UNITED STATES
FORM 10-Q
☒ xQUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
FOR THE QUARTERLY PERIOD ENDED JANUARY 31, 2011
or
☐ oTRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
(Exact Namename of Registrantregistrant as Specifiedspecified in its Charter)
| Delaware | 26-4831346 | |
(State or other jurisdiction of incorporation or organization) | (I.R.S. Employer Identification Number) | |
| (Address of principal executive offices) | (Zip Code) |
973-438-3385
(Registrant’s telephone number, including area code)
Securities registered pursuant to Section 12(b)-2 of the Exchange Act:
| Title of each Class | Trading Symbol | Name of exchange of which registered | ||
| None | None | None |
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, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer”filer,” “smaller reporting company,” and “smaller reporting“emerging growth company” in Rule 12b-2 of the Exchange Act.
Large accelerated filer | ☐ | Accelerated filer | ☐ |
Non-accelerated filer | ☒ | Smaller reporting company | ☒ |
| Emerging growth company | ☒ |
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
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,June 14, 2021 the registrant had the following shares outstanding:
| Class B common stock, $0.01 par value: | |
| Class C common stock, $0.01 par value: |
IDW MEDIA HOLDINGS, INC.
TABLE OF CONTENTS
i
| (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 | ||||
| (in thousands, except per share data) | April 30, 2021 (unaudited) | October 31, | ||||||
| Assets | ||||||||
| Current assets: | ||||||||
| Cash and cash equivalents | $ | 7,607 | $ | 10,541 | ||||
| Trade accounts receivable, net | 22,063 | 22,921 | ||||||
| Inventory | 3,667 | 3,754 | ||||||
| Prepaid expenses | 2,178 | 1,361 | ||||||
| Current assets held for sale from discontinued operations | - | 11,171 | ||||||
| Total current assets | 35,515 | 49,748 | ||||||
| Property and equipment, net | 364 | 410 | ||||||
| Right-of-use assets, net | 539 | 771 | ||||||
| Non-current assets | ||||||||
| Investments | - | 25 | ||||||
| Intangible assets, net | 30 | 52 | ||||||
| Goodwill | 199 | 199 | ||||||
| Television costs, net | 1,270 | 2,926 | ||||||
| Other assets | 325 | 527 | ||||||
| Total assets | $ | 38,242 | $ | 54,658 | ||||
| Liabilities and stockholders’ equity | ||||||||
| Current liabilities: | ||||||||
| Trade accounts payable | $ | 1,163 | $ | 1,406 | ||||
| Accrued expenses | 5,424 | 3,953 | ||||||
| Deferred revenue | 2,125 | 2,385 | ||||||
| Bank loans payable – current portion | 11,664 | 14,204 | ||||||
| Government loans- current portion | 1,320 | 793 | ||||||
| Operating lease obligations – current portion | 603 | 562 | ||||||
| Other current liabilities | 80 | 69 | ||||||
| Current liabilities held for sale from discontinued operations | - | 8,540 | ||||||
| Total current liabilities | 22,379 | 31,912 | ||||||
| Non-current liabilities | ||||||||
| Operating lease obligations – long term portion | 59 | 368 | ||||||
| Government loans – long term portion | 1,071 | 403 | ||||||
| Related party loans payable – long term portion | - | 3,750 | ||||||
| Total non-current liabilities | 1,130 | 4,521 | ||||||
| Total liabilities | $ | 23,509 | $ | 36,433 | ||||
| Stockholders’ equity (see note 3): | ||||||||
| Preferred stock, $.01 par value; authorized shares – 500; no shares issued at April 30, 2021 and October 31, 2020 | - | - | ||||||
| Class B common stock, $0.01 par value; authorized shares – 12,000; 10,024 and 9,987 shares issued and 9,505 and 9,467 shares outstanding at April 30, 2021 and October 31, 2020, respectively | 94 | 93 | ||||||
| Class C common stock, $0.01 par value; authorized shares – 2,500; 545 shares issued and outstanding at April 30, 2021 and October 31, 2020 | 5 | 5 | ||||||
| Additional paid-in capital | 94,267 | 111,379 | ||||||
| Accumulated other comprehensive loss | - | (60 | ) | |||||
| Accumulated deficit | (78,437 | ) | (91,996 | ) | ||||
| Treasury stock, at cost, consisting of 519 shares of Class B common stock at April 30, 2021 and October 31, 2020 | (1,196 | ) | (1,196 | ) | ||||
| Total stockholders’ equity | 14,733 | 18,225 | ||||||
| Total liabilities and stockholders’ equity | $ | 38,242 | $ | 54,658 | ||||
See accompanying notes to condensed consolidated financial statements.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
| Three Months Ended April 30, | Six Months Ended April 30, | |||||||||||||||
| (in thousands, except per share data) | 2021 | 2020 | 2021 | 2020 | ||||||||||||
| Revenues | $ | 10,140 | $ | 9,268 | $ | 18,552 | $ | 19,605 | ||||||||
| Costs and expenses: | ||||||||||||||||
| Direct cost of revenues | 4,726 | 3,295 | 13,959 | 14,912 | ||||||||||||
| Selling, general and administrative | 4,910 | 4,583 | 9,149 | 9,019 | ||||||||||||
| Depreciation and amortization | 60 | 61 | 120 | 128 | ||||||||||||
| Bad debt expense | 11 | - | 11 | - | ||||||||||||
| Total costs and expenses | 9,707 | 7,939 | 23,239 | 24,059 | ||||||||||||
| Income (loss) from operations | 433 | 1,329 | (4,687 | ) | (4,454 | ) | ||||||||||
| Interest income (expense), net | 156 | (10 | ) | 142 | (20 | ) | ||||||||||
| Other expense, net | (12 | ) | (35 | ) | (13 | ) | (61 | ) | ||||||||
| Income (loss) before income taxes | 577 | 1,284 | (4,558 | ) | (4,535 | ) | ||||||||||
| Provision for income taxes | - | - | - | - | ||||||||||||
| Net income (loss) from continuing operations | 577 | 1,284 | (4,558 | ) | (4,535 | ) | ||||||||||
| Loss from discontinued operations, net | (159 | ) | (1,638 | ) | (1,280 | ) | (2,692 | ) | ||||||||
| Gain on sale of discontinued operations | 2,123 | - | 2,123 | - | ||||||||||||
| Net income (loss) | $ | 2,541 | $ | (354 | ) | $ | (3,715 | ) | $ | (7,227 | ) | |||||
| Basic and diluted income (loss) per share (note 2): | ||||||||||||||||
| Continuing operations | $ | 0.27 | $ | 0.15 | $ | (0.24 | ) | $ | (0.56 | ) | ||||||
| Discontinued operations | (0.02 | ) | (0.19 | ) | (0.13 | ) | (0.33 | ) | ||||||||
| Net income (loss) | $ | 0.25 | $ | (0.04 | ) | $ | (0.37 | ) | $ | (0.89 | ) | |||||
| Weighted-average number of shares used in the calculation of basic and diluted income (loss) per share: | 9,972 | 8,845 | 9,962 | 8,143 | ||||||||||||
See accompanying notes to condensed consolidated financial statements
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
(Unaudited)
| Three Months Ended April 30, | Six Months Ended April 30, | |||||||||||||||
| (in thousands) | 2021 | 2020 | 2021 | 2020 | ||||||||||||
| Net income (loss) | $ | 2,541 | $ | (354 | ) | $ | (3,715 | ) | $ | (7,227 | ) | |||||
| Foreign currency translation adjustments | 72 | 4 | 60 | (45 | ) | |||||||||||
| Total comprehensive income (loss) | $ | 2,613 | $ | (350 | ) | $ | (3,655 | ) | $ | (7,272 | ) | |||||
See accompanying notes to condensed consolidated financial statements
CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY
Six Months Ended April 30, 2021 and 2020
(Unaudited)
| Class B Common Stock | Class C Common Stock | Accumulated | Non- | Treasury Stock, at Cost | ||||||||||||||||||||||||||||||||||||||||||||
| (in thousands) | Number of Shares | Amount | Number of Shares | Amount | Stock Subscriptions Receivable | Additional Paid In Capital | Other Comprehensive Loss | Retained Deficit | Controlling Interest (“NCI”) | Number of Shares | Amount | Total Shareholders’ Equity | ||||||||||||||||||||||||||||||||||||
| Balance October 31, 2020 | 9,987 | 93 | 545 | 5 | - | 111,379 | (60 | ) | (91,996 | ) | - | 519 | (1,196 | ) | 18,225 | |||||||||||||||||||||||||||||||||
| Stock based compensation | 82 | 82 | ||||||||||||||||||||||||||||||||||||||||||||||
| Issuance of common stock | 37 | 1 | 24 | 25 | ||||||||||||||||||||||||||||||||||||||||||||
| Issuance of stock options | 77 | 77 | ||||||||||||||||||||||||||||||||||||||||||||||
| Comprehensive loss | ||||||||||||||||||||||||||||||||||||||||||||||||
| Sale of discontinued operations | (17,295 | ) | 21 | 17,274 | - | |||||||||||||||||||||||||||||||||||||||||||
| Net Loss | (3,715 | ) | (3,715 | ) | ||||||||||||||||||||||||||||||||||||||||||||
| Other comprehensive income | 39 | 39 | ||||||||||||||||||||||||||||||||||||||||||||||
| Total comprehensive loss | 60 | (3,715 | ) | - | (3,655 | ) | ||||||||||||||||||||||||||||||||||||||||||
| Balance April 30, 2021 | 10,024 | 94 | 545 | 5 | - | 94,267 | - | (78,437 | ) | - | 519 | (1,196 | ) | 14,733 | ||||||||||||||||||||||||||||||||||
| Balance October 31, 2019 | 7,419 | 74 | 545 | 5 | (1,000 | ) | 96,671 | (60 | ) | (78,457 | ) | 35 | 519 | (1,196 | ) | 16,072 | ||||||||||||||||||||||||||||||||
| Stock based compensation | 520 | 520 | ||||||||||||||||||||||||||||||||||||||||||||||
| Issuance of common stock | 2,151 | 15 | 12,242 | 12,257 | ||||||||||||||||||||||||||||||||||||||||||||
| Subscriptions receivable | 1,000 | 11 | 1,011 | |||||||||||||||||||||||||||||||||||||||||||||
| Issuance of stock options | 333 | 333 | ||||||||||||||||||||||||||||||||||||||||||||||
| NCI divestment in subsidiary | 259 | (35 | ) | 224 | ||||||||||||||||||||||||||||||||||||||||||||
| Comprehensive loss | ||||||||||||||||||||||||||||||||||||||||||||||||
| Net Loss | (7,227 | ) | (7,227 | ) | ||||||||||||||||||||||||||||||||||||||||||||
| Other comprehensive income | (45 | ) | (45 | ) | ||||||||||||||||||||||||||||||||||||||||||||
| Total comprehensive loss | - | - | - | - | - | - | (45 | ) | (7,227 | ) | - | - | - | (7,272 | ) | |||||||||||||||||||||||||||||||||
| Balance April 30, 2020 | 9,570 | 89 | 545 | 5 | - | 109,777 | (105 | ) | (85,425 | ) | - | 519 | (1,196 | ) | 23,145 | |||||||||||||||||||||||||||||||||
See accompanying notes to condensed consolidated financial statements
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 | - | ||||||||||
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
| Six months ended April 30, | ||||||||
| (in thousands) | 2021 | 2020 | ||||||
| Operating activities: | ||||||||
| Net loss | $ | (3,715 | ) | $ | (7,227 | ) | ||
| Adjustments to reconcile net income to net cash (used in) provided by operating activities: | ||||||||
| Depreciation and amortization | 307 | 527 | ||||||
| Amortization of finance leases | 108 | 165 | ||||||
| Bad debt expense | (97 | ) | 482 | |||||
| Stock based compensation | 82 | 520 | ||||||
| Stock options | 77 | 333 | ||||||
| Amortization of right-of-use asset | 513 | 995 | ||||||
| Gain on sale of discontinued operations | (2,123 | ) | - | |||||
| Loss on deconsolidation of subsidiary | - | 35 | ||||||
| Changes in assets and liabilities: | ||||||||
| Trade accounts receivable | 847 | 8,591 | ||||||
| Inventory | 88 | (820 | ) | |||||
| Prepaid expenses and other assets | (589 | ) | 115 | |||||
| Television costs | 1,656 | 6,872 | ||||||
| Right-of-use assets | (269 | ) | (814 | ) | ||||
| Trade accounts payable, accrued expenses and other current liabilities | 1,239 | (2,702 | ) | |||||
| Deferred revenue | (260 | ) | 1,254 | |||||
| Gain on extinguishment of PPP loan | (68 | ) | - | |||||
| Gain on disposal of ROU assets | (97 | ) | - | |||||
| Deconsolidation of subsidiary | - | 339 | ||||||
| Net cash (used in) provided by operating activities | (2,301 | ) | 8,665 | |||||
| Investing activities: | ||||||||
| Disposition of subsidiary, net of cash received | - | (115 | ) | |||||
| Disposal of discontinued operations | (902 | ) | - | |||||
| Capital expenditures | (72 | ) | (299 | ) | ||||
| Net cash used in investing activities | (974 | ) | (414 | ) | ||||
| Financing activities: | ||||||||
| Proceeds from issuance of common stock | 25 | 13,268 | ||||||
| Repayments of finance lease obligations | - | (207 | ) | |||||
| Proceeds of bank loans | - | 2,217 | ||||||
| Proceeds from government loans | 1,196 | - | ||||||
| Repayments of related party loans | - | (4,050 | ) | |||||
| Repayments of bank loans | (2,540 | ) | (13,732 | ) | ||||
| Net cash used in financing activities | (1,319 | ) | (2,504 | ) | ||||
| Effect of exchange rate changes on cash and cash equivalents | 39 | (45 | ) | |||||
| Net (decrease) increase in cash and cash equivalents | (4,555 | ) | 5,702 | |||||
| Cash and cash equivalents at beginning of period | 12,162 | 10,165 | ||||||
| Cash and cash equivalents at end of period | $ | 7,607 | $ | 15,867 | ||||
| Supplemental schedule of investing and financing activities | ||||||||
| Cash paid for interest | $ | - | $ | 18 | ||||
| Cash paid for income taxes | $ | - | $ | - | ||||
See accompanying notes to condensed consolidated financial statements.
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 | $ | - | ||||
(Unaudited)
Note 1—Basis of Presentation
The accompanying unaudited condensed consolidated financial statements of CTMIDW Media Holdings, Inc. and its subsidiaries (the “Company”) have been prepared by Company management in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”) for interim financial information and with the instructions to Form 10-Q and Article 10 of Regulation S-X.10-Q. 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 principally of normal recurring accruals) considered necessary for a fair presentation have been included. Operating results for the three and six months ended January 31, 2011April 30, 2021 are not necessarily indicative of the results that may be expected for the full fiscal year ending JulyOctober 31, 2011.2021. The balance sheet at JulyOctober 31, 20102020 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 Annual Report on Form 10-K for the year ended July 31, 2010, as filedRegistration Statement.
Description of Business and Segment Information
IDW Media Holdings, Inc. together with the U.S. Securitiesits subsidiaries is a diversified media company with operations in publishing, television entertainment and Exchange Commission (the “SEC”).
The Company’s fiscal year ends on July 31. Each reference belowterms “Company,” “we,” “us,” and “our” are used in this report to a fiscal year refersrefer collectively to the fiscal year endingparent company and the subsidiaries through which various businesses are conducted. The term IDWMH is used to refer to the parent company.
The following are our principal businesses and segments:
Publishing (“IDWP”), a publishing company that creates comic books, graphic novels, digital content and games through its imprints IDW, IDW Games, Top Shelf Productions, Artist’s Editions, The Library of American Comics, Yoe! Books, Sunday Press, and EuroComics; and Clover Press, a boutique publishing company that focuses on the book trade and direct market. Effective April 1, 2020, our interest in Clover Press decreased to 19.9% and IDWMH no longer consolidates the operations of Clover Press, but rather values the investment at cost; and
IDW Entertainment (“IDWE”), is a production company and studio that develops and produces content and formats for global platforms and services.
Prior to February 15, 2021, we also owned CTM Media Group (“CTM”), a Company that develops and distributes print and digital-based advertising and information advertising for tourist destinations in targeted tourist markets in 32 states / provinces in the calendar year indicated (e.g., fiscal 2011 refers to the fiscal year endingUS and Canada. On July 31, 2011).
IDW MEDIA HOLDINGS, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
Note 1—Basis of fiscal 2010Presentation and accordingly, WMET’s resultsSummary of Significant Accounting Policies (continued)
Variable Interest Entities
The Company, through its subsidiary IDWE has arrangements with seven special-purpose entities (“SPEs”), some formed for the sole purpose of providing production services in Canada for the production of a television pilot and television series, others for production and writing purposes. The SPEs are classified asindependently owned companies that are effectively controlled by IDWE, that are parties to the related bank production financing arrangements. The Company has determined that SPEs are variable interest entities and that the Company is the primary beneficiary of the SPEs activities and obligor on the SPEs’ debt. All financial activity of the SPEs have been included IDWE’s financial statements, which are part of these condensed consolidated financial statements. IDWE does not need to provide any support to the VIE’s and therefore no foreseen potential losses associated. They have finished all of the productions and these shows have been delivered. The outstanding loans will be paid off by the tax credits in the receivable balances. The carrying amounts and classification of the VIEs’ assets and liabilities are presented below:
| (in thousands) | April 30, 2021 | October 31, 2020 | ||||||
| Cash and cash equivalents | $ | 714 | $ | 732 | ||||
| Accounts receivable | 16,297 | 12,420 | ||||||
| Bank loans | 11,664 | 14,204 | ||||||
| Total | $ | 28,675 | $ | 27,356 | ||||
Revenue Recognition
IDWP’s primary revenue is recognized, net of an allowance for estimated sales returns, at the time of shipment of its graphic novels and comic books by IDWP’s distributor to its customers. IDWE’s revenue is recognized when evidence of a sale or licensing arrangement exists, the product is complete, has been delivered or is available for immediate and unconditional delivery, the license period has begun, the fee is fixed or determinable, and collection is reasonably assured. IDWE’s production activities included those provided by Canadian SPEs, and some of those productions qualify for tax credits in Canada. These credits are recorded as reductions in production cost when the SPE becomes entitled to the Canadian tax credits. The Canada Revenue Agency (“CRA”) has completed the audit on these productions and the related tax refunds are no longer estimates.
Revenue Recognition When Right of Return Exists
Sales returns allowances represent a reserve for IDWP products that may be returned due to dating, competition or other marketing matters, or certain destruction in the field. Sales returns are generally estimated and recorded based on historical sales and returns experience and current trends that are expected to continue. Licensing revenues are recognized upon execution of the agreement for such rights, and other creative revenues are recognized upon completion of services rendered on a contractual basis.
Use of Estimates
The preparation of financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the amounts reported in the financial statements and accompanying notes. Actual results may differ from those estimates.
IDW MEDIA HOLDINGS, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
Note 1—Basis of Presentation and Summary of Significant Accounting Policies (continued)
Concentration Risks
IDWP has two significant customers Diamond Comic Distributors, Inc. (“Diamond”) and Penguin Random House (“PRH”), that pose a concentration risk.
Revenues from Diamond, IDWP’s direct market distributor, represented 25.7% and 13.9% of the total consolidated revenues for the three months ended April 30, 2021 and 2020, respectively, and 26.5% and 16.8% of the total consolidated revenues for the six months ended April 30, 2021 and 2020, respectively. The receivable balances from this customer represented approximately 4.2% and 4.7% of consolidated trade accounts receivable at April 30, 2021 and October 31, 2020, respectively.
Revenues from PRH amounted to 23.2% and 26.3% of consolidated revenue in the three months ended April 30, 2021 and 2020, respectively, and 25.5% and 26.7% of the total consolidated revenues for the six months ended April 30, 2021 and 2020, respectively. The receivable balances represented 5.7% and 10.5% of consolidated receivables at April 30, 2021 and October 31, 2020, respectively.
IDWE has two significant customers Netflix and NBC Universal/SyFy that pose a concentration risk.
Revenue from Netflix, a leading streaming video subscription service, represented 0% and 43.2% of consolidated revenue in the three months ended April 30, 2021 and 2020, respectively, and 0% and 41% of the total consolidated revenues for the six months ended April 30, 2021 and 2020, respectively. The receivable balances from this customer represented 0% and 15.3% of consolidated trade receivables at April 30, 2021 and October 31, 2020, respectively.
NBC Universal/SyFy, a major television network, which accounted for 4.9% and 0% of consolidated revenue in the three months ended April 30, 2021 and 2020, respectively, and 16% and 0% of the total consolidated revenues for the six months ended April 30, 2021 and 2020, respectively. The receivable balances from this customer represented 0% of consolidated trade receivables at both April 30, 2021 and October 31, 2020.
Deferred Revenue
The Company records deferred revenue upon invoicing for contracted commitments for products and services. Revenue is recognized on the date such product or service is provided or delivered in accordance with the contract.
Discontinued Operations
CTM has met the criteria for discontinued operations duringand has been presented as such in the fiscal year 2010.
During the period in which the discontinued operation was classified as held for sale the net loss was reclassified as a separate line item in the Statement of Operations. Additionally, the gain from the sale was presented as a separate line item on the Statement of Operations. Assets and liabilities are also separately reclassified in the balance sheet for all periods presented, prior to the sale. CTM’s assets are no longer reflected on the financial statements for the periods following the CTM Sale Date. Cash flows from a discontinued operation and the continuing business are presented together without separate identification within cash flows from operating, investing and financing activities. Cash flows of CTM’s depreciation, amortization, capital expenditures and significant noncash operating and investing activities for the discontinued operation are presented separately.
IDW MEDIA HOLDINGS, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
Note 1—Basis of Presentation and loss (in millions) before income taxesSummary 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 | ) | ||||||
Recently Issued Accounting Pronouncements Adopted Subsequent to 2020 Fiscal Year End
In March 2019, the FASB issued ASU No. 2019-02, Improvements to Accounting for Costs of Films and License Agreements for Program Materials. ASU 2019-02 aligns the accounting for production costs of episodic television series with the accounting for production costs of films. It also requires an entity to test a film or liabilitieslicense agreement within the scope of WMET included in discontinued operations as of January 31, 2011Subtopic 920-350 for impairment at the film group level, when the film or license agreement is predominantly monetized with other films and/or license agreements. The Company adopted this ASU on November 1, 2020 and July 31, 2010.
Recently Issued Accounting Standard Not Yet Adopted
In June 2016, the FASB issued ASU No. 2016-13, Financial Instruments—Credit Losses (Topic 326), Measurement of Credit Losses on Financial Instruments, that changes the impairment model for most financial assets and certain other instruments. For receivables, loans and other instruments, entities will be required to use a tender offernew forward-looking “expected loss” model that generally will result in the earlier recognition of allowance for losses. For available-for-sale debt securities with unrealized losses, entities will measure credit losses in a manner similar to purchase upcurrent practice, except the losses will be recognized as allowances instead of reductions in the amortized cost of the securities. In addition, an entity will have to thirty percentdisclose significantly more information about allowances, credit quality indicators and past due securities. The new guidance becomes effective for fiscal years beginning after December 15, 2022, though early adoption is permitted. The new provisions will be applied as a cumulative-effect adjustment to retained earnings. We will adopt the new standard on November 1, 2023. We are evaluating the impact that the new standard will have on our consolidated financial statements.
In January 2017, the FASB issued ASU 2017-04, Intangibles—Goodwill and Other (Topic 350), which simplifies the measurement of goodwill by eliminating the Step 2 impairment test. Step 2 measures a goodwill impairment loss by comparing the implied fair value of a reporting unit’s goodwill with the carrying amount of that goodwill. The new guidance requires an entity to compare the fair value of a reporting unit with its outstanding common stock.carrying amount and recognize an impairment charge for the amount by which the carrying amount exceeds the reporting unit’s fair value. Additionally, an entity should consider income tax effects from any tax-deductible goodwill on the carrying amount of the reporting unit when measuring the goodwill impairment loss, if applicable. The new guidance becomes effective for goodwill impairment tests in fiscal years beginning after December 15, 2022, though early adoption is permitted. The company will adopt this guideline prospectively for fiscal year November 1, 2023. The Company offered to purchase up to 0.4 million sharesdoes not believe that the adoption of this new accounting guidance will have any material impact on 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.
Note 4—2—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 still subject to risk of forfeiture (non-vested) using the treasury stock method, unless the effect of such increase iswould be anti-dilutive. The Company excluded 46,999 shares of unvested restricted stock and 302,737 stock options from the calculation of diluted earnings per share as the effect would have been anti-dilutive.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
Note 5—3—Equity
Non-cash compensation included in selling, general and administrative expenses was $95,422 and $207,251 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 | ||||||
Detailed below are shares of Class B common stock of IDT Corporation that they owned asCommon Stock to Howard S. Jonas, the Company’s Chairman of the record dateBoard of Directors and former Chief Executive Officer, for payment of interest on loans:
| Date | Number of Shares | |||
| December 31, 2020 | 6,710 | |||
| September 30, 2020 | 9,710 | |||
| June 30, 2020 | 10,335 | |||
| March 31, 2020 | 14,816 | |||
| January 9, 2020 | 36,586 | |||
| Total shares | 78,157 | |||
On July 13, 2020, 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 millionCompany issued 314,070 shares of Class B unvested restricted stock.
On July 16, 2020, the Company settled its intercompany payable to CTM totaling $6,982,305 and subsequently received a distribution of $6,800,000 from CTM. This transaction was booked into additional paid in capital with CTM and IDWMH to have a nil impact and did not trigger any tax impacts.
On March 9, 2020, the Company closed a private placement of shares of Class B Common Stock at $6.00 per share, pursuant to which the Company issued 2,051,002 shares of Class B Common Stock for gross proceeds of approximately $12,300,000 inclusive of $4.0 million debt-to-equity conversion by the Company’s 2009Chairman of the Board of Directors and former Chief Executive Officer, Howard S. Jonas. The shares issued were subject to a contractual restriction on transfer for six months following the closing of the placement and are subject to other restrictions under applicable law. The proceeds from the issuance of Class B Common Stock Optionhave been netted with $415,000 of costs related to the private placement.
On April 24, 2019, the Company closed the initial round of a private placement of shares of Class B Common Stock to certain existing stockholders at $18.00 per share. In connection with this initial round, on April 24, 2019, the Company issued 767,630 shares of Class B Common Stock for gross proceeds of $13,817,337.
On May 7, 2019, the Company closed the follow-on round of the placement and Incentive Plan (the “Company’sissued 345,792 shares of Class B Common Stock Optionfor gross proceeds of $5,186,885. The follow-on round involved participants in the initial round of the placement who elected to participate in the purchase of unsubscribed shares of Class B Common Stock at $15.00 per share. In the offering, the Company issued a total of 1,113,422 shares of Class B Common Stock and Incentive Plan”), which was previously adopted byreceived total gross proceeds of $19,004,229. The shares issued in the offering were subject to a contractual restriction on transfer for six months following the closing of the offering as well as other restrictions under applicable law.
In connection with a private placement offering, on June 15, 2019, the Company issued 269,478 shares of Class B Common Stock at a price of $17.07 per share for aggregate proceeds of approximately $4,600,000.
IDW MEDIA HOLDINGS, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
Note 3—Equity (continued)
On March 14, 2019, the Company’s Board of Directors and approved by IDT Corporation asadopted the Company’s sole stockholder,2019 Incentive Plan to provide incentives to executive officers, employees, directors and consultants of the Company and/or its subsidiaries. The maximum number ofCompany reserved 300,000 shares of the Company’s Class B common stock reservedCommon Stock for the grant of awards under the Company’s Stock Option and2019 Incentive Plan, is 383,020, subject to adjustment. Incentives available under the Company’s Stock Option and2019 Incentive Plan may include stock options, stock appreciation rights, limited stock appreciation rights, restricted stock and deferred stock units.
Note 4—Loans
Related party loans
On August 21, 2018, the Company entered into a loan agreement with the Company’s Stock OptionChairman of the Board of Directors (who, at the time was also the Company’s Chief Executive Officer and Incentive Plan,majority stockholder) (the “Chairman”) for $5,000,000. Interest accrued at prime rate plus 1% and the loan was due to mature on August 20, 2022. Payment of principal and interest were payable from 70% of the Free Cash Flow, as defined in the loan agreement, of the Company’s CTM Media Group Inc. subsidiary. All outstanding shares of CTM Media Group Inc. stock were pledged as security under the agreement. On December 1, 2019, the Company amended the agreement providing that up to 60% of the interest due may, at the option price of each option award shall not be less than one hundred percent of the fair market valueCompany, be paid in shares of Class B common stock (and the Company’sremaining amount in cash) with such shares valued based on the average closing prices for the Class B common stock on the date of grant. Each option agreement shall provideten trading days immediately prior to the exercise schedule forapplicable interest due date. As at April 30, 2021 the option as determined bycumulative shares issued in connection with the Compensation Committee.loan interest was 63,255. The exercise period willinterest is was to be ten years frompaid quarterly on the date ofloan. In conjunction with the grant ofloan, the option unless otherwise determined byCompany issued the Compensation Committee. No awards have been granted under the Company’s Stock Option and Incentive Planlender a warrant to date.
Bank Loans
On November 21, 2018, a Variable Interest Entity (the “VIE”) (see Note 1) controlled by IDWE entered into a loan agreement with a valuebank that provides for a production financing commitment in the aggregate amount up to CAD 27,700,000. The loan is secured by the VIE’s assets, rights in the related television production’s episodes and distribution agreements for the production and is repayable from the assignment of $1.25 millionproceeds of the related license agreements and tax credits, including interest based on the dateprime rate. IDWE is the guarantor on the loan. The loan matures on May 31, 2021. At April 30, 2021, $5,206,000 was outstanding under the commitment.
On June 21, 2018, a VIE controlled by IDWE entered into a loan agreement with a bank that provides for a production financing commitment in the aggregate amount up to CAD 23,521,000. The loan is secured by the VIE’s assets, rights in the related television production’s episodes and distribution agreements for the production and is repayable from the assignment of grantproceeds of the related license agreements, including interest based on the prime rate. IDWE is the guarantor on the loan. This loan was refinanced on January 4, 2021 with Royal Bank of Canada for a credit facility of CAD 7,868,000 for the purpose of interim financing certain receivables. The loan matures on May 31, 2021.At April 30, 2021 $6,458,000 was outstanding under the commitment.
IDW MEDIA HOLDINGS, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
Note 4—Loans (continued)
Government loans
On April 2, 2021, IDW Media Holdings, Inc. (the “Company”) received loan proceeds of $1,195,680 (the “PPP Loan”) from Bank of America, N.A. pursuant to the Paycheck Protection Program (the “PPP”) under Division A, Title I of the CARES Act, as amended. The PPP Loan, which was in lieuthe form of a cash base salary for five years 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 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 terminatedNote dated April 1, 2021 issued by the Company, matures on April 1, 2026 and bears interest at a rate of 1% per annum, payable monthly commencing on November 2, 2021. The Note may be prepaid by the Company at any time prior to maturity with no prepayment penalties. Funds from the PPP Loan may only be used for cause, a pro rata portionpayroll costs, costs used to continue group health care benefits, mortgage payments, rent, utilities, and interest on certain other debt obligations. Under the terms of the shares would vestPPP, certain amounts of the PPP Loan may be forgiven if they are used for qualifying expenses as described in the CARES Act. The Company intends to use the entire PPP Loan amount for qualifying expenses.
On April 27, 2020, the Company (inclusive of IDWP and IDWE) received loan proceeds of $1,195,679 (the “IDWMH PPP Loan”) from Bank of America, N.A. pursuant to the remainder wouldPaycheck Protection Program (the “PPP”) under Division A, Title I of the CARES Act, which was enacted March 27, 2020. The IDWMH PPP Loan, which was in the form of a Note dated April 15, 2020 issued by the Company, matures on April 15, 2022 and bears interest at a rate of 1% per annum, payable monthly commencing on November 24, 2020. The Note may be forfeited. This arrangement did not impact Mr. Jonas’ cash compensationprepaid by the Company at any time prior to maturity with no prepayment penalties, and under the terms of the loan, payments can be deferred for six months. Funds from the dateIDWMH PPP Loan may be used primarily for payroll costs and costs used to continue group health care benefits, and, up to a limited extent, on mortgage payments, rent, utilities, interest and other expenses as described in the CARES Act. Under the terms of the Spin-Off throughPPP, certain amounts of the pay period includingIDWMH PPP Loans may be forgiven if they are used for those qualifying expenses. The Company used the grant date. Total unrecognized compensation costentire IDWMH PPP Loan amount for those qualifying expenses.
On December 24, 2020, the Company applied for forgiveness on the grant dateIDWMH PPP loan. Forgiveness was $1.25 million. The unrecognized compensation cost has beenapplied for under SBA form 3508, using the 24-week Alternative Payroll Covered Period. As 100% of the loan was used during this period for payroll and is expected to continue torelated payroll expenses, the Company anticipates that the IDWMH PPP loan will 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.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
Note 6—Comprehensive Income (Loss)
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 | ) | ||||||
The Company has the following three reportable business segments: Publishing, IDWE and 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).
Operating results for the business segments of the Company are as follows:
| (in thousands) (unaudited) | Publishing(a) | IDWE(b) | CTM | IDW Media Holdings | Total | |||||||||||||||
| (discontinued operations) | (unallocated overhead) | |||||||||||||||||||
| Three months ended April 30, 2021 | ||||||||||||||||||||
| Revenues | $ | 5,988 | $ | 4,152 | $ | - | $ | - | $ | 10,140 | ||||||||||
| (Loss) income from operations | (510 | ) | 1,216 | - | (273 | ) | 433 | |||||||||||||
| Loss from discontinued operations, net | - | - | (159 | ) | - | (159 | ) | |||||||||||||
| Net (loss) income | (508 | ) | 1,382 | (159 | ) | 1,826 | (c) | 2,541 | ||||||||||||
| Total assets at April 30, 2021 | 12,886 | 21,194 | - | 4,162 | 38,242 | |||||||||||||||
| Three months ended April 30, 2020 | ||||||||||||||||||||
| Revenues | $ | 4,681 | $ | 4,587 | $ | - | $ | - | $ | 9,268 | ||||||||||
| (Loss) income from operations | (646 | ) | 2,161 | - | (186 | ) | 1,329 | |||||||||||||
| Loss from discontinued operations, net | - | - | (1,638 | ) | - | (1,638 | ) | |||||||||||||
| Net (loss) income | (647 | ) | 2,161 | (1,638 | ) | (230 | ) | (354 | ) | |||||||||||
| Total assets at April 30, 2020 | 12,540 | 36,178 | 12,463 | 11,712 | 72,893 | |||||||||||||||
| (in thousands) (unaudited) | Publishing(a) | IDWE(b) | CTM | IDW Media Holdings | Total | |||||||||||||||
| (discontinued operations) | (unallocated overhead) | |||||||||||||||||||
| Six months ended April 30, 2021 | ||||||||||||||||||||
| Revenues | $ | 11,636 | $ | 6,916 | $ | - | $ | - | $ | 18,552 | ||||||||||
| Loss from operations | (883 | ) | (3,336 | ) | - | (468 | ) | (4,687 | ) | |||||||||||
| Loss from discontinued operations, net | - | - | (1,280 | ) | - | (1,280 | ) | |||||||||||||
| Net(loss) income | (883 | ) | (3,171 | ) | (1,280 | ) | 1,619 | (c) | (3,715 | ) | ||||||||||
| Total assets at April 30, 2021 | 12,886 | 21,194 | - | 4,162 | 38,242 | |||||||||||||||
| Six months ended April 30, 2020 | ||||||||||||||||||||
| Revenues | $ | 10,981 | $ | 8,624 | $ | - | $ | - | $ | 19,605 | ||||||||||
| Loss from operations | (554 | ) | (3,390 | ) | - | (510 | ) | (4,454 | ) | |||||||||||
| Loss from discontinued operations, net | - | - | (2,692 | ) | - | (2,692 | ) | |||||||||||||
| Net loss | (555 | ) | (3,390 | ) | (2,692 | ) | (590 | ) | (7,227 | ) | ||||||||||
| Total assets at April 30, 2020 | 12,540 | 36,178 | 12,463 | 11,712 | 72,893 | |||||||||||||||
| (a) | IDWP includes Clover Press through March 31, 2020. As of April 1, 2020, Clover Press was valued at the cost method and was no longer consolidated. |
| (b) | Included in IDWE is Thought Bubble LLC and Word Balloon LLC in which consist of only television costs. |
| (c) | IDW Media Holdings segment reported net income in the three and six months ended April 30, 2021 due to the sale of CTM. |
IDW MEDIA HOLDINGS, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
Note 6—Trade Accounts Receivable and Deferred Revenue
Trade accounts receivable consists of the following:
| (in thousands) | April 30, 2021 | October 31, 2020 | ||||||
| Trade accounts receivable | $ | 22,207 | $ | 23,246 | ||||
| Less allowance for sales returns | (144 | ) | (296 | ) | ||||
| Less allowance for doubtful accounts | - | (29 | ) | |||||
| Trade accounts receivable, net | $ | 22,063 | $ | 22,921 | ||||
Allowance for Doubtful Accounts
The allowance for doubtful accounts reflects the Company’s best estimate of probable losses inherent in the accounts receivable balance. The allowance is determined based on known troubled accounts, historical experience and other currently available evidence.
Changes in deferred revenue consist of the following:
| (in thousands) | ||||
| Beginning balance, October 31, 2020 | $ | 2,385 | ||
| Deferral of revenue | 170 | |||
| Recognition of deferred revenue | (420 | ) | ||
| Return of previously collected funds | (10 | ) | ||
| Ending balance, April 30, 2021 | $ | 2,125 | ||
The Company expects to recognize approximately 100% of this revenue over the next 12 months.
Note 7—Television costs and amortization
| (in thousands) | April 30, 2021 | October 31, 2020 | ||||||
| In-production | $ | - | $ | 435 | ||||
| In-development | 1,270 | 2,491 | ||||||
| Total | $ | 1,270 | $ | 2,926 | ||||
| Three Months Ended | Six Months Ended | |||||||||||||||
| (in thousands) | 2021 | 2020 | 2021 | 2020 | ||||||||||||
| Television cost amortization | $ | 1,385 | $ | 773 | $ | 5,341 | $ | 8,862 | ||||||||
| Television cost impairments | - | - | 2,065 | - | ||||||||||||
| Total | $ | 1,385 | $ | 773 | $ | 7,406 | $ | 8,862 | ||||||||
Amortization expense for television costs are expected to be $1,204,000 over the next twelve months.
| (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 | |||||||||
IDW MEDIA HOLDINGS, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
Note 8— ProvisionAccrued Expenses
Accrued expenses consist of the following:
| (in thousands) | April 30, 2021 | October 31, 2020 | ||||||
| Royalties | $ | 956 | $ | 1,268 | ||||
| Payroll, accrued vacation & payroll taxes | 449 | 511 | ||||||
| Bonus | 145 | 333 | ||||||
| Production costs and participation | 3,504 | 1,495 | ||||||
| Other | 370 | 346 | ||||||
| Total | $ | 5,424 | $ | 3,953 | ||||
Note 9—Property and Equipment
Property and equipment consist of the following:
| (in thousands) | April 30, 2021 | October 31, 2020 | ||||||
| Equipment | $ | 469 | $ | 424 | ||||
| Furniture & Fixtures | 107 | 105 | ||||||
| Leasehold improvements | 826 | 826 | ||||||
| Computer software | 24 | 20 | ||||||
| 1,426 | 1,375 | |||||||
| Less accumulated depreciation and amortization | (1,062 | ) | (965 | ) | ||||
| Property and equipment, net | $ | 364 | $ | 410 | ||||
Depreciation expense of all property and equipment was $49,290, and $60,831 for Income Taxesthe three months ended April 30, 2021 and 2020, respectively, and $119,746 and $128,915 for the six months ended April 30, 2021 and 2020, respectively.
IDW MEDIA HOLDINGS, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
Note 10—Commitments
Lease Commitments
The Company has various lease agreements with terms up to 10 years, including leases of office space, warehouses, and various equipment. Some leases include options to purchase, terminate or extend for one or more years. These options are included in the lease term when it is reasonably certain that the option will be exercised.
The assets and liabilities from operating and finance leases are recognized at the commencement date based on the present value of remaining lease payments over the lease term using the Company’s secured incremental borrowing rates or implicit rates, when readily determinable. Short-term leases, which have an initial term of 12 months or less, are not recorded on the balance sheet.
The Company’s operating leases do not provide an implicit rate that can readily be determined. Therefore, we use a discount rate based on our incremental borrowing rate, which was determined using the Company’s interest rate on its line of credit.
The Company’s weighted-average remaining lease term relating to its operating leases is 1.17 years, with a weighted-average discount rate of 4.59%.
The Company recognized lease expense decreased infor its operating leases of $124,960 and $249,920 for the three and six months ended January 31, 2011 compared to the similar period in fiscal 2010 due to decreases in stateApril 30, 2021, respectively and local$180,885 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$355,767 for the three and six months ended January 31, 2011 compared toApril 30, 2020, respectively. The cash paid under operating leases was $142,516 and $286,926 for the similar periods in fiscal 2010 due tothree and six months ended April 30, 2021, respectively and $168,968 and $367,109 for 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.
At April 30, 2021, the Company commencedhad a tender offerright-of-use-asset related to purchase upoperating leases of $1,037,434, accumulated amortization related to thirty percentoperating leases of its outstanding common stock. The Company concluded the tender offer and repurchased 0.2 million shares$497,580, both of Class A common stock and 0.8 million shareswhich are included as a component 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 following table presents information about the amount and timing of cash flows arising from the Company’s operating leases as of April 30, 2021.
| Maturity of Lease Liability (in thousands) | Total | |||
| Fiscal years ending October 31: | ||||
| 2021 | $ | 307 | ||
| 2022 | 354 | |||
| 2023 | 13 | |||
| 2024 | 7 | |||
| Thereafter | - | |||
| Total undiscounted operating lease payments | $ | 681 | ||
| Less: imputed interest | (19 | ) | ||
| Present value of operating lease liabilities | $ | 662 | ||
IDW MEDIA HOLDINGS, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
Note 11—Deconsolidation of Subsidiary
| a. | Effective April 1, 2020, the Company’s interest in Clover Press decreased to 19.9% and IDWMH no longer consolidates the operations of Clover Press. Accordingly, the Company derecognized related assets, liabilities and noncontrolling interests of Clover Press. |
| b. | Analysis of assets and liabilities over which the Company lost control |
| (in thousands) | March 31, 2020 | |||
| Current assets | ||||
| Cash and cash equivalents | $ | 215 | ||
| Trade accounts receivable | 1 | |||
| Inventory | 62 | |||
| Other current assets | 9 | |||
| Noncurrent assets | ||||
| Intangible assets, net | 10 | |||
| Right-of-use assets | 226 | |||
| Other noncurrent assets | 64 | |||
| Current liabilities | ||||
| Trade accounts payable | (38 | ) | ||
| Operating lease obligation- current | (64 | ) | ||
| Related party notes payable | (50 | ) | ||
| Non-current liabilities | ||||
| Operating lease obligations -long term | (169 | ) | ||
| Net assets deconsolidated | $ | 266 | ||
| c. | Loss on deconsolidation of subsidiary |
| (in thousands) | ||||
| Fair value of interest retained | $ | 25 | ||
| Consideration received | 100 | |||
| Carrying amount of interest retained: | ||||
| Net assets deconsolidated | (266 | ) | ||
| Noncontrolling interests | 106 | |||
| Loss on deconsolidation of subsidiary | $ | (35 | ) | |
Loss on deconsolidation of subsidiary was included in other expenses. The technique used to measure fair value was calculating the net present value of future EBITDA projected over five years. The transaction was not with a related party. The continuing involvement consists of 19.9% ownership and an additional 23.335% interest in officer of IDWMH has one of three seats on the board.
| d. | Net cash outflow arising from deconsolidation of the subsidiary |
| (in thousands) | ||||
| The balance of cash and cash equivalents deconsolidated | $ | (115 | ) | |
IDW for a purchase price of $0.4 million in cash. MEDIA HOLDINGS, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
Note 12—Discontinued Operations
As a result of the transaction,economic downturn related to the outbreak of the COVID-19 virus, and the impact it had on small businesses in the tourist markets, the Company ownsdecided to make a 76.665% interest in IDW. The acquisition was accountedstrategic shift to dispose of CTM and to focus on its entertainment and publishing businesses.
On July 14, 2020, the Company and Howard S. Jonas, the Company’s Chairman of the Board of Directors and former Chief Executive Officer, executed a share purchase agreement pursuant to which the Company agreed to sell all of the stock of CTM to Mr. Jonas or his assignee (the “SPA”) for (i) the cancelation of $3.75 million of indebtedness owed to Mr. Jonas by the Company, (ii) a contingent payment of up to $3.25 million based upon a recovery of quarterly revenues of CTM to 90% of its fiscal 2019 levels during the 18-month period following the closing of the CTM Sale, and (iii) a contingent payment if CTM is sold within 36 months for more than $4.5 million. Prior to executing the share purchase agreement, the Company obtained a third-party’s valuation of CTM and a fairness opinion that stated the consideration being received by the Company in the second quarterCTM Sale was fair. In addition to the Company’s Board of fiscal 2010 as an equity transaction,Directors approving the CTM Sale, the Audit Committee of the Board of Directors, which is comprised entirely of independent directors, approved the CTM Sale in accordancecompliance with the accounting standards on non-controlling interests.
As of July 31, 2020, CTM was reported as a discontinued operation and CTM’s operations have since been included in the ASC Topic 820 (Fair Value Measurementsfinancial statements as discontinued operations. On February 15, 2021, the Company closed the previously announced CTM Sale. The Company wrote down the loan of $3,750,000 and Disclosures). ASU 2010-06 requires new disclosuresrecord a gain of $2,123,219 based on CTM’s net asset value as of the CTM Sale Date. CTM’s assets are no longer reflected on the amountfinancial statements for the periods following the CTM Sale Date and reason for transfersCTM’s operations are only consolidated in and outthe Company’s Condensed Consolidated Statements of Level 1 and 2 fair value measurements. ASU 2010-06 also requires disclosure of activities, including purchases, sales, issuances, and settlements withinOperations results until 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.CTM Sale Date. There was no contingent gain recorded since there was no foreseeable contingent payments to the Company.
According to ASC 205-20-45-9 general corporate overhead should not be allocated to discontinued operations. The adoption of this standardCompany did not haveallocate any corporate overhead to CTM when it began being classified as held for sale in the third quarter of 2020 and continued to not allocate any expenses for the six months ending April 30, 2021.
IDW MEDIA HOLDINGS, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
Note 12—Discontinued Operations (continued)
Following is a material effect onsummary of the Company’s financial statements.
| Results of discontinued operations | Three months ended April 30, | Six months ended, April 30, | ||||||||||||||
| (in thousands) | 2021 | 2020 | 2021 | 2020 | ||||||||||||
| Revenue | $ | 207 | $ | 2,287 | $ | 1,427 | $ | 6,095 | ||||||||
| Direct cost of revenue | 105 | 1,236 | 946 | 2,927 | ||||||||||||
| Selling, general and administrative | 227 | 1,955 | 1,649 | 4,803 | ||||||||||||
| Depreciation and amortization | 45 | 293 | 295 | 564 | ||||||||||||
| Bad Debt | 1 | 431 | (109 | ) | 482 | |||||||||||
| Total costs and expenses | 378 | 3,915 | 2,781 | 8,776 | ||||||||||||
| Loss from operations | (171 | ) | (1,628 | ) | (1,354 | ) | (2,681 | ) | ||||||||
| Interest expense, net | 19 | (9 | ) | 6 | (18 | ) | ||||||||||
| Other (expense) income, net | (7 | ) | (1 | ) | 68 | 7 | ||||||||||
| Loss before income taxes | (159 | ) | (1,638 | ) | (1,280 | ) | (2,692 | ) | ||||||||
| Provision for income taxes | - | - | - | - | ||||||||||||
| Net loss | $ | (159 | ) | $ | (1,638 | ) | $ | (1,280 | ) | $ | (2,692 | ) | ||||
| (i) | Stock based compensation for discontinued operations included in selling, general and administrative expenses is $0 in both the three and six months ended April 30, 2021 and 2020, respectively. |
| (ii) | CTM is no longer consolidated into the Company as of February 15, 2021 the CTM Sale Date. |
Cash flows from discontinued operations for the six months ended April, 30
| (in thousands) | 2021 | 2020 | ||||||
| Depreciation and amortization | $ | 185 | $ | 399 | ||||
| Amortization of finance lease | 109 | 165 | ||||||
| Capital expenditure | (22 | ) | (299 | ) | ||||
IDW MEDIA HOLDINGS, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
Note 12—Discontinued Operations (continued)
| Assets and liabilities of Discontinued Operations (in thousands) | April 30, 2021 | October 31, 2020 | ||||||
| Assets | ||||||||
| Cash | $ | - | $ | 1,621 | ||||
| Trade receivables, net | - | 844 | ||||||
| Prepaid expenses | - | 368 | ||||||
| Total current assets* | - | |||||||
| Property and equipment, net | - | 1,274 | ||||||
| Right-of-use assets, net | - | 4,649 | ||||||
| Intangibles assets, net | - | 142 | ||||||
| Goodwill | - | 2,110 | ||||||
| Other assets | - | 163 | ||||||
| Total Assets | $ | - | $ | 11,171 | ||||
| Liabilities | ||||||||
| Trade accounts payable | - | 891 | ||||||
| Accrued expenses | - | 368 | ||||||
| Deferred revenue | - | 664 | ||||||
| Government loan- current portion | - | 1,125 | ||||||
| Operating lease obligations-current portion | - | 909 | ||||||
| Finance lease obligations- current portion | - | 342 | ||||||
| Income taxes payable and other current liabilities | - | 71 | ||||||
| Total current liabilities* | - | |||||||
| Government loan- long term portion | - | 684 | ||||||
| Operating lease obligations – long term portion | - | 3,034 | ||||||
| Finance lease obligations – long term portion | - | 452 | ||||||
| Total non-current liabilities* | - | |||||||
| Total Liabilities | $ | - | $ | 8,540 | ||||
| * | The assets and liabilities of the disposal group classified as held for sale are all classified as current on Assets and Liabilities of Discontinued Operations since it’s probable the sale will occur and proceeds will be collected within one year. Therefore, no sub totals between current and non-current have been displayed. Since the sale of the discontinued operations the assets and liabilities are no longer reflected above. |
Note 13—Reclassification of prior year presentation
Certain prior year amounts have been reclassified for consistency with 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 evaluatecurrent year presentation.
Note 14—Subsequent events
Management has evaluated subsequent events through June 14, 2021, the date thaton which the consolidated financial statements arewere available to be 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.
On May 3, 2021 and May 10, 2021 both bank loans held by the balance sheet date to determine if any such events must be reportedVIEs controlled by IDWE were subsequently paid off and has determined that there are no subsequent events to be disclosed.
The following information should be read in conjunction with the accompanying condensed consolidatedcombined financial statements and the associated notes thereto of this Quarterly Report, and the audited consolidatedcombined financial statements and the notes thereto and our Management’s Discussion and Analysis of Financial Condition and Results of Operations contained in our Annual Reportthe Company’s Registration Statement on Form 10-K for the fiscal year ended July 31, 2010,S-1 as amended filed with the U.S. Securities and Exchange Commission (the “SEC”).
As used below, unless the context otherwise requires, the terms “the Company,” “we,” “us,” and “our” refer to CTMIDW 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.Registration Statement. 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 filed with the SEC pursuant to the Securities Act of 1933 and the Securities Exchange Act of 1934,1934.
Overview
Our principal businesses consist of:
| i. | IDWP, a publishing company that creates comic books, graphic novels, digital content and games through its imprints IDW, IDW Games, Top Shelf Productions, Artist’s Editions, The Library of American Comics, Yoe! Books, Sunday Press, and EuroComics; and Clover Press, a boutique publishing company that focuses on the book trade and direct market. Effective April 1, 2020, our interest in Clover Press decreased to 19.9% and IDWMH no longer consolidates the operations of Clover Press, but rather values the investment at cost; and |
| ii. | IDWE, is a production company and studio that develops and produces content and formats for global platforms and services. |
Prior to February 15, 2021, we also owned CTM, a company that develops and distributes print and digital-based advertising and information advertising for tourist destinations in targeted tourist markets in 32 states / provinces in the US and Canada. IDWMH has announced an agreement to sell CTM. On July 14, 2020, we and Howard Jonas, our Chairman of the Board of Directors, executed a share purchase agreement pursuant to which we agreed to sell all of the stock of CTM to Mr. Jonas or his assignee for (i) the cancelation of $3.75 million of indebtedness owed to Mr. Jonas by us, (ii) a contingent payment of up to $3.25 million based upon a recovery of quarterly revenues of CTM to 90% of its fiscal 2019 levels during the 18-month period following the closing of the CTM Sale, and (iii) a contingent payment if CTM is sold within 36 months for more than $4.5 million. As of July 31, 2020, CTM was reported as a discontinued operation and CTM’s operations have since been included in the financial statements as discontinued operations. The sale was consummated on February 15, 2021.
Reportable Segments
We have the following three reportable business segments: IDWP, IDWE and CTM (discontinued operations).
IDWP
IDWP is an award-winning publisher of comic books, original graphic novels, and art books as well as board and tabletop games. Founded in 1999, IDWP has a long tradition of supporting original, powerful creator-driven titles. In 2002, IDWP published 30 Days of Night by Steve Niles and Ben Templesmith followed by other horror titles that kickstarted a resurgence in horror-comic publishing across the industry. Since then, IDWP has significantly diversified its publications. Joe Hill and Gabriel Rodríguez’s Locke & Key, Jonathan Maberry’s V Wars, Stan Sakai’s Usagi Yojimbo, Walter Simonson’s Ragnarök, Beau Smith’s Wynonna Earp, Chris Ryall and Ash ley Wood’s Zombies vs Robots, and Joe Hill and Martin Simmonds’ Dying is Easy are just a few of the hundreds of outstanding, award-winning titles published since its inception. Titles such as Canto, Ghost Tree, Road of Bones, Mountainhead, and others in active development now.
In 2015, IDWP acquired Top Shelf Productions, an award-winning critically-acclaimed publisher of graphic novels, which continues to operate as a thriving imprint. Top Shelf is renowned for publishing works of literary significance including our Annual Reportthe #1 New York Times and Washington Post bestselling trilogy, March, by Congressman John Lewis, Andrew Aydin, and Nate Powell. March is the only graphic novel to have won the National Book Award and is the second most taught graphic novel in schools. In July 2019, Top Shelf Productions released George Takei’s graphic memoir, They Called Us Enemy, which debuted at #2 on Form 10-Kthe New York Times Paperback Nonfiction Best Sellers list and as a #1 bestseller on Amazon. They Called Us Enemy was named a “Best Book of the Year” by NPR, Amazon, Forbes, Publishers Weekly, School Library Journal, Kirkus Reviews, the New York Public Library, and more.
In addition to its core of creator-driven franchises, IDWP has also partnered with the owners of major licensed brands to publish many successful licensed titles, including: Hasbro’s Transformers, G.I. Joe, and My Little Pony; Sega’s Sonic The Hedgehog; CBS’s Star Trek; Sony’s Ghostbusters; Viacom’s Teenage Mutant Ninja Turtles; the Marvel Action line of middle-grade comic books designed for younger readers; Toho’s Godzilla; and Lucasfilm’s Star Wars Adventures. These licensed titles bring with them diverse built-in audiences and also build cache and retailer support for IDWP. With licensed franchises, IDWP strategy is to focus not only on licenses that have eager, built-in fan followings but also ongoing licensor support through other channels, such as toys, animation, and film. This strategy enables IDWP to expand its audience reach and to pursue sub-license opportunities with foreign publishers. IDWP also collaborates with other comic publishers to co-publish certain titles, including Batman vs. Teenage Mutant Ninja Turtles (with DC Comics) and Rick & Morty vs. Dungeons and Dragons (with Oni Press, Inc.).
IDWP is also home to the acclaimed imprints The Library of American Comics (publishing classic comic reprints); EuroComics (bringing foreign language comics to an English-speaking audience); Yoe! Books (specializing in creative historical comic collections); Artist’s Editions (scans of original art printed at the same size they were drawn, with all the distinctive creative nuances that make original art unique); and Sunday Press (producing restorations of classic American comic strips).
Many of IDWP’s titles are available in a variety of languages worldwide through foreign licensing. In 2019, IDW also announced a major new initiative to release key titles as Spanish-language graphic novels in the North American market. This initiative kicked off in Summer 2020 with the release of Spanish-language editions of They Called Us Enemy, Red Panda & Moon Bear, and Sonic the Hedgehog.
IDWP’s largest segment is the publication of comic book and trade paperback products. Its comics and graphic novels are primarily distributed through three channels: (i) to comic book specialty stores (the “direct market”). Diamond Comic Distributors, Inc. serves as IDWP’s distributor to the direct market, worldwide; (ii) to traditional retail outlets, including bookstores and mass market stores, on a returnable basis (the “non-direct market”). IDWP’s non-direct market distributor is Penguin Random House Publisher Services (PRHPS). IDWP works hand-in-hand with PRHPS to sell-in and promote IDWP titles to buyers at non-direct market customers such as Amazon, Barnes & Noble, Baker & Taylor, Ingram, Follett, Target, Walmart, and more; and (iii) to Ebook distributors (“digital publishers”). IDWP’s publications are widely available digitally through popular distributors such as Comixology, Amazon, Apple iTunes and iBooks, Google Play, Hoopla, Overdrive, and via IDWP’s own website, idwpublishing.com. Through the direct market and non-direct market, IDWP, including its imprint Top Shelf, sold over 4.1 million units in fiscal year ended July 31, 2010.
In 2014 IDWP launched IDW Games to develop and publish card, board, and tabletop games. Similar to IDWP’s book content, IDW Games offers a mix of popular licensed titles, such as Dragon Ball Z and Batman the Animated Series, as well as creator developed strategic hobby games, such as Towers of Arkhanos and Tonari. IDW Games’ products are a former subsidiary of IDT Corporation. sold to distributors worldwide and are available through retailers such as Gamestop, Barnes & Noble, and Amazon, independent games and comics stores, as well as the direct-to-consumer channel through its website and marketing campaigns.
To further expand and build creator-owned properties beyond publishing, IDWP works with IDWE, as well as other outside partners, to bring creator-owned franchises to television and film through licensing arrangements.
As a result of the Spin-Off, on September 14, 2009, we became an independent public company. IDT CorporationCOVID-19 pandemic, the direct market ceased distribution of new products from April 1, 2020 through May 19, 2020. Accordingly, IDWP did not publish any new comics during this period. Based upon distributor capacity new comic releases began following a reduced distribution schedule beginning May 20, 2020, with the capacity for new product increasing over the subsequent months. The delay in comic releases continues to provide certain functions pursuant to a Master Services Agreement, dated September 14, 2009. Duringhave an impact on 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.
In order to expand its business, (other than working capital). WMET 1160 AMcounter a persistent industry-wide decline in direct market sales and outperform its industry competitors, IDWP continues to focus on launching new creator-owned titles and partnering with established brands to bring fan-favorite properties to the comics market. IDWP is expanding the reach of existing and new products through the development of specialty, library, and education markets; increased direct-to-consumer initiatives; and broadening the reach of creator-driven series through licensing opportunities.
In May 2019, IDWMH invested in a new publishing entity, Clover Press, established by Ted Adams and Robbie Robbins, co-founders of IDWP. Clover Press 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 cashseparate entity and a promissory noteoperates independently from IDWP. Due to its size, and nature of the buyer that is secured by the assets sold. $1.3 million of the purchase pricebusiness, activity related to Clover Press was paidincluded with IDWP for presentation purposes while it was a consolidated entity. Effective April 1, 2020 IDWMH’s interest in cash at the closing and the remainder is owed pursuantClover Press decreased 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 reported19.9%, as a discontinued operation in the third quarter of fiscal 2010result it is now an investment valued at cost and accordingly, WMET’s results are classified as part of discontinued operations during the fiscal year 2010.
IDWP’s revenues represented 55.4%59% and 59.2% of our consolidated revenues in the six months ended January 31, 2011 and 2010, respectively.
IDWE
IDWE is a production company and studio that develops and produces content and formats for global platforms and services.
IDWE was formed on September 20, 2013 to leverage IDWP properties into television series, features and other forms of media by developing and producing original content. IDWE maintains a robust development slate of properties based on IDWP properties primarily for the adult series marketplace and is in IDWadvanced conversations with various global studios and networks for their exploitation. IDWE actively recruits and acquires new franchise material for exploitation primarily in the series format.
IDWE has developed and/or produced four series for television that premiered in calendar 2019 and 2020:
| ● | Wynonna Earp season four aired in two parts due to worldwide COVID-19 related production shutdowns. The first six episodes of season four premiered July 26, 2020 and the second half of season four began airing March 5, 2021. The show was created by Emily Andras and stars Melanie Scrofano and is based on the IDWP comics of Beau Smith. Season four’s twelve episodes are being produced by Seven24 Films and distributed by IDWE, in partnership with Syfy and CTV Sci-Fi. Cineflix Studios is the co-producer and global distributor for the series. Season one’s thirteen episodes aired in fiscal 2016. Season two’s twelve episodes aired in fiscal 2017, and Season three’s twelve episodes aired in fiscal 2018. |
| ● | V Wars debuted on Netflix on December 5, 2019. The 10-episode vampire thriller stars Ian Somerhalder and was produced by High Park Entertainment. The series was based upon Jonathan Maberry’s IDW Publishing comic book series of the same name. |
| ● | October Faction premiered on Netflix on January 23, 2020. The 10-episode show was based on the IDW Publishing comics of Steve Niles and Damien Worm and was adapted by showrunner Damian Kindler and starred Tamara Taylor and J.C. MacKenzie. It was also produced by High Park Entertainment. |
| ● | Locke & Key premiered on Netflix on February 7, 2020. The show is based on the critically-acclaimed graphic novels of Joe Hill and Gabriel Rodriguez published by IDWP. Season two and three have been ordered by Netflix and season two began production Fall 2020. |
Previously, IDWE, in partnership with Ideate Media, partnered with AMC Studios to license the U.S. broadcast and streaming video on demand (SVOD) rights to Dirk Gently, a purchase pricelive-action series based on the Douglas Adams novels and related comic books published by IDWP, to BBC America. Season one of $0.4 million. the series premiered October 22, 2016 in the U.S. on BBC America. The second and final season aired on BBC America in 2017. Netflix currently streams both seasons worldwide.
IDWE’s revenues represented 41% and 37% of our consolidated revenues in the three and six months ended April 30, 2021,respectively. IDWE’s revenues represented 49% and 44% of our consolidated revenues in the three and six months ended April 30, 2020,respectively.
CTM (Discontinued Operations)
As a result of the transaction, we own a 76.665% interest in IDW.
COVID-19: Overview of Impacts
| ● | IDWMH: Received two PPP loans related to core IDWE and IDWP operations. |
| ○ | $1,195,679 on April 27, 2020 |
| ○ | $1,195,680 on April 2, 2021 |
| ● | IDWE: Industry-wide production suspensions halted filming and production of Wynonna Earp Season four after the completion of six of twelve episodes. IDWE continued its program to develop, package and pitch from its library on remote basis. Writer’s rooms have transitioned to virtual operations. |
| ● | IDWP: Direct market distribution was halted in April 1, 2020 by Diamond, the industry’s primary distributor, and IDWP subsequently furloughed approximately 25% of its workforce. Using the proceeds of PPP loans, IDWP was able to bring back 50% of the furloughed workforce. IDWP transitioned to focus on direct-to-consumer (“DTC”) and indirect market channels, and was able to offset the lost direct market sales. Diamond resumed partial operations on May 20, 2020. In recent months, direct market sales volumes have begun to increase, reaching pre-pandemic levels. Additionally, although most products sold through Diamond, a traditionally non-returnable market, have been made returnable, this has not resulted in a significant increase in returns and sales through PRH, a largely returnable market, have seen decreased overall returns. IDWP renegotiated the terms of one of its lease agreements due to COVID-19 impacts. Per ASC 842 guidance the lease liabilities were remeasured as of the modification dates as if the leases were new leases commencing at such time. Accordingly, the ROU assets were adjusted by amounts equal to the adjustments to the lease liabilities. |
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.flows. 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.States. 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.lives and ultimate revenues for television costs. 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 additionalSee Note 1 to the condensed consolidated financial statements in the Registration Statement for a complete discussion of our criticalsignificant accounting policies, see our Management’s Discussion and Analysis of Financial Condition and policies.
Results of Operations in our Annual Report on Form 10-K for fiscal 2010.
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
Net income IDW Media Holdings, Inc.
Consolidated
| (in thousands) (unaudited) | Change | |||||||||||||||
| Three months ended April 30, | 2021 | 2020 | $ | % | ||||||||||||
| Income from continuing operations | $ | 433 | $ | 1,329 | $ | (896 | ) | (67.4 | %) | |||||||
| Interest income (expense), net | 156 | (10 | ) | 166 | (1,660.0 | %) | ||||||||||
| Other expense, net | (12 | ) | (35 | ) | 23 | (65.7 | %) | |||||||||
| Provision for income taxes | - | - | - | nm | ||||||||||||
| Net income from continuing operations | 577 | 1,284 | (707 | ) | (55.1 | %) | ||||||||||
| Net loss from discontinued operations | (159 | ) | (1,638 | ) | 1,479 | (90.3 | %) | |||||||||
| Gain on sale of discontinued operations | 2,123 | - | 2,123 | nm | ||||||||||||
| Net income (loss) | $ | 2,541 | $ | (354 | ) | $ | 2,895 | (817.8 | %) | |||||||
| (in thousands) (unaudited) | Change | |||||||||||||||
| Six months ended April 30, | 2021 | 2020 | $ | % | ||||||||||||
| Loss from continuing operations | $ | (4,687 | ) | $ | (4,454 | ) | $ | (233 | ) | 5.2 | % | |||||
| Interest income (expense), net | 142 | (20 | ) | 162 | (810.0 | %) | ||||||||||
| Other expense, net | (13 | ) | (61 | ) | 48 | (78.7 | %) | |||||||||
| Provision for income taxes | - | - | - | nm | ||||||||||||
| Net loss from continuing operations | (4,558 | ) | (4,535 | ) | (23 | ) | 0.5 | % | ||||||||
| Net loss from discontinued operations | (1,280 | ) | (2,692 | ) | 1,412 | (52.5 | %) | |||||||||
| Gain on sale of discontinued operations | 2,123 | - | 2,123 | nm | ||||||||||||
| Net loss | $ | (3,715 | ) | $ | (7,227 | ) | $ | 3,512 | (48.6 | %) | ||||||
nm—not includemeaningful
Income from operations. Income from operations decreased by ($896,000) for the three months ended April 30, 2021 compared to the three months ended April 30, 2020 due to a separate discussiondecrease in operating income from IDWE of WMET’s results of operation since the operations were not significant.
| (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 | ||||||||||||||||||
Loss from operations increased by ($233,000) for the six months ended April 30, 2021 compared to the six months ended April 30, 2020 due to an increase in operating losses from IDWP of ($329,000) offset by a decrease in losses at IDWE of $54,000 and a decrease in corporate overhead of $42,000. These changes are more fully described in the separate segment analyses below.
Interest income (expense), net increased for the three months and six months ended April 30,2021 compared to the three and six months ended April 30, 2020 by $166,000 and $162,000, respectively, due to the interest income from the CRA tax credits.
Net loss from discontinued operations. Net loss from discontinued operations decreased by $1,479,000 for the three months ended April 30, 2021 compared to the three months ended April 30, 2020 due to the sale of CTM which resulted in our not consolidating their financials into the Company as of February 15, 2021.
Net loss from discontinued operations decreased by $1,412,000 for the six months ended April 30, 2021 compared to the six months ended April 30, 2020 due to the sale of CTM which resulted in our not consolidating their financials into the Company as of February 15, 2021.
Gain on sale of discontinued operations increased by $2,132,000 for the three and six months ended April 30, 2021 compared to April 30, 2020 as a result of the sale of CTM.
IDWP
| (in thousands) (unaudited) | Change | |||||||||||||||
| Three months ended April 30, | 2021 | 2020 | $ | % | ||||||||||||
| Revenues | $ | 5,988 | $ | 4,681 | $ | 1,307 | 27.9 | % | ||||||||
| Direct cost of revenues | 3,335 | 2,505 | 830 | 33.1 | % | |||||||||||
| Selling, general and administrative | 3,102 | 2,770 | 332 | 12.0 | % | |||||||||||
| Depreciation and amortization | 50 | 52 | (2 | ) | (3.8 | %) | ||||||||||
| Bad debt expense | 11 | - | 11 | nm | ||||||||||||
| Income (loss) from operations | $ | (510 | ) | $ | (646 | ) | $ | 136 | (21.1 | %) | ||||||
| (in thousands) (unaudited) | Change | |||||||||||||||
| Six months ended April 30, | 2021 | 2020 | $ | % | ||||||||||||
| Revenues | $ | 11,636 | $ | 10,981 | $ | 655 | 6.0 | % | ||||||||
| Direct cost of revenues | 6,506 | 6,033 | 473 | 7.8 | % | |||||||||||
| Selling, general and administrative | 5,903 | 5,391 | 512 | 9.5 | % | |||||||||||
| Depreciation and amortization | 99 | 111 | (12 | ) | (10.8 | %) | ||||||||||
| Bad debt expense | 11 | - | 11 | nm | ||||||||||||
| Income (loss) from operations | $ | (883 | ) | $ | (554 | ) | $ | (329 | ) | 59.4 | % | |||||
nm—not meaningful
Included in IDWP’s segment from June 1, 2019 through March 31, 2020 is Clover Press. As of April 1, 2020, Clover Press is no longer a consolidated entity and became a cost method investment. Therefore all the Clover Press changes noted below are a result of a nil balance in April 30, 2021.
Revenues. Revenues increased by $1,307,000 in the three months ended April 30, 2021, compared to the three months ended April 30, 2020. IDWP revenue increased $1,425,000 driven by several high-performing direct market titles and increased direct-to-consumer sales, and due to the temporary halt of direct sales in 2020. Games revenue increased $106,000 due to fulfillment of a direct-to-consumer Galaxy Hunters games campaign. Digital sales decreased ($219,000) largely related to increased revenues from several new platforms in 2020. Licensing and royalty revenues increased $111,000 due primarily to an increase in foreign license revenue. This cumulative increase was offset by an overall increase in sales returns and discounts of ($58,000). Additionally, Clover Press revenues decreased by ($58,000) as they are no longer consolidated in the three months ended April 30, 2021.
Revenues increased by $655,000 in the six months ended April 30, 2021, compared to the six months ended April 30, 2020. Publishing revenue increased $1,348,000 driven by several high-performing direct market titles and increased direct-to-consumer sales and due to temporary halt of direct sales in 2020, offset by a decrease in book market sales. Games revenue decreased in the six months ended April 30, 2021 by ($760,000) due to fulfillment of a TMNT: Adventure Game direct-to-consumer games campaign in the six months ended April 30, 2020. Digital sales increased $62,000 due to continued strong sales across all platforms, licensing and royalty revenues increased $80,000 driven by increased foreign license revenue, and sales returns and discounts decreased by $56,000. Additionally, Clover Press revenues decreased by ($131,000) as they are no longer consolidated in the six months ended April 30, 2021.
Direct cost of revenues. IDWP direct cost of revenues increased by $830,000 in the three months ended April 30, 2021 compared to the three months ended April 30, 2020. Direct cost of revenues increased by $473,000 in the six months ended April 30, 2021, compared to the six months ended April 30, 2020. IDWP direct cost of revenues consists primarily of printing expenses, costs of artists and writers, and royalties. Additionally, as of April 30, 2021 IDWP performed a full review of game development costs. As a result, it was determined that capitalized creative costs, advanced royalties, and vendor deposits of $231,000 related to games that would no longer be manufactured, and these amounts were expensed. This adjustment is a one-time write-down and will not have impact on financial statements in future periods. Additionally, Clover Press direct cost of revenues decreased by ($26,000) in the three months ended April 30, 2021and by ($55,000) in the three and six month periods ended April 30, 2021 compared to the corresponding periods in 2020, as they are no longer consolidated in the three and six months ended January 31, 2011April 30, 2021. A portion of inventory was donated by the owners for the start-up of the Company.
IDWP’s gross margin for the three months ended April 30, 2021 decreased to 44.3% from 46.5% for the three months ended April 30, 2020. Gross margin for the six months ended April 30, 2021 decreased to 44.1% from 45.1% for the six months ended April 30, 2020.
Selling, General and Administrative. IDWP selling, general and administrative expenses increased by $332,000 in the three months ended April 30, 2021 compared to the similar periods in fiscal 2010 wasthree months ended April 30, 2020 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,salaries and digital revenues whichbenefits of $365,000, overhead allocations of $252,000, repairs and maintenance of $44,000 and other net changes of $6,000. These were partially offset by declinesdecreases in printing revenues, which business we exited in the fourth quartermarketing expenses 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 | ||||||||||||||||||
IDWP selling, general and administrative expenses increased by $512,000 in the six months ended January 31, 2011April 30, 2021 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 comparedApril 30, 2020 primarily due to the similar periodsincreases in fiscal 2010 was directly attributable to the corresponding increasesalaries and benefits of $633,000, overhead allocations of $464,000, repairs and maintenance of $55,000, and employee recruitment of $33,000. These were offset by decreases in revenues at IDW. The decrease in CTM’s direct costmarketing expenses of revenues($199,000), occupancy and related expenses of ($91,000), selling & distribution expenses of ($42,000), and other net changes of ($25,000). Additionally, Clover Press consolidated selling, general, and administrative decreased by ($316,000) as they are no longer consolidated in the three and six months ended January 31, 2011 compared to the similar periods in fiscal 2010 was principally asApril 30, 2021.
As a resultpercentage 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
IDWE
| (in thousands) (unaudited) | Change | |||||||||||||||
| Three months ended April 30, | 2021 | 2020 | $ | % | ||||||||||||
| Revenues | $ | 4,152 | $ | 4,587 | $ | (435 | ) | (9.5 | %) | |||||||
| Direct cost of revenues | 1,394 | 790 | 604 | 76.5 | % | |||||||||||
| Selling, general and administrative | 1,533 | 1,627 | (94 | ) | (5.8 | %) | ||||||||||
| Depreciation and amortization | 9 | 9 | - | 0.0 | % | |||||||||||
| Income from operations | $ | 1,216 | $ | 2,161 | $ | (945 | ) | (43.7 | %) | |||||||
| (in thousands) (unaudited) | Change | |||||||||||||||
| Six months ended April 30, | 2021 | 2020 | $ | % | ||||||||||||
| Revenues | $ | 6,916 | $ | 8,624 | $ | (1,708 | ) | (19.8 | %) | |||||||
| Direct cost of revenues | 7,453 | 8,878 | (1,425 | ) | (16.1 | %) | ||||||||||
| Selling, general and administrative | 2,781 | 3,119 | (338 | ) | (10.8 | %) | ||||||||||
| Depreciation and amortization | 18 | 17 | 1 | 5.9 | % | |||||||||||
| Loss from operations | $ | (3,336 | ) | $ | (3,390 | ) | $ | 54 | (1.6 | %) | ||||||
nm—not meaningful
Revenues. For the date of grant in lieu of a cash base salary forthree months ended April 30, 2021 revenues decreased by ($435,000) compared to the five year period from October 14, 2009 through October 14, 2014.three months ended April 30, 2020. 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 millionrevenues for the three months ended April 30, 2021 include; Wynonna Earp $674,000 and the completion of the CRA audit which established the final tax credit for V Wars and October Faction of $3,331,000. In the three months ended April 30, 2020, we recognized revenues on delivery of episodes of Locke & Key in the amount of ($4,000,000) and Dirk Gently in the amount of ($440,000).
For the six months ended January 31, 2011, respectively.
| (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 | |||||||||||||||
| (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 | ) | ||||||||||||||
Direct Costcosts of Revenues.revenues. Direct cost of revenues consists primarily of distributionthe amortization of production costs that were capitalized during the production of the television episodes 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.
| (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 | |||||||||||||||||
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 asApril 30, 2021 increased by $604,000 compared to the similar period in fiscal 2010 increased in proportion to increase in revenues and also to an increase in royalty expenses.three months ended April 30, 2020. The increase is related to the amortization from episodes of Wynonna Earp Season 4 in directthe amount of $970,000 that were delivered in the three months ended April 30, 2021. In the three months ended April 30, 2020 the related amortization costs were from Locke & Key in the amount of ($1,333,000) and cost refinements from V Wars and October Faction in the amount of $971,000, and other costs of ($4,000).
Direct costs of revenues infor the six months ended January 31, 2011 asApril 30, 2021 decreased by ($1,425,000) compared to the similar period in fiscal 2010 was principally attributable to the increase in revenues.
IDWE’s gross margin for the three months ended April 30, 2021 was primarily due66.4% compared to 82.8% for the mixthree months ended April 30, 2020. Gross margin for the six months ended April 30, 2021 was (7.8%) compared to (2.9%) for the six months ended April 30, 2020. These gross margin figures are aligned with the rationale provided for revenues and direct costs of products.revenues.
Selling, General and Administrative.Administrative. Selling, General and Administrative expenses decreased by ($94,000) during the three months ended April 30, 2021 compared to the three months ended April 30, 2020. The decrease was driven by decrease in marketing of ($123,000), travel and entertainment of ($13,000), promotional production materials ($292,000), offset by higher salary and benefits of $141,000, consulting fees of $57,000, legal fees of $40,000, accounting fees of $34,000, overhead allocations of $55,000, and other expenses of $7,000.
Selling, general and administrative expenses decreased by ($338,000) during the six months ended April 30, 2021 compared to the six months ended April 30, 2020. The decrease was driven by lower rent of ($27,000), marketing of ($275,000), travel and entertainment of ($55,000), promotional production materials ($446,000), offset by salary and benefits of $232,000, legal fees of $54,000, recruitment fees of $92,000, overhead allocations of $83,000 and other expenses of $4,000.
As a percentage of IDWE’s revenues, selling, general and administrative expenses in the three months ended April 30, 2021 were 40.95% compared to 49.49% in the three months ended April 30, 2020, and 37.28% in the six months ended January 31, 2011 remained the same asApril 30, 2021 compared to the similar periods43.992% 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%April 30, 2020.
Liquidity 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.Capital Resources
We satisfy our cash requirements primarily through cash provided by CTM’sthe Company’s financing and 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 | ||||
| Six months ended April 30, | ||||||||
| (in thousands) (unaudited) | 2021 | 2020 | ||||||
| Cash flows (used in) provided by: | ||||||||
| Operating activities | $ | (2,301 | ) | $ | 8,665 | |||
| Investing activities | (974 | ) | (414 | ) | ||||
| Financing activities | (1,319 | ) | (2,504 | ) | ||||
| Effect of exchange rate changes on cash and cash equivalents | 39 | (45 | ) | |||||
| Net (decrease) increase in cash and cash equivalents | $ | (4,555 | ) | $ | 5,702 | |||
Operating Activities.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 bywere used in operating activities based on some these factors were $1.6 millionamounting to approximately ($2,301,000) and $2.3 million$8,665,000 for the six months ended January 31, 2011April 30, 2021 and 2010,2020, respectively.
Investing Activities.Activities
Our capital expenditures were $0.1 millionapproximately $72,000 and $0.6 million during$299,000 in the six months ended January 31, 2011April 30, 2021 and 2010,2020, 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.Activities
During the six months ended January 31, 2011,April 30, 2021 and 2020 we did not receive any financing from IDT Corporation. Duringrepaid repaid bank loans in the periods presented though the September 14, 2009 Spin-Off, IDT Corporation provided us with the required liquidity to fund our working capital requirementsamounts of $2,540,000 and investments for some of our businesses. We used any excess cash provided by our operations to repay IDT.$13,732,000, respectively. 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.
Changes in each of the six months ended January 31, 2011Trade Accounts Receivables and 2010.
Trade accounts receivable increased marginallydecreased to $3.0 millionapproximately $22,063,000 at January 31, 2011April 30, 2021 compared to $4.2 million$22,921,000 at JulyOctober 31, 2010.2020 principally due to changes in the accruals and collection of IDW Entertainment revenue, as well as the timing of receipts of payments of other receivable balances. The allowance for doubtful accounts as a percentage of gross trade accounts receivable marginally increasedwas 0.65% at April 30, 2021 compared to 25.0%0.13% at JanuaryOctober 31, 2011 compared from 18.2% at July 31, 2010.
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.
Other Sources and Uses of Resources
Where appropriate, makewe evaluate 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.
The COVID-19 pandemic has had a negative financial impact on our business with regard to pay(a) significant losses of revenues and profits at CTM due to the regular quarterly dividendssignificant decline of tourism in the amountUnited States and the closing of $0.06 per share, subjectBroadway shows,(b) the temporary closure of IDW Publishing’s comic book distributor due to confirmation by our management that there is sufficient surplus asCOVID-19 disruptions, and (c) production delays of IDWE’s television show Wynonna Earp. Its production schedule has been delayed which was a direct result of the proposed future payment dates and other circumstances existing atCOVID-19 pandemic that has affected virtually the relevant times.
In the fourth quarter of fiscal 2020 we paid “pull down” costs pursuant to a previously announced, multi-year agreement with Cineflix related to international sales of Wynonna Earp. Specifically, under this agreement, IDWE purchased the distribution rights to seasons one and priortwo of Wynonna Earp from the current licensor (Netflix) and has agreed to our separation from IDT, funding from IDT Corporation. The conversion of our balance duetransfer those rights 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,Cineflix. Cineflix will be sufficientthe international distributor of all four seasons of Wynonna Earp. Due to meet our currently anticipated working capitalchanges in competition as well as the COVID-19 pandemic, the Cineflix deal is not expected to contribute as much as originally expected to IDW’s revenue 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 anyin fiscal years 2021 and 2022 as originally anticipated at the inception of our segments for at least the next twelve months. In addition, wedeal in 2019.
We anticipate that our expected cash balances,inflows from operations during the next twelve months together with our working capital, including the balance of cash and cash equivalents held as well as cash flowsApril 30, 2021 and proceeds from our operations,the private placement closed March 9, 2020, will be sufficient to meetsustain our long-term liquidity needs. The foregoingnext year of operations. However, the Company is based oncontemplating 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 difficultraise in June 2021 as outlined in the current worldwide economic situation and overall decline in consumer demand. FailureRegistration Statement.
The Company plans to generate sufficient revenues and operating income could have a material adverse effect on our results of operations, financial condition and cash flows.
We do not have any “off-balance sheet arrangements,”agreements at this time to potentially acquire other entities or businesses. The foregoing represents our current intentions based upon our present plans and business conditions to use and allocate the net proceeds of this offering. However, the nature, amounts and timing of our actual expenditures may vary significantly depending on numerous factors. As a result, our management has and will retain broad discretion over the allocation of the net proceeds from this offering. We may find it necessary or advisable to use the net proceeds from this offering for other purposes, and we will have broad discretion in the application of net proceeds from this offering. To the extent that the net proceeds we receive from this offering are not immediately used for the above purposes, we intend to invest our net proceeds in short-term, interest-bearing bank deposits or debt instruments.
PPP Funds
On April 2, 2021, IDW Media Holdings, Inc. (the “Company”) received loan proceeds of $1,195,680 (the “PPP Loan”) from Bank of America, N.A. pursuant to the Paycheck Protection Program (the “PPP”) under Division A, Title I of the CARES Act, as definedamended. The PPP Loan, which was in relevant SEC regulationsthe form of a Note dated April 1, 2021 issued by the Company, matures on April 1, 2026 and bears interest at a rate of 1% per annum, payable monthly commencing on November 2, 2021. The Note may be prepaid by the Company at any time prior to maturity with no prepayment penalties. Funds from the PPP Loan may only be used for payroll costs, costs used to continue group health care benefits, mortgage payments, rent, utilities, and interest on certain other debt obligations. The Company intends to use the entire PPP Loan amount for qualifying expenses. Under the terms of the PPP, certain amounts of the PPP Loan may be forgiven if they are used for qualifying expenses as described in the CARES Act.
On April 27, 2020, IDWMH. (inclusive of IDWP and IDWE) received loan proceeds of $1,195,679 from Bank of America, N.A. pursuant to the PPP under Division A, Title I of the CARES Act, which was enacted March 27, 2020. The IDWMH PPP Loan, which was in the form of a Note dated April 15, 2020 issued by the Company, matures on April 15, 2022 and bears interest at a rate of 1% per annum, payable monthly commencing on November 24, 2020. The Note may be prepaid by the Company at any time prior to maturity with no prepayment penalties, and under the terms of the loan, payments can be deferred for six months. Funds from the IDWMH PPP Loan may be used primarily for payroll costs and costs used to continue group health care benefits, and, up to a limited extent, on mortgage payments, rent, utilities, interest and other expenses as described in the CARES Act. Under the terms of the PPP, certain amounts of the IDWMH PPP Loans may be forgiven if they are used for those qualifying expenses. The Company used the entire IDWMH PPP Loan amount for those qualifying expenses.
IDWE
The two capital raises described assisted IDWE in achieving its long-term strategic plans.
The Company’s 2020 private placement of shares of Class B Common Stock at $6.00 per share, pursuant to which the Company issued 2,051,002 shares of Class B Common Stock for gross proceeds of approximately $12,300,000 inclusive of $4.0 million debt-to-equity conversion by the Company’s Chairman of the Board of Directors and former Chief Executive Officer, Howard S. Jonas to pay down the remaining down bridge loan.
Total proceeds of the issuance of Class B Common Stock in the amount of $23,605,000 from the Company’s 2019 three rounds of offerings, in connection with the Company’s private placements, provided a portion of the funding for IDWE’s operations, in addition to the Company’s other working capital needs. $8,000,000 was used to partially payback the bridge loan.
Dividends
In light of the current growth initiatives of the Company, particularly the television property development of IDWE, the Board of Directors determined to continue the suspension of the payment of cash dividends. Projects that have already been approved and commenced are reasonably likelyplacing demands on the Company’s resources, and management and the Board determined that it was in the best interests of the stockholders to have a current orutilize available cash resources for investment in these promising and exciting growth opportunities. This position may continue depending on the timing of projects, the cash generation of the Company’s operations and any financing that the Company may consummate. Decisions as to the payment of dividends in future effectperiods will depend on ourthe financial condition,position, results of operations, liquidity, capital expenditures or capital resources.
There have been no significant changes in our market risk exposures from those described in the Registration Statement.
Foreign Currency Risk
Beginning in 2018, IDWE is the obligor on Canadian loans. There is a foreign currency exchange risk, as the value of liabilities denominated in CAD will fluctuate due to provide the information required by this item.
| Foreign Exchange Balances Held in CAD ( in thousands) | April 30, 2021 | October 31, 2020 | ||||||
| Cash and cash equivalents | $ | 876 | $ | 937 | ||||
| Accounts receivable | 20,021 | 16,355 | ||||||
| Bank loans | 14,329 | 18,917 | ||||||
| Total | $ | 35,226 | $ | 36,209 | ||||
Evaluation of Disclosure Controls and Procedures. Based on their evaluation as of January 31, 2011, our 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) underof the Securities Exchange Act of 1934, as amended), as of the end of the period covered by this Quarterly Report on Form 10-Q. Based on this evaluation, our Chief Executive Officer and Chief Financial Officer have 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.as of April 30, 2021.
Changes in Internal Control over Financial Reporting. There were no changes in our internal control over financial reporting during the six monthsquarter ended January 31, 2011April 30, 2021 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.
| Item 1A. | Risk Factors |
There are no material changes from the risk factors previously disclosedincluded in Item 1A to Part I of our Annual ReportRegistration Statement on Form 10-K for the year ended July 31, 2010.
| Item 4. | Mine Safety Disclosures |
None
| Item 5. | Other Information |
None
| Item 6. | Exhibits |
| Exhibit Number | Description | |
| 31.1* | Certification of Chief Executive Officer pursuant to 17 CFR 240.13a-14(a), as adopted pursuant to §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 of the Sarbanes-Oxley Act of 2002. | |
| 32.1* | Certification of Chief Executive Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to §906 of the Sarbanes-Oxley Act of 2002. | |
| 32.2* | Certification of Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to §906 of the Sarbanes-Oxley Act of 2002. | |
| 101.INS* | XBRL Instance Document | |
| 101.SCH* | XBRL Taxonomy Schema Document | |
| 101.CAL* | XBRL Taxonomy Calculation Linkbase Document | |
| 101.DEF* | XBRL Taxonomy Definition Linkbase Document | |
| 101.LAB* | XBRL Taxonomy Label Linkbase Document | |
| 101.PRE* | XBRL Taxonomy Presentation Linkbase Document |
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.
Date: June 14, 2021
IDW Media Holdings, Inc.
| By: | /s/ Ezra Y. Rosensaft | ||
Chief Executive Officer | |||
| By: | /s/ | ||
Karina M. Fedasz Chief | |||
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