I would agree. I looked at this last year as I had bought and sold them a few years ago and I know their business very well.
I felt all along that they would prevail but the problem is even if they get a few million there is not catalyst for the underlying business as its still losing money, they still have a contract with the WB, which no one watches and no new business lines that will become a hit tv show/toy. Instead they just recycle the same tired lines to squeeze out a little bit of money.
I view the business as a nice salary for the operators as it just kind of struggles around and recycles old concepts. A nice cigar butt type of business that could be good for shareholders but the cash never makes it to bottom line and therefore shareholders as their cost structure seems to high. Excluding depreciation they have been CFFO negative the past few years.
However an asset light business such as this is a leveraged play on a new hit toy which can make tons of money.
Add in the fact that longer term this lawsuit has probably done enough damage that when the contract expires (2013 IIRC - I haven't looked since last summer) the Japanese will probably move this licensing business to whomever they wanted to when this started. While these guys have licensed stuff from other places all the hits come from these guys and when you think of the hit stuff from overseas you think of Pokemon, DragonBall, Avatar (not the movie), Power Rangers and going back further Teenage Mutant Ninja Turtles, they are all from Japan. I thought the Tintin movie was great and has been a hit in Europe for a while but box office sales aren't great here. These guys also seem unwilling to risk and create their own content so while there may be more upside with a cash ruling the stock may hit $1.00 which is a great return but its not like this stock was trading over $.75 before the lawsuit and BK filing.
I wish I would have bought some but I was too focused on DIMEQ to notice it dropped sub $.10. (I need to set up price alerts that hit me in the face).
Lastly, I've seen others to comment that the business has tons of hidden assets. I have no idea what these are. Their actual physical assets are meager (vehicles, some tech equipment), I don't see a NY Office building that they own that they have on the books for $100k unless I am missing something. Their asset is the relationships they have to get to Japanese TV shows to the US, an agreeement with WB that used to be a cost them nothing that changed to them buying the block of programming and them selling and getting the ad revenues. This has been a money loser for them. Again its another form of leverage if they had a hit show but they don't.
Toonzai's current lineup is:
Magi-Nation
Sonic X
Yu-Gi-Oh!
Yu-Gi-Oh! Zexal
Dragon Ball Z Kai
Tai Chi Chasers
Sonic and Yu-Gi-Oh are owned by TV Toyko who I would expect that they will take their business elsewhere when their contract is up. Magi-Nation in Canadian/South Korean, Tai Chi Chasers is South Korean and Dragon Ball is Japanese but from Fuji and not TV Toyko so that could continue.
So of the 6 current shows that make up 5 hours of programming, half will probably go away in a few years. What replaces the business and do I trust mgmt to not waste anything. I don't. Someone convince me I am wrong.
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