4Kids Entertainment, Inc. (NYSE: KDE), announced today the formation of two subsidiaries, TC Digital Games, LLC, a trading card company, and TC Websites, LLC, an online multi-platform game company. 4Kids, a global provider of children’s entertainment and merchandise licensing, will be majority owner of TC Digital, LLC and a fifty percent owner of TC Websites, LLC. This marks the first time that 4Kids Entertainment is going to be directly producing trading cards to be sold at retail.

“The formation of TC Digital Games and TC Websites represent a significant enhancement of our business strategy,” said Alfred R. Kahn, Chairman and CEO of 4Kids Entertainment. “The extraordinary success of Pokémon and Yu-Gi-Oh! has given 4Kids tremendous insight into the trading card industry and the profit potential of a successful trading card game. With the upcoming launch of Chaotic, which integrates traditional trading card game play with unique online game elements, the timing is right for 4Kids to establish and invest in these new ventures. By owning and operating our own trading card and online game operations, 4Kids will now have greater control of the creative, marketing and distribution elements for Chaotic and an opportunity to capture substantially greater revenues and margins than we have recognized from trading card sales in the past,” Kahn said.

Chaotic, which is owned by 4Kids Entertainment and Chaotic USA Entertainment, is an innovative and highly-anticipated trading card game that features a unique alphanumeric code that can be uploaded for virtual play on the free Chaotic website (www.Chaoticgame.com). Once online, kids enter the world of Chaotic, a place where their cards can be stored, traded or played against anyone signed onto Chaotic's virtual world.

Based in San Diego, TC Digital Games and TC Websites base their technology on a series of patents covering the uploading of coded trading cards to a website where online gameplay and community activities occur. The Chaotic website was developed by Chaotic USA Entertainment Group, whose principal is Bryan C. Gannon, a trading card and electronics industry veteran, will serve as President and CEO of the new companies.

Bryan Gannon played an important role in the success of the Yu-Gi-Oh! trading card game when he served as Corporate Vice President, Business Development of Yu-Gi-Oh! card distributor, The Upper Deck Company. Mr. Gannon is currently building a team that will include other trading card and internet industry executives.

> “My industry experience tells me that the time is right to launch these ventures. Collecting trading cards is as popular as ever and adding an on line game play component that uses special codes to upload cards for free on a kid-friendly, companion website is both cutting edge and exciting,” said Gannon. “Chaotic, is already being talked about as the property that will marry traditional trading card play with the digital play experience. I’m excited about the potential success of these ventures,” he said.

> It is anticipated that the Chaotic trading card game will launch in Spring 2007. The Chaotic trading card game is based on the Chaotic animated TV show, which premieres on 4Kids TV on FOX on January 6.