UNITED STATES
FORM 10-Q
☒QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
FOR THE QUARTERLY PERIOD ENDED APRILApril 30, 20112022
or
☐TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
IDW MEDIA HOLDINGS, INC.
(Exact Namename of Registrantregistrant as Specifiedspecified in its Charter)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 | ||
| Class B common stock, $0.01 par value; authorized shares | IDW | NYSE American |
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 June 14, 2011,2022 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
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements (Unaudited)
IDW MEDIA HOLDINGS, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
| (in thousands, except per share data) | April 30, (unaudited) | October 31, | ||||||
| Assets | ||||||||
| Current assets: | ||||||||
| Cash and cash equivalents | $ | 13,681 | $ | 17,532 | ||||
| Trade accounts receivable, net | 4,758 | 5,431 | ||||||
| Inventory | 3,291 | 3,090 | ||||||
| Prepaid expenses | 2,226 | 2,270 | ||||||
| Total current assets | 23,956 | 28,323 | ||||||
| Non-current assets | ||||||||
| Property and equipment, net | 447 | 347 | ||||||
| Right-of-use assets, net | 58 | 302 | ||||||
| Intangible assets, net | 831 | 679 | ||||||
| Goodwill | 199 | 199 | ||||||
| Television costs, net | 1,538 | 1,487 | ||||||
| Other assets | 84 | 61 | ||||||
| Total assets | $ | 27,113 | $ | 31,398 | ||||
| Liabilities and Stockholders’ Equity | ||||||||
| Current liabilities: | ||||||||
| Trade accounts payable | $ | 1,565 | $ | 1,141 | ||||
| Accrued expenses | 3,315 | 3,786 | ||||||
| Production costs payable | 72 | 2,010 | ||||||
| Deferred revenue | 8 | 2,045 | ||||||
| Operating lease obligations – current portion | 47 | 348 | ||||||
| Total current liabilities | 5,007 | 9,330 | ||||||
| Non-current liabilities | ||||||||
| Operating lease obligations – long term portion | 13 | 20 | ||||||
| Total liabilities | $ | 5,020 | $ | 9,350 | ||||
| Stockholders’ equity (see note 3): | ||||||||
| Preferred stock, $.01 par value; authorized shares – 500; no shares issued at April 30, 2022 and October 31, 2021 | - | - | ||||||
| Class B common stock, $0.01 par value; authorized shares – 20,000; 14,053 and 12,938 shares issued and 13,534 and 12,419 shares outstanding at April 30, 2022 and October 31, 2021, respectively | 134 | 123 | ||||||
| Class C common stock, $0.01 par value; authorized shares – 2,500; 545 shares issued and outstanding at April 30, 2022 and October 31, 2021 | 5 | 5 | ||||||
| Additional paid-in capital | 104,117 | 103,819 | ||||||
| Accumulated deficit | (80,967 | ) | (80,703 | ) | ||||
| Treasury stock, at cost, consisting of 519 shares of Class B common stock at April 30, 2022 and October 31, 2021 | (1,196 | ) | (1,196 | ) | ||||
| Total stockholders’ equity | 22,093 | 22,048 | ||||||
| Total liabilities and stockholders’ equity | $ | 27,113 | $ | 31,398 | ||||
| (in thousands) | April 30, 2011 | July 31, 2010 | ||||||
| (Unaudited) | (Note 1) | |||||||
| Assets | ||||||||
| Current assets: | ||||||||
| Cash and cash equivalents | $ | 5,681 | $ | 6,516 | ||||
| Short term investment | 1,033 | 1,030 | ||||||
| Trade accounts receivable, net of allowance for doubtful accounts of $708 and $778 at April 30, 2011 and July 31,2010, respectively | 3,290 | 3,496 | ||||||
| Inventory | 1,732 | 1,462 | ||||||
| Prepaid expenses | 856 | 965 | ||||||
| Note receivable – current portion | 225 | 321 | ||||||
| Total current assets | 12,817 | 13,790 | ||||||
| Property and equipment, net | 2,029 | 2,013 | ||||||
| Note receivable – non-current portion | 2,175 | 2,400 | ||||||
| Other assets | 231 | 198 | ||||||
| Total assets | $ | 17, 252 | $ | 18,401 | ||||
| Liabilities and equity | ||||||||
| Current liabilities: | ||||||||
| Trade accounts payable | $ | 1,026 | $ | 1,187 | ||||
| Accrued expenses | 1,423 | 1,539 | ||||||
| Deferred revenue | 1,549 | 2,035 | ||||||
| Due to IDT Corporation | 23 | 38 | ||||||
| Income tax payable | 426 | 770 | ||||||
| Capital lease obligations—current portion | 233 | 227 | ||||||
| Other current liabilities | 1,009 | 646 | ||||||
| Total current liabilities | 5,689 | 6,442 | ||||||
| Capital lease obligations—long-term portion | 348 | 286 | ||||||
| Total Liabilities | 6,037 | 6,728 | ||||||
| Commitments and contingencies | - | - | ||||||
| Stockholders’ Equity: | ||||||||
| CTM Media Holdings, Inc. stockholders’ equity : | ||||||||
| Preferred stock, $0.01 par value; authorized shares—500 and 10,000 shares April 30, 2011 and July 31, 2010, respectively; no shares issued | - | - | ||||||
| Class A common stock, $0.01 par value; authorized shares—6,000 and 35,000 shares at April 30, 2011 and July 31, 2010, respectively; 1,285 shares issued and 1,106 shares outstanding at April 30, 2011 and July 31, 2010 | 13 | 13 | ||||||
| Class B common stock, $0.01 par value; authorized shares—12,000 and 65,000 shares at April 30, 2011 and July 31, 2010, respectively; 6,924 shares issued and 6,126 shares outstanding at April 30, 2011 and July 31, 2010 | 69 | 69 | ||||||
| Class C common stock, $0.01 par value; authorized shares—2,500 and 15,000 shares at April 30, 2011 and July 31, 2010, respectively; 1,091 shares issued and outstanding at April 30, 2011 and July 31, 2010 | 11 | 11 | ||||||
| Additional paid-in capital | 57,388 | 58,548 | ||||||
| Treasury Stock, at cost, consisting of 179 shares of shares of Class A and 797 shares of Class B at April 30, 2011 and July 31, 2010 | (1,070 | ) | (1,070 | ) | ||||
| Accumulated other comprehensive income | 191 | 117 | ||||||
| Accumulated deficit | (45,833 | ) | (46,235 | ) | ||||
| Total CTM Media Holdings, Inc. stockholders’ equity | 10,769 | 11,453 | ||||||
| Non-controlling interests | 446 | 220 | ||||||
| Total stockholders’ equity | 11,215 | 11,673 | ||||||
| Total liabilities and stockholders’ equity | $ | 17,252 | $ | 18,401 | ||||
See accompanying notes to condensed consolidated financial statements.
Three Months Ended April 30, | Nine Months Ended April 30, | |||||||||||||||
| (in thousands, except per share data) | 2011 | 2010 | 2011 | 2010 | ||||||||||||
| Revenues | $ | 6,791 | $ | 6,832 | 23,117 | $ | 21,431 | |||||||||
| Costs and expenses: | ||||||||||||||||
| Direct cost of revenues (exclusive of depreciation and amortization) | 3,446 | 3,605 | 10,919 | 10,587 | ||||||||||||
| Selling, general and administrative (i) | 3,650 | 3,651 | 11,250 | 10,368 | ||||||||||||
| Depreciation and amortization | 200 | 197 | 544 | 653 | ||||||||||||
| Bad debt | (15 | ) | 36 | 69 | 91 | |||||||||||
| Total costs and expenses | 7,281 | 7,489 | 22,782 | 21,699 | ||||||||||||
| (Loss) income from operations | (490 | ) | (657 | ) | 335 | (268 | ) | |||||||||
| Interest income (expense), net | 15 | (15 | ) | 43 | (73 | ) | ||||||||||
| Other income (expense), net | 3 | (156 | ) | 3 | (160 | ) | ||||||||||
| (Loss) income from continuing operations before income taxes | (472 | ) | (828 | ) | 381 | (501 | ) | |||||||||
| Benefit from (provision for) income taxes | 348 | 49 | 264 | (74 | ) | |||||||||||
| (Loss) income from continuing operations | (124 | ) | (779 | ) | 645 | (575 | ) | |||||||||
| Discontinued operations net of tax: (Note 2) | ||||||||||||||||
| Loss from discontinued operations | - | (316 | ) | - | (570 | ) | ||||||||||
| Net (loss) income | (124 | ) | (1,095 | ) | 645 | (1,145 | ) | |||||||||
| Less – net (loss) income attributable to non-controlling interests | 40 | (36) | 243 | 115 | ||||||||||||
| Net (loss) income attributable to CTM Media Holdings, Inc. | (164 | ) | $ | (1,059 | ) | 402 | $ | (1,260 | ) | |||||||
| Amounts Attributable to CTM Media Holdings, Inc. common stockholders: | ||||||||||||||||
| (Loss) income from continuing operations | (164 | ) | (743 | ) | 402 | (690 | ) | |||||||||
| Loss from discontinued operations | - | (316 | ) | - | (570 | ) | ||||||||||
| Net (loss) income attributable to CTM Media Holdings, Inc. | (164 | ) | $ | (1,059 | ) | 402 | $ | (1,260 | ) | |||||||
(Unaudited)
| Basic and diluted income (loss) per share attributable to CTM Media Holdings, Inc. common stockholders: | ||||||||||||||||
| Income (Loss) from continuing operations | $ | (0.02 | ) | $ | (0.13 | ) | $ | 0.05 | $ | (0.11 | ) | |||||
| Loss from discontinued operations | $ | - | $ | (0.05 | ) | $ | - | $ | (0.09 | ) | ||||||
| Net (loss) income | $ | (0.02 | ) | $ | (0.18 | ) | $ | 0.05 | $ | (0.20 | ) | |||||
| Weighted-average number of shares used in calculation of basic and diluted loss (income) per share: | 8,323 | 5,834 | 8,323 | 6,304 | ||||||||||||
| Dividend declared per common share: | $ | 0.06 | 0.25 | $ | 0.18 | 0.25 | ||||||||||
(i) Stock-based compensation included in selling, general and administrative expenses | 113 | 113 | 339 | 245 | ||||||||||||
| Three Months Ended | Six Months Ended | |||||||||||||||
| (in thousands, except per share data) | April 30, 2022 | April 30, 2021 | April 30, 2022 | April 30, 2021 | ||||||||||||
| Revenues | $ | 6,053 | $ | 10,140 | $ | 17,902 | $ | 18,552 | ||||||||
| Costs and expenses: | ||||||||||||||||
| Direct cost of revenues | 3,597 | 4,726 | 8,387 | 13,959 | ||||||||||||
| Selling, general and administrative | 4,600 | 4,921 | 9,591 | 9,160 | ||||||||||||
| Depreciation and amortization | 100 | 60 | 184 | 120 | ||||||||||||
| Total costs and expenses | 8,297 | 9,707 | 18,162 | 23,239 | ||||||||||||
| (Loss) income from operations | (2,244 | ) | 433 | (260 | ) | (4,687 | ) | |||||||||
| Interest income (expense), net | - | 156 | (10 | ) | 142 | |||||||||||
| Other(expense) income, net | (9 | ) | (12 | ) | 6 | (13 | ) | |||||||||
| Net (loss) income from continuing operations | (2,253 | ) | 577 | (264 | ) | (4,558 | ) | |||||||||
| Loss from discontinued operations, net | - | (159 | ) | - | (1,280 | ) | ||||||||||
| Gain on sale of discontinued operations | - | 2,123 | - | 2,123 | ||||||||||||
| Net gain on discontinued operations | - | 1,964 | - | 843 | ||||||||||||
| Net (loss) income | $ | (2,253 | ) | $ | 2,541 | $ | (264 | ) | $ | (3,715 | ) | |||||
| Basic and diluted (loss) income per share (note 2): | ||||||||||||||||
| Continuing operations | $ | (0.17 | ) | $ | 0.06 | $ | (0.02 | ) | $ | (0.45 | ) | |||||
| Discontinued operations, net | - | 0.20 | 0.08 | |||||||||||||
| Net (loss) income | $ | (0.17 | ) | $ | 0.25 | $ | (0.02 | ) | $ | (0.37 | ) | |||||
| Weighted-average number of shares used in the calculation of basic and diluted (loss) income per share: | 12,906 | 9,972 | 12,895 | 9,962 | ||||||||||||
See accompanying notes to condensed consolidated financial statements.
IDW MEDIA HOLDINGS, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWSCOMPREHENSIVE (LOSS) INCOME
(Unaudited)
| Three Months Ended | Six Months Ended | |||||||||||||||
| (in thousands) | April 30, 2022 | April 30, 2021 | April 30, 2022 | April 30, 2021 | ||||||||||||
| Net (loss) income | $ | (2,253 | ) | 2,541 | $ | (264 | ) | $ | (3,715 | ) | ||||||
| Foreign currency translation adjustments | - | 51 | - | 39 | ||||||||||||
| Sale of discontinued operations | - | 21 | - | 21 | ||||||||||||
| Total comprehensive (loss) income | $ | (2,253 | ) | 2,613 | $ | (264 | ) | $ | (3,655 | ) | ||||||
See accompanying notes to condensed consolidated financial statements
Nine months ended April 30, (in thousands) | 2011 | 2010 | ||||||
| Operating activities | ||||||||
| Net income (loss) | $ | 645 | $ | (1,145 | ) | |||
| Adjustments to reconcile net income (loss) to net cash provided by operating activities: | ||||||||
| Loss from discontinued operations | - | 570 | ||||||
| Depreciation and amortization | 544 | 653 | ||||||
| Provision for doubtful accounts receivable | 69 | 91 | ||||||
| Stock-based compensation | 339 | 245 | ||||||
| Change in assets and liabilities: | ||||||||
| Trade accounts receivable | 143 | 1,184 | ||||||
| Inventory, prepaid, and other assets | (193 | ) | 68 | |||||
| Trade accounts payable, accrued expenses, and other current liabilities | (215 | ) | 163 | |||||
| Deferred revenue | (486 | ) | 41 | |||||
| Net cash provided by operating activities | 846 | 1,870 | ||||||
| Investing activities: | ||||||||
| Capital expenditures | (260 | ) | (320 | ) | ||||
| Purchase of IDW non-controlling interests | - | (414 | ) | |||||
| Payments received on note for sale of assets | 300 | - | ||||||
| Net Cash provided by (used in) investing activities | 40 | (734 | ) | |||||
| Financing activities: | ||||||||
| Distributions to holders of non-controlling interests | (17 | ) | (435 | ) | ||||
| Funding provided by IDT Corporation, net | - | 2,372 | ||||||
| Repurchase of Class A and Class B common stock | - | (1,070 | ) | |||||
| Repayments of capital lease obligations | (205 | ) | (186 | ) | ||||
| Dividends paid | (1,499 | ) | (2,082 | ) | ||||
| Net cash used in financing activities | (1,721 | ) | (1,401 | ) | ||||
| Discontinued operations: | ||||||||
| Net cash used in operating activities | - | (412 | ) | |||||
| Net cash used in investing activities | - | (3 | ) | |||||
| Net cash used in discontinued operations | - | (415 | ) | |||||
| Net decrease in cash and cash equivalents | (835 | ) | (680 | ) | ||||
| Cash and cash equivalents at beginning of period | 6,516 | 6,480 | ||||||
| Cash and cash equivalents at end of period | $ | 5,681 | $ | 5,800 | ||||
| Supplemental schedule of non cash investing and financing activities | ||||||||
| Cash paid for interest | $ | 21 | $ | 18 | ||||
| Purchases of property and equipment through capital lease obligations | $ | 267 | $ | - | ||||
IDW Media Holdings, Inc.
Condensed Consolidated Statements of exchange rate changes on cashStockholders’ Equity
Six Months Ended April 30, 2022 and cash equivalents is not material.2021
(in thousands)
(Unaudited)
| Class B Common Stock | Class C Common Stock | Accumulated Other | Treasury Stock, at Cost | Total | ||||||||||||||||||||||||||||||||||||
| (in thousands) | Number of Shares | Amount | Number of Shares | Amount | Additional Paid In Capital | Comprehensive Loss | Accumulated Deficit | Number of Shares | Amount | Stockholders’ Equity | ||||||||||||||||||||||||||||||
| Balance October 31, 2021 | 12,938 | $ | 123 | 545 | $ | 5 | $ | 103,819 | $ | - | $ | (80,703 | ) | 519 | $ | (1,196 | ) | $ | 22,048 | |||||||||||||||||||||
| Stock based compensation | 309 | 309 | ||||||||||||||||||||||||||||||||||||||
| Issuance of common stock | 1,115 | 11 | - | - | (11 | ) | - | - | - | - | - | |||||||||||||||||||||||||||||
| Comprehensive loss | ||||||||||||||||||||||||||||||||||||||||
| Net Income | - | - | - | - | - | - | (264 | ) | - | - | (264 | ) | ||||||||||||||||||||||||||||
| Total comprehensive loss | - | - | - | - | - | - | (264 | ) | - | - | (264 | ) | ||||||||||||||||||||||||||||
| Balance April 30, 2022 | 14,053 | $ | 134 | 545 | $ | 5 | $ | 104,117 | $ | - | $ | (80,967 | ) | 519 | $ | (1,196 | ) | $ | 22,093 | |||||||||||||||||||||
| Balance October 31, 2020 | 9,987 | $ | 93 | 545 | $ | 5 | $ | 111,379 | $ | (60 | ) | $ | (91,996 | ) | 519 | $ | (1,196 | ) | $ | 18,225 | ||||||||||||||||||||
| Stock based compensation | - | - | - | - | 159 | - | - | - | - | 159 | ||||||||||||||||||||||||||||||
| Issuance of common stock | 37 | 1 | - | - | 24 | - | - | - | - | 25 | ||||||||||||||||||||||||||||||
| 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 | |||||||||||||||||||||
See accompanying notes to condensed consolidated financial statements.
IDW Media Holdings, Inc.
Condensed Consolidated Statements of Stockholders’ Equity
Three Months Ended April 30, 2022 and 2021
(in thousands)
(Unaudited)
| Class B Common Stock | Class C Common Stock | Accumulated Other | Treasury Stock, at Cost | Total | ||||||||||||||||||||||||||||||||||||
| (in thousands) | Number of Shares | Amount | Number of Shares | Amount | Additional Paid In Capital | Comprehensive Loss | Accumulated Deficit | Number of Shares | Amount | Stockholders’ Equity | ||||||||||||||||||||||||||||||
| Balance January 31, 2021 | 12,950 | $ | 123 | 545 | $ | 5 | $ | 103,963 | $ | - | $ | (78,714 | ) | 519 | $ | (1,196 | ) | $ | 24,181 | |||||||||||||||||||||
| Stock based compensation | - | - | - | - | 165 | - | - | - | - | 165 | ||||||||||||||||||||||||||||||
| Issuance of common stock | 1,103 | 11 | - | - | (11 | ) | - | - | - | - | - | |||||||||||||||||||||||||||||
| Comprehensive loss | ||||||||||||||||||||||||||||||||||||||||
| Net Income | - | - | - | - | - | - | (2,253 | ) | - | - | (2,253 | ) | ||||||||||||||||||||||||||||
| Total comprehensive loss | - | - | - | - | - | - | (2,253 | ) | - | - | (2,253 | ) | ||||||||||||||||||||||||||||
| Balance April 30, 2022 | 14,053 | $ | 134 | 545 | $ | 5 | $ | 104,117 | $ | - | $ | (80,967 | ) | 519 | $ | (1,196 | ) | $ | 22,093 | |||||||||||||||||||||
| Balance January 31, 2021 | 10,008 | $ | 94 | 545 | $ | 5 | $ | 111,467 | $ | (72 | ) | $ | (98,252 | ) | 519 | $ | (1,196 | ) | $ | 12,046 | ||||||||||||||||||||
| Stock based compensation | - | - | - | - | 95 | - | - | - | - | 95 | ||||||||||||||||||||||||||||||
| Issuance of common stock | 16 | - | - | - | - | - | - | - | - | - | ||||||||||||||||||||||||||||||
| Comprehensive loss | ||||||||||||||||||||||||||||||||||||||||
| Sale of discontinued operations | - | - | - | - | (17,295 | ) | 21 | 17,274 | - | - | - | |||||||||||||||||||||||||||||
| Net Income | - | - | - | - | - | - | 2,541 | - | - | 2,541 | ||||||||||||||||||||||||||||||
| Other comprehensive income | - | - | - | - | - | 51 | - | - | - | 51 | ||||||||||||||||||||||||||||||
| Total comprehensive income | - | - | - | - | - | 72 | 2,541 | - | - | 2,613 | ||||||||||||||||||||||||||||||
| Balance April 30, 2021 | 10,024 | $ | 94 | 545 | $ | 5 | $ | 94,267 | $ | - | $ | (78,437 | ) | 519 | $ | (1,196 | ) | $ | 14,733 | |||||||||||||||||||||
See accompanying notes to condensed consolidated financial statements.
IDW MEDIA HOLDINGS, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
| Six Months Ended | ||||||||
| (in thousands) | April 30, 2022 | April 30, 2021 | ||||||
| Operating activities: | ||||||||
| Net loss | $ | (264 | ) | $ | (3,715 | ) | ||
| Adjustments to reconcile net loss to net cash used in operating activities: | ||||||||
| Depreciation and amortization | 184 | 307 | ||||||
| Amortization of finance leases | - | 108 | ||||||
| Bad debt recovery | - | (97 | ) | |||||
| Stock based compensation | 309 | 159 | ||||||
| Amortization of right-of-use asset | 244 | 513 | ||||||
| Gain on extinguishment of PPP Loans | - | (68 | ) | |||||
| Gain on sale of discontinued operations | - | (2,123 | ) | |||||
| Changes in operating assets and liabilities: | ||||||||
| Trade accounts receivable | 673 | 847 | ||||||
| Inventory | (201 | ) | 88 | |||||
| Prepaid expenses and other assets | 21 | (589 | ) | |||||
| Television costs | (51 | ) | 1,656 | |||||
| Operating lease liability | (308 | ) | (269 | ) | ||||
| Trade accounts payable, accrued expenses, production costs payable and other current liabilities | (1,985 | ) | 1,239 | |||||
| Deferred revenue | (2,037 | ) | (260 | ) | ||||
| Gain on disposal of ROU assets | - | (97 | ) | |||||
| Net cash used in operating activities | (3,415 | ) | (2,301 | ) | ||||
| Investing activities: | ||||||||
| Disposal of discontinued operations | - | (902 | ) | |||||
| Capital expenditures | (436 | ) | (72 | ) | ||||
| Net cash used in investing activities | (436 | ) | (974 | ) | ||||
| Financing activities: | ||||||||
| Proceeds from issuance of common stock | - | 25 | ||||||
| Repayments of finance lease obligations | - | |||||||
| Proceeds from government loans | - | 1,196 | ||||||
| Repayments of bank loans | - | (2,540 | ) | |||||
| Net cash used in financing activities | - | (1,319 | ) | |||||
| Effect of exchange rate changes on cash and cash equivalents | - | 39 | ||||||
| Net decrease in cash and cash equivalents | (3,851 | ) | (4,555 | ) | ||||
| Cash and cash equivalents at beginning of period | 17,532 | 12,162 | ||||||
| Cash and cash equivalents at end of period | $ | 13,681 | $ | 7,607 | ||||
See accompanying notes to condensed consolidated financial statements.
IDW MEDIA HOLDINGS, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
Note 1—Basis of Presentation and Summary of Significant Accounting Policies
Overview
IDW Media Holdings, Inc. (“IDWMH”) together with its subsidiaries (collectively, the “Company”) is a diversified media company with operations in publishing and television entertainment. The terms “Company,” “we,” “us,” and “our” are used in this report to refer collectively to the parent company and the subsidiaries through which various businesses are conducted.
Basis of Presentation and Principles of Consolidation
The accompanying unaudited condensed consolidated financial statements of CTM Media Holdings, Inc. and its subsidiaries (the “Company”) have been prepared by management in accordance with generally accepted 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.information. Accordingly, they do not include all of the information and footnotes required by U.S. GAAP for complete financial statements. Certain information and footnote disclosures normally included in our annual consolidated financial statements prepared in accordance with U.S. GAAP have been condensed or omitted consistent with Article 8 of Regulation S-X. In the opinion of management, all adjustments (consisting principally of normal recurring accruals) considered necessary for a fair presentation have been included. OperatingInterim results for the three and nine months ended April 30, 2011of operations are not necessarily indicative of the results that may be expected for the fiscalfull year ending July 31, 2011. The balance sheet at July 31, 2010 has been derived from the Company’s auditedor for any future period. These financial statements at that date but does not include all ofshould be read in conjunction with the information and footnotes required by U.S. GAAP for complete financial statements. For further information, please refer to theannual consolidated financial statements and footnotesnotes thereto also included in the Company’sour Annual Report on Form 10-K for the fiscal year ended JulyOctober 31, 2010, as filed with2021. The condensed consolidated financial statements include the U.S. Securitiesaccounts of the Company and Exchange Commission (the “SEC”).its wholly-owned subsidiaries. All significant intercompany accounts and transactions have been eliminated in consolidation. All amounts in these condensed consolidated financial statements and notes to the condensed consolidated financial statements are reflected on a consolidated basis for all periods presented.
The Company’s fiscal year ends on July 31.October 31st. Each reference below to a fiscal year refers to the fiscal year ending in the calendar year indicated (e.g., fiscal 20112021 refers to the fiscal year ending Julyended October 31, 2011)2021).
Use of Estimates
The preparation of the consolidated financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the amounts reported in the condensed consolidated financial statements and accompanying notes. Actual results may differ from those estimates.
In March 2020, the World Health Organization declared the outbreak of a novel coronavirus (COVID-19) as a pandemic, which continues to spread throughout the World. The Company is actively monitoring the COVID-19 pandemic, the restrictive measures imposed to combat its spread and their potential impact on each of our operating segments. While we believe that through the first two quarters of fiscal 2022, there has been significant improvement due to global and domestic vaccination efforts, there is uncertainty around the duration and ongoing impact, if any, of COVID-19 related to both known and unknown risks, including future quarantines, closures and other restrictions resulting from the outbreak, and our operations and our customers and partners may continue to be impacted. The Company has considered information available to it as of the date of issuance of these condensed consolidated financial statements and is not aware of any specific events or circumstances that would require an update to its estimates or judgements, or an adjustment to the carrying value of its assets or liabilities. The accounting estimates and other matters assessed include, but were not limited to, goodwill and other long-lived assets, and revenue recognition. These estimates may change as new events occur and additional information becomes available. Actual results could differ materially from these estimates.
IDW MEDIA HOLDINGS, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
Segment Information
Financial Accounting Standards Board (“FASB”) Accounting Standards Codification 280 (“ASC 280”), Segment Reporting, establishes standards for reporting information about operating segments. Operating segments are defined as components of an enterprise about which separate financial information is available that is evaluated regularly by the chief operating decision maker, or decision-making group, in deciding how to allocate resources and in assessing performance.
The Company’s chief operating decision maker is the Chief Executive Officer, who reviews the financial performance and the results of operations of the segments prepared in accordance with U.S. GAAP when making decisions about allocating resources and assessing performance of the Company (see Note 5).
Our principal business consists of the following principal businesses:segments:
IDWP Publishing (“ |
| ii. | IDW Entertainment (“IDWE”) acts as a production company and |
Prior to February 15, 2021, we also owned CTM Media Group (CTM), |
Trade Accounts Receivable, Net
Trade accounts receivables are recorded at the fiscal year 2010.
Three Months Ended April 30, | Nine Months Ended April 30, | |||||||||||||||
| 2011 | 2010 | 2011 | 2010 | |||||||||||||
| Revenue | $ | - | $ | 56 | $ | - | $ | 407 | ||||||||
| Loss before income taxes and net loss | $ | - | $ | (316 | ) | $ | - | $ | (570 | ) | ||||||
Television Costs
We expense television production, participation and residual costs over the applicable product life cycle based upon the ratio of the current period’s revenues to the estimated remaining total revenues (Ultimate Revenues) for each production. If our estimate of Ultimate Revenues decreases, amortization of film and television costs may be accelerated. Conversely, if our estimate of Ultimate Revenues increases, film and television cost amortization may be slowed. For television series, Ultimate Revenues include revenues that are expected to be earned within ten years from delivery of the first episode, or if still in production, five years from delivery of the most recent episode. IDWE capitalized cost of production and amortized it over the applicable product life cycle based upon the ratio of the current period’s revenues to the estimated remaining total Ultimate Revenues for each production. Advertising, marketing, and general and administrative costs are expensed as incurred.
Every quarter, the Company prepares analyses to support its content amortization expense. Critical assumptions used in determining content amortization include: (i) determining the grouping of contents (ii) the application of an ultimate revenue forecast model based on the contracts of televisions, (iii) gathering the schedules of delivered television episodes from the relative customers, (iv) calculating current period amortization, (v) assessing the accuracy of the Company’s forecasts. The Company continually reviews its estimates and contracts and revises its assumptions if necessary. Any material adjustments from the Company’s review of the amortization are applied prospectively in the period of the change for assets.
IDW MEDIA HOLDINGS, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
With respect to television series or other television productions intended for broadcast, the most sensitive factors affecting estimates of Ultimate Revenues are program ratings and the strength of the advertising market. Television development costs for projects that have been abandoned or have not been set for production within three years are generally written off in the relevant period.
Television costs are stated at the lower of cost less accumulated amortization or fair value. The Company evaluates impairment by the fair value of television costs at the individual level by considering expected future revenue generation, when an event or change in circumstances indicates a change in the expected revenue of the television costs or that the fair value of a film or film group may be less than unamortized costs.
IDWE regularly enters into agreements for the production of its television shows. The agreements provide for the rights and obligations related to the agreement including timing, delivery and payments. IDWE capitalizes the resulting production costs under the agreements in production cost inventory as payments are made or when the products or services are delivered. Amortization of television costs during the three months ended April 30, 2022 and 2021 were $0 and $1,385,0000, respectively. Amortization of television costs during the six months ended April 30, 2022 and 2021 were $999,000 and $5,341,0000, respectively.
Variable Interest Entities
The Company, through its subsidiary IDWE has arrangements with seven special-purpose entities (“SPEs”) Some SPEs were formed for the sole purpose of providing production services of a television pilot and series in Canada, and other SPEs were formed for production and writing purposes. The SPEs are independently owned companies that are effectively controlled by IDWE and are parties to the related bank production financing arrangements. The Company has determined that SPEs are variable interest entities (“VIEs”) and that the Company is the primary beneficiary of the SPEs activities and was the obligor on the SPEs’ debt. All financial activity of the SPEs has been included in IDWE’s financial statements, which are part of these consolidated financial statements. IDWE is not obligated to provide any support to the VIE’s and therefore, potential losses are not foreseen. The SPEs have finished all of the productions and these shows have been delivered. The outstanding loans have been paid off. The carrying amounts and classification of the VIEs’ assets are presented below:
| (in thousands) | April 30, 2022 | October 31, 2021 | ||||||
| Cash and cash equivalents | $ | 75 | $ | 78 | ||||
Revenue Recognition
The Company applies the five-step approach as described in ASC 606, Revenue from Contracts with Customers, which consists of the following: (i) identifying the contract with a customer, (ii) identifying the performance obligations in the contract, (iii) determining the transaction price, (iv) allocating the transaction price to the performance obligations in the contract and (v) recognizing revenue when (or as) the entity satisfies a performance obligation.
IDWP generates revenue primarily from the sale and licensing of comic books, graphic novels, digital content, and games through IDWP’s imprints IDW Publishing, IDW Games, Top Shelf, and Artist’s Editions. Revenue from the direct sale of comic books, graphic novels and games is recognized, net of an allowance for estimated sales returns, at the time of shipment of its graphic novels, comic books and games by IDWP’s distributors to its customers. 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.
IDWE generates revenue primarily from the licensing and distribution of content across various platforms and formats to audiences globally including television series and films. 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.
IDW MEDIA HOLDINGS, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
IDWE enters into production agreements which provide for the rights and obligations related to the agreement including timing, delivery and payments. In certain productions in which IDWE is the distributor and IDWE has the obligation to pay artist, director and writer guilds for residuals for the creative writers of content. In addition, IDWE has the right to receive participation rights recoupment based on viewership of the cumulative production. The Company is unable to make an estimate as the recoupment is based on future viewership and therefore revenue will be recognized at a future date once the amount is known.
IDWE’s production activities included some of 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 SPEs 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. There are possible additional tax credits the Company may be eligible to receive, however due to the uncertainty of the receipt, the Company has not accrued for such credits.
The timing of the Company’s revenue recognition may differ from the timing of payment by its customers. A receivable is recorded when revenue is recognized prior to payment and the Company has an unconditional right to payment. Alternatively, when payment precedes the satisfaction of performance obligations, the Company records a contract liability on the balance sheets within deferred revenue until the performance obligations are satisfied.
In the ordinary course of business, the Company’s reportable segments enter into transactions with one another. The most common types of intersegment transactions include IDWE obtaining rights to produce television series based on content created by IDWP. All intersegment transactions are recorded into intercompany receivables or payables and therefore no revenue or inventory eliminations are required.
Revenue Recognition When Right of Return Exists
IDWP offers its book market distributors, a right of return with no expiration date in accordance with general industry practices. These distributors then offer this same right of return to their book market retail customers. 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. As of April 30, 2022 and October 31, 2021, the Company’s estimated returns were $116,000 and $127,000, respectively.
Direct Cost of Revenues
Direct cost of revenues excludes depreciation and non-production cost amortization expense. Direct cost of revenues for IDWP consists primarily of printing expenses and costs of artist and writers. Direct cost of revenues for IDWE consists primarily of the amortization of production costs that were capitalized during the production of the television episodes, accrued third party participation, and distribution fees directly related to revenue.
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.
Concentration Risks
Financial instruments that potentially subject the Company to concentration of credit risk consist principally of cash, cash equivalents, and trade accounts receivable. The Company holds cash and cash equivalents at major financial institutions, which often exceed the Federal Deposit Insurance Corporation’s (“FDIC”) insurance limits. Historically, the Company has not experienced any losses due to such concentration of credit risk.
IDW MEDIA HOLDINGS, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
IDWP has two significant customers Penguin Random House Publisher Services (“PRHPS”) and Diamond Comic Distributors, Inc. (“Diamond”), that pose a concentration risk.
Revenues from PRHPS, IDWP’s non-direct market distributor, represented 40.5% and 23.1% of the total condensed consolidated revenue for the three months ended April 30, 2022 and 2021, respectively, and 28.0% and 25.4% of the total condensed consolidated revenues for the six months ended April 30, 2022 and 2021, respectively. The receivable balances from PRHPS represented 45.4% and 52.0% of the total condensed consolidated receivables at April 30, 2022 and October 31, 2021, respectively. On June 1, 2022, PRHPS replaced Diamond as IDWP’s distributor to the direct market.
Revenues from Diamond, IDWP’s direct market distributor, represented 38.5% and 25.7% of the total condensed consolidated revenue for the three months ended April 30, 2022, and 2021, respectively, and 23.0% and 26.5% of the total condensed consolidated revenues for the six months ended April 30, 2022 and 2021, respectively. The receivable balances from Diamond represented 28.5% and 20.0% of the total condensed consolidated receivables at April 30, 2022 and October 31, 2021, respectively.
IDWE has two significant customers, Netflix and NBC Universal/SyFy, that pose a concentration risk.
Revenues from Netflix, a leading streaming video subscription service, represented 0.0% and 0.0% of condensed consolidated revenue for the three months ended April 30, 2022 and 2021, respectively, and 23.5% and 0.0% of the total condensed consolidated revenues for the six months ended April 30, 2022 and 2021, respectively.
Revenues from NBC Universal/SyFy, a major television network, represented 0.0% and 4.9% of condensed consolidated revenue for the three months ended April 30, 2022 and 2021, respectively, and 0.0% and 16.0% of the total condensed consolidated revenues for the six months ended April 30, 2022 and 2021, respectively.
Discontinued Operations
CTM met the criteria for discontinued operations and has been presented as such in the condensed consolidated financial statements. In accordance with ASU 2014-08, “Reporting of Discontinued Operations and Disclosures of Disposals of Components of an Entity,” a disposal is categorized as a discontinued operation if the disposal group is a component of an entity or group of components that meets the held for sale criteria, is disposed of by sale, or is disposed of other than by sale, and represents a strategic shift that has or will have a major effect on an entity’s operations and financial results.
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 Condensed Consolidated 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, liabilities, and cash flows are no longer reflected on the condensed consolidated 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. CTM’s depreciation, amortization, capital expenditures and significant noncash operating and investing activities for the discontinued operation are presented separately.
Reclassification of prior year presentation
Certain prior year amounts have been reclassified for consistency with the current year presentation. These reclassifications have not resulted in impacts to net loss. Stock options have been included with stock-based compensation on the Condensed Consolidated Statements of Stockholders’ Equity and Condensed Consolidated Statement of Cash Flows.
Revision of previously issued consolidated financial statements (in thousands)
During the quarter ended April 30, 2022, the Company identified errors that caused an understatement of previously reported current liabilities and accumulated deficit. Specifically, the error related to the lack of accrual for certain actor residuals related to Wynonna Earp incurred in 2016 and 2017. The correction of these errors increased accrued expenses and accumulated deficit each by $589 as of October 31, 2021. This error had no impact on net income or net cash provided by operating activities for the year ended October 31, 2021.
IDW MEDIA HOLDINGS, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
In accordance with Staff Accounting Bulletin (“SAB”) No. 99, Materiality, and SAB No. 108, Considering the Effects of Prior Year Misstatements when Quantifying Misstatements in Current Year Financial Statements, the Company evaluated the errors and determined that the impact was not material to any of our previously issued financial statements.
The following table presents a summary of the impact by financial statement line item of the corrections as of October 31, 2021:
| As of October 31, 2021 ( in thousands) | ||||||||||||
| Consolidated Balance Sheet | As Previously Reported | Adjustment | As Revised | |||||||||
| Accrued expenses | $ | 3,197 | $ | 589 | $ | 3,786 | ||||||
| Total current liabilities | $ | 8,741 | $ | 589 | $ | 9,330 | ||||||
| Total liabilities | $ | 8,761 | $ | 589 | $ | 9,350 | ||||||
| Accumulated deficit | $ | (80,114 | ) | $ | (589 | ) | $ | (80,703 | ) | |||
| Total stockholders’ equity | $ | 22,637 | $ | (589 | ) | $ | 22,048 | |||||
Recently Issued Accounting Pronouncements Adopted
In March 2019, the FASB issued Accounting Standard Update (“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 license agreement within the scope of Subtopic 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 applied its provisions prospectively. In connection with this adoption the Company has evaluated this guidance and determined that were impairments (see Note 3—11) from substantively abandoned television costs which materially impacted the consolidated financial statements for the year ended October 31, 2021. These costs were recorded in direct cost of revenues.
In December 2019, the FASB issued ASC Update No. 2019-12, Income Taxes (Topic 740): Simplifying the Accounting for Income Taxes. The purpose of Update No. 2019-12 is to continue the FASB’s Simplification Initiative to reduce complexity in accounting standards. The amendments in Update No. 2019-12 simplify the accounting for income taxes by removing certain exceptions related to the incremental approach for intra-period tax allocation, the requirement to recognize or derecognize deferred tax liabilities related to equity method investments that are also foreign subsidiaries, and the methodology for calculating income taxes in an interim period. The Company adopted the ASU on November 1, 2021, and adoption did not materially affect our condensed consolidated financial statements.
Recently Issued Accounting Standard Not Yet Adopted
In June 2016, the FASB issued ASU No. 2016-13, Financial Instruments—Credit Losses (Topic 326), 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 new 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 current 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 disclose 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. The Company will adopt the new standard on November 1, 2023. The Company is evaluating the impact that the new standard will have on our condensed consolidated financial statements.
In January 2017, the FASB issued ASU No. 2017-04, Intangibles—Goodwill and Other (Topic 350): Simplifying the Test for Goodwill Impairment, 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 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 the fiscal year beginning November 1, 2023. The Company does not believe that the adoption of this new accounting guidance will have a material impact on its condensed consolidated financial statements.
IDW MEDIA HOLDINGS, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
Note 2—Earnings Per Share
Basic (loss) earnings per share is computed by dividing net (loss) 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(loss earnings) per share is computed in the same manner as basic earnings(loss) income per share except that the number of shares is increased to include non-vested restricted stockadditional shares that would have been outstanding had the potentially dilutive shares been issued, and reduced by the number of shares the Company could have repurchased with the proceeds from issuance of potentially dilutive shares using the treasury stock method, unless the effect of such increase iswould be anti-dilutive. In calculatingThe Company excluded 1,166,803 and 46,999, shares of unvested restricted Class B common stock, options to purchase 972,626 and 302,737 shares of Class B common stock, and warrants to purchase 187,579 and 187,579 shares of Class B common stock from the weighted average shares usedcalculation of diluted loss per share for calculatingthe three and six months ended April 30, 2022 and 2021, respectively, as the effect would have been anti-dilutive. Therefore, basic and diluted (loss) earnings per share unvested restricted stocks issued byare the Company to its foundersame for the six months ended April 30, 2022 and chairman were treated as if they were fully diluted as these2021.
Note 3—Equity
On July 14, 2021, the number of authorized shares carry voting rights and are entitled to dividends and enjoy all other rights and privileges as the other shares.
Nine Months Ended April 30, 2011 | ||||||||||||
| Attributable to the Company | Non-controlling Interests | Total | ||||||||||
| (in thousands) | ||||||||||||
| Balance, July 31, 2010 | $ | 11,453 | $ | 220 | $ | 11,673 | ||||||
| Stock based compensation | 339 | - | 339 | |||||||||
| Cash distributions | - | (17 | ) | (17 | ) | |||||||
| Cash dividends | (1,499 | ) | - | (1,499 | ) | |||||||
| Comprehensive income: | ||||||||||||
| Net income | 402 | 243 | 645 | |||||||||
| Other comprehensive income | 74 | - | 74 | |||||||||
| Comprehensive income | 476 | 243 | 719 | |||||||||
| Balance, April 30, 2011 | $ | 10,769 | $ | 446 | $ | 11,215 | ||||||
Voting Privileges and Protective Features
Each holder of outstanding shares of Class B common stock is entitled to cast the number of votes equal to one tenth of the whole shares of Class B common stock held by such holder. Each holder of outstanding shares of Class C common stock is entitled to cast the number of votes equal to three times the whole shares of Class C common stock held by such holder. Each series of preferred stock, if any are designated and issued, will have such number of shares, designations, preferences, voting powers, qualifications and special or relative rights or privileges as shall be determined by our Board of Directors, which may include, among others, dividends, voting rights, and liquidation preferences.
Restricted Stock
The fair value of restricted shares of the Company’s Class B common stock is determined based on the closing price of the Company’s Class B common stock on the grant date. Share awards generally vest on a graded basis over three years of service.
A summary of the status of the Company’s grants of restricted shares of Class B common stock of IDT Corporation that they owned as of the record date of the Spin-Off. Those particularis presented below:
| Number of Non-vested Shares | Weighted Average Grant Date Fair Value | |||||||
| Outstanding at October 31, 2021 | 85,999 | $ | 4.68 | |||||
| Granted | 1,116,568 | 1.81 | ||||||
| Vested | (34,264 | ) | 4.28 | |||||
| Cancelled / Forfeited | (1,500 | ) | 4.88 | |||||
| Non-vested restricted shares at April 30, 2022 | 1,166,803 | $ | 1.95 | |||||
On April 5, 2022, 1,104,972 restricted shares of the Company’s Class B common stock are restricted underwere issued to our Chairman, and have a vesting period of 5 years.
On April 30, 2022, there was $2,092,000 of total unrecognized compensation cost related to non-vested stock-based compensation arrangements, which is expected to be recognized over 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 millionnext 5 years.
On December 31, 2020, 6,710 shares of Class B unvested restricted stock.common stock were issued to our Chairman, for payment of interest on the loan agreement related to the related party loan that was paid off as of as part of the sale of CTM on February 15, 2021 (see Note 14).
Warrants
Detailed below are outstanding warrants issued to our Chairman associated with the two loans made by the Chairman to the Company, which have subsequently been repaid. The exercise price and expiration of these warrants were amended on March 29, 2022. The 98,336 shares had an original exercise price of $26.44 and were set to expire on March 30, 2022. The 89,243 shares had an original exercise price of $42.02. No additional compensation cost was incurred from the modification.
| Number of Shares | Type of Share | Exercise Price | Expiration | |||||
| 98,336 | Class B common stock | $ | 1.94 | August 21, 2023 | ||||
| 89,243 | Class B common stock | $ | 1.94 | August 21, 2023 | ||||
IDW MEDIA HOLDINGS, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
Note 4—Stock Based Compensation
2019 Incentive Plan
On September 3, 2009,March 14, 2019, the Company’s Compensation Committee ratifiedBoard of Directors adopted the Company’s 20092019 IDW Stock Option and Incentive Plan (the “Company’s Stock Option and(“2019 Incentive Plan”), which was previously adopted by the Company’s Board of Directors and approved by IDT Corporation as the Company’s sole stockholder, to provide incentives to executive officers, employees, directors and consultants of the Company and/or its subsidiaries. The maximum number ofsubsidiaries and reserved 300,000 shares of the Company’s Class B common stock reserved 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.
The following table summarizes stock option activity during the six months ended April 30, 2022.
| Number of Options | Weighted Average Exercise Price | Weighted Average Remaining Contractual Term (in years) | Aggregate Intrinsic Value (in thousands) | |||||||||||||
| Outstanding at October 31, 2021 | 302,737 | $ | 5.69 | 8.32 | $ | - | ||||||||||
| Granted | 698,222 | 2.39 | 9.62 | - | ||||||||||||
| Exercised | - | - | - | - | ||||||||||||
| Cancelled / Forfeited | (28,333 | ) | 6.10 | - | - | |||||||||||
| Outstanding at April 30, 2022 | 972,626 | $ | 3.31 | 9.25 | $ | - | ||||||||||
| Exercisable at April 30, 2022 | 164,920 | $ | 6.17 | 8.40 | $ | - | ||||||||||
At April 30, 2022, unamortized stock compensation for stock options was $1,055,000, which is expected to be recognized over the next 3 years.
Non-cash compensation for stock options issued to employees and restricted stock issued to employees and non-employees (see Note 3) included in compliance with applicable regulations. To date, no shares have been purchased sinceselling, general and administrative expenses for continuing operations was $165,000 and $95,000 during the buyback was approved.three months ended April 30, 2022 and 2021, respectively and $309,000 and $159,000 during the six months ended April 30, 2022 and 2021, respectively.
Note 6—Comprehensive Income (Loss)
Three Months Ended April 30, | Nine Months Ended April 30, | |||||||||||||||
| 2011 | 2010 | 2011 | 2010 | |||||||||||||
| (in thousands) | (in thousands) | |||||||||||||||
| Net (loss) income | $ | (124 | ) | $ | (1,095 | ) | $ | 645 | $ | (1,145 | ) | |||||
| Foreign currency translation adjustments | 26 | (10 | ) | 74 | (11 | ) | ||||||||||
| Comprehensive (loss) income | (98 | ) | (1,105 | ) | 719 | (1,156 | ) | |||||||||
| Comprehensive (loss) income attributable to non-controlling interests | 40 | (36 | ) | 243 | 115 | |||||||||||
| Comprehensive (loss) income attributable to CTM Media Holdings, Inc. | $ | (138 | ) | $ | (1069 | ) | $ | 476 | $ | (1,271 | ) | |||||
The Company has the following reportable business segments: IDWP, 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.(discontinued operations).
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.
Total Assets (in thousands)
At April 30, 2022 total assets are IDWP $13,271, IDWE $2,129, and IDWMH $11,713.
IDW MEDIA HOLDINGS, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
Operating results for the business segments of the Company are as follows:
| (in thousands) | IDWP | IDWE(a) | CTM | IDWMH | Total | |||||||||||||||
| (discontinued operations) | (unallocated overhead) | |||||||||||||||||||
| Three months ended April 30, 2022 | ||||||||||||||||||||
| Revenues | $ | 6,052 | $ | 1 | $ | - | $ | - | $ | 6,053 | ||||||||||
| Loss from operations | (267 | ) | (1,676 | ) | - | (301 | ) | (2,244 | ) | |||||||||||
| Net loss | (267 | ) | (1,685 | ) | - | (301 | ) | (2,253 | ) | |||||||||||
| Three months ended April 30, 2021 | ||||||||||||||||||||
| Revenues | $ | 5,988 | $ | 4,152 | $ | - | $ | - | $ | 10,140 | ||||||||||
| (Loss) income from operations | (509 | ) | 1,216 | - | (274 | ) | 433 | |||||||||||||
| Loss from discontinued operations, net | - | - | (159 | ) | - | (159 | ) | |||||||||||||
| Net (loss) income | (509 | ) | 1,382 | (159 | ) | 1,827 | (b) | 2,541 | ||||||||||||
| (in thousands) | CTM | IDW | Total | |||||||||
| Three months ended April 30, 2011 | ||||||||||||
| Revenues | $ | 3,714 | $ | 3,077 | $ | 6,791 | ||||||
| (Loss) income from operations | (657 | ) | 167 | (490 | ) | |||||||
| Depreciation and amortization | 195 | 5 | 200 | |||||||||
| Total assets at April 30, 2011 | 10,371 | 6,881 | 17,252 | |||||||||
| Three months ended April 30, 2010 | ||||||||||||
| Revenues | $ | 4,051 | $ | 2,781 | $ | 6,832 | ||||||
| (Loss) from operations | (343 | ) | (314 | ) | (657 | ) | ||||||
| Depreciation and amortization | 186 | 11 | 197 | |||||||||
| Total assets at April 30, 2010 (i) | 7,269 | 6,584 | 16,189 | |||||||||
| Nine months ended April 30, 2011 | ||||||||||||
| Revenues | $ | 12,754 | $ | 10,363 | $ | 23,117 | ||||||
| (Loss) income from operations | (689 | ) | 1,024 | 335 | ||||||||
| Depreciation and amortization | 518 | 26 | 544 | |||||||||
| Nine months ended April 30, 2010 | ||||||||||||
| Revenues | $ | 12,890 | $ | 8,541 | $ | 21,431 | ||||||
| Income (loss) from operations | 44 | (312 | ) | (268 | ) | |||||||
| Depreciation and amortization | 586 | 67 | 653 | |||||||||
| (in thousands) (unaudited) | IDWP | IDWE(a) | CTM | IDWMH | Total | |||||||||||||||
| (discontinued operations) | (unallocated overhead) | |||||||||||||||||||
| Six months ended April 30, 2022 | ||||||||||||||||||||
| Revenues | $ | 13,583 | $ | 4,319 | $ | - | $ | - | $ | 17,902 | ||||||||||
| Income (loss) from operations | 246 | 294 | - | (800 | ) | (260 | ) | |||||||||||||
| Net income (loss) | 246 | 300 | (810 | ) | (264 | ) | ||||||||||||||
| 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 | (b) | (3,715 | ) | ||||||||||
| (a) | IDWE includes Thought Bubble LLC and Word Balloon LLC which consist of only television costs. |
| (b) | The parent company, IDW Media Holdings, reported net income in the three and six months ended April 30, 2021 due to the sale of CTM. |
Note 6—Trade Accounts Receivable and Deferred Revenue
Trade accounts receivable consists of the following:
| (in thousands) | April 30, 2022 | October 31, | ||||||
| Trade accounts receivable | $ | 4,874 | $ | 5,558 | ||||
| Less allowance for sales returns | (116 | ) | (127 | ) | ||||
| Trade accounts receivable, net | $ | 4,758 | $ | 5,431 | ||||
Changes in deferred revenue consist of the following:
| (in thousands) | Six months ended April 30, 2022 | |||
| Beginning Balance | $ | 2,045 | ||
| Deferral of revenue | 108 | |||
| Recognition of deferred revenue | (2,145 | ) | ||
| Ending Balance | $ | 8 | ||
The Company expects to satisfy its remaining performance obligations and recognize approximately 100% of this revenue over the next 12 months ending April 30, 2023.
IDW MEDIA HOLDINGS, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
Note 7—Inventory
Inventory consists of the following:
| (in thousands) | April 30, 2022 | October 31, 2021 | ||||||
| Work in progress | $ | 427 | $ | 495 | ||||
| Finished goods | 2,864 | 2,595 | ||||||
| Total | $ | 3,291 | $ | 3,090 | ||||
Note 8— Income TaxesPrepaid Expenses
Prepaid expenses consist of the following:
| (in thousands) | April 30, 2022 | October 31, 2021 | ||||||
| Royalties and deposits | $ | 1,313 | $ | 1,215 | ||||
| Tradeshows | 290 | 1 | ||||||
| Insurance | 157 | 225 | ||||||
| Other prepaids | 466 | 829 | ||||||
| Total | $ | 2,226 | $ | 2,270 | ||||
Note 9—Property and Equipment
Property and equipment consist of the following:
(in thousands) | April 30, 2022 | October 31, 2021 | ||||||
| Equipment | $ | 535 | $ | 557 | ||||
| Furniture and Fixtures | 241 | 106 | ||||||
| Leasehold improvements | 833 | 827 | ||||||
| Computer software | 24 | 24 | ||||||
| Total | 1,633 | 1,514 | ||||||
| Less accumulated depreciation | (1,186 | ) | (1,167 | ) | ||||
| Property and equipment, net | $ | 447 | $ | 347 | ||||
Depreciation expense decreased intotaled $66,000 and $49,000 for the three and nine months ended April 30, 2011 compared to2022 and 2021, respectively and $106,000 and $97,000 for the similar period in fiscal 2010 due to decreases in state and local and foreign income tax expense which was partially offset by an increase in US Alternative Minimum Tax expense. State and local income tax expense decreased in the three and ninesix months ended April 30, 2011 compared to the similar periods in fiscal 2010 due to the utilization of Net Operating Losses (NOL’s) that were not available in the prior periods2022 and the release of accrued tax liability due to the expiration2021, respectively.
Note 10—Intangible Assets
Intangible assets consist of the statutefollowing:
| April 30, 2022 | ||||||||||||||||||||||
| (in thousands) | Amortization Period | Gross Carrying Amount | Additions | Impairments | Accumulated Amortization | Net Book Value | ||||||||||||||||
| Amortized intangible assets: | ||||||||||||||||||||||
| Licensing contracts | 7 years | $ | 893 | $ | — | $ | — | $ | (893 | ) | $ | - | ||||||||||
| Software | 5 years | 704 | — | — | (70 | ) | 634 | |||||||||||||||
| 1,597 | — | — | (963 | ) | 634 | |||||||||||||||||
| In-process intangible assets: | ||||||||||||||||||||||
| Software development costs | 122 | 75 | — | — | 197 | |||||||||||||||||
| 122 | 75 | — | — | 197 | ||||||||||||||||||
| Total | $ | 1,719 | $ | 75 | $ | — | $ | (963 | ) | $ | 831 | |||||||||||
IDW MEDIA HOLDINGS, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
| October 31, 2021 | ||||||||||||||||||||||||
| (in thousands) | Amortization Period | Gross Carrying Amount | Additions | Impairments | Accumulated Amortization | Net Book Value | ||||||||||||||||||
| Amortized intangible assets: | ||||||||||||||||||||||||
| Licensing contracts | 7 years | $ | 893 | $ | — | $ | — | $ | (886 | ) | $ | 7 | ||||||||||||
| 893 | — | — | (886 | ) | 7 | |||||||||||||||||||
| In-process intangible assets: | ||||||||||||||||||||||||
| Software development costs | — | 672 | — | — | 672 | |||||||||||||||||||
| — | 672 | — | — | 672 | ||||||||||||||||||||
| Total | $ | 893 | $ | 672 | $ | — | $ | (886 | ) | $ | 679 | |||||||||||||
Amortization expense totaled $35,000 and $11,000 for the three months ended April 30, 2022 and 2021, respectively and $78,000 and $22,000 for the six months ended April 30, 2022 and 2021, respectively.
Note 11—Television costs and amortization
Television costs consist of limitation. Our foreign income tax expense results from income generated by our foreign subsidiaries that cannot be offset against lossesthe following:
| (in thousands) | April 30, 2022 | October 31, 2021 | ||||||
| In-development | $ | 1,538 | $ | 1,487 | ||||
| Total | $ | 1,538 | $ | 1,487 | ||||
| Three Months Ended | Six Months Ended | |||||||||||||||
| (in thousands) | April 30, 2022 | April 30, 2021 | April 30, 2022 | April 30, 2021 | ||||||||||||
| Television cost amortization | $ | - | $ | 1,385 | $ | 999 | $ | 5,341 | ||||||||
| Television cost impairments | 155 | - | 155 | �� | 2,065 | |||||||||||
| Total | $ | 155 | $ | 1,385 | $ | 1,154 | $ | 7,406 | ||||||||
IDW MEDIA HOLDINGS, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
Note 12—Accrued Expenses
Accrued expenses consist of our other subsidiaries.the following:
| (in thousands) | April 30, 2022 | October 31, | ||||||
| Royalties | $ | 1,291 | $ | 1,410 | ||||
| Residuals | 868 | 589 | ||||||
| Payroll, bonus, accrued vacation and payroll taxes | 805 | 1,304 | ||||||
| Other | 351 | 483 | ||||||
| Total | $ | 3,315 | $ | 3,786 | ||||
Note 13—Commitments
Lease Commitments
The Financial Accounting Standards Board (“FASB”) periodically issues new accounting standards in a continuing effortCompany has various lease agreements with remaining terms up to improve standards2.5 years, including leases of financial accountingoffice space, warehouses, and reporting. We have reviewed the recently issued pronouncements and concluded that no new standards were issued this quarter that appliedequipment. Some leases include options to the Company.
The assets and Disclosures). ASU 2010-06 requires new disclosuresliabilities from operating leases are recognized at the commencement date based on the amountpresent 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 is 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 0.76 years, with a weighted-average discount rate of 4.59% as of April 30, 2022.
The Company recognized lease expense for its operating leases of $126,000 and reason$125,000 for transfersthe three months ended April 30, 2022, and 2021, respectively, and $251,000 and $250,000 for the six months ended April 30, 2022 and 2021, respectively. The cash paid under operating leases was $157,000 and $144,000 for the three months ended April 30, 2022 and 2021, respectively and $314,000 and $287,000 for the six months ended April 30, 2022 and 2021, respectively.
At April 30, 2022, the Company had a right-of-use-asset related to operating leases of $778,000, accumulated amortization related to operating leases of $720,000, both of which are included as a component of right-of-use assets. On October 31, 2021, the Company had a right-of-use-asset related to operating leases of $1,037,000 and accumulated amortization related to operating leases of $735,000.
As of April 30, 2022, future minimum lease payments required under operating leases are as follows:
Maturity of Lease Liability
(in thousands) | Total | |||
| Fiscal years ending October 31: | ||||
| Rest of 2022 | $ | 42 | ||
| 2023 | 13 | |||
| 2024 | 7 | |||
| 2025 | - | |||
| Thereafter | - | |||
| Total minimum lease payments | 62 | |||
| Less: imputed interest | (2 | ) | ||
| Present value of future minimum lease payments | $ | 60 | ||
IDW MEDIA HOLDINGS, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
Note 14—Discontinued Operations
As a result of the 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 decided to make a strategic shift to dispose of CTM and outto focus on its entertainment and publishing businesses.
On February 15, 2021, pursuant to a sales and purchase agreement (“SPA”) dated as of Level 1July 14, 2020 IDWMH sold all of the stock of CTM to an assignee of the Chairman in exchange for (i) the cancelation of $3.75 million of indebtedness owed by IDWMH to the Chairman’s designee, (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 CTM Sale Date, and 2 fair value measurements. ASU 2010-06(iii) a contingent payment if CTM is sold within 36 months the CTM Sale Date for more than $4.5 million. Prior to executing the SPA, 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 CTM Sale was fair. In addition to the Company’s Board of 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 compliance with the Company’s Statement of Policy with respect to Related Person Transactions. The CTM Sale was also requires disclosureapproved by (1) stockholders representing a majority of activities,the combined voting power of the Company’s outstanding capital stock and (2) stockholders representing a majority of the combined voting power of the Company’s outstanding capital stock not held by the Chairman or immediate family members of the Chairman, including, purchases, sales, issuances, and settlements withinwithout limitation, trusts or other vehicles for the Level 3 fair value measurements and clarifies existing disclosure requirements on levelsbenefit 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 afterany of such immediate family members or entities under the control of such persons. On December 15, 2009.2020, the right, title and interest to the SPA were assigned to The adoptionBrochure Distribution Trust, a South Dakota trust. Since the closing of this standardthe CTM Sale, the Company has not had any significant continuing involvement with CTM.
As of July 31, 2020, CTM was reported as a discontinued operation and CTM’s operations have since been included in the condensed consolidated financial statements as discontinued operations. On February 15, 2021, the Company closed the CTM Sale. The loan of $3,750,000 was forgiven in part of the sale and the Company recorded 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 condensed consolidated financial statements for the periods following the CTM Sale Date and CTM’s operations are only consolidated in the Company’s condensed consolidated statements of operations results until the CTM Sale Date. There was no contingent gain recorded since there was no foreseeable contingent payments to the Company.
Pursuant to ASC 205-20-45-9 general corporate overhead should not be allocated to discontinued operations. The Company did not have a material effect onallocate any corporate overhead to CTM when it began being classified as held for sale in the Company’s financial statements.third quarter of 2020 and continued to not allocate any expenses.
The consolidated statements of operations include the following results related to CTM discontinued operations:
Results of discontinued operations
| (in thousands) | Three months ended, April 30, 2021 | Six months ended, April 30, 2021 | ||||||
| Revenue | $ | 207 | $ | 1,427 | ||||
| Direct cost of revenue | 105 | 946 | ||||||
| Selling, general and administrative | 227 | 1,649 | ||||||
| Depreciation and amortization | 45 | 295 | ||||||
| Bad Debt | 1 | (109 | ) | |||||
| Total costs and expenses | 378 | 2,781 | ||||||
| Loss from operations | (171 | ) | (1,354 | ) | ||||
| Interest expense, net | 19 | 6 | ||||||
| Other income (expense), net | (7 | ) | 68 | |||||
| Loss before income taxes | (159 | ) | (1,280 | ) | ||||
| (Provision for) benefit from income taxes | - | - | ||||||
| Net loss | $ | (159 | ) | $ | (1,280 | ) | ||
IDW MEDIA HOLDINGS, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
CTM’s depreciation and amortization, capital expenditures and notable activities for 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 evaluatediscontinued operation include:
| (in thousands) | Six months ended, April 30, 2021 | |||
| Depreciation and amortization | $ | 185 | ||
| Amortization of finance lease | 109 | |||
| Amortization of right-of-use assets | 282 | |||
| Capital expenditure | (22 | ) | ||
| Gain on extinguishment of PPP loan | (68 | ) | ||
Note 15—Subsequent events
The Company has evaluated subsequent events through June 14, 2022, the date thaton which the condensed consolidated financial statements arewere available to be issued. ASU 2010-09 was effective uponThere were no material subsequent events that require recognition or additional disclosures in these condensed consolidated financial statements, except as follows:
On April 5, 2022, the issuanceCompany entered into a new lease agreement for IDWP in San Diego, California. The new lease has an initial term of 3.25 years and commenced on June 1, 2022. Base rent for the initial term is approximately $424,000. The Company has an option to extend the term of the final updatelease for an additional 3 years exercisable only by written notice. The lease is subject to additional charges for common area maintenance and did not have any impact on the Company’s financial statements.other costs.
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations
The following information should be read in conjunction with the accompanying condensed consolidated financial statements and the associated notes thereto of this Quarterly Report, and the audited consolidated financial statements and the related notes thereto and our Management’s Discussion and Analysis of Financial Condition and Results of Operations containedincluded in our Annual Report on Form 10-K for the fiscal year ended JulyOctober 31, 2010, as2021, which was filed with the U.S. Securities and Exchange Commission (the “SEC”(“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 onthe 2021 Form 10-K for the fiscal year ended July 31, 2010.10-K. 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, including1934.
OVERVIEW
We were incorporated in the State of Delaware in May 2009.
In 2009, IDT Corporation, our Annual Report on Form 10-K forformer parent corporation, completed a tax-free spinoff (the “Spin-Off”) of the fiscal year ended July 31, 2010.Company through a pro rata distribution of our common stock IDT’s stockholders.
IDW Media Holdings, Inc., a Delaware corporation, is a holding company consisting of the following principal businesses:
| ● | IDW Publishing, or IDWP, creates comic books, graphic novels, digital content through its imprints IDW, Top Shelf Productions and Artist’s Editions; and |
| ● | IDW Entertainment, or IDWE, a production company and studio that develops, produces and distributes content based on IDWP’s original IP for a variety of formats including film and television. |
Prior to February 15, 2021, we also owned CTM Media Group (CTM), a former subsidiary of IDT Corporation. As a result ofcompany 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 Spin-Off, on September 14, 2009,US and Canada. On February 15, 2021, we became an independent public company. IDT Corporation continues to provide certain functions pursuant to a Master Services Agreement, dated September 14, 2009. During the nine months ended April 30, 2011 and 2010, our selling, general and administrative expenses included $122,000 and $500,000, respectively, for all services and allocated expenses charged by IDT Corporation to us. At April 30, 2011 and July 31, 2010 the amount owed to IDT Corporation was $23,000 and $38,000, respectively.
COVID-19: Overview of fiscal 2010 and accordingly, WMET’s results are classified as part of discontinued operations during the fiscal year 2010.Impacts
| IDWMH: | Received two PPP loans related to core IDWE and IDWP operations. |
| o | $1,195,679 on April 27, 2020, subsequently forgiven on July 20, 2021 |
| o | $1,195,680 on April 2, 2021, subsequently forgiven on October 27, 2021 |
| IDWP: Although COVID-19 caused changes in direct-market returnability in 2020, effective in April 2021, the return policies have reverted back to pre-COVID-19 industry standard practices. Additionally, 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 Right-Of-Use assets were adjusted by amounts equal to the adjustments to the lease liabilities. Although the delay in comic releases continues to have an impact on the industry, the impact has been slowly decreasing and |
| IDWE: Industry-wide production suspensions halted filming and production of Wynonna Earp Season four after the completion of six of twelve episodes. IDWE continues its program to develop, package and pitch from its library on a largely remote basis. While there are some in-person writer’s rooms with strict COVID protocols, the majority |
Business Description
IDW Publishing
IDWP is an award-winning publisher of comic books, original graphic novels, and distributes printart books. 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 mobile-based advertisingBen 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 informationGabriel Rodríguez’s Locke & Key, Jonathan Maberry’s V Wars, Stan Sakai’s Usagi Yojimbo, Beau Smith’s Wynonna Earp, Alan Robert’s The Beauty of Horror adult coloring books, and Darwyn Cooke’s graphic novel adaptations of Richard Stark’s Parker novels are just a few of the hundreds of outstanding, award-winning titles published since its inception.
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 Productions is renowned for publishing works of literary significance including the #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 targeted tourist markets. Throughout its operating region, CTM operates four integratedschools. In July 2019, Top Shelf Productions released George Takei’s graphic memoir, They Called Us Enemy, which debuted at #2 on the New York Times Paperback Nonfiction Best Sellers list and complimentary business lines: Brochure Distribution, Publishing, Right Card™as a #1 bestseller on Amazon. Both titles are now perennial bestsellers and considered two of the finest non-fiction graphic novels ever made. Other iconic Top Shelf Productions titles include Kim Dwinell’s Surfside Girls, Jeff Lemire’s Essex County and The Underwater Welder, and Digital Distribution. CTM had operatedHannah Templer’s Cosmoknights.
In addition to its Designcore 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, Dungeons & Print business, which it exitedDragons and My Little Pony; Sega’s Sonic The Hedgehog; Paramount Global’s, Star Trek; Teenage Mutant Ninja Turtles and Toho’s Godzillas. These licensed titles bring with them diverse built-in audiences and build cache and retailer support for IDWP. With licensed franchises, IDWP’s 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 book publishers to co-publish certain titles, including Batman vs. Teenage Mutant Ninja Turtles and Locke & Key/The Sandman Universe: Hell & Gone (with DC Comics), Rick & Morty vs. Dungeons & Dragons (with Oni Press, Inc.) and Godzilla vs. Power Rangers (with Boom Studios).
IDWP’s focus is to expand and market its library of titles, from both creator-owned titles in our IDW and Top Shelf brands; and also, in partnership with our top-of-class creative partners under our IDW brand. IDWP works synergistically with IDWE to develop new titles and to support existing titles.
IDW Originals is a line of original comic series and graphic novels for the direct comic market and the book trade market. Dedicated to cultivating a diverse lineup of content and creators across all genres and age groups, IDW Originals works with a variety of talent from New York Times Bestselling writers like Scott Snyder on “Dark Spaces: Wildfire,” Stephen Graham Jones on “Earthdivers,” and G. Willow Wilson on “The Hunger and the Dusk.” Plus up-and-coming talent creating the bestsellers of tomorrow. In addition to publishing great content, IDW Originals is also focused on creating IP that can be exploited across all media platforms.
IDWP is also home to Artist’s Editions, oversized deluxe hardcovers featuring scans of original art printed at the same size they were drawn with all the distinctive creative nuances that make original art unique. Some of the standout Artist’s Editions titles include Jim Lee’s X-Men, Mike Mignola’s Hellboy, David Mazzucchelli’s Daredevil Born Again and Jim Sterako’s Nick Fury Agent of SHIELD.
Many of IDWP’s titles are available worldwide through foreign licensing with 642 titles available in 62 territories in 24 languages. In 2020, IDW kicked off a major new initiative to release key titles as Spanish-language graphic novels in the USNorth American market with the release of Spanish-language editions of They Called Us Enemy, Red Panda & Moon Bear, Locke & Key and converted intoSonic 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”); (ii) to traditional retail outlets, including bookstores and mass market stores, on a commission based print referral business modelreturnable basis (the “non-direct market”); 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 webstore at idwpublishing.com. Through the beginning ofdirect market and non-direct market, IDWP, including its imprint Top Shelf Productions, sold over 4.8 million units in fiscal year 2021 and is regularly recognized as the fourth quarterlargest publisher in its category. Diamond served as IDWP’s distributor to the direct market, worldwide, and beginning June 1, 2022, PRHPS replaced Diamond as IDWP’s distributor to the direct market. IDWP’s non-direct market distributor is PRHPS. IDWP works together 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.
In September 2021, IDWP announced an exclusive worldwide multi-year sales and distribution agreement with PRHPS for IDW’s newly published and backlist comic book periodicals, trade collections, and graphic novels to the Direct Market comic shops beginning June 1, 2022.
In 2014, IDWP launched IDW Games to develop and publish card, board, and tabletop games. Similar to IDWP’s book content, IDW Games offered a mix of fiscal 2010. CTM offerspopular 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 were 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 customers a comprehensive mediawebsite and marketing approachcampaigns. In calendar 2021, the Company wound down IDW Games and, going forward, IDW Games is only backfilling final orders and reproducing select existing products.
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 theselicensing arrangements.
To expand its business lines. In fiscal 2011, CTM has been servicing over 2,600 clients and has been maintaining more than 11,000 display stations in over 28 states, territoriesoutperform its industry competitors, IDWP continues to focus on launching new creator-owned titles and provinces inpartnering with established brands to bring fan-favorite properties to the United States (including Puerto Rico)comics market. IDWP is expanding the reach of existing and Canada. CTM’s display stations are located in travel, tourismnew products through the development of specialty, library, and entertainment venues, including hotelseducation markets; increased direct-to-consumer initiatives; and other lodgings, corporate and community venues, transportation terminals and hubs, tourist attractions and entertainment venues. CTM’sbroadening the reach of creator-driven series through licensing opportunities.
IDWP’s revenues represented 55.2%100% and 60.1%59.1% of our consolidated revenues in the ninethree months ended April 30, 20112022 and 2010,2021, respectively and 75.9% and 62.7% in the six months ended April 30, 2022 and 2021, respectively.
IDW Entertainment
IDWE is a production company and studio that develops, produces and distributes content based on IDWP’s original IP for a variety of formats including film and television.
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 for the adult series/features marketplace as well as the kids, family and animation space. IDWE is in advanced conversations with various global studios, networks and streamers for their exploitation. IDWE actively recruits and acquires new franchise material for exploitation primarily in the series format.
IDWE has developed and/or produced a number of series for television:
| ● | 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 IDWP comic book series of the same name. The rights to IDWE’s streaming genre series V Wars reverts back to IDW in 2022; as a result we will be exploring opportunities to monetize the past season and potential opportunities to continue the story with a new partner. |
| ● | October Faction premiered on Netflix on January 23, 2020. The 10-episode show was based on the IDWP 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 aired in October 2021 topping Netflix’s global TV charts in over 81 countries, and season three has been renewed by Netflix. |
| ● | IDWE recently wrapped production on its original Apple TV+ series Surfside Girls, based on the Top Shelf graphic novel of the same name. The live-action 10-episode first season will premiere on Apple TV+ on August 19, 2022. |
While in the past, IDWE focused solely on television development and financing production opportunities, a comic bookbroadening of our strategic goals has evolved to focus on low to no-risk investments as well as developing IP for feature film and graphic novel publisher that createspodcast opportunities. With more varied opportunities for our content/IP, we will be able to grow our brand, expand the perception of IDWE, increase revenue opportunities for the publishing side of the business and licenses intellectual property. IDW’sdevelop a more robust entertainment footprint.
IDWE’s revenues represented 44.8%0% and 39.9%40.9% of our consolidated revenues in the ninethree months ended April 30, 20112022 and 2010,2021, respectively and 24.1% and 37.3% in the six months ended April 30, 2022 and 2021, respectively.
CTM (Discontinued operations)
As a result of the transaction,economic downturn related to the COVID-19 pandemic, and the impact it had on CTM, the Company decided to sell CTM and focus on our entertainment and publishing business. Pursuant to a sales and purchase agreement (“SPA”) dated as of July 14, 2020, we ownsold all of the stock of CTM to an assignee of the Chairman in exchange for (i) the cancelation of $3.75 million of indebtedness owed by us to the Chairman’s designee, (ii) a 76.665% interestcontingent 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 CTM Sale Date, and (iii) a contingent payment if CTM is sold within 36 months of the CTM Sale Date for more than $4.5 million. The CTM Sale closed on February 15, 2021 and CTM is only consolidated up until the sale date with the gain reflected separately in IDW.the consolidated statement of operations.
Results of Operations
We evaluate the performance of our operating business segments based primarily on income (loss) from operations. Accordingly, the income and expense line items below loss from operations are only included in our discussion of the consolidated results of operations.
IDWP
| (in thousands) | Change | |||||||||||||||
| Three months ended April 30, | 2022 | 2021 | $ | % | ||||||||||||
| Revenues | $ | 6,052 | $ | 5,988 | $ | 64 | 1.1 | % | ||||||||
| Direct cost of revenues | 3,150 | 3,333 | (183 | ) | (5.5 | )% | ||||||||||
| Selling, general and administrative | 3,079 | 3,114 | (35 | ) | (1.1 | )% | ||||||||||
| Depreciation and amortization | 90 | 50 | 40 | 80.0 | % | |||||||||||
| (Loss) income from operations | $ | (267 | ) | $ | (509 | ) | $ | 242 | 47.5 | % | ||||||
| (in thousands) | Change | |||||||||||||||
| Six months ended April 30, | 2022 | 2021 | $ | % | ||||||||||||
| Revenues | $ | 13,583 | $ | 11,636 | $ | 1,947 | 16.7 | % | ||||||||
| Direct cost of revenues | 6,864 | 6,506 | 358 | 5.5 | % | |||||||||||
| Selling, general and administrative | 6,312 | 5,914 | 398 | 6.7 | % | |||||||||||
| Depreciation and amortization | 161 | 99 | 62 | 62.6 | % | |||||||||||
| Income (loss) from operations | $ | 246 | $ | (883 | ) | $ | 1,129 | 127.9 | % | |||||||
Revenues. Revenues increased by $64,000 in the three months ended April 30, 2022, compared to the three months ended April 30, 2021, primarily due to an increase in direct-to-consumer revenue of $384,000 related to Sonic the Hedgehog 30th Anniversary, a decrease in sales returns and discounts on book sales of $210,000, and an increase in non-direct market publishing revenue of $108,000 driven by strong They Called Us Enemy sales, partially offset by a decrease in direct market publishing revenue of $275,000 due to fewer titles being released during the period, a decrease in games revenue of $114,000, a decrease in digital revenue of $110,000 due to an overall decrease in sales across all platforms, and a decrease in other revenue categories of $139,000.
Revenues increased by $1,947,000 in the six months ended April 30, 2022, compared to the six months ended April 30, 2021, primarily due to an increase in games revenue of $2,004,000 driven by the fulfillment of the direct-to-consumer games campaign for Batman Adventures, an increase in other publishing revenue of $462,000, a decrease in sales returns and discounts on book sales of $300,000, and an increase in non-direct market publishing revenue of 294,000, partially offset by a decrease in direct market publishing revenue of $796,000 due to fewer titles being released during the period, a decrease in digital sales of $285,000, and a decrease in licensing revenue of $32,000. Sales returns continue to improve compared to prior year due to targeted incentives with accounts to reduce return rates, localization of inventory management at Barnes & Noble, and Covid-related pressures in fiscal 2021. Digital sales are expected to remain below prior year as Covid-related restrictions end and people spend less time-consuming digital media. Direct market sales will likely remain lower for the year compared to prior year due to the release of multiple Teenage Mutant Ninja Turtles: The Last Ronin titles in fiscal 2021.
Effective March 2023, our licenses for the Transformers and GI Joe titles will be terminated. While the cancellation of the licenses for Transformers and GI Joe are anticipated to decrease revenues by approximately $1.2 million in fiscal year 2023, IDWP plans to mitigate the loss of revenue by enhancing its other key licensed brands. Additionally, we expect revenues from IDW Originals to begin to materialize in July 2022 with an estimated five new IDW original titles spanning fiscal 2022 and a planned output of doubling quantities each progressing fiscal year. We expect those efforts to offset any material impact on our gross margin from the loss of the licensed titles.
During calendar 2021, we began to winddown IDW Games and, going forward, IDW Games is only backfilling already developed games. The decision to shut down games was due to its lack of profitability, despite outliers like Batman Adventures, noted above.
Direct cost of revenues. IDWP’s direct cost of revenues decreased by $183,000 in the three months ended April 30, 2022, compared to the three months ended April 30, 2021, primarily due to a decrease in printing expenses and creative costs for IDW Games of $219,000 and a net decrease in other direct costs such as costs of artists and writers of $83,000, offset by an increase in publishing printing costs of $119,000. IDWP’s direct cost of revenues increased by $358,000 in the six months ended April 30, 2022, compared to the six months ended April 30, 2021, primarily due to an increase in printing expenses and creative costs for IDW Games of $564,000 and an increase in publishing printing costs of $287,000, offset by a decrease in royalty expenses of $239,000, a decrease in publishing creative costs of $173,000, and a decrease in digital and licensing costs of $81,000. Although costs were recognized for fulfillment of the Batman Adventures game in the current year, future games costs will only be recognized with individual customer orders. Royalty expense as a percentage of sales is dependent on product and title mix as different revenue streams and titles have different royalty rates.
Gross Margin. IDWP’s gross margin for the three months ended April 30, 2022 increased to 48.0% from 44.3% in the three months ended April 30, 2021. Gross margin for the six months ended April 30, 2022 increased to 49.5% from 44.1% in the six months ended April 30, 2021. These increases are principally due to the recognition of revenue for the fulfillment of the direct-to-consumer games campaign for Batman Adventures and a decrease in royalty expenses as a percentage of revenue.
Selling, General and Administrative. IDWP’s selling, general and administrative expenses decreased by $35,000 during the three months ended April 30, 2022, compared to the three months ended April 30, 2021. The decrease was driven by decreases in salary and benefits of $190,000 and overhead allocation of $70,000, partially offset by increases in consulting of $74,000, software costs of $133,000, and other net changes of $18,000. Consulting expenses of $70,000 were recorded as administrative expense in the three months ended April 30, 2022. These expenses were recorded as salary and benefits in the three months ended April 30, 2021. Additionally, a refund receivable for workers compensation insurance of $79,000 was recorded in salary and benefits in the three months ended April 30, 2022. Administration costs in the current fiscal year include costs related to the recently launched website of $122,000.
IDWP’s selling, general and administrative expenses increased by $398,000 during the six months ended April 30, 2022, compared to the six months ended April 30, 2021. The increase was driven by increases in consulting of $156,000, software costs of $142,000, severance of $40,000, and shipping and direct-to-consumer costs of $241,000, offset by decreases in salary and benefits of $174,000, and other net changes of $7,000. Expense categories include the various changes and differences described above. The overall increase from prior fiscal year relates to Batman Adventures fulfillment costs and costs related to the recently launched website.
As a percentage of IDWP’s revenues, selling, general and administrative expenses in the three months ended April 30, 2022, were 50.9% compared to 52.0% in the three months ended April 30, 2021, and 46.5% in the six months ended April 30, 2022, compared to 50.8% in the six months ended April 30, 2021.
IDWE
| (in thousands) | Change | |||||||||||||||
| Three months ended April 30, | 2022 | 2021 | $ | % | ||||||||||||
| Revenues | $ | 1 | $ | 4,152 | $ | (4,151 | ) | (100 | )% | |||||||
| Direct cost of revenues | 447 | 1,393 | (946 | ) | (67.9 | )% | ||||||||||
| Selling, general and administrative | 1,222 | 1,534 | (312 | ) | (20.3 | )% | ||||||||||
| Depreciation and amortization | 8 | 9 | (1 | ) | nm | |||||||||||
| (Loss) income from operations | $ | (1,676 | ) | $ | 1,216 | $ | (2,892 | ) | (237.8 | )% | ||||||
| (in thousands) | Change | |||||||||||||||
| Six months ended April 30, | 2022 | 2021 | $ | % | ||||||||||||
| Revenues | $ | 4,319 | $ | 6,916 | $ | (2,597 | ) | (37.6 | )% | |||||||
| Direct cost of revenues | 1,523 | 7,453 | (5,930 | ) | (79.6 | )% | ||||||||||
| Selling, general and administrative | 2,484 | 2,781 | (297 | ) | (10.7 | )% | ||||||||||
| Depreciation and amortization | 18 | 18 | - | - | ||||||||||||
| (Loss) income from operations | $ | 294 | $ | (3,336 | ) | $ | 3,630 | 108.8 | % | |||||||
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Revenues. IDWE revenues for the three months ended April 30, 2022, decreased by $4,151,000 compared to the three months ended April 30, 2021. The revenues for the three months ended April 30, 2021, includes revenue from delivered episodes of Wynonna Earp of $820,000 and tax credits for V Wars and October Faction of $3,331,000.
IDWE revenues for the six months ended April 30, 2022, decreased by $2,597,000 compared to the six months ended April 30, 2021. Revenues in the six months ended April 30, 2022, included revenue recognized due to the full delivery of Locke & Key season two in an amount of $4,200,000 and the French-Canadian license received for V Wars of $119,000. In the six months ended April 30, 2021, revenues included recognition from delivered episodes from Wynonna Earp of $3,433,000, tax credits for V Wars and October Faction of $3,331,000, foreign receipts from Dirk Gently of $114,000 and other income of $38,000.
Direct costs of revenues. Direct cost of revenues consists primarily of the amortization of production costs that were capitalized during the production of the television episodes and direct costs related to revenue recognized during related periods.
Direct costs of revenues for the three months ended April 30, 2022, decreased by $946,000 compared to the three months ended April 30, 2021. The amortized television costs for the three months ended April 30, 2022, consisted of inventory write offs of $155,000 and residuals of $292,000. The amortized television costs for the three months ended April 30, 2021, included delivered episodes of Wynonna Earp of $970,000 and cost refinements from October Faction and V Wars of $423,000.
Direct costs of revenues for the six months ended April 30, 2022, decreased by $5,930,000 compared to the six months ended April 30, 2021. The amortized television costs for the six months ended April 30, 2022, consisted of delivered episodes from Locke & Key season 2 of $999,000, cost refinement from October Faction and V Wars of $77,000, inventory write offs of $155,000, and residuals of $292,000. The amortized television costs for the six months ended April 30, 2021, included delivered episodes of Wynonna Earp of $4,918,000, impairment charges of $2,064,000, and cost refinements from October Faction and V Wars of $471,000
IDWE’s gross margin for the three months ended April 30, 2022, was 0.0% compared to 66.4% for the three months ended April 30, 2021. IDWE’s gross margin for the six months ended April 30, 2022, was 64.7% compared to negative 7.8% for the six months ended April 30, 2021. These gross margin figures are aligned with the explanations provided for revenues and direct costs of revenues.
Selling, General and Administrative. Selling, general and administrative expenses decreased by $312,000 during the three months ended April 30, 2022, compared to the three months ended April 30, 2021. The decrease was driven by decreases in consulting costs of $217,000, legal fees of $104,000, professional services of $73,000, marketing of $56,000, recruitment fees of $24,000, and other net changes of $22,000, offset by increases in overhead allocations of $125,000 and non-cash compensation of $59,000.
Selling, general and administrative expenses decreased by $297,000 during the six months ended April 30, 2022, compared to the six months ended April 30, 2021. The decrease was driven by decreases in consulting costs of $280,000, legal fees of $186,000, marketing of $108,000, salary and benefits of $21,000, recruitment fees of $90,000, professional services of $73,000 and other net changes of $13,000, offset by increases in overhead allocation of $381,000, and non-cash compensation of $93,000.
As a percentage of IDWE’s revenues, selling, general and administrative expenses in the six months ended April 30, 2022, was 100.0% compared to 52.0% in the three months ended April 30, 2021, and 57.5% in the six months ended April 30, 2022 compared to 40.2% in the six months ended April 30, 2021.
IDWMH
| (in thousands) | Change | |||||||||||||||
| Three months ended April 30, | 2022 | 2021 | $ | % | ||||||||||||
| Selling, general and administrative | $ | 299 | $ | 273 | $ | 26 | 9.5 | % | ||||||||
| Depreciation and amortization | 2 | 1 | 1 | nm | ||||||||||||
| Loss from operations | $ | (301 | ) | $ | (274 | ) | $ | (27 | ) | 9.9 | % | |||||
| (in thousands) | Change | |||||||||||||||
| Six months ended April 30, | 2022 | 2021 | $ | % | ||||||||||||
| Selling, general and administrative | $ | 795 | $ | 465 | $ | 330 | 71.0 | % | ||||||||
| Depreciation and amortization | 5 | 3 | 2 | nm | ||||||||||||
| Loss from operations | $ | (800 | ) | $ | (468 | ) | $ | 332 | 70.9 | % | ||||||
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Selling, General and Administrative. Selling, general and administrative expenses increased by $26,000 during the three months ended April 30, 2022, compared to the three months ended April 30, 2021. The increase was driven by increases in salary and benefits of $61,000 and shareholder relations of $35,000, offset by decreases in accounting fees of $35,000 and legal fees of $35,000.
Selling, general and administrative expenses increased by $330,000 during the six months ended April 30, 2022, compared to the six months ended April 30, 2021. The increase was driven by increases in salary and benefits of $278,000, shareholder relations of $63,000, non-cash compensation of $19,000, and other net changes of $10,000, offset by decreases in legal fees of $40,000.
Net (loss) income IDW Media Holdings, Inc.
Consolidated
| (in thousands) | Change | |||||||||||||||
| Three months ended April 30, | 2022 | 2021 | $ | % | ||||||||||||
| (Loss) income from continuing operations | $ | (2,244 | ) | $ | 433 | $ | (2,677 | ) | (618.2 | )% | ||||||
| Interest income, net | - | 156 | (156 | ) | (100 | )% | ||||||||||
| Other expenses, net | (9 | ) | (12 | ) | 3 | nm | ||||||||||
| Net (loss) income from continuing operations | (2,253 | ) | 577 | (2,830 | ) | (490.5 | )% | |||||||||
| Loss from discontinued operations, net | - | (159 | ) | 159 | 100.0 | % | ||||||||||
| Gain on sale of discontinued operations | - | 2,123 | (2,123 | ) | (100.0 | )% | ||||||||||
| Net (loss) income | $ | (2,253 | ) | $ | 2,541 | $ | (4,794 | ) | (188.7 | )% | ||||||
| (in thousands) | Change | |||||||||||||||
| Six months ended April 30, | 2022 | 2021 | $ | % | ||||||||||||
| Loss from continuing operations | $ | (260 | ) | $ | (4,687 | ) | $ | 4,427 | 94.5 | % | ||||||
| Interest (expense) income, net | (10 | ) | 142 | (152 | ) | (107.0 | )% | |||||||||
| Other income (expense), net | 6 | (13 | ) | 19 | nm | |||||||||||
| Net loss from continuing operations | (264 | ) | (4,558 | ) | 4,294 | 94.2 | % | |||||||||
Loss from discontinued operations, net | - | (1,280 | ) | 1,280 | 100.0 | % | ||||||||||
| Gain on sale of discontinued operations | - | 2,123 | (2,123 | ) | (100.0 | )% | ||||||||||
| Net loss | $ | (264 | ) | $ | (3,715 | ) | $ | 3,451 | 92.9 | % | ||||||
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(Loss) income from operations. Loss from operations increased by $2,677,000 in the three months ended April 30, 2022, compared to a income from operations in the three months ended April 30, 2021, due to increased operating losses from IDWE of $2,892,000 and an increase in corporate overhead of $28,000, offset by decreased operating losses from IDWP of $243,000. These changes are more fully described in the separate segment analyses above.
Loss from operations decreased by $4,427,000 in the six months ended April 30, 2022, compared to a loss from operations in the six months ended April 30, 2021, due to increased operating income from IDWP of $1,129,000 and from IDWE of $3,630,000 offset by an increase in corporate overhead of $332,000. These changes are more fully described in the separate segment analyses above.
Interest income (expense), net. Interest income decreased by $156,000 in the three months ended April 30, 2022, compared to the three months ended April 30, 2021, and by $152,000 in the six months ended April 30, 2022, compared to the six months ended April 30, 2021 due to interest income from CRA tax credits received in the three and six months ended April 30, 2021.
Loss from discontinued operations, net. Loss from discontinued operations was $0 for the three and six months ended April 30, 2022, compared a loss of $159,000 for the three months ended April 30, 2021 and a loss of $1,280,000 for the six months ended April 30, 2021, respectively, due to the sale of CTM which resulted in CTM no longer being consolidated with the Company as of February 15, 2021.
Gain on sale of discontinued operations decreased by $2,132,000 in the three and six months ended April 30, 2022 compared to the three and six months ended April 30, 2021, as a result of the sale of CTM.
Liquidity and Capital Resources
General
At April 30, 2022, we had cash and cash equivalents of $13,681,000 and working capital (current assets in excess of current liabilities) of $18,949,000.
We anticipate that our expected cash inflows from operations during the next twelve months together with our working capital, including the balance of cash and cash equivalents held as of April 30, 2022, including proceeds from the offering closed on August 6, 2021, will be sufficient to sustain our operations for at least the next twelve months following two reportable business segments:the date of this report.
We satisfy our cash requirements primarily through cash provided by the Company’s operating and financing activities.
| Six months ended April 30, | ||||||||
| (in thousands) | 2022 | 2021 | ||||||
| Cash flows used in: | ||||||||
| Operating activities | $ | (3,415 | ) | $ | (2,301 | ) | ||
| Investing activities | (436 | ) | (974 | ) | ||||
| Financing activities | - | (1,319 | ) | |||||
| Effect of exchange rate changes on cash and cash equivalents | - | 39 | ||||||
| Net decrease in cash and cash equivalents | $ | (3,851 | ) | $ | (4,555 | ) | ||
Operating Activities
Cash flows used in operating activities was $3,415,000 for the six months ended April 30, 2022, and $2,301,000 for the six months ended April 30, 2021. For the six months ended April 30, 2022, the net use of cash is primarily a result of a net loss for the period and unfavorable changes in production cost payable and deferred revenues offset by favorable changes in accounts receivable. For the six months ended April 30, 2021, the net use of cash was primarily a result of a net loss in the period, an unfavorable adjustment for the gain on sale of CTM, and IDW.by an unfavorable change in deferred revenue, partially offset by favorable changes in trade accounts receivable, television costs and trade accounts payable, accrued expenses, production costs payable and other current liabilities.
Investing Activities
Our capital expenditures were approximately $436,000 and $72,000 in the six months ended April 30, 2022, and 2021, respectively. The six months ended April 30, 2021 also included an unfavorable adjustment of $902,000 related to the disposal of CTM.
Financing Activities
During the six months ended April 30, 2021, IDW repaid bank loans in the amount of presentation
Critical Accounting Policies
Our condensed consolidated financial statements and accompanying notes are prepared in accordance with generally accepted 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 andgoodwill, 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 additional discussion of our critical accounting policies, see our Management’s Discussion and Analysis of Financial Condition and Results of OperationsSee Note 1 to the consolidated financial statements included in our Annual2021 Form 10-K.
Recent Accounting Pronouncements
For a description of recently issued accounting pronouncements, including the respective dates of adoption and expected effects on our results of operations and financial condition, see Note 1 to the condensed consolidated financial statements included in this Quarterly Report on Form 10-K10-Q.
Changes in Trade Accounts Receivables and Allowance for fiscal 2010.
| (in thousands) | Three months ended April 30, | Change | Nine months ended April 30, | Change | ||||||||||||||||||||||||||||
| 2011 | 2010 | $ | % | 2011 | 2010 | $ | % | |||||||||||||||||||||||||
| Revenues | ||||||||||||||||||||||||||||||||
| CTM | $ | 3,714 | $ | 4,051 | $ | (337 | ) | (8.3 | ) | $ | 12,754 | $ | 12,890 | $ | (136 | ) | (1.1 | ) | ||||||||||||||
| IDW | 3,077 | 2,781 | 296 | 10.6 | 10,363 | 8,541 | 1,822 | 21.3 | ||||||||||||||||||||||||
| Total revenues | $ | 6,791 | $ | 6,832 | $ | (41 | ) | ( 0.6 | ) | $ | 23,117 | $ | 21,431 | $ | 1,686 | 7.9 | ||||||||||||||||
| (in thousands) | Three Months ended April 30, | Change | Nine months ended April 30, | Change | ||||||||||||||||||||||||||||
| 2011 | 2010 | $ | % | 2011 | 2010 | $ | % | |||||||||||||||||||||||||
| Costs and expenses | ||||||||||||||||||||||||||||||||
| Direct cost of revenues | $ | 3,446 | $ | 3,605 | $ | (159 | ) | (4.4 | ) | $ | 10,919 | $ | 10,587 | $ | 332 | 3.1 | ||||||||||||||||
| Selling, general and administrative | 3,650 | 3,651 | (1 | ) | 0.0 | 11,250 | 10,368 | 882 | 8.5 | |||||||||||||||||||||||
| Depreciation and amortization | 200 | 197 | 3 | 1.5 | 544 | 653 | (109 | ) | (16.7 | ) | ||||||||||||||||||||||
| Bad debt expense | (15 | ) | 36 | (51 | ) | (141.7 | ) | 69 | 91 | (22 | ) | (24.2 | ) | |||||||||||||||||||
| Total costs and expenses | $ | 7,281 | $ | 7,489 | $ | (208 | ) | (2.8 | ) | $ | 22,782 | $ | 21,699 | $ | 1,083 | 5.0 | ||||||||||||||||
| (in thousands) | Three Months ended April 30, | Change | Nine Months ended April 30, | Change | ||||||||||||||||||||||||||||
| 2011 | 2010 | $ | % | 2011 | 2010 | $ | % | |||||||||||||||||||||||||
| (Loss) income from operations | $ | (490 | ) | $ | (657 | ) | $ | 167 | 25.4 | $ | 335 | $ | (268 | ) | $ | 603 | 225.0 | |||||||||||||||
| Interest income (expense) | 15 | (15 | ) | 30 | 200.0 | 43 | (73 | ) | 116 | 158.9 | ||||||||||||||||||||||
| Other income (expense) | 3 | (156 | ) | 159 | 101.9 | 3 | (160 | ) | 163 | 101.9 | ||||||||||||||||||||||
| Benefit from (provision for) income taxes | 348 | 49 | 299 | 610.2 | 264 | (74 | ) | 338 | 456.8 | |||||||||||||||||||||||
| Loss related to discontinued operations | - | (316 | ) | 316 | 100.0 | - | (570 | ) | 570 | 100.0 | ||||||||||||||||||||||
| Net (loss) income | (124 | ) | (1,095 | ) | 971 | 88.7 | 645 | (1,145 | ) | 1,790 | 156.3 | |||||||||||||||||||||
| Less: Net (loss) income attributable to non - controlling interest | 40 | (36 | ) | 76 | 211.1 | 243 | 115 | 128 | 111.3 | |||||||||||||||||||||||
| Net (loss) income attributable to CTM Media Holdings, Inc. | $ | (164 | ) | $ | (1,059 | ) | $ | 895 | 84.5 | $ | 402 | $ | (1,260 | ) | $ | 1,662 | 131.9 | |||||||||||||||
| (in thousands) | Three months ended April 30, | Change | Nine Months ended April 30, | Change | ||||||||||||||||||||||||||||
| 2011 | 2010 | $ | % | 2011 | 2010 | $ | % | |||||||||||||||||||||||||
| Revenues | $ | 3,714 | $ | 4,051 | $ | (337 | ) | (8.3 | ) | $ | 12,754 | $ | 12,890 | $ | (136 | ) | (1.1 | ) | ||||||||||||||
| Direct cost of revenues | 1,566 | 1,714 | (148 | ) | (8.6 | ) | 4,709 | 5,090 | (381 | ) | (7.5 | ) | ||||||||||||||||||||
| Selling, general and administrative | 2,625 | 2,458 | 167 | 6.8 | 8,147 | 7,080 | 1,067 | 15.1 | ||||||||||||||||||||||||
| Depreciation and amortization | 195 | 187 | 8 | 4.3 | 518 | 586 | (68) | (11.6 | ) | |||||||||||||||||||||||
| Bad debt expense | (16 | ) | 36 | (52 | ) | (144.4 | ) | 69 | 91 | (22 | ) | (24.2 | ) | |||||||||||||||||||
| (Loss) income from operations | $ | (656 | ) | $ | (344 | ) | $ | (312 | ) | 90.7 | $ | (689 | ) | $ | 43 | $ | (732 | ) | (1,702.3 | ) | ||||||||||||
| (in thousands) | Three Months ended April 30, | Change | Nine Months ended April 30, | Change | ||||||||||||||||||||||||||||
| 2011 | 2010 | $ | % | 2011 | 2010 | $ | % | |||||||||||||||||||||||||
| Revenues | $ | 3,077 | $ | 2,782 | $ | 295 | 10.6 | $ | 10,363 | $ | 8,541 | $ | 1,822 | 21.3 | ||||||||||||||||||
| Direct cost of revenues | 1,880 | 1,892 | (12 | ) | (0.6 | ) | 6,209 | 5,498 | 711 | 12.9 | ||||||||||||||||||||||
| Selling, general and administrative | 1,025 | 1,193 | (168 | ) | (14.1 | ) | 3,104 | 3,288 | (184 | ) | (5.6 | ) | ||||||||||||||||||||
| Depreciation and amortization | 5 | 11 | (6 | ) | (54.5 | ) | 26 | 67 | (41 | ) | (61.2 | ) | ||||||||||||||||||||
| Income from operations | $ | 167 | $ | (314 | ) | $ | 481 | 153.2 | $ | 1,024 | $ | (312 | ) | $ | 1,336 | 428.2 | ||||||||||||||||
| (in thousands) | Nine months ended April 30, | |||||||
| 2011 | 2010(i) | |||||||
| Cash flows provided by (used in): | ||||||||
| Operating activities | $ | 846 | $ | 1,870 | ||||
| Investing activities | 40 | (734 | ) | |||||
| Financing activities | (1,721 | ) | (1,401 | ) | ||||
| Decrease in cash and cash equivalents from continuing operations | $ | (835 | ) | $ | (265 | ) | ||
| Discontinued operations | - | (415 | ) | |||||
| Decrease in cash and cash equivalents | (835 | ) | (680 | ) | ||||
Trade accounts receivable decreased to $3,998,000approximately $4,758,000 at April 30, 20112022, compared to $4,274,000$5,431,000 at JulyOctober 31, 2010.2021 principally due to changes in the accruals and collection of IDWE 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 decreased to 17.7%was 0% at April 30, 2011 compared2022 and at October 31, 2021, reflecting our collectible receivable experience.
Off- Balance Sheet Arrangements
We do not have any “off-balance sheet arrangements,” as defined in relevant SEC regulations that are reasonably likely to 18.2% at July 31, 2010.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
On August 6, 2021, IDWMH closed a registered public offering of Class B common stock and EF Hutton, as representative of the Underwriters exercised the overallotment option included as part of the offering in full. The Company sold an aggregate of 2,875,000 shares of the Company’s Class B common stock for gross consideration of $10,350,000 less Underwriters commissions of $724,500 and Underwriters expenses of $75,000.
The Company is using the net proceeds we received from the offering principally for the development of original IP and the purchase of associated publishing, media, and merchandise rights to be used across multiple platforms (e.g., print, television, new media) as well as supplemental IP acquisition and marketing spend for these newly created IP franchises, and additionally for technology investment for our website, applications, data and business intelligence; talent investment as we look to expand our kids, middle grade, young adult, and family genres, and to further diversify into animation. The Company also seeks to pursue potential acqui-hire and/or bolt-on mergers and acquisition opportunities, should such opportunities arise.
We do not have any 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 whereinvest our net proceeds in short-term, interest-bearing bank deposits or debt instruments.
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 $500,000, with the average acquisition being less than $100,000 If we were to pursue an acquisition in excess of $500,000 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 investmentreturn-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 (a) the temporary closure of IDWP’s comic book distributor due to COVID-19 disruptions, and (b) production delays of IDWE’s television show Wynonna Earp. Its production schedule had been delayed which was a direct result of the COVID-19 pandemic that had affected virtually the entire filmed entertainment industry. This production delay had negatively impacted the delivery, which in turn pushed out our cash receipts.
In addition,the fourth quarter of fiscal 2020 we willpaid “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 two of Wynonna Earp from the current licensor (Netflix) and had agreed to transfer those rights to Cineflix. Cineflix is now the international distributor of all four seasons of Wynonna Earp. Due to changes in competition as well as the COVID-19 pandemic, the Cineflix deal did not contribute revenue and operating cash flow in fiscal year 2021 at the levels originally anticipated at the inception of the deal.
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 placing demands on the Company’s resources, and management and the Board determined that it was in the best interests of the stockholders to utilize approximately $2,000,000 annuallyavailable 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 pay the regular quarterlypayment of dividends in future periods will depend on the amountfinancial position, results of $0.06 per share, subject to confirmation by our management that there is sufficient surplus as of the proposed future payment datesoperations, prospects and other circumstances existingcurrent and projected competing demands for cash resources at the relevant times.time. The Company continues its position of prudent and conservative cash management and is committed to using all of its resources to maximize shareholder value, balancing short, medium and long-term interests.
Item 3. Quantitative and Qualitative Disclosures About Market Risks
There is a foreign currency exchange risk associated with IDWE’s arrangements with special-purpose entities, formed for the sole purpose of providing production services in Canada, as the value of assets denominated in CAD will fluctuate due to changes in exchange rates, which will affect our production costs.
Foreign Exchange Balances Held in CAD (in thousands) | April 30, 2022 | October 31, 2021 | ||||||
| Cash and cash equivalents | $ | 93 | $ | 85 |
Item 4. ControlsControl and Procedures
Evaluation of Disclosure Controls and Procedures.
Our management, with the participation of April 30, 2011, our Chief Executive Officer (“CEO”)and our Chief Financial Officer (“CFO”) have evaluated the effectiveness of our disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) underas of April 30, 2022 pursuant to Rule 13a-15(b) of the Securities Exchange Act of 1934, as amended) and concluded that our disclosureamended (“Exchange Act”). Disclosure controls and procedures were effectiveare designed to ensure that the information required to be disclosed by us in this Quarterly Report on Form 10-Q was (i)the reports that we file or submit under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and regulationsforms and (ii)that such information is accumulated and communicated to our management, including our Chief Executive OfficerCEO and Chief Financial Officer,CFO, as appropriate, to allow timely decisions regarding required disclosure.
Changes in Internal Control over Financial Reporting.
There were no changes in our internal control over financial reporting that occurred during the nine monthsquarter ended April 30, 20112022, that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.
Part II. OTHER INFORMATION
Item 1. Legal Proceedings.Proceedings
None
Item 1A.1A Risk Factors.Factors
There arehave been no material changes fromto the risk factors previously disclosedRisk Factors set forth in Item 1A to Part I of our Annual Report on Form 10-K for the fiscal year ended JulyOctober 31, 2010.2021, except for the following:
Item 1B. Unresolved Staff Comments.
None
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds.Proceeds
None
Item 3. Defaults Uponupon Senior Securities.Securities
None
Item 4. Removed and ReservedMine Safety Disclosures
Not applicable
Item 5. Other Information
None
Item 6. Exhibits Financial Statement Schedules.
Exhibit Number | Description | |
| 31.1* | Certification of Chief Executive Officer pursuant to 17 CFR 240.13a-14(a), as adopted pursuant to §302 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* | Inline XBRL Instance Document - the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document. | |
| 101.SCH* | Inline XBRL Taxonomy Extension Schema Document | |
| 101.CAL* | Inline XBRL Taxonomy Extension Calculation Linkbase Document | |
| 101.DEF* | Inline XBRL Taxonomy Extension Definition Linkbase Document | |
| 101.LAB* | Inline XBRL Taxonomy Extension Label Linkbase Document | |
| 101.PRE* | Inline XBRL Taxonomy Extension Presentation Linkbase Document | |
| 104* | Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101) |
| Filed or furnished herewith. |
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.
| Date: June 14, | By: | /s/ | |
| Name: | Ezra Y. Rosensaft | ||
| Title: | Chief Executive Officer | ||
| Date: June 14, | By: | /s/ | |
| Name: | Brooke T. Feinstein | ||
| Title: | Chief Financial Officer | ||
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