Jakks Pacific (JAKK) risk factors, FY2024 10-K

Other

1. 01Our inability to redesign, restyle and extend our existing core products and product lines as consumer preferences evolve, and to develop, introduce and gain customer acceptance of new products and product lines, may materially and adversely impact our business, financial condition and results of operations
2. 02There are risks associated with our license agreements
3. 03We derive a significant portion of our net sales from a limited number of licensors. If one or more of these licensors were to terminate or fail to renew our licenses or not grant us new licenses, our business, results of operations and financial condition could be adversely affected
4. 04The failure of our character-related and theme-related products to become and/or remain popular with children may materially and adversely impact our business, results of operations and financial condition
5. 05Our failure to achieve any or all the foregoing benchmarks may cause the infrastructure of our operations to fail, thereby adversely affecting our business, results of operations and financial condition
6. 06In June 2021, we entered into and consummated a binding definitive agreement with JPMorgan Chase (for an asset-based credit line) with the objective of increasing our overall liquidity
7. 07We have entered into an At the Market Issuance Sales Agreement, pursuant to which we may offer and sell, from time to time, shares of our common stock, which may adversely affect the price of our Common Stock
8. 08We have an effective shelf registration statement pursuant to which we may offer and sell, from time to time, securities, which may adversely affect the price of our Common Stock
9. 09We depend upon our Chief Executive Officer and any loss or interruption of his services could adversely affect our business, results of operations and financial condition
10. 10Market conditions and other third-party conduct could negatively impact our margins and the implementation of other business initiatives
11. 11We face risks related to health epidemics and other widespread outbreaks of contagious disease, which could significantly disrupt our supply chain and impact our operating results
12. 12Our business is seasonal and therefore our annual operating results will depend, in large part, on our sales during the relatively brief holiday shopping season. This seasonality is exacerbated by retailers’ shifting inventory management techniques
13. 13The toy industry is highly competitive and our inability to compete effectively may materially and adversely impact our business, results of operations and financial condition
14. 14Our corporate headquarters, fulfillment center and information technology systems are in Southern California, and if these operations are disrupted, we may not be able to operate our core functions and/or ship merchandise to our customers, which would adversely affect our business
15. 15We have substantial sales and manufacturing operations outside of the United States, subjecting us to risks common to international operations
16. 16Legal proceedings may harm our business, results of operations, and financial condition
17. 17We depend upon our proprietary rights, and our inability to safeguard and maintain the same, or claims of third parties that we have violated their intellectual property rights, could have a material adverse effect on our business, results of operations and financial condition
18. 18Restructuring our workforce can be disruptive and harm the results of our operations and financial condition
19. 19The inability to successfully defend claims from taxing authorities or the adoption of new tax legislation could adversely affect the results of our operations and financial condition
20. 20We may not be able to sustain or manage our product line growth, which may prevent us from increasing our net revenues
21. 21Failures of our computer-based information technology and cybersecurity breaches could damage our business
22. 22We rely extensively on information technology in our operations, and any material failure, inadequacy, or interruption of that technology could have a material adverse impact on our business
23. 23If we are unable to acquire and integrate companies and new product lines successfully, we will be unable to implement a significant component of our growth strategy
24. 24We may engage in strategic transactions that could negatively impact our liquidity, increase our expenses and present significant distractions to our management
25. 25If securities or industry analysts publish inaccurate or unfavorable research about our business, the price and trading volume of our common stock could decline
26. 26We have a small public float compared to other larger publicly-traded companies, which may result in price swings in our common stock or make it difficult to acquire or dispose of our common stock
27. 27Our stock price has been volatile over the past several years and could decline in the future, resulting in losses for our investors
28. 28We have a valuation allowance on a portion of the deferred taxes on our books since their future realization is uncertain
29. 29We have a material amount of goodwill which, if it becomes impaired, would result in a reduction in our net earnings