory costs,

and licensing, design, manufacturing, marketing and other costs associated with those products;

we will be able to manufacture and distribute new or current products in a timely manner to

our inclusion of new technology will result in higher sales or increased profits.

Any or all the foregoing factors may adversely affect

our business, results of operations and financial condition.

Any or all the foregoing factors may adversely

affect our business, results of operations and financial condition.

There are risks associated with our license agreements.

Our current licenses require us to pay minimum royalties.

Sales of products under trademarks or trade or brand

names licensed from others account for substantially all of our net sales.

Product licenses allow us to capitalize on characters, designs,

concepts and inventions owned by others or developed by toy inventors and designers.

Our license agreements generally require us to make

specified minimum royalty payments, even if we fail to sell a sufficient number of units to generate these dollar amounts under the percentage

of sales basis under which most agreements are written.

Some of our license agreements have additional requirements for marketing spend

for the brands licensed.

Some of our license agreements disallow certain retailer credits and deductions from the sales base on which

royalties are calculated, including in some cases uncollectable accounts.

In addition, under certain of our license agreements, if we

fail to achieve certain prescribed sales targets, we may be unable to retain or renew these licenses which may adversely impact our business,

results of operations and financial condition.

Many of our license agreements, although multi-year in total, require us to pay a minimum

level of royalties annually that cannot be recouped outside of selling during that time period (often 12 months).

There may also be minimum

royalty commitments assigned to specific geographic regions or countries.

As a result, sudden shocks to the market, such as has been the

case with COVID-19 or when a foundational retailer goes bankrupt, might leave us with these fixed expenses unless licensors are willing

to renegotiate terms in consideration for the unexpected nature of the shock.

Contractual minimal royalty payments are almost always fixed

and determined upon signing, so these sorts of shocks could have a negative impact on our business, results of operations and financial

condition for multiple years given the nature and timing of the shock.

Some of our licenses are restricted in terms of use and include other restrictive provisions.

Sales of products under trademarks or trade or

brand names licensed from others account for substantially all of our net sales.

Product licenses allow us to capitalize on characters,

designs, concepts and inventions owned by others or developed by toy inventors and designers.

Our license agreements generally require

us to make specified minimum royalty payments, even if we fail to sell a sufficient number of units to generate these dollar amounts under

the percentage of sales basis under which most agreements are written.

Some of our license agreements have additional requirements for

marketing spend for the brands licensed.

Some of our license agreements disallow certain retailer credits and deductions from the sales

base on which royalties are calculated, including in some cases uncollectable accounts.

In addition, under certain of our license agreements,

if we fail to achieve certain prescribed sales targets, we may be unable to retain or renew these licenses which may adversely impact

our business, results of operations and financial condition.

Many of our license agreements, although multi-year in total, require us

to pay a minimum level of royalties annually that cannot be recouped outside of selling during that time period (often 12 months).

may also be minimum royalty commitments assigned to specific geographic regions or countries.

As a result, sudden shocks to the market,

such as has been the case with COVID-19, trade wars or when a foundational retailer goes bankrupt, might leave us with these fixed expenses

unless licensors are willing to renegotiate terms in consideration for the unexpected nature of the shock.

Contractual minimal royalty

payments are almost always fixed and determined upon signing, so these sorts of shocks could have a negative impact on our business, results

of operations and financial condition for multiple years given the nature and timing of the shock.

Some of our licenses are restricted in terms of use and include other

restrictive provisions.

Under the majority of our license agreements, the

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approval of contract manufacturers and approval of marketing and promotional materials, limitations on channels of distribution, including

internet sales, change of ownership clauses that require licensor approval of such change and may require a fee to be paid under certain

online sales, change of ownership clauses that require licensor approval of such change and may require a fee to be paid under certain

circumstances and various other provisions that may have an adverse impact on our business, results of operations and financial condition.

New licenses can be difficult and expensive to obtain and, in some cases, retain.

New licenses can be difficult and expensive to obtain and, in some cases,

Our continued success will substantially depend

upon our ability to maintain existing relevant and obtain new additional licenses.

Intense competition exists for desirable licenses in

our industry.

upon our ability to maintain existing relevant licenses and obtain new additional licenses.

Intense competition exists for desirable licenses

in our industry.

We cannot assure you that we will be able to secure or renew significant licenses on terms acceptable to us.

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affect our profitability and competitiveness at retail.

A limited number of licensors account for a large portion of our net sales.

A limited number of licensors account for a large portion of our net

We derive a significant portion of our net sales

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new licenses, our business, results of operations and financial condition could be adversely affected.

● Our license agreements are

subject to audit.

Our license agreements are subject to audit.

In most of our license agreements, the licensor

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of years after license expiration.

In the event that errors or omissions were made in our normal course of business that resulted in underpayment

of royalties, shipping product to an unlicensed territory or channel of distribution, or a variety of other technical infractions, we

could be liable for past due royalties, accrued interest and other financial penalties as outlined in the agreement.

In the event that errors or omissions were made in our normal course of business that resulted in

underpayment of royalties, shipping product to an unlicensed territory or channel of distribution, or a variety of other technical infractions,

we could be liable for past due royalties, accrued interest and other financial penalties as outlined in the agreement.

The failure of our character-related and theme-related products

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The success of many of our character-related and

theme-related products depends upon the popularity of characters in movies, television programs, live sporting exhibitions, and other

media and events.

By extension, any sudden disruption in that calendar can have negative repercussions for our business, both in terms

of recouping our investments to date, as well as monetizing those investments at the profit margins we have planned.

As we have a 9-18-month

concept-to-market timeline depending on the product category, there is a degree of exposure given our dependence on third parties to adhere

to their planned schedules.

theme-related products depends upon the popularity of characters in books, movies, television programs, video games, live sporting exhibitions,

and other media and events.

As we have a 9-18-month concept-to-market timeline depending on the product category, there is a degree of

exposure given our dependence on third parties to adhere to their planned schedules.

By extension, any sudden disruption in that third

party’s release calendar can have negative repercussions for our business, both in terms of recouping our investments to date, as

well as monetizing those investments at the profit margins we have planned.

We cannot assure you that:

entertainment content associated with our character-related and theme-related product lines will be released at the times we expect, via the media we expected and/or will reach a wide enough audience to generate the level of consumer demand we anticipated in agreeing to sign the license and develop our product line;

the success of entertainment content associated with our existing character-related and theme-related product lines will result in substantial promotional value to our products;

entertainment content associated with our character-related and theme-related product lines

will be released at the times we expect, via the media we expected and/or will reach a wide enough audience to generate the level

of consumer demand we anticipated in agreeing to sign the license and develop our product line;

the success of entertainment content associated with our existing character-related and theme-related

product lines will result in substantial promotional value to our products;

we will be successful in renewing licenses upon expiration of terms that are favorable to us;

we will be successful in obtaining licenses to produce new character-related and theme-related products in the future;

we will continue to be able to assess effectively our licensors ’ ability to launch new brands in a manner to effectively create a market for consumer products given the rapidly changing content distribution landscape and a potential reprioritization of their goals for their content launches;

we will continue to be able to effectively assess the longevity and market appetite for consumer products for pre-existing licensor brands given the ever-increasing competition for consumer ’ s attention and discretionary spending.

we will be successful in obtaining licenses to produce new character-related and theme-related

products in the future;

we will continue to be able to assess effectively our licensors ’ ability to

launch new brands in a manner to effectively create a market for consumer products given the rapidly changing content distribution

landscape and a potential reprioritization of their goals for their content launches;

we will continue to be able to effectively assess the longevity and market appetite for consumer

products for pre-existing licensor brands given the ever-increasing competition for consumer ’ s attention and discretionary

Our failure to achieve any or all the foregoing

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our net sales, so that if one or more of our major customers were to experience difficulties in fulfilling their obligations to us, cease

doing business with us, significantly reduce the amount of their purchases from us or return substantial amounts of our products, it could

have a materially adverse effect on our business, results of operations and financial condition.

Our three largest customers, Target®, Walmart®

and Amazon®, accounted for 64.4% of our net sales in 2024.

Except for outstanding purchase orders for specific products, we do not

have written contracts with, or commitments from, any of our customers, and pursuant to the terms of certain of our vendor agreements,

doing business with us, significantly reduce the amount of their purchases from us or return substantial amounts of our products, it

could have a materially adverse effect on our business, results of operations and financial condition.

Our two largest customers are Target® and Walmart®,

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

Except for outstanding purchase orders for specific products,

we do not have written contracts with, or commitments from, any of our customers, and pursuant to the terms of certain of our vendor agreements,

even some purchase orders may be cancelled without penalty up until delivery.

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cost of importing and carrying inventory could also adversely affect our business, results of operations and financial condition.

If one or more of our major

customers were to experience difficulties in fulfilling their obligations to us resulting from bankruptcy or other deterioration in their

financial condition or ability to meet their obligations, cease doing business with us, significantly reduce the amount of their purchases

from us, or return substantial amounts of our products, it could have a material adverse effect on our business, results of operations

and financial condition.

If one or more of our major customers were to

experience difficulties in fulfilling their obligations to us resulting from bankruptcy or other deterioration in their financial condition

or ability to meet their obligations, cease doing business with us, significantly reduce the amount of their purchases from us, or return

substantial amounts of our products, it could have a material adverse effect on our business, results of operations and financial condition.

Restrictions under or the loss of availability under our revolving

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In June 2025, we entered into and consummated a

binding definitive agreement with JPMorgan Chase (for an asset-based credit line) with the objective of increasing our overall liquidity.

All outstanding borrowings under the revolving credit

line are accelerated and become immediately due and payable (and the revolving credit line terminates) in the event of a default, which

includes, among other things, failure to comply with certain financial covenants or breach of representations contained in the credit

line documents, defaults under other loans or obligations, involvement in bankruptcy proceedings, an occurrence of a change of control

or an event constituting a material adverse effect on us (as such terms are defined in the credit line documents).

In the event of a default,

it is possible that our assets and certain of our subsidiaries’ assets may be attached or seized by the lenders.

Any (i) failure

by us to comply with the covenants or other provisions of the credit line (ii) difficulty in securing any required future financing, or

(iii) any such seizure or attachment of assets could have a material adverse effect on our business and financial condition.

Our revolving

credit line matures in June 2026.

We have entered into an At the Market Issuance Sales Agreement,

binding definitive agreement with BMO Bank N.A.

(for a revolving credit facility) with the objective of increasing our overall liquidity.

All outstanding borrowings under the revolving

credit line are accelerated and become immediately due and payable (and the revolving credit line terminates) in the event of a default,

which includes, among other things, failure to comply with certain financial covenants or breach of representations contained in the

credit line documents, defaults under other loans or obligations, involvement in bankruptcy proceedings, an occurrence of a change of

control or an event constituting a material adverse effect on us (as such terms are defined in the credit line documents).

of a default, it is possible that our assets and certain of our subsidiaries’ assets may be attached or seized by the lenders.

Any (i) failure by us to comply with the covenants or other provisions of the credit line (ii) difficulty in securing any required future

financing, or (iii) any such seizure or attachment of assets could have a material adverse effect on our business and financial condition.

Our revolving credit line matures in June 2030.

We may enter into an At the Market Issuance Sales Agreement,

pursuant to which we may offer and sell, from time to time, shares of our common stock, which may adversely affect the price of our Common

We have entered into an At the Market Issuance Sales

Agreement (“ATM Agreement”), pursuant to which we may issue, from time to time, up to $75.0 million of common stock, in one

or more offerings in amounts, prices and at terms that we will determine at the time of the offering.

Any such sale of common stock will

dilute our other equity holders and may adversely affect the market price of the common stock.

Under our currently existing ATM Agreement

Riley, as of March 6, 2025, we have not sold any shares of our common stock.

We have an effective shelf registration statement pursuant to

We have an At the Market Issuance Sales Agreement (“ATM

Agreement”), pursuant to which we may issue, from time to time, up to $75.0 million of common stock, in one or more offerings in

amounts, prices and at terms that we will determine at the time of the offering.

Any such sale of common stock will dilute our other equity

holders and may adversely affect the market price of the common stock.

We expect to file a shelf registration statement pursuant to

which we may offer and sell, from time to time , securities, which may adversely affect the price of our Common Stock.

We have on file with the SEC an effective registration

We expect to file with the SEC an effective registration

statement pursuant to which we 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 we will determine at the time of the offering.

such sale of stock or convertible securities will, or have the potential to, dilute our other equity holders and may adversely affect

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 we will determine at the time of the offering.

Any such sale of stock or convertible securities will, or have the potential to, dilute our other equity holders and may adversely affect

the market price of the common stock.

As of March 6, 2025, we have not sold any securities pursuant to our shelf registration statement.

We depend upon our Chief Executive Officer and any loss or interruption

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and ultimately the play patterns and events that often motivate purchases of our products.

Furthermore, restrictions on nearly all of

our customers’ operating hours in 2020 at one point in the year or another limited consumers’ ability to discover our products

through traditional in-store browsing and unplanned purchases.

Continuation of such a weakened economic and business climate, as well

as consumer uncertainty created by such a climate, could further adversely affect our sales and profitability.

Other conditions, such

as the unavailability of electronic components or other raw materials, for example, may impede our ability to manufacture, source and

ship new and continuing products on a timely basis.

The sudden imposition of tariffs in 2025 in

the US on products sourced from China similarly reduced customer demand for our product in reaction to the increased cost per unit, while

similarly increasing our cost base for product we import for sale in the US out of our US warehouse location.

Other conditions, such as

the unavailability of electronic components or other raw materials, for example, may impede our ability to manufacture, source and ship

new and continuing products on a timely basis.

Interruptions and delays in the availability of raw materials and finished goods could

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outbreaks of contagious disease, which could significantly disrupt our supply chain and impact our operating results.

Significant outbreaks of contagious diseases, and

other adverse public health developments, could have a material impact on our business operations and operating results.

In December 2019,

a strain of Novel Coronavirus causing respiratory illness and death emerged in the city of Wuhan in the Hubei province of China.

government took certain emergency measures to combat the spread of the virus, including extension of the Lunar New Year holiday, implementation

of travel bans and closure of factories and businesses.

The majority of our materials and products are sourced from suppliers located

Significant outbreaks of contagious diseases, and other adverse public

health developments, could have a material impact on our business operations and operating results.

The COVID-19 virus was ultimately declared a global

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be assured that some future potential health-related event will not appear and be just as, or even more, disruptive to our business.

extension it is difficult to quantify the extent of the impact this type of disease would have on our sales, net income and cash flows,

By extension it is difficult to quantify the extent of the impact this type of disease would have on our sales, net income and cash flows,

but it could be quite significant.

Our business is seasonal and therefore our annual operating results

will depend, in large part, on our sales during the relatively brief holiday shopping season.

This seasonality is exacerbated by retailers ’

shifting inventory management techniques.

Sales of our products at retail are extremely seasonal,

with a majority of retail sales occurring during the period from September through December in anticipation of the holiday season.

e-commerce is growing significantly and accounts for a higher portion of the ultimate sales of our products.

E-commerce retailers tend

to hold less inventory and take inventory closer to the time of sale to consumers than traditional brick-and-mortar retailers.

customers are timing their orders so that they are being filled by suppliers, such as us, closer to the time of purchase by consumers.

For our products, a majority of retail sales for the entire year generally occur in the fourth quarter, close to the holiday season.

addition, our FOB business model means that our sale takes place in conjunction with the shipping of our product out of Mainland China

extending the time a customer needs to import the product into their respective country.

As a consequence, the majority of our sales to

our customers occur in the second and third quarters.

The level of inventory carried by retailers may also reduce or delay retail sales

resulting in lower revenues for us.

If we or our customers determine that one of our products is more popular at retail than was originally

anticipated, we may not have sufficient time to produce and ship enough additional products to fully meet consumer demand.

Additionally,

the logistics of supplying more and more product within shorter time periods increases the risk that we will fail to achieve tight and

compressed shipping schedules and quality control, which also may reduce our sales and harm our results of operations.

This seasonal pattern

requires significant use of working capital, mainly to manufacture or acquire inventory during the portion of the year prior to the holiday

season, and it requires accurate forecasting of demand for products during the holiday season in order to avoid losing potential sales

of popular products or producing excess inventory of products that exceed consumer demand.

Our failure to accurately predict and respond

to consumer demand, resulting in under-producing popular items and/or overproducing less popular items, could significantly reduce our

total sales, negatively impact our cash flows, increase the risk of inventory obsolescence, and harm our results of operations and financial

In addition, as a result of the seasonal nature of our business, we would be significantly and adversely affected, in a manner

disproportionate to the impact on a company with sales spread more evenly throughout the year, by unforeseen events such as a terrorist

attack or economic shock that harm the retail environment or consumer buying patterns during our key selling season, or by events such

as strikes or port delays that interfere with the shipment of goods, during the critical months leading up to the holiday shopping season.

The COVID-19 pandemic has also accelerated consumers’

shift to e-commerce transactions with traditional brick & mortar retailers.

Some of these transactions are for “ship-to-home”

purchases and some are for local pick-up by the consumer at the brick-and-mortar location.

In either case, the consumer’s path to

discovery of new items changes to a digital medium.

It remains to be seen whether this change has a negative adverse impact on consumers’

ability to discover the breadth and depth of our product range or whether it discourages adding incremental unplanned purchases to the

shopping cart.

Either scenario could have a negative impact on our overall business performance.

Our business is seasonal and therefore our annual operating

results will depend, in large part, on our sales during the relatively brief holiday shopping season.

This seasonality is exacerbated

by retailers ’ shifting inventory management techniques.

Sales of our products at retail are extremely

seasonal, with a majority of retail sales occurring during the period from September through December in anticipation of the holiday

Further, e-commerce is growing significantly and accounts for a higher portion of the ultimate sales of our products.

retailers tend to hold less inventory and take inventory closer to the time of sale to consumers than traditional brick-and-mortar retailers.

As a result, customers are timing their orders so that they are being filled by suppliers, such as us, closer to the time of purchase

by consumers.

For our products, a majority of retail sales for the entire year generally occur in the fourth quarter, close to the holiday

In addition, our FOB business model means that our sale takes place in conjunction with the shipping of our product out of Mainland

China extending the time a customer needs to import the product into their respective country.

As a consequence, the majority of our

sales to our customers occur in the second and third quarters.

The level of inventory carried by retailers may also reduce or delay retail

sales resulting in lower revenues for us.

If we or our customers determine that one of our products is more popular at retail than was

originally anticipated, we may not have sufficient time to produce and ship enough additional products to fully meet consumer demand.

Additionally, the logistics of supplying more and more product within shorter time periods increases the risk that we will fail to achieve

tight and compressed shipping schedules and quality control, which also may reduce our sales and harm our results of operations.

seasonal pattern requires significant use of working capital, mainly to manufacture or acquire inventory during the portion of the year

prior to the holiday season, and it requires accurate forecasting of demand for products during the holiday season in order to avoid

losing potential sales of popular products or producing excess inventory of products that exceed consumer demand.

Our failure to accurately

predict and respond to consumer demand, resulting in under-producing popular items and/or overproducing less popular items, could significantly

reduce our total sales, negatively impact our cash flows, increase the risk of inventory obsolescence, and harm our results of operations

and financial condition.

In addition, as a result of the seasonal nature of our business, we would be significantly and adversely affected,

in a manner disproportionate to the impact on a company with sales spread more evenly throughout the year, by unforeseen events such

as a terrorist attack or economic shock that harm the retail environment or consumer buying patterns during our key selling season, or

by events such as strikes or port delays that interfere with the shipment of goods, during the critical months leading up to the holiday

shopping season.

Our Costume (Disguise) business is even more seasonal than our

core Toy/Consumer Products business as Halloween remains the primary purchase occasion for our costumes.

This seasonality is further exacerbated

by consumer migration to online shopping as the style and size attributes of the Halloween business (i.e., we make the same costume in

multiple sizes, and the same item “ costume ” across a very wide range of brands and properties)

in part behaves like an apparel-driven transaction rather than “ one-size-for-all ” toy/consumer

This seasonality is further

exacerbated by consumer migration to online shopping as the style and size attributes of the Halloween business (i.e., we make the same

costume in multiple sizes, and the same item “ costume ” across a very wide range of brands and

properties) in part behaves like an apparel-driven transaction rather than “ one-size-for-all ” toy/consumer

product transaction.

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will have a negative impact on that segment of business.

Given that securing licenses, product design and development and ultimately sourcing

of the product takes place over a year in advance of the actual Halloween selling season, we have limited ability to recover invested

expense if the market demand for those products were to suddenly be reduced.

Although some product could be held in inventory or materials

rolled forward to the next manufacturing season, these events would in turn incrementally tie up our capital and add warehousing expense

until the following year at best, and/or put added strain on our third-party manufacturers.

Given that securing licenses, product design and development and ultimately

sourcing of the product takes place over a year in advance of the actual Halloween selling season, we have limited ability to recover

invested expense if the market demand for those products were to suddenly be reduced.

Although some product could be held in inventory

or materials rolled forward to the next manufacturing season, these events would in turn incrementally tie up our capital and add warehousing

expense until the following year at best, and/or put added strain on our third-party manufacturers.

We depend upon third-party manufacturers, and if our relationship

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We depend upon many third-party manufacturers who

develop, provide and use the tools, dies and molds that we generally own to manufacture our products.

However, we have limited control

over the manufacturing processes themselves.

As a result, any difficulties encountered by the third-party manufacturers that result in

product defects, production delays, cost overruns or the inability to fulfill orders on a timely basis, could adversely affect our business,

results of operations and financial condition.

The continuing conflict in the Middle East and its impact on the Red Sea shipping routes,

as well as the climate driven transit disruptions at the Panama Canal in Middle America, may ultimately negatively impact the global flow

of goods with increasing transit times and cost, which could adversely affect our ability to deliver our products in a timely manner and

maintain our expected cost structure.

develop, provide and use the tools, dies and molds that we generally own to manufacture our products, many of which we have successfully

work with for decades.

However, we have limited control over the manufacturing processes themselves.

As a result, any difficulties encountered

by the third-party manufacturers that result in product defects, production delays, cost overruns or the inability to fulfill orders on

a timely basis, could adversely affect our business, results of operations and financial condition.

We do not have long-term contracts with our third-party

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air transportation with our overseas manufacturers were disrupted or terminated even for a relatively short period of time.

dies and molds are located at the facilities of our third-party manufacturers.

Although we own the majority of those tools, dies and molds,

our ability to retrieve them and move them to a new manufacturer in a cost-neutral manner might be limited by lack of manufacturing equipment

compatibility.

of our manufactures supply a meaningful volume of our products, we are constantly evaluating new manufacturing sources to ensure we are

maintaining product quality and innovation, source flexibility and market-appropriate pricing.

Our tools, dies and molds are located at

the facilities of our third-party manufacturers.

Although we own the majority of those tools, dies and molds, our ability to retrieve

them and move them to a new manufacturer in a cost-neutral manner might be limited by lack of manufacturing equipment compatibility or

government regulation.

Although we do not purchase the raw materials used

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or a decline in demand.

In the event that some unexpected shock to the market (like the COVID-19 pandemic or a sudden trade war) were

to suddenly drastically change demand or costing for product anticipated to be procured from our third-party manufacturers, we may incur

some costs relating to raw materials they have ordered on our behalf, and/or finished goods that were not shipped due to last-minute cancelled

orders from our customers buying FOB from China.

In the event that some unexpected shock to the market (like the COVID-19 pandemic, a sudden trade war, or a flare

up in a shooting war in a sensitive area) were to suddenly drastically change demand or costing for product anticipated to be procured

from our third-party manufacturers, we may incur some costs relating to raw materials they have ordered on our behalf, and/or finished

goods that were not shipped due to last-minute cancelled orders from our customers buying FOB from China.

Although our manufacturers bear the foreign-exchange

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not have adequate time to source comparable product elsewhere in time to avoid disruptions in our selling cycle.

The toy industry is highly competitive and our inability to compete

effectively may materially and adversely impact our business, results of operations and financial condition.

The toy industry is highly competitive and our inability to

compete effectively may materially and adversely impact our business, results of operations and financial condition.

The toy industry is highly competitive.

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longer operating histories;

greater economies of scale, inclusive of purchasing power and leverage of their investments across a range of areas, inclusive but not limited to research, technology, data analytics and strategic sourcing.

greater economies of scale, inclusive of purchasing power and leverage of their investments across a range of areas, including but not limited to research, technology, data analytics, logistics and strategic sourcing.

In addition, the toy industry has no significant

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complications in complying with laws in varying jurisdictions and changes in governmental policies;

greater difficulty and expenses associated with recovering from natural disasters, such as earthquakes, hurricanes and floods;

transportation delays and interruption, inclusive of raw material ’ s sourcing to our third-party manufacturers as well as finished goods delivery through to our customers and ultimate consumers;

greater difficulty and expenses associated with recovering from natural disasters, such as earthquakes,

hurricanes and floods;

transportation delays and interruption, inclusive of raw material ’ s sourcing to

our third-party manufacturers as well as finished goods delivery through to our customers and ultimate consumers;

work stoppages;

trade wars in general and the potential imposition of tariffs specifically;

the pricing of intercompany transactions may be challenged by taxing authorities in both foreign jurisdictions and the United States, with potential increases in income and other taxes.

trade wars in general and the imposition or potential imposition of tariffs specifically;

the pricing of intercompany transactions may be challenged by taxing authorities in both foreign

jurisdictions and the United States, with potential increases in income and other taxes.

Our reliance upon external sources of manufacturing

can be shifted, over a period of time, to alternative sources of supply, should such changes be necessary, but not in a cost-neutral manner.

However, if we were prevented from obtaining products or components for a material portion of our product line due to regulatory, political,

labor or other factors beyond our control, our operations would be disrupted while alternative sources of products were secured.

the imposition of trade sanctions by the United States against a class of products imported by us from, or the loss of “normal trade

relations” status by China could significantly increase our cost of products imported from that nation.

Because of the importance

of international sales and international sourcing of manufacturing to our business, our results of operations and financial condition

could be significantly and adversely affected if any of the risks described above or similar type of risks were to occur.

can be shifted, over a period of time, to alternative sources of supply, should such changes be necessary, but cannot be done so quickly

in a cost-neutral manner.

However, if we were prevented from obtaining products or components for a material portion of our product line

due to regulatory, political, labor or other factors beyond our control, our operations would be disrupted while alternative sources of

products were secured.

Also, the imposition of trade sanctions by the United States or another major market where we sell product against

a class of products imported by us from, or the loss of “normal trade relations” status by China could significantly increase

our cost of products imported from that nation.

Because of the importance of international sales and international sourcing of manufacturing

to our business, our results of operations and financial condition could be significantly and adversely affected if any of the risks described

above or similar type of risks were to occur.

Legal proceedings may harm our business, results of operations,

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We cannot provide assurance that we will not

be a party to additional legal proceedings in the future.

be a party to material legal proceedings in the future.

To the extent legal proceedings continue for long time periods or are adversely

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any violation by us of such regulations could result in product liability claims, loss of sales, diversion of resources, damage to our

reputation, increased warranty costs or removal of our products from the market, and we cannot assure you that our product liability insurance

for the foregoing will be sufficient.

reputation, increased warranty costs or removal of our products from the market, and we cannot assure you that our product liability

insurance for the foregoing will be sufficient.

Our business is subject to various laws, including

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loss of licensed rights;

removal of our products from the market and/or destruction of existing inventory and/or write-off of existing-related tooling.

Any of these results may adversely affect our business,

results of operations and financial condition.

There can be no assurance that our product liability insurance will be sufficient to avoid

or limit our loss in the event of an adverse outcome of any product liability claim.

We depend upon our proprietary rights, and our inability to safeguard

and maintain the same, or claims of third parties that we have violated their intellectual property rights, could have a material adverse

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

removal of our products from the market and/or destruction of existing inventory and/or write-off

of existing-related tooling.

Any of these results may adversely affect our

business, results of operations and financial condition.

There can be no assurance that our product liability insurance will be sufficient

to avoid or limit our loss in the event of an adverse outcome of any product liability claim.

We depend upon our proprietary rights, and our inability to

safeguard and maintain the same, or claims of third parties that we have violated their intellectual property rights, could have a material

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

We rely upon trademark, copyright and trade secret

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misappropriation of trade secrets or other violations of their intellectual property rights.

We cannot assure you that other parties will

not assert intellectual property claims against us in the future.

We cannot assure you that other parties

will not assert intellectual property claims against us in the future.

These claims could divert our attention from operating our business

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and harm the results of our operations and financial condition.

We have in the past restructured or made other adjustments

to our workforce in response to the economic environment, performance issues, acquisitions, and other internal and external considerations.

We have in the past restructured or made other

adjustments to our workforce in response to the economic environment, performance issues, acquisitions, and other internal and external

considerations.

Restructurings can among other things result in a temporary lack of focus, reductions in net sales and reduced productivity.

we may be unable to realize the anticipated cost savings from our previously announced restructuring efforts or may incur additional and/or

unexpected costs to realize the anticipated savings.

The amounts of anticipated cost savings and anticipated expenses-related restructurings

are based on our current estimates, but they involve risks, uncertainties, assumptions and other factors that may cause actual results,

performance or achievements to be materially different from those previously planned.

These impacts, among others, could occur in connection

with previously announced restructuring efforts, or related to future acquisitions and other restructurings and, as a result, our results

of operations and financial condition could be negatively affected.

In addition, we may be unable to realize the anticipated cost savings from our previously announced restructuring efforts or may incur

additional and/or unexpected costs to realize the anticipated savings.

The amounts of anticipated cost savings and anticipated expenses-related

restructurings are based on our current estimates, but they involve risks, uncertainties, assumptions and other factors that may cause

actual results, performance or achievements to be materially different from those previously planned.

These impacts, among others, could

occur in connection with previously announced restructuring efforts, or related to future acquisitions and other restructurings and,

as a result, our results of operations and financial condition could be negatively affected.

The inability to successfully defend claims from taxing authorities

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as well as the subjectivity of factual interpretations, our estimates of income tax liabilities may differ from actual payments or assessments.

Claims from tax authorities related to these differences could have an adverse impact on the results of our operations and financial condition.

In addition, legislative bodies in the various countries in which we do business may from time to time adopt new tax legislation that

could have a material adverse effect on our business, results of operations and financial condition.

Claims from tax authorities related to these differences could have an adverse impact on the results of our operations and financial

In addition, legislative bodies in the various countries in which we do business may from time to time adopt new tax legislation

that could have a material adverse effect on our business, results of operations and financial condition.

We may not be able to sustain or manage our product line growth,

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results may not be meaningful and results of operations from prior periods may not be indicative of future results.

We cannot assure that

we will be able to experience growth in, or maintain our present level of, net sales.

We cannot assure

that we will be able to experience growth in, or maintain our present level of, net sales.

Our growth strategy calls for us to continuously

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We experienced a

threat to the security of our computer systems in December 2022 which resulted in the leakage of certain data, including information about

our employees.

Although that incident did not result in material damage to our operations or cash flow, there is no assurance that any

future material breach of the security of our computer systems would not occur, and such occurrences could have a material and adverse

threat to the security of our computer systems in December 2022 which resulted in the leakage of certain data, including information

about our employees.

Although that incident did not result in material damage to our operations or cash flow, there is no assurance that

any future material breach of the security of our computer systems would not occur, and such occurrences could have a material and adverse

effect on our financial position, results of operations and cash flows.

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and any material failure, inadequacy, or interruption of that technology could have a material adverse impact on our business.

We rely extensively on information technology systems

across our operations, including for management of our supply chain, sale and delivery of our products and services, reporting our results

of operations, collection and storage of consumer data, data of customers, employees and other stakeholders, and various other processes

and transactions.

We rely extensively on information technology

systems across our operations, including for management of our supply chain, sale and delivery of our products and services, reporting

our results of operations, collection and storage of consumer data, data of customers, employees and other stakeholders, and various

other processes and transactions.

Many of these systems are managed by third-party service providers.

We use third-party technology and systems for a

variety of reasons, including, without limitation, encryption and authentication technology, employee email, content delivery to customers,

back-office support, and other functions.

In any given year, a small volume of our consumer products and services may rely on a component

or element which is internet-enabled, and may be offered in conjunction with business partners or such third-party service providers.

We, our business partners and third-party service providers may collect, process, store and transmit consumer data, including personal

information, in connection with those products and services.

Failure to follow applicable regulations related to those activities, or

to prevent or mitigate data loss or other security breaches, including breaches of our business partners’ technology and systems,

We use third-party technology and

systems for a variety of reasons, including, without limitation, encryption and authentication technology, employee email, content delivery

to customers, back-office support, and other functions.

In any given year, a small volume of our consumer products and services may rely

on a component or element which is internet-enabled, and may be offered in conjunction with business partners or such third-party service

We, our business partners and third-party service providers may collect, process, store and transmit consumer data, including

personal information, in connection with those products and services.

Failure to follow applicable regulations related to those activities,

or to prevent or mitigate data loss or other security breaches, including breaches of our business partners’ technology and systems,

could expose us or our customers to a risk of loss or misuse of such information, which could adversely affect our results of operations,

result in regulatory enforcement or other litigation and could be a potential liability for us, and otherwise significantly harm our business.

Our ability to effectively manage our business and coordinate the production, distribution, and sale of our products and services depends

significantly on the reliability and capacity of these systems and third-party service providers.

result in regulatory enforcement or other litigation and could be a potential liability for us, and otherwise significantly harm our

Our ability to effectively manage our business and coordinate the production, distribution, and sale of our products and services

depends significantly on the reliability and capacity of these systems and third-party service providers.

Although we have developed systems and processes

that are designed to protect customer information and prevent data loss and other security breaches, including systems and processes designed

to reduce the impact of a security breach at a third-party provider, such measures cannot provide absolute security.

If our systems or

our third-party service providers’ systems fail to operate effectively or are damaged, destroyed, or shut down, or there are problems

with transitioning to upgraded or replacement systems, or there are security breaches in these systems, any of the aforementioned could

occur as a result of natural disasters, human error, software or equipment failures, telecommunications failures, loss or theft of equipment,

acts of terrorism, circumvention of security systems, or other cyber-attacks, including denial-of-service attacks, we could experience

delays or decreases in product sales, and reduced efficiency of our operations.

Additionally, any of these events could lead to violations

of continually evolving privacy laws, loss of customers, or loss, misappropriation or corruption of confidential information, trade secrets

or data, which could expose us to potential litigation, regulatory actions, sanctions or other statutory penalties, any or all of which

could adversely affect our business and cause us to incur significant losses and remediation costs.

that are designed to protect customer information and prevent data loss and other security breaches, including systems and processes

designed to reduce the impact of a security breach at a third-party provider, such measures cannot provide absolute security.

systems or our third-party service providers’ systems fail to operate effectively or are damaged, destroyed, or shut down, or there

are problems with transitioning to upgraded or replacement systems, or there are security breaches in these systems, any of the aforementioned

could occur as a result of natural disasters, human error, software or equipment failures, telecommunications failures, loss or theft

of equipment, acts of terrorism, circumvention of security systems, or other cyber-attacks, including denial-of-service attacks, we could

experience delays or decreases in product sales, and reduced efficiency of our operations.

Additionally, any of these events could lead

to violations of continually evolving privacy laws, loss of customers, or loss, misappropriation or corruption of confidential information,

trade secrets or data, which could expose us to potential litigation, regulatory actions, sanctions or other statutory penalties, any

or all of which could adversely affect our business and cause us to incur significant losses and remediation costs.

The COVID-19 pandemic required most of our employees

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Although in 2022 we defaulted

back to a more traditional on-premise work model, we continue to support a higher degree of work-from-home opportunities than we did pre-COVID-19

(“the work-from-home model”).

Although our policies and procedures continue to adjust and adapt informed by our own experiences

and market norms, we cannot say with certainty what level of hybrid work we will continue to support as we move forward.

mind, we cannot be sure how remote work may generate an increase in new and unforeseen risks of business disruption and/or increased complexity

across the range of functions that comprise the Company’s daily activities.

In addition, the work-from-home model may increase our

vulnerability to hacking and other nefarious activities as employees adjust to new hardware/software infrastructure, resources and processes

as well as close the gap created by no longer being in close physical proximity to their colleagues.

Although all employees are required

to use work infrastructure and our secure VPN, we cannot be completely certain that we will not have increased exposure to security considerations

in this environment.

back to a more traditional on-premise work model, we continue to support a higher degree of work-from-home opportunities than we did

pre-COVID-19 (“the work-from-home model”).

Although our policies and procedures continue to adjust and adapt informed by

our own experiences and market norms, we cannot say with certainty what level of hybrid work we will continue to support as we move forward.

With that in mind, we cannot be sure how remote work may generate an increase in new and unforeseen risks of business disruption and/or

increased complexity across the range of functions that comprise the Company’s daily activities.

In addition, the work-from-home

model may increase our vulnerability to hacking and other nefarious activities as employees adjust to new hardware/software infrastructure,

resources and processes as well as close the gap created by no longer being in close physical proximity to their colleagues.

all employees are required to use work infrastructure and our secure VPN, we cannot be completely certain that we will not have increased

exposure to security considerations in this environment.

If we are unable to acquire and integrate companies and new product

lines successfully, we will be unable to implement a significant component of our growth strategy.

Our growth strategy depends, in part, upon our ability

to acquire companies and new product lines.

lines successfully, we will be unable to implement a meaningful path to growth.

Our growth depends, in part, upon our ability to

acquire companies and new licenses and product lines.

Future acquisitions, if any, may succeed only if we can effectively assess characteristics

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results, including:

difficulties in integrating acquired businesses or product lines, assimilating new facilities and personnel, and harmonizing diverse business strategies and methods of operation;

difficulties in integrating acquired businesses or product lines, assimilating new facilities

and personnel, and harmonizing diverse business strategies and methods of operation;

diversion of management attention from operation of our existing business;

loss of key personnel and institutional knowledge from acquired companies;

failure of an acquired business to achieve targeted financial results, inclusive of working capital needs;

failure of an acquired business to achieve targeted financial results, inclusive of working

capital needs;

limited capital to finance acquisitions and/or fund appropriate working capital post-acquisition;

inability to maintain or secure relevant licenses to maintain or expand the net sales of acquired business.

inability to maintain or secure relevant licenses to maintain or expand the net sales of acquired

We may engage in strategic transactions

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Any such transaction may require us to incur non-recurring or other charges, may increase our near and long-term expenditures

and may pose significant integration challenges or disrupt our management or business, which could harm our operations and financial results.

and may pose significant integration challenges or disrupt our management or business, which could harm our operations and financial

If securities or industry analysts publish

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in our stock price with relatively low trading volume.

In addition, a purchaser that seeks to acquire a significant number of shares may

be unable to do so without increasing our common stock price, and conversely, a seller that seeks to dispose of a significant number of

shares may experience a decreasing stock price.

In addition, a purchaser that seeks to acquire a significant number of shares

may be unable to do so without increasing our common stock price, and conversely, a seller that seeks to dispose of a significant number

of shares may experience a decreasing stock price.

Our stock price has been volatile over the past several years

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management’s attention and resources, adversely affecting our business.

We have a valuation allowance on a portion of the deferred taxes

on our books since their future realization is uncertain.

Deferred tax assets are realized by prior and future

taxable income of appropriate character.

Current accounting standards require that a valuation allowance be recorded if it is not likely

that sufficient taxable income of appropriate character will be generated to realize the deferred tax assets.

We currently believe that

based on the available information, it is more likely than not that a portion of the deferred tax assets, related to capital losses, will

not be realized.

We have a material amount of goodwill which, if it becomes impaired,

would result in a reduction in our net earnings.

Goodwill is the amount by which the cost of an acquisition

exceeds the fair value of the net assets we acquire.

Goodwill is not amortized and is required to be evaluated for impairment at least

Goodwill is the amount by which the cost of an

acquisition exceeds the fair value of the net assets we acquire.

Goodwill is not amortized and is required to be evaluated for impairment

at least annually.

At December 31, 2025, $35.1 million, or 7.9% of our total assets represented goodwill.

Declines in our profitability may impact

the fair value of our reporting units, which could result in a write-down of our goodwill and consequently harm the results of our operations.

Declines in our profitability

may impact the fair value of our reporting units, which could result in a write-down of our goodwill and consequently harm the results

of our operations.

We did not record any goodwill impairment charges during 2025, 2024 or 2023.

In the future, if we do not maintain our profitability and

growth targets, the carrying value of our goodwill may become impaired, resulting in impairment charges.

In the future, if we do not maintain

our profitability and growth targets, the carrying value of our goodwill may become impaired, resulting in impairment charges.

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 1A. Risk Factors