jakkspacif20240930

jakkspacif20240930_10q.htm

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

(Mark one)
☒	QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended September 30, 2024
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: 0-28104

JAKKS Pacific, Inc.

(Exact Name of Registrant as Specified in Its Charter)

Delaware	95-4527222
(State or Other Jurisdiction of Incorporation or Organization)	(I.R.S. Employer Identification No.)

2951 28th Street Santa Monica, California (Address of Principal Executive Offices)	90405 (Zip Code)

Registrant’s Telephone Number, Including Area Code: (424) 268-9444

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 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, smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “non-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 ☒

Securities registered pursuant to Section 12(g) of the Act:

Title of each class	Trading Symbol(s)	Name of each exchange on which registered
Common Stock $.001 Par Value	JAKK	The NASDAQ Global Select Market

The number of shares outstanding of the issuer’s common stock is 10,990,337 as of November 8, 2024.

JAKKS PACIFIC, INC. AND SUBSIDIARIES

TABLE OF CONTENTS TO QUARTERLY REPORT ON FORM 10-Q

QUARTER ENDED SEPTEMBER 30, 2024

ITEMS IN FORM 10-Q

Part I	FINANCIAL INFORMATION
Item 1.	Financial Statements (Unaudited)
	Condensed Consolidated Balance Sheets	3
	Condensed Consolidated Statements of Operations and Comprehensive Income	4
	Condensed Consolidated Statements of Stockholders' Equity	5
	Condensed Consolidated Statements of Cash Flows	6
	Notes to Condensed Consolidated Financial Statements	7
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	22
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	27
Item 4.	Controls and Procedures	27

Part II	OTHER INFORMATION
Item 1.	Legal Proceedings	28
Item 1A.	Risk Factors	28
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	None
Item 3.	Defaults Upon Senior Securities	None
Item 4.	Mine Safety Disclosures	None
Item 5.	Other Information	None
Item 6.	Exhibits	28

Signatures
Exhibit 31.1
Exhibit 31.2
Exhibit 32.1
Exhibit 32.2

PART I – FINANCIAL INFORMATION

Item 1. Financial Statements

JAKKS PACIFIC, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS

(In thousands, except share amounts)

Assets	September 30,			December 31,
	2024			2023
	(Unaudited)
Current assets
Cash and cash equivalents	$	22,070		$	72,350
Restricted cash		214			204
Accounts receivable, net of allowance for credit losses of $5,400 and $3,743 at September 30, 2024 and December 31, 2023, respectively		290,424			123,797
Inventory		63,509			52,647
Prepaid expenses and other assets		8,082			6,374
Total current assets		384,299			255,372
Property and equipment
Office furniture and equipment		9,906			8,852
Molds and tooling		127,222			120,396
Leasehold improvements		6,944			6,708
Total		144,072			135,956
Less accumulated depreciation and amortization		128,947			121,357
Property and equipment, net		15,125			14,599
Operating lease right-of-use assets, net		19,242			23,592
Other long-term assets		1,923			2,162
Deferred income tax assets, net		68,187			68,143
Goodwill		35,102			35,083
Total assets	$	523,878		$	398,951
Liabilities, Preferred Stock and Stockholders' Equity
Current liabilities
Accounts payable	$	98,928		$	42,177
Accounts payable - Meisheng (related party)		35,011			12,259
Accrued expenses		71,748			45,102
Reserve for sales returns and allowances		40,837			38,531
Income taxes payable		—			3,785
Short-term operating lease liabilities		7,405			7,380
Total current liabilities		253,929			149,234
Long-term operating lease liabilities		14,536			16,666
Accrued expenses – long-term		1,824			3,746
Preferred stock derivative liability		—			29,947
Income taxes payable		3,523			3,245
Total liabilities		273,812			202,838

Preferred stock accrued dividends, $0.001 par value; 5,000,000 shares authorized; nil and 200,000 shares issued and outstanding at September 30, 2024 and December 31, 2023, respectively		—			5,992

Stockholders' Equity
Common stock, $0.001 par value; 100,000,000 shares authorized; 10,990,337 and 10,096,197 shares issued and outstanding at September 30, 2024 and December 31, 2023, respectively		11			10
Additional paid-in capital		295,400			278,642
Accumulated deficit		(30,579	)		(73,612	)
Accumulated other comprehensive loss		(15,266	)		(15,627	)
Total JAKKS Pacific, Inc. stockholders' equity		249,566			189,413
Non-controlling interests		500			708
Total stockholders' equity		250,066			190,121
Total liabilities, preferred stock and stockholders' equity	$	523,878		$	398,951

See accompanying notes to condensed consolidated financial statements.

Table of Contents

JAKKS PACIFIC, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME

(In thousands, except per share data)

	Three Months Ended September 30, (Unaudited)					Nine Months Ended September 30, (Unaudited)
	2024		2023			2024		2023
Net sales	$	321,606	$	309,744		$	560,301	$	584,161
Cost of sales:
Cost of goods		158,770		149,052			289,190		293,512
Royalty expense		50,011		51,141			86,181		95,074
Amortization of tools and molds		3,994		2,566			7,462		5,955
Cost of sales		212,775		202,759			382,833		394,541
Gross profit		108,831		106,985			177,468		189,620
Direct selling expenses		7,552		10,684			21,904		22,405
General and administrative expenses		33,101		33,821			100,887		92,492
Depreciation and amortization		95		81			275		276
Selling, general and administrative expenses		40,748		44,586			123,066		115,173
Income from operations		68,083		62,399			54,402		74,447
Loss from joint ventures		—		—			—		(565	)
Other income (expense), net		84		(52	)		294		424
Change in fair value of preferred stock derivative liability		—		(793	)		—		(6,668	)
Loss on debt extinguishment		—		—			—		(1,023	)
Interest income		69

SEC Form 10-Q filed by JAKKS Pacific Inc.