10-Q

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549

FORM 10-Q

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

For the quarterly period ended December 31, 2008

OR

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

For the transition period from________ to ________

Commission file number 0-20394

‘mktg, inc.’

(Exact name of registrant as specified in its charter)

Delaware	06-1340408
(State or other jurisdiction of	(I.R.S. Employer
incorporation or organization)	Identification Number)
75 Ninth Avenue
New York, New York	10011
(Address of principal executive offices)	(Zip Code)

Registrant’s telephone number, including area code: (212) 660-3800

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           o

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          o No           o

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. (Check one):

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

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).

Yes          o No           x

As of April 28, 2009, 8,333,192 shares of the Registrant’s Common Stock, par value $.001 per share, were outstanding.

INDEX

‘mktg, inc.’ AND SUBSIDIARIES

			Page
PART I - FINANCIAL INFORMATION
Item 1.	Condensed Consolidated Financial Statements (Unaudited)
		Balance Sheets – December 31, 2008 and March 31, 2008 (Restated)	3
		Statements of Operations – Three and nine months ended December 31, 2008 and 2007 (Restated)	4
		Statements of Cash Flows – Nine months ended December 31, 2008 and 2007 (Restated)	5
	Notes to Unaudited Condensed Consolidated Financial Statements		6
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations		13
Item 4.	Controls and Procedures		17
PART II - OTHER INFORMATION
Items 1, 1A, 2, 3, 4 and 5. Not Applicable
Item 6.	Exhibits		18
SIGNATURES			19

PART I - FINANCIAL INFORMATION
‘mktg, inc.’
Condensed Consolidated Balance Sheets
December 31, 2008 and March 31, 2008

	December 31, 2008			March 31, 2008
	(Unaudited)			(Restated)
Assets
Current assets:
Cash and cash equivalents	$	1,904,802		$	5,323,527
Accounts receivable, net of allowance for doubtful accounts of $301,000 at December 31, 2008 and $388,000 at March 31, 2008		6,214,862			6,586,673
Unbilled contracts in progress		3,610,855			4,245,148
Deferred contract costs		2,075,623			4,372,813
Prepaid expenses and other current assets		480,913			327,782
Total current assets		14,287,055			20,855,943
Property and equipment, net		2,917,021			3,429,752
Deferred tax asset		401,035			401,035
Goodwill and other intangible assets		10,860,645			7,557,203
Other assets		568,198			489,511
Total assets	$	29,033,954		$	32,733,444
Liabilities and Stockholders’ Equity
Current liabilities:
Notes payable bank – current	$	675,000		$	—
Accounts payable		1,660,360			2,056,913
Accrued compensation		1,199,069			2,774,033
Accrued job costs		5,029,564			6,030,473
Other accrued liabilities		2,209,977			2,801,352
Deferred revenue		8,765,909			10,651,494
Deferred taxes payable		401,035			401,035
Total current liabilities		19,940,914			24,715,300
Deferred rent		1,772,387			2,409,942
Notes payable bank		1,487,500			—
Total liabilities		23,200,801			27,125,242
Commitments and contingencies
Stockholders’ equity:
Class A convertible preferred stock, par value $.001; authorized 650,000 shares; none issued and outstanding		—			—
Class B convertible preferred stock, par value $.001; authorized 700,000 shares; none issued and outstanding		—			—
Preferred stock, undesignated; authorized 3,650,000 shares; none issued and outstanding		—			—
Common stock, par value $.001; authorized 25,000,000 shares; 8,057,808 shares issued and outstanding at December 31, 2008 and 7,624,103 shares issued and outstanding at March 31, 2008		8,058			7,624
Additional paid-in capital		11,645,009			11,178,594
Retained earnings		(5,819,914	)		(5,578,016	)
Total stockholders’ equity		5,833,153			5,608,202
Total liabilities and stockholders’ equity	$	29,033,954		$	32,733,444

See notes to unaudited condensed consolidated financial statements.

3

‘mktg, inc.’
Condensed Consolidated Statements of Operations
Three and Nine Months Ended December 31, 2008 and 2007
(Unaudited)

	Three Months Ended December 31					Nine Months Ended December 31
	2008			2007 (Restated)		2008			2007 (Restated)
Sales	$	25,720,210		$	23,745,750	$	74,571,169		$	59,663,741
Operating expenses:
Reimbursable program costs and expenses		4,657,160			3,615,448		13,811,935			12,682,572
Outside production and other program expenses		11,709,745			11,121,079		33,875,642			23,330,698
Compensation expense		6,894,396			6,485,127		20,863,135			18,099,371
General and administrative expenses		2,035,387			1,979,841		5,877,766			5,104,181
Total operating expenses		25,296,688			23,201,495		74,428,478			59,216,822
Operating income		423,522			544,255		142,691			446,919
Interest (expense)		(24,164	)		—		(68,726	)		—
Interest income,		6,412			15,437		26,319			75,780
Other expense		(342,182	)		—		(342,182	)		—
Income (loss) before provision for income taxes		63,588			559,692		(241,898	)		522,699
Provision for income taxes		—			54,000		—			162,000
Net income (loss)	$	63,588		$	505,692	$	(241,898	)	$	360,699
Basic earnings (loss) per share	$	.01		$	.07	$	(.03	)	$	.05
Diluted earnings (loss) per share	$	.01		$	.07	$	(.03	)	$	.05
Weighted average number of common shares outstanding:
Basic		7,116,416			6,940,510		7,018,496			6,925,931
Diluted		7,245,649			7,181,518		7,018,496			7,115,099

See notes to unaudited condensed consolidated financial statements.

4

‘mktg, inc.’
Condensed Consolidated Statements of Cash Flows
Nine Months Ended December 31, 2008 and 2007
(Unaudited)

	2008			2007 (Restated)
Cash flows from operating activities:
Net (loss) income	$	(241,898	)	$	360,699
Adjustments to reconcile net (loss) income to net cash used in operating activities:
Depreciation and amortization		1,050,136			425,979
Deferred rent credit		(637,555	)		(99,382	)
Provision for bad debt expense		183,492			22,853
Compensation expense on non-vested stock and stock options		466,849			299,493
Deferred income taxes		—			170,976
Changes in operating assets and liabilities:
Accounts receivable		188,319			6,598,010
Unbilled contracts in progress		634,293			(149,691	)
Deferred contract costs		2,297,190			(2,318,628	)
Prepaid expenses and other current assets		(153,131	)		726,023
Other assets		(78,687	)		(448,941	)
Accounts payable		(396,553	)		(2,453,130	)
Accrued compensation		(1,574,964	)		151,112
Accrued job costs		(1,000,909	)		6,345,604
Accrued liabilities		(591,375	)		577,196
Deferred revenue		(1,885,585	)		(8,634,884	)
Net cash (used in) provided by operating activities		(1,740,378	)		1,573,289
Cash flows from investing activities:
Cash paid for acquisition of 3 For All Partners, LLC (including cash held in escrow)		(3,348,251	)		—
Purchases of fixed assets		(492,596	)		(575,124	)
Net cash used in investing activities		(3,840,847	)		(575,124	)
Cash flows from financing activities:
Proceeds from note payable - bank		2,500,000
Payments of debt		(337,500	)		(2,000,000	)
Net cash provided by (used in) financing activities		2,162,500			(2,000,000	)
Net decrease in cash and cash equivalents		(3,418,725	)		(1,001,835	)
Cash and cash equivalents at beginning of period		5,323,527			9,514,081
Cash and cash equivalents at end of period	$	1,904,802		$	8,512,246
Supplemental disclosures of cash flow information:
Interest paid during the period	$	61,475		$	67,590
Income taxes paid during the period	$	74,218		$	85,380
Non-cash investing activities:
Acquisition of 3 For All Partners – property and equipment	$	44,809		$	—
Acquisition of 3 For All Partners – goodwill and other intangible assets	$	3,303,442		$	—

See notes to unaudited condensed consolidated financial statements.

5

‘mktg, inc.’ and Subsidiaries
Notes to the Unaudited Condensed Consolidated Financial Statements

(1)	Basis of Presentation
	The following unaudited interim condensed consolidated financial statements of ‘mktg, inc.’ (formerly CoActive Marketing Group, Inc.) (the “Company”) for the three and nine months ended December 31, 2008 and 2007 have been prepared pursuant to the rules and regulations of the Securities and Exchange Commission. Certain information and note disclosures normally included in annual financial statements prepared in accordance with generally accepted accounting principles have been condensed or omitted pursuant to GAAP for interim financial information and SEC rules and regulations, although the Company believes that the disclosures made are adequate to make the information not misleading. These consolidated financial statements should be read in conjunction with the consolidated financial statements and notes thereto included in the Company’s Amendment No. 2 to its Annual Report on Form 10-K/A for the year ended March 31, 2008. In the opinion of management, such consolidated financial statements reflect all adjustments, consisting of normal recurring adjustments, necessary to present fairly the Company’s results for the interim periods presented. The results of operations for the three and nine months ended December 31, 2008 are not necessarily indicative of the results for a full year.
(2)	Summary of Significant Accounting Policies
	(a)	Principles of Consolidation
		The consolidated financial statements include the financial statements of the Company and its wholly-owned subsidiaries. All significant intercompany balances and transactions have been eliminated in consolidation.
	(b)	Use of Estimates
		The preparation of the financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of the contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Management bases its estimates on certain assumptions, which it believes are reasonable in the circumstances. Actual results could differ from those estimates.
		The Company’s revenues are generated from projects subject to contracts requiring the Company to provide its services within specified time periods generally ranging up to twelve months. As a result, on any given date, the Company has projects in process at various stages of completion. Depending on the nature of the contract, revenue is recognized as follows: (i) on time and material service contracts, revenue is recognized as services are rendered and the costs are incurred; (ii) on fixed price retainer contracts, revenue is recognized on a straight-line basis over the term of the contract; (iii) on fixed price multiple services contracts, revenue is recognized over the term of the contract for the fair value of segments of the services rendered which qualify as separate activities or delivered units of service; to the extent multi-service arrangements are deemed inseparable, revenue on these contracts is recognized as the contracts are completed; (iv) on certain fixed price contracts, revenue is recognized on a percentage of completion basis, whereby the percentage of completion is determined by relating the actual cost of labor performed to date to the estimated total cost of labor for each contract; (v) on certain fixed price contracts, revenue is recognized on the basis of proportional performance as certain key milestones are delivered. Costs associated with the fulfillment of projects are accrued or deferred and recognized proportionately to the related revenue in order to ensure a matching of revenue and expenses in the proper period. Provisions for anticipated losses on uncompleted projects are made in the period in which such losses are determined.
		In assessing the realizability of deferred tax assets, management considers whether it is more likely than not that some or all of such assets will be utilized in future periods. For financial reporting purposes, the Company has incurred losses for fiscal years 2004 through 2008 aggregating $5,961,000. The Company must generate approximately $11,581,000 of aggregate taxable income, exclusive of any reversals or timing differences, to fully utilize its net deferred tax asset. Based upon the available objective evidence, including the Company’s history of losses, management does not believe that it is more likely than not that the net deferred tax asset will be fully utilized. Accordingly, the Company has provided for a full valuation allowance against its net deferred tax asset.
		In October 2008, the Company exercised its option to terminate its sublease for office space (see Note 6). As such, management revised its estimate for the remaining life of its leasehold improvements.

6

(c)

Net Income Per Share

Basic earnings per share is based upon the weighted average number of common shares outstanding during the period. Diluted earnings per share is computed on the same basis, including if dilutive, common share equivalents, which include outstanding options and restricted stock. For purpose of computing diluted earnings per share, 129,233 and 241,008 common share equivalents were assumed to be outstanding for the three months ended December 31, 2008 and 2007, respectively. For the nine months ending December 31, 2007, 189,168 common share equivalents were assumed to be outstanding. For the three and nine months ended December 31, 2008 and 2007, stock options and warrants to purchase approximately 272,016 and 142,157 of common stock were excluded from the calculation of diluted earnings per share as their inclusion would be anti-dilutive. For the three and nine months ended December 31, 2007 stock options and warrants to purchase approximately 235,766 of common stock were excluded from the calculation of diluted earnings per share as their inclusion would be anti-dilutive. The weighted average number of shares outstanding consists of:

	Three Months Ended December 31,				Nine Months Ended December 31,
	2008		2007		2008		2007
Basic		7,116,416		6,940,510		7,018,496		6,925,931
Dilutive effect of options and restricted stock		129,233		241,008		—		189,168
Diluted		7,245,649		7,181,518		7,018,496		7,115,099

(d)	Recent Accounting Standards Affecting the Company
	In September 2006, the Financial Accounting Standards Board (“FASB”) issued Statement of Financial Accounting Standards (“SFAS”) No. 157, “Fair Value Measurements” (“SFAS No. 157”), which defines fair value, establishes a framework for measuring fair value in generally accepted accounting principles, and expands disclosures about fair value measurements. This statement does not require any new fair value measurements, but provides guidance on how to measure fair value by providing a fair value hierarchy used to classify the source of the information. SFAS No. 157 is effective for fiscal years beginning after November 15, 2007, and all interim periods within those fiscal years. In February 2008, the FASB released FASB Staff Position (FSP FAS 157-2 – Effective Date of FASB Statement No. 157) which delays the effective date of SFAS No. 157 for all non-financial assets and non-financial liabilities, except those that are recognized or disclosed at fair value in the financial statements on a recurring basis (at least annually), to fiscal years beginning after November 15, 2008 and interim periods within those fiscal years. The adoption of SFAS No. 157 during the interim period ended June 30, 2008, with respect to the Company’s financial assets and liabilities did not have a material impact on the Company’s Consolidated Financial Statements. The Company is currently assessing the potential impact that adoption of this statement would have on its non-financial assets and non-financial liabilities, if any.
	In February 2007, the FASB issued SFAS No. 159, “Fair Value Option for Financial Assets and Liabilities” (“SFAS No. 159”). SFAS No. 159 allows companies to choose, at specific election dates, to measure eligible financial assets and liabilities that are not otherwise required to be measured at fair value, at fair value. Under SFAS No. 159, companies would report unrealized gains and losses for which the fair value option has been elected in earnings at each subsequent reporting date, and recognize up-front costs and fees related to those items in earnings as incurred. SFAS No. 159 became effective for fiscal years beginning after November 15, 2007. The adoption of SFAS No. 159 during the interim period ended June 30, 2008 did not have a material impact on the Company’s Consolidated Financial Statements due to its election not to measure eligible financial assets and liabilities that are not otherwise required to be measured at fair value, at fair value.
	In December 2007, the FASB issued SFAS No. 141 (revised 2007), Business Combinations, which replaces SFAS No 141. The statement retains the purchase method of accounting for acquisitions, but requires a number of changes, including changes in the way assets and liabilities are recognized in the purchase accounting. It also changes the recognition of assets acquired and liabilities assumed arising from contingencies, requires the capitalization of in-process research and development at fair value, and requires the expensing of acquisition-related costs as incurred. SFAS No. 141R is effective for business combinations for which the acquisition date is on or after the beginning of the first annual reporting period beginning on or after December 15, 2008. Management currently believes that the adoption of this statement will not have a material impact on the Company’s financial statements.

7

		In December 2007, the FASB issued SFAS No. 160, Noncontrolling Interests in Consolidated Financial Statements, an amendment of ARB 51, which changes the accounting and reporting for minority interests. Minority interests will be recharacterized as noncontrolling interests and will be reported as a component of equity separate from the parent’s equity, and purchases or sales of equity interests that do not result in a change in control will be accounted for as equity transactions. In addition, net income attributable to the noncontrolling interest will be included in consolidated net income on the face of the income statement and, upon a loss of control, the interest sold, as well as any interest retained, will be recorded at fair value with any gain or loss recognized in earnings. SFAS No. 160 is effective for annual periods beginning after December 15, 2008. Management currently believes that the adoption of this statement will not have a material impact on the Company’s financial statements.
		In March 2008, the FASB issued FASB Statement No. 161, Disclosures about Derivative Instruments and Hedging Activities. The new standard is intended to improve financial reporting about derivative instruments and hedging activities by requiring enhanced disclosures to enable investors to better understand their effects on an entity’s financial position, financial performance, and cash flows. It is effective for financial statements issued for fiscal years and interim periods beginning after November 15, 2008, with early application encouraged. Management currently believes that the adoption of this statement will not have a material impact on the Company’s financial statements.
		In May 2008, the FASB issued Statement No. 162, “The Hierarchy of Generally Accepted Accounting Principles” (“SFAS 162”). The new standard is intended to improve financial reporting by identifying a consistent framework, or hierarchy, for selecting accounting principles to be used in preparing financial statements that are presented in conformity with U.S. generally accepted accounting principles (GAAP) for nongovernmental entities. Prior to the issuance of SFAS 162, GAAP hierarchy was defined in the American Institute of Certified Public Accountants (AICPA) Statement on Auditing Standards (SAS) No. 69, The Meaning of Present Fairly in Conformity With Generally Accepted Accounting Principles. SFAS 162 is effective 60 days following the SEC’s approval of the Public Company Accounting Oversight Board Auditing amendments to AU Section 411, The Meaning of Present Fairly in Conformity with Generally Accepted Accounting Principles. Management currently believes that the adoption of this statement will not have a material impact on the Company’s financial statements.
(3)	Acquisition of 3 For All Partners, LLC
	On June 30, 2008, the Company, through its wholly-owned subsidiary U.S. Concepts LLC, acquired substantially all of the assets of 3 For All Partners, LLC, d/b/a mktgpartners (“mktgpartners”) pursuant to an Asset Purchase Agreement between the Company, U.S. Concepts LLC, mktgpartners and mktgpartners’ members. Founded in 2003, mktgpartners focuses on entertainment and sports marketing, experiential marketing and promotional media, and is headquartered in New York, with additional offices in Chicago, San Francisco and Toronto.
	The consideration for the acquisition consisted of $3.25 million in cash and 332,226 common shares (the “Share Consideration”) of the Company’s common stock, valued at approximately $1,000,000. In addition the Company incurred $98,251 in direct acquisition costs.
	In connection with the acquisition, the Company hired all of mktgpartners’ employees and issued 166,113 shares of restricted common stock of the Company, valued at approximately $500,000, to certain of those employees. The restricted shares vest annually in equal installments over five years.
	Pursuant to the Asset Purchase Agreement, $750,000 of the cash consideration and the entire Share Consideration were deposited into an escrow account to be held for a period of 18 months to satisfy indemnification claims, if any, that may be made by the Company under the Asset Purchase Agreement. In addition, as more fully set forth in the Asset Purchase Agreement, all or a portion of the escrowed consideration will be subject to release to the Company upon the occurrence of certain specified events under the Asset Purchase Agreement, including the termination of employment (other than due to death or by the Company without cause), of certain key employees of mktgpartners during the first year following the closing of the acquisition, and the failure to achieve “Gross Margin” targets during the 12 month period following the closing.

8

The following table summarizes the preliminary allocation of the $3,348,251 purchase price utilizing the estimated fair values of the assets acquired at June 30, 2008. The Company is currently in the process of obtaining third-party valuations of certain intangible assets, therefore the allocation of the purchase price is subject to refinement.

Purchase price – cash	$	3,250,000
Direct acquisition costs		98,251
Total purchase price (excluding share consideration)	$	3,348,251
Property and equipment	$	44,809
Goodwill and other intangible assets		3,303,442
Total asset acquired	$	3,348,251

The $3,303,442 of goodwill and other intangible assets were assigned to the US Concepts, LLC reporting unit, all of which is expected to be deductible for income tax reporting purposes.

Pro Forma Results of Operations (unaudited)
The following pro forma results of operations for the three months ended December 31, 2007 and for the nine months ended December 31, 2008 and 2007 have been prepared as though the acquisition of mktgpartners had occurred as of the beginning of the earliest period presented. This pro forma financial information is not indicative of the results of operations that the Company would have attained had the acquisition of mktgpartners occurred at the beginning of the periods presented, nor is the pro forma financial information indicative of the results of operations that may occur in the future:

	Three Months Ended December 31, (Restated)		Nine Months Ended December 31,
	2007		2008			2007 (Restated)
Pro forma sales	$	26,852,129	$	77,805,077			69,695,499
Pro forma net income (loss)	$	91,797	$	(574,022	)		(682.467	)
Pro forma basic earnings (loss) per share	$	.01	$	(.08	)		(.10	)
Pro forma diluted earnings (loss) per share	$	.01	$	(.08	)		(.10	)

	The operations of mktgpartners have been included in the Company’s consolidated statement of operations since the date of the acquisition (June 30, 2008).
(4)	Bank Credit Facility
	On June 26, 2008, the Company entered into a Credit Agreement (the “Credit Agreement”) with Sovereign Bank (the “Lender”).
	Pursuant to the Credit Agreement, the Lender provided the Company with (i) a $2.5 million term loan (the “Term Loan”), which was funded in full on June 30, 2008 in connection with the acquisition of 3 For All Partners LLC, and (ii) a $2.5 million revolving credit facility (the “Revolving Credit Facility”). Borrowings under the Revolving Credit Facility are used for working capital purposes.
	The Term Loan and Revolving Credit Facility have been guaranteed by the Company’s subsidiaries and are secured by substantially all of their assets pursuant to a Security Agreement entered into by the Company and its subsidiaries in favor of the Lender.
	Pursuant to the Credit Agreement, among other things:

· All outstanding loans under the Credit Agreement will become due on June 30, 2011 (the “Maturity Date”).

· The Term Loan will be repaid in 12 consecutive quarterly installments commencing on September 30, 2008. The first 11 installments will be in the amount of $168,750, with a final payment in the amount of $643,750 being due on the Maturity Date.

9

· Interest accrues on outstanding loans under the Credit Agreement at a per annum rate equal to, at the Company’s option, the prime rate (3.25% at December 31, 2008) from time to time in effect (but in no event less than the Federal Funds Rate plus one-half percent), or a LIBOR rate selected by the Company, plus a margin of 2.25%.

· The Company is required to comply with a number of affirmative, negative and financial covenants. Among other things, these covenants restrict the Company’s ability to pay dividends, limit annual capital expenditures, provide that the Company’s “Consolidated Debt Service Coverage Ratio” cannot be less than 1.5 to 1.0 as of the end of any fiscal quarter, that its “Consolidated Leverage Ratio” can not exceed 2:25 to 1:00 at the end of any fiscal quarter, and that the Company can not incur a “Consolidated Pre-Tax Net Loss” in excess of $500,000 in the aggregate in any period of two consecutive fiscal quarters.

	As of December 31, 2008, the Company was not in compliance with the Consolidated Debt Service Coverage Ratio and Consolidated Leverage Ratio covenants. In addition, as a result of the restatement of the Company’s financial statements, the Company breached its financial reporting obligations under the Credit Agreement. On April 28, 2009, the Company and the Lender entered into a letter agreement pursuant to which the Lender agreed to enter into an amendment and waiver to the Credit Agreement under which (i) the Lender waives the Company’s past non-compliance with the financial covenants and reporting obligations, (ii) indefinitely suspends the revolving credit facility, (iii) requires the Company to maintain deposits with the Lender at all times in an amount not less then the outstanding balance of the term loan as cash-collateral therefor, and (iv) suspends the Company’s obligation to comply with the financial covenants in the future during the period in which the revolving credit facility is suspended and the term loan is fully cash-collateralized.
(5)	Accounting for Stock-Based Compensation
	Stock Options
	On September 18, 2008, the Company’s stockholders approved the Company’s 2008 Employee Stock Purchase Plan (“Stock Purchase Plan”), which is intended to qualify as an “employee stock purchase plan” under Section 423 of the Code. The Stock Purchase Plan provides eligible employees of the Company with an opportunity to purchase shares of Common Stock through regular payroll deductions at a discount to the market price. The Company has authorized the issuance of up to 300,000 shares of Common Stock under the Stock Purchase Plan, which has not yet been implemented. Accordingly, all 300,000 shares of Common Stock authorized for issuance the Stock Purchase Plan remain available for purchase thereunder.
	Under the Company’s 1992 Stock Option Plan (the “1992 Plan”), employees of the Company and its affiliates and members of the Board of Directors were granted options to purchase shares of common stock of the Company. The 1992 Plan was amended on May 11, 1999 to increase the maximum number of shares of common stock for which options may be granted to 1,500,000 shares. The 1992 Plan terminated in 2002, although options issued thereunder remain exercisable until the termination dates provided in such options. Options granted under the 1992 Plan were either intended to qualify as incentive stock options under the Internal Revenue Code of 1986, or non-qualified options. Grants under the 1992 Plan were awarded by a committee of the Board of Directors, and are exercisable over periods not exceeding ten years from date of grant. The option price for incentive stock options granted under the 1992 Plan must be at least 100% of the fair market value of the shares on the date of grant, while the price for non-qualified options granted to employees and employee directors is determined by the committee of the Board of Directors. At December 31, 2008, there were 20,625 options issued under the 1992 Plan, expiring from April 2009 through April 2011 that remain outstanding.
	On July 1, 2002, the Company established the 2002 Long-Term Incentive Plan (the “2002 Plan”) providing for the grant of options or other awards, including stock grants, to employees, officers or directors of, or consultants to, the Company or its subsidiaries to acquire up to an aggregate of 750,000 shares of Common Stock. In September 2005, the 2002 Plan was amended to increase the number of shares of common stock available under the plan to 1,250,000. In September 2008, the 2002 Plan was amended to increase the number of shares of common stock available under the plan to 1,650,000. Options granted under the 2002 Plan may either be intended to qualify as incentive stock options under the Internal Revenue Code of 1986, or may be non-qualified options. Grants under the 2002 Plan are awarded by a committee of the Board of Directors, and are exercisable over periods not exceeding ten years from date of grant. The option price for incentive stock options granted under the 2002 Plan must be at least 100% of the fair market value of the shares on the date of grant, while the price for non-qualified options granted is determined by the Committee of the Board of Directors. At December 31, 2008, there were 297,500 options issued under the 2002 Plan, expiring from April 2011 through September 2017 that remain outstanding. Any option under the 2002 Plan that is not exercised by an option holder prior to its expiration may be available for re-issuance by the Company. As of December 31, 2008, the Company had 504,210 shares of common stock available for grant of awards under the 2002 Plan.

10

Stock option compensation expense in the three and nine month periods ended December 31, 2008 and 2007 represent the estimated fair value of options and warrants outstanding which are being amortized on a straight-line basis over the requisite vesting period of the entire award.

No stock options were granted during the nine month period ending December 31, 2008. The weighted average estimated fair value of stock options granted in the nine month period ended December 31, 2007 was $1.32 per share. The fair value of options at the date of grant was estimated using the Black-Scholes option pricing model. The expected volatility is based upon historical volatility of our stock and other contributing factors. The expected term is determined using the simplified method as permitted by SAB 107.

The assumptions made in calculating the fair values of options are as follows:

	Three Months Ended December 31,		Nine Months Ended December 31,
	2008	2007	2008	2007
Expected volatility	n/a	n/a	n/a	63.5	%
Expected dividend yield	n/a	n/a	n/a	0	%
Risk-free interest rate	n/a	n/a	n/a	4.51	%
Expected term (in years)	n/a	n/a	n/a	5.25

A summary of option activity under all plans as of December 31, 2008, and changes during the period then ended is presented below:

	Weighted average exercise price		Number of options			Weighted average remaining contractual term		Aggregate intrinsic value
Balance at March 31, 2008	$	2.55		466,250			4.12	$	153,863
Granted		—		—
Exercised		—		—
Canceled	$	3.32		(148,125	)
Balance at December 31, 2008 (vested and expected to vest)	$	2.19		318,125			5.44	$	130,431
Exercisable at December 31, 2008	$	2.19		318,125			5.44	$	130,431

At December 31, 2008 there were no unvested stock option awards and all compensation expense had been fully recognized.

Warrants

At each of December 31, 2008 and March 31, 2008, there were outstanding warrants to purchase an aggregate of 40,766 shares of common stock at an exercise price per share of $3.68 held by one individual. These warrants expire on April 30, 2010.

Non-Vested Stock

As of December 31, 2008, pursuant to the authorization of the Company’s Board of Directors and certain Restricted Stock Agreements, the Company had awarded 828,290 shares of common stock under the Company’s 2002 Plan to certain employees. Grant date fair value is determined by the market price of the Company’s common stock on the date of grant. The aggregate value of these shares at their respective grant dates amounted to $1,915,790 and will be recognized ratably as compensation expense over the vesting periods. The shares of common stock granted pursuant to such agreements vest in various tranches over five years from the date of grant.

The shares awarded under the restricted stock agreements vest on the applicable vesting dates only to the extent the recipient of the shares is then an employee of the Company or one of its subsidiaries, and each recipient will forfeit all of the shares that have not vested on the date his or her employment is terminated.

As of December 31, 2008, pursuant to the authorization of the Company’s Board of Directors and certain Restricted Stock Agreements, the Company had awarded 369,767 shares of common stock that were not issued under the Company’s 2002 Plan. These shares include an award of 200,000 shares to the Company’s Chief Executive Officer.

11

A summary of all non-vested stock activity as of December 31, 2008, and changes during the nine month period then ended is presented below:

	Weighted average grant date fair value		Number of shares			Weighted average remaining contractual term		Aggregate intrinsic value
Unvested at March 31, 2008	$	2.22		653,172			3.82	$	431,094
Granted	$	2.55		438,705
Vested	$	2.67		(156,320	)
Forfeited	$	2.50		(5,000	)
Unvested at December 31, 2008	$	2.52		930,557			3.72	$	0

	Total unrecognized compensation cost related to unvested stock awards at December 31, 2008 amounts to approximately $1,707,198 and is expected to be recognized over a weighted average period of 3.72 years. Total compensation cost for the three and nine months ended December 31, 2008, amounted to approximately $170,789 and $466,849 for these stock awards.
(6)	Commitments and Contingencies
	The Company had sales to one customer in excess of 10% of total sales for the three and nine months ended December 31, 2008. Sales to this customer approximated $15.6 million and $47.3 million for the three and nine month periods, respectively. Accounts receivable as of December 31, 2008 from this customer approximated $2.3 million.
	In October, 2008 the Company exercised its one-time option to terminate early its sublease for its principal office space in New York, effective October 25, 2009. As a result; the Company (i) is amortizing the value of its leasehold improvements over the remaining term of the lease (13 months), and (ii) has revised the monthly amortization of its deferred rent liability.
(7)	Income Taxes
	The Company did not record a benefit for federal, state and local income taxes for the period ended December 31, 2008 because any such benefit would be fully offset by an increase in the valuation allowance against the Company’s net deferred tax asset established as a result of our historical operating losses. The provision for income taxes for the period ended December 31, 2007 was comprised of minimum state income taxes and the impact of a change in estimate of the Company’s net operating loss carryforward.

12

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations.

                    This report contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended, that are based on beliefs of the Company’s management as well as assumptions made by and information currently available to the Company’s management. When used in this report, the words “estimate,” “project,” “believe,” “anticipate,” “intend,” “expect,” “plan,” “predict,” “may,” “should,” “will,” the negative thereof or other variations thereon or comparable terminology are intended to identify forward-looking statements. Such statements reflect the current views of the Company with respect to future events based on currently available information and are subject to risks and uncertainties that could cause actual results to differ materially from those contemplated in those forward-looking statements. Factors that could cause actual results to differ materially from the Company’s expectations are set forth in the Company’s Amendment No. 2 to Annual Report on Form 10-K/A for the fiscal year ended March 31, 2008 under “Risk Factors,” including but not limited to “Recent Losses,” “Customers,” “Dependence on Key Personnel,” “Unpredictable Revenue Patterns,” “Competition,” and “Risks Associated with Acquisitions,” in addition to other information set forth herein and elsewhere in our other public filings with the Securities and Exchange Commission. The forward-looking statements contained in this report speak only as of the date hereof. The Company does not undertake any obligation to release publicly any revisions to these forward-looking statements to reflect events or circumstances after the date hereof or to reflect the occurrence of unanticipated events.

Overview

                    ‘mktg, inc.’, through its wholly-owned subsidiaries Inmark Services LLC, Optimum Group LLC, U.S. Concepts LLC and Digital Intelligence Group LLC, is an integrated sales promotional and marketing services company. We develop, manage and execute sales promotion programs at both national and local levels, utilizing both online and offline media channels. Our programs help our clients effectively promote their goods and services directly to retailers and consumers and are intended to assist them in achieving maximum impact and return on their marketing investment. Our activities reinforce brand awareness, provide incentives to retailers to order and display our clients’ products, and motivate consumers to purchase those products, and are designed to meet the needs of our clients by focusing on communities of consumers who want to engage brands as part of their lifestyles.

                    On June 30, 2008, the Company, through its subsidiary U.S. Concepts LLC, acquired substantially all of the assets of 3 For All Partners, LLC d/b/a mktgpartners (“mktgpartners”), a marketing services company. The consideration for the acquisition consisted of $3.25 million in cash and 332,226 common shares (the “Share Consideration”) of the Company’s common stock, valued at approximately $1,000,000 pursuant to an Asset Purchase Agreement between the Company, U.S. Concepts LLC, mktgpartners and mktgpartners’ members. The foregoing summary does not purport to be complete and is subject to and qualified in its entirety by reference to the actual text of the Asset Purchase Agreement, which has been filed as Exhibit 10.4 to the Company’s Current Report on Form 8-K filed July 2, 2008.

                    Our services include experiential and face to face marketing, event marketing, interactive marketing, ethnic marketing, and all elements of consumer and trade promotion, and are marketed directly to our clients by our sales force operating out of offices located in New York, New York; Cincinnati, Ohio; Chicago, Illinois; San Francisco, California and Toronto, Ontario.

                    ‘mktg, inc.’ was formed under the laws of the State of Delaware in March 1992 and is the successor to a sales promotion business originally founded in 1972. ‘mktg, inc.’ began to engage in the promotion business following a merger consummated on September 29, 1995 that resulted in Inmark becoming its wholly-owned subsidiary. On September 18, 2008, we changed our name from CoActive Marketing Group, Inc. to ‘mktg, inc.’

                    Our corporate headquarters are located at 75 Ninth Avenue, New York, New York 10011, and our telephone number is 212-660-3800. Our Web site is www.mktg.com. Copies of all reports we file with the Securities and Exchange Commission are available on our Web site.

Results of Operations

                    We believe Operating Revenue is a key performance indicator. We define Operating Revenue as our 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 we believe is available to fund our compensation, general and administrative expenses, and capital expenditures. Operating Revenue is a Non-GAAP financial measure disclosed by management to provide additional information to investors in order to provide them with an alternative method for assessing our 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.

13

          The following table presents operating data expressed as a percentage of Operating Revenue for the three and nine months ended December 31, 2008 and 2007, respectively:

	Three Months Ended December 31,				Nine Months Ended December 31,
	2008		2007 (Restated)		2008		2007 (Restated)
Statement of Operations Data:
Operating revenue	100.0	%	100.0	%	100.0	%	100.0	%
Compensation expense	73.7	%	72.0	%	77.6	%	76.5	%
General and administrative expense	21.8	%	22.0	%	21.9	%	21.6	%
Operating income	4.5	%	6.0	%	0.5	%	1.9	%
Interest (expense) income, net	(0.2	%)	0.2	%	(0.1	%)	0.3	%
Other expense	(3.6	%)	0.0	%	(1.3	%)	0.0	%
Income (loss) before provision for income taxes	0.7	%	6.2	%	(0.9	%)	2.2	%
Provision for income taxes	0.0	%	0.6	%	0.0	%	0.7	%
Net income (loss)	0.7	%	5.6	%	(0.9	%)	1.5	%

                    Sales. Sales consist of fees for services, commissions, reimbursable program costs and expenses and other production and program expenses. We purchase a variety of items and services on behalf of our clients for which we are reimbursed pursuant to our client contracts. The amount of reimbursable program costs and expenses and outside production and other program expenses which are included in revenues will vary from period to period, based on the type and scope of the service being provided.

                    Sales for the three months ended December 31, 2008 increased 8% to $25,720,000 compared to $23,746,000 for the three months ended December 31, 2007. Sales for the nine months ended December 31, 2008 were $74,571,000 compared to sales of $59,664,000 for the nine months ended December 31, 2007, an increase of 25%. The increases in sales are due to $8,384,000 of new business for the nine-month period ended December 31, 2008 attributable to the acquisition of mktgpartners, along with an increase in Diageo events we executed, partially offset by reduction in digital and trade marketing.

                    Reimbursable Program Costs and Expenses. Reimbursable program costs and expenses for the three months ended December 31, 2008 and 2007 were $4,657,000 and $3,616,000, respectively. Reimbursable program costs and expenses for the nine months ended December 31, 2008 and 2007 were $13,812,000 and $12,682,000, respectively.

                    Outside Production and other Program Expenses. Outside production and other program expenses consist of the costs of purchased materials, media, services, certain direct labor charged to programs and other expenditures incurred in connection with and directly related to sales but which are not classified as reimbursable program costs and expenses. Outside production and other program expenses for the three months ended December 31, 2008 were $11,710,000 compared to $11,121,000 for the three months ended December 31, 2007. Outside production and other program expenses for the nine months ended December 31, 2008 were $33,876,000 compared to $23,331,000 for the nine months ended December 31, 2007. These increases in expenses are partly due to the acquisition of mktgpartners. In addition, outside production and other program expenses can fluctuate greatly from quarter to quarter based on the nature of the projects.

                    Operating Revenue. For the three months ended December 31, 2008, Operating Revenue increased by 4% to $9,353,000, compared to $9,009,000 for the three months ended December 31, 2007. For the nine months ended December 31, 2008, Operating Revenue increased by 14% to $26,883,000, compared to $23,651,000 for the nine months ended December 31, 2007. These increases in Operating Revenue are primarily the result of our acquisition of mktgpartners along with an increase in Diageo events we executed, partially offset by a reduction in trade marketing. A reconciliation of Sales to Operating Revenues for the three and nine months ended December 31, 2008 and 2007 is set forth below.

	Three Months Ended December 31,								Nine Months Ended December 31,
Sales	2008		%		2007 (restated)		%		2008		%		2007 (restated)		%
Sales – U.S. GAAP	$	25,720,000		100	$	23,746,000		100	$	74,571,000		100	$	59,664,000		100
Reimbursable program costs and outside production expenses		16,367,000		64		14,737,000		62		47,688,000		64		36,013,000		60
Operating Revenue – Non-GAAP	$	9,353,000		36	$	9,009,000		38	$	26,883,000		36	$	23,651,000		40

14

                    Compensation Expense. Compensation expense, exclusive of reimbursable program costs and expenses and other program expenses, consists of the salaries, payroll taxes and benefit costs related to indirect labor, overhead personnel and certain direct labor otherwise not charged to programs. For the three months ended December 31, 2008, compensation expense was $6,894,000, compared to $6,485,000 for the three months ended December 31, 2007, an increase of $409,000. For the nine months ended December 31, 2008, compensation expense was $20,863,000, compared to $18,099,000 for the nine months ended December 31, 2007, an increase of $2,764,000. The increases in compensation expense for the three and nine months ended December 31, 2008 reflect additional costs associated with the acquisition of mktgpartners ($853,000 and $1,698,000, respectively), and the recruiting of senior talent to support our technology, marketing and finance groups, offset by a reduction in bonus accruals.

                    General and Administrative Expenses. General and administrative expenses, consisting of office and equipment rent, depreciation and amortization, professional fees, other overhead expenses and charges for doubtful accounts, were $2,035,000 for the three months ended December 31, 2008, compared to $1,980,000 for the three months ended December 31, 2007, an increase of $55,000. For the nine months ended December 31, 2008, general and administrative expenses were $5,878,000 compared to $5,104,000 for the nine months ended December 31, 2007, an increase of $774,000. The increase in general and administrative expenses for the nine months ended September 30, 2008 reflects $541,000 of additional expenses associated with the acquisition of mktgpartners and the cost of the Company’s rebranding with its new name.

                    Interest (Expense)/Income, Net. Net interest expense for the three months ended December 31, 2008 was $18,000 compared to interest income of $15,000 for the three months ended in December 31, 2007. Net interest expense for the nine months ended December 31, 2008 was $42,000 compared to interest income of $76,000 for the nine months ended December 31, 2007. The reduction in interest income is attributable to the credit facility we entered into in June 2008. Previously, in June 2007, we repaid all obligations under our prior credit facility.

                    Other Expense. Other expense for the three and nine months ended December 31, 2008 was $342,000. In October, 2008 the Company exercised its one-time option to terminate early its sublease for its principal office space in New York, effective October 25, 2009, and paid a non-refundable cancellation fee of $342,000 to the landlord.

                    Income (Loss) before Provision for Income Taxes. The Company’s income before provision for income taxes for the three months ended December 31, 2008 and 2007 was $64,000 and $560,000, respectively. The Company’s loss before income taxes for the nine months ended December 31, 2008 amounted to ($242,000) compared to income before provision for income taxes of $523,000 for the nine months ended December 31, 2007.

                    Provision for Income Taxes. We did not record a benefit or provision for federal, state and local income taxes for the three and nine months ended December 31, 2008 because any such benefit or provision would be fully offset by an increase or decrease, as applicable, in the valuation allowance against the Company’s net deferred tax asset established as a result of our historical operating losses. For the three and nine months ended December 31, 2007, the provision was comprised of minimum state income taxes and the impact of a change in estimate of the tax basis of the Company’s net operating loss carryforward.

                    Net Income (loss). As a result of the items discussed above, net income (loss) for the three and nine months ended December 31, 2008 was $64,000 and ($242,000), respectively, compared to net income for the three and nine months ended December 31, 2007 of $506,000 and $361,000, respectively. Fully diluted earnings (loss) per share amounted to $.01 and $.(03) for the three and nine months ended December 31, 2008, respectively, compared to diluted earnings per share of $.07 and $.05 for the three and nine months ended December 31, 2007, respectively.

Liquidity and Capital Resources

                    Beginning with our fiscal year ended March 31, 2000, we have continuously experienced negative working capital. This deficit has generally resulted from our inability to generate sufficient cash and receivables from our programs to offset our current liabilities, which consist primarily of obligations to vendors and other accounts payable and deferred revenues. We are continuing our efforts to increase revenues from our programs and reduce our expenses, but to date these efforts have not been sufficiently successful. We have been able to operate during this extended period with negative working capital due primarily to bank financing made available to us, advance payments made to us on a regular basis by our largest customers, and to a lesser degree, equity infusions from private placements of our securities ($1 million in January 2000, and $1.63 million in January and February 2003), and stock option and warrant exercises. For the nine months ended December 31, 2008 the working capital deficit increased by $1,795,000 to $5,654,000.

15

                    On June 26, 2008 the we entered into a Credit Agreement with Sovereign Bank under which we were provided with a three-year revolving credit facility in the principal amount of $2,500,000 for working capital purposes, and a three-year term loan in the amount of $2,500,000 that was used to fund a portion of the purchase price for the assets of 3 For All Partners, LLC.

                    Pursuant to the Credit Agreement, among other things:

· All outstanding loans under the Credit Agreement will become due on June 30, 2011 (the “Maturity Date”).

· The Term Loan will be repaid in 12 consecutive quarterly installments commencing on September 30, 2008. The first 11 installments will be in the amount of $168,750, with a final payment in the amount of $643,750 being due on the Maturity Date.

· Interest accrues on outstanding loans under the Credit Agreement at a per annum rate equal to, at our option, the prime rate (5.0% at June 30, 2008) from time to time in effect (but in no event less than the Federal Funds Rate plus one-half percent), or a LIBOR rate selected by us, plus a margin of 2.25%.

· We are required to comply with a number of affirmative, negative and financial covenants. Among other things, these covenants restrict our ability to pay dividends, limit annual capital expenditures, provide that our “Consolidated Debt Service Coverage Ratio” cannot be less than 1.5 to 1.0 as of the end of any fiscal quarter, that its “Consolidated Leverage Ratio” can not exceed 2:25 to 1:00 at the end of any fiscal quarter, and that we can not incur a “Consolidated Pre-Tax Net Loss” in excess of $500,000 in the aggregate in any period of two consecutive fiscal quarters.

                    As of December 31, 2008, we were not in compliance with the Consolidated Debt Service Coverage Ratio and Consolidated Leverage Ratio covenants. In addition, as a result of the restatement of our financial statements, we breached our financial reporting obligations under the Credit Agreement. On April 28, 2009, we entered into a letter agreement with Sovereign Bank pursuant to which Sovereign Bank agreed to enter into an amendment and waiver to the Credit Agreement under which (i) Sovereign Bank waives our past non-compliance with the financial covenants and reporting obligations, (ii) indefinitely suspends our revolving credit facility, (iii) requires us to maintain deposits with Sovereign Bank at all times in an amount not less then the outstanding balance of the term loan as cash-collateral therefor, and (iv) suspends our obligation to comply with the financial covenants in the future during the period in which the revolving credit facility is suspended and the term loan is fully cash-collateralized.

                    At December 31, 2008, we had cash and cash equivalents of $1,905,000, a working capital deficit of $5,654,000, borrowing availability of $2,500,000 under the revolving credit facility, and stockholders’ equity of $5,833,000. In comparison, at March 31, 2008, we had cash and cash equivalents of $5,324,000, a working capital deficit of $3,859,000, and stockholders’ equity of $5,608,000, with no line of credit. The decrease of $3,419,000 in cash and cash equivalents from March 31, 2008 to December 31, 2008 was primarily due to the acquisition of mktgpartners, the purchase of fixed assets, and payment of bank debt and bonuses.

                    Although we currently do not have a revolving credit facility available to us and are required to fully cash collateralize amounts outstanding under our term loan, management believes that cash on hand, together with cash anticipated to be generated from operations, should provide us with adequate financing to fund operations through the end of Fiscal 2010, although there can no assurance in that regard. We may be unable to secure additional financing in the future, if required, on favorable terms or at all. If we issue additional shares of common stock or securities convertible into common stock in order to secure additional funding, current stockholders may experience dilution of their ownership. In the event we issue securities or instruments other than common stock, we may be required to issue such instruments with greater rights than those currently possessed by holders of common stock.

                    Operating Activities. Net cash used in operating activities was $1,740,000 for the nine months ended December 31, 2008 compared to $1,573,000 of net cash provided by operating activities for the nine months ended December 31, 2007. For the nine months ended December 31, 2008, cash used in operating activities primarily was a result of the payment of bonuses. For the prior year, cash provided by operating activities was primarily due to the net income earned for the period inclusive of non cash expenses.

                    Investing Activities. For the nine months ended December 31, 2008, net cash used by investing activities amounted to $3,841,000, primarily relating to the cash portion of the purchase price for the assets of 3 For All Partners, LLC. For the nine months ended December 31, 2007, net cash used by investing activities was $575,000, primarily due to the purchase of computer equipment and software.

16

                    Financing Activities. For the nine months ended December 31, 2008, net cash provided by financing activities amounted to $2,163,000 of net bank borrowings, which were utilized to fund a portion of the purchase price for the acquisition of the assets of 3 For All Partners, LLC. For the nine months ended December 31, 2007, net cash used in financing activities amounted to $2,000,000 resulting from repayments of bank borrowings.

Critical Accounting Policies

                    The preparation of consolidated financial statements in accordance with accounting principles generally accepted in the United States of America requires management to use judgment in making estimates and assumptions that affect the reported amounts of assets, liabilities, revenues and expenses, and related disclosure of contingent assets and liabilities. Certain of the estimates and assumptions required to be made relate to matters that are inherently uncertain as they pertain to future events. While management believes that the estimates and assumptions used were the most appropriate, actual results may vary from these estimates under different assumptions and conditions.

                    Please refer to the Company’s 2008 Annual Report on Form 10-K/A for a discussion of the Company’s critical accounting policies relating to revenue recognition, goodwill and other intangible assets and accounting for income taxes. During the three months ended December 31, 2008, there were no material changes to these policies.

Item 4. Controls and Procedures

Disclosure Controls and Procedures

                    Our management, including our Principal Executive Officer and Principal Financial Officer, evaluated the effectiveness of our “disclosure controls and procedures” as defined in Exchange Act Rule 13a-15(e) as of December 31, in connection with our filing of this Quarterly Report Form 10-Q. Based on that evaluation, and in light of the material weakness described in Amendment No. 2 to our Annual Report on Form 10-K/A for the year ended March 31, 2008 (the “Amended 10-K”), our Principal Executive Officer and Principal Financial Officer concluded that as of December 31, 2008, our disclosure controls and procedures were not effective to ensure that information we are required to disclose in reports that we file or submit under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in rules and forms of the SEC and is accumulated and communicated to our management as appropriate to allow timely decisions regarding required disclosure. For a description of the actions we are taking to remediate our internal controls, please see “Management’s Report on Internal Control Over Financial Reporting” in Item 9A(T) of the Amended 10-K.

Changes in Internal Controls

                    There has not been any change in our internal control over financial reporting that occurred during our quarter ended December 31, 2008 that has materially affected, or is reasonably likely to materially affect, the Company’s internal control over financial reporting.

17

PART II - - OTHER INFORMATION

Items 1, 1A, 2, 3, 4, and 5. Not Applicable

Item 6. Exhibits

31.1	Certification of principal executive officer pursuant to Rule 13a-14(a) of the Exchange Act.
31.2	Certification of principal financial officer pursuant to Rule 13a-14(a) of the Exchange Act.
32.1	Certification of principal executive officer pursuant to Rule 13a-14(b) of the Exchange Act
32.2	Certification of principal financial officer pursuant to Rule 13a-14(b) of the Exchange Act

18

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.

	‘mktg, inc.’
Dated: May 8, 2009	By:	/s/ Charles W. Horsey
		Charles W. Horsey, President
		(principal executive officer)
Dated: May 8, 2009	By:	/s/ James R. Haughton
		James R. Haughton, Senior Vice President - Controller
		(principal financial officer)

19

EX-31.1

Exhibit 31.1

CERTIFICATION

I, Charles W. Horsey, certify that:
1.	I have reviewed this quarterly report on Form 10-Q of ‘mktg, inc.’ for the period ended December 31, 2008.
2.	Based on my knowledge, this quarterly report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this quarterly report;
3.	Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
4.	The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
	(a)     Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
	(b)     Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
	(c)     Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures as of the end of the period covered by this report based on such evaluation; and
	(d)     Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and
5.	The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent function):
	(a)     All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting that are reasonable likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
	(b)     Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Dated: May 8, 2009	/s/ Charles W. Horsey
	Charles W. Horsey
	President

EX-31.2

Exhibit 31.2

CERTIFICATION

I, James R. Haughton, certify that:
1.	I have reviewed this quarterly report on Form 10-Q of ‘mktg, inc.’ for the period ended December 31, 2008.
2.	Based on my knowledge, this quarterly report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this quarterly report.
3.	Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report.
4.	The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
	(a)     Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
	(b)     Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
	(c)     Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures as of the end of the period covered by this report based on such evaluation; and
	(d)     Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and
5.	The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal controls over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent function):
	(a)     All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonable likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
	(b)     Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Dated: May 8, 2009	/s/ James R. Haughton
	James R. Haughton
	Senior Vice President - Controller

EX-32.1

Exhibit 32.1

‘mktg, inc.’
CERTIFICATION PURSUANT TO
18 U.S.C. SECTION 1350,
AS ADOPTED PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

          In connection with the Quarterly Report of ‘mktg, inc.’ (the “Company”) on Form 10-Q for the period ending December 31, 2008 as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, Charles W. Horsey, President of the Company, certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that to the best of my knowledge:

(1)	The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and
(2)	The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

Dated: May 8, 2009	/s/ Charles W. Horsey
	Charles W. Horsey
	President

EX-32.2

Exhibit 32.2

‘mktg, inc.’
CERTIFICATION PURSUANT TO
18 U.S.C. SECTION 1350,
AS ADOPTED PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

          In connection with the Quarterly Report of ‘mktg, inc.’ (the “Company”) on Form 10-Q for the period ending December 31, 2008 as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, James R. Haughton, Senior Vice President - Controller of the Company, certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that to the best of my knowledge:

(1)	The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and
(2)	The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

Dated: May 8, 2009	/s/ James R. Haughton
	James R. Haughton
	Senior Vice President - Controller