MAAL Marketing Alliance Inc (PK)

Highlights for the three-month period ended March 31, 2005 -- Company changes fiscal year end to March 31st -- Net income of $384,000, or $0.19 per share -- Revenues increase 5% to $3.9 million -- Balance sheet remains solid with $2.5 million of working capital and no long-term debt. The Marketing Alliance, Inc. (Pink Sheets: MAAL) ("TMA"), a consortium of independent life insurance brokerage general agencies located throughout the United States, today announced financial results for the three months ended March 31, 2005. As previously announced, TMA's Board of Directors approved a change in the Company's fiscal year to the period ending March 31st from a calendar year ending on December 31st. The Company decided to make this change as a means of better aligning its fiscal year with the business cycle of its member agencies. The next quarterly period the Company will report will be its fiscal first quarter ended June 30, 2005. Revenues for the three-month period ended March 31, 2005 increased to $3.9 million from $3.7 million in the same period last year, largely due to internal growth among TMA's member agencies. Net operating revenue, or gross profit, for the three months ended March 31, 2005 was $1.7 million, or 44% of revenues, down slightly from the $1.8 million, or 48% of revenues, reported in the same period last year, due primarily to increased bonuses earned by TMA distributors. Operating expenses for the three-month period ended March 31, 2005 rose 25% to $930,000 from the same prior year period. This increase was largely due to severance packages given to the Company's former CEO and other personnel, and start-up costs relating to the Company's TMA Marketing, Inc. subsidiary, which provides annuity products to TMA member agencies. Despite these non-recurring charges, TMA reported operating income of $775,000 in the three-month period ended March 31, 2005, as compared to operating income of $1.0 million in the comparable prior year period. The Company reported net income of $384,000, or $0.19 per share, in the three month period ended March 31, 2005, versus net income of $721,000, or $0.35 per share, for the same period last year. The primary reason for this decline is a realized and unrealized loss on investments during the period. In April 2005, the Company reassessed its investment strategy, which previously consisted of a portfolio largely containing equity investments in regional banks. TMA has now shifted a large majority of its investment portfolio to third-party financial managers, with a focus on steady, long-term growth consistent with TMA's working capital needs. Ronald D. Verzone, Chairman of TMA, stated, "Our focus over the past year has been to aggressively address potential areas of growth for the Company, while still adhering to our core philosophy of providing our independent member agencies with the means to compete within their marketplace. One of TMA's initiatives was the opening of the Omaha Business Center in May 2004. The Business Center offers TMA's distributors increased efficiency levels for each transaction, as all aspects of the application processing cycle are handled internally. This allows our independent agents to allocate more time and resources to growing their business. With the growth of the business center, we are optimistic that we can continue to attract new agencies to our expanding network." Mr. Verzone concluded, "We enter our next fiscal year with a great opportunity to leverage our investments in the Business Center and TMA Marketing Inc., which allows our distributors that do not presently market annuity products to enter a new profit center without any start-up costs. We are pleased to have successfully completed both of these initiatives without incurring any long-term debt, and feel that by continuing to enhance the available products and capabilities of our distributors, we are fueling TMA's growth." ABOUT THE MARKETING ALLIANCE, INC. Headquartered in Pittsburgh, PA, TMA is one the largest organizations providing support to independent insurance brokerage agencies, with a goal of providing members value-added services on a more efficient basis than they can achieve individually. TMA's network is comprised of approximately 150 independent life brokerage and general agencies in 43 states. Investor information can be accessed through the shareholder section of TMA's website at http://www.themarketingalliance.com/si_who.cfm. FORWARD LOOKING STATEMENT Investors are cautioned that forward-looking statements involve risks and uncertainties that may affect TMA's business and prospects. Any forward-looking statements contained in this press release represent our estimates only as of the date hereof, or as of such earlier dates as are indicated, and should not be relied upon as representing our estimates as of any subsequent date. These statements involve a number of risks and uncertainties, including, but not limited to, general changes in economic conditions. While we may elect to update forward-looking statements at some point in the future, we specifically disclaim any obligation to do so. -0- *T Consolidated Statement of Operations Quarter Ended 3/31/2005 3/31/2004 Revenues $3,877,316 $3,689,554 ------------ ----------- Distributor Related Expenses Distributor bonus & commissions paid 1,473,294 1,129,338 Distributor benefits & processing 698,858 772,380 ------------ ----------- Total 2,172,152 1,901,718 ------------ ----------- Net Operating Revenue 1,705,164 1,787,836 Operating Expenses 930,446 742,444 ------------ ----------- Operating Income 774,718 1,045,392 Other Income (Expense) Interest & dividend Income (net) 9,087 5,811 Realized & unrealized gains (losses) on investments (net) (223,678) 205,827 Interest expense (3,059) (6,925) Other (20,373) (18,454) ------------ ----------- Income Before Provision for Income Tax 536,695 1,231,651 Provision for income taxes (152,778) (510,558) ------------ ----------- Net Income $ 383,917 $ 721,093 ============ =========== Shares Outstanding 2,036,747 2,036,747 Operating Income per Share $ 0.38 $ 0.51 Net Income per Share $ 0.19 $ 0.35 Consolidated Selected Balance Sheet Items As of Assets 3/31/2005 12/31/2004 Current Assets Cash $ 451,228 $ 354,640 Receivables 4,776,861 2,538,925 Investments 1,929,600 4,861,673 Other 287,826 273,542 ------------ ----------- Total Current Assets 7,445,515 8,028,780 Other Non Current Assets 460,754 490,563 ------------ ----------- Total Assets $7,906,269 $8,519,343 ============ =========== Liabilities & Stockholders' Equity Total Current Liabilities $4,941,478 $5,938,469 ------------ ----------- Total Liabilities 4,941,478 5,938,469 Stockholders' Equity 2,964,791 2,580,874 ------------ ----------- Liabilities & Stockholders' Equity $7,906,269 $8,519,343 ============ =========== *T