{"url_path":"/sec/jakk/10-k/2026/item-1","section_key":"item-1","section_title":"Item 1 Business**","topic":"sec","document":{"doc_type":"10-K","doc_date":"2026-03-02","source_url":"https://www.sec.gov/Archives/edgar/data/1009829/0001185185-26-000723-index.html","accession_number":"0001185185-26-000723","cik":"0001009829","ticker":"JAKK","issuer_name":"JAKKS PACIFIC INC","edgar_url":"https://www.sec.gov/Archives/edgar/data/1009829/0001185185-26-000723-index.html","primary_entity_key":"0001009829","primary_entity_name":"JAKKS PACIFIC INC"},"word_count":5002,"has_tables":true,"body_markdown":"** **\n\n**Item 1. Business**\n\n \n\nIn this report, “JAKKS,” the “Company,”\n“we,” “us” and “our” refer to JAKKS Pacific, Inc. and its subsidiaries.\n\n \n\n**Company Overview**\n\n \n\nWe are a leading multi-product line, multi-brand\ntoy company that designs, produces, markets, sells and distributes toys and related kid-targeted consumer products, inclusive of kids\nindoor and outdoor furniture, costumes and various product lines in the sporting goods and home furnishings space. We focus our business\non acquiring or licensing well-recognized intellectual property (“IP”), trademarks and/or brand names, most with long product\nhistories (“evergreen brands”). We seek to acquire/license these evergreen brands because we believe they are less subject\nto market fads or trends. We also develop proprietary products marketed under our own trademarks and brand names and have historically\nacquired complementary businesses to further grow our portfolio. For accounting purposes, our products have been divided into two segments:\n(i) Toys/Consumer Products and (ii) Costumes. Segment information with respect to revenues, assets and profits or losses attributable\nto each segment is contained in Note 3 to the audited consolidated financial statements contained below in Item 8. Our products include:\n\n \n\n \n●\nAction figures and accessories, including licensed characters based on the Nintendo®, Sonic the Hedgehog®, and The Simpsons® franchises and our own proprietary brands including Creepy Crawlers®;\n\n \n \n \n\n \n●\nToy vehicles, including Xtreme Power Dozer®, Xtreme Power Dump Truck®, XPV®, Road Champs®, Fly Wheels® and AirTitans® inflatable remote-control dinosaur;\n\n \n \n \n\n \n●\nDolls and accessories, including small dolls, large dolls, fashion dolls and baby dolls based on licenses, including Disney Darlings, Disney Encanto®, Disney Moana® 2, Disney ILY 4EVER®, Disney Frozen®, Disney Princess® and Minnie Mouse®, and infant and pre-school toys based on TV shows like PBS’s Daniel Tiger’s Neighborhood® as well as in-house brands such as Perfectly Cute®,  Charming™, and KidTopia™;\n\n \n \n \n\n \n●\nPrivate label products developed exclusively for certain retail customers in various product categories;\n\n \n \n \n\n \n●\nFoot-to-floor ride-on products, including those based on BBC’s Bluey®, Fisher-Price®, Nickelodeon®, and Hasbro® licenses and inflatable play environments, tents and wagons;\n\n \n \n \n\n \n●\nRole play, dress-up, pretend play and novelty products for boys and girls based on well-known brands and entertainment properties such as Disney Frozen®*,*Black & Decker®*,*Disney Princess®, and Disney Encanto®, as well as those based on our own proprietary brands;\n\n \n \n \n\n \n●\nIndoor and outdoor kids’ furniture, activity trays and tables and room décor, seasonal and outdoor products, including those based on Disney® characters, Nickelodeon® and Hasbro® licenses;\n\n \n \n \n\n \n●\nHalloween and everyday costumes for children and in some cases teens and adults based on licensed and proprietary non-licensed brands, including Super Mario Bros.®, Microsoft’s Halo®, Disney-Pixar Toy Story®, Harry Potter®, Minions®, Sesame Street®, Power Rangers®¸ Pokemon®, Hasbro® brands, Universal’s Wicked® and Disney Frozen®, Disney Princess® and related Halloween accessories;\n\n \n \n \n\n \n●\nOutdoor activity toys including ReDo Skateboard Co.® and junior sports toys including Sky Ball® hyper-charged balls, SportsZone® sport sets and Wave Hoop® toy hoops marketed under our Maui® brand; and\n\n \n \n \n\n \n●\nBoard games under the brand JAKKS Wild Games®, including Temple Raider®, K.O. Corral® and Galactic JAXX™.\n\n  \n\nWe continually review the marketplace to identify\nand evaluate popular and evergreen brands and product categories that we believe have the potential for growth. We endeavor to generate\ngrowth within these lines by:\n\n \n\n \n●\ncreating innovative products under our established\nlicenses and brand names;\n\n \n\n \n●\nadding new items to the branded product lines that\nwe expect will enjoy greater popularity;\n\n \n\n \n●\ninfusing innovation and technology when appropriate\nto make products more appealing to today’s kids; and\n\n \n\n \n●\nexpanding our international product offering either\nsold directly to retailers or via third-party distributors.\n\n \n\n4\n\n[Table of Contents](#TableOfContents) \n\n \n\n**Our Business Strategy**\n\n \n\nIn addition to developing our own proprietary brands,\nproperties and marks, licensing popular IP enables us to use these high-profile marks at a lower cost than we would incur if we purchased\nthese marks or funded the development of comparable marks on our own. Beyond the investment profile, we have an appreciation of the challenges\nand expertise required to break through the noise in a world filled with high-budget, content-centric consumer choices either based on\nwell-known pre-existing IP or the even higher hurdle to launch new IP in the current marketplace. By licensing IP and trademarks from\nworld-class brand owners and content creators, we have potential access to a far greater range of marks than would be available for purchase.\nLicensors ultimately are responsible for the franchise management of their IP, and we, by extension, leverage their related investment\nin content and promotion, which we hope in turn will create a robust market for our related toy, consumer products and costume product\nlines. Licensors often also invest resources in engaging our largest customers directly to keep them aware of new initiatives and content\nto facilitate our sell-in of product. It also helps to credibly assure licensors that we will prioritize their brands, properties and\nIP rather than explicitly competing with them with a broad range of self-developed content-led offerings. We also license technology developed\nby unaffiliated inventors and product developers to enhance the design, innovation and functionality of our products.\n\n \n\nWe sell our products through our in-house sales staff and independent\nsales representatives to toy and mass-market retail chain stores, department stores, office supply stores, drug and grocery store chains,\nclub stores, value-oriented dollar stores, toy specialty stores and wholesalers. Our two largest customers are Target® and Walmart®,\nwhich accounted for 26.6% and 26.1%, respectively, of our net sales in 2025. No other customer accounted for more than 10% of our net\nsales in 2025.\n\n \n\n**Our Growth Strategy**\n\n \n\nKey elements of our growth strategy include:\n\n \n\n**●****Expand Core Product Lines.** We manage our existing\nand new brands through strategic product development initiatives, including introducing new products, modifying existing products and\nextending existing product lines to maximize their longevity and expand their retail channel reach. Our marketing teams and product designers\nstrive to develop new products or product lines to offer added technological, aesthetic and functional improvements to our extensive\nportfolio.\n\n \n\n**●****Enter New Product Categories.** We use our extensive\nexperience in the toy and other consumer product industries to evaluate products and licenses in new product categories and to develop\nadditional product lines. We began marketing licensed classic video games for simple plug-in use with television sets and expanded into\nseveral related categories by infusing additional technologies such as motion gaming and through the licensing of this category from\nour current licensors, such as Disney®. In recent years, we entered the skateboard space at a retailer’s request and have since\nexpanded into related protective gear and accessories.\n\n \n\n \n**●**\n**Acquire Additional Character and Product Licenses.** We have acquired the rights to use many familiar brand and character names and logos from third parties that we use with our primary trademarks and brands. Currently, among others, we have license agreements with Nickelodeon®, Disney®, Pixar®, Marvel®, NBCUniversal®, Microsoft®, Sega®, Sony®, Netflix® and WarnerMedia®, as well as with the licensors of many other popular characters. We also license IP from other toy companies for categories in which they do not offer products found within our core product lines. We intend to continue to pursue new licenses from these media & entertainment companies along with other licensors. We also intend to continue to secure additional inventions and product concepts through our existing network of inventors and product developers.\n\n \n\n \n**●**\n**Expand International Sales.** We believe that non-US markets: Europe, Australia, Canada, Latin America and Asia, offer us significant growth opportunities. In 2025, our sales generated outside the United States were approximately $154.1 million, or 27.0% of total net sales. Third-party distributors remain a core component of our international business, and we are constantly assessing how to expand our mutual businesses. We currently utilize warehouses in the United Kingdom, Germany (opened in 2025), Italy, Belgium and Spain (the latter two opened in 2024) to support sales expansion in Europe. We also have warehouse capacity in Mexico.\n\n \n\n**●****Pursue Strategic Acquisitions.** We have supplemented\nour internal growth with selected strategic acquisitions. Most of the product lines we market today were originally acquired via acquisition\nover the past 20+ years.\n\n \n\n**●****Capitalize On Our Operating Efficiencies.** We\nbelieve that our current infrastructure and operating model can accommodate growth without a proportionate increase in our operating\nand administrative expenses, thereby increasing our operating margins.\n\n \n\n5\n\n[Table of Contents](#TableOfContents) \n\n \n\nThe execution of our medium-longer-term growth\nstrategy, however, is subject to several risks and uncertainties, and we cannot assure you that we will experience growth in or maintain\nour present level of net sales (see “Risk Factors,” in Item 1A). For example, our growth strategy will place additional demands\nupon our management, operational capacity and financial resources and systems. The increased demand upon management may necessitate our\nrecruitment and retention of additional qualified management personnel. We cannot assure you that we will be able to recruit and retain\nqualified personnel or expand and manage our operations effectively and profitably. To effectively manage future growth, we must continue\nto expand our operational, financial and management information systems and to train, motivate and manage our workforce, globally. While\nwe believe that our operational, financial and management information systems will be adequate to support our future growth, no assurance\ncan be given they will be adequate without significant investment in our infrastructure. Failure to expand our operational, financial\nand management information systems or to train, motivate, manage and retain employees could have a material adverse effect on our business,\nfinancial condition and results of operations.\n\n \n\nMoreover, implementation of our growth strategy\nis subject to risks beyond our control, including: competition; market acceptance of new products; changes in economic conditions; changes\nin the media & entertainment landscape disrupting the traditional model of capturing consumer attention for new entertainment-led\nofferings; our ability to obtain or renew licenses on commercially reasonable terms; and our ability to finance increased levels of accounts\nreceivable and inventory necessary to support our sales growth, if any.\n\n \n\nFurthermore, we cannot assure you that we can\nidentify attractive acquisition candidates or negotiate acceptable acquisition terms, and our failure to do so may adversely affect the\nresults of our operations and our ability to sustain growth.\n\n \n\nFinally, our acquisition strategy involves a number\nof risks, each of which could adversely affect our operating results, including difficulties in integrating acquired businesses or product\nlines, assimilating new facilities and personnel and harmonizing diverse business strategies and methods of operation, diversion of management\nattention from operation of our existing business, loss of key personnel from acquired companies, and failure of an acquired business\nto achieve targeted financial results.\n\n \n\n**Industry Overview**\n\n \n\nAccording to Toy Association, Inc., the leading\ntoy industry trade group, the United States is the world’s largest toy market, followed by China, Japan and Western Europe. Total\nretail sales of toys, excluding video games, in the United States, were approximately $30.3 billion in 2025. We believe the two largest\nUnited States toy companies, Hasbro® and Mattel®, along with The LEGO Group (headquartered in Denmark), collectively hold a dominant\nshare of the U.S. toy market. In addition, hundreds of smaller companies compete in the design and development of new toys, the procurement\nof character and product licenses, and the improvement, expansion and re-introduction of previously established products and product\nlines.\n\n \n\nOver the decades, the toy industry has experienced\nsubstantial consolidation among both toy companies and toy retailers. We believe that the ongoing consolidation of toy companies provides\nus with increased growth opportunities due to retailers’ desire to not be entirely dependent upon a few dominant toy companies.\nRetailer concentration also enables us to ship products, manage account relationships and track point of sale information more effectively\nand efficiently.\n\n \n\n**Products**\n\n \n\nWe focus our business on acquiring or licensing\nwell-recognized properties, trademarks and/or brand names, and we seek to acquire evergreen brands which are less subject to market fads\nor trends. Generally, our license agreements for products and concepts call for royalties ranging from 1% to 22% of net sales, and some\nmay require minimum royalty guarantees and up-front or advanced royalty payments against those guarantees. Our principal products are\nhighlighted above in our Company Overview.\n\n \n\n6\n\n[Table of Contents](#TableOfContents) \n\n \n\n**Sales, Marketing and Distribution**\n\n \n\nWe sell all our products through our own in-house\nsales staff and independent sales representatives to toy and mass-market retail chain stores, department stores, office supply stores,\ndrug and grocery store chains, club stores, dollar stores, toy specialty stores and wholesalers. Our two largest customers are Target®\nand Walmart®, which accounted for 26.6% and 26.1%, respectively, of our net sales in 2025. No other customer accounted for more than\n10% of our net sales in 2025. In 2024, our three largest customers, Target®, Walmart® and Amazon®, accounted for 29.6%, 26.2%\nand 10.6%, respectively, of our net sales. No other customer accounted for more than 10% of our net sales in 2024. We generally sell products\nto our customers on open account with payment terms typically varying from 30 to 90 days or, in some cases, pursuant to letters of credit.\nFor sales outside of the United States, we may also purchase credit insurance to mitigate the risk, if any, of non-payment. From time\nto time, we allow our customers credits against future purchases from us in order to facilitate their retail markdown and sales of slow-moving\ninventory. We also sell our products through e-commerce sites, including Walmart.com, Target.com and Amazon.com.\n\n \n\nWe contract the manufacture of most of our products\nto unaffiliated manufacturers located in The People’s Republic of China (“China”). We sell the finished products to\nour customers, many of whom take title to the goods in China. These methods allow us to reduce certain operating costs and working capital\nrequirements. We also contract the manufacture of certain products from Hong Kong Meisheng Cultural Company Limited (“Meisheng”),\nwhich involved payments to Meisheng of approximately $75.3 million and $98.4 million for the years ended December 31, 2025 and 2024, respectively.\nAs of December 31, 2024, Meisheng owned 4.8% of our outstanding common stock and until our 2025 annual meeting a designee of Meisheng\nwas a member of our board of directors. A portion of our sales originate in the United States, so we hold certain inventory in a US warehouse\nand fulfillment facility. To date, a majority of all our sales has been to customers based in the United States. We intend to continue\ntrying to expand distribution of our products into foreign territories and, accordingly, we have:\n\n \n\n \n●\nengaged representatives to oversee sales in certain foreign territories;\n\n \n\n \n●\nengaged distributors in certain foreign territories;\n\n \n\n \n●\nestablished direct relationships with retailers in certain foreign\nterritories;\n\n \n\n \n●\nopened sales offices in Canada, Europe and Mexico;\n\n \n\n \n●\nopened distribution centers in the UK, the Netherlands, Italy, Belgium,\nSpain and Mexico.\n\n \n\nOutside of the United States, we currently sell\nour products primarily in Europe, Australia, Canada, Latin America and Asia. Sales of our products abroad accounted for approximately\n$154.1 million, or 27.0% of our net sales in 2025 and approximately $146.0 million, or 21.1% of our net sales in 2024. We believe that\nforeign markets present an attractive opportunity, and we plan to intensify our marketing efforts and further expand our distribution\nchannels abroad.\n\n \n\nWe establish reserves for allowances provided\nto our customers, including discounts, pricing concessions, promotional allowances and allowances for anticipated breakage or defective\nproduct, at the time of shipment. The reserves are determined as a percentage of sales based upon either historical experience or upon\nestimates or programs agreed upon with our customers.\n\n \n\nWe obtain, directly, or through our sales representatives,\norders for our products from our customers and arrange for the manufacture of these products as discussed below. Cancellations generally\nare made in writing, and we take appropriate steps to notify our manufacturers of these cancellations. We may incur costs or other losses\nbecause of cancellations.\n\n \n\nWe maintain a full-time sales and marketing staff,\nmany of whom make on-site visits to customers for the purpose of showing products and soliciting orders for products. We also retain\na number of independent sales representatives to sell and promote our products, both domestically and internationally. Together with\nretailers, we occasionally test the consumer acceptance of new products in selected markets before committing resources to large-scale\nproduction.\n\n \n\nWe publicize and advertise our products online\nand on mobile devices, in trade and consumer magazines and other publications, market our products at international, national and regional\ntoy and other specialty trade shows, conventions and exhibitions and carry on cooperative advertising programs with toy and mass market\nretailers and other customers which include the use of print, online, mobile and television ads and via in-store displays. We also produce\nand broadcast television commercials for several of our product lines, if we expect that the resulting increase in our net sales will\njustify the relatively high cost of television/media advertising.\n\n \n\n7\n\n[Table of Contents](#TableOfContents) \n\n \n\n**Product Development**\n\n \n\nEach of our product lines has an in-house lead\nresponsible for product development. The in-house lead identifies and evaluates inventor products and concepts and other opportunities\nto enhance or expand existing product lines or to enter new product categories. In addition, we create proprietary products to fully\nexploit our concept and character licenses. Although we have the capability to create and develop products from inception to production,\nwe also use third-parties to provide a portion of the sculpting, sample making, illustration and package design required for our products\nto accommodate our increasing product innovations and introductions as well as accelerate our speed-to-market. Typically, the development\nprocess takes from nine to eighteen months from concept to production and shipment to our customers, but given our Company’s size\nand structure, we have demonstrated the ability to shrink that down to three to nine months successfully when the opportunity requires.\n\n \n\nWe employ a staff of product designers. We occasionally\nacquire other product concepts from unaffiliated third-parties. If we accept and develop a third-party’s concept for new toys,\nwe generally pay a royalty on the sale of the toys developed from this concept, and may, on an individual basis, guarantee a minimum\nroyalty. Royalties payable to inventors and developers generally range from 1% to 5% of the wholesale sales price for each unit of a\nproduct sold by us. We believe that utilizing experienced third-party inventors gives us access to a wide range of development talent.\nWe currently work with numerous toy inventors and designers for the development of new products and the enhancement of existing products.\n\n \n\nSafety testing of our products is done at the\nmanufacturers’ facilities by quality control personnel employed by us or by independent third-party contractors engaged by us.\nSafety testing is designed to meet or exceed regulations imposed by federal and state, as well as applicable international governmental\nauthorities, our retail partners, licensors and the Toy Association. We also closely monitor quality assurance procedures for our products\nfor safety purposes. In addition, independent laboratories engaged by some of our larger customers and licensors test certain of our\nproducts.\n\n \n\n**Manufacturing and Supplies**\n\n \n\nOur products are currently produced by overseas\nthird-party manufacturers, which we choose on the basis of quality, flexibility, reliability and price. Consistent with industry practice,\nthe use of third-party manufacturers enables us to avoid incurring fixed manufacturing costs, while maximizing flexibility, capacity and\nthe latest production technology. Substantially all of the manufacturing services performed overseas for us are paid for on open account\nwith the manufacturers. To date, we have not experienced any material delays in the delivery of our products from our manufacturers; however,\ndelivery schedules are subject to various factors beyond our control, and any delays in the future could adversely affect our sales. The\nCOVID-19 pandemic created some short-term delays as manufacturing capacity both dropped during the peak of the outbreak and then again\nwas stretched when consumer demand for different categories of products spiked because of the unprecedented level of households operating\nunder confined-to-home/social distancing guidelines. Currently, we have ongoing relationships with over 50 different manufacturers. We\nbelieve that alternative sources of supply are available to us although we cannot be assured that we can obtain adequate supplies of manufactured\nproducts on short notice in a cost neutral manner. We may also incur costs or other losses as a result of not placing orders consistent\nwith our forecasts for products to be manufactured by our suppliers or manufacturers for a variety of reasons including customer order\ncancellations or a decline in demand.\n\n \n\nAlthough we do not conduct the day-to-day manufacturing\nof our products, we are extensively involved in the design of product prototypes and production tools, dies and molds for our products\nand we seek to ensure quality control by actively reviewing the production process and testing the products produced by our manufacturers.\nWe employ quality control inspectors who rotate among our manufacturers’ factories to monitor the production of substantially all\nour products. Some of our customers might also conduct their own product quality testing.\n\n \n\nThe principal raw materials used in the production\nand sale of our toy products are plastics, zinc alloy, plush, printed fabrics, paper products and electronic components, all of which\nare currently available at reasonable prices from a variety of sources. Although we do not directly manufacture our products, we own the\nmajority of the tools, dies and molds used in the manufacturing process, and these are transferable among manufacturers if we choose to\nemploy alternative manufacturers. Tools, dies and molds represent a substantial portion of our property and equipment with a net book\nvalue of $16.6 million and $13.5 million as of December 31, 2025, and 2024, respectively. Substantially all of these assets are located\nacross various provinces in China.\n\n \n\n8\n\n[Table of Contents](#TableOfContents) \n\n \n\n**Patents, Trademarks, Copyrights and Licenses**\n\n \n\nWe routinely pursue protection of our products\nthrough some form or combination of intellectual property right(s). We file patent applications where appropriate to protect our innovations\narising from new development and design, and as a result, possess a portfolio of issued patents in the U.S. and abroad. Most of our products\nare produced and sold under trademarks owned by or licensed to us. In recent years, our rate of filing new trademark applications has\nincreased. We also register certain aspects of some of our products with the U.S. Copyright Office. In the same vein, we enforce our rights\nagainst infringers because we recognize that our intellectual property rights are significant assets that contribute to our success. Accordingly,\nwhile we believe we are sufficiently protected and the duration of our rights are aligned with the lifecycle of our products, the loss\nof some of these rights could have an adverse effect on our financial growth expectations and business operations.\n\n \n\n**Competition**\n\n \n\nCompetition in the toy industry is intense. Globally,\ncertain of our competitors have greater financial resources, larger sales and marketing and product development departments, stronger\nname recognition, wholly-owned brands and properties with high consumer awareness and appeal, longer operating histories and benefit\nfrom greater economies of scale. These factors, among others, may enable our competitors to market their products at lower prices or\non terms more advantageous to customers than those we could offer for our competitive products. Competition often extends to the procurement\nof entertainment and product licenses, as well as the marketing and distribution of products and the obtaining of adequate shelf space.\nCompetition may result in price reductions, reduced gross margins and loss of market share, any of which could have a material adverse\neffect on our business, financial condition and results of operations. In many of our product lines we compete directly against one or\nboth of two of the toy industry’s most dominant companies, Mattel® and Hasbro®. In addition, we compete in our Halloween\ncostume lines with Rubies II®. We also compete with numerous smaller domestic and foreign toy manufacturers, importers and marketers\nin each of our product categories.\n\n \n\n**Seasonality and Backlog**\n\n \n\nIn 2025, 57.9% of our net sales were made in the\nsecond and third quarters. Generally, the first quarter is the period of lowest shipments and sales in our business and in the toy industry\nand therefore it is also the least profitable quarter due to various fixed costs. Seasonality factors cause our operating results to fluctuate\nsignificantly from quarter to quarter. However, our outdoor/seasonal products are primarily sold in the spring and summer seasons, and\nour year-round costume business ships most of its volume focused on consumer sales taking place just before Halloween at the end of October.\nOur results of operations may also fluctuate because of factors such as the timing of new products (and related expenses) introduced by\nus or our competitors, the theatrical/entertainment-led releases of licensed brands, the advertising activities of our competitors, delivery\nschedules set by our customers and the emergence of new market entrants. We believe, however, that the low retail price of most of our\nproducts may be less subject to seasonal fluctuations than higher-priced toy products.\n\n \n\nWe ship products in accordance with delivery schedules\nspecified by our customers, who generally request delivery of products within three to six months of the date of their orders for orders\nshipped FOB China or Hong Kong and within three days for orders shipped domestically (i.e., from one of our warehouses). Because customer\norders may be canceled at any time, often without penalty, our backlog may not accurately indicate sales for any future period.\n\n \n\n9\n\n[Table of Contents](#TableOfContents) \n\n \n\n**Government and Industry Regulation**\n\n \n\nOur products are subject to the provisions of\nthe Consumer Product Safety Act (“CPSA”) as amended by the Consumer Product Safety Improvement Act (“CPSIA”),\nthe Federal Hazardous Substances Act (“FHSA”), the Flammable Fabrics Act (“FFA”) and regulations promulgated\nthereunder. Additionally, our products may be subject to various other regulations in the United States, European Union, and other jurisdictions.\nThe CPSIA, FHSA, and FFA are administered by the United States Consumer Products Safety Commission (“CPSC”) which requires\nindependent third-party testing by accredited laboratories of products we sell in the United States. Failure to comply with such requirements\ncan result in the CPSC banning such products. The CPSC also may require the recall to repair and/or repurchase by the manufacturer\nof articles that it deems noncompliant. Similar laws exist in some states and cities and in various international markets. We maintain\na quality control program designed to reasonably ensure compliance with all applicable laws.\n\n \n\n**Human Capital**\n\n \n\nOur success comes from recruiting, retaining and\nmotivating talented individuals around the world. JAKKS Pacific, Inc. continuously strives to create a safe, healthy, productive and\nharmonious work environment.\n\n \n\nAs of December 31, 2025, we had approximately 652\nemployees (including temporary and seasonal employees) working in over 10 countries worldwide to create innovative products and experiences\nthat inspire, entertain, and develop children through play, with 292 employees (44.8 % of the total workforce) located outside the U.S.\n\n \n\n*Employee Engagement*\n\n \n\nOne of our main focuses is employee retention.\nWe empower our management to identify top performers and mentor them. We encourage all employees to take advantage of in-house and external\ntraining programs and continuing education. Our Human Resources department has an open-door policy that encourages employees to seek career\nadvancement advice. We hold various events and workshops throughout the year, and employees are encouraged to voice any concerns and/or\nto bring forth their ideas and suggestions.\n\n \n\n*Culture and Environment*\n\n \n\nWe are dedicated to developing and maintaining\na workplace culture that celebrates and values the unique contributions of every individual.\n\n \n\nOur organization’s ethos is significantly\nshaped by the collective blend of distinct perspectives, life journeys, expertise, creativity, innovative thinking, self-expression,\nexceptional skills, and talents that our team members bring to their roles.\n\n \n\nWe wholeheartedly welcome and encourage the rich\ntapestry of differences among our employees. This includes, but is not limited to, variations in age, skin tone, physical and cognitive\nabilities, ethnic background, family composition, gender identity or expression, linguistic heritage, national origin, political views,\nracial identity, religious beliefs, sexual orientation, socio-economic background, military service history, and other personal characteristics.\n\n \n\nOur initiatives to promote a varied and representative\nworkforce encompass a wide range of practices and policies. These include, but are not limited to, our approaches to recruitment and\nhiring, compensation packages and benefits, professional growth opportunities and training programs, as well as our processes for internal\npromotions and transfers.\n\n \n\n10\n\n[Table of Contents](#TableOfContents) \n\n \n\n*Training and Development*\n\n \n\nWe take pride in offering the opportunity for\nemployees to continuously learn and to grow their careers. Annually, employees are offered various types of training and the opportunity\nto continue their education. This includes both online and instructor-led training covering a variety of topics ranging from career-related,\nto federally- and locally-mandated, to JAKKS Pacific, Inc. Company policy, to financial services and health/wellness-related. Nearly\nall employees take advantage of some if not all of these optional learning opportunities.\n\n \n\n*Health and Safety*\n\n \n\nWe are committed to providing a safe, healthy and productive working\nenvironment for all our employees globally.\n\n \n\n**Environmental Issues**\n\n \n\nWe may be subject to legal and financial obligations\nunder environmental, health and safety laws in the United States and in other jurisdictions where we operate. We are not currently aware\nof any material environmental liabilities associated with any of our operations.\n\n \n\n**Available Information**\n\n \n\nWe make available free of charge on or through\nour Internet website, www.jakks.com, our annual report on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K, and\namendments to these reports filed or furnished pursuant to Section 13(a) or 15(d) of the Securities Exchange Act of 1934 as soon as reasonably\npracticable after we electronically file such material with, or furnish it to, the SEC. In addition, we have previously filed registration\nstatements and other documents with the SEC. Any document we file may be inspected without charge at the SEC’s website at www.sec.gov.\n(These website addresses are not intended to function as hyperlinks, and the information contained in our website and in the SEC’s\nwebsite is not intended to be a part of this filing.)\n\n \n\n**Our Corporate Information**\n\n \n\nWe were formed as a Delaware corporation in 1995.\nOur principal executive offices are located at 2951 28th Street, Santa Monica, California 90405. Our telephone number is (424) 268-9444\nand our Internet Website address is www.jakks.com. The contents of our website are not incorporated in or deemed to be a part of this\nAnnual Report on Form 10-K."}