UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

FORM 10-Q
 

FORM 10-Q/A

Amendment No. 1
 
x   QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

xQUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
 
FOR THE QUARTERLY PERIOD ENDED JANUARYOCTOBER 31, 20112010
 
or
 
o   TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
¨TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
 
Commission File Number: 000-53718


CTM MEDIA HOLDINGS, INC.
(Exact Name of Registrant as Specified in its Charter)


 
Delaware 
Delaware26-4831346
(State or other jurisdiction of
incorporation or organization)
(I.R.S. Employer
Identification Number)
  
11 Largo Drive South, Stamford, Connecticut06907
(Address of principal executive offices)(Zip Code)
 
(203) 323-5161
(Registrant’s telephone number, including area code)


 
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.    Yes  x     No   ¨
 
Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes ¨No  ¨
 
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.
 
1
Large accelerated filer   ¨
Accelerated filer   ¨
Non-accelerated filer   ¨ (Do not check if a smaller reporting company)
Smaller reporting company   x
 
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act.):    Yes  ¨     No   x
 
As of March 17, 2011, the registrant had the following shares outstanding:

Class A common stock, $0.01 par value:1,106,468 shares outstanding (excluding 178,517 treasury shares)
Class B common stock, $0.01 par value:6,126,322 shares outstanding (excluding 797,183 treasury shares)
Class C common stock, $0.01 par value:1,090,775 shares outstanding
 
CTM MEDIA HOLDINGS, INC.
TABLE OF CONTENTS
PART I. FINANCIAL INFORMATION       3
Item 1.Financial Statements       3
Condensed Consolidated Balance Sheets  as of January 31, 2011(unaudited) and July 31, 2010       3
Condensed Consolidated Statements of Operations (unaudited) for the three and six months ended January 31, 2011 and 2010.       4
Condensed Consolidated Statements of Cash Flows (unaudited) for the three and six months ended January 31, 2011 and 2010.       5
Notes to Condensed Consolidated Financial Statements (unaudited).       6
Item 2.Management’s Discussion and Analysis of Financial Condition and Results of Operations      12
Item 3.Quantitative and Qualitative Disclosures About Market Risk      19
Item 4T.Controls and Procedures      19
PART II. OTHER INFORMATION20
Item 1.Legal Proceedings 20
Item 1A.Risk Factors       20
Item 2.Unregistered Sales of Equity Securities and Use of Proceeds 20
Item 3.Defaults Upon Senior Securities      20
Item 4.Removed and Reserved       20
Item 5.Other Information       20
Item 6.Exhibits       20
SIGNATURES       21
2
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements (Unaudited)
CTM MEDIA HOLDINGS, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(in thousands) 
January 31,
2011
  
July 31,
2010
 
  (Unaudited)  (Note 1) 
Assets      
Current assets:      
Cash and cash equivalents $6,956  $6,516 
Short term investment  1,032    1,030 
Trade accounts receivable, net  2,243    3,496 
Inventory  1,647    1,462 
Prepaid expenses  1,067    965 
Note receivable – current portion  318   321 
Total current assets  13,263    13,790 
Property and equipment, net  1,955   2,013 
Licenses and other intangibles, net  2   17 
Note receivable – non current portion  2,250   2,400 
Other assets  207    181 
Total assets $17,677  $18,401 
Liabilities and equity        
Current liabilities:        
Trade accounts payable $858  $ 1,187 
Accrued expenses  1,693   1,539 
Deferred revenue  1,211   2,035 
Due to IDT Corporation  31   38 
Income tax payable  770   770 
Capital lease obligations—current portion  231   227 
Other current liabilities  856   646 
Total current liabilities  5,650    6,442 
Capital lease obligations—long-term portion  322   286 
Total liabilities  5,972   6,728 
Commitments and contingencies  -   - 
Stockholders’ Equity:        
CTM Media Holdings, Inc.  stockholders’ equity :        
Preferred stock, $.01 par value; authorized shares—500 and 10,000 shares January 31,2011 and July 31, 2010, respectively; no shares issued  -   - 
Class A common stock, $.01 par value; authorized shares—6,000 and 35,000 shares at January 31,2011 and July 31, 2010, respectively; 1,285 shares issued and 1,106 shares outstanding at January 31, 2011 and July 31, 2010   13   13 
Class B common stock, $.01 par value; authorized shares—12,000 and 65,000 shares at January 31, 2011 and January 31, 2010, respectively; 6,924 shares issued and 6,126 shares outstanding at January 31, 2011 and July 31, 2010   69   69 
Class C common stock, $.01 par value; authorized shares—2,500 and 15,000 shares at January 31, 2011 and July 31, 2010, respectively; 1,091 shares issued and outstanding at January 31, 2011 and July 31, 2010   11   11 
Additional paid-in capital  57,776   58,548 
Treasury Stock, at cost, consisting of 179 shares of shares of Class A and 797 shares of Class B at January 31, 2011 and July 31, 2010  (1,070)  (1,070)
Accumulated other comprehensive income  165    117 
    Accumulated deficit  (45,670)  (46,235)
Total CTM Media Holdings, Inc. stockholders’ equity  11,294   11,453 
    Noncontrolling interests  411   220 
Total stockholders’ equity  11,705   11,673 
Total liabilities and stockholders’ equity $17,677  $18,401 
See accompanying notes to condensed consolidated financial statements.
3
Explanatory Note

CTM MEDIA HOLDINGS, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
  
Three Months Ended
January 31,
  
Six Months Ended
January 31,
 
(in thousands, except per share data) 2011  2010  2011  2010 
             
Revenues $7,677  $6,365   16,326  $14,598 
Costs and expenses:                
Direct cost of revenues (exclusive of depreciation and amortization)  3,712   3,234   7,473   6,982 
Selling, general and administrative (i)  3,786   3,533   7,600   6,718 
Depreciation and amortization  173   228   344   456 
Bad debt  38   51   84   54 
Total costs and expenses  7,709   7,046   15,501   14,210 
Income (loss) from operations  (32)  (681)  825   388 
Interest income (expense), net  13   (42)  28   (60)
Other income (expense) , net  7   3   -   (4 )
Income (loss) from continuing operations before income taxes  (12)  (720)  853   324 
Benefit from (provision for) income taxes  (16)  116   (84)  (123)
Income (loss) from continuing operations  (28)  (604)  769   201 
Discontinued operations net of tax: (Note 2)                
Loss from discontinued operations  -   (121)  -   (251)
Net Income (loss)  (28)  (725)  769   (50)
Less – net income attributable to non-controlling interests  (116)  (6 )  (203)  (151)
Net income (loss) attributable to CTM Media Holdings, Inc.  (144) $(719)  566  $(201)
Amounts Attributable to CTM Media Holdings, Inc. common stockholders:                
Income (loss) from continuing operations  (144)  (598)  566   50 
Loss from discontinued operations  -   (121)  -   (251)
Net income (loss) attributable to CTM Media Holdings, Inc.  (144) $(719)  566  $(201)
Basic and diluted income (loss)  per share  attributable to CTM Media Holdings, Inc. common stockholders:            
Income (loss) from continuing operations $(0.02) $(0.09) $0.07  $0.01 
Loss from discontinued operations $-  $(0.02) $-  $(0.04)
Net income (loss) $(0.02) $(0.11) $0.07  $(0.03)
Weighted-average number of shares used in calculation of basic and diluted loss per share:  8,323   6,380   8,323   6,539 
Dividend declared per common share: $-   -  $0.12   - 
(i)  Stock-based compensation included in selling, general and administrative expenses
114113226131
See accompanying notes to condensed consolidated financial statements.
4

 CTM MEDIA HOLDINGS, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
Six Months ended January 31,
(in thousands)
 2011  2010 
Operating activities      
Net income (loss) $769  $(50)
Adjustments to reconcile net income (loss) to net cash provided by  operating activities:        
Loss from discontinued operations  -   251 
Depreciation and amortization  344   456 
Provision for doubtful accounts receivable  84   54 
Stock-based compensation  226   131 
Change in assets and liabilities:        
Trade accounts receivable  1,145   1,429 
Inventory, prepaid and other assets  (313)  (60)
Trade accounts payable, accrued expenses, and other current liabilities  100   515 
Deferred revenue  (824)  (396)
Net cash provided by operating activities  1,531   2,330 
Investing activities:        
Capital expenditures  (103)  (150)
    Purchase of IDW non-controlling interests  -   (414)
    Payments received on note for sale of assets  153   - 
Net Cash provided by (used in) investing activities  50   (564)
Financing activities:        
Distributions to holders of non-controlling interests  (12)  (435)
Funding provided by IDT Corporation, net  -   2,254 
Repurchase of Class A and Class B common stock  -   (1,070)
Repayments of capital lease obligations  (130)  (130)
Dividends paid  (999)  - 
Net cash (used in) provided by financing activities  (1,141)  619 
Discontinued operations:        
Net cash used in operating activities  -   (233)
Net cash used in investing activities  -   (3)
Net cash provided by financing activities  -   117 
Net cash used in discontinued operations  -   (119)
Net increase  in cash and cash equivalents  440   2,266 
Cash and cash equivalents at beginning of period  6,516   6,480 
Cash and cash equivalents at end of period $6,956  $8,746 
Supplemental schedule of non cash  investing and financing activities        
Cash paid for interest $15  $13 
Purchases of property and equipment through capital lease obligations $166  $- 
The effect of exchange rate changes on cash and cash equivalents is not material.
See accompanying notes to condensed consolidated financial statements.
5

CTM MEDIA HOLDINGS, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
Note 1—Basis of Presentation
The accompanying unaudited condensed consolidated financial statements of CTM Media Holdings, Inc. and its subsidiaries (the “Company”) have been prepared by management in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”) for interim financial information and with the instructionsis filing this amendment to Form 10-Q and Article 10 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by U.S. GAAP for complete financial statements. In the opinion of management, all adjustments (consisting of normal recurring accruals) considered necessary for a fair presentation have been included. Operating results for the three and six months ended January 31, 2011 are not necessarily indicative of the results that may be expected for the fiscal year ending July 31, 2011. The balance sheet at July 31, 2010 has been derived from the Company’s audited financial statements at that date but does not include all of the information and footnotes required by U.S. GAAP for complete financial statements. For further information, please refer to the consolidated financial statements and footnotes thereto included in the Company’s Annualour Quarterly Report on Form 10-K10-Q for the yearquarterly period ended JulyOctober 31, 2010, aswhich was originally filed with the U.S. Securities and Exchange Commission (the “SEC”).
The Company’s fiscal year ends on July 31. Each reference belowDecember 15, 2010 (the “Original Filing”), in response to a fiscal year refers to the fiscal year ending in the calendar year indicated (e.g., fiscal 2011 refers to the fiscal year ending July 31, 2011).
On August 1, 2009, the Company adopted the accounting standard relating to noncontrolling interests in consolidated financial statements (see Note 11).
The Company consists of the following principal businesses:
CTM Media Group (“CTM”), the Company’s brochure distribution company and other advertising-based product initiatives focused on small to medium sized businesses; and
The Company’s majority interest in Idea and Design Works, LLC (“IDW”), which is a comic book and graphic novel publisher that creates and licenses intellectual property.
The Company was formerly a subsidiary of IDT Corporation (“IDT Corporation” or “IDT”) formed on May 8, 2009. On September 14, 2009, the Company was spun-off by IDT to its stockholders and became an independent public company (the “Spin-Off”). IDT transferred its ownership in all of the entities that became the Company’s consolidated subsidiaries prior to the Spin-Off. The entities that became direct or indirect subsidiaries of the Company are: CTM; Beltway Acquisition Corporation; IDT Local Media, Inc. (which conducted certain operations related to CTM with only the Local Pull business still active) and IDT Internet Mobile Group, Inc. (“IIMG”). IIMG owns approximately 77% of the equity interests in IDW (see Note 10 for the purchase of additional interest in IDW). All indebtedness owed by any of these entities to IDT Corporation or its affiliates was converted into a capital contribution.  All references to the Company, its assets and results of operations for periods prior to the actual formation of the Company, refer to the subsidiaries of IDT that are now ownedcomment received by the Company and their consolidated assets and resultsfrom the SEC solely to amend the certifications pursuant to Section 302 of operations.the Sarbanes-Oxley Act of 2002.

The Company’s authorized capital stock, upon incorporation, consisted of (a) 35 million shares of Class A common stock, (b) 65 million shares of Class B common stock, (c) 15 million shares of Class C common stock, and (d) 10 million shares of Preferred Stock. IDT Corporation completedThis Amendment does not reflect events occurring after the Spin-Off through a pro rata distributionfiling of the Company’s common stockOriginal Filing and no attempt has been made in this Amendment to IDT Corporation’s stockholders of recordmodify or update other disclosures as presented in the Original Filing.  All other Items of the close of business on August 3, 2009 (the “record date”). As a result of the Spin-Off, each of IDT Corporation’s stockholders received: (i) one share of the Company’s Class A common stock for every three shares of IDT Corporation’s common stock held on the record date; (ii) one share of the Company’s Class B common stock for every three shares of IDT Corporation’s Class B common stock held on the record date; (iii) one share of the Company’s Class C common stock for every three shares of the IDT Corporation’s Class A common stock held on the record date; and (iv) cash in lieu of a fractional share of all classes of the Company’s common stock. On September 14, 2009, as a result of the Spin-Off, the Company had 1.3 million shares of Class A common stock, 5.1 million shares of Class B common stock and 1.1 million shares of Class C common stock issued and outstanding.

On December 20, 2010 the Company’s authorized shares of: (i) Class A common stock was reduced from 35,000,000 shares to 6,000,000 shares; (ii) Class B common stock from 65,000,000 shares to 12,000,000 shares; (iii) Class C common stock from 15,000,000 shares to 2,500,000 shares; and (iv) Preferred Stock from 10,000,000 shares to 500,000 shares, each par value $0.01 per share.  The amendment was authorized by the Company’s Board of Directors on October 19, 2010, and approved on November 12, 2010 by the Written Consent of the holders of shares representing approximately 50.1%, 58%, and 100% of the Company’s outstanding Class A common stock, Class B common stock and Class C common stock, and approximately 84% of the combined voting power of the Company’s outstanding capital stock.

6

Note 2—Discontinued Operations
Sale of assets of WMET Radio

On May 5, 2010, the Company consummated the sale of substantially all of the assets used in the WMET radio station business (other than working capital). WMET 1160 AM is a radio station serving the Washington, D.C. metropolitan area.  The sale price for the WMET assets was $4 million in a combination of cash and a promissory note of the buyer that is secured by the assets sold.  $1.3 million of the purchase price was paid in cash at the closing and the remainder is owed pursuant to a two-year promissory note, which is extendable in part to three years at the option of the buyer. The sale met the criteria to be reported as a discontinued operation in the third quarter of fiscal 2010 and accordingly, WMET’s results are classified as part of discontinued operations during the fiscal year 2010.
Summary Financial Data of Discontinued Operations

Revenues and loss (in millions) before income taxes of WMET, which are included in discontinued operations, were as follows:
  
 Three Months Ended
January 31, 
  
 Six Months Ended 
January 31,
 
  2011  2010  2011  2010 
Revenue $-  $0.1  $-  $0.4 
Loss before income taxes and net loss $-  $(0.1) $-  $(0.3)

There were no assets or liabilities of WMET included in discontinued operations as of January 31, 2011 and July 31, 2010.

7
Note 3—Stock Repurchase and Cash Dividends

On November 17, 2009, the Company commenced a tender offer to purchase up to thirty percent of its outstanding common stock. The Company offered to purchase up to 0.4 million shares of its Class A common stock and up to 2.4 million shares of its Class B common stock, at a price per share of $1.10. The offer expired on December 22, 2009 and pursuant to the offer, the Company repurchased 0.2 million shares of Class A common stock and 0.8 million shares of Class B common stock for an aggregate purchase price of $1.1 million, representing approximately 14% of its total outstanding capital stock at the time.
The Company paid a cash dividend in the amount of $0.25 per share (approximately $2.1 million in the aggregate), $0.06 per share (approximately $0.5 million in the aggregate), and $0.12 per share (approximately $1.0 million in the aggregate), on March 15, 2010, June 15, 2010 and November 9, 2010, respectively, to stockholders of record as of March 8, 2010, May 3, 2010 and November 1, 2010, respectively, of the Company’s Class A, Class B and Class C common stock.
On October 19, 2010, the Company’s Board of Directors approved the payment of regular quarterly dividends in the amount of $0.06 per share, subject to confirmation by the Company’s management that there is sufficient surplus as of the proposed future payment dates and other circumstances existing at the relevant times. This amount was paid during the second quarter of fiscal 2011.

On February 22, 2011, the Board of Directors, in light of the Company’s cash position, declared the payment of a cash dividend in the amount of $0.06 per share (approximately $0.5 million in the aggregate) which, subject to confirmation by the Company’s management that there is sufficient surplus as of the proposed payment date, will be paid on or about March 17, 2011 to stockholders of record as of March  8, 2011 of the Company’s Class A common stock, Class B common stock and Class C common stock.  

In addition, the Board of Directors approved the buyback of up to 1 million shares of either the Company’s Class A common stock or Class B common stock.  Any purchases will be made in compliance with applicable regulations.

8
The declaration of any future dividend will be at the discretion of the Company’s Board of Directors and will depend on the Company’s financial condition, results of operations, capital requirements, business conditions and other factors, as well as a determination by the Company’s Board of Directors that dividends are in the best interest of the Company’s stockholders.

Note 4—Earnings Per Share
Basic earnings per share is computed by dividing net income (loss) attributable to all classes of common stockholders by the weighted average number of shares of all classes of common stock outstanding during the applicable period. Diluted earnings per share is computed in the same manner as basic earnings per share, except that the number of shares is increased to include non-vested restricted stock using the treasury stock method, unless the effect of such increase is anti-dilutive.
Note 5—Equity
Changes in the components of equity  were as follows:
  
Six Months Ended
January 31, 2011
 
  Attributable to the Company  Noncontrolling Interests  Total 
  (in thousands) 
Balance, July 31, 2010 $11,453  $220  $11,673 
             
Stock based compensation  226   -   226 
Cash distributions  -   (12)  (12)
Cash dividends  (999)  -   (999)
Comprehensive income:            
             Net income  566   203   769 
             Other comprehensive  income  48   -   48 
             Comprehensive income  614   203   817 
Balance, January 31, 2011 $11,294  $411  $11,705 

As part of the Spin-Off, holders of restricted stock of IDT Corporation received, in respect of those restricted shares, one share of the Company’s Class A common stock for every three restricted shares of common stock of IDT Corporation that they owned as of the record date of the Spin-Off and one share of the Company’s Class B common stock for every three restricted shares of Class B common stock of IDT Corporation that they owned as of the record date of the Spin-Off. Those particular shares of the Company’s stock are restricted under the same terms as the corresponding IDT Corporation restricted shares in respect of which they were issued. Upon completion of the Spin-Off on September 14, 2009, there were 0.3 million shares of Class A unvested restricted stock and 0.5 million shares of Class B unvested restricted stock.

On September 3, 2009, the Company’s Compensation Committee ratified the Company’s 2009 Stock Option and Incentive Plan (the “Company’s Stock Option and Incentive Plan”), which was previously adopted by the Company’s Board of Directors and approved by IDT Corporation as the Company’s sole stockholder, to provide incentives to executive officers, employees, directors and consultants of the Company and/or its subsidiaries. The maximum number of shares of the Company’s Class B common stock reserved for the grant of awards under the Company’s Stock Option and Incentive Plan is 383,020, subject to adjustment. Incentives available under the Company’s Stock Option and Incentive Plan may include stock options, stock appreciation rights, limited stock appreciation rights, restricted stock, and deferred stock units.
Under the Company’s Stock Option and Incentive Plan, the option price of each option award shall not be less than one hundred percent of the fair market value of the Company’s Class B common stock on the date of grant. Each option agreement shall provide the exercise schedule for the option as determined by the Compensation Committee. The exercise period will be ten years from the date of the grant of the option unless otherwise determined by the Compensation Committee. No awardsOriginal Filing have been granted under the Company’s Stock Option and Incentive Plan to date.
9
On October 14, 2009, the Company’s Board of Directors granted its Chairman and founder, Howard S. Jonas, 1.8 million restricted shares of the Company’s Class B common stock with a value of $1.25 million on the date of grant in lieu of a cash base salary for five years periodomitted from October 14, 2009 through October 14, 2014. The restricted shares will vest in equal thirds on each of October 14, 2011, October 14, 2012 and October 14, 2013. Unvested shares would be forfeited if the Company terminates Mr. Jonas’ employment other than under circumstances where accelerated vesting applies. The shares are subject to adjustments or acceleration based on certain corporate transactions, changes in capitalization, or termination, death or disability of Mr. Jonas. If Mr. Jonas is terminated by the Company for cause, a pro rata portion of the shares would vest and the remainder would be forfeited. This arrangement did not impact Mr. Jonas’ cash compensation from the date of the Spin-Off through the pay period including the grant date. Total unrecognized compensation cost on the grant date was $1.25 million. The unrecognized compensation cost has been and is expected to continue to be recognized over the vesting period from October 14, 2009 through October 14, 2014. The unrecognized compensation cost as of January 31, 2011 was $0.67 million.
The Company repurchased $1.1 million of its Class A and Class B common stock in the second quarter ended January 31, 2010 in connection with the tender offer that expired on December 22, 2009.
Note 6—Comprehensive Income (Loss)
Comprehensive income (loss) consists of net income (loss) and other gains and losses affecting equity that, under generally accepted accounting principles are excluded from net income. Changes in the components of other comprehensive income (loss) are described below.
   
Three Months Ended
January 31,
  
Six Months Ended
January 31,
 
  2011  2010  2011  2010 
  (in thousands)  (in thousands) 
Net income (loss) $(28) $(725) $769  $(50)
Foreign currency translation adjustments  16   (5)  48   - 
Comprehensive income (loss)  (12)  (730)  817   (50)
Comprehensive income (loss) attributable to non-controlling interests  (116)  (6)  (203)  (151)
Comprehensive income (loss) attributable to CTM Media Holdings, Inc. $(128)  (724) $614  $(201)
Note 7—Business Segment Information
The Company has the following reportable business segments: CTM and IDW. CTM consists of our brochure distribution company and other advertising-based new product initiatives focused on small to medium sized businesses. IDW is a comic book and graphic novel publisher that creates and licenses original intellectual property.  The Company owns 76.665% of IDW.
The Company’s reportable segments are distinguished by types of service, customers and methods used to provide their services. The operating results of these business segments are regularly reviewed by the Company’s management.
The accounting policies of the segments are the same as the accounting policies of the Company as a whole. The Company evaluates the performance of its business segments based primarily on operating income (loss).
10

Operating results for the business segments of the Company are as follows:
(in thousands) CTM  IDW  Total 
Three months ended January 31, 2011         
Revenues $4,011  $3,666  $7,677 
Income (loss) from operations  (527)  495   (32)
Depreciation and amortization  164   9   173 
Total assets at January 31, 2011  10,362   7,315   17,677 
Three months January 31, 2010            
Revenues $3,924  $2,441  $6,365 
Income (loss) from operations  (375)  (306 )  (681)
Depreciation and amortization  203   25   228 
Total assets at January 31, 2010  9,918   6,547   16,465 
Six months ended January 31, 2011            
Revenues $9,040  $7,286  $16,326 
Income (loss) from operations  (32)  857   825 
Depreciation and amortization  323   21   344 
Six months ended January 31, 2010            
Revenues $8,839  $5,759  $14,598 
Income (loss) from operations  387   1   388 
Depreciation and amortization  399   57   456 
Note 8— Provision for Income Taxes
Income tax expense decreased in the three and six months ended January 31, 2011 compared to the similar period in fiscal 2010 due to decreases in state and local and foreign income tax expense which was partially offset by an increase in US Alternative Minimum Tax expense. State and local income tax expense decreased in the three and six months ended January 31, 2011 compared to the similar periods in fiscal 2010 due to the utilization of Net Operating Losses (NOLs) that were not available in the prior periods. Our foreign income tax expense results from income generated by our foreign subsidiaries that cannot be offset against losses of our other subsidiaries.
Note 9 – Tender Offer

On November 17, 2009, the Company commenced a tender offer to purchase up to thirty percent of its outstanding common stock. The Company concluded the tender offer and repurchased 0.2 million shares of Class A common stock and 0.8 million shares of Class B common stock for an aggregate purchase price of $1.1 million, representing approximately 14% of its total outstanding capital stock at the time.

Note 10 – Purchase of Non-Controlling Interests in IDW

On November 5, 2009, the Company purchased an additional 23.335% interest in IDW for a purchase price of $0.4 million in cash. As a result of the transaction, the Company owns a 76.665% interest in IDW. The acquisition was accounted for in the second quarter of fiscal 2010 as an equity transaction, in accordance with the accounting standards on non-controlling interests.  
Note 11— Recently Issued Accounting Standards
The Financial Accounting Standards Board (“FASB”) periodically issues new accounting standards in a continuing effort to improve standards of financial accounting and reporting. We have reviewed the recently issued pronouncements and concluded that no new standards were issued this quarter that applied to the Company.
In January 2010, the FASB issued Accounting Standards Update (ASU) No. 2010-06, “Improving Disclosures about Fair Value Measurements” (“ASU 2010-06”), which is included in the ASC Topic 820 (Fair Value Measurements and Disclosures). ASU 2010-06 requires new disclosures on the amount and reason for transfers in and out of Level 1 and 2 fair value measurements.  ASU 2010-06 also requires disclosure of activities, including purchases, sales, issuances, and settlements within the Level 3 fair value measurements and clarifies existing disclosure requirements on levels of disaggregation and disclosures about inputs and valuation techniques.  Except for otherwise provided, ASU 2010-06 is effective for interim and annual reporting periods beginning after December 15, 2009. The adoption ofAmendment.  Accordingly, this standard did not have a material effect on the Company’s financial statements.

In February 2010, the FASB issued ASU No. 2010-09, “Amendments to Certain Recognition and Disclosure Requirements” (“ASU 2010-09”), which is included in ASC Topic 855 (Subsequent Events).  ASU 2010-09 clarifies that an SEC filer is required to evaluate subsequent events through the date that the financial statements are issued.  ASU 2010-09 was effective upon the issuance of the final update and did not have any impact on the Company’s financial statements.
Note 12 — Subsequent Events
The Company completed a review and analysis of all events that occurred after the balance sheet date to determine if any such events must be reported and has determined that there are no subsequent events to be disclosed.

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Item 2.      Management’s Discussion and Analysis of Financial Condition and Results of Operations
The following informationAmendment should be read in conjunction with the accompanying condensed consolidated financial statements and the associated notes thereto of this Quarterly Report, and the audited consolidated financial statements and the notes thereto and our Management’s Discussion and Analysis of Financial Condition and Results of Operations contained in our Annual Report on Form 10-K for the fiscal year ended July 31, 2010, as filed with the U.S. Securities and Exchange Commission (the “SEC”).
In accordance with Item 10-(f)(2)(ii) of Regulation S-K, we qualify as a “smaller reporting company” because our public float was below $75 million, calculated based on the actual share price on January 29, 2010, the last business day of our second fiscal quarter in fiscal 2010, and the aggregate number of shares distributed to non-affiliates. We therefore followed the disclosure requirements of Regulation S-K applicable to smaller reporting companies in this Quarterly Report on Form 10-Q.
As used below, unless the context otherwise requires, the terms “the Company,” “we,” “us,” and “our” refer to CTM Media Holdings, Inc., a Delaware corporation, and our subsidiaries.
Forward-Looking Statements
This Quarterly Report on Form 10-Q contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934, including statements that contain the words “believes,” “anticipates,” “expects,” “plans,” “intends,” and similar words and phrases. These forward-looking statements are subject to risks and uncertainties that could cause actual results to differ materially from the results projected in any forward-looking statement. In addition to the factors specifically noted in the forward-looking statements, other important factors, risks and uncertainties that could result in those differences include, but are not limited to, those discussed under Item 1A to Part I “Risk Factors” in our Annual Report on Form 10-K for the fiscal year ended July 31, 2010. The forward-looking statements are made as of the date of this report and we assume no obligation to update the forward-looking statements, or to update the reasons why actual results could differ from those projected in the forward-looking statements. Investors should consult all of the information set forth in this report and the other information set forth from time to time in our reports filedfilings with the SEC pursuantsubsequent to the Securities Act of 1933 and the Securities Exchange Act of 1934, including our Annual Report on Form 10-K for the fiscal year ended July 31, 2010.
OVERVIEW

We are a former subsidiary of IDT Corporation. As a resultfiling of the Spin-Off, on September 14, 2009, we became an independent public company. IDT Corporation continues to provide certain functions pursuant to a Master Services Agreement, dated September 14, 2009. During the six months ended January 31, 2011 and 2010, our selling, general and administrative expenses included $0.1 million and $0.5 million, respectively, for all services and allocated expenses charged by IDT Corporation to us. At January 31, 2011 and July 31, 2010 the amount owed to IDT Corporation was $0.1 million.Original Filing.
 
On November 17, 2009, the Company commenced a tender offer to purchase up to thirty percent of its outstanding common stock. The Company concluded the tender offer and repurchased 0.2 million shares of Class A common stock and 0.8 million shares of Class B common stock for an aggregate purchase price of $1.1 million, representing approximately 14% of its total outstanding capital stock at the time.

On May 5, 2010, the Company consummated the sale of substantially all of the assets used in the WMET radio station business (other than working capital). WMET 1160 AM is a radio station serving the Washington, D.C. metropolitan area.  The sale price for the WMET assets was $4 million in a combination of cash and a promissory note of the buyer that is secured by the assets sold.  $1.3 million of the purchase price was paid in cash at the closing and the remainder is owed pursuant to a two-year promissory note, which is extendable in part to three years at the option of the buyer. The sale met the criteria to be reported as a discontinued operation in the third quarter of fiscal 2010 and accordingly, WMET’s results are classified as part of discontinued operations during the fiscal year 2010.
Our principal businesses consist of:
CTM Media Group (“CTM”), our brochure distribution company and other advertising-based new product initiatives focused on small to medium sized businesses; and
Our majority interest in Idea and Design Works, LLC (“IDW”), which is a comic book and graphic novel publisher that creates and licenses intellectual property.

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CTM

CTM develops and distributes print and mobile-based advertising and information in targeted tourist markets. Throughout its operating region, CTM operates four integrated and complimentary business lines: Brochure Distribution, Publishing, RightCardTM, and Digital Distribution. CTM had operated its Design & Print business, which it exited at the beginning of the fourth quarter of fiscal 2010. CTM offers its customers a comprehensive media marketing approach through these business lines. In fiscal 2011, CTM has been servicing over 2,600 clients and has been maintaining more than 11,000 display stations in over 28 states, territories and provinces in the United States (including Puerto Rico) and Canada. CTM’s display stations are located in travel, tourism and entertainment venues, including hotels and other lodgings, corporate and community venues, transportation terminals and hubs, tourist attractions and entertainment venues. CTM’s revenues represented 55.4% and 59.2% of our consolidated revenues in the six months ended January 31, 2011 and 2010, respectively.
IDW

IDW is a comic book and graphic novel publisher that creates and licenses intellectual property. IDW’s revenues represented 44.6% and 38.5% of our consolidated revenues in the three months ended January 31, 2011 and 2010, respectively.
On November 5, 2009 we purchased an additional 23.335% interest in IDW for a purchase price of $0.4 million. As a result of the transaction, we own a 76.665% interest in IDW.

REPORTABLE SEGMENTS
We have the following two reportable business segments: CTM and IDW.
PRESENTATION OF FINANCIAL INFORMATION
Basis of presentation
The condensed consolidated financial statements for the periods reflect our financial position, results of operations, and cash flows as if the current structure existed for all periods presented. The financial statements have been prepared using the historical basis for the assets and liabilities and results of operations.
CRITICAL ACCOUNTING POLICIES
Our condensed consolidated financial statements and accompanying notes are prepared in accordance with accounting principles generally accepted in the United States (“U.S. GAAP”). Our significant accounting policies are described in Note 1 to the consolidated financial statements included in our Annual Report on Form 10-K for fiscal 2010. The preparation of financial statements requires management to make estimates and assumptions that affect the reported amounts of assets, liabilities, revenues and expenses as well as the disclosure of contingent assets and liabilities. Critical accounting policies are those that require application of management’s most subjective or complex judgments, often as a result of matters that are inherently uncertain and may change in subsequent periods. Our critical accounting policies include those related to the allowance for doubtful accounts and intangible assets with indefinite useful lives and valuation of long-lived assets including intangible assets with finite useful lives. Management bases its estimates and judgments on historical experience and other factors that are believed to be reasonable under the circumstances. Actual results may differ from these estimates under different assumptions or conditions. For additional discussion of our critical accounting policies, see our Management’s Discussion and Analysis of Financial Condition and Results of Operations in our Annual Report on Form 10-K for fiscal 2010.
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RESULTS OF OPERATIONS

We evaluate the performance of our operating business segments based primarily on income (loss) from operations. Accordingly, the income and expense line items below income (loss) from operations are only included in our discussion of the consolidated results of operations. Also, we did not include a separate discussion of WMET’s results of operation since the operations were not significant.
Three and Six Months Ended January 31, 2011 Compared to Three and Six Months Ended January 31, 2010
Consolidated
(in millions) 
Three Months ended
January 31,
  Change  
Six Months ended
January 31,
  Change 
  2011  2010  $   %   2011   2010  $   % 
Revenues                            
CTM $4.0  $3.9  $0.1   2.6  $9.0  $8.8  $0.2   2.3 
IDW  3.6   2.4   1.2  50   7.3   5.7   1.6   28.1 
Total revenues $7.6  $6.3  $1.3   20.6  $16.3  $14.5  $1.8   12.4 
Revenues. The increase in consolidated revenues in the three and six months ended January 31, 2011 compared to the similar periods in fiscal 2010 was primarily due to the increase in IDW’s  revenues and a slight increase in CTM’s revenues. The increase in IDW’s revenues was primarily due to an increase in publishing revenues, digital publishing revenues, and royalty income which were partially offset by a decline in licensing revenues. CTM’s revenues  during the three and six month periods ended January 31, 2011 slightly increased when compared to the similar periods in fiscal 2010 due to increases in  Right CardTM revenues, map publishing revenues,  and digital revenues which were partially offset by declines in printing revenues, which business we exited in the fourth quarter of fiscal 2010. 
(in millions)   Three Months ended January 31,  Change    Six Months ended January 31, Change 
  2011  2010  $  %  2011  2010  $  % 
Costs and expenses                            
Direct cost of revenues $3.7  $3.2  $0.5   15.6  $7.4  $6.9  $0.5   7.2 
Selling, general and administrative  3.7   3.5   0.2   5.7   7.6   6.7   0.9   13.4 
Depreciation and amortization  0.2   0.2   0   -   0.4   0.5   (0.1)  (20)
Bad debt expense  0.1   0.1   0   -   0.1   0.1   -   0 
                                 
Total costs and expenses $7.7  $7  $0.7   10  $15.5  $14.2  $1.3   9.2 
Direct Cost of Revenues.The increase in direct cost of revenues in the three and six months ended January 31, 2011 compared to the similar periods in fiscal 2010 was a result of an increase in direct cost of revenues at our   IDW segment which were partially offset by a marginal decline at our CTM segment. The increase in direct cost of revenues at IDW in the three and six months ended January 31, 2011 compared to the similar periods in fiscal 2010 was directly attributable to the corresponding increase in revenues at IDW. The decrease in CTM’s direct cost of revenues in the three and six months ended January 31, 2011 compared to the similar periods in fiscal 2010 was principally as a result of our exiting the printing business. Overall gross margin increased to 51.3% and 54.6% in the three and six months ended January 31, 2011 respectively, from 49.2% and 52.4% in the three and six months ended January 31, 2010 respectively. This increase was a result of an increase in overall gross margins at our CTM and IDW segments
Selling, General and Administrative. The increase in selling, general and administrative expenses in the three and six months ended January 31, 2011 compared to the similar periods in fiscal 2010 was primarily due to an increase in the selling, general and administrative expenses of CTM which were partially offset by a decline in selling, general and administrative expenses of IDW. CTM’s selling, general and administrative expenses increased in the three and six months ended January 31, 2011 compared to the similar periods in fiscal 2010 due to an increase in payroll costs, offsite costs related to meetings of CTM’s sales personnel, advertising costs, and professional costs. IDW’s selling, general and administrative expenses declined marginally due to a decline in administrative and occupancy costs. Total selling, general and administrative expenses associated with operating as a publicly traded company were $0.2 million and $0.4 million for the three and six months ended January 31, 2011.

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As a percentage of total revenues, selling, general and administrative expenses decreased to 48.7% in the three months ended January 31, 2011 from 55.6% in the similar periods in fiscal 2010 and marginally increased to 46.6% in the six months ended January 31, 2011 from 46.2% in the similar period in fiscal 2010.
On October 14, 2009, our Board of Directors granted our Chairman and founder, Howard S. Jonas, 1.8 million restricted shares of our Class B common stock with a value of $1.25 million on the date of grant in lieu of a cash base salary for the five year period from October 14, 2009 through October 14, 2014. The restricted shares will vest in equal thirds on each of October 14, 2011, October 14, 2012 and October 14, 2013. Unvested shares would be forfeited if we terminate Mr. Jonas’ employment other than under circumstances where the accelerated vesting applies. The shares are subject to adjustments or acceleration based on certain corporate transactions, changes in capitalization, or termination, death or disability of Mr. Jonas. If Mr. Jonas is terminated by us for cause, a pro rata portion of the shares would vest. This arrangement does not impact Mr. Jonas’ cash compensation from the date of the Spin-Off through the pay period including the grant date. Total unrecognized compensation cost on the grant date was $1.25 million. The unrecognized compensation cost is expected to be recognized over the vesting period from October 14, 2009 through October 14, 2014.  The related stock-based compensation related to this grant was $0.1 million and $0.2 million for the three and six months ended January 31, 2011, respectively.
Bad Debt Expense. The decrease and increase in bad debt expense in the three and six months ended January 31, 2011 was due primarily to a corresponding decrease and increase in bad debt expense of CTM.
(in millions) 
Three Months ended
January 31,
  Change  
Six Months ended
January 31,
  Change 
  2011  2010  $  %   2011  2010  $  % 
(Loss) income from operations $-  $(0.7) $0.7   100.0  $0.9  $0.3  $0.6      200 
Benefit from (provision for) income taxes  0.0   0.1   (0.1)  (100.0)   (0.1)  (0.0)  (0.1)  100 
Loss related to discontinued operations  -   (0.1)  0.1   100.0   -   (0.3)  0.3   - 
Net (loss) income  -   (0.7)  0.7   100.0   0.8   (0.0)  0.8   100 
     Less: Net loss (income) attributable to non - controlling interest  (0.1)   -   (0.1)   100.0   (0.2)  (0.2)   -   - 
Net (loss) income attributable to CTM Media Holdings, Inc. $(0.1) $(0.7) $0.6   86.0  $0.6  $(0.2) $0.8   400 


Income Taxes. Benefit from (provision for) income taxes in the three and six months ended January 31, 2010 compared to the similar periods in fiscal 2009 remained substantially unchanged.
We and IDT entered into a Tax Separation Agreement, dated as of September 14, 2009, to provide for certain tax matters including the assignment of responsibility for the preparation and filing of tax returns, the payment of and indemnification for taxes, entitlement to tax refunds and the prosecution and defense of any tax controversies. Pursuant to this agreement, IDT must indemnify us from all liability for taxes of ours and our subsidiaries for periods ending on or before September 14, 2009, and we must indemnify IDT from all liability for taxes of ours and our subsidiaries accruing after September 14, 2009. Also, for periods ending on or before September 14, 2009, IDT shall have the right to control the conduct of any audit, examination or other proceeding brought by a taxing authority. We shall have the right to participate jointly in any proceeding that may affect our tax liability unless IDT has indemnified us. Finally, we and our subsidiaries agreed not to carry back any net operating losses, capital losses or credits for any taxable period ending after September 14, 2009 to a taxable period ending on or before September 14, 2009 unless required by applicable law, in which case any refund of taxes attributable to such carry back shall be for the account of IDT.
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Income (loss) attributable to non controlling interests. On November 5, 2009, we purchased an additional 23.335% noncontrolling interest in IDW for a purchase price of $0.4 million in cash. As a result of the transaction, we own a 76.665% interest in IDW.
CTM
(in millions) 
Three months ended
January 31,
  Change  
Six Months ended
January 31,
  Change 
  2011  2010  $   %   2011   2010  $   % 
Revenues $4.0  $3.9  $0.1   2.6  $9.0  $8.8  $0.2   2.3 
Direct cost of revenues  1.5   1.7   (0.2)  11.8   3.1   3.4   (0.3)  (8.8)
Selling, general and administrative  2.8   2.4   0.4   16.7   5.5   4.6   0.9   19.6 
Depreciation and amortization  0.1   0.2   (0.1)  (50.0)  0.3   0.4   (0.1)��  (25.0) 
Bad debt expense      -       -  -   0.1   0.0   0.1  100.0 
(Loss) income from operations $(0.4) $(0.4) $-  -  $0.0  $0.4  $(0.4) (100.0)

Revenues. The marginal increase in CTM’s revenues in the three and six months ended January 31, 2011 compared to the similar periods in fiscal 2010 was primarily due to increases in our right card revenues, map publishing revenues, and digital revenues which were partially offset by declines in printing revenues resulting from our exiting that line of business in the fourth quarter of fiscal 2010. We are continuing to see positive signs of a gradual recovery in our business such that we expect revenues to be more or at least equal to the corresponding periods in fiscal 2010.

Direct Cost of Revenues. Direct cost of revenues consists primarily of distribution and fulfillment payroll, warehouse and vehicle distribution expenses and print and design expenses. The direct cost of revenues in the three months and six months ended January 31, 2011 compared to the similar periods in fiscal 2010 is slightly lower. The decline is primarily on account of decreases in direct cost of printing revenues associated with our unprofitable printing business which were partially offset by increases in direct costs of Right CardTM and publishing revenues.
CTM’s gross margin percentage increased in the three and six months ended January 31, 2011 to 62.5% and 65.6%, respectively, compared to 56.4% and 61.4% in the similar periods in fiscal 2010. Since a significant portion of CTM’s cost of sales is fixed, the gross margin percentage decreases when revenues decrease. Additionally, there was an increase in gasoline and payroll costs during the three and six months ended January 31, 2010.
Selling, General and Administrative. Selling, general and administrative expenses consist primarily of payroll and related benefits, facilities costs and insurance. Selling, general and administrative expenses increased in the three and six months ended January 31, 2011 as compared to the similar periods in fiscal 2010 primarily due to marginal increases in offsite staff training costs, facilities rent, and advertising costs. Total selling, general and administrative expenses for these costs associated with operating as a publicly traded company was $0.2 million and $0.4 million for the three and six months ended January 31, 2011. As a percentage of CTM’s aggregate revenues, selling, general and administrative expenses increased to 70.0% and 61.1% in the three and six months ended January 31, 2011 from 60.3% and 52.3% in the similar periods in fiscal 2010.
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IDW
(in millions) 
Three Months ended
January 31,
  Change  
Six Months ended
January 31,
  Change 
  2011  2010  $   %   2011   2010  $   % 
Revenues $3.6  $2.4  $1.2   50.0  $7.3  $5.8  $1.5   25.9 
Direct cost of revenues  2.1   1.6   0.5   31.3   4.3   3.6   0.7   19.4 
Selling, general and administrative  1.1   1.1   -   -   2.1   2.1   -   - 
Depreciation and amortization  -   -   -  -   0.1   0.1   -  - 
Income from operations $0.3  $(0.3) $0.7  233.3  $0.8  $-  $0.8  100 

Revenues. IDW’s revenues increased in the three and six months ended January 31, 2011 as compared to the similar periods in fiscal 2010. The increase in IDW’s revenues as compared to the similar periods in fiscal 2010 was primarily due to the release of blockbuster products Bloom County, The Outfit (YTD), True Blood, and James Patterson’s Witch & Wizard. Digital publishing revenues continued to increase due to the greater application of digital equipment leading to an increase in digital publishing revenues.
In an effort to increase availability of versions of its content at retail outlets, IDW has entered into a number of digital distribution agreements this year, and IDW’s publications are currently available for purchase via mobile devices, primarily iPhones/iPod Touch/iPad. IDW titles are also available direct-to-desktop via several websites and are available on Sony’s PSP and PSP Go.
Direct Cost of Revenues. Direct cost of revenues consists primarily of printing expenses and costs of artists and writers. Direct cost of revenues in the three months ended January 31, 2011 as compared to the similar period in fiscal 2010 increased in proportion to increase in revenues and also to an increase in royalty expenses. The increase in direct cost of revenues in the six months ended January 31, 2011 as compared to the similar period in fiscal 2010 was principally attributable to the increase in revenues.
IDW’s aggregate gross margin increased in the three and six months ended January 31, 2011 to 41.7% and 41.1%, respectively, from 33.3% and 37.9% in the similar periods in fiscal 2010. The increase in the three and six months ended January 31, 2010 was primarily due to the mix of products.
Selling, General and Administrative. Selling, general and administrative expenses in the three and six months ended January 31, 2011 remained the same as compared to the similar periods in fiscal 2010. Marginal declines in occupancy and administration costs were offset by a slight increase in marketing and personnel costs. As a percentage of IDW’s aggregate revenues, selling, general and administrative expenses decreased in the three and six months ended January 31, 2011 to 30.6% and 28.8%, respectively, from 47.8% and 36.4% in the similar periods in fiscal 2010, as revenues increased at a faster rate while selling, general and administrative expenses remained the same.
LIQUIDITY AND CAPITAL RESOURCES
Historically, we satisfied our cash requirements primarily through cash provided by CTM’s operating activities and funding from IDT.
(in millions) Six months ended January 31, 
  2011  2010(i) 
Cash flows provided by (used in):      
Operating activities $1.5  $2.3 
Investing activities  .1   (0.5)
Financing activities  (1.2)  0.6 
Increase in cash and cash equivalents $0.4  $2.4 
(i)  Excludes cash flows from discontinued operations
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Operating Activities. Our cash flow from operations varies from quarter to quarter and from year to year, depending on our operating results and the timing of operating cash receipts and payments, specifically trade accounts receivable and trade accounts payable. Cash flows provided by operating activities based on these factors were $1.6 million and $2.3 million for the six months ended  January 31, 2011 and 2010, respectively.

Investing Activities. Our capital expenditures were $0.1 million and $0.6 million during the six months ended January 31, 2011 and 2010, respectively. We currently anticipate that total capital expenditures for all of our divisions in fiscal 2011 will be approximately $0.3 million. We expect to fund our capital expenditures with our cash, cash equivalents and short term investments on hand.

Financing Activities. During the six months ended January 31, 2011, we did not receive any financing from IDT Corporation. During the periods presented though the September 14, 2009 Spin-Off, IDT Corporation provided us with the required liquidity to fund our working capital requirements and investments for some of our businesses. We used any excess cash provided by our operations to repay IDT. In the three months ended October 31, 2009, IDT Corporation provided cash to us of $2.4 million. In September 2009, the amount due to IDT Corporation of $25.3 million was converted into a capital contribution.
During the six months ended January 31, 2011 and 2010, we distributed cash to the minority shareholders of IDW in the amount of $0.02 million and $0.4 million, respectively. We also paid dividends of $1.0 million during the six months ended January 31, 2011
We repaid capital lease obligations of $0.1 million in each of the six months ended January 31, 2011 and 2010.

CHANGES IN TRADE ACCOUNTS RECEIVABLE AND ALLOWANCE FOR DOUBTFUL ACCOUNTS
Gross trade accounts receivable increased marginally to $3.0 million at January 31, 2011 compared to $4.2 million at July 31, 2010. The allowance for doubtful accounts as a percentage of gross trade accounts receivable marginally increased to 25.0% at January 31, 2011 compared from 18.2% at July 31, 2010.
Other Sources and Uses of Resources
We intend to, where appropriate, make strategic investments and acquisitions to complement, expand, and/or enter into new businesses. In considering acquisitions and investments, we search for opportunities to profitably grow our existing businesses, to add qualitatively to the range of businesses in our portfolio and to achieve operational synergies. Historically, such acquisitions have not exceeded $0.5 million, with the average acquisition being less than $0.1 million. If we were to pursue an acquisition in excess of $0.5 million we would likely need to secure financing arrangements. At this time, we cannot guarantee that we will be presented with acquisition opportunities that meet our return on investment criteria, or that our efforts to make acquisitions that meet our criteria will be successful. 

In addition, we will utilize approximately $2 million annually to pay the regular quarterly dividends in the amount of $0.06 per share, subject to confirmation by our management that there is sufficient surplus as of the proposed future payment dates and other circumstances existing at the relevant times.

Historically, we satisfied our cash requirements primarily through cash provided by CTM’s operating activities and prior to our separation from IDT, funding from IDT Corporation. The conversion of our balance due to IDT Corporation into a capital contribution in September 2009 significantly improved our working capital balance. We do not currently have any material debt obligations. With the exit of certain lines of businesses within CTM, we expect that our operations in fiscal 2011 and the balance of cash, cash equivalents and short term investment that we held as of January 31, 2011, will be sufficient to meet our currently anticipated working capital and capital expenditure requirements, capital lease obligations, make limited acquisitions and investments, pay the currently announced and any future declared dividends and fund any potential operating cash flow deficits within any of our segments for at least the next twelve months. In addition, we anticipate that our expected cash balances, as well as cash flows from our operations, will be sufficient to meet our long-term liquidity needs. The foregoing is based on a number of assumptions, including that we will collect on our receivables, effectively manage our working capital requirements, and maintain our revenue levels and liquidity. Predicting these matters is particularly difficult in the current worldwide economic situation and overall decline in consumer demand. Failure to generate sufficient revenues and operating income could have a material adverse effect on our results of operations, financial condition and cash flows.
FOREIGN CURRENCY RISK
Revenues from our international operations represented 8.2% and 7.5% of our consolidated revenues for the six months ended January 31, 2011 and 2010, respectively. A significant portion of these revenues is in currencies other than the U.S. Dollar, primarily Canadian dollars. Our foreign currency exchange risk is somewhat mitigated by our ability to offset the majority of these non-U.S. Dollar-denominated revenues with operating expenses that are paid in the same currencies. While the impact from fluctuations in foreign exchange rates affects our revenues and expenses denominated in foreign currencies, the net amount of our exposure to foreign currency exchange rate changes at the end of each reporting period is generally not material.
OFF-BALANCE SHEET ARRANGEMENTS
We do not have any “off-balance sheet arrangements,” as defined in relevant SEC regulations that are reasonably likely to have a current or future effect on our financial condition, results of operations, liquidity, capital expenditures or capital resources.
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RECENTLY ADOPTED ACCOUNTING STANDARDS

The Financial Accounting Standards Board (“FASB”) periodically issues new accounting standards in a continuing effort to improve standards of financial accounting and reporting. We have reviewed the recently issued pronouncements and concluded that no new standards were issued this fiscal quarter that applied to the Company.
In January 2010, the FASB issued Accounting Standards Update (ASU) No. 2010-06, “Improving Disclosures about Fair Value Measurements” (“ASU 2010-06”), which is included in the ASC Topic 820 (Fair Value Measurements and Disclosures). ASU 2010-06 requires new disclosures on the amount and reason for transfers in and out of Level 1 and 2 fair value measurements.  ASU 2010-06 also requires disclosure of activities, including purchases, sales, issuances, and settlements within the Level 3 fair value measurements and clarifies existing disclosure requirements on levels of disaggregation and disclosures about inputs and valuation techniques.  Except for otherwise provided, ASU 2010-06 is effective for interim and annual reporting periods beginning after December 15, 2009. The adoption of this standard did not have a material effect on the Company’s financial statements.

In February 2010, the FASB issued ASU No. 2010-09, “Amendments to Certain Recognition and Disclosure Requirements” (“ASU 2010-09”), which is included in ASC Topic 855 (Subsequent Events).  ASU 2010-09 clarifies that an SEC filer is required to evaluate subsequent events through the date that the financial statements are issued.  ASU 2010-09 was effective upon the issuance of the final update and did not have a significant impact on the Company’s financial statements.
Item 3.   Quantitative and Qualitative Disclosures About Market Risks
Smaller reporting companies are not required to provide the information required by this item.
Item 4. Controls and Procedures
Evaluation of Disclosure Controls and Procedures. Based on their evaluation as of January 31, 2011, our Chief Executive Officer and our Chief Financial Officer have evaluated the effectiveness of our disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as amended) and concluded that our disclosure controls and procedures were effective to ensure that the information required to be disclosed by us in this Quarterly Report on Form 10-Q was (i) recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and regulations and (ii) accumulated and communicated to our management, including our Chief Executive Officer and Chief Financial Officer, to allow timely decisions regarding required disclosure.
Changes in Internal Control over Financial Reporting.  There were no changes in our internal control over financial reporting during the six months ended January 31, 2011 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.
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  PART II. OTHER INFORMATION
Item 1. Legal Proceedings.
None
Item 1A. Risk Factors.
There are no material changes from the risk factors previously disclosed in Item 1A to Part I of our Annual Report on Form 10-K for the year ended July 31, 2010.
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds.
None
Item 3. Defaults Upon Senior Securities.
None

Item 4. (Removed and Reserved)
Item 5.   Other Information
None
 
Item 6.    Exhibits, Financial Statement Schedules.
Exhibit
Number
Description
  
31.1*
Certification of Chief Executive Officer pursuant to 17 CFR 240.13a-14(a), as adopted pursuant to §302§ 302 of the Sarbanes-Oxley Act of 2002.
  
31.2*
Certification of Chief Financial Officer pursuant to 17 CFR 240.13a-14(a), as adopted pursuant to §302§ 302 of the Sarbanes-Oxley Act of 2002.
  
32.1*
31.3*
Certification of Chief Executive Officer pursuant to 18 U.S.C. Section 1350,17 CFR 240.13a-14(a), as adopted pursuant to §906§ 302 of the Sarbanes-Oxley Act of 2002.
  
32.2*
31.4*
Certification of Chief Financial Officer pursuant to 18 U.S.C. Section 1350,17 CFR 240.13a-14(a), as adopted pursuant to §906§ 302 of the Sarbanes-Oxley Act of 2002.
 
________________

*
Filed herewith.
 
 
202
 

Signatures

Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.
 
   
 CTM Media Holdings, Inc.
   
March 17,24, 2011By:/s/    Marc E. Knoller        
  
Marc E. Knoller
Chief Executive Officer and President
   
March 17,24, 2011By:/s/    Leslie B. Rozner        
  
Leslie B. Rozner
Chief Financial Officer, Treasurer and Secretary




3
 
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