1
                       SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549

                                    FORM 10-Q

                        [X] Quarterly report pursuant to
                           Section 13 or 15(d) of the
                         Securities Exchange Act of 1934

                   For the quarterly period ended June 30, 2001
                   -------------------------------------------

                                       or

          [ ] Transition report pursuant to Section 13 or 15(d) of the
                         Securities Exchange Act of 1934



                             Commission file number:
                             -----------------------


                      THE MANAGEMENT NETWORK GROUP, INC.
             ------------------------------------------------------
             (Exact name of registrant as specified in its charter)




              DELAWARE                                  48-1129619
  -------------------------------                   ------------------
  (State or other jurisdiction of                    (I.R.S. Employer
   incorporation or organization)                   Identification No.)


             7300 COLLEGE BLVD., SUITE 302, OVERLAND PARK, KS 66210
             ------------------------------------------------------
               (Address of principal executive offices) (Zip Code)

                                  913-345-9315
               --------------------------------------------------
               Registrant's telephone number, including area code

Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days.

                                 Yes [X] No [ ]

Indicate the number of shares outstanding of each of the issuer's classes of
common stock as of the latest practicable date.

As of July 25, 2001 TMNG had outstanding 29,591,676 shares of common stock.


   2

                       THE MANAGEMENT NETWORK GROUP, INC.
                                      INDEX



                                                                            PAGE
                                                                   
PART I.  FINANCIAL INFORMATION:
         ITEM 1.   Consolidated Condensed Financial Statements:

                   Consolidated Condensed Balance Sheets - June
                     30, 2001 (unaudited) and December 30, 2000 ............ 3

                   Consolidated Condensed Statements of Income and
                     Comprehensive Income (unaudited) - Thirteen
                     Weeks ended June 30, 2001 and July 1, 2000, and
                     Twenty-six Weeks Ended June 30, 2001 and July 1,
                     2000 .................................................. 4

                   Consolidated Condensed Statements of Cash Flows
                     (unaudited) - Twenty-six Weeks ended June 30,
                     2001 and July 1, 2000.................................  5

                   Notes to Consolidated Condensed Financial
                   Statements..............................................  6

         ITEM 2.   Management's Discussion and Analysis of Financial
                   Condition and Results of Operations.....................  7

         ITEM 3.   Quantitative and Qualitative Disclosures about
                   Market Risk............................................. 18


PART II. OTHER INFORMATION

         ITEM 1.   Legal Proceedings......................................  19

         ITEM 2.   Changes in Securities and Use of Proceeds .............  19

         ITEM 4.   Submission to a Vote of Securities Holders ............  19

         ITEM 6.   Exhibits and Reports on Form 8-K.......................  20

         Signatures.......................................................  20





   3



PART I.  FINANCIAL INFORMATION
ITEM 1.  Consolidated Condensed Financial Statements

                       THE MANAGEMENT NETWORK GROUP, INC.
                      CONSOLIDATED CONDENSED BALANCE SHEETS
                        (In thousands, except share data)






                                                                          (unaudited)
                                                          December 30,      June 30,
                                                             2000             2001
                                                           ---------       ---------
                                                                     
CURRENT ASSETS:
  Cash and cash equivalents                                $  70,583       $  83,036
  Receivables:
    Accounts receivable                                       17,985          11,801
    Accounts receivable - unbilled                             8,023           5,359
                                                           ---------       ---------
                                                              26,008          17,160
    Less: Allowance for doubtful accounts                       (766)           (663)
                                                           ---------       ---------
                                                              25,242          16,497
  Other assets                                                 1,280           1,139
                                                           ---------       ---------
            Total current assets                              97,105         100,672
                                                           ---------       ---------
PROPERTY AND EQUIPMENT, NET                                    1,298           1,489
GOODWILL, NET                                                 18,016          17,098
DEFERRED TAX ASSET                                             3,010           3,196
                                                           ---------       ---------
            Total assets                                   $ 119,429       $ 122,455
                                                           =========       =========

CURRENT LIABILITIES:
  Trade accounts payable                                   $   1,282       $   1,261
  Accrued payroll, bonuses and related expenses                4,722           2,679
  Other accrued liabilities                                    1,953           1,572
                                                           ---------       ---------
            Total current liabilities                          7,957           5,512
                                                           ---------       ---------

STOCKHOLDERS' EQUITY
  Common Stock:                                                   29              29
       Voting - $.001 par value, 100,000,000 shares
       authorized; 29,465,808 and 29,590,635 issued
       and outstanding on December 30, 2000 and June
       30, 2001, respectively
  Preferred stock - $.001 par value, 10,000,000
      shares authorized; no shares issued or
      outstanding
  Additional paid-in capital                                 136,917         137,096
  Accumulated deficit                                        (22,071)        (18,307)
  Accumulated other comprehensive income -
      Foreign currency translation adjustment                     35             (13)
  Unearned compensation                                       (3,438)         (1,862)
                                                           ---------       ---------
            Total stockholders' equity                       111,472         116,943
                                                           ---------       ---------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY                 $ 119,429       $ 122,455
                                                           =========       =========



            See notes to consolidated condensed financial statements.


   4

                       THE MANAGEMENT NETWORK GROUP, INC.
      CONSOLIDATED CONDENSED STATEMENTS OF INCOME AND COMPREHENSIVE INCOME
                      (In thousands, except per share data)
                                   (unaudited)



                                       For the thirteen             For the twenty-six
                                          weeks ended                  weeks ended
                                  ---------------------------------------------------------
                                  July 1, 2000   June 30, 2001  July 1, 2000   June 30, 2001
                                  ------------   ------------   ------------   ------------
                                                                     
REVENUES                            $ 19,464       $ 13,691       $ 35,866       $ 32,025
COST OF SERVICES:
  Direct cost of services             10,109          6,892         18,638         16,436
  Equity related charges               2,001            707          3,917          1,120
                                    --------       --------       --------       --------
    Total cost of services            12,110          7,599         22,555         17,556
                                    --------       --------       --------       --------
GROSS PROFIT                           7,354          6,092         13,311         14,469
OPERATING EXPENSES:
  Selling, general and
   administrative                      3,916          3,837          7,333          8,566
  Depreciation and amortization           61            600            115          1,182
  Equity related charges                 392            261            810            459
                                    --------       --------       --------       --------
    Total operating expenses           4,369          4,698          8,258         10,207
                                    --------       --------       --------       --------
INCOME FROM OPERATIONS                 2,985          1,394          5,053          4,262
OTHER INCOME (EXPENSE)
  Interest income                        777            692          1,626          1,412
  Other, net                               8             (3)          (127)           (17)
                                    --------       --------       --------       --------
    Total other income                   785            689          1,499          1,395
                                    --------       --------       --------       --------
INCOME BEFORE PROVISION FOR
 INCOME TAXES                          3,770          2,083          6,552          5,657
PROVISION FOR INCOME TAXES            (1,517)          (655)        (2,621)        (1,893)
                                    --------       --------       --------       --------
NET INCOME                             2,253          1,428          3,931          3,764
OTHER COMPREHENSIVE INCOME -
  Foreign currency translation
    adjustment                           (29)            (3)           (45)           (48)
                                    --------       --------       --------       --------
COMPREHENSIVE INCOME                $  2,224       $  1,425       $  3,886       $  3,716
                                    ========       ========       ========       ========
NET INCOME PER COMMON SHARE
  Basic                             $   0.08       $   0.05       $   0.14       $   0.13
                                    ========       ========       ========       ========
  Diluted                           $   0.08       $   0.05       $   0.14       $   0.12
                                    ========       ========       ========       ========
SHARES USED IN CALCULATION OF
 NET INCOME PER COMMON SHARE
  Basic                               27,460         29,560         27,443         29,525
                                    ========       ========       ========       ========
  Diluted                             28,690         30,491         28,664         30,456
                                    ========       ========       ========       ========




            See notes to consolidated condensed financial statements.


   5

                       THE MANAGEMENT NETWORK GROUP, INC.
                 CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS
                                 (In thousands)
                                   (unaudited)



                                         For the twenty-six weeks ended
                                         ------------------------------
                                              July 1,        June 30,
                                               2000           2001
                                             --------       --------
                                                      
CASH FLOWS FROM OPERATING ACTIVITIES:
  Net income                                 $  3,931       $  3,764
  Adjustments to reconcile net income
    to net cash provided by operating
     activities:
    Depreciation and amortization                 115          1,182
    Equity related charges                      4,727          1,579
    Income tax benefit realized upon
     exercise of stock options                    614             17
    Provision for deferred income taxes        (2,019)          (206)
    Other changes in operating assets
     and liabilities
     Accounts receivable                       (3,968)         6,081
     Accounts receivable - unbilled            (2,676)         2,664
     Other assets                                (217)           161
     Trade accounts payable                       269            (21)
     Accrued liabilities                        1,758         (2,424)
                                             --------       --------
             Net cash provided by
              operating activities              2,534         12,797
                                             --------       --------

CASH FLOWS FROM INVESTING ACTIVITIES:
  Acquisition of property and
   equipment                                     (193)          (454)
             Net cash used in                --------       --------
              investing activities               (193)          (454)
                                             --------       --------

CASH FLOWS FROM FINANCING ACTIVITIES:
  Issuance of common stock, net of
   expenses                                      (128)
  Exercise of options                             118            158
                                             --------       --------
             Net cash (used in) provided
              by financing activities             (10)           158
                                             --------       --------
Effect of exchange rate on cash and
 cash equivalents                                 (45)           (48)
                                             --------       --------
Net increase in cash and cash
 equivalents                                    2,286         12,453
Cash and cash equivalents, beginning
 of period                                     51,523         70,583
                                             --------       --------
Cash and cash equivalents, end of
 period                                      $ 53,809       $ 83,036
                                             ========       ========

Supplemental disclosure of cash flow
 information:
  Cash paid during period for taxes          $  3,329       $  1,411
                                             ========       ========



            See notes to consolidated condensed financial statements.

   6

                       THE MANAGEMENT NETWORK GROUP, INC.
              NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
                                   (unaudited)

1.     Basis of Reporting

       The accompanying consolidated condensed financial statements of The
       Management Network Group, Inc. (the "Company") as of June 30, 2001, and
       for the thirteen and twenty-six weeks ended June 30, 2001 and July 1,
       2000, are unaudited and reflect all normal recurring adjustments which
       are, in the opinion of management, necessary for the fair presentation of
       the Company's consolidated condensed financial position, results of
       operations, and cash flows as of these dates and for the periods
       presented. The consolidated condensed financial statements have been
       prepared in accordance with accounting principles generally accepted in
       the United States of America for interim financial information.
       Consequently, these statements do not include all the disclosures
       normally required by accounting principles generally accepted in the
       United States of America for annual financial statements nor those
       normally made in the Company's Annual Report on Form 10-K. Accordingly,
       reference should be made to the Company's Annual Report on Form 10-K for
       additional disclosures, including a summary of the Company's accounting
       policies, which have not changed.

2.     Earnings Per Share

       The Company calculates and presents earnings per share using a dual
       presentation of basic and diluted earnings per share. Basic earnings per
       share is computed using the weighted average number of common shares
       outstanding. Diluted earnings per share is computed using the weighted
       average number of common shares outstanding and the assumed exercise of
       stock options and warrants (using the treasury stock method).

       The following table sets forth the computation of basic and diluted net
       income per share for the periods indicated (in thousands, except per
       share amounts):



                                             FOR THE THIRTEEN WEEKS ENDED      FOR THE TWENTY-SIX WEEKS ENDED
                                             ----------------------------------------------------------------
                                                   JULY 1,        June 30,       JULY 1,       June 30,
                                                    2000           2001           2000           2001
                                                  -----------------------------------------------------
                                                                                   
Numerator
      Net income                                  $  2,253       $  1,428       $  3,931       $ 3,764
Denominator
     Weighted average common shares                 27,460         29,560         27,443        29,525
     Weighted average unvested and vested
       stock options                                 2,948          4,564          2,858         3,888
     Weighted average unvested and vested
       stock options subject to repurchase          (1,718)        (3,633)        (1,637)       (2,957)
Denominator for basic calculation                   27,460         29,560         27,443        29,525
Denominator for diluted calculation                 28,690         30,491         28,664        30,456
Basic net income per common share                 $   0.08       $   0.05       $   0.14       $  0.13
Diluted net income per common share               $   0.08       $   0.05       $   0.14       $  0.12


3.     Equity Related Charges

       During the thirteen weeks ended June 30, 2001, the Company granted
       approximately 1,536,000 stock options to employees and approximately
       34,000 stock options to a non-employee director at a weighted average
       exercise price of $4.00 and recorded net compensation expense related to
       all stock options of $538,000. Equity related charges to cost of services
       associated with warrants totaled $430,000.
   7

       During the twenty-six weeks ended June 30, 2001, the Company granted
       approximately 1,868,000 stock options to employees and approximately
       34,000 stock options to a non-employee director at a weighted average
       exercise price of $4.75 and recorded net compensation expense related to
       all stock options of $718,000. During the same period, the Company
       recorded equity related charges to cost of services associated with
       warrants of $861,000.

4.     Reclassification

       The presentation of certain condensed financial information for the
       twenty- six weeks ended July 1, 2000 has been reclassified to conform to
       the current period's presentation. This reclassification has no effect on
       Net Income or Stockholders' Equity as previously reported.

5.     Contingencies

       During 1997, one of the Company's customers entered Chapter 11 of the
       bankruptcy code. According to the bankruptcy code, certain payments made
       within a specified period of time prior to the date of the bankruptcy
       filing and payments made subsequent to the date of the bankruptcy filing
       which are not previously authorized, could be declared "preference
       payments". Under certain conditions, preference payments could be
       required to be remitted to the bankruptcy trustee for satisfaction of
       general creditor claims. During fiscal year 1998, the bankruptcy trustee
       filed suit against the Company for preferential payments received prior
       to and subsequent to the bankruptcy filing, and related damages of
       approximately $1.9 million. The total amount of payments received from
       this customer during the specified preference period aggregated
       approximately $320,000 and may be declared preference payments. In the
       opinion of management, resolution of this legal action will not have a
       material adverse effect on the Company's consolidated results of
       operations, cash flows or financial position.

ITEM 2.  Management's Discussion and Analysis of Financial Condition and Results
         of Operations

       In addition to historical information, this quarterly report contains
forward-looking statements. Certain risks and uncertainties could cause actual
results to differ materially from those reflected in such forward-looking
statements. Factors that might cause a difference include, but are not limited
to, those discussed in the section entitled "Management's Discussion and
Analysis of Financial Condition and Results of Operations - Risk Factors."
Readers are cautioned not to place undue reliance on these forward-looking
statements, which reflect management's opinions only as of the date of this
report. We undertake no obligation to revise or publicly release the results of
any revision to these forward-looking statements. Readers should carefully
review the risk factors described in this quarterly report and in other
documents that we file from time to time with the Securities and Exchange
Commission.

The following should be read in connection with the Management's Discussion and
Analysis of Financial Condition and Results of Operations as presented in our
Annual Report on Form 10-K.

RESULTS OF OPERATIONS

THIRTEEN WEEKS ENDED JUNE 30, 2001 COMPARED TO THIRTEEN WEEKS ENDED JULY 1, 2000

       Revenues

       Revenues decreased 29.7% to $13.7 million for the thirteen weeks ended
June 30, 2001 from $19.5 million for the thirteen weeks ended July 1, 2000. The
decrease in revenues was due primarily to a deferral or reduction of management
consulting demand by the telecommunications and technology industry, resulting

   8

from macroeconomic events impacting this sector, including reductions in capital
funding, business failures and industry restructurings and reorganizations.
Additionally, for the thirteen weeks ended June 30, 2001, our international
revenue base represented 10.2% of our revenues, down from 26.9% for the thirteen
weeks ended July 1, 2000, due in part to the domestic revenue generated by our
recently acquired subsidiary, TMNG Marketing, Inc. (formerly known as The
Weathersby Group, Inc.), and the decline in services provided to international
customers.

       Included in revenue for the thirteen weeks ended June 30, 2001 were
services provided to two large customers, which each accounted for more than 10%
of our revenues and represented an aggregate of 25.5% of total revenue. Included
in revenue for the thirteen weeks ended July 1, 2000 were services provided to
three large customers, which each accounted for more than 10% of our revenues
and represented an aggregate of 41.7% of total revenue.

       Costs of Services

       Direct costs of services decreased 31.8% to $6.9 million for the thirteen
weeks ended June 30, 2001 compared to $10.1 million for the thirteen weeks ended
July 1, 2000. As a percentage of revenues, gross margin on services was 49.7%
for the thirteen weeks ended June 30, 2001 and 48.1% for the thirteen weeks
ended July 1, 2000. The increase in gross margin as a percentage of revenue was
attributable primarily due to contract price increases and volume requirements
associated with our largest clients as well as 10% cost reductions negotiated
with most of our vendors.

       Non-cash stock based compensation charges were $707,000 and $2.0 million
for the thirteen weeks ended June 30, 2001 and the thirteen weeks ended July 1,
2000, respectively. Of the $707,000 compensation charges related to the thirteen
weeks ended June 30, 2001, $430,000 was recorded in connection with warrants
issued during the fourth quarter of 1999 and $277,000 was recorded in connection
with stock options previously granted to employees and non-employee consultants.
The decrease in non-cash stock based compensation charges for the thirteen
weeks ended June 30, 2001 compared to the thirteen weeks ended July 1, 2000 was
primarily a result of the reduction in the amortization of the deferred
compensation charges recorded in connection with pre-initial public offering
grants of non-qualified stock options. These charges represent 5.2% of revenues
for the thirteen weeks ended June 30, 2001 compared to 10.3% of revenues for the
thirteen weeks ended July 1, 2000.

       Operating Expenses

       In total, operating expenses for the thirteen weeks ended June 30, 2001
increased by 7.5% to $4.7 million compared to $4.4 million for the thirteen
weeks ended July 1, 2000. This increase principally reflects goodwill
amortization charges of $467,000 recognized in 2001 arising from the TMNG
Marketing, Inc. acquisition in September 2000. Selling, general and
administrative expenses decreased to $3.8 million for the thirteen weeks ended
June 30, 2001 from $3.9 million for the thirteen weeks ended July 1, 2000. As a
percentage of revenues, selling, general and administrative expenses increased
to 28.0% compared to 20.1% for the thirteen weeks ended June 30, 2001 and July
1, 2000, respectively. This percentage increase was primarily attributable to
the decrease in revenues in the second quarter of fiscal year 2001. In the
second quarter of fiscal year 2001, management implemented a number of
cost-reduction initiatives in selling, general and administrative areas to
address the macroeconomic slow down within the telecommunications industry.
Management continues to evaluate cost reduction opportunities to better match
revenues and costs in the revised economic environment.

       Non-cash stock based compensation charges of $261,000 and $392,000 for
the thirteen weeks ended June 30, 2001 and thirteen weeks ended July 1, 2000,
respectively, were recorded in connection with stock options granted to our
partners, principals and certain senior executives and non-employee directors.
These charges increased operating expenses as a percentage of revenue by 1.9% of
revenues for the thirteen weeks ended June 30, 2001 compared to 2.0% of revenues
for the thirteen weeks ended July 1, 2000. The decrease in non-cash stock based
compensation charges for the thirteen weeks ended June 30, 2001 compared to the
thirteen weeks ended July 1, 2000 was a result of the reduction in the
amortization of the deferred compensation charges recorded in connection with
pre-initial public offering grants of non-qualified stock options.
   9

       Other Income and Expenses

       Interest income was $692,000 and $777,000 for the thirteen weeks ended
June 30, 2001 and thirteen weeks ended July 1, 2000, respectively, and
represented interest earned on invested balances. Interest income decreased for
the thirteen weeks ended June 30, 2001 due primarily to the Company's shift to
tax-exempt investments and the lower interest rates associated with these
investments. Additionally, interest income decreased due to the Federal Reserve
Bank reducing interest rates during the quarter, which was partially offset by
larger invested cash balances. We invest in short-term, high-grade investment
instruments, and maintain a mix of taxable and tax-exempt instruments as part of
our overall investment policy.

       Income Taxes

       Provision for income taxes for the second quarter of fiscal year 2001 as
a percentage of pretax income was 31.4% compared to 40.2% for the second quarter
of fiscal year 2000. The decrease in income taxes as a percentage of revenue was
due primarily to the partial shift of investments by TMNG from taxable to
tax-exempt securities that are not taxed at the federal income tax level.

TWENTY-SIX WEEKS ENDED JUNE 30, 2001 COMPARED TO TWENTY-SIX WEEKS ENDED JULY 1,
2000

       Revenues

       Revenues decreased 10.7% to $32.0 million for the twenty-six weeks ended
June 30, 2001 from $35.9 million for the twenty-six weeks ended July 1, 2000.
The decrease in revenues was due primarily to a deferral or reduction of
management consulting demand by the telecommunications and technology industry
resulting from macroeconomic events in this sector during 2001, including
reductions in capital funding, business failures and industry restructurings and
reorganizations. Additionally, for the twenty-six weeks ended June 30, 2001, our
international revenue base represented 13.9% of our revenues, down from 29.1%
for the twenty-six weeks ended July 1, 2000, due in part to the domestic revenue
generated by our recently acquired subsidiary, TMNG Marketing, Inc. (formerly
known as The Weathersby Group, Inc.), and the decline in services provided to
international customers.

       Included in revenue for the twenty-six weeks ended June 30, 2001 were
services provided to two large customers, which each accounted for more than 10%
of our revenues and represented an aggregate of 24.4% of total revenue. Included
in revenue for the twenty-six weeks ended July 1, 2000 were services provided to
two large customers, which each accounted for more than 10% of our revenues and
represented an aggregate of 34.4% of total revenue.

       Cost of Services

       Direct cost of services decreased 11.8% to $16.4 million for the
twenty-six weeks ended June 30, 2001 compared to $18.6 million for the
twenty-six weeks ended July 1, 2000. As a percentage of revenues, our gross
margin on services was 48.7% for the twenty-six weeks ended June 30, 2001 and
48.0% for the twenty-six weeks ended July 1, 2000. The increase in gross margin
as a percentage of revenue was attributable primarily to contract increases and
volume requirements associated with our largest clients as well as 10% cost
reductions negotiated with most of our vendors, of which both factors were more
pronounced in the second quarter of fiscal 2001.

       Non-cash stock based compensation charges were $1.1 million and $3.9
million for the twenty-six weeks ended June 30, 2001 and July 1, 2000,
respectively. Of the $1.1 million compensation charges related to the twenty-six
weeks ended June 30, 2001, $861,000 was recorded in connection with warrants
issued during the fourth quarter of 1999 and $779,000 was recorded in connection
with stock options previously granted to employees and non-employee consultants.

   10

Non-cash stock based compensation charges were offset by a $520,000 credit in
the first and second quarters of fiscal year 2001 representing a reversal of
previously recorded expense attributable to the forfeiture and cancellation of
unvested stock options in the first and second quarters of fiscal year 2001.
Additionally, the decrease in non-cash stock based compensation charges for the
twenty-six weeks ended June 30, 2001 compared to the twenty-six weeks ended July
1, 2000 was primarily a result of the reduction in the amortization of the
deferred compensation charges recorded in connection with pre-initial public
offering grants of non-qualified stock options. These net charges increase costs
of services as a percentage of revenue by 3.5% and 10.9% for the twenty-six
weeks ended June 30, 2001 and the twenty-six weeks ended July 1, 2000,
respectively.

       Operating Expenses

       In total, operating expenses for the twenty-six weeks ended June 30, 2001
increased to $10.2 million or 23.6% from $8.3 million for the twenty-six weeks
ended July 1, 2000. The major components of this increase are $933,000 of
goodwill amortization related to the acquisition of TMNG Marketing, Inc.
(formerly known as The Weathersby Group, Inc.) in September 2000 and $1.2
million increase in selling, general and administrative expense primarily
related to increased personnel costs and investments in technology. As a
percentage of revenues, selling, general and administrative expenses increased
to 26.7% compared to 20.4% for the twenty-six weeks ended June 30, 2001 and July
1, 2000, respectively. This percentage increase was partially attributable to
the decrease in revenues in 2001. In the second quarter of fiscal year 2001,
management implemented a number of cost-reduction initiatives in selling,
general and administrative areas to address the economic slow down within the
telecommunications industry. Management continues to evaluate cost reduction
opportunities to better match revenues and costs in the revised economic
environment.

       Non-cash stock based compensation charges of $459,000 and $810,000 for
the twenty-six weeks ended June 30, 2001 and twenty-six weeks ended July 1,
2000, respectively, were recorded in connection with stock options granted to
our partners, principals and certain senior executives and non-employee
directors. These charges increased operating expenses as a percentage of revenue
by 1.4% and 2.3% for the twenty-six weeks ended June 30, 2001 and the twenty-six
weeks ended July 1, 2000, respectively. The decrease in non-cash stock based
compensation charges for the twenty-six weeks ended June 30, 2001 compared to
the twenty-six weeks ended July 1, 2000 was a result of the reduction in the
amortization of the deferred compensation charges recorded in connection with
pre-initial public offering grants of non-qualified stock options.

       Other Income and Expenses

       Interest income was $1.4 million and $1.6 million for the twenty-six
weeks ended June 30, 2001 and July 1, 2000, respectively, and represented
interest earned on invested balances. Interest income decreased during the
twenty-six weeks ended June 30, 2001 due primarily to the Company's shift to
tax-exempt investments and the lower interest rates associated with these
investments. Additionally, interest income decreased due to the Federal Reserve
Bank reducing interest rates during the period, which was partially offset by
larger invested cash balances. We invest in short-term, high-grade investment
instruments, and maintain a mix of taxable and tax-exempt instruments as part of
our overall investment policy.

       Other, net represents a loss of $17,000 and $127,000 for the twenty-six
weeks ended June 30, 2001 and the twenty-six weeks ended July 1, 2000. The loss
for the twenty-six weeks ended July 1, 2000 was due primarily to foreign
currency exchange losses recorded on a project located in Switzerland that was
billed in Swiss francs. The project concluded during fiscal year 2000 and did
not affect the first and second quarters of fiscal year 2001.


   11

       Income Taxes

       Provision for income taxes for the twenty-six weeks ended June 30, 2001
as a percentage of pretax income was 33.5% compared to 40.0% for the twenty-six
weeks ended July 1, 2000. The decrease in income taxes as a percentage of
revenue was due primarily to the partial shift of investments by TMNG from
taxable to tax-exempt securities that are not taxed at the federal income tax
level.

       Liquidity and Capital Resources

       At June 30, 2001, we had approximately $83.0 million in cash and cash
equivalents. We believe the cash on hand, in addition to cash generated from
operations, will be sufficient to meet anticipated cash requirements, including
anticipated capital expenditures and consideration for possible acquisitions,
for at least the next 12 months. Should our business expand more rapidly than
expected, we believe that bank credit would be available to fund such operating
and capital requirements.

       Net cash provided by operating activities was $12.8 million for the
twenty-six weeks ended June 30, 2001 compared to $2.5 million for the twenty-six
weeks ended July 1, 2000. Net cash provided by operating activities increased
primarily due to the reduction in accounts receivable reflecting more focused
billing and collection activities in 2001 compared to 2000.

        Net cash used in investing activities was $454,000 for the twenty-six
weeks ended June 30, 2001 compared to $193,000 for the twenty-six weeks ended
July 1, 2000. These amounts relate primarily to capital expenditures by the
Company for leasehold improvements, computer equipment and software.

        Net cash provided by financing activities was $158,000 for the
twenty-six weeks ended June 30, 2001 and related to the exercise of
non-qualified stock options. Net cash used in financing activities was $10,000
for the twenty-six weeks ended July 1, 2000, and related primarily to stock
issuance costs associated with the Company's initial public offering on November
22, 1999, offset by funds received from the exercise of non-qualified stock
options.

       Risk Factors

       Statements in this section and elsewhere in this quarterly report that
are not purely historical, such as statements regarding our expectations,
beliefs, intentions, plans, and strategies regarding the future, are
forward-looking statements. These statements are only predictions, and they
involve risks, uncertainties, and assumptions that could cause our actual
results to differ materially from the results we express in the forward-looking
statements. This section includes important factors that could cause or
contribute to these differences. We cannot guarantee the results expressed in
any forward-looking statement. We have based all forward-looking statements on
information available to us on the date of this quarterly report, and we have no
obligation to update any forward-looking statement.

HISTORICALLY WE HAVE FOCUSED EXCLUSIVELY ON SERVING THE TELECOMMUNICATIONS
INDUSTRY, WHICH HAS RECENTLY EXPERIENCED DECLINING RESULTS OF OPERATIONS AND A
REDUCTION IN THE AVAILABILITY OF INVESTMENT CAPITAL, AND INDUSTRY CONDITIONS
COULD HARM OUR BUSINESS

       Historically we derived a significant amount of our revenues from
consulting engagements within the telecommunications industry. Much of our past
growth arose from business opportunities presented by industry trends that
included deregulation, increased competition, technological advances, the growth
of e-business and the convergence of service offerings.

       However, beginning in late 2000 and continuing into 2001, many
telecommunications companies, including carriers, equipment manufacturers and
other industry participants have begun reporting declining results of operations

   12

and there have been several bankruptcy filings. Our future operating results
could be affected by declining results of operations among telecommunications
companies as well as client financial difficulties. Future client financial
difficulties that result in write-offs that are in excess of our bad debt
reserves could harm our results of operations in future fiscal periods. In
addition, the worsening conditions in the telecommunications sector could cause
companies to delay new product and new business initiatives and to seek to
control expenses by reducing use of outside consultants. Additionally, the
telecommunications industry is in a period of consolidation, which could reduce
our client base, eliminate future opportunities or create conflicts of interest
among clients. As a result, current industry conditions could harm our business,
financial condition and results of operations.

WE ARE DEPENDENT ON A LIMITED NUMBER OF LARGE CUSTOMERS FOR A MAJOR PORTION OF
OUR REVENUES, AND THE LOSS OF A MAJOR CUSTOMER COULD REDUCE REVENUES AND HARM
OUR BUSINESS

       We derive a significant portion of our revenues from a relatively limited
number of clients. For example, for the twenty-six weeks ended June 30, 2001,
revenues from our ten most significant clients accounted for approximately 66.5%
of revenues. The services required by any one client may be affected by industry
consolidation, technological developments, economic slowdown or internal budget
constraints. As a result, the volume of work performed for specific clients
varies from period to period, and a major client in one period may not use our
services in a subsequent period.

       Our services are often sold under short-term engagements and most clients
can reduce or cancel their contracts with little or no penalty or notice. Our
operating results may suffer if we are unable to rapidly deploy consultants if a
client defers, modifies or cancels a project. Consequently, you should not
predict or anticipate our future revenue based on the number of clients we have
or the number and scope of our existing engagements.

OUR REVENUES AND OPERATING RESULTS MAY FLUCTUATE SIGNIFICANTLY FROM QUARTER TO
QUARTER, AND FLUCTUATIONS IN OUR OPERATING RESULTS COULD CAUSE OUR STOCK PRICE
TO DECLINE

       Our revenue and operating results may vary significantly from quarter-to-
quarter due to a number of factors. In future quarters, our operating results
may be below the expectations of public market analysts or investors, and the
price of our common stock may decline. Factors that could cause quarterly
fluctuations include:

       -      the beginning and ending of significant contracts during a
              quarter;

       -      the size and scope of assignments;

       -      consultant turnover, utilization rates and billing rates;

       -      the loss of key consultants, which could cause clients to end
              their relationships with us;

       -      the ability of clients to terminate engagements without penalty;

       -      fluctuations in demand for our services resulting from budget
              cuts, project delays, cyclical downturns or similar events;

       -      clients' decisions to divert resources to other projects, which
              may limit clients' resources that would otherwise be allocated to
              projects we could provide;

       -      reductions in the prices of services offered by our competitors;

       -      fluctuations in the telecommunications market and economic
              conditions;

       -      seasonality during the summer, vacation and holiday periods; and

       -      fluctuations in the value of foreign currencies versus the U.S.
              dollar.
   13

       Because a significant portion of our expenses are relatively fixed, a
variation in the number of client assignments or the timing of the initiation or
the completion of client assignments may cause significant variations in
operating results from quarter-to-quarter and could result in losses. To the
extent the addition of consultant employees is not followed by corresponding
increases in revenues, additional expenses would be incurred that would not be
matched by corresponding revenues. Therefore, profitability would decline and we
could potentially experience losses. In addition, our stock price would likely
decline.

WE MUST CONTINUE TO ATTRACT AND RETAIN QUALITY CONSULTANTS, AND OUR INABILITY TO
DO SO WOULD IMPAIR OUR ABILITY TO SERVICE EXISTING ENGAGEMENTS OR UNDERTAKE NEW
ENGAGEMENTS, RESULTING IN A DECLINE IN OUR REVENUES AND INCOME

       We must attract a significant number of new consultants to implement
growth plans. The number of potential consultants that meet our hiring criteria
is relatively small, and there is significant competition for these consultants
from direct competitors and others in the telecommunications industry.
Competition for these consultants may result in significant increases in our
costs to retain the consultants, which could reduce our margins and
profitability. In addition, we will need to attract consultants in international
locations, principally Europe, to support our international growth plans. We
have limited experience in recruiting internationally, and we may not be able to
do so. Our inability to recruit new consultants and retain existing consultants
could impair our ability to service existing engagements or undertake new
engagements. If we are unable to attract and retain consultants, revenues and
profitability would decline.

THE MARKET IN WHICH WE COMPETE IS INTENSELY COMPETITIVE AND ACTIONS BY
COMPETITORS COULD RENDER OUR SERVICES LESS COMPETITIVE CAUSING REVENUES AND
INCOME TO DECLINE

       The market for consulting services to telecommunications companies is
intensely competitive, highly fragmented and subject to rapid change.
Competitors include general management consulting firms, the consulting
practices of "Big Five" accounting firms, most of which have practice groups
focused on the telecommunications industry and local or regional firms
specializing in telecommunications services. Some of these competitors have also
formed strategic alliances with telecommunications and technology companies
serving the industry. We also compete with internal resources of our clients.
Our competitors include:

       -      American Management Systems;

       -      Accenture;

       -      Booz-Allen & Hamilton;

       -      The Boston Consulting Group;

       -      Cap Gemini Ernst & Young;

       -      KPMG; and

       -      PricewaterhouseCoopers.


       Many information technology consulting firms also maintain significant
practice groups devoted to the telecommunications industry. Many of these
companies have a national and international presence and may have greater
personnel, financial, technical and marketing resources. We may not be able to
compete successfully with our existing competitors or with any new competitors.

       We also believe our ability to compete depends on a number of factors
outside of our control, including:

       -      the prices at which others offer competitive services, including
              aggressive price competition and discounting on individual
              engagements which may become increasingly prevalent due to
              worsening economic conditions;
   14

       -      the ability and willingness of our competitors to finance
              customers' projects on favorable terms;

       -      the ability of our competitors to undertake more extensive
              marketing campaigns than we can;

       -      the extent, if any, to which our competitors develop proprietary
              tools that improve their ability to compete with us;

       -      the ability of our customers to perform the services themselves;
              and

       -      the extent of our competitors' responsiveness to customer needs.

       We may not be able to compete effectively on these or other factors. If
we are unable to compete effectively, our market position, and therefore our
revenues and profitability, would decline.

WE HAVE EXPERIENCED RAPID GROWTH IN THE BUSINESS IN RECENT FISCAL YEARS. IF WE
CONTINUE TO EXPERIENCE SUCH GROWTH, OUR OPERATIONAL INFRASTRUCTURE MAY NOT BE
ABLE TO SUPPORT GROWTH

       We are currently experiencing a period of rapid growth that may strain
managerial and operational resources. To support growth, our organizational
infrastructure must grow accordingly.

       To manage the growth of our operations and personnel, we must:

       -      improve existing and implement new operational, financial and
              management controls, reporting systems and procedures; and

       -      maintain and expand our financial management information systems.

       If we fail to address these issues, our operational infrastructure may be
insufficient to support our levels of business activity. In this event, we could
experience disruptions in our business and declining revenues or profitability.

IF WE DO NOT EFFECTIVELY MANAGE THE CONVERSION OF INDEPENDENT SUBJECT MATTER
EXPERTS TO EMPLOYEES, WE COULD INCUR UNANTICIPATED COSTS WHICH WOULD HARM OUR
FINANCIAL PERFORMANCE

       We offer contingent employee or full-time employee status to certain of
our independent subject matter experts. As independent subject matter experts
are converted to consultant employees, we incur additional fixed costs for each
such employee that we do not incur when retained as an independent subject
matter expert. To effectively manage these additional fixed costs, we will need
to continuously improve utilization management and minimize unbilled employee
time. In addition, this change may cause other disruptions to our business. If
we fail to effectively manage this transition, we could incur additional costs
due to underutilization of full-time employees as well as other unanticipated
costs.

WE MUST CONTINUALLY ENHANCE OUR SERVICES TO MEET THE CHANGING NEEDS OF OUR
CUSTOMERS OR WE MAY LOSE FUTURE BUSINESS TO OUR COMPETITORS

       Our future success will depend upon our ability to enhance existing
services and to introduce new services to meet the requirements of our customers
in a rapidly developing and evolving market. Present or future services may not
satisfy the needs of the telecommunications market. If we are unable to
anticipate or respond adequately to customer needs, lost business may result and
our financial performance will suffer.


   15

PLANS FOR INTERNATIONAL EXPANSION MAY NOT SUCCEED, WHICH WOULD HARM OUR REVENUES
AND PROFITABILITY

       Future revenues depend to a large extent on expansion into international
markets. International operations might not succeed for a number of reasons,
including:

       -      difficulties in staffing and managing foreign operations;

       -      seasonal reductions in business activity;

       -      fluctuations in currency exchange rates or imposition of currency
              exchange controls;

       -      competition from local and foreign-based consulting companies;

       -      issues relating to uncertainties of laws and enforcement relating
              to the protection of intellectual property;

       -      unexpected changes in trading policies and regulatory
              requirements;

       -      legal uncertainties inherent in transnational operations such as
              export and import regulations, tariffs and other trade barriers;

       -      taxation issues;

       -      operational issues such as longer customer payment cycles and
              greater difficulties in collecting accounts receivable;

       -      language and cultural differences;

       -      general political and economic trends; and

       -      expropriations of assets, including bank accounts, intellectual
              property and physical assets by foreign governments.

       Accordingly, we may not be able to successfully execute the business plan
in foreign markets. If we are unable to achieve anticipated levels of revenues
from international operations, our revenues and profitability would decline.

IF INTERNATIONAL BUSINESS VOLUMES INCREASE, WE WILL BE EXPOSED TO GREATER
FOREIGN CURRENCY EXCHANGE RISKS, WHICH COULD RESULT IN INCREASED EXPENSES AND
DECLINING PROFITABILITY

       Revenues derived from our international engagements continue to represent
a significant number of our engagements. Some international engagements are
denominated in the local currency of the clients. Expenses incurred in
delivering these services, consisting primarily of consultant compensation, are
typically denominated in U.S. dollars. To the extent that the value of a
currency in which billings are denominated decreases in relation to the U.S.
dollar or another currency in which expenses are denominated, our operating
results and financial condition could be harmed. We may hedge our foreign
currency exposure from time to time, but hedging may not be effective.

OUR TMNG.COM BUSINESS IS DEPENDENT ON CONTINUED GROWTH, USE AND ACCEPTANCE OF
THE INTERNET AND E-BUSINESS

       Our success in providing e-business related consulting services depends
in part on widespread acceptance and use of the Internet as a way to conduct
business. The Internet and e-business may not become a viable long-term
commercial marketplace due to potentially inadequate development of the
necessary network infrastructure or delayed development of enabling technologies
and performance improvements. Our business would be harmed if:

       -      use of the Internet and other online services does not increase or
              increases at a slower pace than expected or on-line services do
              not become viable marketplaces;
   16

       -      the infrastructure for the Internet and other online services does
              not effectively support future expansion of e-business; or

       -      concerns over security and privacy inhibit the growth of the
              Internet.

The failure of the Internet to continue to grow would inhibit the demand for our
TMNG.com consulting services and our revenues and financial performance.

WE ARE DEPENDENT ON A LIMITED NUMBER OF KEY PERSONNEL, AND THE LOSS OF THESE
INDIVIDUALS COULD HARM OUR COMPETITIVE POSITION AND FINANCIAL PERFORMANCE

       Our business consists primarily of the delivery of professional services
and, accordingly, our success depends upon the efforts, abilities, business
generation capabilities and project execution of our executive officers and key
consultants. Our success is also dependent upon the managerial, operational and
administrative skills of our executive officers, particularly Richard Nespola,
our President and Chief Executive Officer. The loss of any executive officer or
key consultant or group of consultants, or the failure of these individuals to
generate business or otherwise perform at or above historical levels could
result in a loss of customers or revenues, and could therefore harm our
financial performance.

IF WE FAIL TO PERFORM EFFECTIVELY ON PROJECT ENGAGEMENTS, OUR REPUTATION, AND
THEREFORE OUR COMPETITIVE POSITION AND FINANCIAL PERFORMANCE COULD BE HARMED

       Many of our engagements come from existing clients or from referrals by
existing clients. Therefore, our growth is dependent on our reputation and on
client satisfaction. The failure to perform services that meet a client's
expectations may damage our reputation and harm our ability to attract new
business. Damage to our reputation arising from client dissatisfaction could
therefore harm our financial performance.

IF WE FAIL TO DEVELOP LONG-TERM RELATIONSHIPS WITH OUR CUSTOMERS, OUR SUCCESS
WOULD BE JEOPARDIZED

       A substantial majority of our business is derived from repeat customers.
Future success depends to a significant extent on our ability to develop
long-term relationships with successful telecommunications providers who will
give new and repeat business. Inability to build long-term customer relations
would result in declines in our revenues and profitability.

A LARGE NUMBER OF PERSONNEL ARE CLASSIFIED AS INDEPENDENT CONTRACTORS FOR TAX
AND EMPLOYMENT LAW PURPOSES, AND IF THESE PERSONNEL WERE TO BE RECLASSIFIED AS
EMPLOYEES, WE COULD BE SUBJECT TO BACK TAXES, INTEREST, PENALTIES AND OTHER
LEGAL CLAIMS

       We provide approximately half of our consulting services through
independent contractors and, therefore, do not pay federal or state employment
taxes or withhold income taxes for such persons. Further, we generally do not
include these independent contractors in our benefit plans. In the future, the
IRS and state authorities may challenge the status of consultants as independent
contractors. Independent subject matter experts may also initiate proceedings to
seek reclassification as employees under state law. In either case, if persons
engaged by us as independent subject matter experts are determined to be
employees by the IRS or any state taxation department, we would be required to
pay applicable federal and state employment taxes and withhold income taxes with
respect to such persons and could become liable for amounts required to be paid
or withheld in prior periods along with penalties. In addition, we could be
required to include such persons in our benefit plans retroactively and going
forward. Any challenge by the IRS or state authorities or individuals resulting
in a determination that a substantial number of persons we have classified as
independent subject matter experts are actually employees could subject us to
liability for back taxes, interest and penalties, which would harm our
profitability.


   17

WE COULD BE SUBJECT TO CLAIMS FOR PROFESSIONAL LIABILITY, WHICH COULD HARM OUR
FINANCIAL PERFORMANCE

       As a provider of professional services, we face the risk of liability
claims. A liability claim brought against us could harm our business. We may
also be subject to claims by clients for the actions of our consultants and
employees arising from damages to clients' business or otherwise.

       In particular, we are currently a defendant in litigation brought by the
bankruptcy trustee of a former client. This litigation seeks to recover $320,000
in consulting fees paid by the former client and also seeks to recover at least
$1.85 million for breach of contract, breach of fiduciary duties and negligence.

THE MARKET PRICE OF OUR COMMON STOCK IS VOLATILE, AND INVESTORS MAY EXPERIENCE
INVESTMENT LOSSES

       The market price of our common stock is volatile. Our stock price could
decline or fluctuate in response to a variety of factors, including:

       -      variations in quarterly operating results;

       -      announcements of technological innovations that render talent
              outdated;

       -      trends in the telecommunications industry;

       -      acquisitions or strategic alliances by the Company or others in
              the industry;

       -      failure to achieve financial analysts' or other estimates of
              results of operations for any fiscal period;

       -      changes in estimates of performance or recommendations by
              financial analysts; and

       -      market conditions in the telecommunications industry and the
              economy as a whole.

       In addition, the stock market experiences significant price and volume
fluctuations. These fluctuations particularly affect the market prices of the
securities of many high technology companies. These broad market fluctuations
could harm the market price of our common stock.

WE MAY MAKE ACQUISITIONS, WHICH ENTAIL RISKS THAT COULD HARM OUR FINANCIAL
PERFORMANCE OR STOCK PRICE

       As part of our business strategy, we have made and will likely continue
to make acquisitions. Any future acquisition would be accompanied by the risks
commonly encountered in acquisitions. These risks include:

       -      the difficulty associated with assimilating the personnel and
              operations of acquired companies;

       -      the potential disruption of our existing business; and

       -      adverse effects on the financial statements, including one-time
              write-offs and assumption of liabilities of acquired businesses.

       If we make acquisitions and any of these problems materialize, these
acquisitions could negatively affect our operations, profitability and financial
operations.

OUR INABILITY TO PROTECT OUR INTELLECTUAL PROPERTY COULD HARM OUR COMPETITIVE
POSITION AND OUR FINANCIAL PERFORMANCE

       Despite our efforts to protect proprietary rights from unauthorized use
or disclosure, parties, including former employees or consultants, may attempt
to disclose, obtain or use our solutions or technologies. The steps we have
taken may not prevent misappropriation of solutions or technologies,
particularly in foreign countries where laws or law enforcement practices may

   18

not protect proprietary rights as fully as in the United States. Unauthorized
disclosure of our proprietary information could make our solutions and
methodologies available to others and harm our competitive position.

PRINCIPAL STOCKHOLDERS, EXECUTIVE OFFICERS AND DIRECTORS WILL RETAIN SUBSTANTIAL
CONTROL OVER US AND MAY MAKE DECISIONS THAT ARE NOT IN THE BEST INTEREST OF OUR
OTHER STOCKHOLDERS

       Executive officers, directors and stockholders owning more than five
percent of outstanding common stock (and their affiliates) own over a majority
of our outstanding common stock. As a result, such persons, acting together,
have the ability to substantially influence all matters submitted to the
stockholders for approval (including the election and removal of directors and
any merger, consolidation or sale of all or substantially all assets) and to
control management and affairs. Accordingly, concentration of ownership of our
common stock may have the effect of delaying, deferring or preventing a change
in control, impeding a merger, consolidation, takeover or other business
combination involving us or discouraging a potential acquirer from making a
tender offer or otherwise attempting to obtain control of us, even if such a
transaction would be beneficial to other stockholders.

WE USED TO BE TAXED UNDER SUBCHAPTER "S" OF THE INTERNAL REVENUE CODE AND CLAIMS
OF TAXING AUTHORITIES RELATED TO PRIOR SUBCHAPTER "S" CORPORATION STATUS COULD
HARM US

       From 1993 through 1998, we were taxed as a "pass-through" entity under
subchapter "S" of the Internal Revenue Code. Since February 1998, we have been
taxed under subchapter "C" of the Internal Revenue Code, which is applicable to
most corporations and treats the corporation as an entity that is separate and
distinct from its stockholders. If our tax returns for the years in which we
were a subchapter "S" corporation were to be audited by the Internal Revenue
Service or another taxing authority and an adverse determination was made during
the audit, we could be obligated to pay back taxes, interest and penalties. The
stockholders of our predecessor entity agreed, at the time we acquired our
predecessor, to indemnify us against negative tax consequences arising from our
prior "S" corporation status. However, this indemnity may not be sufficient to
cover claims made by the IRS or other taxing authorities, and any such claims
could result in additional costs and harm our financial performance.

WE MAY SEEK TO RAISE ADDITIONAL FUNDS, AND ADDITIONAL FUNDING MAY BE DILUTIVE TO
STOCKHOLDERS OR IMPOSE OPERATIONAL RESTRICTIONS

       Any additional equity financing may be dilutive to our stockholders and
debt financing, if available, may involve restrictive covenants, which may limit
our operating flexibility with respect to certain business matters. If
additional funds are raised through the issuance of equity securities, the
percentage ownership of stockholders will be reduced. These stockholders may
experience additional dilution in net book value per share and any additional
equity securities may have rights, preferences and privileges senior to those of
the holders of our common stock.

ANTI-TAKEOVER PROVISIONS AND OUR RIGHT TO ISSUE PREFERRED STOCK COULD MAKE A
THIRD PARTY ACQUISITION DIFFICULT

       Our certificate of incorporation and bylaws and anti-takeover provisions
of Delaware law could make it more difficult for a third party to acquire
control, even if a change in control would be beneficial to stockholders. In
addition, our bylaws provide for a classified board, with board members serving
staggered three-year terms. The Delaware anti-takeover provisions and the
existence of a classified board could make it more difficult for a third party
to acquire us.

Item 3.  Quantitative and Qualitative Disclosures About Market Risk

       We anticipate that revenues from international engagements will continue
to represent a significant percentage of our revenues. We may enter into
consulting engagements that are denominated in foreign currencies. To the extent

   19

that the value of a currency in which our billings are denominated decreases in
relation to the U.S. dollar or another currency in which our expenses are
denominated, our expenses would increase and the profitability of the engagement
would decline. We may hedge our foreign currency exposure from time to time but
our hedging activities may not be effective.

       We invest idle cash balances in highly liquid short-term investments, the
earnings of which are subject to interest rate fluctuations. The average
invested balance during the twenty-six weeks ended June 30, 2001 was
approximately $76.8 million. We make no attempt to hedge this risk.

Part II.  Other Information

Item 1.  Legal Proceedings

       TMNG has not been subject to any new litigation or claims against the
Company since the time of TMNG's last 10-K filing, dated March 29, 2001. For a
summary of litigation TMNG is currently involved, refer to TMNG's 10-K, as filed
with the Securities and Exchange Commission on March 29, 2001.

Item 2.  Changes in Securities and Use of Proceeds

       On November 22, 1999, the Securities and Exchange Commission declared
TMNG's Registration Statement on Form S-1 (File No. 333-87383) for its initial
public offering effective. On November 23, 1999, TMNG closed its offering of an
aggregate of 4,615,000 shares of TMNG Common Stock at an aggregate offering
price of $78.5 million. The managing underwriters for the offering were JP
Morgan H & Q (formerly known as Hambrecht & Quist), Robertson Stephens, Salomon
Smith Barney and Jefferies & Company, Inc. Net proceeds to TMNG, after deducting
underwriting discounts and commissions of $5.5 million and offering expenses of
$1.6 million, were $71.4 million. On November 29, 1999 TMNG used $22.3 million
of the proceeds from its initial public offering to repay all indebtedness. The
remainder of the proceeds will be used for working capital, general corporate
purposes and as possible consideration for acquisitions.

On August 2, 2000, the Securities and Exchange Commission declared TMNG's
Registration Statement on Form S-1 (File No. 333-40864) effective. On August 2,
2000, TMNG closed its offering of an aggregate of 3,000,000 shares of TMNG
Common Stock at an aggregate offering price of $68.6 million. Net proceeds to
TMNG, after deducting underwriting discounts and commissions of $1.1 million and
offering expenses of $728,000 were $21.0 million. Proceeds will be used for
working capital, general corporate purposes and as possible consideration for
acquisitions.

Item 4.  Submission to a Vote of Security Holders

       TMNG held an Annual Meeting of Stockholders on June 6, 2001.

              1.     The stockholders approved the election of three directors.
                     The votes cast for each nominee were as follows:

                                                   FOR           WITHHELD

                     Mario M. Rosati           23,740,980      1,090,436
                     Andrew D. Lipman          24,612,624        218,792
                     Roy A. Wilkens            24,607,677        223,739

              2.     The stockholders approved the 2001 TMNG Senior Executive
                     Bonus Plan by a vote of 21,743,847 shares in favor of the
                     plan; 1,678,313 shares against the plan; 5,600 shares
                     abstaining and 1,403,656 shares delivered not voted.

              3.     The stockholders ratified the appointment of Deloitte &
                     Touche LLP as independent auditor for the Company for the
                     2001 fiscal year by a vote of 24,768,196 shares in favor of
                     the appointment; 61,720 shares against the appointment and
                     1,500 shares abstaining.
   20

Item 6.  Exhibits and Reports on Form 8-K

       (a) None.

       (b) Reports on Form 8-K

              TMNG did not file any Reports on Form 8-K during the quarter ended
              June 30, 2001.

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.



            SIGNATURE                       TITLE                       DATE
            ---------                       -----                       ----
                                                             

     /s/ RICHARD P. NESPOLA      President, Chief Executive        August 14, 2001
                                 Officer and Director
         Richard P. Nespola      (Principal executive officer)

     /s/ DONALD E. KLUMB         Chief Financial Officer and       August 14, 2001
                                    Treasurer
         Donald E. Klumb         (Principal financial officer
                                 and principal accounting
                                 officer)

*By: /s/ DONALD E. KLUMB
--------------------------------
         Donald E. Klumb
         Attorney-in-Fact