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The Marketing Alliance Announces 2004 First Quarter Results

PITTSBURGH--(BUSINESS WIRE)--June 9, 2004--The Marketing Alliance, Inc. (MAAL.PK)

The Marketing Alliance, Inc. (MAAL.PK) ("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, 2004 (see attached tables).
Q1 2004 Highlights

-- Revenue Increases 5% to $3.7 Million

-- Net Income of $721,000, or $0.35 Per Share

-- No Long Term Debt at 3/31/04

-- Relocates Business Processing Center to Omaha, NE

-- Launches Subsidiary, TMA Marketing, Inc., for Annuity Products and Marketing Support

-- Dividend of $0.40 Per Share Paid January 31, 2004

Revenue for the first quarter of 2004 increased 5% to $3.7 million from $3.5 million last year. Net operating revenue for the first quarter rose 13.3% to $2.6 million from $2.3 million in the same period last year.

Operating expenses for the first quarter of 2004 rose 63% to $742,000 from the same period one year ago, due primarily to start-up costs incurred in connection with the opening of the Company's TMA Marketing ("TMAM") subsidiary and additional expenses associated with being a publicly-traded company incurred during the quarter. Despite these additional operating costs, operating income for the first quarter of 2004 remained relatively stable at $1.05 million from $1.1 million in the comparable prior year period. Net income for the first quarter of 2004 was $721,000, or $.35 per share, versus net income of $723,000, or $.36 per share, for the same period last year.

Timothy P. McKenna, CLU, President of TMA, commented, "During the first quarter, TMA added eight new distributors, bringing the Company's total number of distributors to 147 in 43 states as of March 31, 2004. Our focus is to continue introducing new agencies to the competitive benefits that TMA provides, which include leveraging pooled production, shared services and outsourcing. We are optimistic that we will continue to attract new agencies to our network as well as help our existing agencies grow with our core carriers."

BUSINESS SERVICE CENTER

TMA also announced that it recently relocated its business service center to a Company-controlled facility in Omaha, NE, from Shawnee Mission, KS, where it had outsourced processing through a third party. The relocation is expected to result in increased efficiency levels for the processing of transactions as all aspects of the processing cycle will be controlled internally. The processing center was initially staffed with 12 new employees of TMA who have had direct experience in full service case management. Management and supervisors of the processing center have previous experience in home office insurance company operations, as well as in full service brokerage agencies. Management of the processing center will report directly to TMA executives, ensuring a high level of quality control.

The relocation was completed in mid-May. The Company expects to incur start-up costs of approximately $200,000 associated with the relocation in the second quarter of 2004.

TMA LAUNCHES TMA MARKETING, INC.

Based in Philadelphia, PA, TMAM will represent TMA members in offering non-traditional products to both existing and new customers. TMAM provides distributors a turnkey annuity marketing and support program from a variety of carriers.

A FOCUS ON SERVICE

Mr. McKenna continued, "The relocation and Company control of the business service center was the result of a thorough internal review undertaken by management and the feedback we received from TMA members during this review. Many of our participating agencies suggested that access to a more experienced case manager would facilitate a faster, more efficient outcome. TMAM will allow those distributors that don't presently market annuity products to enter a new profit center for their agency without incurring significant start-up costs. As both of these recent initiatives demonstrate, TMA is dedicated to providing our members with a level of service and support that enhances their ability to grow while maintaining their independence."

FINANCIAL POSITION

Shareholders' equity at March 31, 2004 increased 32% to $3 million from $2.3 million at December 31, 2003. TMA had no long-term debt at March 31, 2004. Receivables at March 31, 2004 include deferred first year commissions initially recorded in December 2003 of approximately $2.2 million. These receivables are based upon management's estimate of amounts to be received for policies with effective dates in 2003. Estimated amounts due to brokers relative to the deferred first year commissions are included in total current liabilities at March 31, 2004 and approximate $1.7 million. Operations for the three months ended March 31, 2004 and 2003 do not include any revenues or expenses relating to the deferred first year commissions.

ABOUT THE MARKETING ALLIANCE

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 147 independent life brokerage and general agencies in 43 states. TMA recently launched a new shareholder section of its website, incorporating recent share price information, management biographical information, financial results, news items and contact information. The site can be accessed through TMA's home page, or directly 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 the Company'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, higher than anticipated start-up costs related to the Company's relocation of its business processing center to a Company-controlled facility in Omaha, NE. While we may elect to update forward-looking statements at some point in the future, we specifically disclaim any obligation to do so.

The Marketing Alliance, Inc.
Consolidated Statement of Operations

Quarter Ended
March 31, March 31,
2004 2003
---- ----

Revenues $3,689,554 $3,521,427

Distributor Costs
Distributor bonus 1,129,338 1,261,236
Distributor benefits 772,380 728,070
--------- ---------
Total 1,901,718 1,989,306
--------- ---------

Gross Profit 1,787,836 1,532,121

Operating Expenses 742,444 455,301
--------- ---------

Operating Income 1,045,392 1,076,820

Other income (Expense)
Interest and dividend income (net) 5,811 18,257
Realized and unrealized gains on investments 205,827 105,670
Interest expense (6,925) (8,197)
Other (18,454) (40,259)
--------- ---------

Income before provision for income taxes 1,231,651 1,152,291

Provision for income taxes (510,558) (429,000)
--------- ---------

Net income 721,093 723,291
========= =========

Shares Outstanding 2,036,747 2,036,747

Operating income per share $0.51 $0.53
Net income per share $0.35 $0.36

The Marketing Alliance, Inc.
Selected Consolidated Balance Sheet Data

As of
-----
March 31, December 31,
2004 2003
---- ----
ASSETS

Cash $534,427 $252,486
Receivables 4,762,570 4,272,802
Investments 3,468,744 5,265,467
Other 248,991 207,298
--------- ---------
Total current assets $9,014,732 $9,998,053
--------- ---------

Total assets $9,436,413 $10,331,798
========= ==========

LIABILITIES AND SHAREHOLDERS' EQUITY

Total current liabilities $6,453,674 $8,070,152
--------- ---------

Total liabilities 6,453,674 8,070,152

Total shareholders' equity 2,982,739 2,261,646
--------- ---------
Total liabilities and shareholders' equity $9,436,413 $10,331,798
========= ==========


Contacts


The Marketing Alliance, Inc.
Timothy P. McKenna, 412-231-5630
tmckenna@themarketingalliance.com
www.themarketingalliance.com
OR
Investor Relations:
The Equity Group Inc.
Devin Sullivan, 212-836-9608
dsullivan@equityny.com
OR
Adam Prior, 212-836-9606
aprior@equityny.com

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