The Marketing Alliance Announces Financial Results for the Fiscal 2011 First Quarter Ended June 30, 2010

The Marketing Alliance, Inc. (OTC: MAAL) (“TMA”), a provider of services and distributor of products to independent insurance agencies throughout the United States, today announced financial results for its fiscal first quarter ended June 30, 2010.

Timothy M. Klusas, TMA’s President, stated, “We continue to focus on maintaining operations that we believe are highly adaptable to respond to rapidly changing market conditions. We feel that this is a business that requires a streamlined, cost-efficient infrastructure to operate most profitably, and we remained focused on improving the company’s profitability throughout this period. We continued to build new carrier relationships that can enable our distributors to remain flexible during the current economic climate by providing additional policy and product options to its customers that in turn meet their customers’ changing needs. We feel that this effort added value for our distributors and more stability for them to grow their business with these carriers.”

Mr. Klusas continued,” The flexibility of our network allowed our distributors to position their business to take advantage of profitable new opportunities to grow their top-line, while the leverage of our business model allowed the same distributors to pursue this growth in a profitable, capital-efficient way, such as through our Business Service Center or Annuity Centers. The interplay of these factors and other offerings in our service model resulted in a more favorable mix of business that increased operating profit versus the same quarter last year. Separately, our net income was affected by non-operating realized and unrealized losses on investments, which was not a surprise in a quarter where the S&P 500 decreased 11.8% versus a 15.2% gain last year.”

Fiscal 2011 First Quarter Financial Review

• Total revenues for the three-month period ended June 30, 2010 were $4,985,275, nearly matching the $5.0 million in revenues for the prior-year period.
• Net operating revenue (gross profit) grew 22% to $1.5 million from $1.2 million in the comparable prior year fiscal period. The Company’s gross profit margins improved to 30% from 25% in the prior-year period, largely due to distributors utilizing more of the Company’s services and a more favorable mix of business.
• Operating income rose 39% to $747,682, or 15% of revenues, from operating income of $537,538, or 11% of revenues, for the prior-year period due to distributors utilizing more of the Company’s services as mentioned above and improved gross margins.
• Realized and unrealized losses on investments during the period totaled $301,701, compared to a realized and unrealized gain of $296,950 for the prior-year period. The Company’s net earnings for the period were negatively impacted by the decrease in the value of its investments. The Company is supported by a strong balance sheet with no long-term debt, and the fluctuations in realized and unrealized gains or losses have not impacted TMA’s ability to operate effectively or capitalize on any growth opportunities.
• Net income for the fiscal 2011 first quarter decreased 49% to $262,873, or $0.14 per share, from net income of $512,333, or $0.27 per share, in the fiscal 2010 first quarter, primarily as a result of realized and unrealized losses on investments.

Balance Sheet Information

TMA’s balance sheet at June 30, 2010 reflected cash and cash equivalents of $3.9 million, working capital of $6.0 million, and shareholders’ equity of $6.9 million; compared to $3.8 million, $6.2 million, and $6.7 million, respectively, at March 31, 2010.

About The Marketing Alliance, Inc.

Headquartered in St. Louis, MO, TMA is one of 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.

Investor information can be accessed through the shareholder section of TMA’s website at http://www.themarketingalliance.com/si_who.cfm. TMA stock is quoted in the “pink sheets” (www.pinksheets.com) under the symbol “MAAL”.

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.

Consolidated Statement of Operations

Quarter Ended

6/30/10

6/30/09

Revenues

$

4,985,275

$

5,031,292

Distributor Related Expenses

        
        
        
        
        
        
        
        
        
      
      
        
          Bonus & commissions
        
        
        
        
        
        
          2,850,903
        
        
        
        
        
        
        
        
          3,174,874
        
        
        
      
      
        
          Benefits & processing
        
        
        
        
           
        
        
          630,346
        
        
           
        
        
        
        
           
        
        
          619,525
        
        
           
        
      
      
        
          

Total

3,481,249

3,794,399

Net Operating Revenue

1,504,026

1,236,893

Operating Expenses

        
        
        
        
           
        
        
          756,344
        
        
           
        
        
        
        
           
        
        
          699,355
        
        
           
        
      
      
        
        
        
        
        
        
        
        
        
           
        
      
      
        
          

Operating Income

747,682

537,538

Other Income (Expense)

        
        
        
        
        
        
        
        
        
      
      
        
          Interest & dividend income [net]
        
        
        
        
        
        
          27,078
        
        
        
        
        
        
        
        
          29,481
        
        
        
      
      
        
          Realized & unrealized [losses]
        
        
        
        
        
        
        
        
        
      
      
        
          on investments (net)
        
        
        
        
        
        
          (301,701
        
        
          )
        
        
        
        
        
        
          296,950
        
        
        
      
      
        
        
        
        
        
        
        
        
        
           
        
      
      
        
          Interest expense
        
        
        
        
           
        
        
          (3,947
        
        
          )
        
        
        
        
           
        
        
          (4,636
        
        
          )
        
      
      
        
        
        
        
        
        
        
        
        
           
        
      
      
        
          

Income Before Provision for Income Tax

469,112

859,333

        
        
        
      
      
        
        
        
        
        
        
        
        
        
           
        
      
      
        
          Provision for income taxes
        
        
        
        
           
        
        
          (206,239
        
        
          )
        
        
        
        
           
        
        
          (347,000
        
        
          )
        
      
      
        
        
        
        
        
        
        
        
        
           
        
      
      
        
          

Net Income

$

262,873

$

512,333

Average Shares Outstanding

1,901,578

1,917,724

Operating Income per Share

$

0.39

$

0.28

Net Income per Share

$

0.14

$

0.27

Consolidated Selected Balance Sheet Items

As of

Assets

6/30/10

3/31/10

Current Assets

        
        
        
        
        
        
        
        
        
      
      
        
          Cash & Equivalents
        
        
        
        
          $
        
        
          3,853,643
        
        
        
        
          $
        
        
          3,802,842
        
      
      
        
          Receivables
        
        
        
        
        
        
          5,299,265
        
        
        
        
        
        
          5,548,948
        
      
      
        
          Investments
        
        
        
        
        
        
          2,240,578
        
        
        
        
        
        
          2,414,856
        
      
      
        
          Other
        
        
        
        
           
        
        
          294,488
        
        
        
        
           
        
        
          513,531
        
      
      
        
          

Total Current Assets

11,687,974

12,280,177

Other Non Current Assets

977,793

503,893

Total Assets

$

12,665,767

$

12,784,070

Liabilities & Stockholders' Equity

Total Current Liabilities

        
        
        
        
          $
        
        
          5,735,859
        
        
        
        
          $
        
        
          6,117,031
        
      
      
        
        
        
        
        
        
        
        
        
           
        
      
      
        
          

Total Liabilities

5,735,859

6,117,031

Stockholders' Equity

6,929,908

6,667,039

Liabilities & Stockholders' Equity

$

12,665,767

$

12,784,070