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EXCEL - IDEA: XBRL DOCUMENT - 'mktg, inc.'Financial_Report.xls
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EX-21 - EXHIBIT 21 - 'mktg, inc.'ex_21.htm
EX-32.1 - EXHIBIT 32.1 - 'mktg, inc.'ex32_1.htm
EX-31.2 - EXHIBIT 31.2 - 'mktg, inc.'ex31_2.htm
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EX-31.1 - EXHIBIT 31.1 - 'mktg, inc.'ex31_1.htm
EX-23.1 - EXHIBIT 23.1 - 'mktg, inc.'ex23_1.htm
(5) Debt
12 Months Ended
Mar. 31, 2012
Debt Disclosure [Text Block]
(5) Debt
    Debt consists of the following as of March 31, 2012 and 2011:

    March 31,2012     March 31, 2011  
$2,500,000 face value, 12.5% Senior Secured Notes due  December 15, 2012 (a)   $     $ 2,500,000  
$4,000,000 revolving credit facility (b)            
Less current portion           (2,500,000 )
Long-term debt   $     $  

(a) Senior Secured Notes
    The Company issued $2,500,000 face value of the Secured Notes on December 15, 2009 in connection with the December 15, 2009 financing described in Note 4. As described in Note 4, the proceeds from the financing were allocated among multiple financial instruments based on fair values. Proceeds allocated to the Secured Notes amounted to $1,433,812. The resulting discount was subject to amortization through charges to interest expense over the term to maturity using the effective interest method. Discount amortization included in interest expense for Fiscal 2011 amounted to $985,660. The Company did not incur any amortization of the original interest discount on the Secured Notes for Fiscal 2012 as they were fully amortized as of March 31, 2011.
    The Secured Notes were secured by substantially all of the Company’s assets; bore interest at a rate of 12.5% per annum payable quarterly; and would have matured in one installment on December 15, 2012.
    In May 2010, the Company entered into a First Amendment to Senior Secured Notes, in connection with the Company’s pledge of $500,000 as cash collateral to Sovereign Bank to secure the Company’s reimbursement obligations under a letter of credit issued on behalf of the Company in favor of American Express Related Services Company, Inc. (“Amex”). On September 12, 2011, Amex released the $500,000 letter of credit it had been issued by Sovereign Bank.
    In November, 2011, in conjunction with the Company obtaining a bank credit facility (see Note 4), the Company repaid in full the remaining $2 million of principal outstanding under its Secured Notes.

(b) Bank Credit Facility
    On November 23, 2011, the Company entered into a Loan and Security Agreement with TD Bank, N.A. (the “Bank”), pursuant to which it was provided with a $4.0 million revolving credit facility (the “Credit Facility”). Borrowings under the Credit Facility are secured by substantially all of Company’s assets, including $500,000 of cash collateral that was deposited in a blocked account maintained with the Bank, and have been guaranteed by the Company’s subsidiaries.
    Pursuant to the Loan Agreement, among other things: 

  · All outstanding loans will become due on November 23, 2012, provided that following the Company’s request, the Bank may in its sole discretion agree to one year extensions of the maturity date;
  · Interest accrues on outstanding loans at a per annum rate equal to the greater of (i) 4.0%, and (ii) the Bank’s prime rate as from time to time in effect plus one percent;
  · Aggregate loans outstanding at any time are limited to a borrowing base equal to 80% of the Company’s eligible accounts receivable, as determined by the Bank, provided that the advance rate is limited to 50% with respect to accounts receivable from customers of the Company whose receivables constitute more than 50% of the Company’s receivables in the aggregate; and
  · 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, provide that the Company’s debt service coverage ratio (as determined pursuant to the Loan Agreement) cannot be less than 1.25 to 1.0 as of the end of any fiscal year, and require that the Company have immediately available cash at all times, including borrowings under the Credit Facility, of at least $3 million. The Company was in compliance with these covenants at March 31, 2012.

  If the Company does not comply with the financial and other covenants and requirements of the Loan Agreement, the Bank may, subject to various cure rights, require the immediate payment of all amounts outstanding under the Loan Agreement.

  Upon the closing of the Credit Facility, the Company paid a $30,000 commitment fee to the Bank plus its legal costs and expenses.
    At March 31, 2012, the Company had no borrowings outstanding under the Credit Facility and availability of $3,726,000.
    In connection with the Loan Agreement, the holders of the Company’s Series D Preferred Stock entered into a Standstill Agreement with the Bank under which such stockholders have agreed not to exercise any rights they may have to cause the Company to redeem their shares of Series D Preferred Stock prior to December 15, 2015 (or such earlier date as the Credit Facility is terminated), other than upon a change of control or liquidation event of the Company.