MKTG INC Announces Operating Results for Its Fiscal Year Ended March 31, 2014

NEW YORK, June 27, 2014 /PRNewswire/ -- MKTG INC (OTCQB: CMKG), a full service marketing agency, today announced its operating results for its fiscal year ended March 31, 2014.

Operating Results – Fiscal 2014

For its fiscal year ended March 31, 2014, Operating Revenue increased $1.0 million or 2% to $43.9 million, compared to $42.9 million for its fiscal year ended March 31, 2013. Compensation and general and administrative expenses were $41.0 million for the fiscal 2014, compared to $38.2 million for fiscal 2013. Operating income for fiscal 2014 was $2.8 million, compared to $4.7 million for fiscal 2013. Modified EBITDA for fiscal 2014 was $3.9 million, compared to $6.1 million for fiscal 2013.

Fair Value Adjustment to Compound Embedded Derivatives

The Company's income statements for the periods include accounting adjustments shown below the operating income line. These are non-cash fair value adjustments to compound embedded derivative generated from the Company's December 2009 financing. For the twelve months ended March 31, 2014 and March 31, 2013, these adjustments amounted to $979,000 and ($1,660,000), respectively. The amount of these adjustments is driven by a number of factors, most importantly, by the value of the Company's stock. As its stock price fluctuates, the Company is required to record adjustments, with increases in stock price reducing net income, and declines in stock price increasing net income. Consequently, the Company believes it is most appropriate to focus on its operating income as the basis for assessing operating performance.

Operating Revenue and Modified EBITDA

The Company believes Operating Revenue and Modified EBITDA are key performance indicators. The Company defines Operating Revenue as sales less reimbursable program costs and expenses and outside production and other program expenses. Operating Revenue is the net amount derived from sales to customers that management believes is available to fund compensation, general and administrative expenses and capital expenditures. The Company defines Modified EBITDA as income before interest, income taxes, depreciation and amortization plus other non-cash expenses. The Company uses Modified EBITDA as a supplemental measure to evaluate operational performance. Operating Revenue and Modified EBITDA are Non-GAAP financial measures disclosed by management to provide additional information to investors in order to provide them with alternative methods for assessing the Company's financial condition and operating results. These measures are not in accordance with, or a substitute for, GAAP and may be different from or inconsistent with Non-GAAP financial measures used by other companies. Reconciliations of Operating Revenue to sales and Modified EBITDA to operating income are provided at the end of this press release.

About MKTG INC

MKTG INC is a full service marketing agency headquartered in New York with full service offices in San Francisco, Los Angeles, Chicago, Cincinnati and London, England. The Company currently serves a variety of the world's most recognizable brands. Its services include experiential marketing, digital marketing, retail promotions and strategic research and planning. The firm's programs help its clients profitably connect with consumers and create networks of brand advocates to generate brand awareness and higher sales for its customers. For more information, please visit www.mktg.com.

This press release includes statements which constitute forward-looking statements made pursuant to the safe harbor provision of the Private Securities Litigation Reform Act of 1995. Forward-looking statements in this press release are not promises or guarantees and are subject to risks and uncertainties that could cause our actual results to differ materially from those anticipated. These statements are based on management's current expectations and assumptions and are naturally subject to uncertainty and changes in circumstances. We caution you not to place undue reliance upon any such forward-looking statements. Actual results may vary materially from those expressed or implied by the statements herein. Factors that could cause actual results to differ materially from the Company's expectations are set forth in the Company's Annual Report on Form 10-K for the fiscal year ended March 31, 2014 under "Risk Factors," and include the risk that projected business opportunities will fail to materialize or will be delayed. The Form 10-K may be obtained by visiting the Company's website or by accessing the database maintained by the Securities and Exchange Commission at http://www.sec.gov.

 

MKTG INC

Consolidated Statements of Operations

For The Fiscal Years Ended March 31, 2014 and 2013





Fiscal Years Ended

March 31,




2014



2013

Sales


$

139,028,963


$

130,809,778

Operating revenue


$

43,852,396


$

42,885,686

Operating income


$

2,830,011


$

4,694,497

Fair value adjustments to compound embedded derivative


$

978,724


$

(1,659,575)

Income before provision for income taxes


$

3,809,272


$

3,035,501

Provision for income taxes


$

1,516,000


$

1,820,587

Net income


$

2,293,272


$

1,214,914








Earnings per share:







Basic


$

0.28


$

0.15

Diluted


$

0.13


$

0.07

 

MKTG INC

Consolidated Balance Sheets

March 31, 2014 and 2013





March 31, 2014


March 31, 2013






Total assets

$

44,388,809

$

40,606,970

Total liabilities

$

28,350,215

$

27,297,244

Preferred stock

$

3,848,272

$

3,132,882

Total stockholders' equity

$

12,190,322

$

10,176,844

 

MKTG INC

Operating Revenue Schedule

For The Fiscal Years Ended March 31, 2014 and 2013





Fiscal Years Ended

March 31,




2014



2013








Sales


$

139,028,963


$

130,809,778

Reimbursable program costs and expenses



25,805,741



23,004,366

Outside production and other program expenses



69,370,826



64,919,726

Operating Revenue


$

43,852,396


$

42,885,686

 

MKTG INC

Modified EBITDA Schedule

For The Fiscal Years Ended March 31, 2014 and 2013





Fiscal Years Ended

March 31,




2014



2013








Operating income


$

2,830,011


$

4,694,497

Depreciation and amortization



756,764



979,411

Share based compensation expense



354,669



442,115

Modified EBITDA


$

3,941,444


$

6,116,023

 

 

SOURCE MKTG INC



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