The Marketing Alliance Announces Financial Results for Quarter Ended June 30, 2023

The Marketing Alliance, Inc. (OTC: MAAL) (“TMA” or the “Company”), today announced financial results for its fiscal 2024 first quarter ended June 30, 2023.

1Q 2024 Financial Key Items (all comparisons to the prior year period)

• Operating income from continuing operations of $52,191 compared to $383,810. The differences were largely due to the late timing of insurance fees (revenue) in the current year and the timing of revenue associated with the company’s annual conference, which was collected in the prior fiscal year due to an earlier conference date
• Revenues were $4,109,746 compared to $4,382,845, the decrease due primarily to late timing in the current year fee structure and revenue from the company’s annual conference billed prior to the beginning of this fiscal year
• Net income from continuing operations was $139,508 or $0.02 per share compared to ($257,992) or ($0.03) per share as the current quarter benefited from an investment gain of $152,212, compared with a loss of ($670,618) in the prior year quarter

Management Comments

Timothy M. Klusas, TMA’s Chief Executive Officer, commented, “Our fiscal first quarter 2024 results were actually quite similar to our results in the same quarter last year except for a few unfortunate timing issues. Our insurance fee revenue was approximately $100,000 less than the previous year quarter because we issued our fee structure later than in the previous year. While this affected fee revenue this quarter, we calculated that the difference relative to the previous year quarter would be reduced throughout the balance of the fiscal year. Second, the timing of our annual insurance conference, earlier this year than the previous year, had the effects of the company collecting reimbursements and sponsorships for the conference in the previous fiscal year while leaving the expenses paid in the current fiscal year. The combined negative financial effect on the quarter versus the prior year quarter was approximately $204,000. While we wouldn’t ordinarily be concerned with the timing of our conferences relative to financial quarters, the timing around the fiscal year end had a pronounced effect this time.”

Mr. Klusas added, “Our construction business had another exceptional start and actively positioned itself for larger jobs as we progress throughout the year.”

Fiscal First Quarter 2024 Financial Review

• Revenues were $4,109,746 compared to $4,382,845, due primarily to the factors above involved with timing of revenues on the company’s insurance fees and also the timing of reimbursements from an earlier annual conference, causing billings to be moved into the previous fiscal year.
  
  
• Net operating revenue (gross profit) for the quarter was $1,042,371, compared to net operating revenue of $1,262,026 in the prior-year fiscal period. Net operating revenue was affected by the decreases in revenue discussed above and relatively similar expense levels.
  
  
• Operating expenses increased to $990,180 compared to $878,216 for the prior year. Approximately half of this increase was due to increased meeting expenses of a larger conference. This comparison was also affected by favorable one-time benefits in the previous year quarter such as reversals of accrued expenses and a one-time employee retention credit of $14,000.
  
  
• The Company reported operating income from continuing operations of $52,191 compared to $383,810 in the prior year period, with differences due to factors discussed above.
  
  
• Operating EBITDA (excluding investment portfolio income) declined to $124,952 from $446,480 in the prior year period. A note reconciling operating EBITDA to operating income can be found at the end of this release.
  
  
• Investment gain (loss), net (from non-operating investment portfolio) for the quarter was $152,212, as compared with ($670,618) during the same period the previous year.
  
  
• Net income from continuing operations was $139,508 or $0.02 per share compared to ($257,992) or ($0.03) per share.

Balance Sheet Information

• TMA’s balance sheet on June 30, 2023, reflected cash and cash equivalents of $1.4 million; working capital of $5.6 million; and shareholders’ equity of 6.4 million; compared to cash and cash equivalents of $2.5 million, working capital of $7 million, and shareholders’ equity of $7.0 million as of June 30, 2022.

About The Marketing Alliance, Inc.

Headquartered in St. Louis, MO, TMA provides support to independent insurance brokerage agencies, with a goal of integrating insurance and “insuretech” engagement platforms to provide 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/shareholder-information.

TMA’s common stock is quoted on the OTC Markets (http://www.otcmarkets.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. Examples of forward-looking statements include, among others, statements we make regarding our expectations for our financial performance in future periods, our ability to obtain industry acceptance and competitive advantages of digital and no-contact business solutions, and our ability to generate earnings from our construction business. Any forward-looking statements contained in this press release represent our estimates, expectations or intentions only as of the date hereof, or as of such earlier dates as are indicated, and should not be relied upon as representing our views as of any subsequent date. These statements involve a number of risks and uncertainties, including, but not limited to, expectations of the economic environment, material adverse changes in economic conditions in the markets we serve and in the general economy; the ultimate duration and impact of the ongoing COVID-19 pandemic and any other public health events, the ways that insurance carriers may react in their underwriting policies and procedures to the continuing risks they perceive from the COVID-19 pandemic; our reliance on a limited number of insurance carriers and any potential termination of those relationships or failure to develop new relationships;] privacy and cyber security regulations; future state and federal regulatory actions and conditions in the states in which we conduct our business; our ability to work with carriers on marketing, distribution and product development; pricing and other payment decisions and policies of the carriers in our insurance distribution business, changes in the public securities markets that affect the value of our investment portfolio; and weather and environmental conditions in the areas served by our construction . While we may elect to update forward-looking statements at some point in the future, we specifically disclaim any obligation to do so.

CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited)
		Three Months Ended
		June 30,
		2023				2022
Insurance commission and fee revenue	$	3,899,144		$		4,002,084
Construction revenue		180,802				205,661
Other insurance revenue		29,800				175,100
Total revenues		4,109,746				4,382,845
Insurance distributor related expenses:
Distributor bonuses and commissions		2,560,053				2,474,822
Business processing and distributor costs		293,875				456,511
Depreciation		2,892				2,958
		2,856,820				2,934,291
Costs of construction:
Direct and indirect costs of construction		153,543				141,324
Depreciation		57,012				45,204
		210,555				186,828
Total costs of revenues		3,067,375				3,120,819
Net operating revenue		1,042,371				1,262,026
Total operating expenses		990,180				878,216
Operating income from continuing operations		52,191				383,810
Other income (expense):
Investment gain (loss), net		152,212				(670,618	)
Interest expense		(46,695	)			(52,884	)
Paycheck protection program forgiveness		0				24,500
Income (loss) from continuing operations before provision		157,708				(315,192	)
for income taxes
Income tax expense		18,200				(57,200	)
Income (loss) from continuing operations		139,508				(257,992	)
Discontinued operations:
Income from discontinued operations,
net of income taxes		0				14,418
Net income from discontinued operations		0				14,418
Net Income (Loss)	$	139,508		$		(243,574	)
Average Shares Outstanding		8,081,266				8,081,266
Operating Income from continuing operations per Share	$	0.01		$		0.05
Net Income per Share	$	0.02		$		(0.03	)

CONSOLIDATED BALANCE SHEETS Unaudited
		June 30,				March 31,
		2023				2023
ASSETS
CURRENT ASSETS
Cash and cash equivalents	$	1,377,085			$	2,461,956
Equity securities		4,198,708				3,904,217
Restricted cash		554,525				536,212
Accounts receivable		7,450,218				9,710,905
Inventory		11,777				7,534
Current portion of notes receivable		123,123				146,645
Prepaid expenses		198,762				189,036
Assets related to discontinued operations		1,030				6,822
Total current assets		13,915,228				16,963,327
PROPERTY AND EQUIPMENT, net		1,043,651				817,945
OTHER ASSETS
Notes receivable, net due to the allowance		568,392				586,435
Restricted cash		2,050,737				2,369,036
Operating lease right-of-use assets		286,150				402,534
Total other assets		2,905,279				3,358,005
	$	17,864,158			$	21,139,277
LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES
Accounts payable and accrued expenses		6,193,685				7,930,566
Dividends payable		404,243				566,949
Line of credit payable		675,000				400,000
Current portion of notes payable		838,929				811,223
Current portion of finance lease liability		41,579				67,276
Current portion of operating lease liability		137,653				131,851
Liabilities related to discontinued operations		677				87,194
Total current liabilities		8,291,766				9,995,059
LONG-TERM LIABILITIES
Notes payable, net of current portion and debt issuance costs		2,697,906				3,529,616
Finance lease liability, net of current portion		129,629				165,191
Operating lease liability, net of current portion		139,315				276,497
Deferred taxes		216,000				200,000
Total long-term liabilities		3,182,850				4,171,304
Total liabilities		11,474,616				14,166,363
COMMITMENTS AND CONTINGENCIES
SHAREHOLDERS' EQUITY
Common stock, no par value; 50,000,000 shares authorized,
8,081,266 shares issued and outstanding June 30, 2022
8,081,266 shares issued and outstanding June 30, 2023		1,025,341				1,025,341
Retained earnings		5,364,201				5,947,573
Total shareholders' equity		6,389,542				6,972,914
	$	17,864,158			$	21,139,277

Note – Operating EBITDA (excluding investment portfolio income)

		Three Months Ended
		June 30,
		2023		2022
Operating Income from Continuing Operations	$	52,191	$	383,810
Add:
Depreciation/Amortization Expense	$	72,761	$	62,670
EBITDA (Operating Income from Continuing Operations)	$	124,952	$	446,480

The Company elects not to include investment portfolio income because the Company believes it is non-operating in nature.

The Company uses Operating EBITDA as a measure of operating performance. However, Operating EBITDA is not a recognized measurement under U.S. generally accepted accounting principles, or GAAP, and when analyzing its operating performance, investors should use Operating EBITDA in addition to, and not as an alternative for, income as determined in accordance with GAAP. Because not all companies use identical calculations, its presentation of Operating EBITDA may not be comparable to similarly titled measures of other companies and is therefore limited as a comparative measure. Furthermore, as an analytical tool, Operating EBITDA has additional limitations, including that (a) it is not intended to be a measure of free cash flow, as it does not consider certain cash requirements such as tax payments; (b) it does not reflect changes in, or cash requirements for, its working capital needs; and (c) although depreciation and amortization are non-cash charges, the assets being depreciated and amortized often will have to be replaced in the future, and Operating EBITDA does not reflect any cash requirements for such replacements, or future requirements for capital expenditures or contractual commitments. To compensate for these limitations, the Company evaluates its profitability by considering the economic effect of the excluded expense items independently as well as in connection with its analysis of cash flows from operations and through the use of other financial measures.

The Company believes Operating EBITDA is useful to an investor in evaluating its operating performance because it is widely used to measure a company’s operating performance without regard to certain non-cash or unrealized expenses (such as depreciation and amortization) and expenses that are not reflective of its core operating results over time. The Company believes Operating EBITDA presents a meaningful measure of corporate performance exclusive of its capital structure, the method by which assets were acquired and non-cash charges and provides additional useful information to measure performance on a consistent basis, particularly with respect to changes in performance from period to period.

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The Marketing Alliance Stock at the time of publication of the news with a fall of -13,51 % to 1,600USD on Nasdaq OTC stock exchange (29. September 2023, 02:10 Uhr).