Funko, Inc.

Previous wording

We sell our products in numerous countries across North America, Europe, Latin America, Asia and Africa, with approximately 41% of our net sales in the six months ended June 30, 2026 generated outside of the United States. We also source, procure and assemble inventory, primarily out of Vietnam, China and Cambodia. As such, we are exposed to and impacted by global macroeconomic factors. Current macroeconomic factors remain very dynamic, such as greater political uncertainty, unrest or instability in the United States, Central and Eastern Europe (including the ongoing Russia-Ukraine War), the Middle East, and certain Southeast Asia regions as well as financial instability, new or increasing tariffs and general uncertainty over U.S. trade and tariff policies, rising interest rates and heightened inflation that could reduce our net sales or have impacts to our gross margin (as defined below), net income and cash flows.

Current wording

We sell our products in numerous countries across North America, Europe, Latin America, Asia and Africa, with approximately 41% of our net sales in the nine months ended September 30, 2026 generated outside of the United States. We also source, procure and assemble inventory, primarily out of Vietnam, China and Cambodia. As such, we are exposed to and impacted by global macroeconomic factors. Current macroeconomic factors remain very dynamic, such as greater political uncertainty, unrest or instability in the United States, Central and Eastern Europe (including the ongoing Russia-Ukraine War), the Middle East, and certain Southeast Asia regions as well as financial instability, new or increasing tariffs and general uncertainty over U.S. trade and tariff policies, rising interest rates and heightened inflation that could reduce our net sales or have impacts to our gross margin (as defined below), net income and cash flows.

Previous wording

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. The Company’s total IEEPA tariffs paid as of the date of this report is approximately $20 million. In March 2026, the Court of International Trade (“CIT”) ordered U.S. Customs and Border Protection to refund certain tariffs collected under IEEPA. During the quarter ended June 30, 2026, we applied for the refund of invalidated tariffs we paid under IEEPA and executed a participatory sale of $22.1 million in tariff claims for $19.2 million. Half of the proceeds from the sale were used to pay down our Term Loan Facility.

Current wording

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. In March 2026, the Court of International Trade (“CIT”) ordered U.S. Customs and Border Protection to refund certain tariffs collected under IEEPA. During the quarter ended June 30, 2026, we applied for the refund of invalidated tariffs we paid under IEEPA and executed a participatory sale of $22.1 million in tariff claims for $19.2 million. Half of the proceeds from the sale were used to pay down our Term Loan Facility. As of September 30, 2026, we had received $17.4 million associated with these tariff claims from U.S. Customs and Border Protection and remitted the related proceeds in accordance with the terms of the participatory sale.

Previous wording

The federal government may attempt to impose new or similar tariffs under alternative statutory mechanisms. There remains substantial uncertainty regarding the duration of existing and newly announced tariffs, potential changes or pauses to such tariffs, tariff levels, and whether further additional tariffs or other retaliatory actions may be imposed, modified, or suspended, and the impacts of such actions on our business. This has led and may lead to further continued uncertainty and volatility in U.S. and global financial and economic conditions and commodity markets, declining consumer confidence, significant inflation and diminished expectations for the economy, and ultimately reduced demand for our products. We will continue to monitor changes to the import and export policies of the U.S. and other countries that could impact our financial position, results of operations and cash flows.

Current wording

The federal government may continue to attempt to impose new or similar tariffs under alternative statutory mechanisms. There remains substantial uncertainty regarding the duration of existing and newly announced tariffs, potential changes or pauses to such tariffs, tariff levels, and whether further additional tariffs or other retaliatory actions may be imposed, modified, or suspended, and the impacts of such actions on our business. This has led and may lead to further continued uncertainty and volatility in U.S. and global financial and economic conditions and commodity markets, declining consumer confidence, significant inflation and diminished expectations for the economy, and ultimately reduced demand for our products. We will continue to monitor changes to the import and export policies of the U.S. and other countries that could impact our financial position, results of operations and cash flows.

Previous wording

In addition, we have been and continue to be operating in a challenging retail environment where retailers have slowed their restocking, prioritized lower inventory levels and, in some cases, have negotiated additional discounting for sell-through or canceled their orders. Moreover, tariffs on imports have adversely impacted and may in the future adversely impact our costs, and we have raised prices for certain of our products. This has had an impact across our brands and geographies of reducing our net sales, gross margin and net income. Additionally, tariffs could impact consumer discretionary spending in future periods. We have strategically adjusted our inventory buy-in to focus on non-exclusive core products in order to help mitigate this impact.

Current wording

In addition, we have been and continue to be operating in a challenging retail environment where retailers have slowed their restocking, prioritized lower inventory levels and, in some cases, have negotiated additional discounting for sell-through or canceled their orders. Moreover, tariffs on imports have adversely impacted our costs in recent periods and may in the future adversely impact our costs, and we have raised prices for certain of our products. Additionally, tariffs could impact consumer discretionary spending in future periods. We have strategically adjusted our inventory buy-in to focus on non-exclusive core products in order to help mitigate this impact.

Previous wording

(1)Earnings before interest, taxes, depreciation and amortization (“EBITDA”) and Adjusted EBITDA are financial measures not calculated in accordance with U.S. generally accepted accounting principles (“U.S. GAAP”), or non-GAAP financial measures. For a reconciliation of EBITDA and Adjusted EBITDA to net loss, the most closely comparable U.S. GAAP financial measure, see “Non-GAAP Financial Measures” below.

Current wording

(1)Earnings before interest, taxes, depreciation and amortization (“EBITDA”) and Adjusted EBITDA are financial measures not calculated in accordance with U.S. generally accepted accounting principles (“U.S. GAAP”), or non-GAAP financial measures. For a reconciliation of EBITDA and Adjusted EBITDA to net income (loss), the most closely comparable U.S. GAAP financial measure, see “Non-GAAP Financial Measures” below.

Previous wording

The following table sets forth information comparing the components of net income (loss) for the three months ended June 30, 2026 and 2025:

Current wording

The following table sets forth information comparing the components of net income for the three months ended September 30, 2026 and 2025:

Previous wording

Net sales were $207.7 million for the three months ended June 30, 2026, an increase of 7.4%, compared to $193.5 million for the three months ended June 30, 2025. The increase in net sales was due primarily to increased sales of core Pop! products and the impact of price increases that went into effect during the third-quarter of 2025.

Current wording

Net sales were $258.3 million for the three months ended September 30, 2026, an increase of 3.0%, compared to $250.9 million for the three months ended September 30, 2025. The increase in net sales was due primarily to increased sales of core Pop! products, with especially strong demand in our international markets, partially offset by a decline in sales of Loungefly products.

Previous wording

On a geographical basis, net sales in the United States increased 3.4% to $121.8 million in the three months ended June 30, 2026 as compared to $117.9 million in the three months ended June 30, 2025. Net sales in Europe increased 19.4% to $69.0 million in the three months ended June 30, 2026 as compared to $57.8 million in the three months ended June 30, 2025. Net sales in other international locations decreased 5.1% to $16.9 million in the three months ended June 30, 2026 as compared to $17.8 million in the three months ended June 30, 2025.

Current wording

On a geographical basis, net sales in the United States decreased 2.4% to $151.7 million in the three months ended September 30, 2026 as compared to $155.4 million in the three months ended September 30, 2025. Net sales in Europe increased 11.5% to $82.7 million in the three months ended September 30, 2026 as compared to $74.2 million in the three months ended September 30, 2025. Net sales in other international markets increased 12.1% to $23.9 million in the three months ended September 30, 2026 as compared to $21.3 million in the three months ended September 30, 2025.

Previous wording

On a branded category basis, net sales of the Core Collectible branded category increased 9.0% to $171.6 million in the three months ended June 30, 2026 as compared to $157.5 million in the three months ended June 30, 2025. Loungefly branded category net sales decreased 1.7% to $31.3 million in the three months ended June 30, 2026 as compared to $31.8 million in the three months ended June 30, 2025. Other branded category net sales increased 15.2% to $4.8 million in the three months ended June 30, 2026 as compared to $4.1 million in the three months ended June 30, 2025.

Current wording

On a branded category basis, net sales of the Core Collectible branded category increased 4.8% to $210.1 million in the three months ended September 30, 2026 as compared to $200.4 million in the three months ended September 30, 2025. Loungefly branded category net sales decreased 9.8% to $40.3 million in the three months ended September 30, 2026 as compared to $44.7 million in the three months ended September 30, 2025. Other branded category net sales increased 37.0% to $8.0 million in the three months ended September 30, 2026 as compared to $5.8 million in the three months ended September 30, 2025.

Previous wording

Cost of sales (exclusive of depreciation and amortization) was $202.2 million for the six months ended June 30, 2026, a decrease of 17.6%, compared to $245.3 million for the six months ended June 30, 2025. Cost of sales (exclusive of depreciation and amortization) decreased primarily as a result of product mix, as discussed above. In addition, cost of sales for the six months ended June 30, 2026 benefited from one-time items, including the recognition of a receivable for previously paid tariffs and the release of related tariff accruals.

Current wording

Cost of sales (exclusive of depreciation and amortization) was $141.5 million for the three months ended September 30, 2026, a decrease of 5.8%, compared to $150.2 million for the three months ended September 30, 2025. Cost of sales (exclusive of depreciation and amortization) decreased primarily as a result of product mix, as discussed above. In addition, during the three months ended September 30, 2026, we recognized favorable impacts from adjustments to the royalty audit reserve accrual, lower minimum guaranteed royalties, and lower duty and tariff costs compared to the three months ended September 30, 2025.

Previous wording

Gross margin (exclusive of depreciation and amortization), calculated as net sales less cost of sales as a percentage of net sales, was 56.6% for the three months ended June 30, 2026, compared to 32.1% for the three months ended June 30, 2025. The increase in gross margin (exclusive of depreciation and amortization) for the three months ended June 30, 2026 compared to the three months ended June 30, 2025 was driven primarily by savings in product costs as a result of the product mix sold, price increases, and lower royalty impairment expense. In addition, gross margin for the three months ended June 30, 2026 benefited from one-time items, including the recognition of a receivable for previously paid tariffs and the release of related tariff accruals.

Current wording

Gross margin (exclusive of depreciation and amortization), calculated as net sales less cost of sales as a percentage of net sales, was 45.2% for the three months ended September 30, 2026, compared to 40.2% for the three months ended September 30, 2025. Gross margin (exclusive of depreciation and amortization) increased for the three months ended September 30, 2026 compared to the three months ended September 30, 2025, due to the factors noted above.

Previous wording

Selling, general, and administrative expenses were $163.4 million for the six months ended June 30, 2026, a decrease of 2.2%, compared to $167.1 million for the six months ended June 30, 2025. The decrease was driven primarily by a $6.1 million decrease in personnel and related costs (including salary and related taxes/benefits, commissions and equity-based compensation), partially offset by an increase of $1.0 million in professional fees, primarily related to the third-party debt fees associated with the Fifth Amendment to our Credit Agreement. Selling, general and administrative expenses were 40.0% and 43.5% of net sales for each of the six months ended June 30, 2026 and 2025, respectively.

Current wording

Selling, general, and administrative expenses were $86.9 million for the three months ended September 30, 2026, an increase of 8.9%, compared to $79.8 million for the three months ended September 30, 2025. The increase was driven primarily by a $3.1 million increase in advertising and marketing fees and an increase in personnel and related costs (including salary and related taxes/benefits, commissions and equity-based compensation) of $2.4 million. Selling, general and administrative expenses were 33.6% and 31.8% of net sales for each of the three months ended September 30, 2026 and 2025, respectively.

Previous wording

Depreciation and amortization expense was $15.8 million for the three months ended June 30, 2026, an increase of 8.5%, compared to $14.5 million for the three months ended June 30, 2025, primarily related to the type and timing of assets placed in service.

Current wording

Depreciation and amortization expense was $15.0 million for the three months ended September 30, 2026, an increase of 3.4%, compared to $14.5 million for the three months ended September 30, 2025, primarily related to the type and timing of assets placed in service.

Previous wording

Interest expense, net was $5.2 million for the three months ended June 30, 2026, an increase of 14.9%, compared to $4.5 million for the three months ended June 30, 2025. The increase in interest expense, net was due primarily to higher interest rates under our Credit Agreement and higher average balance of debt outstanding during the three months ended June 30, 2026.

Current wording

Interest expense, net was $4.8 million for the three months ended September 30, 2026, a decrease of 14.1%, compared to $5.6 million for the three months ended September 30, 2025. The decrease in interest expense, net was primarily due to a lower average balance of debt outstanding during the three months ended September 30, 2026.

Previous wording

Other expense, net was $0.5 million and $0.9 million for the three months ended June 30, 2026 and 2025, respectively. Other expense, net for the three months ended June 30, 2026 and 2025 was primarily related to foreign currency gains and losses relating to transactions denominated in currencies other than the U.S. dollar.

Current wording

Other expense, net was $1.3 million and other income, net $1.4 million for the three months ended September 30, 2026 and 2025, respectively. Other expense (income), net for the three months ended September 30, 2026 and 2025 was primarily related to foreign currency gains and losses relating to transactions denominated in currencies other than the U.S. dollar.

Previous wording

Income tax expense was $1.0 million and $0.8 million for the three months ended June 30, 2026 and 2025, respectively. The Company’s tax expense primarily reflects foreign income taxes in jurisdictions where the Company generates taxable income under its transfer pricing arrangements. The U.S. operations continue to be in a full valuation allowance position, resulting in no material U.S. federal or state income tax expense.

Current wording

Income tax expense was $1.3 million and $1.2 million for the three months ended September 30, 2026 and 2025, respectively. The Company’s tax expense primarily reflects foreign income taxes in jurisdictions where the Company generates taxable income under its transfer pricing arrangements. The U.S. operations continue to be in a full valuation allowance position, resulting in no material U.S. federal or state income tax expense.

Previous wording

The following table sets forth information comparing the components of net loss for the six months ended June 30, 2026 and 2025:

Current wording

The following table sets forth information comparing the components of net income (loss) for the nine months ended September 30, 2026 and 2025:

Previous wording

Net sales were $408.6 million for the six months ended June 30, 2026, an increase of 6.4%, compared to $384.2 million for the six months ended June 30, 2025. The increase in net sales was due primarily to increased sales of core Pop! products and the impact of price increases that went into effect during the third-quarter of 2025, partially offset by a decline in sales of Loungefly products.

Current wording

Net sales were $667.0 million for the nine months ended September 30, 2026, an increase of 5.0%, compared to $635.1 million for the nine months ended September 30, 2025. The increase in net sales was due primarily to increased sales of core Pop! products and the impact of price increases that went into effect during the third-quarter of 2025, partially offset by a decline in sales of Loungefly products.

Previous wording

On a geographical basis, net sales in the United States increased 2.1% to $239.2 million in the six months ended June 30, 2026 as compared to $234.2 million in the six months ended June 30, 2025. Net sales in Europe increased 16.2% to $137.0 million in the six months ended June 30, 2026 as compared to $117.9 million in the six months ended June 30, 2025. Net sales in other international locations increased 1.0% to $32.4 million in the six months ended June 30, 2026 as compared to $32.1 million in the six months ended June 30, 2025.

Current wording

On a geographical basis, net sales in the United States increased 0.3% to $390.9 million in the nine months ended September 30, 2026 as compared to $389.6 million in the nine months ended September 30, 2025. Net sales in Europe increased 14.4% to $219.8 million in the nine months ended September 30, 2026 as compared to $192.1 million in the nine months ended September 30, 2025. Net sales in other international markets increased 5.4% to $56.3 million in the nine months ended September 30, 2026 as compared to $53.4 million in the nine months ended September 30, 2025.

Previous wording

On a branded category basis, net sales of the Core Collectible branded category increased 12.7% to $340.4 million in the six months ended June 30, 2026 as compared to $302.0 million in the six months ended June 30, 2025. Loungefly branded category net sales decreased 13.0% to $58.5 million in the six months ended June 30, 2026 as compared to $67.2 million in the six months ended June 30, 2025. Other branded category net sales decreased 35.5% to $9.7 million in the six months ended June 30, 2026 as compared to $15.0 million in the six months ended June 30, 2025.

Current wording

On a branded category basis, net sales of the Core Collectible branded category increased 9.6% to $550.5 million in the nine months ended September 30, 2026 as compared to $502.4 million in the nine months ended September 30, 2025. Loungefly branded category net sales decreased 11.7% to $98.8 million in the nine months ended September 30, 2026 as compared to $111.9 million in the nine months ended September 30, 2025. Other branded category net sales decreased 15.3% to $17.7 million in the nine months ended September 30, 2026 as compared to $20.8 million in the nine months ended September 30, 2025.

Previous wording

Cost of sales (exclusive of depreciation and amortization) was $90.1 million for the three months ended June 30, 2026, a decrease of 31.5%, compared to $131.4 million for the three months ended June 30, 2025. Cost of sales (exclusive of depreciation and amortization) decreased primarily as a result of product mix, as discussed above. In addition, cost of sales for the three months ended June 30, 2026 benefited from one-time items, including the recognition of a receivable for previously paid tariffs and the release of related tariff accruals.

Current wording

Cost of sales (exclusive of depreciation and amortization) was $343.7 million for the nine months ended September 30, 2026, a decrease of 13.1%, compared to $395.5 million for the nine months ended September 30, 2025. Cost of sales (exclusive of depreciation and amortization) decreased primarily as a result of product mix, as discussed above. In addition, during the nine months ended September 30, 2026, we recognized favorable impacts from adjustments to the royalty audit reserve accrual, lower minimum guaranteed royalties, and lower duty and tariff costs compared to the nine months ended September 30, 2025. Cost of sales for the nine months ended September 30, 2026 also benefited from one-time items, including the recognition of a receivable for previously paid tariffs and the release of related tariff accruals.

Previous wording

Selling, general, and administrative expenses were $79.7 million for the three months ended June 30, 2026, a decrease of 3.1%, compared to $82.3 million for the three months ended June 30, 2025. The decrease was driven primarily by a $4.0 million decrease in personnel and related costs (including salary and related taxes/benefits, commissions and equity-based compensation), partially offset by an increase in advertising and marketing fees of $1.8 million. Selling, general and administrative expenses were 38.4% and 42.5% of net sales for each of the three months ended June 30, 2026 and 2025, respectively.

Current wording

Selling, general, and administrative expenses were $250.3 million for the nine months ended September 30, 2026, an increase of 1.4%, compared to $246.9 million for the nine months ended September 30, 2025. The increase was driven primarily by a $5.5 million increase in advertising and marketing fees, partially offset by a decrease in personnel and related costs (including salary and related taxes/benefits, commissions and equity-based compensation) of $3.8 million. Selling, general and administrative expenses were 37.5% and 38.9% of net sales for each of the nine months ended September 30, 2026 and 2025, respectively.

Previous wording

Depreciation and amortization expense was $30.5 million for the six months ended June 30, 2026, an increase of 2.5%, compared to $29.8 million for the six months ended June 30, 2025, primarily related to the type and timing of assets placed in service.

Current wording

Depreciation and amortization expense was $45.6 million for the nine months ended September 30, 2026, an increase of 2.8%, compared to $44.3 million for the nine months ended September 30, 2025, primarily related to the type and timing of assets placed in service.

Previous wording

Interest expense, net was $10.1 million for the six months ended June 30, 2026, an increase of 20.4%, compared to $8.4 million for the six months ended June 30, 2025. The increase in interest expense, net was due primarily to higher interest rates under our Credit Agreement and a higher average balance of debt outstanding during the six months ended June 30, 2026.

Current wording

Interest expense, net was $14.9 million for the nine months ended September 30, 2026, an increase of 6.6%, compared to $14.0 million for the nine months ended September 30, 2025. The increase in interest expense, net was due primarily to higher interest rates under our Credit Agreement and a higher average balance of debt outstanding during the nine months ended September 30, 2026.

Previous wording

Other expense, net was $0.9 million and $1.1 million for the six months ended June 30, 2026 and 2025, respectively. Other expense, net for the six months ended June 30, 2026 and 2025 was primarily related to foreign currency gains and losses relating to transactions denominated in currencies other than the U.S. dollar.

Current wording

Other expense, net was $2.3 million for the nine months ended September 30, 2026, and other income, net was $0.3 million for the nine months ended September 30, 2025. Other expense (income), net for the nine months ended September 30, 2026 and 2025 was primarily related to foreign currency gains and losses relating to transactions denominated in currencies other than the U.S. dollar.

Previous wording

Income tax expense was $4.2 million and $1.7 million for the six months ended June 30, 2026 and 2025, respectively. The Company’s tax expense primarily reflects foreign income taxes in jurisdictions where the Company generates taxable income under its transfer pricing arrangements. The U.S. operations continue to be in a full valuation allowance position, resulting in no material U.S. federal or state income tax expense.

Current wording

Income tax expense was $5.5 million and $2.9 million for the nine months ended September 30, 2026 and 2025, respectively. The Company’s tax expense primarily reflects foreign income taxes in jurisdictions where the Company generates taxable income under its transfer pricing arrangements. The U.S. operations continue to be in a full valuation allowance position, resulting in no material U.S. federal or state income tax expense.

Previous wording

Net income was $15.4 million for the three months ended June 30, 2026, compared to net loss of $41.0 million for the three months ended 2025. The increase in net income was primarily due to the increase in net sales, in addition to the decrease in operating expenses as compared to the three months ended June 30, 2025. In addition, net income for the three months ended June 30, 2026 benefited from one-time items, including the recognition of a receivable for previously paid tariffs and the release of related tariff accruals.

Current wording

Net income was $4.8 million for the nine months ended September 30, 2026, compared to a net loss of $68.1 million for the nine months ended September 30, 2025. The increase in net income was primarily due to the increase in net sales, in addition to the decrease in operating expenses as compared to the nine months ended September 30, 2025. In addition, net income for the nine months ended September 30, 2026 benefited from one-time items, including the recognition of a receivable for previously paid tariffs and the release of related tariff accruals.

Previous wording

EBITDA, Adjusted EBITDA, Adjusted Net Income (Loss) and Adjusted Earnings (Loss) per Diluted Share (collectively the “Non-GAAP Financial Measures”) are supplemental measures of our performance that are not required by, or presented in accordance with, U.S. GAAP. The Non-GAAP Financial Measures are not measurements of our financial performance under U.S. GAAP and should not be considered as an alternative to net income (loss), income (loss) per share or any other performance measure derived in accordance with U.S. GAAP. We define EBITDA as net income (loss) before interest expense, net, income tax expense, depreciation and amortization. We define Adjusted EBITDA as EBITDA further adjusted for non-cash charges related to equity-based compensation programs, acquisition transaction costs and other expenses, certain severance, relocation and related costs, foreign currency transaction gains and losses and other unusual or one-time items. We define Adjusted Net Income (Loss) as net income (loss) attributable to Funko, Inc. adjusted for the reallocation of income (loss) attributable to non-controlling interests from the assumed exchange of all outstanding common units and options in FAH, LLC for newly issued-shares of Class A common stock of Funko, Inc. and further adjusted for the impact of certain non-cash charges and other items that we do not consider in our evaluation of ongoing operating performance. These items include, among other things, non-cash charges related to equity-based compensation programs, acquisition transaction costs and other expenses, certain severance, relocation and related costs, foreign currency transaction gains and losses and the income tax expense (benefit) effect of these adjustments. We define Adjusted Earnings (Loss) per Diluted Share as Adjusted Net Income (Loss) divided by the weighted-average shares of Class A common stock outstanding, assuming (1) the full exchange of all outstanding common units and options in FAH, LLC for newly issued-shares of Class A common stock of Funko, Inc. and (2) the dilutive effect of stock options and unvested common units, if any. We caution investors that amounts presented in accordance with our definitions of the Non-GAAP Financial Measures may not be comparable to similar measures disclosed by our competitors, because not all companies and analysts calculate the Non-GAAP Financial Measures in the same manner. We present the Non-GAAP Financial Measures because we consider them to be important supplemental measures of our performance and believe they are frequently used by securities analysts, investors, and other interested parties in the evaluation of companies in our industry. Management believes that investors’ understanding of our performance is enhanced by including these Non-GAAP Financial Measures as a reasonable basis for comparing our ongoing results of operations.

Current wording

EBITDA, Adjusted EBITDA, Adjusted Net Income (Loss) and Adjusted Earnings (Loss) per Diluted Share (collectively the “Non-GAAP Financial Measures”) are supplemental measures of our performance that are not required by, or presented in accordance with, U.S. GAAP. The Non-GAAP Financial Measures are not measurements of our financial performance under U.S. GAAP and should not be considered as an alternative to net income (loss), income (loss) per share or any other performance measure derived in accordance with U.S. GAAP. We define EBITDA as net income (loss) before interest expense, net, income tax expense, depreciation and amortization. We define Adjusted EBITDA as EBITDA further adjusted for non-cash charges related to equity-based compensation programs, acquisition transaction costs and other expenses, certain severance, relocation and related costs, foreign currency transaction gains and losses, third-party debt amendment fees, tax receivable agreement liability adjustments and other unusual or one-time items. We define Adjusted Net Income (Loss) as net income (loss) attributable to Funko, Inc. adjusted for the reallocation of income (loss) attributable to non-controlling interests from the assumed exchange of all outstanding common units and options in FAH, LLC for newly issued-shares of Class A common stock of Funko, Inc. and further adjusted for the impact of certain non-cash charges and other items that we do not consider in our evaluation of ongoing operating performance. These items include, among other things, non-cash charges related to equity-based compensation programs, acquisition transaction costs and other expenses, certain severance, relocation and related costs, foreign currency transaction gains and losses and the income tax expense (benefit) effect of these adjustments. We define Adjusted Earnings (Loss) per Diluted Share as Adjusted Net Income (Loss) divided by the weighted-average shares of Class A common stock outstanding, assuming (1) the full exchange of all outstanding common units and options in FAH, LLC for newly issued-shares of Class A common stock of Funko, Inc. and (2) the dilutive effect of stock options and unvested common units, if any. We caution investors that amounts presented in accordance with our definitions of the Non-GAAP Financial Measures may not be comparable to similar measures disclosed by our competitors, because not all companies and analysts calculate the Non-GAAP Financial Measures in the same manner. We present the Non-GAAP Financial Measures because we consider them to be important supplemental measures of our performance and believe they are frequently used by securities analysts, investors, and other interested parties in the evaluation of companies in our industry. Management believes that investors’ understanding of our performance is enhanced by including these Non-GAAP Financial Measures as a reasonable basis for comparing our ongoing results of operations.

Previous wording

(3)Represents both unrealized and realized foreign currency losses on transactions denominated other than in U.S. dollars, including derivative gains and losses on foreign currency forward exchange contracts.

Current wording

(4)Represents both unrealized and realized foreign currency losses on transactions denominated other than in U.S. dollars, including derivative gains and losses on foreign currency forward exchange contracts.

Previous wording

(4)Represents recognized adjustments to the tax receivable agreement liability.

Current wording

(5)Represents recognized adjustments to the tax receivable agreement liability.

Previous wording

(5)Represents nonrecurring third-party debt fees paid as part of the Fifth Amendment to the Credit Agreement.

Current wording

(6)Represents nonrecurring third-party debt fees paid as part of the Fifth Amendment to the Credit Agreement.

Previous wording

(6)Represents the income tax expense effect of the above adjustments including adding back the valuation allowance to the net loss. This adjustment uses an effective tax rate of 25% for all periods presented.

Current wording

(7)Represents the income tax expense effect of the above adjustments including adding back the valuation allowance to the net income (loss). This adjustment uses an effective tax rate of 25% for all periods presented.

Previous wording

The following table shows summary cash flow information for the six months ended June 30, 2026 and 2025 (in thousands):

Current wording

The following table shows summary cash flow information for the nine months ended September 30, 2026 and 2025 (in thousands):

Previous wording

Operating Activities. Net cash provided by operating activities was $23.6 million for the six months ended June 30, 2026, compared to net cash used in operating activities of $44.4 million for the six months ended June 30, 2025. Changes in net cash provided by or used in operating activities resulted primarily from cash received from net sales and cash payments for product costs and royalty expenses paid to our licensors. Other drivers of the changes in net cash provided by operating activities include shipping and freight costs, selling, general and administrative expenses (including personnel expenses and commissions and rent and facilities costs) and interest payments made for our short-term borrowings and long-term debt. Our accounts receivable typically are short term and settle in approximately 30 to 90 days (average 50 days).

Current wording

Operating Activities. Net cash provided by operating activities was $54.2 million for the nine months ended September 30, 2026, compared to net cash used in operating activities of $33.2 million for the nine months ended September 30, 2025. Changes in net cash provided by or used in operating activities resulted primarily from cash received from net sales and cash payments for product costs and royalty expenses paid to our licensors. Other drivers of the changes in net cash provided by operating activities include shipping and freight costs, selling, general and administrative expenses (including personnel expenses and commissions and rent and facilities costs) and interest payments made for our short-term borrowings and long-term debt. Our accounts receivable typically are short term and settle in approximately 30 to 90 days (average 50 days).

Previous wording

The increase in net cash provided by operating activities for the six months ended June 30, 2026 compared to the six months ended June 30, 2025 was primarily due to a decrease in net loss of $66.4 million and changes in working capital that increased net cash provided by operating activities by $2.3 million. Within working capital, the primary drivers were increases in accrued expenses and other liabilities of $6.3 million and accrued royalties of $9.9 million, partially offset by decreases in prepaid expenses and other assets of $3.0 million and accounts payable of $9.2 million.

Current wording

The increase in net cash provided by operating activities for the nine months ended September 30, 2026 compared to the nine months ended September 30, 2025 was primarily due to a decrease in net loss, providing $72.9 million, and an increase in working capital of $9.5 million. The working capital increase was primarily due to an increase in accounts payable of $20.6 million due to higher inventory purchases and the timing of vendor payments, as well as an increase in prepaid expenses and other current assets of $7.1 million. The increase was partially offset by decreases in accounts receivable, net of $9.5 million, inventory of $4.3 million, and accrued expenses and other current liabilities of $3.9 million.

Previous wording

Investing Activities. Our net cash used in investing activities primarily consists of purchases of property and equipment. For the six months ended June 30, 2026 and 2025 net cash used in investing activities was $19.0 million and $15.2 million and was primarily related to purchases of tooling and molds used for production of our product lines.

Current wording

Investing Activities. Our net cash used in investing activities primarily consists of purchases of property and equipment. For the nine months ended September 30, 2026 and 2025 net cash used in investing activities was $24.8 million and $23.0 million and was primarily related to purchases of tooling and molds used for production of our product lines.

Previous wording

For the six months ended June 30, 2026, net cash used in financing activities was $5.8 million, primarily related to payments on the Term Loan Facility, Revolving Credit Facility and Equipment Finance Loan of $21.3 million and payment for debt amendment costs of $3.6 million, partially offset by $19.2 million in proceeds from the one-time sale of a tariff receivable. For the six months ended June 30, 2025, net cash provided by financing activities was $73.7 million, primarily related to borrowings on the Revolving Line of Credit Facility of $85.0 million, partially offset by payments on the Term Loan Facility and Equipment Finance Loan of $11.5 million.

Current wording

For the nine months ended September 30, 2026, net cash used in financing activities was $29.2 million, primarily related to payments on the Term Loan Facility, Revolving Credit Facility and Equipment Finance Loan of $27.2 million, payments under the tariff receivable sales agreement of $17.4 million, and payment for debt amendment costs of $3.6 million, partially offset by $19.2 million in proceeds from the one-time sale of a tariff receivable. For the nine months ended September 30, 2025, net cash provided by financing activities was $57.8 million, primarily related to borrowings on the Revolving Line of Credit Facility of $85.0 million, partially offset by payments on the Term Loan Facility and Equipment Finance Loan of $17.3 million.

Previous wording

As of June 30, 2026, we had $73.7 million of indebtedness outstanding under our Term Loan Facility (net of unamortized discount of $3.3 million) and $124.6 million outstanding borrowings under our Revolving Credit Facility, leaving no remaining funds available under the Revolving Credit Facility.

Current wording

As of September 30, 2026, we had $70.2 million of indebtedness outstanding under our Term Loan Facility (net of unamortized discount of $2.6 million) and $124.3 million outstanding borrowings under our Revolving Credit Facility, leaving no remaining funds available under the Revolving Credit Facility.

Previous wording

On March 31, 2026, an amortization payment in an amount equal to $4,500,000 was paid with respect to the Term Loan Facility. At the end of each fiscal quarter thereafter, commencing with the fiscal quarter ending June 30, 2026, (i) the Term Loan Facility, will amortize in quarterly installments equal to $4,125,000, with any outstanding balance due and payable on the Maturity Date and (ii) the revolving credit facility will amortize in quarterly installments equal to $375,000 (accompanied by permanent commitment reductions), with any outstanding balance due and payable on the Maturity Date. On June 30, 2026, we paid the required quarterly installment of $4,500,000, allocated between the debt facilities in accordance with the Credit Agreement.

Current wording

On March 31, 2026, an amortization payment in an amount equal to $4,500,000 was paid with respect to the Term Loan Facility. At the end of each fiscal quarter thereafter, commencing with the fiscal quarter ending June 30, 2026, (i) the Term Loan Facility, amortizes in quarterly installments equal to $4,125,000, with any outstanding balance due and payable on the Maturity Date and (ii) the revolving credit facility amortizes in quarterly installments equal to $375,000 (accompanied by permanent commitment reductions), with any outstanding balance due and payable on the Maturity Date. On September 30, 2026, we paid the required quarterly installment of $4,500,000, allocated between the debt facilities in accordance with the Credit Agreement.

Previous wording

In addition, the Credit Agreement requires FAH, LLC and its subsidiaries to, subject to the proviso at the end of this paragraph, comply with the following Financial Covenants: (i) on a quarterly basis, commencing with the fiscal quarter ending December 31, 2026, a maximum Net Leverage Ratio of 2.50:1.00, (ii) on a quarterly basis, commencing with the fiscal quarter ending September 30, 2026, a minimum Fixed Charge Coverage Ratio of (a) 0.75:1.00 with respect to the fiscal quarter ending September 30, 2026, (b) 0.85:1.00 with respect to the fiscal quarter ending December 31, 2026, (c) 1.00:1.00 with respect to the fiscal quarter ending March 31, 2027, and (d) 1.25:1.00 with respect to the fiscal quarter ending June 30, 2027 and each fiscal quarter thereafter, (iii) at all times, a minimum Qualified Cash covenant of $10.0 million, and (iv) for the six-month period ending June 30, 2026, a minimum Consolidated EBITDA covenant of $15.1 million; provided that if, in any fiscal quarter, FAH, LLC voluntarily prepays, prior to the date on which a compliance certificate is required to be delivered in respect of such fiscal quarter, more than $10.0 million of principal of then-outstanding loans, then all of the applicable Financial Covenants (other than the minimum Qualified Cash covenant), to the extent required to be tested in such fiscal quarter, will be deemed waived for such fiscal quarter (the “Covenant Cure Right”); provided, further, that (x) the Covenant Cure Right is not permitted to be exercised in two (2) consecutive fiscal quarters, and (y) if the Covenant Cure Right is to be exercised in any fiscal quarter, FAH, LLC needs to have complied with the maximum Fixed Charge Coverage Ratio required in respect of the preceding fiscal quarter.

Current wording

In addition, the Credit Agreement requires FAH, LLC and its subsidiaries to, subject to the proviso at the end of this paragraph, comply with the following Financial Covenants: (i) on a quarterly basis, commencing with the fiscal quarter ending December 31, 2026, a maximum Net Leverage Ratio of 2.50:1.00, (ii) on a quarterly basis, commencing with the fiscal quarter ending September 30, 2026, a minimum Fixed Charge Coverage Ratio of (a) 0.75:1.00 with respect to the fiscal quarter ending September 30, 2026, (b) 0.85:1.00 with respect to the fiscal quarter ending December 31, 2026, (c) 1.00:1.00 with respect to the fiscal quarter ending March 31, 2027, and (d) 1.25:1.00 with respect to the fiscal quarter ending June 30, 2027 and each fiscal quarter thereafter, (iii) at all times, a minimum Qualified Cash covenant of $10.0 million, and (iv) for the six month period ending June 30, 2026, a minimum Consolidated EBITDA covenant of $15.1 million; provided that if, in any fiscal quarter, FAH, LLC voluntarily prepays, prior to the date on which a compliance certificate is required to be delivered in respect of such fiscal quarter, more than $10.0 million of principal of then-outstanding loans, then all of the applicable Financial Covenants (other than the minimum Qualified Cash covenant), to the extent required to be tested in such fiscal quarter, will be deemed waived for such fiscal quarter (the “Covenant Cure Right”); provided, further, that (x) the Covenant Cure Right is not permitted to be exercised in two (2) consecutive fiscal quarters, and (y) if the Covenant Cure Right is to be exercised in any fiscal quarter, FAH, LLC needs to have complied with the minimum Fixed Charge Coverage Ratio required in respect of the preceding fiscal quarter.