The following discussion should be read in conjunction with the Consolidated Financial Statements and Notes thereto included in Item 8 of this Annual Report.

OVERVIEW
We are a former subsidiary of IDT. 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 to incur additional costs for the infrastructure to perform the necessary accounting, internal control and reporting functions. We expect to incur incremental costs of $300,000-$500,000 for these functions. A significant portion of these functions will be provided by IDT pursuant to the Master Services Agreement, dated September 14, 2009, between us and IDT.

Our principal businesses consist of:

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

• Our majority interest in Idea and Design Works, LLC, which is a comic book and graphic novel publisher that creates and licenses intellectual property; and

• The WMET-AM radio station in the Washington, D.C. metropolitan area.

Our operations face challenges, including those discussed under Item 1A to Part I "Risk Factors" in this Annual Report. In particular, we face challenges:

• related to the current state of the United States and global economies and its impact on travel and other discretionary spending;

• from technological changes; and

• from alternatives to our products and services.

We are developing plans and changes to our businesses to address each of these identified challenges.

The current economic situation, including reductions in compensation, increases in unemployment and the relatively low level of consumer confidence, has led to a decrease in travel and spending on entertainment, which has a negative impact on CTM's operations. While the segment of the travel industry that CTM targets is less impacted by the downturn, and certain consumers may look to more modest travel options, including car travel as opposed to air travel, which could increase the demand for the offerings of CTM's customers, any negative impact on travel and entertainment spending could negatively impact CTM's business.

In addition, we believe that several important customers of CTM, specifically, those in the theater industry and particularly those on Broadway, are currently experiencing financial challenges, and those challenges could become more severe, including possible bankruptcy, which could impact CTM's collections and future revenues.

CTM has increased its monitoring of customers' financial condition and is seeking to target those sectors of the market that it believes to be less impacted by the current economic situation.

IDW's products are directly impacted to a lesser degree by the economic situation, but IDW is experiencing challenges to its distribution efforts as certain retail stores, which are an important outlet through which its products are sold, are experiencing pressure and some may close.

CTM and IDW both anticipate challenges to their businesses from new entrants, technological developments and developments of alternative products and are addressing these challenges by developing their own competitive offerings.

CTM sees a continuation of the trend away from print advertising. CTM is, therefore, seeking to maintain its market share by developing and marketing internet-based services to existing and other customers and to upgrade its offerings to compete with alternative providers. In addition, CTM has developed offerings for newer applications, such as text messaging to mobile phones.

IDW is also impacted by declines in the publishing industry. To counteract that decline, IDW is increasing its presence in the digital book area.

IDW's performance in recent quarters included sales of comic book and graphic novel products linked to successful movie properties. To replicate this performance, IDW needs to obtain access to other big name properties and/or sequels to the recent successful movies. Blockbuster movies are hard to predict and those from major developers often have their own outlets for comic book and graphic novel development. IDW will continue to seek out attractive opportunities, and will attempt to increase sales of other properties to maintain its overall revenue figures.

CTM
CTM develops and distributes print and mobile-based advertising and information in targeted tourist markets. CTM operates five integrated and complimentary business lines: Brochure Distribution, Design & Print, Publishing, RightCardTM, and Digital Distribution. CTM offers its customers a comprehensive media marketing approach through these business lines. In fiscal 2009, CTM serviced over 3,000 clients and maintained more than 11,000 display stations in over 30 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 terminals and hubs, tourist attractions and entertainment venues. CTM's revenues represented 59.0% of consolidated revenues in fiscal 2009 and 66.2% in fiscal 2008.

IDW
IDW is a comic book and graphic novel publisher that creates and licenses intellectual property. IDW's revenues represented 37.5% of consolidated revenues in fiscal 2009 and 30.2% in fiscal 2008.

WMET
WMET 1160 AM is a radio station serving the Washington, D.C. metropolitan area. WMET's revenues represented 3.5% of consolidated revenues in fiscal 2009 and 3.6% in fiscal 2008.

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 consolidated financial statements for the periods reflect our financial position, results of operations, changes in stockholders' equity 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 financial statements are prepared in accordance with accounting principles generally accepted in the United States of America ("U.S. GAAP"). The preparation of financial statements requires management to make estimates and judgments that affect the reported amounts of assets, liabilities, revenue 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. See Note 1 to the Consolidated Financial Statements in this Annual Report for a complete discussion of our significant accounting policies.

Allowance for Doubtful Accounts
We maintain allowances for doubtful accounts receivable for estimated losses, which result from the inability or unwillingness of our customers to make required payments. We base our allowances on our determination of the likelihood of recoverability of trade accounts receivable based on past experience and current collection trends that are expected to continue. In addition, we perform ongoing credit evaluations of our significant customers, but historically we have not required collateral to support trade accounts receivable from our customers. Our estimates of recoverability of customer accounts may change due to new developments, changes in assumptions or changes in our strategy, which may impact our allowance for doubtful accounts balances. We continually assess the likelihood of potential amounts or ranges of recoverability and adjust our allowances accordingly, however actual collections and write-offs of trade accounts receivables may materially differ from our estimates.

Goodwill and Intangible Assets with Indefinite Useful Lives In accordance with Financial Accounting Standards Board ("FASB") Statement of Financial Accounting Standards ("SFAS") No. 142, Goodwill and Other Intangible Assets, goodwill and other intangible assets deemed to have indefinite lives are not amortized. These assets are reviewed annually (or more frequently under various conditions) for impairment using a fair value approach. Other intangible assets with definite lives are amortized over their estimated useful lives.

The goodwill impairment assessment involves estimating the fair value of the reporting unit and comparing it to its carrying amount (which is known as Step
1). If the carrying value of the reporting unit exceeds its estimated fair value, additional steps are followed to determine if an impairment of goodwill is required. In fiscal 2009, we recorded aggregate goodwill impairment charges of $32.6 million, which reduced the carrying amount our goodwill to zero. We estimated the fair value of our reporting units using discounted cash flow methodologies, as well as considering third party market value indicators. Calculating the fair value of the reporting units, and allocating the estimated fair value to all of the tangible assets, intangible assets and liabilities, required significant estimates and assumptions by management.

At July 31, 2009, the carrying value of our FCC licenses, which are deemed to have indefinite lives and are not amortized, was $0.5 million. We will have to continue to review our FCC licenses for impairment at least annually. Should our estimates or assumptions regarding the fair value of our FCC licenses prove to be incorrect, we may record additional impairment in future periods.

Valuation of Long-Lived Assets including Intangible Assets with Finite Useful Lives
We test the recoverability of our long-lived assets including identifiable intangible assets with finite useful lives whenever events or changes in circumstances indicate that the carrying value of any such asset may not be recoverable. Such events or changes in circumstances include:

• significant actual underperformance relative to expected performance or projected future operating results;

• significant changes in the manner or use of the asset or the strategy of our overall business; and

• significant adverse changes in the business climate in which we operate.

If we determine that the carrying value of certain long-lived assets may not be recoverable and may exceed its fair value based upon the existence of one or more of the above indicators, we will test for impairment based on the projected undiscounted cash flows to be derived from such asset. If the projected undiscounted future cash flows are less than the carrying value of the asset, we will record an impairment loss based on the difference between the estimated fair value and the carrying value of the asset. We generally measure fair value by considering sale prices for similar assets or by discounting estimated future cash flows from the asset using an appropriate discount rate. Cash flow projections and fair value estimates require significant estimates and assumptions by management. Should our estimates and assumptions prove to be incorrect, we may be required to record impairments in future periods and such impairments could be material.

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.

Year Ended July 31, 2009 Compared To Year Ended July 31, 2008 We recorded aggregate goodwill impairment charges of $32.6 million in fiscal 2009. At July 31, 2009, the carrying amount of our goodwill was reduced to zero as a result of these impairment charges. Our operating results for fiscal 2009, which included these significant goodwill impairment charges, are not necessarily indicative of the results that may be expected in the future. Goodwill impairment is not a cash expenditure therefore it did not impact our liquidity at July 31, 2009, nor will these charges impact our future liquidity.

Consolidated

(in millions)                                     Change
Year ended July 31,    2009       2008        $           %
Revenues
CTM                   $ 19.9     $ 21.6     $ (1.7 )     (7.9%)
IDW                     12.6        9.8        2.8         28.1
Other                    1.2        1.2        0.0          0.1
Total revenues        $ 33.7     $ 32.6     $  1.1         3.2%

Revenues. The increase in consolidated revenues in fiscal 2009 compared to fiscal 2008 was primarily due to the increase in IDW revenues, partially offset by a decrease in CTM revenues. The increase in IDW revenues in fiscal 2009 compared to fiscal 2008 was as a result of an increase in titles sold. 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 during the fiscal 2009.

(in millions)                                                     Change
Year ended July 31,                    2009       2008        $           %
Costs and expenses
Direct cost of revenues               $ 14.6     $ 12.5     $  2.1        16.5%
Selling, general and administrative     15.7       18.3       (2.6 )     (13.7)
Depreciation and amortization            1.4        2.1       (0.7 )     (30.8)
Bad debt expense                         1.0        0.5        0.5        112.5
Impairment and severance charges        33.4        3.7       29.7           nm
Total costs and expenses              $ 66.1     $ 37.1     $ 29.0        78.3%

nm-not meaningful

Direct Cost of Revenues. The increase in direct cost of revenues in fiscal 2009 compared to fiscal 2008 reflects the increases in IDW's and CTM's direct cost of revenues. The increase in IDW's direct cost of revenues in fiscal 2009 compared to fiscal 2008 was a result of the increase in revenues. The increase in CTM's direct cost of revenues was the result of a shift in costs as a result of the decrease in distribution revenues and an increase in printing revenues. Printing revenues are a lower margin business compared to our higher margin distribution business. However, we maintain the printing business as a method to solidify our relationship with our customers by providing this requested service.

Overall gross margin decreased from 61.5% in fiscal 2008 to 56.5% in fiscal 2009 due to a decrease in CTM's gross margin, which was primarily due to the mix of products as a result of an increase in lower margin printing revenues.

Selling, General and Administrative. The decrease in selling, general and administrative expenses in fiscal 2009 compared to fiscal 2008 was due to a decrease in the selling, general and administrative expenses of CTM. CTM's selling, general and administrative expenses decreased in fiscal 2009 compared to fiscal 2008 due primarily to the exit from certain unprofitable lines of businesses, consisting of Traffic Pull 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 mostly 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 $1.1 million and $3.5 million in fiscal 2009 and fiscal 2008, respectively. As a percentage of total revenues, selling, general and administrative expenses decreased from 55.8% in fiscal 2008 to 46.6% in fiscal 2009 as selling, general and administrative expenses decreased while revenues increased.

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. This arrangement does not impact Mr. Jonas' cash compensation from the date of the Spin-Off through the pay period including the grant date. Total unrecognized compensation cost on the grant date was $1.25 million. The unrecognized compensation cost is expected to be recognized over the vesting period from October 14, 2009 through October 14, 2014.

Bad Debt Expense. The increase in bad debt expense in fiscal 2009 compared to fiscal 2008 was due primarily to an increase in bad debt expense of CTM as a result of several of its customers going out of business.

Impairment and Severance Charges. We recorded aggregate goodwill impairment charges of $32.6 million in fiscal 2009. In the second quarter of fiscal 2009, the following events and circumstances indicated that the fair value of certain of our reporting units may be below their carrying value: (1) a significant adverse change in the business climate, (2) operating losses of reporting units, and (3) significant revisions to internal forecasts. We measured the fair value of our reporting units by discounting their estimated future cash flows using an appropriate discount rate. The carrying value including goodwill of CTM, IDW and WMET exceeded their estimated fair value, therefore we performed additional steps for these reporting units to determine whether an impairment of goodwill was required. As a result of this analysis, in fiscal 2009, we recorded goodwill impairment of $29.7 million in CTM, $1.8 million in IDW, and $1.1 million in WMET, which reduced the carrying amount of the goodwill in each of these reporting units to zero. Calculating the fair value of the reporting units, and allocating the estimated fair value to all of the tangible assets, intangible assets and liabilities, requires significant estimates and assumptions.

The primary drivers in our assumptions that resulted in the goodwill impairment in fiscal 2009 were (1) lower than expected revenues since our prior annual goodwill impairment test conducted as of May 1, 2008 that caused us to reduce our revenue and cash flow projections at December 31, 2008, the date of our interim impairment test, (2) an increase in the discount rates used at December 31, 2008 compared to May 1, 2008, (3) reductions in the terminal value growth rates used at December 31, 2008 compared to May 1, 2008, and (4) no expectation of an economic recovery in our cash flow projections. The primary drivers behind our changed expectations for future results, cash flows and liquidity were (1) the global economic slowdown, (2) lower than expected revenue including a decrease in customer spending, (3) certain of our customers experiencing financial challenges including bankruptcy, and (4) specifically related to CTM, new lines of business that did not perform as expected and were discontinued beginning in the fourth quarter of fiscal 2008. All of these factors contributed to the reduction in the revenue and cash flow projections at December 31, 2008 compared to May 1, 2008.

Impairment and severance charges in fiscal 2008 included mainly impairment charges of $3.5 million related to WMET's property and equipment.

(in millions)                                               Change
Year ended July 31,           2009        2008         $            %
 Loss from operations        $ (32.5 )   $ (4.5 )   $ (28.0 )           nm
Interest income, net               -        0.1        (0.1 )     (191.9)%
Other expense, net                 -       (0.1 )       0.1        (108.0)
Minority interests              (1.2 )     (0.4 )      (1.0 )           nm
Provision for income taxes      (0.2 )     (0.4 )       0.3              -
Net loss                     $ (33.9 )   $ (5.3 )   $ (28.7 )           nm

nm-not meaningful

Minority Interests. Minority interests arise from the 47% interest held by the minority owners of IDW.

Income Taxes. Provision for income taxes in fiscal 2009 decreased compared to fiscal 2008 primarily due to decreases in our state and local income tax expense. Our foreign income tax expense was substantially the same in fiscal 2009 and fiscal 2008. We had no federal income tax expense or benefit in either fiscal 2009 or fiscal 2008. Our foreign income tax expense results from income generated by our foreign subsidiaries that cannot be offset against losses generated in the United States.

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 indemnified us from all liability for taxes of ours and our subsidiaries for periods ending on or before September 14, 2009, and we indemnified IDT from all liability for taxes of our and our subsidiaries accruing after September 14, 2009. Also, for periods ending on or before September 14, 2009, IDT shall have the right to control the conduct of any audit, examination or other proceeding brought by a taxing authority. We shall have the right to participate jointly in any proceeding that may affect our tax liability unless IDT has indemnified us. Finally, we and our subsidiaries agreed not to carry back any net operating losses, capital losses or credits for any taxable period ending after September 14, 2009 to a taxable period ending on or before September 14, 2009 unless required by applicable law, in which case any refund of taxes attributable to such carry back shall be for the account of IDT.

CTM

(in millions)                                                       Change
Year July 31,                          2009        2008         $           %
Revenues                              $  19.9     $ 21.6     $  (1.7 )     (7.9)%
Direct cost of revenues                   7.5        7.0         0.5          7.0
Selling, general and administrative      11.0       13.7        (2.7 )     (19.7)
Depreciation and amortization             0.8        0.7         0.1         10.3
Bad debt expense                          0.7        0.3         0.4        154.9
Impairment and severance charges         30.3        0.2        30.1           nm
Loss from operations                  $ (30.4 )   $ (0.3 )   $ (30.1 )         nm

nm-not meaningful

Revenues. The decrease in CTM's revenues in fiscal 2009 compared to fiscal 2008 was primarily due to a decrease in distribution revenues attributable to the global economic slowdown and a decrease in advertising and customer spending and in some cases certain customers going out of business. We experienced these declines in the majority of the states that we operate in while certain states such as Connecticut and New York remained flat. Offsetting this decrease in distribution revenues was an increase in printing revenues in fiscal 2009. We are beginning to see positive signs of a gradual recovery in our business such that we expect our fiscal 2010 revenues to be slightly higher than our fiscal 2009 revenues.

Direct Cost of Revenues. Direct cost of revenues consist primarily of distribution and fulfillment payroll, warehouse and vehicle distribution expenses, and print and design expenses. The increase in direct cost of revenues in fiscal 2009 compared to fiscal 2008 reflects a shift in costs as a result of the decrease in distribution revenues and an increase in printing revenues. Printing revenues are a lower margin business compared to our higher margin distribution business. However, we maintain the printing business as a method to solidify our relationship with our customers by providing this requested service.

CTM's aggregate gross margin decreased in fiscal 2009 to 62.2% from 67.5% in fiscal 2008. The decrease was primarily due to the mix of products as a result of an increase in lower margin printing revenues.

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 in fiscal 2009 compared to fiscal 2008 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 fiscal 2008 and is mostly 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 . . .