Funko第二季轉虧為盈 受惠關稅退稅及成本控制

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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

FORM 10-Q

☒QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended June 30, 2026 
OR
☐TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from _____________to _____________
Commission file number: 001-38274

FUNKO, INC.
(Exact name of registrant as specified in its charter)

Delaware35-2593276
(State or other jurisdiction of
incorporation or organization)(I.R.S. Employer
Identification No.)

2802 Wetmore Avenue98201
EverettWashington
(Address of principal executive offices)(Zip Code)

(425) 783-3616
(Registrant’s telephone number, including area code)
N/A
(Former name, former address and former fiscal year, if changed since last report)

Securities registered pursuant to Section 12(b) of the Act:
Title of each classTrading Symbol(s)Name of each exchange on which registered
Class A Common Stock,
$0.0001 par value per shareFNKOThe Nasdaq Stock Market LLC

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.    Yes  ☒ No  ☐
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).    Yes  ☒    No  ☐
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
Large accelerated filer☐Accelerated Filer☒
Non-accelerated filer☐Smaller reporting company☒
Emerging growth company☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.   ☐  
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).    Yes  ☐    No  ☒
As of August 4, 2026, the registrant had 55,995,766 shares of Class A common stock, $0.0001 par value per share, and 91,276 shares of Class B common stock, $0.0001 par value per share, outstanding.

INDEX
Page

Part I
FINANCIAL INFORMATION

Item 1.
Financial Statements
4

Condensed Consolidated Statements of Operations (unaudited) for the Three and Six Months Ended June 30, 2026 and 2025
4

Condensed Consolidated Statements of Comprehensive Income (Loss) (unaudited) for the Three and Six Months Ended June 30, 2026 and 2025
5

Condensed Consolidated Balance Sheets (unaudited) as of June 30, 2026 and December 31, 2025
6

Condensed Consolidated Statements of Cash Flows (unaudited) for the Six Months Ended June 30, 2026 and 2025
7

Condensed Consolidated Statements of Stockholders’ Equity (unaudited) for the Three and Six Months Ended June 30, 2026 and 2025
8

Notes to Unaudited Condensed Consolidated Financial Statements
10

Item 2.
Management’s Discussion and Analysis of Financial Condition and Results of Operations
28

Item 3.
Quantitative and Qualitative Disclosures About Market Risk
45

Item 4.
Controls and Procedures
46

Part II
OTHER INFORMATION

Item 1.
Legal Proceedings
47

Item 1A.
Risk Factors
48

Item 2.
Unregistered Sales of Equity Securities and Use of Proceeds
96

Item 5.
Other Information
96

Item 6.
Exhibits
97

SIGNATURES
99

SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS
This Quarterly Report on Form 10-Q contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995 and other securities laws. All statements contained in this Quarterly Report on Form 10-Q other than statements of historical fact, including statements regarding our future operating results and financial position, the expected impact of general economic and market conditions, including the imposition of tariffs and the uncertainty over U.S. trade and tariff policies, on our business, results of operations and financial condition, capital resources and our ability to generate cash to fund our operations, anticipated benefits from sales under our registration statement on Form S-3 and Sales Agreement, as defined herein, compliance with financial and negative covenants and related impacts to our business, our business strategy and plans, including plans to improve our liquidity and financial condition, plans for expansion in our international markets, plans for product line expansions, our review of strategic alternatives, potential acquisitions, market growth and trends, demand for our products, inventory expectations, anticipated future expenses and payments, future refinancing efforts, efforts to remediate our material weaknesses in internal control over financial reporting and our objectives for future operations, are forward-looking statements. The words “believe,” “may,” “will,” “estimate,” “continue,” “anticipate,” “intend,” “expect,” “could,” “would,” “project,” “plan,” “potentially,” “preliminary,” “likely,” and similar expressions are intended to identify forward-looking statements. We have based these forward-looking statements largely on our current expectations and projections about future events and trends that we believe may affect our financial condition, results of operations, business strategy, short-term and long-term business operations and objectives, and financial needs. These forward-looking statements are subject to a number of risks, uncertainties, and assumptions, including the important factors described in this Quarterly Report on Form 10-Q under Part II, Item 1A. “Risk Factors,” and in our other filings with the Securities and Exchange Commission (“SEC”), that may cause our actual results, performance or achievements to differ materially and adversely from those expressed or implied by the forward-looking statements.
Any forward-looking statements made herein speak only as of the date of this Quarterly Report on Form 10-Q, and you should not rely on forward-looking statements as predictions of future events. Although we believe that the expectations reflected in the forward-looking statements are reasonable, we cannot guarantee that the future results, performance, or achievements reflected in the forward-looking statements will be achieved or occur. We undertake no obligation to update any of these forward-looking statements for any reason after the date of this Quarterly Report on Form 10-Q or to conform these statements to actual results or revised expectations.
1

Summary of Risk Factors
Our business is subject to numerous risks and uncertainties, including those described in Part II, Item 1A. “Risk Factors” in this Quarterly Report on Form 10-Q. Some of the factors that could materially and adversely affect our business, financial condition, results of operations or prospects include, but are not limited to, the following:
•We are subject to risks related to the retail industry including, but not limited to, potential negative impacts of global and regional economic downturns, changes in retail practices, and our ability to maintain and further develop relationships with our retail customers and distributors.
•Our substantial sales and manufacturing operations outside the United States subject us to risks associated with international operations, including, but not limited to, changes in the global trade markets and policies, including tariffs, as well as fluctuations in foreign currency or tax rates.
•Our indebtedness could adversely affect our financial health and competitive position, and we may not be able to secure additional financing on favorable terms, or at all, to meet our future capital needs.
•There can be no assurance that we will be successful in identifying or completing any strategic alternative, that any such strategic alternative will result in additional value for our stockholders or that the process will not have an adverse impact on our business.
•We are subject to risks related to the operation of our business, including, but not limited to, our ability to execute our business strategy, manage our growth and our inventories, and attract and retain qualified personnel.
•As a purveyor of licensed pop culture consumer products, we are largely dependent on content development and creation by third parties, and are subject to a number of related risks including, but not limited to, the creation of compelling content by licensors, and the market appeal of the properties we license and the products we create.
•We are subject to risks related to intellectual property, including our ability to obtain, protect and enforce our intellectual property rights and our ability to operate our business without violating the intellectual property rights of other parties.
•Our success is dependent on our ability to manage fluctuations in our business, including fluctuations in gross margin, seasonal impacts and fluctuations due to the timing and popularity of new product releases.
•Our business depends in large part on our vendors and outsourcers, and our reputation and ability to effectively operate our business may be harmed by actions taken by these third parties outside of our control.
•We are subject to potential legal risks including, but not limited to, ongoing securities class action litigation, future product liability suits or product recalls, or risks associated with failure to comply with the various laws and regulations to which we are subject, any of which could have a significant adverse effect on our financial condition and results of operations.
•We are subject to risks related to information technology including, but not limited to, risks related to the operation of our e-commerce business, our ability to operate our information systems and our compliance with laws related to privacy and the protection of data.
•TCG has significant influence over us, and its interests may conflict with the interests of our other stockholders. 
•There are risks related to our organizational structure, including the Tax Receivable Agreement, which confers certain benefits upon the parties to the TRA (the "TRA Parties") that will not benefit Class A common stockholders to the same extent as it will benefit the TRA Parties.
2

•There are risks associated with the ownership of our Class A common stock including, but not limited to, potential dilution by future issuances and volatility in the price of our Class A common stock.
3

Part I – FINANCIAL INFORMATION

Item 1.
Financial Statements

FUNKO, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
Three Months Ended June 30,Six Months Ended June 30,
2026202520262025
(In thousands, except per share data)
Net sales$207,719 $193,469 $408,638 $384,208 
Cost of sales (exclusive of depreciation and amortization)90,090 131,429 202,182 245,297 
Selling, general, and administrative expenses79,723 82,259 163,410 167,066 
Depreciation and amortization15,767 14,528 30,541 29,790 
Total operating expenses185,580 228,216 396,133 442,153 
Income (loss) from operations22,139 (34,747)12,505 (57,945)
Interest expense, net5,198 4,522 10,082 8,371 

Other expense, net480 887 936 1,055 
Income (loss) before income taxes16,461 (40,156)1,487 (67,371)
Income tax expense 1,016 848 4,169 1,692 
Net income (loss)15,445 (41,004)(2,682)(69,063)
Less: net income (loss) attributable to non-controlling interests
61 (514)9 (985)
Net income (loss) attributable to Funko, Inc.$15,384 $(40,490)$(2,691)$(68,078)
Income (loss) per share of Class A common stock:
Basic$0.28 $(0.74)$(0.05)$(1.26)
Diluted$0.27 $(0.74)$(0.05)$(1.26)
Weighted average shares of Class A common stock outstanding:

Basic55,860 54,362 55,644 53,948 
Diluted57,461 54,362 55,644 53,948 

See accompanying notes to the unaudited condensed consolidated financial statements.
4

FUNKO, INC.
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS) 
(Unaudited)
Three Months Ended June 30,Six Months Ended June 30,
2026202520262025
(In thousands)
Net income (loss)$15,445 $(41,004)$(2,682)$(69,063)
Other comprehensive income (loss):
Foreign currency translation gain (loss)396 5,708 (620)8,218 
Comprehensive income (loss)15,841 (35,296)(3,302)(60,845)
Less: Comprehensive income (loss) attributable to non-controlling interests
62 (436)7 (880)
Comprehensive income (loss) attributable to Funko, Inc.$15,779 $(34,860)$(3,309)$(59,965)

See accompanying notes to the unaudited condensed consolidated financial statements.
5

 FUNKO, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(Unaudited)

June 30,
2026December 31,
2025
(In thousands, except per share data)
Assets
Current assets:
Cash and cash equivalents$40,713 $42,148 
Accounts receivable, net93,561 117,018 
Inventories88,800 83,136 
Prepaid expenses and other current assets51,540 48,094 
Total current assets274,614 290,396 
Property and equipment, net64,498 68,679 
Operating lease right-of-use assets, net41,671 46,928 
Goodwill133,848 133,900 
Intangible assets, net127,925 135,826 

Other assets11,191 9,505 
Total assets$653,747 $685,234 
Liabilities and Stockholders’ Equity
Current liabilities:
Revolving credit facility$1,500 $1,125 
Current portion of term debt16,939 21,932 
Current portion of operating lease liabilities16,989 18,792 
Accounts payable58,206 64,748 

Accrued royalties54,712 59,821 
Accrued expenses and other current liabilities87,583 77,499 

Total current liabilities235,929 243,917 
Long-term debt182,659 202,246 
Operating lease liabilities43,273 48,680 

Other long-term liabilities3,867 4,261 

Commitments and Contingencies (Note 6)

Stockholders’ equity:
Class A common stock, par value $0.0001 per share, 200,000 shares authorized; 55,989 and 55,327 shares issued and outstanding as of June 30, 2026 and December 31, 2025, respectively
5 5 
Class B common stock, par value $0.0001 per share, 50,000 shares authorized; 91 issued and outstanding as of June 30, 2026 and December 31, 2025, respectively
— — 
Additional paid-in-capital362,526 357,330 
Accumulated other comprehensive income4,003 4,621 
Accumulated deficit(178,833)(176,142)
Total stockholders’ equity attributable to Funko, Inc.187,701 185,814 
Non-controlling interests318 316 
Total stockholders’ equity188,019 186,130 
Total liabilities and stockholders’ equity$653,747 $685,234 

See accompanying notes to the unaudited condensed consolidated financial statements.
6

FUNKO, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
Six Months Ended June 30,
20262025
(In thousands)
Operating Activities
Net loss$(2,682)$(69,063)
Adjustments to reconcile net loss to net cash provided by (used in) operating activities:
Depreciation and amortization30,541 29,790 
Equity-based compensation5,196 6,377 

Other, net1,133 1,301 
Changes in operating assets and liabilities:
Accounts receivable, net23,318 24,572 
Inventories(6,160)(5,761)
Prepaid expenses and other assets2,499 5,529 
Accounts payable(5,992)3,207 

Accrued royalties(5,109)(14,967)
Accrued expenses and other liabilities(19,114)(25,427)
Net cash provided by (used in) operating activities23,630 (44,442)

Investing Activities
Purchases of property and equipment(18,954)(16,211)

Other, net— 970 
Net cash used in investing activities(18,954)(15,241)

Financing Activities
Borrowings on revolving credit facility— 85,000 

Debt amendment costs(3,648)— 
Payments of term debt(21,303)(11,530)

Proceeds from sale of tariff receivable19,248 — 

Payments under tax receivable agreement(249)— 
Other, net179 193 
Net cash (used in) provided by financing activities(5,773)73,663 

Effect of exchange rates on cash and cash equivalents(338)516 

Net change in cash and cash equivalents(1,435)14,496 
Cash and cash equivalents at beginning of period42,148 34,655 
Cash and cash equivalents at end of period$40,713 $49,151 

See accompanying notes to the unaudited condensed consolidated financial statements.
7

FUNKO, INC.
CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY
(Unaudited)

Class A Common
StockClass B Common
StockAdditional
Paid-In CapitalOther
Comprehensive IncomeAccumulated DeficitNon-
Controlling InterestsTotal
(in thousands)SharesAmountSharesAmount
Period ended March 31, 202655,830 $6 91 $— $359,744 $3,608 $(194,217)$259 $169,400 
Distribution to continuing equity owners— — — — — — — (3)(3)
Equity-based compensation— — — — 2,782 — — — 2,782 
Activity under equity-based compensation plans159 (1)— — — — — — (1)
Cumulative translation adjustment— — — — — 395 — 1 396 

Net income— — — — — — 15,384 61 15,445 
Period ended June 30, 202655,989 $5 91 $— $362,526 $4,003 $(178,833)$318 $188,019 

Class A Common
StockClass B Common
StockAdditional
Paid-In CapitalOther
Comprehensive IncomeAccumulated DeficitNon-
Controlling InterestsTotal
(in thousands)SharesAmountSharesAmount
Period ended March 31, 202554,252 $5 648 $— $348,358 $807 $(136,370)$1,355 $214,155 
Distribution to continuing equity owners— — — — — — — (11)(11)
Equity-based compensation— — — — 3,112 — — — 3,112 
Activity under equity-based compensation plans278 — — — 117 — — — 117 
Cumulative translation adjustment— — — — — 5,630 — 78 5,708 

Net loss— — — — — — (40,490)(514)(41,004)
Period ended June 30, 202554,530 $5 648 $— $351,587 $6,437 $(176,860)$908 $182,077 

See accompanying notes to the unaudited condensed consolidated financial statements.

8

FUNKO, INC.
CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY
(Unaudited)

Class A Common
StockClass B Common
StockAdditional
Paid-In CapitalOther
Comprehensive IncomeAccumulated DeficitNon-
Controlling InterestsTotal
(in thousands)SharesAmountSharesAmount
Period ended December 31, 202555,327 $5 91 $— $357,330 $4,621 $(176,142)$316 $186,130 
Distribution to continuing equity owners— — — — — — — (5)(5)
Equity-based compensation— — — — 5,196 — — — 5,196 
Activity under equity-based compensation plans662 — — — — — — — — 
Cumulative translation adjustment— — — — — (618)— (2)(620)

Net loss— — — — — — (2,691)9 (2,682)
Period ended June 30, 202655,989 $5 91 $— $362,526 $4,003 $(178,833)$318 $188,019 

Class A Common
StockClass B Common
StockAdditional
Paid-In CapitalOther
Comprehensive (loss) IncomeAccumulated DeficitNon-
Controlling InterestsTotal
(in thousands)SharesAmountSharesAmount
Period ended December 31, 202452,967 $5 1,430 $— $343,472 $(1,676)$(108,782)$3,334 $236,353 
Distribution to continuing equity owners— — — — — — — (35)(35)
Equity-based compensation— — — — 6,377 — — — 6,377 
Activity under equity-based compensation plans781 — — — 227 — — — 227 
Cumulative translation adjustment— — — — — 8,113 — 105 8,218 

Redemption of common units of FAH, LLC782 — (782)— 1,511 — — (1,511)— 

Net loss— — — — — — (68,078)(985)(69,063)
Period ended June 30, 202554,530 $5 648 $— $351,587 $6,437 $(176,860)$908 $182,077 

See accompanying notes to the unaudited condensed consolidated financial statements.
9

FUNKO, INC.
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

1. Organization and Operations
The unaudited condensed consolidated financial statements include Funko, Inc. and its subsidiaries (together, the “Company”) and have been prepared in accordance with U.S. generally accepted accounting principles (“U.S. GAAP”) for interim financial information and the instructions to Rule 10-01 of Regulation S-X. Accordingly, they do not include all the information and footnotes required by U.S. GAAP for complete financial statements. All intercompany balances and transactions have been eliminated.
The Company was formed as a Delaware corporation on April 21, 2017. The Company was formed for the purpose of completing an initial public offering (“IPO”) of its Class A common stock and related transactions in order to carry on the business of Funko Acquisition Holdings, L.L.C. (“FAH, LLC”) and its subsidiaries. 
Funko, Inc. operates and controls all of FAH, LLC’s operations and, through FAH, LLC and its subsidiaries, conducts FAH, LLC’s business as the sole managing member. Accordingly, the Company consolidates the financial results of FAH, LLC and reports a non-controlling interest in its unaudited condensed consolidated financial statements representing the common units of FAH, LLC interests still held by other owners of FAH, LLC (collectively, the “Continuing Equity Owners”).
Interim Financial Information
In the opinion of management, all adjustments considered necessary for a fair statement of the results as of the date of and for the interim periods presented have been included, and such adjustments consist of normal recurring adjustments. The unaudited condensed consolidated results of operations for the current interim period are not necessarily indicative of the results for the entire year ending December 31, 2026, due to seasonality and other factors. These unaudited condensed consolidated financial statements should be read in conjunction with the Company’s audited consolidated financial statements and related notes included in its Annual Report on Form 10-K for the year ended December 31, 2025, filed with the Securities and Exchange Commission (“SEC”).
Liquidity
During the three and six months ended June 30, 2026, the Company recorded net income of $15.4 million, and net loss of $2.7 million, respectively, in addition to having recurring net losses of $67.4 million, $14.7 million, and $154.1 million for the fiscal years ended December 31, 2025, December 31, 2024, and December 31, 2023, respectively. Net income (loss) for the three and six months ended June 30, 2026, is inclusive of a $25.4 million pre-tax benefit to cost of sales related to the recovery of International Emergency Economic Powers Act ("IEEPA") tariffs paid or accrued. Refer to Note 2 for additional information. The Company’s principal sources of liquidity are existing cash and cash equivalents and cash flows from operating activities. There is no remaining borrowing availability under the Company's Revolving Credit Facility, as defined below, and the amended Credit Agreement, as defined below, requires that cash in excess of $50.0 million be used for prepayment of the Revolving Credit Facility, which prepayments permanently reduce the revolving commitments. Cash provided by operating activities for the six months ended June 30, 2026 was $23.6 million, which included $9.0 million of interest payments. As of June 30, 2026, the Company held cash and cash equivalents of $40.7 million, which is inclusive of proceeds from the sale of substantially all of the Company’s tariff refund receivables of $19.2 million less a repayment made on the long-term balance of the Term Loan Facility of $9.6 million (refer to Note 2 for additional information) with the remaining amount used to fund ongoing operations. Total debt under the Credit Agreement is $198.3 million (net of $3.3 million in unamortized debt amendment fees) with a maturity date of December 31, 2027, which is beyond one year from the date that the unaudited condensed consolidated financial statements are issued.
10

The Company sources, procures and assembles inventory, primarily out of Vietnam, Cambodia, and China. The effects of tariffs imposed in 2025, and the potential imposition of modified or additional tariffs or export controls by other countries, could continue to have an adverse effect on future net sales, margins, profitability and cash flows. The Company anticipates it may face continued supply chain challenges, cost volatility, and consumer and economic uncertainty due to these ongoing changes in global trade policies. To proactively manage the Company’s liquidity, the Company has lowered costs by shifting production to lower-tariff countries and by reducing overhead and capital expenditures. The Company has also continued to benefit from price increases implemented in 2025.
On February 13, 2026, the Company entered into an amendment (the “Fifth Amendment”) with the lenders under the Credit Agreement in effect prior to the Fifth Amendment (the “Prior Credit Agreement”) and JPMorgan Chase Bank, N.A. as administrative agent. The Fifth Amendment, among other things, amended the Prior Credit Agreement to (i) extend the maturity date of the loans under the Prior Credit Agreement from September 17, 2026 to December 31, 2027, and (ii) amend the financial covenants applicable to FAH, LLC and its subsidiaries under the Prior Credit Agreement to, among other things, (a) waive the minimum Fixed Charge Coverage Ratio financial covenant for the fiscal quarter ended December 31, 2025 and the fiscal quarters ending March 31, 2026 and June 30, 2026, (b) provide FAH, LLC additional cushion with respect to the minimum Fixed Charge Coverage Ratio financial covenant for the fiscal quarters ending September 30, 2026, December 31, 2026 and March 31, 2027 relative to the minimum Fixed Charge Coverage Ratio covenant set forth in the Prior Credit Agreement, (c) introduce a minimum Consolidated EBITDA covenant for the six-month period ending June 30, 2026, (d) waive the maximum Net Leverage Ratio covenant for the fiscal quarter ended December 31, 2025 and the fiscal quarters ending March 31, 2026, June 30, 2026 and September 30, 2026, (e) subject to certain usage restrictions, permit FAH, LLC to forego testing of certain Financial Covenants for any test period (to the extent required to be tested in such test period and not in two consecutive quarters) if FAH, LLC makes a voluntary permanent prepayment of the loans under the Credit Agreement in an amount not less than $10.0 million prior to the delivery of a compliance certificate for such test period, (f) requiring amortization payments on the outstanding revolving loans, with each such amortization payment in respect of the outstanding revolving loans permanently reducing the revolving commitments and (g) requiring quarterly mandatory prepayment of the revolving loans with cash (subject to certain exceptions) and cash equivalents in excess of $50.0 million, with each such prepayment permanently reducing the revolving commitments. Consistent with the Prior Credit Agreement, the Credit Parties are subject to a covenant to hold no less than $10.0 million of Qualified Cash at any time.
As a result of the Fifth Amendment to the Credit Agreement, the Company expects that its existing resources and future cash flows from operations and cash and cash equivalents, will provide it with sufficient liquidity to meet its obligations for at least the next twelve months from the issuance date of these financial statements, including compliance with all covenants under the Credit Agreement. As the Company's financial condition continues to improve as a result of the initiatives referred to above, the Company plans to either amend the Credit Agreement to further extend the maturity, seek alternative financing arrangements prior to the maturity of the debt, or opportunistically pursue other business opportunities or strategic transactions with the assistance of financial advisors. However, there can be no assurance these plans will be completed. If the Company is unable to complete these plans before the end of the fiscal year December 31, 2026, the debt would then be reclassified from a long-term liability to a current liability. If the Credit Agreement is not refinanced before its maturity date of December 31, 2027 on terms that are acceptable to the Company or, if the Company does not successfully enter into a transaction(s) to strengthen its balance sheet and increase its financial flexibility, the Company’s liquidity, results of operations, cash flows and financial condition would be materially adversely impacted.
11

2. Significant Accounting Policies and Transactions
Use of Estimates
The preparation of the Company’s unaudited condensed consolidated financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities at the date of the consolidated financial statements as well as the reported amounts of revenues and expenses during the reporting period. Actual results could differ from these estimates and assumptions.
Significant Accounting Policies
Inventories
Inventories consist primarily of figures, plush, apparel, homewares, accessories and other finished goods, and are accounted for using the first-in, first-out (“FIFO”) method. Inventory costs include direct product costs, freight and duty costs. Inventories are stated at the lower of cost or net realizable value. The Company estimates obsolescence based on assumptions regarding future demand. This valuation requires us to make judgments, based on currently available information, about the likely method of disposition, such as through sales to customers, or liquidation, and expected recoverable value of each disposition category. Reserves for excess and obsolete inventories were $11.9 million and $11.0 million as of June 30, 2026 and December 31, 2025, respectively.
Revenue Recognition and Sales Allowance
Revenue from the sale of the Company’s products is recognized when control of the goods is transferred to the customer, which is upon shipment or upon receipt of finished goods by the customer, depending on the contract terms. Deferred revenue is recognized when the Company collects cash from the customer and has not yet filled its obligation for delivery of product. Deferred revenue was $15.5 million and $17.6 million as of June 30, 2026 and December 31, 2025, respectively, and is recorded within accrued expenses and other current liabilities on the Company's condensed consolidated balance sheets. The Company expects to recognize revenue under these performance obligations over the next 12 months.
The Company routinely enters into arrangements with its customers to provide sales incentives, support customer promotions, and provide allowances for returns and defective merchandise. These sales adjustments require management to make estimates. In making these estimates, management considers all available information including the overall business environment, historical trends and information from customers, such as agreed upon customer contract terms as well as historical experience from the customer. The costs of these programs reduce gross sales in the period the related sale is recognized. The Company adjusts its estimates at least quarterly or when facts and circumstances used in the estimate process change. As of June 30, 2026 and December 31, 2025, the Company had sales allowance of $29.6 million and $39.8 million, respectively.
Goodwill and Intangible Assets 
Goodwill represents the excess of the purchase price over the net amount of identifiable assets acquired and liabilities assumed in a business combination measured at fair value. The Company evaluates goodwill for impairment annually on October 1 of each year and upon the occurrence of triggering events or substantive changes in circumstances that could indicate a potential impairment by assessing qualitative factors or performing a quantitative analysis in determining whether it is more likely than not that the fair value of the net assets is below their carrying amounts.
12

Intangible assets acquired in a business combination are recognized separately from goodwill and are initially recognized at their fair value at the acquisition date. Intangible assets acquired include intellectual property (product design), customer relationships, and trade names. These are definite-lived assets and are amortized on a straight-line basis over their estimated useful lives. Intangible assets are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of the assets might not be recoverable. Conditions that would necessitate an impairment assessment include a significant decline in the observable market value of an asset, a significant change in the extent or manner in which an asset is used, or any other significant adverse change that would indicate that the carrying amount of an asset or group of assets may not be recoverable.
The Company has evaluated potential goodwill impairment triggering events as of June 30, 2026, and determined it was more likely than not that the fair value of the reporting unit was above carrying value of the net assets. However, the Company will continue to evaluate for impairment triggering events due to the substantive changes in circumstances, such as market capitalization, which could indicate a potential impairment and the need to record a material, non-cash charge in a future period. The Company also expects to assess the recoverability of the carrying value of the identified intangible and other long-lived assets, to the extent conditions necessitate an impairment assessment.
A description of the Company’s other significant accounting policies is included in the audited consolidated financial statements within its Annual Report on Form 10-K for the year ended December 31, 2025. 
IEEPA Tariffs
On February 20, 2026, the U.S. Supreme Court ruled that U.S. tariffs imposed under IEEPA on goods imported into the U.S. were unauthorized. During the second quarter of 2026, management deemed the recovery of IEEPA tariffs paid to be probable. Accordingly, the Company recognized a benefit of $25.4 million in cost of sales (exclusive of depreciation and amortization) within the condensed consolidated statements of operations for the recovery of IEEPA tariffs paid or accrued with the applicable corresponding receivable for tariffs paid of $22.1 million reflected in prepaid expenses and other current assets. In addition, during the second quarter of 2026, the Company executed a participatory sale of $22.1 million in tariff claims for $19.2 million. This resulted in the recognition of a liability within accrued expenses and other current liabilities. The Company will continue to monitor developments pertaining to the import and export policies of the U.S. and other countries, as well as those pertaining to tariff refunds and litigation, that could impact the Company’s financial position, results of operations and cash flows.
Accounting Pronouncements Not Yet Adopted
In November 2024, the Financial Accounting Standards Board issued ASU 2024-03, Income Statement - Reporting Comprehensive Income - Expense Disaggregation Disclosures (Subtopic 220-40): Disaggregation of Income Statement Expenses for public business entities. ASU 2024-03 requires that an entity disclose in the notes to the financial statements specified information about certain costs and expenses, including the amounts of (a) purchases of inventory, (b) employee compensation, (c) depreciation, (d) intangible asset amortization, and (e) other amounts of depletion expense included in each relevant expense caption presented on the statement of operations. The standard also requires disclosure of a qualitative description of the amounts remaining in relevant expense captions that are not separately disaggregated quantitatively, as well as the total amount of selling expenses and an entity’s definition of selling expenses. The ASU was clarified in January 2025 and is effective for annual reporting periods beginning after December 15, 2026 and interim periods within annual reporting periods beginning after December 15, 2027, with early adoption permitted and it can be applied on either a prospective or retroactive basis. The Company is currently evaluating the ASU to determine its impact on income statement presentation and enhanced footnote disclosures.
13

3. Fair Value Measurements
The Company’s financial instruments, other than those discussed below, include cash and cash equivalents, accounts receivable, accounts payable, and accrued liabilities. The carrying amounts of these financial instruments approximate fair value due to the short-term nature of these instruments. For financial instruments measured at fair value on a recurring basis, the Company prioritizes the inputs used in measuring fair value according to a three-tier fair value hierarchy defined by U.S. GAAP. 
Cash equivalents. As of June 30, 2026 and December 31, 2025, cash equivalents included $14.9 million and $16.6 million, respectively, of highly liquid money market funds, which are classified as Level 1 within the fair value hierarchy.
Debt. The estimated fair value of the Company’s debt instruments, which are classified as Level 3 financial instruments, including the revolving credit facility, term debt, and equipment loans, at June 30, 2026 and December 31, 2025, was approximately $204.4 million and $225.7 million, respectively. The carrying values of the Company’s debt at June 30, 2026 and December 31, 2025, were $201.1 million and $225.3 million, respectively. The estimated fair value of the Company’s debt instruments primarily reflects assumptions regarding credit spreads for similar floating-rate instruments with similar terms and maturities and the Company’s standalone credit risk.

4. Debt
Debt consists of the following (in thousands):
June 30, 2026December 31, 2025
Revolving Credit Facility124,625 125,000 

Term Loan Facility$76,981 $95,246 
Equipment Finance Loan2,756 5,435 
Debt issuance costs(3,264)(378)
Total term debt76,473 100,303 
Less: current portion
18,439 23,057 
Long-term debt, net$182,659 $202,246 

14

Credit Facilities
On September 17, 2021 (the "Original Closing Date"), FAH, LLC and certain of its material domestic subsidiaries from time to time (the “Credit Agreement Parties”) entered into a credit agreement (as amended, restated, amended and restated, supplemented, wai