----

----

----

----

----

| 10-K Partand Item No. |                                                                                                                            | Page No. |
|-----------------------|---------------------------------------------------------------------------------------------------------------------------------|----------|
|                  |                                                                                                                            |     |
| PART I                |                                                                                                                            |     |
| Item 1                |  Business                                                                                                                  | 1        |
| Item 1A               |  Risk Factors                                                                                                              | 4        |
| Item 1B               |  Unresolved Staff Comments                                                                                                 | 8        |
| Item 2                |  Properties                                                                                                                | 9        |
| Item 3                |  Legal Proceedings                                                                                                         | 9        |
| Item 4                |  Removed and Reserved                                                                                                      | 11       |
|                  |                                                                                                                            |     |
| PART II               |                                                                                                                            |     |
| Item 5                |  Market for the Registrant’s Common Equity and Related Stockholder Matters and Issuer Purchases of Equity Securities | 11       |
| Item 6                |  Selected Consolidated Financial Data                                                                                      | 12       |
| Item 7                |  Management’s Discussion and Analysis of Financial Condition and Results of Operations                               | 14       |
| Item 7A               |  Quantitative and Qualitative Disclosures About Market Risk                                                                | 28       |
| Item 8                |  Financial Statements and Supplementary Data                                                                               | 29       |
| Item 9                |  Changes in and Disagreements with Accountants on Accounting and Financial Disclosure                                      | 29       |
| Item 9A               |  Controls and Procedures                                                                                                   | 29       |
| Item 9B               |  Other Information                                                                                                         | 30       |
|                  |                                                                                                                            |     |
| PART III              |                                                                                                                            |     |
| Item 10               |  Directors and Executive Officers of the Registrant                                                                        | 30       |
| Item 11               |  Executive Compensation                                                                                                    | 30       |
| Item 12               |  Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters                            | 30       |
| Item 13               |  Certain Relationships and Related Transactions                                                                            | 30       |
| Item 14               |  Principal Accountant Fees and Services                                                                                    | 30       |
|                  |                                                                                                                            |     |
| PART IV               |                                                                                                                            |     |
| Item 15               |  Exhibits and Financial Statement Schedules                                                                                | 31       |

----

----

----

----

| Name              |   | Age |   | Employed By Registrant Since |   | Recent Position(s) Held As Of March 30, 2011                                                                       |
|-------------------|--------|-----|--------|------------------------------|--------|--------------------------------------------------------------------------------------------------------------------|
| Bruce R. Foster   |   | 51  |   | 2002                         |   | Executive Vice President and Chief Financial Officer (since 2005); Senior Vice President of Finance (2002 to 2005) |
| Samuel R. Newborn |   | 56  |   | 2000                         |   | Executive Vice President and General Counsel                                                                       |
| Brian Lacey       |   | 60  |   | 2003                         |   | Executive Vice President, International                                                                            |
| Daniel Barnathan  |   | 56  |   | 2002                         |   | President of 4Kids Ad Sales, Inc.                                                                                  |

----

| ·   | A bankruptcy filing may adversely affect our business prospects, including our ability to continue to obtain and maintain the contracts necessary to operate our business on competitive terms; |
|--------------------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | We may be unable to retain and motivate key executives and employees through the bankruptcy process, and we may have difficulty attracting new employees; |
|--------------------|-----------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | There can be no assurance as to our ability to maintain or obtain sufficient financing sources for operations or to fund any reorganization plan and meet future obligations; |
|--------------------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | There can be no assurance that we will be able to successfully develop, prosecute, confirm and consummate one or more plans of reorganization that are acceptable to the bankruptcy court and our creditors, equity holders and other parties in interest; |
|--------------------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | The value of our common stock could be reduced to zero as result of a bankruptcy filing. |
|--------------------|------------------------------------------------------------------------------------------|

----

| (i)   | our current Properties, product concepts or programming will continue to be popular for any significant period of time; |
|-----------------|-------------------------------------------------------------------------------------------------------------------------|

| (ii)   | new Properties, product concepts or programming we represent or produce will achieve and or sustain popularity in the marketplace; |
|------------------|------------------------------------------------------------------------------------------------------------------------------------|

| (iii)   | a Property’s life cycle will be sufficient to permit us to recover revenues in excess of the costs of advance payments, guarantees, development, marketing, royalties and other costs relating to such Property; or |
|-------------------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (iv)   | we will successfully anticipate, identify and react to consumer preferences. |
|------------------|------------------------------------------------------------------------------|

----

----

----

| Address                                                          | Expiration of Lease | Use                                                               | Approximate Square Feet |
|------------------------------------------------------------------|---------------------|-------------------------------------------------------------------|-------------------------|
|                                                             |                |                                                              |                    |
| 53 West 23rd Street,  11th FloorNew York, New York     | June 30, 2017       | Executive, Administrative and Production Facilities               | 25,000                  |
|                                                             |                |                                                              |                    |
| 53 West 23rd Street,  6th FloorNew York, New York      | February 29, 2012   | Sales, Marketing and Website Development                          | 5,600                   |
|                                                             |                |                                                              |                    |
| 1st Floor Mutual House70 Conduit StreetLondon, England           | July 30, 2011       | International SalesOffice                                         |  2,400             |
|                                                             |                |                                                              |                    |
| 12481 High Bluff Drive,Suite 110San Diego,  California | February 24, 2011   | Trading Card and Game Distribution – Discontinued Operation | 4,200                   |

----

----

| 2010           |   | Low    |   |   | High   |   |
|----------------|--------|--------|--------|--------|--------|--------|
| First Quarter  |   | $      | 1.01   |   |   | $      | 1.70 |   |
| Second Quarter |   |   | 0.55   |   |   |   | 1.25 |   |
| Third Quarter  |   |   | 0.53   |   |   |   | 0.80 |   |
| Fourth Quarter |   |   | 0.32   |   |   |   | 0.64 |   |
|           |   |   |   |   |   |   |   |   |
| 2009           |   | Low    |   |   | High   |   |
| First Quarter  |   | $      | 1.01   |   |   | $      | 2.48 |   |
| Second Quarter |   |   | 1.09   |   |   |   | 2.24 |   |
| Third Quarter  |   |   | 1.35   |   |   |   | 2.43 |   |
| Fourth Quarter |   |   | 1.30   |   |   |   | 2.15 |   |
|           |   |   |   |   |   |   |   |   |

----

|         |   | December 31, |   |
|--------------|--------|--------------|--------|
|         |   | 2005         |   |   | 2006 |   |   | 2007 |   |   | 2008 |   |   | 2009 |   |   | 2010 |   |
| 4Kids        |   | $            | 100.00 |   |   | $ | 116.12 |   |   | $ | 83.81 |   |   | $ | 12.49 |   |   | $ | 10.13 |   |   | $ | 2.61 |   |
| S&P 600  |   | $            | 100.00 |   |   | $ | 114.07 |   |   | $ | 112.68 |   |   | $ | 76.63 |   |   | $ | 94.85 |   |   | $ | 118.55 |   |
| Russell 2000 |   | $            | 100.00 |   |   | $ | 118.37 |   |   | $ | 116.51 |   |   | $ | 77.15 |   |   | $ | 55.27 |   |   | $ | 69.25 |   |
| Peer Group   |   | $            | 100.00 |   |   | $ | 132.12 |   |   | $ | 114.85 |   |   | $ | 83.20 |   |   | $ | 134.47 |   |   | $ | 152.07 |   |

| (f)   | Purchases of Equity Securities by the Issuer - |
|-----------------|------------------------------------------------|

|   Period During 2010 |   | Total Number of Shares Purchased |    |   | Average Price Paid Per Share |   |    | Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs |   |   | Maximum Number of Shares that May Yet Be Purchased Under the Plans or Programs |   |
|--------------------------------|--------|----------------------------------|---------|--------|------------------------------|--------|---------|----------------------------------------------------------------------------------|--------|--------|--------------------------------------------------------------------------------|--------|
| Jan. 1 – Jan. 31         |   |                             | — |   |                         |   | — |                                                                             |   |   | —                                                                        |   |   |   | — |   |
| Feb. 1 – Feb. 28         |   |                             | — |   |                         |   | — |                                                                             |   |   | —                                                                        |   |   |   | — |   |
| Mar. 1 – Mar. 31         |   |                             | — |   |                         |   | — |                                                                             |   |   | —                                                                        |   |   |   | — |   |
| Apr. 1 – Apr. 30         |   |                             | — |   |                         |   | — |                                                                             |   |   | —                                                                        |   |   |   | — |   |
| May 1 – May 31           |   |                             | 64,841  |   |                         | $      | 0.84    |                                                                             |   |   | —                                                                        |   |   |   | — |   |
| Jun. 1 – Jun. 30         |   |                             | — |   |                         |   | — |                                                                             |   |   | —                                                                        |   |   |   | — |   |
| Jul. 1 – Jul. 31         |   |                             | — |   |                         |   | — |                                                                             |   |   | —                                                                        |   |   |   | — |   |
| Aug. 1 – Aug. 31         |   |                             | — |   |                         |   | — |                                                                             |   |   | —                                                                        |   |   |   | — |   |
| Sep. 1 – Sep. 30         |   |                             | — |   |                         |   | — |                                                                             |   |   | —                                                                        |   |   |   | — |   |
| Oct. 1 – Oct. 31         |   |                             | — |   |                         |   | — |                                                                             |   |   | —                                                                        |   |   |   | — |   |
| Nov. 1 – Nov. 30         |   |                             | — |   |                         |   | — |                                                                             |   |   | —                                                                        |   |   |   | — |   |
| Dec. 1 – Dec. 31         |   |                             | — |   |                         |   | — |                                                                             |   |   | —                                                                        |   |   |   | — |   |
| Total                          |   |                             | 64,841  |   |                         | $      | 0.84    |                                                                             |   |   | —                                                                        |   |   |   | — |   |

----

|                                                                                 |   | 2010   |       |   | 2009   |   |       | 2008   |   |   | 2007       |   |   | 2006   |       |
|--------------------------------------------------------------------------------------|--------|--------|------------|--------|--------|--------|------------|--------|--------|--------|------------|--------|--------|--------|------------|
| Net revenues:                                                                        |   |   |       |   |   |   |       |   |   |   |       |   |   |   |       |
|    Service revenue                                                    |   | $      | 14,478     |   |   | $      | 24,394     |   |   | $      | 41,925     |   |   | $      | 48,428     |   |   | $ | 61,661 |   |
|    Other revenue                                                      |   |   | —    |   |   |   | 9,786      |   |   |   | —    |   |   |   | —    |   |   |   | — |   |
|            Total net revenues |   |   | 14,478     |   |   |   | 34,180     |   |   |   | 41,925     |   |   |   | 48,428     |   |   |   | 61,661 |   |
|                                                                                 |   |   |       |   |   |   |       |   |   |   |       |   |   |   |       |   |   |   |   |   |
| Costs and expenses:                                                                  |   |   |       |   |   |   |       |   |   |   |       |   |   |   |       |   |   |   |   |   |
|    Selling, general and administrative (*)                            |   |   | 28,011     |   |   |   | 33,175     |   |   |   | 36,966     |   |   |   | 34,974     |   |   |   | 39,001 |   |
|    Amortization of television and film costs                          |   |   | 6,827      |   |   |   | 21,511     |   |   |   | 7,707      |   |   |   | 8,179      |   |   |   | 8,041 |   |
|    Amortization of 4Kids TV broadcast fee                             |   |   | —    |   |   |   | —    |   |   |   | 16,022     |   |   |   | 21,472     |   |   |   | 22,462 |   |
|    Impairment of investment in international                          |   |   |       |   |   |   |       |   |   |   |       |   |   |   |       |   |   |   |   |   |
|        trading card subsidiary                    |   |   | —    |   |   |   | 2,430      |   |   |   | —    |   |   |   | —    |   |   |   | — |   |
|           Total costs and expenses |   |   | 34,838     |   |   |   | 57,116     |   |   |   | 60,695     |   |   |   | 64,625     |   |   |   | 69,504 |   |
|                                                                                 |   |   |       |   |   |   |       |   |   |   |       |   |   |   |       |   |   |   |   |   |
| Loss from operations                                                                 |   |   | (20,360    | )      |   |   | (22,936    | )      |   |   | (18,770    | )      |   |   | (16,197    | ) |   |   | (7,843 | ) |
|                                                                                 |   |   |       |   |   |   |       |   |   |   |       |   |   |   |       |   |   |   |   |   |
| Interest income                                                                      |   |   | 403        |   |   |   | 1,076      |   |   |   | 2,722      |   |   |   | 5,281      |   |   |   | 4,143 |   |
| Impairment of investment securities                                                  |   |   | (3,578     | )      |   |   | (6,175     | )      |   |   | (7,834     | )      |   |   | —    |   |   |   | — |   |
| Loss on sale of investment securities                                                |   |   | (1,616     | )      |   |   | (7,647     | )      |   |   | —    |   |   |   | —    |   |   |   | — |   |
|          Total other (expense) income   |   |   | (4,791     | )      |   |   | (12,746    | )      |   |   | (5,112     | )      |   |   | 5,281      |   |   |   | 4,143 |   |
|                                                                                 |   |   |       |   |   |   |       |   |   |   |       |   |   |   |       |   |   |   |   |   |
| Loss before income taxes                                                             |   |   | (25,151    | )      |   |   | (35,682    | )      |   |   | (23,882    | )      |   |   | (10,916    | ) |   |   | (3,700 | ) |
| Benefit from (provision for) income taxes                                            |   |   | —    |   |   |   | 3,805      |   |   |   | (300       | )      |   |   | (2,436     | ) |   |   | 3,506 |   |
|                                                                                 |   |   |       |   |   |   |       |   |   |   |       |   |   |   |       |   |   |   |   |   |
| Loss from continuing operations                                                      |   |   | (25,151    | )      |   |   | (31,877    | )      |   |   | (24,182    | )      |   |   | (13,352    | ) |   |   | (194 | ) |
| Loss from discontinued operations                                                    |   |   | (6,489     | )      |   |   | (20,579    | )      |   |   | (12,637    | )      |   |   | (9,974     | ) |   |   | (812 | ) |
| Net loss                                                                             |   |   | (31,640    | )      |   |   | (52,456    | )      |   |   | (36,819    | )      |   |   | (23,326    | ) |   |   | (1,006 | ) |
|                                                                                 |   |   |       |   |   |   |       |   |   |   |       |   |   |   |       |   |   |   |   |   |
| Loss attributable to noncontrolling interests                                        |   |   | 4,479      |   |   |   | 10,380     |   |   |   | —    |   |   |   | —    |   |   |   | — |   |
|                                                                                 |   |   |       |   |   |   |       |   |   |   |       |   |   |   |       |   |   |   |   |   |
| Net loss attributable to 4Kids Entertainment, Inc.                                   |   | $      | (27,161    | )      |   | $      | (42,076    | )      |   | $      | (36,819    | )      |   | $      | (23,326    | ) |   | $ | (1,006 | ) |
|                                                                                 |   |   |       |   |   |   |       |   |   |   |       |   |   |   |       |   |   |   |   |   |
| Per share amounts:                                                                   |   |   |       |   |   |   |       |   |   |   |       |   |   |   |       |   |   |   |   |   |
| Basic and diluted loss per share attributable to                                     |   |   |       |   |   |   |       |   |   |   |       |   |   |   |       |   |   |   |   |   |
| 4Kids Entertainment, Inc. common shareholders                                        |   |   |       |   |   |   |       |   |   |   |       |   |   |   |       |   |   |   |   |   |
|     Continuing operations                                        |   | $      | (1.87      | )      |   | $      | (2.40      | )      |   | $      | (1.81      | )      |   | $      | (1.01      | ) |   | $ | (0.01 | ) |
|     Discontinued operations                                      |   |   | (0.15      | )      |   |   | (0.76      | )      |   |   | (0.98      | )      |   |   | (0.76      | ) |   |   | (0.07 | ) |
| Basic and diluted loss per share attributable to                                     |   |   |       |   |   |   |       |   |   |   |       |   |   |   |       |   |   |   |   |   |
| 4Kids Entertainment, Inc. common shareholders                                        |   | $      | (2.02      | )      |   | $      | (3.16      | )      |   | $      | (2.79      | )      |   | $      | (1.77      | ) |   | $ | (0.08 | ) |
| Weighted average common shares                                                       |   |   |       |   |   |   |       |   |   |   |       |   |   |   |       |   |   |   |   |   |
|     outstanding – basic and diluted                        |   |   | 13,460,214 |   |   |   | 13,303,192 |   |   |   | 13,181,549 |   |   |   | 13,209,495 |   |   |   | 13,104,051 |   |
|                                                                                 |   |   |       |   |   |   |       |   |   |   |       |   |   |   |       |   |   |   |   |   |
| Net loss attributable to 4Kids Entertainment, Inc.:                                  |   |   |       |   |   |   |       |   |   |   |       |   |   |   |       |   |   |   |   |   |
| Loss from continuing operations                                                      |   | $      | (25,151    | )      |   | $      | (31,877    | )      |   | $      | (24,182    | )      |   | $      | (13,352    | ) |   | $ | (194 | ) |
|                                                                                 |   |   |       |   |   |   |       |   |   |   |       |   |   |   |       |   |   |   |   |   |
| Loss from discontinued operations                                                    |   |   | (6,489     | )      |   |   | (20,579    | )      |   |   | (12,637    | )      |   |   | (9,974     | ) |   |   | (812 | ) |
| Loss attributable to noncontrolling interests                                        |   |   | 4,479      |   |   |   | 10,380     |   |   |   | —    |   |   |   | —    |   |   |   | — |   |
| Net loss from discontinued operations                                                |   |   | (2,010     | )      |   |   | (10,199    | )      |   |   | (12,637    | )      |   |   | (9,974     | ) |   |   | (812 | ) |
| Net loss attributable to 4Kids Entertainment, Inc.                                   |   | $      | (27,161    | )      |   | $      | (42,076    | )      |   | $      | (36,819    | )      |   | $      | (23,326    | ) |   | $ | (1,006 | ) |
|                                                                                 |   |   |       |   |   |   |       |   |   |   |       |   |   |   |       |   |   |   |   |   |

----

|                             |   | Year Ended December 31, |   |
|----------------------------------|--------|-------------------------|--------|
|                             |   | 2010                    |   |   | 2009 |   |   | 2008 |   |   | 2007 |   |   | 2006 |   |
| Other Operating Data:            |   |                    |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Cash flow (used in) provided by: |   |                    |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Operating activities             |   | $                       | (6,139 | ) |   | $ | (13,580 | ) |   | $ | (33,334 | ) |   | $ | (15,850 | ) |   | $ | (1,057 | ) |
| Investing activities             |   |                    | 6,812  |   |   |   | 3,429 |   |   |   | 24,432 |   |   |   | 22,605 |   |   |   | (18,047 | ) |
| Financing activities             |   |                    | (44    | ) |   |   | 74 |   |   |   | (2,641 | ) |   |   | 2 |   |   |   | 1,445 |   |
|                             |   |                    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |

|                       |   | Year Ended December 31, |   |
|----------------------------|--------|-------------------------|--------|
|                       |   | 2010                    |   |   | 2009 |   |   | 2008 |   |   | 2007 |   |   | 2006 |   |
|                       |   |                    |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Total assets               |   | $                       | 29,070 |   |   | $ | 56,653 |   |   | $ | 100,574 |   |   | $ | 151,079 |   |   | $ | 181,395 |   |
| Working capital            |   |                    | 2,052  |   |   |   | 4,859 |   |   |   | 17,579 |   |   |   | 65,135 |   |   |   | 123,906 |   |
| Stockholders’ equity |   |                    | 10,258 |   |   |   | 35,117 |   |   |   | 74,991 |   |   |   | 128,088 |   |   |   | 154,737 |   |
|                       |   |                    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |

|   | Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations. |
|--------|------------------------------------------------------------------------------------------------------|

----

----

----

----

|                                                                                 |   |   | 2010    |   |   | 2009    |   |   | 2008    |   |
|--------------------------------------------------------------------------------------|--------|--------|---------|--------|--------|---------|--------|--------|---------|--------|
| Net revenues                                                                         |   |   | 100     | %      |   | 100     | %      |   | 100     | %      |
|                                                                                 |   |   |    |   |   |    |   |   |    |   |
| Costs and expenses:                                                                  |   |   |    |   |   |    |   |   |    |   |
|    Selling, general and administrative                                |   |   | 194     |   |   | 97      |   |   | 88      |   |
|    Amortization of television and film costs                          |   |   | 47      |   |   | 63      |   |   | 18      |   |
|    Amortization of 4Kids TV broadcast fee                             |   |   | — |   |   | — |   |   | 38      |   |
|    Impairment of investment in international                          |   |   |    |   |   |    |   |   |    |   |
|       trading card subsidiary                          |   |   | — |   |   | 7       |   |   | — |   |
|           Total costs and expenses |   |   | 241     |   |   | 167     |   |   | 144     |   |
|                                                                                 |   |   |    |   |   |    |   |   |    |   |
| Loss from operations                                                                 |   |   | (141    | )      |   | (67     | )      |   | (44     | )      |
|                                                                                 |   |   |    |   |   |    |   |   |    |   |
| Interest income                                                                      |   |   | 3       |   |   | 3       |   |   | 6       |   |
| Impairment of investment securities                                                  |   |   | (25     | )      |   | (18     | )      |   | (19     | )      |
| Loss on sale of investment securities                                                |   |   | (11     | )      |   | (22     | )      |   | — |   |
|          Total other expense            |   |   | (33     | )      |   | (37     | )      |   | (13     | )      |
|                                                                                 |   |   |    |   |   |    |   |   |    |   |
| Loss before income taxes                                                             |   |   | (174    | )      |   | (104    | )      |   | (57     | )      |
| Benefit from (provision for) income taxes                                            |   |   | — |   |   | 11      |   |   | (1      | )      |
|                                                                                 |   |   |    |   |   |    |   |   |    |   |
| Loss from continuing operations                                                      |   |   | (174    | )      |   | (93     | )      |   | (58     | )      |
| Loss from discontinued operations                                                    |   |   | (45     | )      |   | (60     | )      |   | (30     | )      |
| Net loss                                                                             |   |   | (219    | )      |   | (153    | )      |   | (88     | )      |
|                                                                                 |   |   |    |   |   |    |   |   |    |   |
| Net loss attributable to noncontrolling interests                                    |   |   | 31      |   |   | 30      |   |   | — |   |
|                                                                                 |   |   |    |   |   |    |   |   |    |   |
| Net loss attributable to 4Kids Entertainment, Inc.                                   |   |   | (188    | )%     |   | (123    | )%     |   | (88     | )%     |
|                                                                                 |   |   |    |   |   |    |   |   |    |   |

|                                        |   | 2010   |   |   | 2009   |   |   | $ Change |   |   | % Change |   |
|---------------------------------------------|--------|--------|--------|--------|--------|--------|--------|----------|--------|--------|----------|--------|
| Licensing                                   |   | $      | 12,046 |   |   | $      | 24,068 |     |   | $      | (12,022  | )      |   |   | (50 | )% |
| Advertising Media and Broadcast             |   |   | 921    |   |   |   | 2,772  |     |   |   | (1,851   | )      |   |   | (67 | ) |
| Television and Film Production/Distribution |   |   | 1,511  |   |   |   | 7,340  |     |   |   | (5,829   | )      |   |   | (79 | ) |
| Total                                       |   | $      | 14,478 |   |   | $      | 34,180 |     |   | $      | (19,702  | )      |   |   | (58 | )% |

| (i)   | reduced licensing revenues as a result of a one-time payment of $9,786 received in 2009 in consideration of the Company’s agreement to terminate its right to serve as the merchandise licensing agent for the “Teenage Mutant Ninja Turtles” Property prior to the scheduled expiration of the representation agreement with the Mirage Group in 2012; as well as |
|-----------------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (ii)   | reduced licensing revenues on the “Monster Jam”, “Teenage Mutant Ninja Turtles”, and “Yu-Gi-Oh Properties, worldwide of approximately $1,530, $1,360 and $1,120, respectively; partially offset by |
|------------------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (iii)   | increased licensing revenues on the “Pokémon” Property of approximately $2,500. |
|-------------------|--------------------------------------------------------------------------------------------------|

----

| (i)   | decreased international broadcast sales from the “Dinosaur King”, “Yu-Gi-Oh!” and “Teenage Mutant Ninja Turtles” television series of approximately $1,400, $840 and $440, respectively; as well as |
|-----------------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (ii)   | increased licensor participations relating to “Yu-Gi-Oh!” home video revenues of approximately $1,500; as well as |
|------------------|-------------------------------------------------------------------------------------------------------------------------------|

| (iii)   | decreased domestic and international broadcast sales from the “Chaotic” television series of approximately $600. |
|-------------------|------------------------------------------------------------------------------------------------------------------------------|

| (i)   | decreased personnel related costs of approximately $8,160; as well as |
|-----------------|-----------------------------------------------------------------------|

| (ii)   | decreased international selling expenses of approximately $1,950; partially offset by |
|------------------|---------------------------------------------------------------------------------------|

| (iii)   | increased costs due to decreased capitalized production salaries of approximately $3,480; as well as |
|-------------------|------------------------------------------------------------------------------------------------------|

| (iv)   | increased network selling expenses of approximately $1,510. |
|------------------|-------------------------------------------------------------|

|                                      |   | 2010 |   |   | 2009   |   |   | $ Change |   |   | % Change |
|-------------------------------------------|--------|------|--------|--------|--------|--------|--------|----------|--------|--------|----------|
| Amortization of Television and Film Costs |   | $    | 6,827  |   |   | $      | 21,511 |     |   | $      | (14,684  | ) |   |   | (68 | )% |

----

|                                        |   |   |    |   |   |   |    |
|---------------------------------------------|--------|--------|---------|--------|--------|--------|---------|
|                                        |   | 2010   |    |   | 2009   |   |    | $ Change |   |   | % Change |   |
| Licensing                                   |   | $      | (7,822  | )      |   | $      | (8,913  | ) |   | $ | 1,091 |   |   |   | 12 | % |
| Advertising, Media and Broadcast            |   |   | (8,161  | )      |   |   | (4,278  | ) |   |   | (3,883 | ) |   |   | (91 | ) |
| Television and Film Production/Distribution |   |   | (9,168  | )      |   |   | (22,491 | ) |   |   | 13,323 |   |   |   | 59 |   |
| Total                                       |   | $      | (25,151 | )      |   | $      | (35,682 | ) |   | $ | 10,531 |   |   |   | 30 | % |

----

|                              |   |   |   |   |   |   |
|-----------------------------------|--------|--------|--------|--------|--------|--------|
|                              |   | 2010   |   |   | 2009   |   |
| Net revenues                      |   | $      | 247    |   |   | $      | 2,603 |   |
| Total costs and expenses          |   |   | 6,736  |   |   |   | 23,182 |   |
| Loss from discontinued operations |   | $      | (6,489 | )      |   | $      | (20,579 | ) |

|                                        |   | 2009   |   |   | 2008   |   |   | $ Change |   |   | % Change |   |
|---------------------------------------------|--------|--------|--------|--------|--------|--------|--------|----------|--------|--------|----------|--------|
| Licensing                                   |   | $      | 24,068 |   |   | $      | 17,124 |     |   | $      | 6,944    |   |   |   | 41 | % |
| Advertising Media and Broadcast             |   |   | 2,772  |   |   |   | 16,368 |     |   |   | (13,596  | )      |   |   | (83 | ) |
| Television and Film Production/Distribution |   |   | 7,340  |   |   |   | 8,433  |     |   |   | (1,093   | )      |   |   | (13 | ) |
| Total                                       |   | $      | 34,180 |   |   | $      | 41,925 |     |   | $      | (7,745   | )      |   |   | (18 | )% |

| (i)   | a one-time payment of $9,786 received in consideration of the Company’s agreement to terminate its right to serve as the merchandise licensing agent for the “Teenage Mutant Ninja Turtles” Property prior to the scheduled expiration of the representation agreement with the Mirage Group in 2012; as well as |
|-----------------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (ii)   | increased revenues attributable to the “Monster Jam” Property, domestically of approximately $740; partially offset by |
|------------------|------------------------------------------------------------------------------------------------------------------------------------|

| (iii)   | decreased licensing revenues on the “Teenage Mutant Ninja Turtles”, “Winx Club” and “Shaman King” Properties, worldwide of approximately $1,650, $460 and $440, respectively. |
|-------------------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

| (i)   | decreased international broadcast sales from the “Viva Piñata”, “Teenage Mutant Ninja Turtles” and “Yu-Gi-Oh!” television series of approximately $990, $510 and $470, respectively; as well as |
|-----------------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (ii)   | decreased contract revenue from the “Viva Piñata” television series of approximately $600; partially offset by |
|------------------|---------------------------------------------------------------------------------------------------------------------------------|

| (iii)   | increased international broadcast sales from the “Dinosaur King” television series of approximately $790. |
|-------------------|-----------------------------------------------------------------------------------------------------------------------|

| (i)   | decreased personnel related costs of approximately $3,120; as well as |
|-----------------|-----------------------------------------------------------------------|

| (ii)   | decreased international selling expenses of approximately $1,030; as well as |
|------------------|------------------------------------------------------------------------------|

| (iii)   | decreased website costs of approximately $730; as well as |
|-------------------|-----------------------------------------------------------|

| (iv)   | decreased travel and entertainment costs of approximately $470; and |
|------------------|---------------------------------------------------------------------|

| (v)   | decreased advertising and marketing costs of approximately $400; partially offset by |
|-----------------|--------------------------------------------------------------------------------------|

| (vi)   | decreased capitalized production salaries which increased costs by approximately $1,670. |
|------------------|------------------------------------------------------------------------------------------|

|                                      |   | 2009 |   |   | 2008   |   |   | $ Change |   |   | % Change |
|-------------------------------------------|--------|------|--------|--------|--------|--------|--------|----------|--------|--------|----------|
| Amortization of Television and Film Costs |   | $    | 21,511 |   |   | $      | 7,707  |     |   | $      | 13,804   |   |   |   | 179 | % |

|                                   |   | 2009 |    |   | 2008   |   |   | $ Change |   |   | % Change |
|----------------------------------------|--------|------|---------|--------|--------|--------|--------|----------|--------|--------|----------|
| Amortization of 4Kids TV Broadcast Fee |   | $    | — |   |   | $      | 16,022 |     |   | $      | (16,022  | ) |   |   | — | % |

----

|                                        |   |   |    |   |   |   |    |
|---------------------------------------------|--------|--------|---------|--------|--------|--------|---------|
|                                        |   | 2009   |    |   | 2008   |   |    | $ Change |   |   | % Change |   |
| Licensing                                   |   | $      | (8,913  | )      |   | $      | (8,558  | ) |   | $ | (355 | ) |   |   | (4 | )% |
| Advertising, Media and Broadcast            |   |   | (4,278  | )      |   |   | (8,854  | ) |   |   | 4,576 |   |   |   | 52 |   |
| Television and Film Production/Distribution |   |   | (22,491 | )      |   |   | (6,470  | ) |   |   | (16,021 | ) |   |   | (248 | ) |
| Total                                       |   | $      | (35,682 | )      |   | $      | (23,882 | ) |   | $ | (11,800 | ) |   |   | (49 | )% |

----

|                              |   |   |    |   |   |   |
|-----------------------------------|--------|--------|---------|--------|--------|--------|
|                              |   | 2009   |    |   | 2008   |   |
| Net revenues                      |   | $      | 2,603   |   |   | $      | 15,276 |   |
| Total costs and expenses          |   |   | 23,182  |   |   |   | 27,913 |   |
| Loss from discontinued operations |   | $      | (20,579 | )      |   | $      | (12,637 | ) |

|                      |   | 2010   |   |   | 2009   |   |   | $ Change |   |
|---------------------------|--------|--------|--------|--------|--------|--------|--------|----------|--------|
|                      |   |   |   |   |   |   |   |     |   |
| Cash and cash equivalents |   | $      | 4,195  |   |   | $      | 3,621  |     |   | $ | 574 |   |

|        |   | 2010   |   |   | 2009   |   |   | $ Change |   |
|-------------|--------|--------|--------|--------|--------|--------|--------|----------|--------|
|        |   |   |   |   |   |   |   |     |   |
| Investments |   | $      | 7,126  |   |   | $      | 14,180 |     |   | $ | (7,054 | ) |

----

----

| Sources (Uses)       |   | 2010   |   |   | 2009   |   |    | 2008   |   |
|----------------------|--------|--------|--------|--------|--------|--------|---------|--------|--------|
| Operating Activities |   | $      | (6,139 | )      |   | $      | (13,580 | )      |   | $ | (33,334 | ) |
| Investing Activities |   |   | 6,812  |   |   |   | 3,429   |   |   |   | 24,432 |   |
| Financing Activities |   |   | (44    | )      |   |   | 74      |   |   |   | (2,641 | ) |

----

----

| Broadcast Season |      |   | Minimum Fee |   |
|------------------|-----------|--------|-------------|--------|
|             | 2008/2009 |   |        | $      | 15,000 |   |
|             | 2009/2010 |   |        | $      | 12,000 |   |
|             | 2010/2011 |   |        | $      | 11,500 |   |
|             | 2011/2012 |   |        | $      | 11,500 |   |

| Year Ending December 31, |   | CW Agreement |    |   | Operating Leases |   |   | Total  |   |
|--------------------------|--------|--------------|---------|--------|------------------|--------|--------|--------|--------|
| 2011                     |   | $            | 16,500  |   |             | $      | 1,254  |   |   | $ | 17,754 |   |
| 2012                     |   |         | 11,500  |   |             |   | 975    |   |   |   | 12,475 |   |
| 2013                     |   |         | 6,500   |   |             |   | 999    |   |   |   | 7,499 |   |
| 2014                     |   |         | — |   |             |   | 1,026  |   |   |   | 1,026 |   |
| 2015                     |   |         | — |   |             |   | 1,056  |   |   |   | 1,056 |   |
| 2016 and after           |   |         | — |   |             |   | 1,648  |   |   |   | 1,648 |   |
| Total                    |   | $            | 34,500  |   |             | $      | 6,958  |   |   | $ | 41,458 |   |

----

----

----

|                                                                                         | Page        |
|----------------------------------------------------------------------------------------------|-------------|
|                                                                                         | Number      |
| Report of Independent Registered Public Accounting Firm on Consolidated Financial Statements | F-1         |
|                                                                                         |        |
|                                                                                         |        |
| Consolidated Balance Sheets - December 31, 2010 and 2009                                     | F-2         |
|                                                                                         |        |
| Consolidated Statements of Operations - Years Ended                                          |        |
|    December 31, 2010, 2009 and 2008                                           | F-3         |
|                                                                                         |        |
| Consolidated Statements of Stockholders’ Equity and Comprehensive Loss -               |        |
|    Years Ended December 31, 2010, 2009 and 2008                               | F-4         |
|                                                                                         |        |
| Consolidated Statements of Cash Flows - Years Ended                                          |        |
|    December 31, 2010, 2009 and 2008                                           | F-5         |
|                                                                                         |        |
| Notes to Consolidated Financial Statements                                                   | F-6 to F-32 |

----

----

| ExhibitNumber | Description                                                                                                                                                                                                                                                                                                                                                                                                                        |
|---------------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|          |                                                                                                                                                                                                                                                                                                                                                                                                                               |
| 3.1           | Certificate of Incorporation of the Registrant filed on April 28, 1970, as amended on October 12, 1971, as further amended on April 21, 1972, as further amended on July 17, 1979, as further amended on May 22, 1985, as further amended on July 30, 1986, as further amended on July 19, 1989, as further amended on November 16, 1995 (changing the name of the Corporation to 4Kids Entertainment, Inc.).   (1) |
|          |                                                                                                                                                                                                                                                                                                                                                                                                                               |
| 3.2           | Certificate of Amendment to the Certificate of Incorporation of the Registrant, dated April 29, 1999.  (2)                                                                                                                                                                                                                                                                                                               |
|          |                                                                                                                                                                                                                                                                                                                                                                                                                               |
| 3.3           | Certificate of Amendment to the Certificate of Incorporation of the Registrant, dated May 18, 2000.   (3)                                                                                                                                                                                                                                                                                                           |
|          |                                                                                                                                                                                                                                                                                                                                                                                                                               |
| 3.4           | Certificate of Amendment to the Certificate of Incorporation of the Registrant, dated August 15, 2007.   (4)                                                                                                                                                                                                                                                                                                        |
|          |                                                                                                                                                                                                                                                                                                                                                                                                                               |
| 3.5           | Amended and Restated By-Laws of the Registrant adopted by the Board of Directors on April 30, 2010 (34).                                                                                                                                                                                                                                                                                                                           |
|          |                                                                                                                                                                                                                                                                                                                                                                                                                               |
| 4.1           | Form of Common Stock Certificate. (5)                                                                                                                                                                                                                                                                                                                                                                                              |
|          |                                                                                                                                                                                                                                                                                                                                                                                                                               |
| 4.2           | Rights Agreement dated as of August 15, 2007 between 4Kids Entertainment and Continental Stock Transfer & Trust Co., as Rights Agent. (4)                                                                                                                                                                                                                                                                                      |
|          |                                                                                                                                                                                                                                                                                                                                                                                                                               |
| 4.3           | First Amendment dated as of June 23, 2008 of the Rights Agreement between 4Kids Entertainment and Continental Stock Transfer & Trust Co., as Rights Agent. (26)                                                                                                                                                                                                                                                                |
|          |                                                                                                                                                                                                                                                                                                                                                                                                                               |
| 10.1          | 1999 Stock Option Plan. (*) (2)                                                                                                                                                                                                                                                                                                                                                                                                    |
|          |                                                                                                                                                                                                                                                                                                                                                                                                                               |
| 10.2          | 2000 Stock Option Plan. (*) (3)                                                                                                                                                                                                                                                                                                                                                                                                    |
|          |                                                                                                                                                                                                                                                                                                                                                                                                                               |
| 10.3          | 2001 Stock Option Plan. (*) (6)                                                                                                                                                                                                                                                                                                                                                                                                    |
|          |                                                                                                                                                                                                                                                                                                                                                                                                                               |
| 10.4          | 2002 Stock Option Plan. (*) (7)                                                                                                                                                                                                                                                                                                                                                                                                    |
|          |                                                                                                                                                                                                                                                                                                                                                                                                                               |
| 10.5          | 2003 Stock Option Plan. (*) (8)                                                                                                                                                                                                                                                                                                                                                                                                    |
|          |                                                                                                                                                                                                                                                                                                                                                                                                                               |
| 10.6          | 2004 Stock Option Plan. (*) (9)                                                                                                                                                                                                                                                                                                                                                                                                    |
|          |                                                                                                                                                                                                                                                                                                                                                                                                                               |
| 10.7          | 2005 Long-Term Incentive Compensation Plan. (*) (10)                                                                                                                                                                                                                                                                                                                                                                               |
|          |                                                                                                                                                                                                                                                                                                                                                                                                                               |
| 10.8          | 2006 Long-Term Incentive Compensation Plan. (*) (11)                                                                                                                                                                                                                                                                                                                                                                               |
|          |                                                                                                                                                                                                                                                                                                                                                                                                                               |
| 10.9          | 2007 Long-Term Incentive Compensation Plan. (*) (12)                                                                                                                                                                                                                                                                                                                                                                               |
|          |                                                                                                                                                                                                                                                                                                                                                                                                                               |
| 10.10         | 2008 Long-Term Incentive Compensation Plan (*) (13)                                                                                                                                                                                                                                                                                                                                                                                |
|          |                                                                                                                                                                                                                                                                                                                                                                                                                               |
| 10.11         | Agreement of Lease, dated March 28, 1988, between the Registrant and 1414 Avenue of the Americas Company   (“1414 Lease”).  (14)                                                                                                                                                                                                                                                              |
|          |                                                                                                                                                                                                                                                                                                                                                                                                                               |
| 10.12         | Amendment, dated July 8, 1994, to the 1414 Lease.  (14)                                                                                                                                                                                                                                                                                                                                                                  |
|          |                                                                                                                                                                                                                                                                                                                                                                                                                               |
| 10.13         | Amended and Restated Employment Agreement dated January 1, 2002, between 4Kids Entertainment Licensing, Inc. and Alfred R. Kahn.  (*)(15)                                                                                                                                                                                                                                                                                |
|          |                                                                                                                                                                                                                                                                                                                                                                                                                               |
| 10.14         | Second Amended and Restated Employment Agreement, dated December 15, 2006, between 4Kids Entertainment Licensing, Inc. and Alfred R. Kahn.  (*)(16)                                                                                                                                                                                                                                                                      |
|          |                                                                                                                                                                                                                                                                                                                                                                                                                               |
| 10.15         | Amendment to Second Amended and Restated Employment Agreement, dated December 31, 2009, between 4Kids Entertainment Licensing, Inc. and Alfred R. Kahn.  (*)(31)                                                                                                                                                                                                                                                         |
|          |                                                                                                                                                                                                                                                                                                                                                                                                                               |
| 10.16         | Separation Agreement, dated January 10, 2011 between 4Kids Entertainment Licensing, Inc. and Alfred R. Kahn (*)(Included herein)                                                                                                                                                                                                                                                                                                   |
|          |                                                                                                                                                                                                                                                                                                                                                                                                                               |
| 10.17         | Employment Agreement, dated January 1, 2002, between 4Kids Entertainment Licensing, Inc. and Samuel R. Newborn.  (*)(15)                                                                                                                                                                                                                                                                                                 |
|          |                                                                                                                                                                                                                                                                                                                                                                                                                               |
| 10.18         | Amendment dated as of June 16, 2003, to the Employment Agreement between 4Kids Entertainment Licensing, Inc. and Samuel R. Newborn.  (*)(15)                                                                                                                                                                                                                                                                             |
|          |                                                                                                                                                                                                                                                                                                                                                                                                                               |
| 10.19         | Amendment to Employment Agreement, dated as of March 2, 2006, between 4Kids Entertainment Licensing, Inc. and Samuel R. Newborn.  (*)(17)                                                                                                                                                                                                                                                                                |
|          |                                                                                                                                                                                                                                                                                                                                                                                                                               |
| 10.20         | Amendment to Employment Agreement, dated as of October 14, 2009, among 4Kids Entertainment Licensing, Inc., 4Kids Entertainment Inc. and Samuel R. Newborn.  (*)(29)                                                                                                                                                                                                                                                     |
|          |                                                                                                                                                                                                                                                                                                                                                                                                                               |
| 10.21         | Severance Agreement, dated as of October 14, 2009, among 4Kids Entertainment, Inc., 4Kids Entertainment Licensing, Inc. and Samuel R. Newborn.  (*)(29)                                                                                                                                                                                                                                                                  |
|          |                                                                                                                                                                                                                                                                                                                                                                                                                               |
| 10.22         | Amendment to Severance Agreement, dated as of December 31, 2009, among 4Kids Entertainment, Inc., and 4Kids Entertainment Licensing, Inc. and Samuel R. Newborn.  (*)(31)                                                                                                                                                                                                                                                |
|          |                                                                                                                                                                                                                                                                                                                                                                                                                               |
| 10.23         | Employment Agreement dated as of December 1, 2005, between 4Kids Entertainment Licensing, Inc., and Bruce R. Foster.  (*)(18)                                                                                                                                                                                                                                                                                            |

----

|   |                                                                                                                                                                                                                                              |
|--------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| 10.24  | Amendment to Employment Agreement dated as of January 30, 2007, among 4Kids Entertainment Licensing, Inc., 4Kids Entertainment, Inc. and Bruce R. Foster.  (*)(19)                                                                      |
|   |                                                                                                                                                                                                                                              |
| 10.25  | Amendment to Employment Agreement dated as of April 16, 2007, among 4Kids Entertainment Licensing, Inc., 4Kids Entertainment, Inc. and Bruce R. Foster.  (*)(32)                                                                        |
|   |                                                                                                                                                                                                                                              |
| 10.26  |  Amendment to Employment Agreement, dated as of October 14, 2009, among 4Kids Entertainment Licensing, Inc., 4Kids Entertainment, Inc. and Bruce R. Foster.  (*)(29)                                                               |
|   |                                                                                                                                                                                                                                              |
| 10.27  | Severance Agreement, dated as of October 14, 2009, among 4Kids Entertainment Licensing, Inc., 4Kids Entertainment, Inc. and Bruce R. Foster.  (*)(29)                                                                                   |
|   |                                                                                                                                                                                                                                              |
| 10.28  | Amendment to Severance Agreement, dated as of December 31, 2009, among 4Kids Entertainment Licensing, Inc., 4Kids Entertainment, Inc. and Bruce R. Foster.  (*)(31)                                                                     |
|   |                                                                                                                                                                                                                                              |
| 10.29  | Employment Agreement dated as of July 1, 2003, between 4Kids Entertainment Licensing, Inc. and Brian Lacey.  (*)(20)                                                                                                                    |
|   |                                                                                                                                                                                                                                              |
| 10.30  | Amendment to Employment Agreement, dated as of October 16, 2006, among 4Kids Entertainment Licensing, Inc., 4Kids Entertainment, Inc. and Brian Lacey.  (*)(21)                                                                         |
|   |                                                                                                                                                                                                                                              |
| 10.31  | Severance Agreement, dated as of November 24, 2009, among 4Kids Entertainment Licensing, Inc., 4Kids Entertainment, Inc. and Brian Lacey.  (*)(30)                                                                                      |
|   |                                                                                                                                                                                                                                              |
| 10.32  | Amendment Agreement, dated March 14, 2006, between 4Kids Entertainment, Inc. and Fox Broadcasting Company. (*)(20)                                                                                                                                |
|   |                                                                                                                                                                                                                                              |
| 10.33  | Settlement Agreement and Mutual General Release dated as of June 19, 2006 among The Summit Media Group, Inc., The Beacon Media Group LLC, Sheldon Hirsch, Tom Horner and Paul Caldera. (23)                                                       |
|   |                                                                                                                                                                                                                                              |
| 10.34  | Operating Agreement of TC Digital Games LLC, dated as of December 11, 2006, between 4Kids Digital Games, Inc. and Chaotic USA Entertainment Digital Games LLC. (22)                                                                               |
|   |                                                                                                                                                                                                                                              |
| 10.35  | Operating Agreement of TC Websites LLC, dated as of December 11, 2006, between 4Kids Websites, Inc. and Chaotic USA Entertainment Group, Inc. (22)                                                                                                |
|   |                                                                                                                                                                                                                                              |
| 10.36  | Operating Acquisition and Administration agreement dated June 28, 2002 between Cherry Lane Publishing Company, Inc. and 4Kids Entertainment Music, Inc. (24)                                                                                      |
|   |                                                                                                                                                                                                                                              |
| 10.37  | Saturday Morning Programming Block dated October 1, 2007 between The CW Network, LLC. and 4Kids Entertainment, Inc. (24)                                                                                                                          |
|   |                                                                                                                                                                                                                                              |
| 10.38  | Amended Saturday Morning Programming Block dated June 23, 2010 between The CW Network, LLC. and 4Kids Entertainment, Inc. (35)                                                                                                                    |
|   |                                                                                                                                                                                                                                              |
| 10.39  | Membership Interest Purchase Agreement dated December 18, 2007 between TC Digital Games, LLC, Chaotic USA Entertainment Group, Inc. and 4Kids Digital, Inc. (24)                                                                                  |
|   |                                                                                                                                                                                                                                              |
| 10.40  | Membership Interest Purchase Agreement dated December 18, 2007 between TC Websites LLC, Chaotic USA Entertainment Group, Inc. and 4Kids Websites, Inc. (24)                                                                                       |
|   |                                                                                                                                                                                                                                              |
| 10.41  |  First Amendment dated as of September 15, 2008 to the Operating Agreement of TC Websites LLC, between 4Kids Websites, Inc. and Chaotic USA Entertainment Group, Inc. (27)                                                                   |
|   |                                                                                                                                                                                                                                              |
| 10.42  | Employment Agreement, dated as of June 1, 2008, between 4Kids Ad Sales, Inc. and Daniel Barnathan.  (*)(25)                                                                                                                             |
|   |                                                                                                                                                                                                                                              |
| 10.43  | Confidential Settlement Agreement and General Release of all Claims between 4Kids Entertainment, Inc. and the Fox Broadcasting Company. (28)                                                                                                      |
|   |                                                                                                                                                                                                                                              |
| 10.44  | Letter Agreement Supplement to the Termination, Assignment and Release Agreement, dated as of October 20, 2009, between 4Kids Entertainment, Inc. and its Subsidiaries,  Mirage Licensing, Inc and Mirage Studios, Inc.  (33) |
|   |                                                                                                                                                                                                                                              |
| 21.1   | List of Subsidiaries of the Registrant.                                                                                                                                                                                                           |
|   |                                                                                                                                                                                                                                              |
| 23.1   | Consent of EisnerAmper LLP, Independent Registered Public Accounting Firm.                                                                                                                                                                        |
|   |                                                                                                                                                                                                                                              |
| 31.1   | Certification of principal executive officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.                                                                                            |
|   |                                                                                                                                                                                                                                              |
| 31.2   | Certification of Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.                                                                                                |
|   |                                                                                                                                                                                                                                              |
| 32.1   | Joint Certification of principal executive officer and Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.                                                          |
|   | ______________                                                                                                                                                                                                                                    |
|   |                                                                                                                                                                                                                                              |
| *      | Denotes a management contract or compensatory plan, contract or arrangement.                                                                                                                                                                      |

----

|   |                                                                                                                            |
|--------|---------------------------------------------------------------------------------------------------------------------------------|
| (1)    | Incorporated by reference to Annual Report on Form 10-K for the year ended December 31, 1995 (File No. 000-07843).              |
|   |                                                                                                                            |
| (2)    | Incorporated by reference to 1999 Proxy Statement for Annual Meeting of Shareholders held April 29, 1999 (File No. 000-07843).  |
|   |                                                                                                                            |
| (3)    | Incorporated by reference to 2000 Proxy Statement for Annual Meeting of Shareholders held May 17, 2000 (File No. 000-07843).    |
|   |                                                                                                                            |
| (4)    | Incorporated by reference to Current Report on Form 8-K dated August 16, 2007 (File No. 001-16117).                             |
|   |                                                                                                                            |
| (5)    | Incorporated by reference to Registration Statement on Form S-1 declared effective March 7, 1986 (File No. 33-3056).            |
|   |                                                                                                                            |
| (6)    | Incorporated by reference to 2002 Proxy Statement for Annual Meeting of Shareholders held May 23, 2001 (File No. 001-16117).    |
|   |                                                                                                                            |
| (7)    | Incorporated by reference to 2002 Proxy Statement for Annual Meeting of Shareholders held May 23, 2002 (File No. 001-16117).    |
|   |                                                                                                                            |
| (8)    | Incorporated by reference to 2003 Proxy Statement for Annual Meeting of Shareholders held May 23, 2003 (File No. 001-16117).    |
|   |                                                                                                                            |
| (9)    | Incorporated by reference to 2004 Proxy Statement for Annual Meeting of Shareholders held May 27, 2004 (File No. 001-16117).    |
|   |                                                                                                                            |
| (10)   | Incorporated by reference to 2005 Proxy Statement for Annual Meeting of Shareholders held May 26, 2005 (File No. 001-16117).    |
|   |                                                                                                                            |
| (11)   | Incorporated by reference to 2006 Proxy Statement for Annual Meeting of Shareholders held May 26, 2006 (File No. 001-16117).    |
|   |                                                                                                                            |
| (12)   | Incorporated by reference to 2007 Proxy Statement for Annual Meeting of Shareholders held May 25, 2007 (File No. 001-16117).    |
|   |                                                                                                                            |
| (13)   | Incorporated by reference to 2008 Proxy Statement for Annual Meeting of Shareholders held May 20, 2008 (File No. 001-16117).    |
|   |                                                                                                                            |
| (14)   | Incorporated by reference to Annual Report on Form 10-K for the year ended December 31, 1990 (File No. 000-07843).              |
|   |                                                                                                                            |
| (15)   | Incorporated by reference to Quarterly Report on Form 10-Q for the quarter ended June 30, 2003 (File No.  001-16117). |
|   |                                                                                                                            |
| (16)   | Incorporated by reference to Current Report on Form 8-K dated December 21, 2006 (File No. 001-16117).                           |
|   |                                                                                                                            |
| (17)   | Incorporated by reference to Current Report on Form 8-K dated March 8, 2006 (File No. 001-16117).                               |
|   |                                                                                                                            |
| (18)   | Incorporated by reference to Current Report on Form 8-K dated January 13, 2006 (File No. 001-16117).                            |
|   |                                                                                                                            |
| (19)   | Incorporated by reference to Current Report on Form 8-K dated February 5, 2007 (File No. 001-16117).                            |
|   |                                                                                                                            |
| (20)   | Incorporated by reference to Annual Report on Form 10-K for the year ended December 31, 2005 (File No. 000-07843).              |
|   |                                                                                                                            |
| (21)   | Incorporated by reference to Current Report on Form 8-K dated November 2, 2006 (File No. 001-16117).                            |
|   |                                                                                                                            |
| (22)   | Incorporated by reference to Annual Report on Form 10-K for the year ended December 31, 2006 (File No. 000-07843).              |
|   |                                                                                                                            |
| (23)   | Incorporated by reference to Current Report on Form 8-K dated June 23, 2006 (File No. 001-16117).                               |
|   |                                                                                                                            |
| (24)   | Incorporated by reference to Annual Report on Form 10-K for the year ended December 31, 2007 (File No. 000-07843).              |
|   |                                                                                                                            |
| (25)   | Incorporated by reference to Quarterly Report on Form 10-Q for the quarter ended June 30, 2008 (File No. 001-16117).            |
|   |                                                                                                                            |
| (26)   | Incorporated by reference to Current Report on Form 8-K dated June 25, 2008 (File No. 001-16117).                               |
|   |                                                                                                                            |
| (27)   | Incorporated by reference to Quarterly Report on Form 10-Q for the quarter ended September 30, 2008 (File No. 001-16117).       |
|   |                                                                                                                            |
| (28)   | Incorporated by reference to Annual Report on Form 10-K for the year ended December 31, 2008 (File No. 000-07843).              |
|   |                                                                                                                            |
| (29)   | Incorporated by reference to Current Report on Form 8-K dated October 21, 2009 (File No. 001-16117).                            |
|   |                                                                                                                            |
| (30)   | Incorporated by reference to Current Report on Form 8-K December 1, 2009 (File No. 001-16117).                                  |
|   |                                                                                                                            |
| (31)   | Incorporated by reference to Current Report on Form 8-K dated January 7, 2010 (File No. 001-16117).                             |

----

|   |                                                                                                               |
|--------|--------------------------------------------------------------------------------------------------------------------|
| (32)   | Incorporated by reference to Current Report on Form 8-K dated April 23, 2007 (File No. 001-16117).                 |
|   |                                                                                                               |
| (33)   | Incorporated by reference to Annual Report on Form 10-K for the year ended December 31, 2009 (File No. 001-16117). |
|   |                                                                                                               |
| (34)   | Incorporated by reference to Current Report on Form 8-K April 30, 2010 (File No. 001-16117).                       |
|   |                                                                                                               |
| (35)   | Incorporated by reference to Current Report on Form 8-K June 30, 2010 (File No. 001-16117).                        |
|   |                                                                                                               |
|   |                                                                                                               |
|   |                                                                                                               |
|   |                                                                                                               |
|   |                                                                                                               |

----

----

|                                                                                                                                                                                                                                                                                                    |   | December 31, 2010 |    |   | December 31, 2009 |   |
|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|-------------------|---------|--------|-------------------|--------|
| ASSETS:                                                                                                                                                                                                                                                                                                 |   |              |    |   |              |   |
| Current assets:                                                                                                                                                                                                                                                                                         |   |              |    |   |              |   |
|    Cash and cash equivalents                                                                                                                                                                                                                                                             |   | $                 | 4,195   |   |              | $      | 3,621 |   |
|    Investments                                                                                                                                                                                                                                                                           |   |              | 7,126   |   |              |   | — |   |
|    Accounts receivable - net                                                                                                                                                                                                                                                             |   |              | 7,818   |   |              |   | 13,843 |   |
|    Income taxes receivable                                                                                                                                                                                                                                                               |   |              | 30      |   |              |   | 4,044 |   |
|    Prepaid expenses and other current assets                                                                                                                                                                                                                                             |   |              | 1,185   |   |              |   | 2,111 |   |
|    Current assets of discontinued operations                                                                                                                                                                                                                                             |   |              | 39      |   |              |   | 2,401 |   |
| Total current assets                                                                                                                                                                                                                                                                                    |   |              | 20,393  |   |              |   | 26,020 |   |
|                                                                                                                                                                                                                                                                                                    |   |              |    |   |              |   |   |   |
| Property and equipment - net                                                                                                                                                                                                                                                                            |   |              | 1,197   |   |              |   | 1,663 |   |
| Long-term investments                                                                                                                                                                                                                                                                                   |   |              | — |   |              |   | 14,180 |   |
| Accounts receivable - noncurrent, net                                                                                                                                                                                                                                                                   |   |              | 59      |   |              |   | 153 |   |
| Film and television costs - net                                                                                                                                                                                                                                                                         |   |              | 3,668   |   |              |   | 6,832 |   |
| Non-current assets of discontinued operations                                                                                                                                                                                                                                                           |   |              | — |   |              |   | 1,721 |   |
| Other assets - net (includes related party amounts of $195 and $1,215, respectively)                                                                                                                                                                                                                    |   |              | 3,753   |   |              |   | 6,084 |   |
| Total assets                                                                                                                                                                                                                                                                                            |   | $                 | 29,070  |   |              | $      | 56,653 |   |
|                                                                                                                                                                                                                                                                                                    |   |              |    |   |              |   |   |   |
| LIABILITIES AND EQUITY:                                                                                                                                                                                                                                                                                 |   |              |    |   |              |   |   |   |
| Current liabilities:                                                                                                                                                                                                                                                                                    |   |              |    |   |              |   |   |   |
|    Due to licensors                                                                                                                                                                                                                                                                      |   | $                 | 2,501   |   |              | $      | 6,578 |   |
|    Accounts payable and accrued expenses                                                                                                                                                                                                                                                 |   |              | 12,517  |   |              |   | 9,566 |   |
|    Current liabilities of discontinued operations                                                                                                                                                                                                                                        |   |              | 1,753   |   |              |   | 2,738 |   |
|    Deferred revenue                                                                                                                                                                                                                                                                      |   |              | 1,570   |   |              |   | 2,279 |   |
| Total current liabilities                                                                                                                                                                                                                                                                               |   |              | 18,341  |   |              |   | 21,161 |   |
|                                                                                                                                                                                                                                                                                                    |   |              |    |   |              |   |   |   |
| Deferred rent                                                                                                                                                                                                                                                                                           |   |              | 471     |   |              |   | 375 |   |
| Total liabilities                                                                                                                                                                                                                                                                                       |   |              | 18,812  |   |              |   | 21,536 |   |
|                                                                                                                                                                                                                                                                                                    |   |              |    |   |              |   |   |   |
| Commitments and contingencies (Note 15)                                                                                                                                                                                                                                                                 |   |              |    |   |              |   |   |   |
| 4Kids Entertainment, Inc. shareholders’ equity                                                                                                                                                                                                                                                    |   |              |    |   |              |   |   |   |
|       Preferred stock, $.01 par value – authorized 3,000,000 shares; none issued                                                                                                                                                                                    |   |              | — |   |              |   | — |   |
|       Common stock, $.01 par value - authorized 40,000,000 shares;       issued 15,652,845 and 15,411,099 shares; outstanding       13,528,958 and 13,352,053 shares in 2010 and 2009, respectively |   |              | 157     |   |              |   | 154 |   |
|       Additional paid-in capital                                                                                                                                                                                                                                          |   |              | 68,699  |   |              |   | 66,991 |   |
|       Accumulated other comprehensive income (loss)                                                                                                                                                                                                                       |   |              | 470     |   |              |   | (4,644 | ) |
|       Retained (deficit) earnings                                                                                                                                                                                                                                         |   |              | (7,863  | )      |              |   | 19,298 |   |
|                                                                                                                                                                                                                                                                                                    |   |              | 61,463  |   |              |   | 81,799 |   |
| Less cost of 2,123,887 and 2,059,046 treasury shares in 2010 and 2009, respectively                                                                                                                                                                                                                     |   |              | (36,488 | )      |              |   | (36,434 | ) |
| Total shareholders’ equity of 4Kids Entertainment, Inc.                                                                                                                                                                                                                                           |   |              | 24,975  |   |              |   | 45,365 |   |
| Noncontrolling interests related to discontinued operations                                                                                                                                                                                                                                             |   |              | (14,717 | )      |              |   | (10,248 | ) |
| Total equity                                                                                                                                                                                                                                                                                            |   |              | 10,258  |   |              |   | 35,117 |   |
| Total liabilities and equity                                                                                                                                                                                                                                                                            |   | $                 | 29,070  |   |              | $      | 56,653 |   |

----

|                                                                                 |   | 2010   |       |   | 2009   |   |       | 2008   |   |
|--------------------------------------------------------------------------------------|--------|--------|------------|--------|--------|--------|------------|--------|--------|
| Net revenues:                                                                        |   |   |       |   |   |   |       |   |   |
|    Service revenue                                                    |   | $      | 14,478     |   |   | $      | 24,394     |   |   | $ | 41,925 |   |
|    Other revenue                                                      |   |   | —    |   |   |   | 9,786      |   |   |   | — |   |
|           Total net revenues       |   |   | 14,478     |   |   |   | 34,180     |   |   |   | 41,925 |   |
|                                                                                 |   |   |       |   |   |   |       |   |   |   |   |   |
| Costs and expenses:                                                                  |   |   |       |   |   |   |       |   |   |   |   |   |
|    Selling, general and administrative                                |   |   | 28,011     |   |   |   | 33,175     |   |   |   | 36,966 |   |
|    Amortization of television and film costs                          |   |   | 6,827      |   |   |   | 21,511     |   |   |   | 7,707 |   |
|    Amortization of 4Kids TV broadcast fee                             |   |   | —    |   |   |   | —    |   |   |   | 16,022 |   |
|    Impairment of investment in international                          |   |   |       |   |   |   |       |   |   |   |   |   |
|       trading card subsidiary                          |   |   | —    |   |   |   | 2,430      |   |   |   | — |   |
|           Total costs and expenses |   |   | 34,838     |   |   |   | 57,116     |   |   |   | 60,695 |   |
|                                                                                 |   |   |       |   |   |   |       |   |   |   |   |   |
| Loss from operations                                                                 |   |   | (20,360    | )      |   |   | (22,936    | )      |   |   | (18,770 | ) |
|                                                                                 |   |   |       |   |   |   |       |   |   |   |   |   |
| Other income (expense)                                                               |   |   |       |   |   |   |       |   |   |   |   |   |
| Interest income                                                                      |   |   | 403        |   |   |   | 1,076      |   |   |   | 2,722 |   |
| Impairment of investment securities                                                  |   |   | (3,578     | )      |   |   | (6,175     | )      |   |   | (7,834 | ) |
| Loss on sale of investment securities                                                |   |   | (1,616     | )      |   |   | (7,647     | )      |   |   | — |   |
|          Total other expense            |   |   | (4,791     | )      |   |   | (12,746    | )      |   |   | (5,112 | ) |
|                                                                                 |   |   |       |   |   |   |       |   |   |   |   |   |
| Loss before income taxes                                                             |   |   | (25,151    | )      |   |   | (35,682    | )      |   |   | (23,882 | ) |
| Benefit from (provision for) income taxes                                            |   |   | —    |   |   |   | 3,805      |   |   |   | (300 | ) |
|                                                                                 |   |   |       |   |   |   |       |   |   |   |   |   |
| Loss from continuing operations                                                      |   |   | (25,151    | )      |   |   | (31,877    | )      |   |   | (24,182 | ) |
| Loss from discontinued operations                                                    |   |   | (6,489     | )      |   |   | (20,579    | )      |   |   | (12,637 | ) |
| Net loss                                                                             |   |   | (31,640    | )      |   |   | (52,456    | )      |   |   | (36,819 | ) |
| Loss attributable to noncontrolling interests                                        |   |   | 4,479      |   |   |   | 10,380     |   |   |   | — |   |
|                                                                                 |   |   |       |   |   |   |       |   |   |   |   |   |
| Net loss attributable to 4Kids Entertainment, Inc.                                   |   | $      | (27,161    | )      |   | $      | (42,076    | )      |   | $ | (36,819 | ) |
|                                                                                 |   |   |       |   |   |   |       |   |   |   |   |   |
| Per share amounts:                                                                   |   |   |       |   |   |   |       |   |   |   |   |   |
| Basic and diluted loss per share attributable to                                     |   |   |       |   |   |   |       |   |   |   |   |   |
| 4Kids Entertainment, Inc. common shareholders                                        |   |   |       |   |   |   |       |   |   |   |   |   |
|     Continuing operations                                        |   | $      | (1.87      | )      |   | $      | (2.40      | )      |   | $ | (1.81 | ) |
|     Discontinued operations                                      |   |   | (0.15      | )      |   |   | (0.76      | )      |   |   | (0.98 | ) |
| Basic and diluted loss per share attributable to                                     |   |   |       |   |   |   |       |   |   |   |   |   |
| 4Kids Entertainment, Inc. common shareholders                                        |   | $      | (2.02      | )      |   | $      | (3.16      | )      |   | $ | (2.79 | ) |
| Weighted average common shares                                                       |   |   |       |   |   |   |       |   |   |   |   |   |
|     outstanding – basic and diluted                        |   |   | 13,460,214 |   |   |   | 13,303,192 |   |   |   | 13,181,549 |   |
|                                                                                 |   |   |       |   |   |   |       |   |   |   |   |   |
| Net loss attributable to 4Kids Entertainment, Inc.:                                  |   |   |       |   |   |   |       |   |   |   |   |   |
| Loss from continuing operations                                                      |   | $      | (25,151    | )      |   | $      | (31,877    | )      |   | $ | (24,182 | ) |
|                                                                                 |   |   |       |   |   |   |       |   |   |   |   |   |
| Loss from discontinued operations                                                    |   |   | (6,489     | )      |   |   | (20,579    | )      |   |   | (12,637 | ) |
| Loss attributable to noncontrolling interests                                        |   |   | 4,479      |   |   |   | 10,380     |   |   |   | — |   |
| Net loss from discontinued operations                                                |   |   | (2,010     | )      |   |   | (10,199    | )      |   |   | (12,637 | ) |
| Net loss attributable to 4Kids Entertainment, Inc.                                   |   | $      | (27,161    | )      |   | $      | (42,076    | )      |   | $ | (36,819 | ) |
|                                                                                 |   |   |       |   |   |   |       |   |   |   |   |   |

----

|                                                                          |   | 4Kids Entertainment, Inc. Shareholders |    |   |                       |   |    |              |   |
|-------------------------------------------------------------------------------|--------|----------------------------------------|---------|--------|----------------------------|--------|---------|-------------------|--------|
|                                                                          |   | Common Stock                           |    |   | Additional Paid-In Capital |   |    | Retained Earnings |   |   | Accumulated Other Comprehensive (Loss) Income |   |   | Less Treasury Stock |   |   | Total Shareholders’ Equity |   |   | Non-controlling Interests |   |   | Total Equity |   |
|                                                                          |   | Shares                                 |    |   | Amount                     |   |
| BALANCE, DECEMBER 31, 2007                                                    |   |                                   | 15,100  |   |                       | $      | 151     |              |   | $ | 63,679 |   |   | $ | 100,323 |   |   | $ | (2,562 | ) |   | $ | (33,503 | ) |   | $ | 128,088 |   |   | $ | — |   |   | $ | 128,088 |   |
| Issuance of common stock and stock options exercised                          |   |                                   | 147     |   |                       |   | 1       |              |   |   | 1,428 |   |   |   | — |   |   |   | — |   |   |   | — |   |   |   | 1,429 |   |   |   | — |   |   |   | 1,429 |   |
| Acquisition of treasury stock, at cost                                        |   |                                   | — |   |                       |   | — |              |   |   | — |   |   |   | — |   |   |   | — |   |   |   | (2,873 | ) |   |   | (2,873 | ) |   |   | — |   |   |   | (2,873 | ) |
| Comprehensive loss:                                                           |   |                                   |    |   |                       |   |    |              |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Net loss                                                                      |   |                                   | — |   |                       |   | — |              |   |   | — |   |   |   | (36,819 | ) |   |   | — |   |   |   | — |   |   |   | (36,819 | ) |   |   | — |   |   |   | (36,819 | ) |
| Translation adjustment                                                        |   |                                   | — |   |                       |   | — |              |   |   | — |   |   |   | — |   |   |   | (1,348 | ) |   |   | — |   |   |   | (1,348 | ) |   |   | — |   |   |   | (1,348 | ) |
| Unrealized loss on investment securities                                      |   |                                   | — |   |                       |   | — |              |   |   | — |   |   |   | — |   |   |   | (13,486 | ) |   |   | — |   |   |   | (13,486 | ) |   |   | — |   |   |   | (13,486 | ) |
| Total comprehensive loss                                                      |   |                                   | — |   |                       |   | — |              |   |   | — |   |   |   | — |   |   |   | — |   |   |   | — |   |   |   | (51,653 | ) |   |   | — |   |   |   | (51,653 | ) |
| BALANCE, DECEMBER 31, 2008                                                    |   |                                   | 15,247  |   |                       | $      | 152     |              |   | $ | 65,107 |   |   | $ | 63,504 |   |   | $ | (17,396 | ) |   | $ | (36,376 | ) |   | $ | 74,991 |   |   | $ | — |   |   | $ | 74,991 |   |
| Cumulative effect of change in accounting principle (1)                       |   |                                   | — |   |                       |   | — |              |   |   | — |   |   |   | (2,130 | ) |   |   | 2,130 |   |   |   | — |   |   |   | — |   |   |   | — |   |   |   | — |   |
| As adjusted                                                                   |   |                                   | 15,247  |   |                       |   | 152     |              |   |   | 65,107 |   |   |   | 61,374 |   |   |   | (15,266 | ) |   |   | (36,376 | ) |   |   | 74,991 |   |   |   | — |   |   |   | 74,991 |   |
| Issuance of common stock and stock options exercised                          |   |                                   | 164     |   |                       |   | 2       |              |   |   | 1,884 |   |   |   | — |   |   |   | — |   |   |   | — |   |   |   | 1,886 |   |   |   | — |   |   |   | 1,886 |   |
| Capital contribution from noncontrolling interests                            |   |                                   | — |   |                       |   | — |              |   |   | — |   |   |   | — |   |   |   | — |   |   |   | — |   |   |   | — |   |   |   | 132 |   |   |   | 132 |   |
| Acquisition of treasury stock, at cost                                        |   |                                   | — |   |                       |   | — |              |   |   | — |   |   |   | — |   |   |   | — |   |   |   | (58 | ) |   |   | (58 | ) |   |   | — |   |   |   | (58 | ) |
| Reclassification adjustment related to realized loss of investment securities |   |                                   | — |   |                       |   | — |              |   |   | — |   |   |   | — |   |   |   | 8,570 |   |   |   | — |   |   |   | 8,570 |   |   |   | — |   |   |   | 8,570 |   |
| Comprehensive loss:                                                           |   |                                   |    |   |                       |   |    |              |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Net loss                                                                      |   |                                   | — |   |                       |   | — |              |   |   | — |   |   |   | (42,076 | ) |   |   | — |   |   |   | — |   |   |   | (42,076 | ) |   |   | (10,380 | ) |   |   | (52,456 | ) |
| Translation adjustment                                                        |   |                                   | — |   |                       |   | — |              |   |   | — |   |   |   | — |   |   |   | 504 |   |   |   | — |   |   |   | 504 |   |   |   | — |   |   |   | 504 |   |
| Unrealized loss reclassified to earnings                                      |   |                                   | — |   |                       |   | — |              |   |   | — |   |   |   | — |   |   |   | 1,548 |   |   |   | — |   |   |   | 1,548 |   |   |   | — |   |   |   | 1,548 |   |
| Total comprehensive loss                                                      |   |                                   | — |   |                       |   | — |              |   |   | — |   |   |   | — |   |   |   | — |   |   |   | — |   |   |   | (40,024 | ) |   |   | (10,380 | ) |   |   | (50,404 | ) |
| BALANCE, DECEMBER 31, 2009                                                    |   |                                   | 15,411  |   |                       | $      | 154     |              |   | $ | 66,991 |   |   | $ | 19,298 |   |   | $ | (4,644 | ) |   | $ | (36,434 | ) |   | $ | 45,365 |   |   | $ | (10,248 | ) |   | $ | 35,117 |   |
| Issuance of common stock and stock options exercised                          |   |                                   | 242     |   |                       |   | 3       |              |   |   | 1,708 |   |   |   | — |   |   |   | — |   |   |   | — |   |   |   | 1,711 |   |   |   | — |   |   |   | 1,711 |   |
| Capital contribution from noncontrolling interests                            |   |                                   | — |   |                       |   | — |              |   |   | — |   |   |   | — |   |   |   | — |   |   |   | — |   |   |   | — |   |   |   | 10 |   |   |   | 10 |   |
| Acquisition of treasury stock, at cost                                        |   |                                   | — |   |                       |   | — |              |   |   | — |   |   |   | — |   |   |   | — |   |   |   | (54 | ) |   |   | (54 | ) |   |   | — |   |   |   | (54 | ) |
| Comprehensive loss:                                                           |   |                                   |    |   |                       |   |    |              |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Net loss                                                                      |   |                                   | — |   |                       |   | — |              |   |   | — |   |   |   | (27,161 | ) |   |   | — |   |   |   | — |   |   |   | (27,161 | ) |   |   | (4,479 | ) |   |   | (31,640 | ) |
| Translation adjustment                                                        |   |                                   | — |   |                       |   | — |              |   |   | — |   |   |   | — |   |   |   | (117 | ) |   |   | — |   |   |   | (117 | ) |   |   | — |   |   |   | (117 | ) |
| Unrealized loss reclassified to earnings                                      |   |                                   | — |   |                       |   | — |              |   |   | — |   |   |   | — |   |   |   | 5,231 |   |   |   | — |   |   |   | 5,231 |   |   |   | — |   |   |   | 5,231 |   |
| Total comprehensive loss                                                      |   |                                   | — |   |                       |   | — |              |   |   | — |   |   |   | — |   |   |   | — |   |   |   | — |   |   |   | (22,047 | ) |   |   | (4,479 | ) |   |   | (26,526 | ) |
| BALANCE, DECEMBER 31, 2010                                                    |   |                                   | 15,653  |   |                       | $      | 157     |              |   | $ | 68,699 |   |   | $ | (7,863 | ) |   | $ | 470 |   |   | $ | (36,488 | ) |   | $ | 24,975 |   |   | $ | (14,717 | ) |   | $ | 10,258 |   |

----

|                                                                                 |   | 2010   |    |   | 2009   |   |    | 2008   |   |
|--------------------------------------------------------------------------------------|--------|--------|---------|--------|--------|--------|---------|--------|--------|
| Cash flows from operating activities:                                                |   |   |    |   |   |   |    |   |   |
| Net loss                                                                             |   | $      | (31,640 | )      |   | $      | (52,456 | )      |   | $ | (36,819 | ) |
| Adjustments to reconcile net loss to net cash                                        |   |   |    |   |   |   |    |   |   |   |   |   |
| provided by (used in) operating activities:                                          |   |   |    |   |   |   |    |   |   |   |   |   |
| Depreciation and amortization                                                        |   |   | 745     |   |   |   | 755     |   |   |   | 796 |   |
| Amortization of television and film costs                                            |   |   | 6,827   |   |   |   | 21,511  |   |   |   | 7,707 |   |
| Amortization of 4Kids TV broadcast fee                                               |   |   | — |   |   |   | — |   |   |   | 16,022 |   |
| Provision for doubtful accounts                                                      |   |   | 920     |   |   |   | 398     |   |   |   | 420 |   |
| Share-based compensation                                                             |   |   | 1,263   |   |   |   | 1,839   |   |   |   | 1,630 |   |
| Deferred income taxes                                                                |   |   | — |   |   |   | 127     |   |   |   | (127 | ) |
| Impairment of investment in international trading card subsidiary                    |   |   | — |   |   |   | 2,430   |   |   |   | — |   |
| Impairment of investment securities                                                  |   |   | 3,578   |   |   |   | 6,175   |   |   |   | 7,834 |   |
| Loss on sale of investment securities                                                |   |   | 1,616   |   |   |   | 7,647   |   |   |   | — |   |
| Changes in operating assets and liabilities:                                         |   |   |    |   |   |   |    |   |   |   |   |   |
| Accounts receivable                                                                  |   |   | 5,129   |   |   |   | 7,791   |   |   |   | (875 | ) |
| Film and television costs                                                            |   |   | (3,663  | )      |   |   | (11,682 | )      |   |   | (10,016 | ) |
| Income taxes receivable                                                              |   |   | 4,014   |   |   |   | (3,907  | )      |   |   | 1,022 |   |
| Prepaid 4Kids TV broadcast fee                                                       |   |   | — |   |   |   | — |   |   |   | (14,014 | ) |
| Prepaid expenses and other current assets                                            |   |   | 919     |   |   |   | (726    | )      |   |   | 1,514 |   |
| Other assets - net                                                                   |   |   | 2,331   |   |   |   | 5,753   |   |   |   | (2,879 | ) |
| Due to licensors                                                                     |   |   | (4,081  | )      |   |   | 983     |   |   |   | 908 |   |
| Accounts payable and accrued expenses                                                |   |   | 3,418   |   |   |   | (3,610  | )      |   |   | (2,137 | ) |
| Deferred revenue                                                                     |   |   | (709    | )      |   |   | (991    | )      |   |   | 286 |   |
| Deferred rent                                                                        |   |   | 96      |   |   |   | (85     | )      |   |   | (158 | ) |
| Net cash used in continuing operating activities                                     |   |   | (9,237  | )      |   |   | (18,048 | )      |   |   | (28,886 | ) |
| Net cash provided by (used in) discontinued operating activities                     |   |   | 3,098   |   |   |   | 4,468   |   |   |   | (4,448 | ) |
| Net cash used in operating activities                                                |   |   | (6,139  | )      |   |   | (13,580 | )      |   |   | (33,334 | ) |
|                                                                                 |   |   |    |   |   |   |    |   |   |   |   |   |
| Cash flows from investing activities:                                                |   |   |    |   |   |   |    |   |   |   |   |   |
| Proceeds from sale of investments                                                    |   |   | 7,091   |   |   |   | 3,733   |   |   |   | 24,975 |   |
| Purchase of property and equipment                                                   |   |   | (311    | )      |   |   | (304    | )      |   |   | (543 | ) |
| Proceeds from disposal of property and equipment                                     |   |   | 32      |   |   |   | — |   |   |   | — |   |
| Net cash provided by investing activities                                            |   |   | 6,812   |   |   |   | 3,429   |   |   |   | 24,432 |   |
|                                                                                 |   |   |    |   |   |   |    |   |   |   |   |   |
| Cash flows from financing activities:                                                |   |   |    |   |   |   |    |   |   |   |   |   |
| Proceeds from exercise of stock options                                              |   |   | — |   |   |   | — |   |   |   | 232 |   |
| Purchase of treasury shares                                                          |   |   | (54     | )      |   |   | (58     | )      |   |   | (2,873 | ) |
| Capital contribution from noncontrolling interests                                   |   |   | 10      |   |   |   | 132     |   |   |   | — |   |
| Net cash (used in) provided by financing activities                                  |   |   | (44     | )      |   |   | 74      |   |   |   | (2,641 | ) |
| Effects of exchange rate changes on cash and cash equivalents                        |   |   | (55     | )      |   |   | 195     |   |   |   | 174 |   |
| Net increase (decrease) in cash and cash equivalents                                 |   |   | 574     |   |   |   | (9,882  | )      |   |   | (11,369 | ) |
| Cash and cash equivalents, beginning of period                                       |   |   | 3,621   |   |   |   | 13,503  |   |   |   | 24,872 |   |
| Cash and cash equivalents, end of period                                             |   | $      | 4,195   |   |   | $      | 3,621   |   |   | $ | 13,503 |   |
| Supplemental disclosure of cash flow information:                                    |   |   |    |   |   |   |    |   |   |   |   |   |
| Cash paid during period for income taxes                                             |   | $      | 8       |   |   | $      | 115     |   |   | $ | 55 |   |
| Supplemental schedule of non-cash investing and financing activities                 |   |   |    |   |   |   |    |   |   |   |   |   |
| Unrealized gain (loss) on marketable securities included in other comprehensive loss |   | $      | 5,231   |   |   | $      | 10,118  |   |   | $ | (13,486 | ) |
| Vesting of restricted shares                                                         |   | $      | 1,711   |   |   | $      | 1,886   |   |   | $ | 1,197 |   |

----

----

----

----

| ·   | Level 1 - Quoted prices in active markets for identical assets or liabilities. |
|--------------------|--------------------------------------------------------------------------------|

| ·   | Level 2 - Inputs other than Level 1 that are observable, either directly or indirectly, such as quoted prices for similar assets or liabilities, quoted prices in markets that are not active, or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the assets or liabilities. |
|--------------------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | Level 3 - Unobservable inputs that are supported by little or no market activity and that are significant to the fair value of the assets or liabilities. |
|--------------------|-----------------------------------------------------------------------------------------------------------------------------------------------------------|

----

----

----

----

|                         |   | Estimated Fair Value Measurements |   |
|------------------------------|--------|-----------------------------------|--------|
|                         |   | Carrying Value               |   |   | Quoted Prices in Active Markets (Level 1) |   |   | Significant Other Observable Inputs (Level 2) |   |   | Significant Unobservable Inputs (Level 3) |   |
| December 31, 2010:           |   |                              |   |   |   |   |   |   |   |   |   |   |
| Financial Assets             |   |                              |   |   |   |   |   |   |   |   |   |   |
| Cash and cash equivalents    |   | $                                 | 4,195  |   |   | $ | 4,195 |   |   | $ | — |   |   | $ | — |   |
| Auction rate securities      |   |                              | 7,089  |   |   |   | — |   |   |   | — |   |   |   | 7,089 |   |
| Preferred shares             |   |                              | 37     |   |   |   | — |   |   |   | — |   |   |   | 37 |   |
| Total short-term investments |   |                              | 11,321 |   |   |   | 4,195 |   |   |   | — |   |   |   | 7,126 |   |
|                         |   |                              |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Total Financial Assets       |   | $                                 | 11,321 |   |   | $ | 4,195 |   |   | $ | — |   |   | $ | 7,126 |   |
|                         |   |                              |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| December 31, 2009:           |   |                              |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Financial Assets             |   |                              |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Cash and cash equivalents    |   | $                                 | 3,621  |   |   | $ | 3,621 |   |   | $ | — |   |   | $ | — |   |
| Total short-term investments |   |                              | 3,621  |   |   |   | 3,621 |   |   |   | — |   |   |   | — |   |
|                         |   |                              |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Auction rate securities      |   |                              | 9,050  |   |   |   | — |   |   |   | — |   |   |   | 9,050 |   |
| Corporate obligations        |   |                              | 3,689  |   |   |   | — |   |   |   | — |   |   |   | 3,689 |   |
| Preferred shares             |   |                              | 1,441  |   |   |   | — |   |   |   | — |   |   |   | 1,441 |   |
| Total long-term investments  |   |                              | 14,180 |   |   |   | — |   |   |   | — |   |   |   | 14,180 |   |
|                         |   |                              |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Total Financial Assets       |   | $                                 | 17,801 |   |   | $ | 3,621 |   |   | $ | — |   |   | $ | 14,180 |   |
|                         |   |                              |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                         |   |                              |   |   |   |   |   |   |   |   |   |   |   |   |   |   |

----

|                                                              |   | December 31, 2010 |   |
|-------------------------------------------------------------------|--------|-------------------|--------|
|                                                              |   | Amortized Cost    |   |   | Unrealized Loss |   | EstimatedFair Value |   |
| Short-term investments:                                           |   |              |   |   |   |   |   |   |   |
|        Auction rate securities |   | $                 | 12,300 |   |   | $ | (5,211 | ) |   | $ | 7,089 |   |
|        Preferred shares        |   |              | 6,150  |   |   |   | (6,113 | ) |   |   | 37 |   |
| Total short-term investments                                      |   | $                 | 18,450 |   |   | $ | (11,324 | ) |   | $ | 7,126 |   |
|                                                              |   |              |   |   |   |   |   |   |   |   |   |   |
|                                                              |   |              |   |   |   |   |   |   |   |   |   |   |
|                                                              |   | December 31, 2009 |   |
|                                                              |   | Amortized Cost    |   |   | Unrealized Loss |   |   | EstimatedFair Value |   |
| Long-term investments:                                            |   |              |   |   |   |   |   |   |   |   |   |   |
|        Auction rate securities |   | $                 | 17,300 |   |   | $ | (8,250 | ) |   | $ | 9,050 |   |
|        Corporate obligations   |   |              | 5,400  |   |   |   | (1,711 | ) |   |   | 3,689 |   |
|        Preferred shares        |   |              | 12,850 |   |   |   | (11,409 | ) |   |   | 1,441 |   |
| Total long-term investments                                       |   | $                 | 35,550 |   |   | $ | (21,370 | ) |   | $ | 14,180 |   |
|                                                              |   |              |   |   |   |   |   |   |   |   |   |   |

|                                                                          |   | Auction Rate Securities |   |   | Corporate Bonds |   |    | Preferred Shares |   |   | Total   |   |
|-------------------------------------------------------------------------------|--------|-------------------------|--------|--------|-----------------|--------|---------|------------------|--------|--------|---------|--------|
| Balance as of January 1, 2010                                                 |   | $                       | 9,050  |   |            | $      | 3,689   |             |   | $      | 1,441   |   |   | $ | 14,180 |   |
|                                                                          |   |                    |   |   |            |   |    |             |   |   |    |   |   |   |   |   |
| Unrealized net change  – included in other comprehensive loss |   |                    | 3,520  |   |            |   | 1,711   |             |   |   | — |   |   |   | 5,231 |   |
|                                                                          |   |                    |   |   |            |   |    |             |   |   |    |   |   |   |   |   |
| Unrealized loss –   included in earnings                 |   |                    | (3,499 | )      |            |   | — |             |   |   | (79     | )      |   |   | (3,578 | ) |
|                                                                          |   |                    |   |   |            |   |    |             |   |   |    |   |   |   |   |   |
| Realized (loss) / gain from sale or settlement                                |   |                    | (342   | )      |            |   | (1,404  | )                |   |   | 130     |   |   |   | (1,616 | ) |
|                                                                          |   |                    |   |   |            |   |    |             |   |   |    |   |   |   |   |   |
| Proceeds from sales or settlements                                            |   |                    | (1,640 | )      |            |   | (3,996  | )                |   |   | (1,455  | )      |   |   | (7,091 | ) |
|                                                                          |   |                    |   |   |            |   |    |             |   |   |    |   |   |   |   |   |
| Balance as of December 31, 2010                                               |   | $                       | 7,089  |   |            | $      | — |             |   | $      | 37      |   |   | $ | 7,126 |   |

|                            |   | December 31, |   |
|---------------------------------|--------|--------------|--------|
|                            |   | 2010         |   |   | 2009 |   |
| Gross accounts receivable       |   | $            | 8,517  |   |   | $ | 14,785 |   |
| Allowance for doubtful accounts |   |         | (640   | ) |   |   | (789 | ) |
|                            |   |         | 7,877  |   |   |   | 13,996 |   |
| Less: long-term portion         |   |         | (59    | ) |   |   | (153 | ) |
|                            |   | $            | 7,818  |   |   | $ | 13,843 |   |

----

|                      |   | December 31, |   |
|---------------------------|--------|--------------|--------|
|                      |   | 2010         |   |   | 2009 |   |
| Opening balance           |   | $            | 6,832  |   |   | $ | 16,661 |   |
| Additions                 |   |         | 3,663  |   |   |   | 11,682 |   |
|                      |   |         | 10,495 |   |   |   | 28,343 |   |
| Amortization              |   |         | (6,827 | ) |   |   | (21,511 | ) |
| Ending Balance            |   | $            | 3,668  |   |   | $ | 6,832 |   |
|                      |   |         |   |   |   |   |   |   |
| Development/Preproduction |   | $            | 75     |   |   | $ | 392 |   |
| Production                |   |         | 326    |   |   |   | 1,645 |   |
| Completed not released    |   |         | 325    |   |   |   | 639 |   |
| Completed released        |   |         | 2,942  |   |   |   | 4,156 |   |
|                      |   | $            | 3,668  |   |   | $ | 6,832 |   |

|                                            |   | December 31, |   |
|-------------------------------------------------|--------|--------------|--------|
|                                            |   | 2010         |   |   | 2009 |   |
| Computer equipment and software                 |   | $            | 3,398  |   |   | $ | 3,438 |   |
| Website development                             |   |         | 87     |   |   |   | 87 |   |
| Machinery and equipment                         |   |         | 2,052  |   |   |   | 2,130 |   |
| Office furniture and fixtures                   |   |         | 1,082  |   |   |   | 1,097 |   |
| Leasehold improvements                          |   |         | 3,156  |   |   |   | 3,032 |   |
| Office equipment                                |   |         | 354    |   |   |   | 354 |   |
|                                            |   |         | 10,129 |   |   |   | 10,138 |   |
| Less: accumulated depreciation and amortization |   |         | (8,932 | ) |   |   | (8,475 | ) |
|                                            |   | $            | 1,197  |   |   | $ | 1,663 |   |

----

|                             | Shares(In thousands) | WeightedAverageExercisePrice |   | RemainingContractual  Life(in years) |   | AggregateIntrinsicValue (in thousands) |   |
|----------------------------------|----------------------|------------------------------|--------|------------------------------------------------|--------|---------------------------------------------|--------|
| Outstanding at January 1, 2008   | 1,715                |                         | $      | 18.43                                          |   |                                        |   |   |   |   |
| Granted                          | —              |                         |   | —                                        |   |                                        |   |   |   |   |
| Exercised                        | (75                  | )                            |   | 3.10                                           |   |                                        |   |   |   |   |
| Forfeited, cancelled or expired  | (339                 | )                            |   | 12.63                                          |   |                                        |   |   |   |   |
|                             | 1,301                |                         | $      | 20.76                                          |   |                                        |   |   |   |   |
| Outstanding at December 31, 2008 | —              |                         |   | —                                        |   |                                        |   |   |   |   |
| Granted                          | —              |                         |   | —                                        |   |                                        |   |   |   |   |
| Exercised                        | —              |                         |   | —                                        |   |                                        |   |   |   |   |
| Forfeited, cancelled or expired  | (531                 | )                            |   | 24.35                                          |   |                                        |   |   |   |   |
|                             | 770                  |                         | $      | 18.28                                          |   |                                        |   |   |   |   |
| Outstanding at December 31, 2009 | —              |                         |   | —                                        |   |                                        |   |   |   |   |
| Granted                          | —              |                         |   | —                                        |   |                                        |   |   |   |   |
| Exercised                        | —              |                         |   | —                                        |   |                                        |   |   |   |   |
| Forfeited, cancelled or expired  | (480                 | )                            |   | 20.56                                          |   |                                        |   |   |   |   |
| Outstanding at December 31, 2010 | 290                  |                         | $      | 14.29                                          |   | 0.5                                         |   | $ | — |   |
|                             |                 |                         |   |                                           |   |                                        |   |   |   |   |
| Exercisable at December 31, 2010 | 290                  |                         | $      | 14.29                                          |   | 0.5                                         |   | $ | — |   |

|                     |                      |   | Options Outstanding                          |   |   | Options Exercisable                                   |   |
|--------------------------|---------------------------|--------|----------------------------------------------|--------|--------|-------------------------------------------------------|--------|
| Ranges ofExercise Prices |                      |   | Number Outstanding at 12/31/10(in thousands) |   |   | Weighted Average Remaining Contractual Life(in years) |   |   | Weighted Average Exercise Price |   |   | Number Exercisable at 12/31/10(in thousands) |   |   | Weighted Average Exercise Price |   |
| $                        | 8.94 - $ 13.41  |   |                                         |   | 150    |                                                  |   |   | 0.0 |   |   | $ | 8.94 |   |   |   | 150 |   |   | $ | 8.94 |   |
| $                        | 13.42 - $ 20.13 |   |                                         |   | 140    |                                                  |   |   | 1.0 |   |   |   | 20.03 |   |   |   | 140 |   |   |   | 20.03 |   |
|                     |                      |   |                                         |   |   |                                                  |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Total                    |                      |   |                                         | 290    |   |                                                  |   | 0.5 |   |   | $ | 14.29 |   |   |   | 290 |   |   | $ | 14.29 |   |

----

|                             | Number of Shares(in thousands) |   | Weighted- Average Grant Date Fair Value |
|----------------------------------|--------------------------------|--------|-----------------------------------------|
| Outstanding at January 1, 2008   | 254                            |   | $                                       | 16.68 |   |
|   Granted              | 311                            |   |                                    | 7.85 |   |
|   Vested               | (71                            | )      |                                    | 16.65 |   |
|   Forfeited                 | (29                            | )      |                                    | 11.21 |   |
|                             |                           |   |                                    |   |   |
| Outstanding at December 31, 2008 | 465                            |   | $                                       | 11.11 |   |
|   Granted              | 378                            |   |                                    | 1.46 |   |
|   Vested               | (164                           | )      |                                    | 11.46 |   |
|   Forfeited            | (85                            | )      |                                    | 6.11 |   |
|                             |                           |   |                                    |   |   |
| Outstanding at December 31, 2009 | 594                            |   | $                                       | 5.58 |   |
|   Granted              | —                        |   |                                    | — |   |
|   Vested               | (242                           | )      |                                    | 7.09 |   |
|   Forfeited            | (100                           | )      |                                    | 4.39 |   |
| Outstanding at December 31, 2010 | 252                            |   |   $                                | 4.60 |   |

|                                                                                                                       |   | December 31, |   |
|----------------------------------------------------------------------------------------------------------------------------|--------|--------------|--------|
|                                                                                                                       |   | 2010         |   | 2009 |   | 2008 |   |
| Percentage of revenue derived from major Properties (revenue in excess of 10 percent of total revenue)                     |   | 56           | %      | 62 | % | 33 | % |
| Number of major Properties                                                                                                 |   | 2            |   | 2 |   | 2 |   |
|                                                                                                                       |   |         |   |   |   |   |   |
| Percentage of revenue derived from major customers/licensees  (revenue in excess of 10 percent of total revenue) |   | 39           | %      | 18 | % | 15 | % |
| Number of major customers/licensees                                                                                        |   | 1            |   | 1 |   | 1 |   |

----

|                                      | Years Ended December 31, |
|-------------------------------------------|--------------------------|
|                                      |                     | 2010 |   |   | 2009 |   |   | 2008 |   |
| Current tax (benefit):                    |                     |   |   |   |   |   |   |   |   |
| Federal                                   |                     | $ | — |   |   | $ | (3,927 | ) |   | $ | — |   |
| State and local                           |                     |   | — |   |   |   | — |   |   |   | — |   |
| Foreign                                   |                     |   | — |   |   |   | — |   |   |   | 101 |   |
|                                      |                     | $ | — |   |   | $ | (3,927 | ) |   | $ | 101 |   |
| Deferred tax (benefit):                   |                     |   |   |   |   |   |   |   |   |   |   |   |
| Federal                                   |                     |   | — |   |   |   | — |   |   |   | — |   |
| State and local                           |                     |   | — |   |   |   | — |   |   |   | — |   |
| Foreign                                   |                     |   | — |   |   |   | 122 |   |   |   | 199 |   |
|                                      |                     |   | — |   |   |   | 122 |   |   |   | 199 |   |
|                                      |                     |   |   |   |   |   |   |   |   |   |   |   |
| (Benefit from) provision for income taxes |                     | $ | — |   |   | $ | (3,805 | ) |   | $ | 300 |   |

|         |   | Years Ended December 31, |    |
|--------------|--------|--------------------------|---------|
|         |   | 2010                     |    |   | 2009 |   |   | 2008 |   |
|         |   |                     |    |   |   |   |   |   |   |
| Domestic     |   | $                        | (29,370 | ) |   | $ | (54,048 | ) |   | $ | (35,940 | ) |
| Foreign      |   |                     | (2,270  | ) |   |   | (2,213 | ) |   |   | (889 | ) |
| Pre-tax loss |   | $                        | (31,640 | ) |   | $ | (56,261 | ) |   | $ | (36,829 | ) |

|                                        | Years Ended December 31, |
|---------------------------------------------|--------------------------|
|                                        | 2010                     | % of Pretax |   |   | 2009 |   | % of Pretax |   |   | 2008 |   | % of Pretax |   |
|                                        |                     |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Tax at Federal statutory rate               | $                        | (11,074 | ) | (35.0 | )% | $ | (19,691 | ) | (35.0) | % | $ | (12,890 | ) | (35.0) | % |
| Increase (decrease) in:Valuation allowances |                     | 12,564 |   | 39.7 |   |   |   | 18,438 |   | 32.8 |   |   | 15,576 |   | 42.3 |   |
| Permanent differences                       |                     | 10 |   | — |   |   |   | 150 |   | 0.3 |   |   | (188 | ) | (0.5) |   |
| State and local taxes - net                 |                     | (1,500 | ) | (4.7 | ) |   |   | (2,702 | ) | (4.8) |   |   | (1,867 | ) | (5.1) |   |
| Other - net                                 |                     | — |   | — |   |   |   | — |   | — |   |   |  (331 | ) | (0.9) |   |
| Income tax (benefit) provision              | $                        | — |   |     — | % |   | $ | (3,805 | ) | (6.7) | % | $ | 300 |   | 0.8 | % |

----

|                                           |   | December 31, |    |
|------------------------------------------------|--------|--------------|---------|
|                                           |   | 2010         |    |   | 2009 |   |
| Deferred Tax Assets:                           |   |         |    |   |   |   |
| Investments                                    |   | $            | 4,544   |   |   | $ | 5,489 |   |
| Inventory                                      |   |         | — |   |   |   | 2,415 |   |
| Film and television costs                      |   |         | 719     |   |   |   | 1,119 |   |
| Accounts receivable allowances                 |   |         | 224     |   |   |   | 274 |   |
| Foreign tax credits                            |   |         | — |   |   |   | 186 |   |
| Net operating loss carryforwards               |   |         | 37,864  |   |   |   | 29,596 |   |
| Capital loss carryforwards                     |   |         | 4,575   |   |   |   | 3,059 |   |
| Restricted stock/Stock options                 |   |         | 1,877   |   |   |   | 1,463 |   |
| Contributions                                  |   |         | 98      |   |   |   | 270 |   |
| Deferred rent                                  |   |         | 197     |   |   |   | 222 |   |
| Property and equipment                         |   |         | 976     |   |   |   | 807 |   |
| Gross deferred tax assets                      |   | $            | 51,074  |   |   | $ | 44,900 |   |
|                                           |   |         |    |   |   |   |   |   |
| Deferred Tax Liabilities:                      |   |         |    |   |   |   |   |   |
| Film and television costs                      |   | $            | — |   |   | $ | — |   |
| Foreign earnings                               |   |         | — |   |   |   | (1,210 | ) |
| Accrued minimum guarantees                     |   |         | (28     | ) |   |   | (190 | ) |
| Gross deferred tax liabilities                 |   | $            | (28     | ) |   | $ | (1,400 | ) |
|                                           |   |         |    |   |   |   |   |   |
| Valuation allowance                            |   | $            | (51,046 | ) |   | $ | (43,500 | ) |
|                                           |   |         |    |   |   |   |   |   |
| Net deferred tax asset                         |   | $            | — |   |   | $ | — |   |
| Amounts recognized in the Consolidated Balance |   |         |    |   |   |   |   |   |
|    Sheets consist of:           |   |         |    |   |   |   |   |   |
| Deferred tax asset – current             |   | $            | — |   |   | $ | — |   |
| Deferred tax asset – non-current         |   |         | — |   |   |   | — |   |
| Net deferred tax asset                         |   | $            | — |   |   | $ | — |   |

|                                                    | Years Ended December 31, |   |
|---------------------------------------------------------|--------------------------|--------|
|                                                    |                     | 2010   |   |   | 2009 |   |   | 2008 |   |
|                                                    |                     |   |   |   |   |   |   |   |   |
|                                                    |                     |   |   |   |   |   |   |   |   |
| Beginning balance                                       |                     | $      | 43,500 |   |   | $ | 33,164 |   |   | $ | 11,912 |   |
| Additions to provision                                  |                     |   | 10,490 |   |   |   | 14,383 |   |   |   | 15,576 |   |
| (Credit) charge to accumulated other comprehensive loss |                     |   | (2,944 | ) |   |   | (4,047 | ) |   |   | 5,676 |   |
|                                                    |                     | $      | 51,046 |   |   | $ | 43,500 |   |   | $ | 33,164 |   |
|                                                    |                     |   |   |   |   |   |   |   |   |   |   |   |

| Loss Carryforwards         |   | Expiration |      |   | Gross Amount |   |
|----------------------------|--------|------------|-----------|--------|--------------|--------|
|                       |   |       |      |   |         |   |
| Federal                    |   | 2030       |      |   | $            | 89,625 |   |
| State and local            |   |       | 2016-2030 |   |         |   | 92,721 |   |
| Foreign                    |   | Indefinite |      |   |         | 5,035  |   |
|                       |   |       |      |   |         |   |   |   |
| Capital Loss Carryforwards |   |       |      |   |         |   |   |   |
|                       |   |       |      |   |         |   |   |   |
| Federal                    |   |       | 2014      |   |         | $      | 11,439 |   |
| State and local            |   |       | 2014      |   |         |   | 11,439 |   |
|                       |   |       |      |   |         |   |   |   |

----

|                                 |   | Total Severance and Other Costs for the Year Ended December 31, 2010 |   |   | Remaining Liability as of December 31, 2010 |   |
|--------------------------------------|--------|----------------------------------------------------------------------|--------|--------|---------------------------------------------|--------|
| Severance and related costs          |   | $                                                                    | 302    |   |                                        | $      | 200 |   |
| Inventory write-down and destruction |   |                                                                 | 92     |   |                                        |   | — |   |
| Disposal of property and equipment   |   |                                                                 | 1,120  |   |                                        |   | — |   |
| Termination of contracts and leases  |   |                                                                 | 1,159  |   |                                        |   | 542 |   |
|     Total        |   | $                                                                    | 2,673  |   |                                        | $      | 742 |   |

----

|                              |   | Years Ended December 31, |   |
|-----------------------------------|--------|--------------------------|--------|
|                              |   | 2010                     |   |   | 2009 |   |   | 2008 |   |
| Total net revenues                |   | $                        | 247    |   |   | $ | 2,603 |   |   | $ | 15,276 |   |
| Total costs and expenses          |   |                     | 6,736  |   |   |   | 23,182 |   |   |   | 27,913 |   |
| Loss from discontinued operations |   | $                        | (6,489 | ) |   | $ | (20,579 | ) |   | $ | (12,637 | ) |
|                              |   |                     |   |   |   |   |   |   |   |   |   |   |

|                                              |   | December 31, 2010 |    |   | December 31, 2009 |   |
|---------------------------------------------------|--------|-------------------|---------|--------|-------------------|--------|
| ASSETS                                            |   |              |    |   |              |   |
|   Accounts receivable – net       |   | $                 | — |   |              | $      | 627 |   |
|   Inventory                             |   |              | — |   |              |   | 1,273 |   |
|   Prepaid and other current assets      |   |              | 39      |   |              |   | 501 |   |
| Current assets of discontinued operations         |   | $                 | 39      |   |              | $      | 2,401 |   |
|                                              |   |              |    |   |              |   |   |   |
|   Property and equipment - net          |   | $                 | — |   |              | $      | 1,235 |   |
|   Other assets - net                    |   |              | — |   |              |   | 486 |   |
| Non-current assets of discontinued operations     |   | $                 | — |   |              | $      | 1,721 |   |
|                                              |   |              |    |   |              |   |   |   |
| LIABILITIES                                       |   |              |    |   |              |   |   |   |
|   Accounts payable and accrued expenses |   | $                 | 1,753   |   |              | $      | 2,738 |   |
| Current liabilities of discontinued operations    |   | $                 | 1,753   |   |              | $      | 2,738 |   |
|                                              |   |              |    |   |              |   |   |   |

----

|                     |   | Years Ended December 31, |    |
|--------------------------|--------|--------------------------|---------|
|                     |   | 2009                     |    |   | 2008 |   |
| Total net revenues       |   | $                        | 36,651  |   |   | $ | 48,393 |   |
| Total costs and expenses |   |                     | 59,587  |   |   |   | 67,163 |   |
| Loss from operations     |   | $                        | (22,936 | ) |   | $ | (18,770 | ) |
|                     |   |                     |    |   |   |   |   |   |

|                     |   | Years Ended December 31, |    |
|--------------------------|--------|--------------------------|---------|
|                     |   | 2009                     |    |   | 2008 |   |
| Total net revenues       |   | $                        | 34,180  |   |   | $ | 41,925 |   |
| Total costs and expenses |   |                     | 57,116  |   |   |   | 60,695 |   |
| Loss from operations     |   | $                        | (22,936 | ) |   | $ | (18,770 | ) |
|                     |   |                     |    |   |   |   |   |   |

| a.   | Bonus Plan - Bonuses are eligible to key officers and employees in an amount, if any, to be determined in the sole discretion of the Compensation Committee of the Board of Directors in consultation with the management of 4Kids. For 2010, 2009 and 2008, no bonuses were awarded to the Chairman and CEO of the Company by the Compensation Committee.  Additionally, no bonuses were awarded to employees for 2010, 2009 and 2008. |
|----------------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| b.   | Leases - The Company leases certain office, administration and production facilities. Commitments for minimum rentals, not including common charges, under non-cancelable leases at the end of 2010 are as follows: |
|----------------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| Year EndingDecember 31, |   | Amount  |   |
|-------------------------|--------|---------|--------|
| 2011                    |   |  $ | 1,254  |   |
| 2012                    |   |    | 975    |   |
| 2013                    |   |    | 999    |   |
| 2014                    |   |    | 1,026  |   |
| 2015                    |   |    | 1,056  |   |
| 2016 and after          |   |    | 1,648  |   |
| Total                   |   | $       | 6,958  |   |

| c.   | Litigation - TCD International, Ltd. - On February 12, 2010, Home Focus Development, Ltd., a British Virgin Islands Corporation, (“Home Focus”) filed suit against 4Kids in the United States District Court for the Southern District of New York. Home Focus alleged that 4Kids owed Home Focus $1,075 under an Interest Purchase Agreement among 4Kids, Home Focus and TC Digital entered into on March 2, 2009, pursuant to which the Company acquired a 25% ownership interest in TCD International, Ltd. (“TDI”). |
|----------------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

----

| d.   | Employment Contracts - As of December 31, 2010, the Company had employment and severance agreements and arrangements with certain of its executive officers and management personnel. The agreements generally continue until terminated by the employee or the Company, and provide for severance payments under certain circumstances.  The majority of the agreements and arrangements provide the employees with certain additional rights after a change of control (as defined in such agreements) of the Company occurs.  The agreements include a covenant against competition with the Company which extends for a period of time after termination for any reason. As of December 31, 2010, if all of the employees under contract were terminated by the Company without good cause or following a change of control, under these contracts, the Company’s liability would be approximately $8,157 or $6,852, respectively. Subsequent to December 31, 2010, the Company announced that Alfred R. Kahn had retired and resigned from his position as Chief Executive Officer of the Company, as Chairman of the Company’s Board of Directors, and as a member of the Company’s Board of Directors, effective on January 10, 2011. In connection with his retirement and resignation, Mr. Kahn entered into a separation agreement with the Company, dated as of January 10, 2011 (the “Separation Agreement”), pursuant to which Mr. Kahn is entitled to an aggregate payment of $250 in six equal monthly installments and certain other benefits. |
|----------------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| e.   | Broadcast Agreement(The CW Broadcast Agreement) - On October 1, 2007, the Company and The CW entered into an agreement, which was amended on June 24, 2010, pursuant to which The CW granted to the Company the exclusive right to program The CW's Saturday morning children's programming block (“The CW4Kids”) that is broadcast in most markets between 7am and 12pm for an initial term of five years beginning with The CW's 2008-2009 broadcast season (the “CW Agreement”). |
|----------------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

| Broadcast Season |                               |   | Minimum Fee |   |
|------------------|------------------------------------|--------|-------------|--------|
|             |      2008/2009 |   |        | $      | 15,000 |   |
|             |      2009/2010 |   |        | $      | 12,000 |   |
|             |      2010/2011 |   |        | $      | 11,500 |   |
|             |     2011/2012       |   |        | $      | 11,500 |   |

| Year Ending December 31, |   | CW Agreement |    |
|--------------------------|--------|--------------|---------|
| 2011                     |   | $            | 16,500  |   |
| 2012                     |   |         | 11,500  |   |
| 2013                     |   |         | 6,500   |   |
| 2014                     |   |         | — |   |
| 2015                     |   |         | — |   |
| 2016 and after           |   |         | — |   |
| Total                    |   | $            | 34,500  |   |

----

| f.   | Contractual Arrangements - During the normal course of business, the Company may enter into various agreements with third parties to license, acquire, distribute, broadcast, develop and/or promote Properties. The terms of these agreements will vary based on the services and/or Properties included within the agreements, as each of these agreements also have specific provisions relating to rights granted, territory and contractual term. |
|----------------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|                                                            |   | Year Ended December 31, |    |
|-----------------------------------------------------------------|--------|-------------------------|---------|
|                                                            |   | 2010                    |    |   | 2009 |   |   | 2008 |   |
| TC Digital net loss before common units noncontrolling interest |   | $                       | (8,584  | ) |   | $ | (19,107 | ) |   | $ | (11,877 | ) |
| Noncontrolling interest percentage                              |   |                    | 45      | % |   |   | 45 | % |   |   | 45 | % |
| Noncontrolling interest loss allocation                         |   |                    | (3,863  | ) |   |   | (8,598 | ) |   |   | (5,345 | )* |
| Less: Capital contribution from noncontrolling interest         |   |                    | — |   |   |   | — |   |   |   | — |   |
| Loss attributable to noncontrolling interest                    |   | $                       | (3,863  | ) |   | $ | (8,598 | ) |   | $ | (5,345 | ) |
|                                   |   |                    |    |   |   |   |   |   |   |   |   |   |

----

|                                                             |   | Year Ended December 31, |   |
|------------------------------------------------------------------|--------|-------------------------|--------|
|                                                             |   |    2010       |   |   |     2009 |   |   |                       2008 |   |
| TC Websites net loss before common units noncontrolling interest |   | $                       | (1,369 | ) |   | $ | (3,959 | ) |   | $ | (3,632 | ) |
| Noncontrolling interest percentage                               |   |                    | 45     | % |   |   | 45 | % |   |   | 45 | % |
| Noncontrolling interest loss allocation                          |   |                    | (616   | ) |   |   | (1,782 | ) |   |   | (1,634 | )* |
| Less: Capital contribution from noncontrolling interest          |   |                    | 10     |   |   |   | 132 |   |   |   | 310 |   |
| Loss attributable to noncontrolling interest                     |   | $                       | (606   | ) |   | $ | (1,650 | ) |   | $ | (1,324 | ) |
|                               |   |                    |   |   |   |   |   |   |   |   |   |   |

----

|   | ° | Chaotic Property Representation Agreement - On December 11, 2006, 4Kids Licensing, CUSA and Apex Marketing, Inc. (“Apex”), a corporation in which Gannon holds 60% of the outstanding capital stock and Milito owns 39% of the outstanding capital stock, entered into an amended and restated Chaotic Property Representation Agreement (“CPRA”) replacing the original Chaotic Property Representation Agreement entered into by the parties in April 2005. Under the terms of the CPRA, 4Kids Licensing is granted exclusive television broadcast and production, merchandising licensing, and home video rights to the “Chaotic” Property worldwide in perpetuity, subject to certain limited exceptions. Under the terms of the CPRA, all “Chaotic” related income less approved merchandising and other expenses shall be distributed 50% to the Company and 50% to CUSA and Apex, excluding trading card royalties which are distributed 55% to 4Kids Digital and 45% to CUSA. Additionally, all approved production expenses for television episodes based on the “Chaotic” property are allocated 50% to 4Kids Licensing and 50% to CUSA and Apex. As of December 31, 2010, 2009, and 2008, there were no distributions and approximately $8,583, $8,458, and $6,938, respectively, of production, merchandising and other general expenses were owed to 4Kids Licensing by CUSA and Apex, collectively which were fully reserved on the Company’s consolidated financial statements. |
|--------|--------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | ° | Patent License Agreements - On December 11, 2006, TC Digital and TC Websites each entered into an agreement (the “Patent License Agreements”) with Cornerstone Patent Technologies, LLC (“Cornerstone”), a limited liability company, in which Gannon and Milito each hold a 25% membership interest. Pursuant to the Patent License Agreements, TC Digital and TC Websites obtained exclusive licenses (subject to certain exceptions) to use certain patent rights in connection with “Chaotic” and other trading card games which are uploaded to websites owned and operated by each such entity. Additionally, each of TC Digital and TC Websites agreed to pay Cornerstone a royalty of 1.5% of the Manufacturers Suggested Retail Price for the sale of trading cards.  On September 10, 2007, the Company purchased a 25% interest in such patents from Cornerstone for $750. During the year ended December 31, 2010, the Company earned no royalties, and during the years ended December 31, 2009 and 2008, the Company earned royalties of $250 and $158, respectively, associated with its portion of such patents, which such royalties are eliminated in the Company’s consolidated financial statements. |
|--------|--------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | ° | Operating Agreement of TC Digital LLC - Under the terms of the TC Digital operating agreement (“TCD Agreement”), TC Digital is obligated to pay the following fees and/or royalties to: (i) 4Kids Digital equal to 3% of TC Digital’s gross revenues up to $350 per year for management services performed; (ii) 4Kids Digital and CUSA equal to 3% of net sales of each pack of trading cards sold; and  (iii) the Company equal to (x) 10% of the net sales of “Chaotic” trading cards and (y) an additional 1% of net sales of “Chaotic” trading cards above $50 million during a calendar year.  The Company acquired its rights to receive royalties of 10% in respect to net sales of “Chaotic” trading cards under the TCD Agreement through purchases from Dracco Company Ltd. (“Dracco”) of a 5% royalty stream on October 17, 2007, a 1% royalty stream, previously allocated to CUSA from Dracco, on December 18, 2007, a 4% royalty stream on March 17, 2008 in exchange for one-time payments of $2,250, $450 and $1,100, respectively.  The consideration for the purchase of the 1% royalty stream for $450 was satisfied through the settlement of certain capital contributions required to be made by CUSA to TC Websites under the TCW Agreement. During the years ended December 31, 2010, 2009, and 2008, the Company earned royalties and / or fees of $74, $879, and $2,791, respectively under the TCD Agreement.  The Company’s portion of such royalties and / or management fees were eliminated in its consolidated financial statements. |
|--------|--------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   |   ° | Chaotic Merchandise License Agreement - On December 11, 2006, 4Kids Licensing, CUSA and TC Digital entered into a merchandise licensing agreement pursuant to which 4Kids Licensing and CUSA granted TC Digital exclusive rights to manufacture, produce and license “Chaotic” trading cards and related accessories through December 31, 2016. Under the terms of the agreement, TC Digital is obligated to pay a royalty on trading cards and all related accessories equal to (i) 4% of net sales to 4Kids Licensing while any amounts are outstanding to 4Kids Digital under the loan agreement or line of credit agreement or (ii) if no amounts are outstanding to 4Kids Digital under the loan agreement of line of credit agreement, 8% of net sales of such cards and accessories, 55% of which will be paid to 4Kids Licensing and 45% of which will be paid to CUSA.  For the years ended December 31, 2010 , 2009, and 2008, no royalties had been earned under this agreement. |
|--------|--------------------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

|   | ° | Operating Agreement of TC Websites LLC - On December 11, 2006, 4Kids Websites entered into the TC Websites Operating Agreement (“TCW Agreement”) with CUSA to purchase a 50% membership interest in TC Websites, which was amended on December 18, 2007 in connection with 4Kids Websites’ acquisition of an additional 5% ownership interest in TC Websites.   Under the terms of the TCW Agreement, each member of TC Websites is obligated to make capital contributions on a pro-rata basis to the extent determined by its Management Committee to be necessary to fund the operation of the Website. Any transaction resulting in the sale of more than 50% of TC Websites’ membership interests or in the sale of all or substantially all of TC Digital’s assets requires the consent of members of TC Websites holding two-thirds of its membership interests (as opposed to a majority of its membership interests). |
|--------|--------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | ° | Interest Purchase Agreement- On March 2, 2009, TC Digital, the Company and Home Focus entered into various agreements pursuant to which TC Digital and Home Focus agreed to form TDI and the Company agreed to purchase the TDI Interest from Home Focus.  The purchase price for the TDI Interest is an initial price of $1,575 with an obligation to pay up to an additional $1,000 (the "Conditional Payments") conditioned upon the “Chaotic” television series being telecast in the five largest European television markets (the United Kingdom, France, Germany, Spain and Italy) and/or TDI selling in excess of $10,000 of “Chaotic” trading cards. To date, the Company has entered into agreements for the telecast of the “Chaotic” television series in the UK, France and Germany, requiring the Company to make $600 of the Conditional Payments. The Company has paid Home Focus the following consideration for the TDI interest: the Company paid $475 upon execution of the various agreements and has paid the monthly installments of $125 for each of April, May, June, July and August of 2009.  The Company ceased paying Home Focus additional amounts under the Interest Purchase Agreement due to the failure by Home Focus to make the required capital contributions to TDI required under the Shareholders Agreement, dated March 2, 2009, entered into by the Company and Home Focus with respect to TDI (the “TDI Agreement”).  See Note 15. Commitments and Contingencies for details of this matter. |
|--------|--------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | ° | TDI Shareholders Agreement- Under the TDI Agreement, the Board of Directors of TDI consists of four directors. TC Digital has the right to elect two directors and the Company and Home Focus each have the right to elect one director. There are a number of extraordinary actions that require the consent by shareholders holding at least 80% of the voting stock of TDI in addition to approval of the Board of Directors. The TDI Agreement requires the shareholders to provide TDI with additional capital on a pro rata basis in exchange for additional equity. Under the TDI Agreement, TDI is required to pay or reimburse TC Digital for the costs and expenses associated with the printing, advertising, marketing and promotion of the “Chaotic” trading card game in the TDI Territory. In addition, TDI is responsible for reimbursing TC Digital and TC Websites for the cost of translating the “Chaotic” trading cards and “Chaotic” website into the European languages and for bandwidth and equipment charges associated with making the “Chaotic” website operational in the TDI Territory. TDI is also required to pay TC Digital and TC Websites a design fee equal to 3% and 1.5%, respectively, of net sales of “Chaotic” trading cards in the TDI  Territory.   For the year ended December 31, 2010, TC Digital and TC Websites earned no royalties and for the year ended December 31, 2009, TC Digital and TC Websites earned royalties of $33 and $16, respectively, under this agreement arising from the net sales of “Chaotic” trading cards in the TDI Territory.  The royalties earned by TC Digital and TC Websites are eliminated in the Company’s consolidated financial statements. |
|--------|--------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

| Years Ended December 31,                                          |   | Licensing |    |   | Advertising Media and Broadcast |   |    | TV and Film Production/ Distribution |   |   | Total   |   |
|-------------------------------------------------------------------|--------|-----------|---------|--------|---------------------------------|--------|---------|--------------------------------------|--------|--------|---------|--------|
| 2010:                                                             |   |      |    |   |                            |   |    |                                 |   |   |    |   |
| Net revenues from external customers                              |   | $         | 12,046  |   |                            | $      | 921     |                                 |   | $      | 1,511   |   |   | $ | 14,478 |   |
| Amortization of television and film costs                         |   |      | — |   |                            |   | — |                                 |   |   | 6,827   |   |   |   | 6,827 |   |
| Interest income                                                   |   |      | 396     |   |                            |   | 6       |                                 |   |   | 1       |   |   |   | 403 |   |
| Impairment of investment securities                               |   |      | (3,578  | )      |                            |   | — |                                 |   |   | — |   |   |   | (3,578 | ) |
| Loss on sale of investment security                               |   |      | (1,616  | )      |                            |   | — |                                 |   |   | — |   |   |   | (1,616 | ) |
| Segment loss                                                      |   |      | (7,822  | )      |                            |   | (8,161  | )                                    |   |   | (9,168  | )      |   |   | (25,151 | ) |
| Segment assets                                                    |   |      | 16,356  |   |                            |   | 4,995   |                                 |   |   | 7,680   |   |   |   | 29,031 |   |
|                                                              |   |      |    |   |                            |   |    |                                 |   |   |    |   |   |   |   |   |
| 2009:                                                             |   |      |    |   |                            |   |    |                                 |   |   |    |   |   |   |   |   |
| Net revenues from external customers                              |   | $         | 24,068  |   |                            | $      | 2,772   |                                 |   | $      | 7,340   |   |   | $ | 34,180 |   |
| Amortization of television and film costs                         |   |      | — |   |                            |   | — |                                 |   |   | 21,511  |   |   |   | 21,511 |   |
| Impairment of investment in international trading card subsidiary |   |      | 2,430   |   |                            |   | — |                                 |   |   | — |   |   |   | 2,430 |   |
| Interest income                                                   |   |      | 1,059   |   |                            |   | 17      |                                 |   |   | — |   |   |   | 1,076 |   |
| Impairment of investment securities                               |   |      | (6,175  | )      |                            |   | — |                                 |   |   | — |   |   |   | (6,175 | ) |
| Loss on sale of investment security                               |   |      | (7,647  | )      |                            |   | — |                                 |   |   | — |   |   |   | (7,647 | ) |
| Segment loss                                                      |   |      | (8,913  | )      |                            |   | (4,278  | )                                    |   |   | (22,491 | )      |   |   | (35,682 | ) |
| Segment assets                                                    |   |      | 32,820  |   |                            |   | 7,606   |                                 |   |   | 12,105  |   |   |   | 52,531 |   |
|                                                              |   |      |    |   |                            |   |    |                                 |   |   |    |   |   |   |   |   |
| 2008:                                                             |   |      |    |   |                            |   |    |                                 |   |   |    |   |   |   |   |   |
| Net revenues from external customers                              |   | $         | 17,124  |   |                            | $      | 16,368  |                                 |   | $      | 8,433   |   |   | $ | 41,925 |   |
| Amortization of television and film costs                         |   |      | — |   |                            |   | — |                                 |   |   | 7,707   |   |   |   | 7,707 |   |
| Amortization of 4Kids TV broadcast fee                            |   |      | — |   |                            |   | 16,022  |                                 |   |   | — |   |   |   | 16,022 |   |
| Interest income                                                   |   |      | 2,658   |   |                            |   | 56      |                                 |   |   | 8       |   |   |   | 2,722 |   |
| Impairment of investment securities                               |   |      | (7,834  | )      |                            |   | — |                                 |   |   | — |   |   |   | (7,834 | ) |
| Segment loss                                                      |   |      | (8,558  | )      |                            |   | (8,854  | )                                    |   |   | (6,470  | )      |   |   | (23,882 | ) |
| Segment assets                                                    |   |      | 52,937  |   |                            |   | 14,271  |                                 |   |   | 24,499  |   |   |   | 91,707 |   |

----

|                                               |   | Fiscal Quarters                                                   |   |
|----------------------------------------------------|--------|-------------------------------------------------------------------|--------|
|    2010                             |   | First                                                             |   |   | Second |   |   | Third |   |   | Fourth |   |
|                                               |   | (In thousands, except per share amounts) |   |
| Revenues                                           |   | $                                                                 | 4,230  |   |   | $ | 2,456 |   |   | $ | 2,986 |   |   | $ | 4,806 |   |
| Loss from continuing operations                    |   |                                                              | (2,969 | ) |   |   | (5,934 | ) |   |   | (8,488 | ) |   |   | (7,760 | ) |
| Net loss from discontinued operations              |   |                                                              | (510   | ) |   |   | (532 | ) |   |   | (1,356 | ) |   |   | 388 |   |
| Net loss attributable to 4Kids Entertainment, Inc. |   | $                                                                 | (3,479 | ) |   | $ | (6,466 | ) |   | $ | (9,844 | ) |   | $ | (7,372 | ) |
| Basic and diluted loss per share attributable to   |   |                                                              |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| 4Kids Entertainment, Inc. common shareholders      |   |                                                              |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|     Continuing operations      |   | $                                                                 | (0.22  | ) |   | $ | (0.44 | ) |   | $ | (0.63 | ) |   | $ | (0.57 | ) |
|     Discontinued operations    |   |                                                              | (0.04  | ) |   |   | (0.04 | ) |   |   | (0.10 | ) |   |   | 0.03 |   |
| Basic and diluted loss per share attributable to   |   |                                                              |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| 4Kids Entertainment, Inc. common shareholders      |   | $                                                                 | (0.26  | ) |   | $ | (0.48 | ) |   | $ | (0.73 | ) |   | $ | (0.54 | ) |

|                                               |   | Fiscal Quarters                                                   |   |
|----------------------------------------------------|--------|-------------------------------------------------------------------|--------|
|    2009                             |   | First                                                             |   |   | Second |   |   | Third |   |   | Fourth |   |
|                                               |   | (In thousands, except per share amounts) |   |
| Revenues                                           |   | $                                                                 | 8,895  |   |   | $ | 3,782 |   |   | $ | 5,312 |   |   | $ | 16,191 |   |
| Loss from continuing operations                    |   |                                                              | 34     |   |   |   | (11,417 | ) |   |   | (3,348 | ) |   |   | (17,146 | ) |
| Net loss from discontinued operations              |   |                                                              | (2,074 | ) |   |   | (2,333 | ) |   |   | (1,655 | ) |   |   | (4,137 | ) |
| Net loss attributable to 4Kids Entertainment, Inc. |   | $                                                                 | (2,040 | ) |   | $ | (13,750 | ) |   | $ | (5,003 | ) |   | $ | (21,283 | ) |
| Basic and diluted loss per share attributable to   |   |                                                              |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| 4Kids Entertainment, Inc. common shareholders      |   |                                                              |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|     Continuing operations      |   | $                                                                 | 0.01   |   |   | $ | (0.86 | ) |   | $ | (0.25 | ) |   | $ | (1.28 | ) |
|     Discontinued operations    |   |                                                              | (0.16  | ) |   |   | (0.18 | ) |   |   | (0.12 | ) |   |   | (0.31 | ) |
| Basic and diluted loss per share attributable to   |   |                                                              |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| 4Kids Entertainment, Inc. common shareholders      |   | $                                                                 | (0.15  | ) |   | $ | (1.04 | ) |   | $ | (0.37 | ) |   | $ | (1.59 | ) |

----

----