UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

x	QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

FOR THE QUARTERLY PERIOD ENDED OCTOBER 31, ~~2009~~2010

¨	TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

Commission File Number: 000-53718

CTM MEDIA HOLDINGS, INC.

(Exact Name of Registrant as Specified in its Charter)


Delaware	26-4831346
(State or other jurisdiction of incorporation or organization)	(I.R.S. Employer Identification Number)

11 Largo Drive South, Stamford, Connecticut	06907
(Address of principal executive offices)	(Zip Code)

(203) 323-5161

(Registrant’s telephone number, including area code)

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes x No ¨

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes ¨No ¨

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.


Large accelerated filer ¨		Accelerated filer ¨
Non-accelerated filer ¨ (Do not check if a smaller reporting company)		Smaller reporting company x

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act.): Yes ¨ No x

As of December ~~10, 2009,~~13, 2010, the registrant had the following shares outstanding:


Class A common stock, $0.01 par value:	~~1,285,818~~1,106,468 shares outstanding (excluding 178,517 treasury shares)
Class B common stock, $0.01 par value:	~~6,923,450~~6,126,267 shares outstanding (excluding 797,183 treasury shares)
Class C common stock, $0.01 par value:	1,090,775 shares outstanding

~~Table of Contents~~

CTM MEDIA HOLDINGS, INC.

TABLE OF CONTENTS



PART I. FINANCIAL INFORMATION		32

Item 1.	Financial ~~Statements (Unaudited)~~ Statements.	2

	Condensed Consolidated Balance Sheets as of October 31, 2010 (unaudited) and July 31, 2010.	2

	Condensed Consolidated Statements of Operations (unaudited) for the three months ended October 31, 2010 and 2009.	3

	~~Condensed Consolidated Balance Sheets~~	3

	Condensed Consolidated Statements of ~~Operations~~ Cash Flows (unaudited) for the three months ended October 31, 2010 and 2009.	4

	~~Condensed Consolidated Statements of Cash Flows~~	5

	Notes to Condensed Consolidated Financial Statements (unaudited).	65

Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations .	11
~~Item 3.~~	~~Quantitative and Qualitative Disclosures About Market Risk~~	189

Item ~~4T.~~3.	~~Controls~~Quantitative and ~~Procedures~~ Qualitative Disclosures about Market Risk.	1816

Item 4.	Controls and Procedures.	16

PART II. OTHER INFORMATION		1916

Item 1.	Legal ~~Proceedings~~ Proceedings.	1916

Item 1A.	Risk ~~Factors~~ Factors.	1916

Item 2.	Unregistered Sales of Equity Securities and Use of ~~Proceeds~~ Proceeds.	1916

Item 3.	Defaults Upon Senior ~~Securities~~ Securities.	1916

Item 4.	~~Submission of Matters to a Vote of Security Holders~~ (Removed and Reserved)	1916

Item 5.	Other ~~Information~~ Information.	1917

Item 6.	~~Exhibits~~ Exhibits.	2017

SIGNATURES		2118

~~Table of Contents~~

PART I. FINANCIAL INFORMATION

Item 1. Financial Statements ~~(Unaudited)~~

CTM MEDIA HOLDINGS, INC.

CONDENSED CONSOLIDATED BALANCE SHEETS


(in thousands)	October 31, 2010			July 31, 2010
Assets	(Unaudited)
Current assets:
Cash and cash equivalents	$	6,435		$	6,516
Short term investment		1,030			1,030
Trade accounts receivable, net		3,514			3,496
Inventory – Finished goods		1,585			1,462
Prepaid expenses		904			965
Note – receivable – current portion		415			321
Total current assets		13,883			13,790
Property and equipment, net		2,061			2,013
Licenses and other intangibles, net		9			17
Note receivable – non-current portion		2,325			2,400
Other assets		181			181
Total assets	$	18,459		$	18,401
Liabilities and stockholders’ equity
Current liabilities:
Trade accounts payable	$	1,112		$	1,187
Accrued expenses		1,499			1,539
Deferred revenue		1,323			2,035
Due to IDT Corporation		44			38
Income tax payable		822			770
Dividends payable		999			-
Capital lease obligations—current portion		244			227
Other current liabilities		440			646
Total current liabilities		6,483			6,442
Capital lease obligations—long-term portion		373			286
Total liabilities		6,856			6,728
Stockholders’ Equity:
CTM Media Holdings, Inc. stockholders’ equity:
Preferred stock, $.01 par value; authorized shares—10,000; no shares issued at October 31, 2010 and July 31, 2010		—			—
Class A common stock, $0.01 par value; authorized shares—35,000; 1,285 shares issued and 1,106 shares outstanding at October 31, 2010 and July 31, 2010		13			13
Class B common stock, $0.01 par value; authorized shares—65,000; 6,923 shares issued and 6,126 shares outstanding at October 31, 2010 and July 31, 2010		69			69
Class C common stock, $0.01 par value; authorized shares—15,000; 1,091 shares issued and outstanding at October 31, 2010 and July 31, 2010		11			11
Additional paid-in capital		57,662			58,548
Treasury Stock, at cost, consisting of 179 shares of shares of Class A and 797 shares of class B at October 31, 2010 and July 31, 2010		(1,070	)		(1,070	)
Accumulated other comprehensive income		149			117
Accumulated deficit		(45,526	)		(46,235	)
Total CTM Media Holdings, Inc. stockholders’ equity		11,308			11,453
Non-controlling interests		295			220
Total equity		11,603			11,673
Total liabilities and stockholders’ equity	$	18,459		$	18,401

See accompanying notes to condensed consolidated financial statements.

(in thousands) October 31, 2009 July 31, 2009
Assets
Current assets:
  Cash and cash equivalents
$ 10,163 $ 6,480
  Short term investment
1,026 1,024
  Trade accounts receivable, net
2,595 3,908
  Inventory
1,484 1,405
  Prepaid expenses
1,040 983
Total current assets                                                                                                                      16,308 13,800
     Property and equipment, net                                                                                                                      4,067 4,243
     Licenses and other intangibles, net                                                                                                                      557 587
     Other assets                                                                                                                      162 159
Total assets                                                                                                                      $ 21,094 $ 18,789
Liabilities and equity (deficit)
Current liabilities:
  Trade accounts payable
$ 960 1,024
  Accrued expenses
2,247 2,050
  Deferred revenue
1,218 1,731
  Due to IDT Corporation
— 24,921
  Capital lease obligations—current portion
225 222
  Other current liabilities
664 563
Total current liabilities                                                                                                                      5,314 30,511
    Capital lease obligations—long-term portion                                                                                                                      474 529
Total liabilities                                                                                                                      5,788 31,040
Commitments and contingencies —
Equity (deficit):
  CTM Media Holdings, Inc.  stockholders’ equity:
        Preferred stock, $.01 par value; authorized shares—10,000; no shares issued — —
        Class A common stock, $.01 par value; authorized shares—35,000; 1,286 shares issued
            and outstanding at October 31, 2009
13 —
        Class B common stock, $.01 par value; authorized shares—65,000; 6,923 shares issued
             and outstanding at October 31, 2009
69 —
        Class C common stock, $.01 par value; authorized shares—15,000; 1,091 shares issued
              and outstanding at October 31, 2009
11 —
        Additional paid-in capital                                                                                                                      60,360 33,141
        Accumulated other comprehensive income                                                                                                                      129 124
          Accumulated deficit
(46,966 ) (47,483 )
           Total CTM Media Holdings, Inc. stockholders’ equity (deficit)                                                                                                                      13,616 (14,218 )
   Noncontrolling interests
1,690 1,967
           Total equity (deficit)                                                                                                                      15,306 (12,251 )
           Total liabilities and equity (deficit)                                                                                                                      $ 21,094 $ 18,789

CTM MEDIA HOLDINGS, INC.

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(Unaudited)

	Three Months Ended October 31,
(in thousands, except per share data)	2010			2009

Revenues	$	8,649		$	8,233
Costs and expenses:
Direct cost of revenues		3,761			3,748
Selling, general and administrative (i)		3,814			3,183
Depreciation and amortization		171			228
Bad debt		46			3
Total costs and expenses		7,792			7,162
Income from operations		857			1,071
Interest income (expense), net		15		(18		)
Other expense, net		(7	)		(7	)
Income from continuing operations before income taxes		865			1,046
Provision for income taxes		(68	)		(238	)
Income from continuing operations		797			808

Discontinued operations, net of tax: (Note 2)
Loss from discontinued operations		—			(132	)
Net Income		797			676

Less - net income attributable to non-controlling interests		(87	)		(158	)
Net income attributable to CTM Media Holdings, Inc.	$	710		$	518

Amounts Attributable to CTM Media Holdings, Inc. common stockholders:
Income from continuing operations		710			650
Loss from discontinued operations		—			(132	)
Net income attributable to CTM Media Holdings, Inc.		710			518
Basic and diluted income (loss) per share attributable to CTM Media Holdings, Inc. common stockholders:
Income from continuing operations	$	0.08		$	0.08
Loss from discontinued operations	$	—		$	(0.02	)
Net income per share	$	0.08		$	0.06

Weighted-average number of shares used in calculation of basic and diluted income per share:		8,323			7,848

Dividend declared per common share:	$	0.12		$	—

(i) Stock-based compensation included in selling, general and administrative expenses	$	112		$	19

See accompanying notes to condensed consolidated financial statements.

~~Table of Contents~~

~~CTM MEDIA HOLDINGS, INC.~~

~~CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS~~

Three Months ended October 31,
(in thousands, except per share data)
2009 2008
Revenues                                                                                                                        $ 8,435 $ 9,056
Costs and expenses:
    Direct cost of revenues (exclusive of depreciation and amortization)
3,748 3,589
    Selling, general and administrative
3,441 4,534
    Depreciation and amortization
274 420
    Bad debt
33 76
    Severance charges
— 414
Total costs and expenses                                                                                                                        7,496 9,033
Income from operations                                                                                                                        939 23
Interest expense, net                                                                                                                        (18 ) (16 )
Other expense, net                                                                                                                        (7 ) (3 )
Income before income taxes                                                                                                                        914 4
Provision for income taxes                                                                                                                        (238 ) (168 )
Net income (loss)                                                                                                                        $ 676 $ (164 )

Less: net income attributable to non-controlling interests                                                                                                                        (158 ) (151 )
Net income (loss) attributable to CTM Media Holdings, Inc.
518 (315 )

Earnings (loss) per share attributable to CTM Media Holdings, Inc. common stockholders:
Basic
$ 0.08 $ (0.05 )
Diluted
$ 0.07 $ (0.05 )
Weighted-average number of shares used in calculation of earnings (loss) per share:
Basic
6,697 6,684
Diluted
7,679 6,684

~~See accompanying notes to condensed consolidated financial statements.~~

~~Table of Contents~~

CTM MEDIA HOLDINGS, INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited)

Three Months ended October 31,
(in thousands)
2009 2008
Operating activities
Net income (loss)                                                                                                                      $ 676 $ (164 )
Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities:
    Depreciation and amortization
274 420
    Provision for doubtful accounts receivable
33 76
    Stock-based compensation
19 4
Change in assets and liabilities:
    Trade accounts receivable
1,264 589
    Inventory, prepaid and other assets
(138 ) (205 )
    Trade accounts payable, accrued expenses, and other current liabilities
251 (51 )
    Deferred revenue
(513 ) (729 )
Net cash provided by (used in) operating activities                                                                                                                      1,866 (60 )
Investing activities
Capital expenditures                                                                                                                      (65 ) (243 )
Net cash used in investing activities                                                                                                                      (65 ) (243 )
Financing activities
Distributions to holders of noncontrolling interests                                                                                                                      (435 ) (340 )
Funding provided by IDT Corporation, net                                                                                                                      2,371 579
Repayments of capital lease obligations                                                                                                                      (54 ) (36 )
Net cash provided by financing activities                                                                                                                      1,882 203
Net increase (decrease) in cash and cash equivalents                                                                                                                      3,683 (100 )
Cash and cash equivalents at beginning of year                                                                                                                      6,480 5,590
Cash and cash equivalents at end of year                                                                                                                      $ 10,163 $ 5,490

Supplemental schedule of non-cash investing and financing activities
    Purchases of property and equipment through capital lease obligations
$ - $ 95

Three Months ended October 31, (in thousands)	2010			2009
Operating activities
Net income	$	797		$	676
Adjustments to reconcile net income to net cash provided by operating activities:
Loss from discontinued operations		—			132
Depreciation and amortization		171			228
Provision for doubtful accounts receivable		46			3
Stock-based compensation		112			19
Change in assets and liabilities:
Trade accounts receivable		(27	)		1,360
Inventory, prepaid and other assets		(84	)		(139	)
Trade accounts payable, accrued expenses, and other current liabilities		(263	)		349
Deferred revenue		(712	)		(511	)
Net cash provided by operating activities		40			2,117
Investing activities:
Capital expenditures		(46	)		(62	)
Cash used in investing activities		(46	)		(62	)
Financing activities:
Distributions to holders of non controlling interests		(12	)		(435	)
Funding provided by IDT Corporation, net		—			2,107
Repayments of capital lease obligations		(63	)		(54	)
Net cash (used in) provided by financing activities		(75	)		1,618
Discontinued operations:
Net cash used in operating activities		—			(251	)
Net cash used in investing activities		—			(3	)
Net cash provided by financing activities		—			264
Net cash provided by discontinued operations		—			10

Net (decrease) increase in cash and cash equivalents		(81	)		3,683

Cash and cash equivalents at beginning of period		6,516			6,480

Cash and cash equivalents at end of period	$	6,435		$	10,163

Supplemental schedule of non cash investing and financing activities
Cash paid for interest	$	8		$	10
Purchases of property and equipment through capital lease obligations	$	166		$	—
Dividends payable	$	999		$	—

The effect of exchange rate changes on cash and cash equivalents is not material.

See accompanying notes to condensed consolidated financial statements.

~~Table of Contents~~

CTM MEDIA HOLDINGS, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

Note 1—Basis of Presentation

The accompanying unaudited condensed consolidated financial statements of CTM Media Holdings, Inc. and its subsidiaries (the “Company” or “Holdings”) have been prepared by Management in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”) for interim financial information and with the instructions to Form 10-Q and Article 10 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by U.S. GAAP for complete financial statements. In the opinion of management, all adjustments (consisting principally of normal recurring accruals) considered necessary for a fair presentation have been included. Operating results for the three months ended October 31, ~~2009~~2010 are not necessarily indicative of the results that may be ~~expected~~exp ected for the fiscal year ending July 31, ~~2010.~~2011. The balance sheet at July 31, ~~2009~~2010 has been derived from the Company’s audited financial statements at that date but does not include all of the information and footnotes required by U.S. GAAP for complete financial statements. For further information, please refer to the consolidated financial statements and footnotes thereto included in the Company’s Annual Report on Form 10-K for the year ended July 31, ~~2009,~~2010, as filed with the U.S. Securities and Exchange Commission (the “SEC”).

The Company’s fiscal year ends on July 31 of each calendar year. Each reference below to a fiscal year refers to the fiscal year ending in the calendar year indicated (e.g., fiscal ~~2010~~2011 refers to the fiscal year ending July 31, ~~2010)~~2011).

On August 1, 2009, the Company adopted the accounting standard relating to noncontrolling interests in consolidated financial statements (see Note 11).The Company’s management evaluated events or transactions that occurred after October 31, 2009 through December 15, 2009 for potential recognition or disclosure in the financial statements.

Holdings is a holding company consisting of the following principal businesses:

CTM Media Group (“CTM”), the Company’s brochure distribution company and other advertising-based product initiatives focused on small to medium sized businesses; and

The Company’s majority interest in Idea and Design Works, LLC (“IDW”), which is a comic book and graphic novel publisher that creates and licenses intellectual ~~property; and~~property.

~~The WMET-AM radio station in the Washington, D.C. metropolitan area (“WMET”).~~

Holdings was formerly a subsidiary of IDT Corporation (“IDT Corporation” or “IDT”) formed on May 8, 2009. On September 14, 2009, Holdings was spun-off by IDT to its stockholders and became an independent public company (the “Spin-Off”). IDT transferred its ownership in all of the entities that became Holdings’ consolidated subsidiaries to Holdings prior to the Spin-Off. The entities that became direct or indirect subsidiaries of the Holdings are: CTM; Beltway Acquisition Corporation; IDT Local Media, Inc. (which conducted certain operations related to CTM with only the Local Pull business currently still active) and IDT Internet Mobile Group, Inc. (“IIMG”). IIMG ~~owns~~had owned approximately 53% of the equity interests in ~~IDW (see Note 10 for subsequent purchase of~~IDW. On November 5, 2009, the Company purchased an additional 23.33 5% interest in ~~IDW).~~IDW for a purchase price of $0.4 million in cash. As a result of the transaction, the Company owns a 76.665% interest in IDW. The acquisition was accounted for in the second quarter of fiscal 2010, as an equity transaction, in accordance with the accounting standards on non-controlling interests. All indebtedness owed by any of these entities to IDT Corporation or its affiliates was converted into a capital ~~contribution.~~contribution prior to the Spin-Off. All references to the Company, its assets and results of operations for periods prior to the actual formation of the Company, refer to the subsidiaries of IDT that are now owned by the Company, and their consolidated assets and results of operations.

Holdings’ authorized capital stock currently consists of (a) 35 million shares of Class A common stock, (b) 65 million shares of Class B common stock, (c) 15 million shares of Class C common stock, and (d) 10 million shares of Preferred Stock. IDT Corporation completed the Spin-Off through a pro rata distribution of Holdings common stock to IDT Corporation’s stockholders of record as of the close of business on August 3, 2009 (the “record date”). As a result of the Spin-Off, each of IDT Corporation’s stockholders received: (i) one share of Holdings’ Class A common stock for every three shares of IDT Corporation’s common stock held on the record date; (ii) one share of Holdings’ Class B common stock for every three shares of IDT Corporation’s Class B common stock held on the record date; (iii) one share of Holdings’ Class C common stock for every three shares of the IDT Corporation’s Class A common stock held on the record date; and (iv) cash from IDT Corporation in lieu of a fractional share of all classes of Holdings’ common stock. On September 14, 2009, as a result of the Spin-Off, Holding’s had 1.3 million shares of Class A common stock, 5.1 million shares of Class B common stock and 1.1 million shares of Class C common stock issued and outstanding.

On October 19, 2010, the Company’s Board of Directors passed resolutions to amend (the “Amendment”) the Company’s Second Restated Certificate of Incorporation to decrease the authorized number of shares of (i) Class A common stock from 35 million shares to 6 million shares, (ii) Class B common stock from 65 million shares to 12 million shares, (iii) Class C common stock from 15 million shares to 2.5 million shares, and (iv) Preferred Stock from 10 million shares to 500,000 shares. The Amendment was approved on November 12, 2010, by written consent of the holders of a majority of the shares of each class of the Company’s outstanding capital stock, holding shares of the Company’s common stock (which included 560,234 shares of Class A common stock, 3,573,472 shares of Class B common sto ck and 1,090,775 shares of Class C common stock which are convertible into shares of Class A common stock on a 1-for-1 basis), representing approximately 50.1%, 58%, and 100%, respectively of the combined voting power of the Company’s outstanding Class A, Class B and Class C common stock, as of October 29, 2010. An Information Statement disclosing the Amendment and its approval was mailed to stockholders on or about November 29, 2010 and the Amendment will become effective on December 20, 2010, which is at least twenty days after mailing of the Information Statement.

Prior to the Spin-Off, IDT Corporation provided certain services to the entities that became Holdings’ consolidated subsidiaries. Holdings and IDT Corporation entered into a Master Services Agreement, dated September 14, 2009, pursuant to which IDT Corporation ~~will continue~~continues to provide to Holdings, among other things, certain administrative and other services. In addition, pursuant to the Master Services Agreement, IDT Corporation ~~will provide~~provides certain additional services to Holdings, on an interim basis. Such services include assistance with periodic reports required to be filed with the SEC, as well as maintaining minutes, books and records of meetings of the Board of Directors, Audit Committee and Compensation Committee, as well as assistance with corporate

~~Table of Contents~~

governance. The cost of these additional services are not included in Holdings’ historical results of operations for the period prior to the Spin-Off, as they were not applicable for periods that Holdings was not a separate public company.

Note 2—Discontinued Operations

Sale of assets of WMET Radio

Summary Financial Data of Discontinued Operations

Revenues and loss (in millions) before income taxes of WMET, which are included in discontinued operations, were as follows:

	Three Months Ended October 31,
	2010		2009

Revenue	$	—	$	0.2
Loss before income taxes and net loss		—		(0.1	)

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

Note 3—Stock Repurchase and Cash Dividend

On November 17, 2009, the Company commenced a tender offer to purchase up to thirty percent of its outstanding common stock. The Company offered to purchase up to 0.4 million shares of its Class A common stock and up to 2.4 million shares of its Class B common stock, at a price per share of $1.10. The offer expired on December 22, 2009 and pursuant to the offer, the Company repurchased 0.2 million shares of Class A common stock and 0.8 million shares of Class B common stock for an aggregate purchase price of $1.1 million, representing approximately 14% of its total outstanding capital stock at the time.

The Company paid a cash dividend in the amount of $0.25 per share (approximately $2.1 million in the aggregate), $0.06 per share (approximately $0.5 million in the aggregate), and $0.12 per share (approximately $1 million in the aggregate), on March 15, 2010, June 15, 2010 and November 9, 2010, respectively, to stockholders of record as of March 8, 2010, May 3, 2010 and November 1, 2010, respectively, of the Company’s Class A, Class B and Class C common stock.

In addition, on October 19, 2010, our Board of Directors approved the payment of regular quarterly dividends in the amount of $0.06 per share, subject to confirmation by our management that there is sufficient surplus as of the proposed future payment dates and other circumstances existing at the relevant times.

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

Note 2—4—Earnings Per Share

Basic earnings per share is computed by dividing net income attributable to all classes of common stockholders by the weighted average number of shares of all classes of common stock outstanding during the applicable period. Diluted earnings per share is computed in the same manner as basic earnings per share, except that the number of shares is increased to include non-vested restricted stock using the treasury stock method, unless the effect of such increase is anti-dilutive. For the three months ended October 31, 2008, the diluted earnings per share equal basic earnings per share because the Company had losses from operations and the impact of the 831 thousand shares of non-vested restricted stock would have been anti-dilutive.

~~The earnings per share for the periods prior to the Spin-Off were calculated as if the number of shares outstanding at the Spin-Off were outstanding during those periods.~~

Note 3—5—Equity

Changes in the components of stockholders’ equity were as follows:

Three Months Ended
October 31, 2009

Attributable to Holdings
Noncontrolling Interests Total
(in thousands)
Balance, July 31, 2009
$ (14,218 ) $ 1,967 $ (12,251 )

Cash contribution and capitalization of balance due to IDT Corporation
27,292 — 27,292
Stock based compensation
19 — 19
Cash distributions
— (435 ) (435 )
Comprehensive loss:
    Net income
518 158 676
    Other comprehensive income
5 — 5

    Comprehensive income
523 158 681

Balance, October 31, 2009
$ 13,616 $ 1,690 $ 15,306

~~On August 1, 2009, the Company adopted the accounting standard relating to noncontrolling interests in consolidated financial statements (see Note 11).~~

	Three Months Ended October 31,2010
	Attributable to Holdings			Non-controlling Interests			Total
	(in thousands)
Balance, July 31, 2010	$	11,453		$	220		$	11,673

Stock based compensation		112			—			112
Cash distributions		—			(12	)		(12	)
Cash dividends		(999	)		—			(999	)
Comprehensive income:
Net income		710			87			797
Other comprehensive income		32			—			32

Comprehensive income		742			87			829

Balance, October 31, 2010	$	11,308		$	295		$	11,603

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

On September 3, 2009, the Company’s Compensation Committee ratified the Company’s 2009 Stock Option and Incentive Plan (the “Company’s Stock Option and Incentive Plan”), which was previously adopted by the Company’s Board of Directors and approved by IDT Corporation as ~~its~~the Company’s sole stockholder, to provide incentives to executive officers, employees, directors and consultants of the Company and/or its subsidiaries. The maximum number of shares of the Company’s Class B common stock reserved for the grant of awards under the Company’s Stock Option and Incentive Plan ~~shall be~~is 383,020, subject to adjustment. Incentives available under the Company’s Stock Option and Incentive Plan may include stock options, stock appreciation rights, limited stock appreciation rights, restricted ~~stock,~~sto ck, and deferred stock units.

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Under the Company’s Stock Option and Incentive Plan, the option price of each option award shall not be less than one hundred percent of the fair market value of the Company’s Class B common stock on the date of grant. Each option agreement shall provide the exercise schedule for the option as determined by the Compensation Committee. The exercise period will be ten years from the date of the grant of the option unless otherwise determined by the Compensation Committee. No awards have been granted under the Company’s Stock Option and Incentive Plan to date.

On October 14, 2009, the Company’s Board of Directors granted its Chairman and founder, Howard S. Jonas, 1.8 million restricted shares of the Company’s Class B common stock with a value of $1.25 million on the date of grant in lieu of a cash base salary for the next five years. The restricted shares will vest in equal thirds on each of October 14, 2011, October 14, 2012 and October 14, 2013. Unvested shares would be forfeited if the Company’s terminates Mr. Jonas’ employment other than under circumstances where accelerated vesting applies. The shares are subject to adjustments or acceleration based on certain corporate transactions, changes in capitalization, or termination, death or disability of Mr. Jonas. If Mr. Jonas is terminated by the Company for cause, a pro rata portion of the shares would vest and the remainder would be forfeited. This arrangement did not impact Mr. Jonas’ cash compensation from the date of the Spin-Off through the pay period including the grant date. Total unrecognized compensation cost on the grant date was $1.25 million. The unrecognized compensation cost has been and is expected to continue to be recognized over the vesting period from October 14, 2009 through October 14, 2014.

The Company repurchased $1.1 million of its Class A and Class B common stock in the second quarter ended January 31, 2010 in connection with the tender offer that expired on December 22, 2009.

Note 4—6—Comprehensive Income ~~(Loss)~~

Comprehensive income ~~(loss)~~ consists of net income ~~(loss)~~ and other gains and losses affecting equity that, under generally accepted accounting principles are excluded from net income. Changes in the components of other comprehensive income ~~(loss)~~ are described below.

Three Months Ended
October 31,

2009 2008
(in thousands)
Net income (loss)
$ 676 $ (164 )
Foreign currency translation adjustments
5 (59 )

Comprehensive income (loss)
681 (223 )
Comprehensive income (loss) attributable to noncontrolling interests
(158 ) (151 )
Comprehensive income (loss) attributable to CTM Media Holdings, Inc.
$ 523 $ (374 )

	Three Months Ended October 31,
	2010			2009
	(in thousands)
Net income	$	797		$	676
Foreign currency translation adjustments		32			5
Comprehensive income		829			681
Comprehensive income attributable to non-controlling interests		(87	)		(158	)
Comprehensive income attributable to CTM Media Holdings, Inc.	$	742		$	523

Note 5—7—Business Segment Information

The Company has the following two reportable business segments: CTM and IDW. CTM consists of ~~our~~the Company’s 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 results of operations of WMET do not comprise a separate segment and are reported under the heading “Other.” WMET-AM operates a radio station in the Washington, D.C. metropolitan area.~~

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 chief operating decision maker.

The accounting policies of the segments are the same as the accounting policies of the Company as a whole. The Company evaluates the performance of its business segments based primarily on operating ~~income (loss).~~income. There are no other significant asymmetrical allocations to segments.

Operating results for the business segments of the Company are as follows:

(in thousands)	CTM		IDW		Total
Three months ended October 31, 2010
Revenues	$	5,029	$	3,620	$	8,649
Operating income		495		362		857
Depreciation and amortization		159		12		171
Total assets at October 31, 2010	$	17,522	$	937	$	18,459
Three months ended October 31, 2009 (i)
Revenues	$	4,915	$	3,318	$	8,233
Operating income		763		308		1,071
Depreciation and amortization		197		31		228
Total assets at October 31, 2009	$	11,556	$	6,537	$	18,093

(in thousands) CTM IDW Other Total
Three months ended October 31, 2009
Revenues $ 4,915 $ 3,318 $ 202 $ 8,435
Operating income (loss) 762 308 (131 ) 939
Depreciation and amortization 197 32 45 274
Severance charges - - - -
Total assets at October 31, 2009 11,556 6,537 3,001 21,094
Three months ended October 31, 2008
Revenues $ 5,789 $ 2,950 $ 317 $ 9,056
Operating income(loss) (112 ) 313 (178 ) 23
Depreciation and amortization 210 84 126 420
Severance charges 395 19 - 414
Total assets at October 31, 2008 38,084 7,021 4,187 49,292

~~Note 6—Commitments~~ (i) Amounts for 2009 exclude assets and ~~Contingencies~~

~~The Company is subject to legal proceedings that have arisen in the ordinary course~~discontinued operations of business and have not been finally adjudicated. Although there can be no assurance in this regard, in the opinion of the Company’s management, none of the legal proceedings to which the Company is a party will have a material adverse effect on the Company’s results of operations, cash flows or its financial condition.

~~Note 7—Related Party Transaction~~

Up until the Spin-Off on September 14, 2009, IDT Corporation, the Company’s former parent company, charged the Company for certain transactions and allocated routine expenses based on company specific items. In addition, IDT Corporation controlled the flow of the Company’s treasury transactions. In September 2009, IDT Corporation funded the Company with an additional $2.0 million inWMET.

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~~cash in advance of the Spin-Off. Also on September 14, 2009, the aggregate of approximately $27.3 million of the amount due to IDT Corporation was converted into a capital contribution.~~Note 8—Provision for Income Taxes

~~Note 8 – Severance Charges~~

~~The charges in~~Provision for income taxes for the three months ended October 31, ~~2008 consists primarily of severance~~2010 and 2009 was $68,000 and $238,000 respectively. The decrease is due to the reduction in the provisions for federal, state and foreign income taxes. The reduction in the provision for federal and state income taxes amounts to $120,000 and is related to ~~a company-wide cost savings program initiated towards~~ the ~~end~~utilization of tax benefits that were created in periods subsequent to October 31, 2009. The reduction in foreign tax expense amounts to $50,000 and is proportional to the ~~third quarter of fiscal 2006.~~reduction in foreign earnings in the corresponding periods.

Note 9 – Tender Offer

On November 17, 2009, the Company commenced a tender offer to purchase up to thirty percent of its outstanding common ~~stock and on December 3, 2009, revised the number of shares it is offering to purchase pursuant to, and extended the expiration date of,~~stock. The Company concluded the tender ~~offer. The Company is offering to purchase up to 0.4~~offer and repurchased 0.2 million shares of ~~its~~ Class A common stock ~~or any lesser number of Class A shares that stockholders properly tender in the tender offer,~~ and ~~up to 2.4~~0.8 million shares of ~~its~~ Class B common stock ~~or any lesser number~~for an aggregate purchase price of ~~Class B shares that stockholders properly tender in the tender offer,~~$1.1 million, representing ~~up to thirty percent~~approximately 14% of its total outstanding capital stock at ~~a price per share of $1.10, for a maximum aggregate purchase price of $3.1 million. The tender offer is made upon~~ the terms and conditions set forth in the Offer to Purchase dated November 17, 2009, and the related Letter of Transmittal, each as amended and supplemented, which have been filed with the SEC and are being made available to Holdings stockholders. The offer will expire at 5:00 p.m., New York City time, on Thursday, December 17, 2009, unless extended by the Company. In accordance with the rules of the SEC, the Company may purchase up to an additional two percent of the outstanding shares of either or both classes without amending or extending the tender offer.time.

Note 10 – Purchase of ~~Noncontrolling~~Non-Controlling Interests in IDW

On November 5, 2009, the Company purchased aan additional 23.335% ~~noncontrolling~~ interest in IDW ~~that it did not own~~ for a purchase price of $0.4 ~~million. After~~million in cash. As a result of the transaction, the Company owns a 76.665% interest in IDW. The acquisition ~~will be~~was was accounted for in the second quarter of fiscal 2010 as an equity transaction, in accordance with the accounting standards on ~~noncontrolling~~non-controlling interests. ~~The Company acquired the additional noncontrolling interests as it determined that it was an attractive price as well as to reduce the number of noncontrolling interest shareholders in this business.~~

Note 11—~~Recently Adopted Accounting Standards and~~ Recently Issued Accounting Standards ~~Not Yet Adopted~~

~~In September 2009, the Company adopted changes issued by the~~The Financial Accounting Standards Board (“FASB”) periodically issues new accounting standards in a continuing effort to improve standards of financial accounting and reporting. We have reviewed the recently issued pronouncements and concluded that no new standards were issued this quarter that applied to the ~~authoritative hierarchy of U.S. GAAP. These changes establish~~Company.

In January 2010, the FASB issued Accounting Standards ~~Codification™ (the "Codification"~~Update (ASU) No. 2010-06, “Improving Disclosures about Fair Value Measurements” (“ASU 2010-06”) as, which is included in the ~~source~~ASC Topic 820 (Fair Value Measurements and Disclosures). ASU 2010-06 requires new disclosures on the amount and reason for transfers in and out of ~~authoritative U.S. GAAP~~Level 1 and 2 fair value measurements. ASU 2010-06 also requires disclosure of activities, including purchases, sales, issuances, and settlements within the Level 3 fair value measurements and clarifies existing disclosure requirements on levels of disaggregation and disclosures about inputs and valuation techniques. Except for ~~all non-governmental entities. Rules~~otherwise provided, ASU 2010-06 is effective for interim and interpretive releases of the SEC under authority of federal securities laws are also sources of authoritative U.S. GAAP for SEC registrants. The Codification did not change or alter existing U.S. GAAP.annual reporting periods beginning after December 15, 2009. The adoption of ~~these changes had no~~this standa rd did not have a material effect on the Company’s financial statements.

In February 2010, the FASB issued ASU No. 2010-09, “Amendments to Certain Recognition and Disclosure Requirements” (“ASU 2010-09”), which is included in ASC Topic 855 (Subsequent Events). ASU 2010-09 clarifies that an SEC filer is required to evaluate subsequent events through the date that the financial statements are issued. ASU 2010-09 was effective upon the issuance of the final update and did not have any impact on the Company’s financial ~~position, results of operations or cash flows.~~

~~On August 1, 2009, the Company adopted the accounting standard relating to noncontrolling interests in consolidated financial~~ statements. This standard clarifies that a noncontrolling interest in a subsidiary, which was previously referred to as a minority interest, is an ownership interest in the consolidated entity that should be reported as equity in the consolidated financial statements. Also, this standard requires consolidated net income (loss) to include the amounts attributable to both the parent and the noncontrolling interest, and it requires disclosure of the amounts of net income (loss) attributable to the parent and to the noncontrolling interest. Finally, this standard requires increases and decreases in the noncontrolling ownership interest amount to be accounted for as equity transactions, and the gain or loss on the deconsolidation of a subsidiary will be measured using the fair value of any noncontrolling equity investment rather than the carrying amount of the retained investment. As required by this standard, the Company retrospectively changed the classification and presentation of noncontrolling interests in its financial statements for all prior periods. The adoption of this standard did not have a material impact on the Company’s financial position, results of operations or cash flows.

In April 2009, the FASB issued a standard that amends the requirements for disclosures about fair value of financial instruments, which were previously only required in the annual financial statements of publicly traded companies. The standard requires such disclosures for interim reporting periods of publicly traded companies as well. The standard also requires entities to disclose the methods and significant assumptions used to estimate fair value of financial instruments in interim financial statements, and to highlight any changes in the methods and assumptions from prior periods. This standard was effective for the Company’s financial statements beginning on May 1, 2009. The adoption of this standard had no impact on the Company’s consolidated financial statements.

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initially measure at fair value and recognize all assets obtained and liabilities incurred as a result of a transfer of an entire financial asset or group of financial assets accounted for as a sale. Additionally, on and after the effective date, existing QSPEs must be evaluated for consolidation by reporting entities in accordance with the applicable consolidation guidance. These changes also require enhanced disclosures about, among other things, (a) a transferor’s continuing involvement with transfers of financial assets accounted for as sales, (b) the risks inherent in the transferred financial assets that have been retained, and (c) the nature and financial effect of restrictions on the transferor’s assets that continue to be reported in the statement of financial position. The Company is required to adopt these changes on August 1, 2010. The Company is currently evaluating the impact of these changes on its consolidated financial statements.

In June 2009, the FASB issued changes to the consolidation guidance applicable to a variable interest entity (“VIE”) including amending the guidance governing the determination of whether an enterprise is the primary beneficiary of a VIE, and is, therefore, required to consolidate an entity, by requiring a qualitative analysis rather than a quantitative analysis. The qualitative analysis will include, among other things, consideration of who has the power to direct the activities of the entity that most significantly impact the entity’s economic performance and who has the obligation to absorb losses or the right to receive benefits of the VIE that could potentially be significant to the VIE. The changes also require continuous reassessments of whether an enterprise is the primary beneficiary of a VIE and enhanced disclosures about an enterprise’s involvement with a VIE. The Company is required to adopt these changes on August 1, 2010. The Company is currently evaluating the impact of these changes on its consolidated financial statements

Note 12—Subsequent events

The Company completed a review and analysis of all events that occurred after the balance sheet date to determine if any such events must be reported and has determined that there are no subsequent events to be disclosed.

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Item 2. Management’s Discussion and Analysis of Financial Condition and Results of ~~Operations~~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 notes thereto and our Management’s Discussion and Analysis of Financial Condition and Results of Operations contained in our Annual Report on Form 10-K for the fiscal year ended July 31, ~~2009,~~2010, as filed with the ~~U.S. Securities and Exchange Commission (the “SEC”).~~SEC.

In accordance with Item 10-(f)(2)(ii) of Regulation S-K, we qualify as a “smaller reporting company” because our public float was below $75 million, calculated based on the actual share price on January 31, 2010, the ~~September 14, 2009 Spin-Off date~~last business day of its second fiscal quarter, and the aggregate number of shares distributed to non-affiliates. We therefore followed the disclosure requirements of Regulation S-K applicable to smaller reporting companies in this Quarterly Report on Form 10-Q.

As used below, unless the context otherwise requires, the terms “the Company,” “Holdings,” “we,” “us,” and “our” refer to CTM Media Holdings, Inc., a Delaware corporation, and our subsidiaries.

Forward-Looking Statements

This Quarterly Report on Form 10-Q contains forward-looking statements. Statements that are not historical facts are 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~~such forward-looking statements are ~~subject~~statements made pursuant to the Safe Harbor Provisions of the Private Securities Litigation Reform Act of 1995. Examples of forward-looking statements include:

• statements about Holdings’ and its divisions’ future performance;

• projections of Holdings’ and its divisions’ results of operations or financial condition; and

• statements regarding Holdings’ plans, objectives or goals, including those relating to its strategies, initiatives, competition, acquisitions, dispositions and/or its products.

Words such as “believe,” “anticipate,” “plan,” “expect,” “intend,” “target,” “estimate,” “project,” “predict,” “forecast,” “guideline,” “aim,” “will,” “should,” “likely,” “continue” and similar expressions are intended to identify forward-looking statements but are not the exclusive means of identifying such statements. Readers are cautioned not to place undue reliance on these forward-looking statements and all such forward-looking statements are qualified in their entirety by reference to the following cautionary statements.

Forward-looking statements are based on Holdings’ current expectations, estimates and assumptions and because forward-looking statements address future results, events and conditions, they, by their very nature, involve inherent risks and uncertainties, many of which are unforeseeable and beyond Holdings’ control. Such known and unknown risks, uncertainties and other factors may cause Holdings’ actual results, performance or other achievements to differ materially from the anticipated results, performance or achievements expressed, projected or implied by these forward-looking statements.

These factors include those discussed under the headings “Risk Factors” and “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in Holdings’ periodic filings made with the SEC.

Holdings cautions that ~~could~~such factors are not exhaustive and that other risks and uncertainties may cause actual results to differ materially from ~~the results projected~~those in ~~any~~ forward-looking ~~statement. In addition to the factors specifically noted in the forward-looking~~statements.

Forward-looking statements other important factors, risks and uncertainties that could result in those differences include, but are not limited to, those discussed under Item 1A to Part I “Risk Factors” in our Annual Report on Form 10-K for the fiscal year ended July 31, 2009. The forward-looking statements are madespeak only as of the date they are made and are statements of ~~this report~~Holdings’’ current expectations concerning future results, events and ~~we assume~~conditions and Holdings is under no obligation to update any of the forward-looking statements, whether as a result of new information, future events or ~~to update the reasons why actual results could differ from those projected in the forward-looking statements.~~otherwise. 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, including our Annual Report on Form 10-K for the fiscal year ended July 31, ~~2009.~~2010.

OVERVIEW

We are a former subsidiary of IDT ~~Corporation (“IDT”).~~Corporation. As a result of the Spin-Off, on September 14, 2009, we became an independent public company. ~~While many of the costs of being a public company were already borne by our business units – either directly or by allocation of corporate overhead from~~ IDT ~~– we now need~~Corporation continues to incur additional costs for the infrastructure to perform the necessary accounting, internal control and reporting functions. We expect to incur annual incremental costs of $300,000-$500,000 for these functions. A significant portion of theseprovide certain functions ~~will be provided by IDT~~ pursuant to ~~the~~a Master Services Agreement, dated September 14, 2009. During the three months ended October 31, 2010 and 2009, ~~between us~~our selling, general and ~~IDT.~~administrative expenses were $0.1 million and $.20.15 million, respectively, for all services and allocated expenses charged by IDT Corporation to us. At October 31, 2010 and 2009 the amount owed to IDT Corporation was $0.1 million and $0.2 million, respectively.

On May 5, 2010, the Company consummated the sale of substantially all of the assets used in the WMET radio station business (other than working capital). WMET 1160 AM is a radio station serving the Washington, D.C. metropolitan area. The sale price ~~per share~~for the WMET assets was $4 million in a combination of ~~$1.10, for~~cash and a ~~maximum aggregate~~promissory note of the buyer that is secured by the assets sold. $1.3 million of the purchase price was paid in cash at the closing and the remainder is owed pursuant to a two-year promissory note, which is extendable in part to three years at the option of ~~$3.1 million.~~the buyer. The ~~tender offer is made upon~~sale met the ~~terms and conditions set forth~~criteria to be reported as a discontinued operation in the ~~Offer to Purchase dated November 17, 2009,~~third quarter of fiscal 2010 and accordingly, WMET’s results are classified as part of discontinued operations during the related Letter of Transmittal, each as amended and supplemented, which have been filed with the SEC and are being made available to Holdings stockholders. The offer will expire at 5:00 p.m., New York City time, on Thursday, December 17, 2009, unless extended by the Company. In accordance with the rules of the SEC, the Company may purchase up to an additional two percent of the outstanding shares of either or both classes without amending or extending the tender offer.fiscal year 2010.

Our principal businesses consist of:

CTM Media Group (“CTM”), our brochure distribution company and other advertising-based new product initiatives focused on small to medium sized businesses; and

Our majority interest in Idea and Design Works, LLC (“IDW”), which is a comic book and graphic novel publisher that creates and licenses intellectual ~~property; and~~property.

~~The WMET-AM radio station in the Washington, D.C. metropolitan area (“WMET”).~~

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CTM

CTM develops and distributes print and mobile-based advertising and information in targeted tourist markets. Throughout its operating region, CTM operates ~~five~~four integrated and complimentary business lines: Brochure Distribution, Publishing, RightCardTM, and Digital Distribution. CTM had operated its Design & Print ~~Publishing, RightCard~~TM~~, and Digital Distribution.~~business, which it exited at the beginning of the fourth quarter of fiscal 2010. CTM offers its customers a comprehensive media marketing approach through these business lines. In fiscal ~~2009,~~2010, CTM serviced over ~~3,000~~2,600 clients and maintained more than 11,000 display stations in over 3028 states and provinces in the United States (including Puerto Rico) and Canada. CTM’s display stations are located in travel, tourism and entertainment venues, including hotels and other lodgings, corporate and community venues, ~~transportation~~transporta tion terminals and hubs, tourist attractions and entertainment venues. CTM’s revenues represented ~~58.3%~~58% and 60% of our consolidated revenues in the three months ended October 31, 2010 and 2009, ~~and 63.9% in the similar period in fiscal 2009.~~respectively.

IDW

IDW is a comic book and graphic novel publisher that creates and licenses intellectual property. IDW’s revenues represented ~~39.3%~~42% and 40% of our consolidated revenues in the three months ended October 31, 2010 and 2009, ~~and 32.6% in the similar period in fiscal 2009.~~respectively.

On November 5, 2009 we purchased aan additional 23.335% ~~noncontrolling~~ interest in IDW ~~that we did now own~~ for a purchase price of $0.4 million. ~~After this~~As a result of the transaction, we own a 76.665% interest in IDW.

~~WMET~~

WMET 1160 AM is a radio station serving the Washington, D.C. metropolitan area. WMET’s revenues represented 2.4% of our consolidated revenues in the three months ended October 31, 2009 and 3.5% in the similar period in fiscal 2009.

REPORTABLE SEGMENTS

We have the following two reportable business segments: CTM and IDW. ~~The results of operations of WMET do not comprise a separate reportable segment and are reported under the heading “Other.”~~

PRESENTATION OF FINANCIAL INFORMATION

Basis of presentation

The condensed consolidated financial statements for the periods reflect our financial position, results of operations, and cash flows as if the current structure existed for all periods presented. The financial statements have been prepared using the historical basis for the assets and liabilities and results of operations.

CRITICAL ACCOUNTING POLICIES

Our condensed consolidated financial statements and accompanying notes are prepared in accordance with accounting principles generally accepted in the United ~~States (“U.S. GAAP”).~~States. 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 ~~2009.~~2010. The preparation of financial statements requires management to make estimates and assumptions that affect the reported amounts of assets, liabilities, revenues and expenses as well as the disclosure of contingent assets and liabilities. Critical accounting policies are those that require application of management’s most subjective or complex judgments, often as a result of matters that are inherently uncertain and may change in subsequent periods. Our critical accounting policies include those related to the allowance for doubtful accounts, goodwill and intangible assets with indefinite useful lives and valuation of long-lived assets including intangible assets with finite useful lives. Management bases its estimates and judgments on historical experience and other factors that are believed to be reasonable under the circumstances. Actual results may differ from these estimates under different assumptions or conditions. For additional discussion of our critical accounting policies, see our Management’s Discussion and Analysis of Financial Condition and Results of Operations in our Annual Report on Form 10-K for fiscal ~~2009.~~2010.

RESULTS OF OPERATIONS

We evaluate the performance of our operating business segments based primarily on income ~~(loss)~~ from operations. Accordingly, the income and expense line items below income ~~(loss)~~ from operations are only included in our discussion of the consolidated results of operations.

Three Months Ended October 31, ~~2009~~2010 Compared to Three Months Ended October 31, ~~2008~~2009

Consolidated Revenues

(in millions) Change
Quarter ended October 31, 2009 2008 $ %
Revenues
   CTM $ 4.9 $ 5.8 $ (0.9 ) (15.1 )%
   IDW 3.3 3.0 0.3 12.5
   Other 0.2 0.3 (0.1 ) (36.1 )
Total revenues $ 8.4 $ 9.1 $ (0.7 ) (6.9 )%

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(in millions)					Change
Quarter ended October 31,	2010		2009		$		%
Revenues
CTM	$	5.0	$	4.9	$	0.1	2.0
IDW		3.6		3.3		0.3	9.0
Total revenues	$	8.6	$	8.2	$	0.4	4.8

Revenues.The ~~decrease~~increase in consolidated revenues in the three months ended October 31, 2010 compared to the three months ended October 31, 2009 was primarily due to a marginal increase in CTM revenues of $0.1 million and an increase in IDW revenues of $0.3 million. Revenues at our IDW segment increased as a result of increases in publishing revenues of $0.3 million and Digital and Creative Services revenue of $0.1 million which were partially offset by a decline in Licensing and Royalty Revenues of $0.1 million. The marginal increase in CTM revenues was primarily due to better economic conditions in the current fiscal period compared to the same period in fiscal 2010.

Consolidated Costs and Expenses

(in millions)					Change
Three months ended October 31,	2010		2009		$		%
Costs and expenses
Direct cost of revenues	$	3.8	$	3.7	$	0.1	2.7
Selling, general and administrative		3.8		3.2		0.6	18.8
Depreciation and amortization		0.2		0.2		—	—
Bad debt expense		0.0		0.0		—	—
Total costs and expenses	$	7.8	$	7.1	$	0.7	9.8

Direct Cost of Revenues. Direct Cost of Consolidated Revenues in the three months ended October 31, 2010 compared to the similar period in fiscal ~~2009 was primarily due to the decrease in CTM~~2010 marginally increased. Direct cost of revenues ~~partially offset by an increase in~~at IDW revenues. The decrease in CTM revenues was primarily due to the global economic slowdown and a decrease in advertising and customer spending and in some cases certain of our customers going out of business. Offsetting this decrease in CTM’s distribution revenues was an increase in printing revenues duringfor the three months ended October 31, ~~2009. The increase in IDW~~2010 and 2009 was approximately $2.2 million and $2.1 million respectively. Direct costs of revenues at CTM for the three months ended October 31, 2010 and 2009 were each approximately $1.6 million. Overall gross margin increased from 54.9% in the three months ended October 31, 2009 ~~compared~~ to 55.8% in the ~~similar period in fiscal 2009 was as a result of an increase in titles sold.~~

(in millions) Change
Three months ended October 31, 2009 2008 $ %
Costs and expenses
Direct cost of revenues $ 3.8 $ 3.6 $ 0.2 4.4 %
Selling, general and administrative 3.4 4.5 (1.1 ) (24.1 )
Depreciation and amortization 0.3 0.4 (0.1 ) (34.7 )
Bad debt expense - 0.1 (0.1 ) (57.1 )
Severance charges - 0.4 (0.4 ) nm
Total costs and expenses $ 7.5 $ 9.0 $ (1.5 ) (17.0 )%

~~nm—not meaningful~~

~~Direct Cost of Revenues.~~ three months ended October 31, 2010. The increase was due to increases in ~~direct cost of revenues~~the gross margin at both our CTM segment and IDW segments. CTM’s gross margin increased from 67.3% in the three months ended October 31, 2009 ~~compared~~ to ~~the similar period~~68.0% in ~~fiscal 2009 reflects the increases in~~th e three months ended October 31, 2010, while IDW’s ~~direct cost of revenues offset by CTM’s decrease in cost of revenues. The increase in IDW’s direct cost of revenues~~gross margins increased from 36.3% in the three months ended October 31, 2009 ~~compared~~ to the similar period in fiscal 2009 was a result of the increase in revenues. The decrease in CTM’s direct cost of revenues was primarily the result of lower revenues. Overall gross margin decreased from 60.4%38.8% in the three months ended October 31, ~~2008 to 55.6%~~2010.

Selling, General and Administrative. Selling, general, and administrative expenses increased from $3.2 million in the three months ended October 31, 2009 ~~was due~~ to $3.8 million in the three months ended October 31, 2010. As a ~~decrease~~percentage of consolidated revenues, selling, general and administrative costs increased from 39.0% in ~~CTM’s gross margin. Since a significant portion of CTM cost of sales is fixed,~~ the ~~gross margin percentage decreases when revenues decrease. Additionally, there was a decrease~~three months ended October 31, 2009 to 44.2% in ~~higher margin distribution revenues and an~~the three months ended October 31, 2010. The increase ~~in lower margin printing revenues. We maintain the printing business as a method to solidify our relationship with our customers by providing this requested service.~~

~~Selling, General and Administrative.~~ ~~The decrease~~ in selling, general and administrative expenses in the three months ended October 31, ~~2009~~2010 compared to the similar period in fiscal ~~2009~~2010 was primarily due to a ~~decrease~~increase in the selling, general and administrative expenses of ~~CTM.~~CTM and a marginal increase in our IDW segment. CTM’s selling, general and administrative expenses ~~decreased~~increased in the three months end ed October 31, 2010 compared to the three months ended October 31, 2009 ~~compared to the similar period in fiscal 2009~~ due to ~~the exit from certain unprofitable lines~~an increase in payroll costs, offsite costs related to meetings of ~~businesses, overall cost reductions including headcount~~CTM’s sales personnel, advertising costs, and ~~insurance premiums,~~audit/accounting costs. Selling, general, and ~~lower commissions~~administrative costs at our IDW segment marginally increased as a result of ~~a decrease~~increase in ~~revenue. The exited businesses consist of Traffic Pull~~personnel costs and Local Pull, our Internet search position enhancement ventures, and Click2Talk, our Web-based communications product. The exit from these lines of business was a process that commenced in the fourth quarter of fiscal 2008 and is completed. The Local Pull product is still being offered by CTM, however the business model has been reworked and Local Pull is being marketed through outsourced channels, which is more cost effective for us. Total selling, general and administrative expenses for these exited businesses was $0.6 million for the three months ended October 31, 2008. As a percentage of total revenues, selling, general and administrative expenses decreased from 50.1% in the three month ended October 31, 2008 to 40.8% in the three months ended October 31, 2009 as selling, general and administrative expenses decreased while revenues increased.marketing expenses.

On October 14, 2009, our Board of Directors granted our Chairman and founder, Howard S. Jonas, 1.8 million restricted shares of our Class B common stock with a value of $1.25 million on the date of grant in lieu of a cash base salary for the next five years. The restricted shares will vest in equal thirds on each of October 14, 2011, October 14, 2012 and October 14, 2013. Unvested shares would be forfeited if we terminate Mr. Jonas’ employment other than under circumstances where ~~the~~ accelerated vesting applies. The shares are subject to adjustments or acceleration based on certain corporate transactions, changes in capitalization, or termination, death or disability of Mr. Jonas. If Mr. Jonas is terminated by us for cause, a pro rata portion of the shares would ~~vest.~~vest and the remainder would be forfeited. This arrangement does ~~not~~no t impact Mr. Jonas’ cash compensation from the date of the Spin-Off through the pay period including the grant date. Total unrecognized compensation cost on the grant date was $1.25 million. The unrecognized compensation cost ishas been and expected to continue to be recognized over the vesting period from October 14, 2009 through October 14, 2014. The related stock-based compensation related to this grant in the first quarter of fiscal 2011 and 2010 was ~~nil.~~$112 thousand and 19 thousand, respectively.

Bad Debt Expense.~~The decrease in bad~~ Bad debt expense in the three months ended October 31, ~~2009~~2010 of fiscal 2011 compared to the same period in fiscal 2010 was ~~due primarily to a decrease in bad debt expense of WMET.~~flat.

~~Severance Charges.~~ ~~The charges in the three months ended October 31, 2008 consist primarily of severance related to a company-wide cost savings program initiated towards the end of the third quarter of Fiscal 2006.~~

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Net Income attributable to CTM Media Holdings, Inc. and non controlling interests

(in millions) Change
Three months ended October 31, 2009 2008 $ %
Income from operations $ 0.9 $ 0.0 $ 0.9 nm
Interest income, net — 0.0 0.0 nm
Other expense, net — 0.0 0.0 nm
Provision for income taxes (0.2 ) (0.2 ) (0.0 ) nm
Net income (loss) 0.7 (0.2 ) 0.9 nm
Less: Net income attributable to non controlling interest (0.2 ) (0.1 ) (0.1 ) nm
Net income (loss) attributable to CTM Media Holdings, Inc. $ 0.5 $ (0.3 ) $ 0.8 nm

(in millions)							Change
Three months ended October 31,	2010			2009			$			%
Income from continuing operations	$	0.8		$	1.0		$	(0.2	)	(20.0	)
Interest income, net		—			—			—		—
Other expense, net		—			—			—		—
Provision for income taxes		—			(0.2	)		0.2		100.0
Loss from discontinued operations		—			(0.1	)		0.1		100.0
Net income		0.8			0.7			0.1		14.3
Less: Net income attributable to non controlling interest		(0.1	)		(0.2	)		0.1		50.0
Net income attributable to CTM Media Holdings, Inc.	$	0.7		$	0.5		$	0.2		40.0

~~nm—not meaningful~~

Income Taxes. Provision for income ~~taxes in~~tax for the three months ended October 31, ~~2009~~2010 compared to 2009 decreased by $170,000. This decrease is due to the ~~similar period~~utilization of tax benefits that were created in ~~fiscal~~periods subsequent to October 31, 2009 ~~remained substantially unchanged.~~of $120,000, and a reduction in foreign earnings and related foreign income tax of $50,000.

We and IDT entered into a Tax Separation Agreement, dated as of September 14, 2009, to provide for certain tax matters including the assignment of responsibility for the preparation and filing of tax returns, the payment of and indemnification for taxes, entitlement to tax refunds and the prosecution and defense of any tax controversies. Pursuant to this agreement, IDT must indemnify us from all liability for taxes of ours and our subsidiaries for periods ending on or before September 14, 2009, and we must indemnify IDT from all liability for taxes of ours and our subsidiaries accruing after September 14, 2009. Also, for periods ending on or before September 14, 2009, IDT shall have the right to control the conduct of any audit, examination or other proceeding brought by a taxing authority. We shall have the right to participate ~~jointly~~jointl y in any proceeding that may affect our tax liability unless IDT has indemnified us. Finally, we and our subsidiaries agreed not to carry back any net operating losses, capital losses or credits for any taxable period ending after September 14, 2009 to a taxable period ending on or before September 14, 2009 unless required by applicable law, in which case any refund of taxes attributable to such carry back shall be for the account of ~~IDT.~~IDT Corporation.

Income ~~(loss)~~ attributable to ~~noncontrolling interests.~~ non-controlling interest.~~Noncontrolling~~ Non-controlling interests arise from the ~~47% interest held by the minority owners of IDW.~~

~~On November 5, 2009 we purchased a~~ 23.335% ~~noncontrolling~~ interest in IDW ~~that we did now own for a purchase price of $0.4 million. After this transaction we own a 76.665% interest in IDW.~~not held by Holdings.

CTM

(in millions)					Change
Three months ended October 31,	2010		2009		$				%
Revenues	$	5.0	$	4.9	$	0.1		$	2.0
Direct cost of revenues		1.6		1.6		—			—
Selling, general and administrative		2.7		2.3		0.4			17.4
Depreciation and amortization		0.2		0.2		—			—
Bad debt expense		—		—		—			—
Impairment and severance charges		—		—		—			—
Income from operations	$	0.5	$	0.8	$	(0.3	)	$	(37.5	)

~~CTM~~

(in millions) Change
Three months ended Oct 31, 2009 2008 $ %
Revenues $ 4.9 $ 5.8 $ (0.9 ) (15.1 )%
   Direct cost of revenues 1.7 1.9 (0.2 ) (8.4 )
   Selling, general and administrative 2.2 3.4 (1.2 ) (34.2 )
   Depreciation and amortization 0.2 0.2 0.0 6.4
   Bad debt expense 0.0 0.0 0.0 nm
   Impairment and severance charges 0.0 0.4 (0.4 ) nm
Income (loss) from operations $ 0.8 $ (0.1 ) $ 0.9 nm

~~nm—not meaningful~~

Revenues.The ~~decrease~~marginal increase in CTM’s revenues in the three months ended October 31, ~~2009~~2010 compared to the ~~similar period in fiscal~~three months ended October 31, 2009 was primarily due to ~~a decrease~~increases in distribution and publishing revenues, ~~attributable to~~digital distribution revenues and right card revenues, which were partially offset by a decline in printing revenues. In the global economic slowdown and a decrease in advertising and customer spending and in some cases certain customers going out of business. The most significant declines have been in our New York market, due to the weakness in Broadway show advertising, followed by Connecticut and Florida. We are beginning to see positive signs of a gradual recovery in our business such that we expect revenues beginning in the thirdfourth quarter of fiscal 2010, CTM exited the unprofitable printing and now refers customers to ~~be slightly higher than our corresponding fiscal 2009 quarterly revenues.~~a third party provider and receives a commission on the work.

Direct Cost of Revenues.Direct cost of revenues consists primarily of distribution and fulfillment payroll, warehouse, ~~and~~ vehicle distribution, ~~expenses,~~ and print and design expenses. Direct cost of revenues for the three months ended October 31, 2010 was approximately the same as the three months ended October 31, 2009. The ~~decrease~~decline in direct cost of printing revenues, CTM’s unprofitable line of business that we exited at the beginning of the fourth quarter of fiscal 2010, were offset by marginal increases in direct costs of digital distribution revenues, right cardrevenues, and distribution and publishing revenues. Additionally, CTM’s distribution and fleet maintenance costs marginally increased during the three months ended October 31, 2010 as compared to the three months ende d October 31, 2009.

CTM’s gross margin increased in the three months ended October 31, ~~2009~~2010 to 68.0% compared to ~~the similar period in fiscal 2009 is primarily due to decreased revenues.~~

~~CTM’s gross margin decreased~~67.3% in the three months ended October 31, ~~2009 to 65.4% compared to 68.0% in the similar period in fiscal~~ 2009. The ~~decrease~~increase was primarily due to a ~~decrease~~shift in product mix to relatively higher margin distribution revenues ~~and an increase in~~from relatively lower margin printing revenues. ~~However, we maintain the printing business as a method to solidify our relationship with our customers by providing this requested service.~~

Selling, General and Administrative.Selling, general and administrative expenses consist primarily of payroll and related benefits, facilities costs and insurance. Selling, general and administrative expenses ~~decreased~~increased in the three months ended October 31, ~~2009~~2010 as compared to the similar period in fiscal 2009 primarily due to the exit from certain unprofitable lines of businesses, consisting of Traffic Pull, Local Pull and Click2Talk. The exit from these lines of business was a process that commenced in the fourth quarter of

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fiscal 2008 and is completed. The Local Pull product is still being offered by CTM, however the business model has been reworked and Local Pull is being marketed through outsourced channels, which is more cost effective for us. Total selling, general and administrative expenses for these exited businesses was $0.6 million for the three months ended October 31, ~~2008.~~ 2009 primarily due to the increase in payroll costs, offsite costs related to our sales personnel, advertising costs, and accounting costs.

As a percentage of CTM’s aggregate revenues, selling, general and administrative expenses ~~decreased~~increased in the three month ended October 31, ~~2009~~2010 to ~~45.9%~~54.0% from ~~59.1%~~46.9% in the ~~similar period in fiscal~~three months ended October 31, 2009, as selling, general and administrative expenses ~~decreased~~increased at a faster rate than the increase in revenues.

~~Severance charges.~~ The charges in the three months ended October 31, 2008 consists primarily of severance related to an IDT company-wide cost savings program initiated towards the end of the third quarter of fiscal 2006.

IDW

(in millions)					Change										Change
Three months ended October 31,	2009		2008		$			%			2010		2009		$		%

Revenues	$	3.3	$	3.0	$	0.3			12.5	%	$	3.6	$	3.3	$	0.3	9.0
Direct cost of revenues		2.1		1.8		0.3			18.2			2.2		2.1		0.1	4.7
Selling, general and administrative		0.9		0.8		0.1			16.0			1.0		0.9		0.1	11.1
Depreciation and amortization		0.0		0.1		(0.1	)	nm				0.0		0.0		0.0	—
Impairment and severance charges		0.0		—		0.0		nm
Income from operations	$	0.3	$	0.3	$	(0.0	)	nm			$	0.4	$	0.3	$	0.1	33.3

~~nm—not meaningful~~

Revenues.The increase in IDW’s revenues in the three months ended October 31, ~~2009~~2010 as compared to the ~~similar period in fiscal~~three months ended October 31, 2009 was due to ~~new editorial hires~~an increase in Publishing revenues, Digital Publishing revenues, and Creative Services revenues which were partially offset by a decline in Licensing and Royalty Services revenues. Publishing revenues increased due to the ~~fourth quarter~~release of ~~fiscal 2009~~additional titles such as The Outfit, James Patterson’s Witch and Wizard, Classics Mutilated, and Bloom County Vol. 3, Digitals Publishing revenues increased as a result of the conversion of more titles to digital based formats and increased use of digital equipment by consumers. Creative Services revenues increased as a resu lt of additional creative service projects during the first quarter of fiscal ~~2010, which have resulted in more products and an increase~~2011 that were not experienced in the ~~number~~first fiscal quarter of ~~titles released .. Also,~~last year. Licensing and Royalty revenues increased due to fourth quarter comic book movie releases, such as Transformers: Revenge of the Fallen, Star Trek (2009), Terminator Salvation, and G.I. Joe: The Rise of Cobra, that continued to have an impact on first quarter revenues, and the release in the first quarter of fiscal ~~2010 of Bloom County, one of~~2011, was higher that the ~~most popular and critically acclaimed newspaper strips. We do not expect IDW’s~~same quarter in fiscal 2010 ~~revenues to be~~ as ~~high as those earned in~~result of four movies options granted during the first quarter of fiscal ~~2009.~~2010.

In an effort to increase availability of versions of its content at retail outlets, IDW has entered into a number of digital distribution agreements ~~this~~over the past calendar year, and IDW’s publications are currently available for purchase via mobile phones, primarily iPhones/iPod Touch. Various IDW titles are also available direct-to-desktop via several websites and ~~are expected to be available~~ on Sony’s PSP and PSP Go ~~by the end of calendar 2009.~~gaming devices.

Direct Cost of Revenues.Direct cost of revenues consists primarily of printing expenses and costs of artists and writers. Direct costs of revenues increased primarily due to an increase in direct costs of printing services, direct costs of creative services and royalty expenses which were partially offset by a decline in direct digital publishing and direct licensing costs. The increase in direct cost of ~~revenues~~printing services, direct costs of creative services and royalty expenses in the three months ended October 31, ~~2009~~2010 as compared to ~~the similar period in fiscal 2009 reflects the increase in revenues.~~

~~IDW’s aggregate gross margin decreased in~~ the three months ended October 31, 2009 ~~to 38.2% from 41.2%~~primarily reflects the increase in ~~the similar period in fiscal 2009. The decrease in~~revenues. Direct costs of digital publishing during the three months ended October 31, 2009 was higher due to certain one-time costs incurred during that period. Direct costs of licensing declined during the three months ended October 31, 2010 compared to the three months ended October 31, 2009 primarily as a result of a decline in related revenues.

IDW’s aggregate gross margin increased in the three months ended October 31, 2010 to 38.9% from 36.4% in the three months ended October 31, 2009. The increase in the three months ended October 31, 2010 was primarily due to the mix of ~~products.~~products and lower costs.

Selling, General and Administrative.Selling, general and administrative expenses marginally increased in the three ~~month~~months ended October 31, ~~2009~~2010 as compared to the ~~similar period in fiscal~~three months ended October 31, 2009 primarily due to higher commissions ~~due to~~on increased revenues and the increase in the number of employees and ~~consultants. In addition, IDW added~~consultants, as well as a ~~Chief Operating Officer, and implemented a more structured bonus plan as compared to the similar period in fiscal 2009, all of which resulted in an~~marginal increase in ~~selling, general and administrative expense.~~occupancy costs. As a percentage of IDW’s aggregate revenues, selling, general and administrative expenses marginally increased in the three months ended October 31, ~~2009~~2010 to ~~28.0%~~27.8% from ~~27.1% in~~27.3% compared to the ~~similar period in fiscal 2009, as revenues increased at a slower rate than selling, general and administrative expenses.~~three months ended October 31, 2009.

LIQUIDITY AND CAPITAL RESOURCES

Historically, we satisfied our cash requirements primarily through cash provided by CTM’s operating activities and funding from ~~IDT.~~IDT Corporation.

(in millions)	Three months ended October 31,						Three months ended October 31,
	2009			2008			2010			2009
Cash flows provided by (used in):
Operating activities	$	1.9		$	(0.1	)	$	0.1		$	2.1
Investing activities		(0.1	)		(0.2	)		(0.1	)		(0.1	)
Financing activities		1.9			0.2			(0.1	)		1.6
Increase (decrease) in cash and cash equivalents	$	3.7		$	(0.1	)
(Decrease) increase in cash and cash equivalents							$	(0.1	)	$	3.6

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Operating ~~Activities~~

Activities. Our cash flow from operations varies from quarter to quarter and from year to year, depending on our operating results and the timing of operating cash receipts and payments, specifically trade accounts receivable and trade accounts payable. Beginning in the fourth quarter of fiscal 2008, we commenced to exit from certain unprofitable lines of businesses of CTM, consisting of Traffic Pull, Local Pull and Click2Talk. The exit from these lines of business is completed. The Local Pull product is still being offeredCash flows provided by ~~CTM, however the business model has been reworked and Local Pull is being marketed through outsourced channels, which is more cost effective for us. Cash used in~~ operating activities ~~from~~based on these ~~exited businesses was approximately $0.6~~factors were $0.1 million and $2.1 million for the three months ended October 31, ~~2008.~~2010 and 2009, respectively.

Investing ~~Activities~~

Activities. Our capital expenditures were $0.1 million each in the three months ended October 31, 2010 and 2009, ~~and $0.2 million in the similar period in fiscal 2009.~~respectively. We currently anticipate that total capital expenditures for all of our divisions in fiscal ~~2010~~2011 will be approximately $0.3 million. We expect to fund our capital expenditures with our cash, cash equivalents and short term investments on ~~hand and~~hand.

Financing Activities. During the ~~$2.0 million of cash that~~three months ended October 31, 2010, we ~~received~~did not receive any financing from IDT ~~in September 2009.~~

~~Financing Activities.~~

Corporation. During ~~all~~the periods presented though the September 14, 2009 Spin-Off, IDT Corporation provided us with the required liquidity to fund our working capital requirements and investments for some of our businesses. We used any excess cash provided by our operations to repay IDT. In the three months ended October 31, 2009, ~~and 2008,~~ IDT Corporation provided cash to us of $2.4 ~~million and $0.6 million, respectively.~~million. In September 2009, the amount due to IDT Corporation of ~~$27.3~~$25.3 million was converted into a capital contribution.

~~We distributed cash of $0.4 million in~~During the three months ended October 31, 2010 and 2009, ~~and $0.3 million in the similar period in fiscal 2009~~we distributed cash to the minority shareholders of ~~IDW.~~IDW in the amount of $0.01million and $0.4 million, respectively.

We repaid capital lease obligations of $0.1 million in each of the three months ended October 31, ~~2009~~2010 and ~~nil in the similar period in fiscal~~ 2009.

CHANGES IN TRADE ACCOUNTS RECEIVABLE AND ALLOWANCE FOR DOUBTFUL ACCOUNTS

Gross trade accounts receivable ~~decreased~~increased marginally to ~~$3.3~~$4.3 million at October 31, ~~2009~~2010 compared to ~~$4.6~~$4.2 million at July 31, ~~2009, primarily due to higher collections in IDW.~~2010. The allowance for doubtful accounts as a percentage of gross trade accounts receivable marginally increased to ~~20.2%~~18.6% at October 31, ~~2009~~2010 compared ~~to 14.7%~~from 18.2% at July 31, ~~2009, primarily due to changes in WMET’s allowance as result of new management re-evaluating the adequacy of WMET’s allowance.~~2010.

Other Sources and Uses of Resources

We intend to, where appropriate, make strategic investments and acquisitions to complement, expand, and/or enter into new businesses. In considering acquisitions and investments, we search for opportunities to profitably grow our existing businesses, to add qualitatively to the range of businesses in our portfolio and to achieve operational synergies. Historically, such acquisitions have not exceeded $0.5 million, with the average acquisition being less than $0.1 million. If we were to pursue an acquisition in excess of $0.5 million we would likely need to secure financing arrangements. At this time, we cannot guarantee that we will be presented with acquisition opportunities that meet our return on investment criteria, or that our efforts to make acquisitions that meet our criteria will be successful.

~~We are currently evaluating strategic alternatives with respect~~In addition, we will utilize approximately $2 million annually to ~~certain~~pay the regular quarterly dividends in the amount of $0.06 per share,, subject to confirmation by our ~~business units, particularly WMET, in an attempt to (i) rid ourselves~~management that there is sufficient surplus as of the ~~negative impact of money losing operations, or (ii) take advantage of attractive opportunities to monetize business units.~~proposed future payment dates and other circumstances existing at the relevant times.

Historically, we satisfied our cash requirements primarily through cash provided by CTM’s operating activities and funding from ~~IDT.~~IDT Corporation. The conversion of our balance due to IDT Corporation into a capital contribution in September 2009 significantly improved our working capital balance. We do not currently have any material debt obligations. With the exit of certain lines of businesses within CTM, we expect that our operations in fiscal ~~2010~~2011 and the balance of cash, cash equivalents and short term investment that we held as of October 31, ~~2009,~~2010, will be sufficient to meet our currently anticipated working capital and capital expenditure requirements, capital lease obligations, make limited acquisitions and investments, pay the currently announced and any future declared dividends and fund any potential operating cash flow deficits within any of our segments for at least the next twelve months. In addition, we anticipate that our expected cash balances, as well as cash flows from our operations, will be sufficient to meet our long-term liquidity needs. The foregoing is based on a number of assumptions, including that we will collect on our receivables, effectively manage our working capital requirements, and maintain our revenue levels and liquidity. Predicting these matters is particularly difficult in the current worldwide economic situation and overall decline in consumer demand. Failure to generate sufficient revenues and operating income could have a material adverse effect on our results of operations, financial condition and cash flows.

~~Table of Contents~~

FOREIGN CURRENCY RISK

Revenues from our international operations represented ~~8.6%~~9.6% and ~~9.2%~~8.8% of our consolidated revenues for the three months ended October 31, 2010 and 2009, ~~and 2008,~~ respectively. ~~A significant portion of these~~These revenues isare in ~~currencies other than the U.S. Dollar, primarily~~ Canadian ~~dollars and recently in Euros, although our revenues in Euros are not significant at this time.~~dollars. Our foreign currency exchange risk is somewhat mitigated by our ability to offset the majority of ~~these~~ non-U.S. Dollar-denominated revenues with operating expenses that are paid in the same currencies. While the impact from fluctuations in foreign exchange rates affects our revenues and expenses denominated in foreign currencies, the net amount of our exposure to foreign currency exchange rate changes at the end of each reporting period is generally not material.

OFF-BALANCE SHEET ARRANGEMENTS

We do not have any “off-balance sheet arrangements,” as defined in relevant SEC regulations that are reasonably likely to have a current or future effect on our financial condition, results of operations, liquidity, capital expenditures or capital resources.

RECENTLY ADOPTED ACCOUNTING STANDARDS

~~In September 2009, we adopted changes issued by the~~The Financial Accounting Standards Board (“FASB”) periodically issues new accounting standards in a continuing effort to improve standards of financial accounting and reporting. We have reviewed the recently issued pronouncements and concluded that no new standards were issued this fiscal quarter that applied to the authoritative hierarchy of U.S. GAAP. These changes establish the FASB Accounting Standards Codification™ (the "Codification") as the source of authoritative U.S. GAAP for all non-governmental entities. Rules and interpretive releases of the SEC under authority of federal securities laws are also sources of authoritative U.S. GAAP for SEC registrants. The Codification did not change or alter existing U.S. GAAP. The adoption of these changes had no impact on our financial position, results of operations or cash flows.Company.

~~On August 1, 2009, we adopted~~In January 2010, the ~~accounting standard relating to noncontrolling interests in consolidated financial statements. This standard clarifies that a noncontrolling interest in a subsidiary,~~FASB issued Accounting Standards Update (ASU) No. 2010-06, “Improving Disclosures about Fair Value Measurements” (“ASU 2010-06”), which ~~was previously referred to as a minority interest,~~ is ~~an ownership interest~~included in the ~~consolidated entity that should be reported as equity~~ASC Topic 820 (Fair Value Measurements and Disclosures). ASU 2010-06 requires new disclosures on the amount and reason for transfers in ~~the consolidated financial statements. Also, this standard requires consolidated net income (loss) to include the amounts attributable to both the parent~~ and ~~the noncontrolling interest,~~out of Level 1 and it2 fair value measurements. ASU 2010-06 also requires disclosure of activities, including purchases, sales, issuances, and settlements within the amounts of net income (loss) attributable to the parent and to the noncontrolling interest. Finally, this standard requires increases and decreases in the noncontrolling ownership interest amount to be accounted for as equity transactions, and the gain or loss on the deconsolidation of a subsidiary will be measured using theLevel 3 fair value measurements and clarifies existing disclosure requirements on levels of ~~any noncontrolling equity investment rather than the carrying amount of the retained investment. As required by this standard, we retrospectively changed the classification~~disaggregation and ~~presentation of noncontrolling interests in our financial statements~~disclosures about inputs and valuation techniques. Except for ~~all prior periods.~~otherwise provided, ASU 2010-06 is effective for interim and annual reporting periods beginning after December 15, 2009. The adoption of this ~~standard~~standa rd did not have a material ~~impact~~effect on ~~our~~the Company’s financial ~~position, results of operations or cash flows.~~statements.

In ~~April 2009,~~February 2010, the FASB issued ~~a standard~~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 ~~amends~~an SEC filer is required to evaluate subsequent events through the ~~requirements for disclosures about fair value of financial instruments, which were previously only required in~~date that the ~~annual~~ financial statements of publicly traded companies. The standard requires such disclosures for interim reporting periods of publicly traded companies as well. The standard also requires entities to disclose the methods and significant assumptions used to estimate fair value of financial instruments in interim financial statements, and to highlight any changes in the methods and assumptions from prior periods. This standardare issued. ASU 2010-09 was effective ~~for our financial statements beginning on May 1, 2009. The adoption~~upon the issuance of ~~this standard had no~~the final update and did not have a significant impact on ~~our consolidated~~the Company’s financial statements.

In June 2009, the FASB issued changes to the accounting for transfers of financial assets. These changes include (a) eliminating the concept of a qualifying special-purpose entity (“QSPE”), (b) clarifying and amending the de-recognition criteria for a transfer to be accounted for as a sale, (c) amending and clarifying the unit of account eligible for sale accounting, and (d) requiring that a transferor initially measure at fair value and recognize all assets obtained and liabilities incurred as a result of a transfer of an entire financial asset or group of financial assets accounted for as a sale. Additionally, on and after the effective date, existing QSPEs must be evaluated for consolidation by reporting entities in accordance with the applicable consolidation guidance. These changes also require enhanced disclosures about, among other things, (a) a transferor’s continuing involvement with transfers of financial assets accounted for as sales, (b) the risks inherent in the transferred financial assets that have been retained, and (c) the nature and financial effect of restrictions on the transferor’s assets that continue to be reported in the statement of financial position. We are required to adopt these changes on August 1, 2010. We are currently evaluating the impact of these changes on our consolidated financial statements.

In June 2009, the FASB issued changes to the consolidation guidance applicable to a variable interest entity (“VIE”) including amending the guidance governing the determination of whether an enterprise is the primary beneficiary of a VIE, and is, therefore, required to consolidate an entity, by requiring a qualitative analysis rather than a quantitative analysis. The qualitative analysis will include, among other things, consideration of who has the power to direct the activities of the entity that most significantly impact the entity’s economic performance and who has the obligation to absorb losses or the right to receive benefits of the VIE that could potentially be significant to the VIE. The changes also require continuous reassessments of whether an enterprise is the primary beneficiary of a VIE and enhanced disclosures about an enterprise’s involvement with a VIE. We are required to adopt these changes on August 1, 2010. We are currently evaluating the impact of these changes on our consolidated financial statements.

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Item 3.3. Quantitative and Qualitative Disclosures About Market ~~Risks~~Risks.

Smaller reporting companies are not required to provide the information required by this item.

Item 4T.4. Controls and ~~Procedures~~Procedures.

Evaluation of Disclosure Controls and Procedures.~~This~~ Based on their evaluation as of October 31, 2010, our Chief Executive Officer and our Chief Financial Officer have evaluated the effectiveness of our disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as amended) and concluded that our disclosure controls and procedures were effective to ensure that the information required to be disclosed by us in this Quarterly Report ~~does not include a report of management’s assessment regarding internal control over financial reporting due~~on Form 10-Q was (i) recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and regulations and (ii) accumulated and communicated to ~~a transition period established by rules of the SEC for newly public companies.~~our management, including our Chief Executive Officer and Chief Financial Officer, to allow timely decisions rega rding required disclosure.

Changes in Internal Control over Financial Reporting. There were no changes in our internal control over financial reporting (as such term is defined in Rules 13a-15(f) and 15d-15(f) under the Securities Exchange Act of 1934, as amended) during the fiscal quarter ended October 31, ~~2009~~2010 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

~~Table of Contents~~

PART II. OTHER INFORMATION

Item 1. Legal ~~Proceedings~~Proceedings.

~~None~~ None.

Item 1A. Risk Factors

There are no material changes from the risk factors previously disclosed in Item 1A to Part I of our Annual Report on Form 10-K for the fiscal year ended July 31, ~~2009.~~2010.

Item 2. Unregistered Sales of Equity Securities and Use of ~~Proceeds~~Proceeds.

~~None~~None.

Item 3. Defaults Upon Senior ~~Securities~~Securities.

~~None~~None.

Item 4. (Removed and Reserved).

~~Item 4. Submission of Matters to a Vote of Security Holders~~

~~None~~

Item 5. Other Information

~~None~~None.

~~Table of Contents~~

Item 6. Exhibits, Financial Statement Schedules.

Exhibit Number	Description

31.1*	Certification of Chief Executive Officer pursuant to 17 CFR 240.13a-14(a), as adopted pursuant to ~~§302~~§ 302 of the Sarbanes-Oxley Act of 2002.

31.2*	Certification of Chief Financial Officer pursuant to 17 CFR 240.13a-14(a), as adopted pursuant to ~~§302~~§ 302 of the Sarbanes-Oxley Act of 2002.

32.1*	Certification of Chief Executive Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to ~~§906~~§ 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~~§ 906 of the Sarbanes-Oxley Act of 2002.

________________

*	Filed herewith.

2017

~~Table of Contents~~

Signatures

Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.


	CTM Media Holdings, Inc.

December 15, ~~2009~~2010	By:	/s/ Marc E. Knoller
		Marc E. Knoller Chief Executive Officer and President

December 15, ~~2009~~2010	By:	/s/ Leslie B. Rozner
		Leslie B. Rozner Chief Financial Officer, Treasurer and Secretary


(in thousands)	October 31, 2009			July 31, 2009
Assets
Current assets:
Cash and cash equivalents	$	10,163		$	6,480
Short term investment		1,026			1,024
Trade accounts receivable, net		2,595			3,908
Inventory		1,484			1,405
Prepaid expenses		1,040			983
Total current assets		16,308			13,800
Property and equipment, net		4,067			4,243
Licenses and other intangibles, net		557			587
Other assets		162			159
Total assets	$	21,094		$	18,789
Liabilities and equity (deficit)
Current liabilities:
Trade accounts payable	$	960			1,024
Accrued expenses		2,247			2,050
Deferred revenue		1,218			1,731
Due to IDT Corporation		—			24,921
Capital lease obligations—current portion		225			222
Other current liabilities		664			563
Total current liabilities		5,314			30,511
Capital lease obligations—long-term portion		474			529
Total liabilities		5,788			31,040
Commitments and contingencies					—
Equity (deficit):
CTM Media Holdings, Inc. stockholders’ equity:
Preferred stock, $.01 par value; authorized shares—10,000; no shares issued		—			—
Class A common stock, $.01 par value; authorized shares—35,000; 1,286 shares issued and outstanding at October 31, 2009		13			—
Class B common stock, $.01 par value; authorized shares—65,000; 6,923 shares issued and outstanding at October 31, 2009		69			—
Class C common stock, $.01 par value; authorized shares—15,000; 1,091 shares issued and outstanding at October 31, 2009		11			—
Additional paid-in capital		60,360			33,141
Accumulated other comprehensive income		129			124
Accumulated deficit		(46,966	)		(47,483	)
Total CTM Media Holdings, Inc. stockholders’ equity (deficit)		13,616			(14,218	)
Noncontrolling interests		1,690			1,967
Total equity (deficit)		15,306			(12,251	)
Total liabilities and equity (deficit)	$	21,094		$	18,789

Earnings (loss) per share attributable to CTM Media Holdings, Inc. common stockholders:
Basic	$	0.08	$	(0.05	)
Diluted	$	0.07	$	(0.05	)
Weighted-average number of shares used in calculation of earnings (loss) per share:
Basic		6,697		6,684
Diluted		7,679		6,684

	Three Months Ended October 31, 2009
	Attributable to Holdings			Noncontrolling Interests			Total
	(in thousands)
Balance, July 31, 2009	$	(14,218	)	$	1,967		$	(12,251	)

Cash contribution and capitalization of balance due to IDT Corporation		27,292			—			27,292
Stock based compensation		19			—			19
Cash distributions		—			(435	)		(435	)
Comprehensive loss:
Net income		518			158			676
Other comprehensive income		5			—			5

Comprehensive income		523			158			681

Balance, October 31, 2009	$	13,616		$	1,690		$	15,306


(in thousands)	CTM			IDW		Other			Total
Three months ended October 31, 2009
Revenues	$	4,915		$	3,318	$	202		$	8,435
Operating income (loss)		762			308		(131	)		939
Depreciation and amortization		197			32		45			274
Severance charges		-			-		-			-
Total assets at October 31, 2009		11,556			6,537		3,001			21,094
Three months ended October 31, 2008
Revenues	$	5,789		$	2,950	$	317		$	9,056
Operating income(loss)		(112	)		313		(178	)		23
Depreciation and amortization		210			84		126			420
Severance charges		395			19		-			414
Total assets at October 31, 2008		38,084			7,021		4,187			49,292

(in millions)						Change
Three months ended Oct 31,	2009		2008			$			%
Revenues	$	4.9	$	5.8		$	(0.9	)		(15.1	)%
Direct cost of revenues		1.7		1.9			(0.2	)		(8.4	)
Selling, general and administrative		2.2		3.4			(1.2	)		(34.2	)
Depreciation and amortization		0.2		0.2			0.0			6.4
Bad debt expense		0.0		0.0			0.0		nm
Impairment and severance charges		0.0		0.4			(0.4	)	nm
Income (loss) from operations	$	0.8	$	(0.1	)	$	0.9		nm