15. COMMITMENTS AND CONTINGENCIES

a.	Bonus Plan - Key officers and employees are eligible for bonuses 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 the Company. No bonuses were awarded in 2012, 2011 and 2010.

b.	Claim Payment - On December 21, 2012, a key officer received a payment of $350 in accordance with the Plan for a claim granted by the Company in satisfaction of all claims and obligations under his prior severance agreement.

c..	Leases - The Company leased certain office, administration and production facilities through December 2012. As part of the July 2, 2012 sale of certain of the Company's assets, see Note 1 for details; the Company transferred all of its future obligations under various lease agreements to the buyer.

On January 2, 2013, the Company entered into a sublease agreement for certain office and administrative space expiring October 31, 2015. Commitments for minimum rentals, not including common charges, under this non-cancelable lease at the end of 2012 are as follows:

Year Ending December 31,	Amount
2013	$	170
2014		246
2015		209
2016 and after		—
Total	$	625

Rent expense for all operating leases charged against earnings amounted to $336, $459 and $871 during fiscal years 2012, 2011 and 2010, respectively.

Employment Contracts - As of December 31, 2012, one executive officer had agreed to enter into an employment agreement with the Company. The agreement was formally executed on March 21, 2013, with an effective date of December 21, 2012. The agreement generally continues until terminated by the employee or the Company, and provides for severance payments under certain circumstances. The agreement includes a covenant against competition with the Company which extends for a period of time after termination for any reason. As of December 31, 2012, if the employee under contract were terminated by the Company without good cause, under these contracts, the Company's liability would be approximately $150.

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.

TCD International, Ltd. – On February 12, 2010, Home Focus Development, Ltd., a British Virgin Islands Corporation, ("Home Focus") filed suit against the Company in the United States District Court for the Southern District of New York. Home Focus alleged that the Company owed Home Focus $1,075 under an Interest Purchase Agreement among the Company, 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").

On April 26, 2010, the Company filed an answer and asserted various counterclaims against Home Focus and its owners, in their individual capacities. In its counterclaims, the Company has alleged that Home Focus failed to make its contractually required initial capital contribution of $250 to TDI necessary to acquire the 25% ownership interest in TDI it purported to sell to the Company and also failed to contribute its 50% share of the expenses. The Company has further asserted counterclaims of fraud and misrepresentation.

The parties have not proceeded with the litigation in light of the filing of the Bankruptcy Cases on April 6, 2011, which had the effect of automatically staying such litigation. The parties have had substantive discussions and have exchanged draft agreements regarding the possible resolution of the claims and counterclaims. There can be no assurance that the parties will conclude their settlement discussions satisfactorily. The Home Focus claim is currently a disputed claim in the Bankruptcy Cases. If the Home Focus claim is not settled, it may need to be litigated by the Company either in the Bankruptcy Court or in the United States District Court for the Southern District of New York should the Bankruptcy Court cede jurisdiction of this dispute.

Pokémon Royalty Audit - During the first quarter of 2010, The Pokémon Company International ("TPC") commenced an audit of the Company covering the period from mid-2001 through 2008. On May 28, 2010, the Company received a letter from counsel for TPC ("TPC Letter") claiming that the audit "identified deficiencies totaling almost $4,700" and demanding payment of the deficiency together with interest thereon. The TPC Letter failed to provide any schedules or other specific information regarding the alleged deficiencies. By letter dated June 11, 2010 ("4Kids Letter"), the Company disputed the allegations made in the TPC Letter and advised TPC that the Company would not be paying the alleged deficiency or any interest thereon. The 4Kids Letter also proposed that, as had been discussed by the parties, the Company would audit TPC which was the recipient and payee of Pokémon merchandise licensing, television broadcast and home video proceeds during the 2001 - 2008 period, and that after the completion of the parties' respective audits, the parties would review the audit reports and discuss any outstanding issues.

On July 14, 2010, the Company and TPC executed a tolling agreement tolling the statute of limitations until October 21, 2010 with respect to TPC's claims. The Company and TPC also agreed in the tolling agreement that neither party would commence any litigation against the other party until after the expiration of the tolling period in order to allow for the parties to complete their respective audits and to discuss the results thereof. During mid-June 2010, the Company commenced its audit of TPC which was completed in December 2010. On October 12, 2010, the Company and TPC executed an amendment to the tolling agreement extending the tolling of the statute of limitations until January 15, 2011. On January 26, 2011, the Company and TPC executed a second amendment to the tolling agreement extending the tolling of the statute of limitations until March 15, 2011. On March 25, 2011, the Company and TPC executed a third amendment to the tolling agreement extending the tolling of the statute of limitations until April 15, 2011. The parties have not sought to further extend the tolling agreement in light of the filing of the Bankruptcy Cases on April 6, 2011, which had the effect of automatically staying such claims. On or about April 15, 2011, TPC filed various proofs of claim in the Bankruptcy Cases.

After the closing on July 2, 2012 of the sale pursuant to the Asset Purchase Agreement, the parties resumed settlement discussions. The Company and TPC entered into a Settlement Agreement and General Release which was fully executed by the parties on October 18, 2012. The Settlement Agreement and General Release provided that the 12 proofs of claim totaling in excess of $6,000 filed by TPC in the Bankruptcy Cases were to be consolidated into one general unsecured claim in the amount of $1,000, plus interest allowed by the Bankruptcy Court on the claims of general unsecured creditors in the Bankruptcy Cases. Such consolidated claim was to be considered an allowed claim by the Debtors and be paid upon the Bankruptcy Court's approval of the Settlement Agreement and General Release and the confirmation of a plan in the Bankruptcy Cases allowing for payment in full on claims of the Debtors' unsecured creditors. In addition, the Company relinquished its right to receive a share of the net profits on Pokémon Movie 4 which was distributed by Miramax in 2003. The Company and TPC also released each other from any and all claims. The Settlement Agreement and General Release was approved by the Bankruptcy Court.

On December 5, 2012, the Bankruptcy Court issued an order approving the Settlement Agreement and General Release between the Company and TPC. On December 13, 2012, the Bankruptcy Court issued an order confirming the Company's Plan and on December 26, 2012, the Plan became effective. On December 21, 2012, TPC was paid $1,000, plus interest in respect of its allowed claim. In view of the foregoing, the Settlement Agreement and General Release between the Company and TPC is effective.

Yu-Gi-Oh! Royalty Audit - During the first quarter of 2010, ADK, one of the Licensors, commenced an audit of the Company with respect to the amounts paid by the Company to ADK during the course of the the Company's representation of Yu-Gi-Oh!, which started in 2001.

On June 25, 2010, the Company received a letter from counsel for ADK ("ADK Letter") alleging that the Company had improperly deducted certain expenses from amounts paid to ADK and had failed to pay ADK a share of certain Yu-Gi-Oh! home video revenues. In addition, the ADK Letter requested that the Company provide additional documentation with respect to withholding taxes deducted from ADK's share of Yu-Gi-Oh! revenues. The ADK Letter claimed that the total of the improper deductions and underpayments was approximately $3,000. By letter dated June 29, 2010 ("4Kids Yu-Gi-Oh! Letter"), the Company disputed substantially all of the allegations contained in the ADK Letter.

The ADK Letter also demanded that the Company and ADK sign a tolling agreement with an effective date of June 1, 2010 which would stop the running of the statute of limitations during the four month tolling period starting on June 1, 2010 and concluding on September 30, 2010. On June 29, 2010, the Company and ADK entered into the tolling agreement described above. On October 19, 2010, the Company and ADK signed an amendment to the tolling agreement extending the tolling period through December 31, 2010.

On December 20, 2010, the Company received a letter from ADK which alleged audit findings of $4,819. By letters, dated December 29, 2010, the Company disputed substantially all of the alleged audit findings. On January 11, 2011, the parties entered into another amendment to the tolling agreement extending the tolling period through March 31, 2011.

On March 4, 2011, ADK requested a payment from the Company in order for representatives of the Licensors to agree to meet with representatives of the Company. On March 17, 2011, the Company made a $1,000 payment to ADK as a show of good-faith so that a meeting could take place with ADK to attempt to resolve the audit claims. Notwithstanding the $1,000 good-faith payment, the Company also reserved its rights to dispute all of ADK's audit claims. On March 18, 2011, representatives of the Company met with representatives of ADK in a further, but ultimately unsuccessful, attempt to resolve the outstanding issues.

On March 24, 2011, the Company received a letter from the Nihon Ad Systems, Inc., on behalf of itself and TV Tokyo Corporation, purporting to terminate the agreement dated July 1, 2008 between the Licensors and the Company with respect to the Yu-Gi-Oh! Property (the "Yu-Gi-Oh! Agreement") for alleged breaches of the Yu-Gi-Oh! Agreement by the Company. The purported termination letter did not comply with the 10 business day notice and cure provision in the Yu-Gi-Oh! Agreement. On March 24, 2011, the Licensors filed a lawsuit against the Company in the United States District Court for the Southern District of New York also claiming that the Company has breached the Yu-Gi-Oh! Agreement on grounds substantially the same as those asserted in its audit findings and seeking more than $4,700 in damages (the "Yu-Gi-Oh! Litigation").

On March 27, 2011, the Company, responding to the letter from the Licensors, completely rejected the purported termination of the Yu-Gi-Oh! Agreement by the Licensors as wrongful and devoid of any factual and legal basis. On March 30, 2011, the Company received a letter from counsel to the Licensors reiterating the Licensors' position with respect to the termination of the Yu-Gi-Oh! Agreement.

The commencement of the Bankruptcy Cases automatically "stayed" the Yu-Gi-Oh! Litigation until such time as the Bankruptcy Court may order otherwise.

On May 13, 2011, the Debtors made a motion in the Bankruptcy Court for an order enforcing the automatic stay with respect to the Company's rights under the Yu-Gi-Oh! Agreement, requesting that the Bankruptcy Court confirm that the automatic stay applied to the purported termination of such agreement by the Licensors on March 24, 2011. On May 18, 2011, the United States District Court judge approved the stipulated order referring the litigation to the United States Bankruptcy Court for the Southern District of New York. On June 2, 2011, the Bankruptcy Court entered a stipulated Order confirming that the automatic stay applied to the purported termination of the Yu-Gi-Oh! Agreement and reaffirmed that the Company may exercise its rights under the Yu-Gi-Oh! Agreement pending the outcome of the litigation between the Company and the Licensors.

On June 10, 2011, the Company filed its answer and counterclaims against the Licensors. The Company disputed substantially all of the audit claims asserted by Licensors in their complaint and asserted counterclaims against the Licensors arising from the termination of the Yu-Gi-Oh! Agreement. The Company counterclaims seek damages from the Licensors' wrongful termination of the Yu-Gi-Oh! Agreement.

The trial in the Yu-Gi-Oh! Litigation, initially to determine whether the purported termination of the Yu-Gi-Oh! Agreement was effective and whether any amounts owed by the Company to the Licensors exceed the credits claimed by the Company for amounts paid or advanced to Licensors, commenced in the Bankruptcy Court on August 29, 2011 and concluded on September 23, 2011.

On December 29, 2011, the Bankruptcy Court issued its decision ruling in favor of the Company in the first phase of the Yu-Gi-Oh! Litigation. In its 154 page decision, the Bankruptcy Court ruled that the Yu-Gi-Oh! Agreement was not effectively terminated by the Licensors prior to the Company's bankruptcy filing on April 6, 2011. Rather, the Bankruptcy Court ruled that the Yu-Gi-Oh! Agreement remained in full force and effect and is property of the Company's bankrupt estate. In addition, the Bankruptcy Court's opinion carefully considered each of the Licensors' nine audit findings totaling over $4,700 and concluded that audit findings totaling approximately 99% of the amount claimed by the Licensors were "meritless". The remaining two audit claims totaling $48, which the Company does not dispute, were offset by the roughly $800 credit balance in favor of the Company as of March 24, 2011, the date that the Licensors sent the Company the purported notice of termination, and the $1,000 good-faith payment made by the Company on March 17, 2011 which was subsequently returned to the Company on January 24, 2012.

On February 29, 2012, the Company and the Licensors entered into a Settlement Agreement settling all claims brought by Licensors against the Company and all counterclaims brought by the Company against the Licensors in the Yu-Gi-Oh! Litigation. The Settlement Agreement provides, among other things, for the Licensors to make a payment to the Company in the amount of $8,000 upon the order of the Bankruptcy Court approving the Settlement Agreement becoming a final order. On March 9, 2012, the Bankruptcy Court issued an order approving the Settlement Agreement. Under the Settlement Agreement, the Licensors acknowledged that the Yu-Gi-Oh! Agreement remained valid, binding and legally enforceable with the Company continuing to serve as the exclusive licensing agent for the merchandise licensing, television broadcast and home video rights to the Yu-Gi-Oh! Property (as hereinafter defined) throughout the world outside of Asia. The Settlement Agreement further provided for each of the Company and the Licensors to release the other from all claims they may have against each other, other than certain indemnification claims and claims that may arise under the Settlement Agreement. The Settlement Agreement also provided that the agreement does not constitute an admission by any party of any violation of any agreement or law. On March 27, 2012, the Company received the payment in the amount of $8,000 pursuant to the Settlement Agreement.

Wildcat Intellectual Property Holdings, LLC v. 4Kids Entertainment, Inc. et al. - On July 5, 2011, Wildcat Intellectual Property Holdings, LLC filed suit against the Company, Chaotic USA Entertainment Group, Inc., Electronic Arts Inc., Konami Digital Entertainment, Inc., Nintendo of America Inc., Panini America, Inc., Pokémon USA, Inc., Sony Computer Entertainment America LLC, Sony Online Entertainment LLC, The Topps Company, Inc., Wizards of the Coast LLC and Zynga Inc. (collectively the "Wildcat Defendants") in the United States District Court for the Eastern District of Texas seeking damages and other various fees. The suit alleges that the Wildcat Defendants infringed upon United States Patent Number 6,200,216 entitled "Electronic Trading Card". Since the Wildcat suit with respect to the Company pertains to alleged actions by the Company occurring prior to the commencement of the Bankruptcy Cases, the Wildcat suit is "stayed" by Bankruptcy Cases. Wildcat did not file a proof of claim in the Bankruptcy Cases by the April 18, 2012 claims bar date.

Lehman Brothers, Inc. Claim - The Company believes that Lehman Brothers, Inc., the securities broker-dealer that purchased the auction rate securities on behalf of the Company violated its legal obligations to the Company. As a result, the Company took various measures to obtain appropriate legal relief, including initiating an arbitration on April 3, 2008 against Lehman Brothers, Inc. and the brokers who had serviced the Company's Lehman account with the Financial Industry Regulatory Authority. On September 15, 2008, Lehman Brothers Holdings, Inc., the parent company of Lehman Brothers, Inc., filed for bankruptcy. The Company's arbitration proceeding was stayed by the Lehman bankruptcy. On September 16, 2008, Barclays PLC announced that it had reached an agreement to purchase the assets of Lehman Brothers Holdings, Inc.'s North American operations, including substantial assets of Lehman Brothers, Inc. The Lehman-Barclays transaction was approved by the United States Bankruptcy Court for the Southern District of New York on September 20, 2008. On September 19, 2008, the Securities Investor Protection Corporation ("SIPC") filed a proceeding, placing Lehman Brothers, Inc. in liquidation under the Securities Investor Protection Act ("SIPA"). SIPC, pursuant to its authority under SIPA, has acted to facilitate the transfer of Lehman Brothers, Inc.'s customer accounts (including the Company's accounts) to Barclays, PLC. In late September, 2009, the Company filed a proof of claim against Lehman Brothers, Inc. in the United States Bankruptcy Court for the Southern District of New York. The principal amount of the claim was approximately $31,500 plus interest. In addition, the proof of claim requested treble damages. The proof of claim is a general unsecured claim. The Company's claim against Lehman Brothers, Inc. is still pending and there has been no determination made as to the validity or allowed amount of the claim. On October 18, 2011, the Company entered into a settlement agreement and general release with the brokers who had serviced the Company's account with Lehman Brothers, Inc. in exchange for a payment to the Company of approximately $489. The Trustee in the Lehman Brothers, Inc. bankruptcy proceeding is expected to begin the claims resolution process with respect to the unsecured claims at some point in 2013.

The CW - On April 11, 2012, the Company received a letter (the "Original Letter"), from The CW pursuant to which The CW gave notice to the Company pursuant to Section 5.h of The CW Agreement, to the effect that the Company has not made a payment required by The CW Agreement. The amount set forth in the Original Letter as being owed by the Company to The CW in respect of such payment is alleged to be $3,688. Pursuant to the provisions of The CW Agreement, if a payment required to be made by the Company under The CW Agreement is not made within ten days of the receipt of notice from The CW, The CW is entitled to exercise various rights and remedies including terminating The CW Agreement.

Following discussions between representatives of the Company and The CW, the Company received another letter from The CW on April 19, 2012, which was revised and re-sent to the Company on April 24, 2012 (the "Second Letter"). Pursuant to the Second Letter, The CW indicated that it would not terminate or seek to terminate The CW Agreement based on the failure of the Company to pay the amounts alleged to be owed under The CW Agreement, so long as certain conditions identified in the Second Letter are satisfied, including that:

1. A motion ("Kidsco Sale Motion") to approve the sale of certain of the Company's assets (including The CW Agreement) to Kidsco (such sale, a "Section 363 Sale") is filed with the Bankruptcy Court in connection with the Debtors' Bankruptcy Cases, no later than April 25, 2012, such motion is granted no later than June 30, 2012, and such Section 363 Sale must close no later than July 17, 2012; and

2. The CW Agreement can only be sold to Kidsco (or any other entity as The CW may approve of, in its sole discretion).

The Second Letter further provided that The CW reserved all rights and remedies, including the right to terminate or seek to terminate the CW Agreement, if any of the foregoing conditions are not satisfied.

The Company satisfied the first condition of the Second Letter by filing the Kidsco Sale Motion with the Bankruptcy Court on April 18, 2012 prior to the April 25, 2012 deadline. The Company satisfied the second condition of the Second Letter since the Section 363 Sale closed on July 2, 2012, prior to the July 17, 2012 deadline. Pursuant to the Section 363 Sale, the Company assumed The CW Agreement and assigned The CW Agreement to Kidsco. In addition, at the closing of the Section 363 Sale, 4Kids paid the sum of $3,051 to The CW, the agreed-upon cure amount necessary to be paid to The CW in order for 4Kids to assume The CW Agreement. As part of the closing of the Section 363 Sale, the Company also received a release from The CW releasing the Company from any and all claims under The CW Agreement.

Cornerstone Patent Technologies, LLC – On April 25, 2011, Cornerstone Patent Technologies, LLC ("Cornerstone") filed proof of claim No. 20 (the "Cornerstone Claim") against the Debtors in the Bankruptcy Cases in the amount of $3,300. Other than filing the Cornerstone Claim, Cornerstone has not commenced litigation against the Debtors. The Cornerstone Claim alleges (i) breach of a Patent License Agreement dated September 10, 2007 by non-Debtors TC Digital and TC Websites; (ii) breach of Patent Purchase Agreement dated September 7, 2007, by 4Kids Technology for failing to notify Cornerstone of alleged wrongdoing by the JVs; (iii) unfair competition; (iv) tortuous interference with contract; (v) unjust enrichment; and (vi) piercing the corporate veil. The Company disputes the Cornerstone Claim in its entirety. On November 12, 2012, the Company filed a motion with the Bankruptcy Court to estimate the Cornerstone Claim at $0 or in the alternative disallow the claim. On December 5, 2012, the Bankruptcy Court entered an agreed order between the Company and Cornerstone providing that on the effective date of the Plan, the Debtors would establish a disputed claims reserve on account of the Cornerstone Claim in the amount of $228, without prejudice to (i) Cornerstone's rights to pursue an allowed claim or judgment against the Debtors in an amount greater than the reserve, with such allowed claim or judgment to be paid pursuant to the Plan and (ii) the Debtors' rights to defend, contest or otherwise oppose on any grounds, the Cornerstone Claim or any other claims or litigation asserted by or on behalf of Cornerstone or any other party. The parties have had discussions regarding the possible resolution of the Cornerstone Claim. There can be no assurance that the parties will conclude their settlement discussions satisfactorily. The Cornerstone Claim remains a disputed claim in the Bankruptcy Cases. If the Cornerstone Claim is not settled, it may need to be litigated by the Company.

The Bankruptcy Cases – The Bankruptcy Cases were initially filed by the Debtors with the Bankruptcy Court on April 6, 2011. On October 5, 2012, the Company filed their Plan and Disclosure Statement. On October 29, 2012, the Debtors filed amended versions of the Plan and Disclosure Statement. On October 31, 2012, the Bankruptcy Court entered a solicitation procedures order permitting the Debtors to send the Plan and Disclosure Statement to the parties entitled to vote on the Plan. On December 13, 2012, the Bankruptcy Court held a confirmation hearing with respect to the Plan. After a hearing and consideration by the Bankruptcy Court of the provisions of the Plan, including consideration of support for the Plan by a vote of approximately 99.93% of shareholders who voted their shares, and there being only one objector to the Plan, the Bankruptcy Court issued an order confirming the Plan. The Plan became effective on December 21, 2012.

After the effective date of the Plan, the Company paid creditors holding undisputed, allowed claims the full amount of such allowed claims. The Company and its counsel have also negotiated various settlement agreements with creditors holding disputed claims. There remain outstanding a number of claims which the Company and its counsel are seeking to resolve prior to the date (currently March 21, 2013 unless extended) when the Company must file formal objections to the disputed claims. If certain disputed claims are not satisfactorily resolved, these disputed claims may need to be litigated in the Bankruptcy Court or in other courts or administrative bodies. The cost and expense to litigate disputed claims as well as any damages which may be awarded to the holders of such disputed claims may have a material adverse effect on the Company's financial position or the results of its operations or cash flows.