IDW Media Holdings, Inc.

IDW assumes no obligation either to update any forward-looking statements that they have made or may make or to update the factors that may cause actual results to differ materially from those that they forecast. Please note that the IDW earnings release is available on the Investor Relations page of the IDW Media Holdings corporate website.

I will now turn the call over to Mr. Rosensaft.

Please go ahead.

Thank you, operator, and thanks to everyone on the call for joining us.

My remarks cover our results for the first quarter of our 2020 fiscal year, the 3 months ended January 31, 2020. Throughout my remarks, I will compare first quarter fiscal 2020 results to the first quarter of fiscal 2019 results.

I'll also touch upon our outlook for the remainder of fiscal 2020 and fiscal 2021.

Operationally, this is a remarkable quarter for IDW. On our last call, we discussed the Netflix premiere of V Wars, our sci-fi vampire series starring Ian Somerhalder, based on the successful IDW Publishing comic series by award-winning Jonathan Maberry; and October Faction, a science fiction drama based on the IDW Publishing comics series created by another award winner Steve Niles and Damien Worm.

Both shows premiered in the first quarter and were widely watched.

Locke & Key, our supernatural horror drama based on IDW Publishing comic series by Joe Hill, yet another award winner, was much anticipated and when it debuted on February 7, quickly moved on to the list of Netflix's Top 10 in the U.S.A. shows.

We have had conversations with Netflix about renewing each of the 3 shows and expect that they will make their decisions by the summer.

Speaking of the summer, season 4 of Wynonna Earp continues in production and should debut later this year on SyFy. Shout out to the many, many fans who are eagerly waiting the show's return.

This will be the best season yet.

IDW Publishing also had some exceptional news during the quarter, announcing a multiyear global publishing program with the Smithsonian Institution, the largest museum, educational and research complex in the world. Together, we are going to develop graphic novels built on Smithsonian's unparalleled knowledge base.

This is a new territory for us and for the graphic novel format. It will be exciting to see how it develops.

The Animated Series Adventures has generated pledges of over $1.3 million so far. And Teenage Mutant Ninja Turtles Adventures: City Fall received pledges for $800,000.

The economics in both games are very good, and we will account for them as we ship to customers this year, in the case of Teenage Mutant Ninja Turtles, and in the late fiscal 2020 or early 2021 for Batman. These 2 wins only begin to scratch the surface on the ways we can build deeper connections with fandoms around the world through IDW 360 even when, as in both of these cases, the IP is licensed.

Now let's look at our financial results for the quarter. Consolidated revenue increased by $4.8 million from the year-ago quarter to $14.2 million in the first quarter of fiscal 2020.

The increase was generated principally at IDW Entertainment, where revenue jumped to $4 million from just $87,000 a year earlier, reflecting the 3 -- the final 3 episodes of October Faction to Netflix in November.

Publishing revenue increased to $6.2 million, up $1 million from the year-ago quarter. The revenue increase reflected increased books sales via Amazon, early sales of backlisted of Locke & Key comics, driven by the show and growth at IDW Games, including sales from the summer release, as mentioned, of Teenage Mutant Ninja Turtles Adventures.

CTM revenue decreased $240,000 year-over-year to $3.8 million, resulting from the loss of a magazine client and several Broadway shows.

Our consolidated loss from operations increased $2.9 million to $6.9 million. The increased loss was driven by the delivery of the remaining episodes of October Faction in the quarter.

As we discussed in our call last quarter, the loss is incurred as a result of show overages for which IDW is responsible under the legacy production financing agreement put in place by prior management.

IDW Entertainment's loss from operations was $5.6 million compared to a loss from operations of $1.2 million in the year-ago quarter, the major driver, as mentioned, October Faction.

As previously discussed, the deal to finance October Faction's production left IDW on the hook for overages and other indirect expenses, a structure that we are not planning to employ going forward.

With that, as noted, we have substantially absorbed nearly all the impact of legacy production finance deals. We expect to turn the financial corner on the current slate of streaming shows when we recognize a positive bottom line contribution from Locke & Key in the next 2 quarters of this year.

IDW Publishing delivered $92,000 in income from operations compared to a loss from operations of $1.5 million in the year-ago quarter, a massive swing. The significant improvement was driven by increased sales of and improved margins on IDW Publishing books and to a lesser extent, increased game sales.

We expect that IDW Publishing results will continue to strengthen this year as we focus on higher-margin offerings and rightsized overhead.

Finally, CTM narrowed its loss from operations to $1.1 million from $1.3 million in Q1 of 2019. Due to seasonal factors, the first quarter is typically the least profitable of the year for this business.

And CTM typically generates improved results in the remaining 3 quarters of our fiscal year.

IDW's consolidated loss per share was $0.91 in the first quarter of 2020, compared to a loss per share of $0.67 in the first quarter of 2019. The increase was almost entirely a function of the loss on delivery of remaining October Faction episodes, as mentioned, partially offset by the improved contributions from Publishing and CTM.

Looking ahead to the balance of the 2020 fiscal year, we should see significant improvements in our bottom line with the delivery of Locke & Key in the second quarter and season 4 of Wynonna Earp in the second half of the year. As I mentioned in the prior quarter's call, we have budgeted to provide Cineflix and SyFy with complete 4 season packages of Wynonna Earp.

That deal should generate meaningful positive operating contributions in both fiscal 2021 and 2022, but will entail a one-time outlay later this year when we reacquire the early seasons windows of Wynonna Earp.

Finally, we continue to work to ensure that IDW as a whole will be profitable in fiscal 2021, while working to realize the upside afforded by the potential renewals of our shows, by new deals being developed by IDW Entertainment based on our IP holdings and by enhanced monetization through IDW Games, merchandising and other IDW 360 programs.

I know that many of you on the call with us this evening, including myself, are concerned about or perhaps even have already been impacted by the coronavirus. First, I want to send my heartfelt wishes and prayers for a speedy recovery to those whose friends, family or colleagues have been personally affected.

From a business perspective, IDW is preparing for the potential impact of the coronavirus at CTM and throughout our operations. This situation is, obviously, as we all know, evolving rapidly, and the outlook is too uncertain at this time for us to discuss whether or how much of an impact it could have on our operations or finances.

We will certainly take this discussion up again in the coming quarters as the picture becomes clearer.

Turning to our balance sheet. We continue to focus on paying down our debt, manage working capital appropriately and enhancing liquidity.

To that end, we recently closed on a private placement of our Class B common stock. We successfully raised $12.3 million of capital, inclusive of a $4 million debt-to-equity conversion by our Chairman and CEO, Howard Jonas.

During the remainder of 2020, between Netflix license fees and Canadian tax credits associated with our shows, we expect to pay off our production bank loan from $45 million today to 0 by the end of calendar year 2020. At that point, our total debt comprised only $5 million owed to Mr.

Jonas for loans he provided the company in 2018. With our debt financial health in order, we are preparing to reregister as an SEC reporting company, and will apply to list our Class B common stock on the NYSE American Stock Exchange.

We hope to complete our uplist during the second or third quarter and look forward to providing our shareholders with increased transparency and liquidity.

In summary, this was a great quarter operationally for IDW, and we expect that our finances will continue to improve this year. Through the uplisting and reregistration process, we hope to gain additional visibility and gain a stronger position to help investors and markets understand the enormous upside potential of IDW.

Now I will be happy to take your questions. Operator, back to you for Q&A.