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The following discussion and analysis of financial condition and results of operations should be read together with our condensed consolidated financial statements and notes thereto, which appear elsewhere herein. Disclosure Regarding Forward-Looking Statements This Report includes “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. For example, statements included in this Report regarding our financial position, business strategy and other plans and objectives for future operations, and assumptions and predictions about future product demand, supply, manufacturing, costs, marketing and pricing factors are all forward-looking statements. When we use words like “intend,” “anticipate,” “believe,” “estimate,” “plan” or “expect,” or other words of a similar import, we are making forward-looking statements. We believe that the assumptions and expectations reflected in such forward-looking statements are reasonable, based upon information available to us on the date hereof, but we cannot assure you that these assumptions and expectations will prove to have been correct or that we will take any action that we may presently be planning. We have disclosed certain important factors (e.g., see “Risk Factors”) that could cause our actual results to differ materially from our current expectations elsewhere in this Report. You should understand that forward-looking statements made in this Report are necessarily qualified by these factors. We are not undertaking to publicly update or revise any forward-looking statement if we obtain new information or upon the occurrence of future events or otherwise. Critical Accounting Estimates Our critical accounting policies and estimates are included in the 2025 Annual Report on Form 10-K and did not materially change during the first six months of 2026. New Accounting Pronouncements See Note 1 to the condensed consolidated financial statements. Results of Operations The following unaudited table sets forth, for the periods indicated, certain statement of income data as a percentage of net sales: Three Months Ended June 30, (Unaudited) Six Months Ended June 30, (Unaudited) 2026 2025 2026 2025 Net sales 100 % 100 % 100 % 100 % Cost of sales: Cost of goods 49.4 49.3 49.2 48.8 Royalty expense 16.6 16.4 16.3 16.2 Amortization of tools and molds 1.7 1.5 1.7 1.4 Cost of sales 67.7 67.2 67.2 66.4 Gross profit 32.3 32.8 32.8 33.6 Direct selling expenses 6.1 5.6 6.8 6.6 General and administrative expenses 26.2 29.4 28.2 29.7 Depreciation and amortization 0.1 0.1 0.1 0.1 Selling, general and administrative expenses 32.4 35.1 35.1 36.4 Loss from operations (0.1 ) (2.3 ) (2.3 ) (2.8 ) Other income (expense), net 5.0 — 2.8 — Loss on debt extinguishment — (0.4 ) — (0.2 ) Interest income 0.6 0.3 0.5 0.3 Interest expense (0.1 ) (0.1 ) (0.1 ) (0.1 ) Income (loss) before provision for (benefit from) income taxes 5.4 (2.5 ) 0.9 (2.8 ) Provision for (benefit from) income taxes 1.2 (0.6 ) 0.3 (0.8 ) Net income (loss) 4.2 % (1.9 )% 0.6 % (2.0 )% 19 Table of Contents The following unaudited table sets forth, for the periods indicated, certain statements of operations data by segment (in thousands): Three Months Ended Six Months Ended June 30, June 30, 2026 2025 2026 2025 Net Sales Toys/Consumer Products $ 97,507 $ 80,379 $ 197,602 $ 187,817 Costumes 41,731 38,715 48,312 44,530 139,238 119,094 245,914 232,347 Cost of Sales Toys/Consumer Products 64,006 53,293 130,119 122,532 Costumes 30,271 26,778 35,228 31,779 94,277 80,071 165,347 154,311 Gross Profit Toys/Consumer Products 33,501 27,086 67,483 65,285 Costumes 11,460 11,937 13,084 12,751 $ 44,961 $ 39,023 $ 80,567 $ 78,036 Comparison of the Three Months Ended June 30, 2026 and 2025 Net Sales Toys/Consumer Products. Net sales of our Toys/Consumer Products segment were $97.5 million for the three months ended June 30, 2026 compared to $80.4 million for the prior year period, representing an increase of $17.1 million, or 21.3%. The increase was driven by higher sales in the Action Play and Collectibles division, up 40.7% versus a year ago, driven by sales of Super Mario Movie and Nintendo products. Additionally, the Dolls, Role-Play/Dress Up division increased 11.8% compared to the same period a year ago. Costumes. Net sales of our Costumes segment were $41.7 million for the three months ended June 30, 2026 compared to $38.7 million for the prior year period, representing an increase of $3.0 million, or 7.8%. The increase was primarily due to reduced orders a year ago from select recurring customers as a result of the US tariffs. Cost of Sales Toys/Consumer Products. Cost of sales of our Toys/Consumer Products segment was $64.0 million, or 65.6% of related net sales for the three months ended June 30, 2026 compared to $53.3 million, or 66.3% of related net sales for the prior year period, representing an increase of $10.7 million, or 20.1%. The decrease as a percentage of net sales was due to lower product costs as a percentage of net sales, while in the increase in dollars was due to higher volume. Costumes. Cost of sales of our Costumes segment was $30.3 million, or 72.7% of related net sales for the three months ended June 30, 2026, compared to $26.8 million, or 69.3% of related net sales for the prior year period, representing an increase of $3.5 million, or 13.1%. The increase was due to higher product costs as a percentage of net sales on Costume product versus a year ago. Selling, General and Administrative Expenses Selling, general and administrative expenses were $45.1 million for the three months ended June 30, 2026 compared to $41.8 million for the prior year period constituting 32.4% and 35.1% of net sales, respectively. Selling, general and administrative expenses were up $3.3 million year over year due to slightly higher selling expenses and salaries and benefits. Other Income (Expense), net Other Income (Expense), net was $7.0 million for the three months ended June 30, 2026 compared to $25 thousand for the prior year period. The increase is mainly due to refunded import tariff expenditures. A portion of the refund related to U.S. inventory still on hand as of June 30, 2026 was applied to these inventory items to reduce their cost basis. Provision for (Benefit from) Income Taxes Our income tax expense, which includes federal, state and foreign income taxes and discrete items, was $1.7 million, or an effective tax rate of 22.5%, for the three months ended June 30, 2026. During the comparable period in 2025, our income tax benefit was $0.6 million, or an effective tax rate of 20.7%. The increase in the effective tax rate is primarily attributable to an increase in tax expense from discrete items recognized during the current-year period. 20 Table of Contents Comparison of the Six Months Ended June 30, 2026 and 2025 Net Sales Toys/Consumer Products. Net sales of our Toys/Consumer Products segment were $197.6 million for the six months ended June 30, 2026 compared to $187.8 million for the prior year period, representing an increase of $9.8 million, or 5.2%. The increase was driven by higher sales in the Action Play and Collectibles division, up 33.7% versus a year ago, due to higher sales related to the Super Mario Movie product, offset by 12.3% lower sales in the Dolls, Role-Play/Dress Up division. Costumes. Net sales of our Costumes segment were $48.3 million for the six months ended June 30, 2026 compared to $44.5 million for the prior year period, representing an increase of $3.8 million, or 8.5%. The increase was primarily due to reduced orders a year ago from select recurring customers as a result of the US tariffs. Cost of Sales Toys/Consumer Products. Cost of sales of our Toys/Consumer Products segment was $130.1 million, or 65.8% of related net sales for the six months ended June 30, 2026 compared to $122.5 million, or 65.2% of related net sales for the prior year period, representing an increase of $7.6 million, or 6.2%. Cost of sales as a percentage of related net sales was relatively flat year-over-year with the increase in dollars due to greater overall sales. Costumes. Cost of sales of our Costumes segment was $35.2 million, or 72.9% of related net sales for the six months ended June 30, 2026, compared to $31.8 million, or 71.5% of related net sales for the prior year period, representing an increase of $3.4 million, or 10.7%. The increase as a percentage of net sales was due to higher net inventory reserves on Costume product versus a year ago. Selling, General and Administrative Expenses Selling, general and administrative expenses were $86.3 million for the six months ended June 30, 2026 compared to $84.6 million for the prior year period constituting 35.1% and 36.4% of net sales, respectively. Selling, general and administrative expenses were up $1.7 million year over year, with slightly higher selling expenses and salaries and benefits. Other Income (Expense), net Other Income (Expense), net was $7.0 million for the six months ended June 30, 2026 compared to $30 thousand for the prior year period. The increase is due to refunded import tariff expenditures. A portion of the refund related to U.S. inventory still on hand as of June 30, 2026 was applied to these inventory items to reduce their cost basis. Provision for (Benefit from) Income Taxes Our income tax expense, which includes federal, state and foreign income taxes and discrete items, was $0.9 million, or an effective tax rate of 35.1%, for the six months ended June 30, 2026. During the comparable period in 2025, our income tax benefit was $1.8 million, or an effective tax rate of 27.3%. The increase in the effective tax rate is primarily attributable to an increase in tax expense from discrete items recognized during the current-year period. 21 Table of Contents Seasonality and Backlog The retail toy industry is inherently seasonal. Generally, our sales have been highest during the second and third quarters, and collections for those sales have been highest during the succeeding fourth and first quarters. Our working capital needs have been highest during the second and third quarters as we make royalty advance payments for some of our licenses and buy and sell inventory subject to customer payment terms. While we have taken steps to level sales over the entire year, sales are expected to remain heavily influenced by the seasonality of our toy and costume products. The result of these seasonal patterns is that operating results and the demand for working capital may vary significantly by quarter. Orders placed with us are generally cancellable until the date of shipment. The combination of seasonal demand and the potential for order cancellation makes accurate forecasting of future sales difficult and causes us to believe that backlog may not be an accurate indicator of our future sales. Similarly, financial results for a particular quarter may not be indicative of results for the entire year. Liquidity and Capital Resources As of June 30, 2026, we had working capital (inclusive of cash, cash equivalents and restricted cash) of $116.0 million, compared to $121.0 million as of December 31, 2025, representing a decrease in working capital of $5.0 million during the six-month period ended June 30, 2026. The decrease in working capital is mainly attributable to cash used for investing and financing activities, offset with $11.1 million refunded by the federal government related to import tariffs levied under the International Emergency Economic Powers Act (IEEPA) and related interest. Operating activities provided net cash of $26.1 million during the six months ended June 30, 2026, as compared to net cash used of $15.9 million in the prior year period. The increase in net cash provided by operating activities year-over-year is primarily due to refunds received related to IEEPA tariffs and income taxes, and lower overall inventory costs year-over-year. Other than open purchase orders issued in the normal course of business related to shipped product, we have no obligations to purchase inventory from our manufacturers. However, we may incur costs or other losses as a result of not placing orders consistent with our forecasts for product manufactured by our suppliers or manufacturers for a variety of reasons including customer order cancellations or a decline in demand. As part of our strategy to develop and market new products, we have entered into various character and product licenses with royalties/obligations generally ranging from 1% to 22% payable on net sales of such products. As of June 30, 2026, these agreements required future aggregate minimum royalty guarantees of $185.0 million exclusive of $3.8 million in advances already paid. Of this $185.0 million future minimum royalty guarantee, $60.7 million is due over the next twelve months. Investing activities used net cash of $10.5 million and $6.0 million for the six months ended June 30, 2026 and 2025, respectively, and consisted primarily of cash paid for the purchase of molds and tooling used in the manufacture of our products and purchases of investments to fund our obligation to our employees stemming from our non-qualified deferred compensation plan. Financing activities used net cash of $7.1 million and $9.4 million for the six months ended June 30, 2026 and 2025, respectively. The cash used in financing activities during the six months ended June 30, 2026, consists of $1.3 million used for the repurchase of our common stock for employee tax withholding and $5.7 million used to pay dividends. The cash used in financing activities during the six months ended June 30, 2025, consists of $3.8 million used for the repurchase of our common stock for employee tax withholding and $5.6 million used to pay dividends. In June 2025, we terminated our existing $67.5 million JPMorgan ABL revolving credit facility in connection with entering into a new senior secured facility with BMO Bank N.A. The prior facility had no outstanding borrowings at the time of termination. We recorded a non-cash charge of $0.3 million for the write-off of previously deferred financing costs associated with the JPMorgan facility. On June 24, 2025, we entered into a new $70.0 million senior secured revolving credit facility with a maturity date of June 24, 2030. This facility replaces our prior facility and is expected to provide improved pricing and enhanced liquidity flexibility. Interest is payable at either SOFR plus a leverage-based margin or a Base Rate alternative and includes a commitment fee on unused amounts. The facility includes financial covenants requiring a minimum interest coverage ratio of 3.00 to 1.00 and a maximum total net leverage ratio of 2.00 to 1.00. As of June 30, 2026, we were in compliance with all financial covenants. Availability under the revolving facility as of June 30, 2026, was $68.7 million. The facility provides the Company with flexibility to fund working capital, capital expenditures, acquisitions, and general corporate purposes. See Note 5 – Credit Facilities for additional information pertaining to our Credit Facilities. As of June 30, 2026 and December 31, 2025, we held cash and cash equivalents, including restricted cash, of $60.6 million and $54.1 million, respectively. Cash, and cash equivalents, including restricted cash held outside of the United States in various foreign subsidiaries totaled $9.4 million and $16.9 million as of June 30, 2026 and December 31, 2025, respectively. The cash and cash equivalents, including restricted cash balances in our foreign subsidiaries have either been fully taxed in the U.S. or tax has been accounted for in connection with the Tax Cuts and Jobs Act, or may be eligible for a full foreign dividends received deduction under such Act, and thus would not be subject to additional U.S. tax should such amounts be repatriated in the form of dividends or deemed distributions. As such, foreign withholding taxes on future repatriations are not expected to be significant. 22 Table of Contents Our primary sources of working capital are cash flows from operations and borrowings under our Revolving Facility (see Note 5 – Credit Facilities). Typically, cash flows from operations are impacted by the effect on sales of (1) the appeal of our products, (2) the success of our licensed brands in motivating consumer purchase of related merchandise, (3) the highly competitive conditions existing in the toy industry and in securing commercially attractive licenses, (4) dependency on a limited set of large customers, and (5) general economic conditions. A downturn in any single factor or a combination of factors could have a material adverse impact upon our ability to generate sufficient cash flows to operate the business. In addition, our business and liquidity are dependent to a significant degree on our vendors and their financial health, as well as the ability to accurately forecast the demand for products. The loss of a key vendor, or material changes in support by them, or a significant variance in actual demand compared to the forecast, can have a material adverse impact on our cash flows and