4Kids Reports Wider Loss

NEW YORK: Announcing its Q1 financials today, 4Kids Entertainment said that it has received “non-binding indication of interest from a third party” to buy out the company.

The company will make available to the undisclosed potential acquirer due diligence information regarding its assets and operations. 4Kids also says it intends to enter into discussions with the potential buyer “regarding exclusivity and the acquirer’s indication of interest.” The potential acquirer has set a price that represents "a premium over the recent closing prices for the company’s common stock." The stock price closed at $1.10 on Friday and reached a high of $1.25 today.

4Kids announced last August that it was exploring alternatives, including a merger or sale of the company. Reporting its Q1 results today, the company said that revenues had fallen from $9.3 million to $4.2 million, while net loss widened from $2 million to $3.5 million. 4Kids is also facing a New York Stock Exchange delisting, now that its market cap has fallen below $15 million.

“In the first quarter of 2010, our revenue decreased from the comparable period in 2009 due to lower licensing revenue and reduced television advertising revenue,” said Alfred R. Kahn, chairman and CEO. “Although first quarter 2010 Yu-Gi-Oh! revenues were essentially flat, the company received reduced licensing revenues from several properties formerly represented by the company.”

Kahn continued: “Although 4Kids is a smaller, more streamlined company, we continue to have the necessary skills, experience and liquidity to promote our current properties, invest in new properties and generally rebuild the business. We believe that we have a promising pipeline of new properties, some of which will debut at next month’s Licensing Show in Las Vegas. With the dramatic reductions to our cost structure, we can become profitable if any of our new properties gain traction.”