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 March 31, 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 May 8, 2001 TMNG had outstanding 29,565,073 shares of common stock.


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                       THE MANAGEMENT NETWORK GROUP, INC.
                                      INDEX



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

                 Consolidated Condensed Balance Sheets March 31, 2001
                   (unaudited) and December 30, 2000 ..........................      2

                 Consolidated Condensed Statements of Income and
                   Comprehensive Income (unaudited) - Thirteen weeks
                   ended March 31, 2001 and April 1, 2000 .....................      3

                 Consolidated Condensed Statements of Cash Flows
                   (unaudited) - Thirteen weeks ended March 31, 2001
                   and April 1, 2000 ..........................................      4

                 Notes to Consolidated Condensed Financial Statements
                   (unaudited) ................................................      5

         ITEM 2.  Management's Discussion and Analysis of
                   Financial Condition and Results of Operations ..............      5

         ITEM 3.  Quantitative and Qualitative Disclosures About
                   Market Risk ................................................     15

PART II. OTHER INFORMATION

         ITEM 1.  Legal Proceedings ...........................................     15

         ITEM 2.  Changes in Securities and Use of Proceeds....................     15

         ITEM 6.  Exhibits and Reports on Form 8-K ............................     16

         Signatures............................................................     16


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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,     March 31,
                                                                2000             2001
                                                              ---------       ---------
                                                                        
CURRENT ASSETS:
  Cash and cash equivalents ............................      $  70,583       $  75,562
  Receivables:
    Accounts receivable ................................         17,985          15,348
    Accounts receivable - unbilled .....................          8,023           7,443
                                                              ---------       ---------
                                                                 26,008          22,791
    Less: Allowance for doubtful accounts ..............           (766)           (640)
                                                              ---------       ---------
                                                                 25,242          22,151
  Other assets .........................................          1,280           1,560
                                                              ---------       ---------
            Total current assets .......................         97,105          99,273
                                                              ---------       ---------
Property and Equipment, net ............................          1,298           1,491
Goodwill, net ..........................................         18,016          17,550
Deferred Tax Asset .....................................          3,010           3,025
                                                              ---------       ---------
            Total Assets ...............................      $ 119,429       $ 121,339
                                                              =========       =========
CURRENT LIABILITIES:
  Trade accounts payable ...............................      $   1,282       $     901
  Accrued payroll, bonuses and related expenses ........          4,722           3,511
  Other accrued liabilities ............................          1,953           2,435
                                                              ---------       ---------
            Total current liabilities ..................          7,957           6,847
                                                              ---------       ---------
STOCKHOLDERS' EQUITY
  Common Stock: ........................................             29              29
    Voting - $.001 par value, 100,000,000 shares
    authorized; 29,465,808 and 29,514,620 issued and
    outstanding on December 30, 2000 and March 31, 2001,
    respectively
  Additional paid-in capital ...........................        136,917         136,696
  Accumulated deficit ..................................        (22,071)        (19,734)
  Accumulated other comprehensive income -
   Foreign currency translation adjustment .............             35             (11)
  Unearned compensation ................................         (3,438)         (2,488)
                                                              ---------       ---------
           Total stockholders' equity ..................        111,472         114,492
                                                              ---------       ---------
Total Liabilities and Stockholders' Equity .............      $ 119,429       $ 121,339
                                                              =========       =========


           See notes to consolidated condensed financial statements.

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



                                       For the Thirteen Weeks Ended
                                       ----------------------------
                                       April 1,           March 31,
                                         2000               2001
                                       --------           --------
                                                    
Revenues ...........................   $ 16,402           $ 18,334
Cost of Services:
  Direct cost of services ..........      8,529              9,544
  Equity related charges ...........      1,916                413
                                       --------           --------
    Total cost of services .........     10,445              9,957
                                       --------           --------
Gross Profit .......................      5,957              8,377
Operating Expenses:
  Selling, general and
     administrative ................      3,471              5,310
  Equity related charges ...........        418                198
                                       --------           --------
    Total operating expenses .......      3,889              5,508
                                       --------           --------
Income From Operations .............      2,068              2,869
Other Income (Expense)
  Interest income ..................        849                721
  Other, net .......................       (135)               (15)
                                       --------           --------
    Total other income (expense) ...        714                706
                                       --------           --------
Income Before Provision for
 Income Taxes ......................      2,782              3,575
Provision for Income Taxes .........      1,104              1,238
                                       --------           --------
Net Income .........................      1,678              2,337
Other Comprehensive Income -
  Foreign currency translation
    adjustment .....................        (16)               (45)
                                       --------           --------
Comprehensive Income ...............   $  1,662           $  2,292
                                       ========           ========
Net Income Per Common Share

  Basic ............................   $   0.06           $   0.08
                                       ========           ========
  Diluted ..........................   $   0.06           $   0.08
                                       ========           ========
Shares Used in Calculation
 of Net Income Per Common Share

  Basic ............................     27,425             29,490
                                       ========           ========
  Diluted ..........................     28,651             30,276
                                       ========           ========



           See notes to consolidated condensed financial statements.

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



                                                        For the Thirteen Weeks Ended
                                                        ----------------------------
                                                           April 1,       March 31,
                                                             2000           2001
                                                           --------       --------
                                                                    
CASH FLOWS FROM OPERATING ACTIVITIES:
  Net income ........................................      $  1,678       $  2,337
  Adjustments to reconcile  net income to net
    cash provided by operating activities:
     Depreciation and amortization ..................            53            582
     Stock option compensation ......................         2,334            611
     Income tax benefit realized upon exercise
       of stock options .............................            94             39
     Provision for deferred income taxes ............          (973)            13
     Other changes in operating assets and liabilities:
          Accounts receivable .......................          (561)         2,511
          Accounts receivable - unbilled ............        (2,022)           580
          Other assets ..............................           134           (308)
          Trade accounts payable ....................           698           (381)
          Accrued liabilities .......................           677           (729)
                                                           --------       --------
             Net cash provided by operating
              activities ............................         2,112          5,255
                                                           --------       --------
CASH FLOWS FROM INVESTING ACTIVITIES:
  Acquisition of property and equipment .............           (56)          (309)
                                                           --------       --------
             Net cash used in investing
              activities ............................           (56)          (309)
                                                           --------       --------
CASH FLOWS FROM FINANCING ACTIVITIES:
  Expense incurred in connection with issuance
   of common stock ..................................          (119)
  Exercise of options ...............................            14             78
                                                           --------       --------
             Net cash (used in) provided by financing
               activities ...........................          (105)            78
                                                           --------       --------
Effect of exchange rate on cash and cash
 equivalents ........................................           (16)           (45)
                                                           --------       --------
Net increase in cash and cash equivalents ...........         1,935          4,979
Cash and cash equivalents, beginning of period ......        51,523         70,583
                                                           --------       --------
Cash and cash equivalents, end of period ............      $ 53,458       $ 75,562
                                                           ========       ========
Supplemental disclosure of cash flow information:
  Cash paid during period for taxes .................      $    291       $     43
                                                           ========       ========



           See notes to consolidated condensed financial statements.

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                          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 March 31, 2001, and for
    the three months (thirteen weeks) ended March 31, 2001 and April 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):



                                                      THIRTEEN WEEKS ENDED
                                                 -------------------------------
                                                 APRIL 1, 2000    MARCH 31, 2001
                                                  (UNAUDITED)      (UNAUDITED)
                                                 -------------    --------------
                                                            
Numerator
  Net income ................................      $  1,678       $  2,337
Denominator
  Weighted average common shares ............        27,425         29,490
  Weighted average unvested common shares ...         2,782          3,214
  Weighted average unvested common shares
    subject to repurchase ...................        (1,556)        (2,428)
Denominator for basic calculation ...........        27,425         29,490
Denominator for diluted calculation .........        28,651         30,276
Basic & diluted net income per share ........      $   0.06       $   0.08


3.  Equity Related Charges

    During the three months ended March 31, 2001, the Company granted
    approximately 317,000 stock options to employees at a weighted average
    exercise price of $8.34. During the same period, the Company recorded net
    compensation expense related to all stock options of $180,000.

    Equity related charges to cost of services associated with warrants during
    the first quarter of fiscal year 2001 totaled $431,000.

4.  Reclassification

    The presentation of certain condensed financial information for the thirteen
    weeks ended April 1, 2000 has been reclassified to conform to the current
    quarter'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 and which may be declared preference payments aggregated
    approximately $320,000. 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

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     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 MARCH 31, 2001 COMPARED TO THIRTEEN WEEKS ENDED APRIL 1,
2000

     Revenues

     Revenues increased 11.6% to $18.3 million for the first quarter of fiscal
year 2001 from $16.4 million for the first quarter of fiscal 2000. The increase
in revenues was due primarily to an increase in consulting services performed
for our new and existing clients during the period, and, to a lesser extent,
increased billing rates of our consultants. Our international revenue base
decreased to 17% of our revenues, from 32% in the first quarter of 2000, due
primarily to the domestic revenue generated by our recently acquired subsidiary,
TWG Marketing, Inc.

     Costs of Services

     Direct costs of services increased to $9.5 million for the first quarter of
fiscal year 2001 from $8.5 million in the first quarter of fiscal 2000. As a
percentage of revenues, our gross margin on services as a percentage of revenue
was comparable with the first quarter of 2000 at 48%.

     Non-cash stock based compensation charges were $881,000 and $1.9 million
for the first quarter of fiscal year 2001 and 2000, respectively. Of the
$881,000 compensation charges related to fiscal year 2001, $431,000 was recorded
in connection with warrants issued during the fourth quarter of 1999 and
$450,000 was recorded in connection with stock options previously granted to
employees and non-employee consultants. Non-cash stock based compensation
charges were offset by a $468,000 credit in the first quarter of fiscal year
2001, representing a reversal of previously recorded expense attributable to the
forfeiture and cancellation of unvested stock options in the first quarter of
fiscal year 2001. These charges increased costs of services as a percentage of
revenue by 2.3% and 11.6% for the first quarter of fiscal year 2001 and 2000,
respectively.

     Operating Expenses

     Selling, general and administrative expenses net of goodwill amortization
increased to $4.8 million in the first quarter of fiscal year 2001, or 37.1%,
from $3.5 million in the first quarter of fiscal 2000. As a percentage of
revenues, selling, general and administrative expenses net of goodwill
amortization increased to 26.2% compared to 21.2% for the first quarter of
fiscal year 2001 and 2000, respectively. We incurred an increase in selling,
general and administrative expenses primarily due to the personnel and
technology costs associated with the increased administrative staffing assembled
to support the projected growth of the organization. As a result of a
macroeconomic slow down within the telecommunications industry, actual revenue
growth fell short of projections. Management is evaluating cost reduction
opportunities to better match revenues in the revised macroeconomic environment.

     Non-cash stock based compensation charges of $198,000 and $418,000 for the


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first quarter of fiscal year 2001 and first quarter of fiscal year 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 1.1%
and 2.5% for the first quarter of fiscal year 2001 and the first quarter of
fiscal 2000, respectively.

  Other Income and Expenses

        Interest income was $721,000 and $849,000 for the first quarter of
fiscal year 2001 and first quarter of fiscal year 2000, respectively, and
represented interest earned on invested balances. Interest income decreased in
the first quarter of fiscal 2001 due primarily to the Company's shift to
tax-exempt investments beginning in the third quarter of fiscal 2000 and the
lower interest rates associated with these investments as compared to the rates
on taxable investments. 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 $15,000 and $135,000 for the first
quarter of fiscal year 2001 and the first quarter of fiscal 2000. The loss in
the first quarter of fiscal year 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 quarter of fiscal year 2001.

Income Taxes

        Provision for income taxes for the first quarter of fiscal year 2001 as
a percentage of pretax income was 34.6% compared to 39.7% for the first quarter
of fiscal year 2000. The decrease in income taxes as a percentage of revenues
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 March 31, 2001, we had approximately $75.6 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 $5.3 million and $2.1 million
for the first quarter of fiscal year 2001 and fiscal year 2000, respectively.
Net cash provided by operating activities increased primarily due to the
reduction in accounts receivable balances and the increase in cash generated
through business operations.

     Net cash used in investing activities was $309,000 and $56,000 for the
first quarter of fiscal year 2001 and fiscal year 2000, respectively. Both these
amounts relate to capital expenditures for leasehold improvements, computer
equipment and software by the Company.

     Net cash provided by financing activities was $78,000 for the first quarter
of fiscal year 2001, and related to the exercise of non-qualified stock options.
Net cash used in financing activities was $105,000 for the first quarter of
fiscal year 2000 and related primarily to stock issuance costs associated with
the Company's initial public stock offering on November 22, 1999.

Risk Factors

     Statements in this section and elsewhere in this quarterly report that are
not purely historical, such as statements regarding our expectations, beliefs,

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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.

WE FOCUS EXCLUSIVELY ON SERVING THE TELECOMMUNICATIONS INDUSTRY AND THEREFORE
CHANGES IN THIS INDUSTRY COULD REDUCE OUR CUSTOMER BASE OR CAUSE CUSTOMERS TO
USE INTERNAL RESOURCES

     We derive a significant amount of our revenues from consulting engagements
within the telecommunications industry. Much of our recent growth has arisen
from business opportunities presented by industry trends that include
deregulation, increased competition, technological advances, the growth of
e-business and the convergence of service offerings.

     If these trends change, the demand for telecommunications consulting work
will likely decrease. Currently, many companies in the telecommunications sector
are experiencing declining results of operations and, as a result, these
companies may reduce spending on consultants and new projects. In addition, the
telecommunications industry is in a period of consolidation, which could reduce
the client base, eliminate future opportunities or create conflicts of interest
among clients. Additionally, current and future economic pressures in the
industry may cause telecommunications companies to use internal resources in
lieu of outside consultants or to reduce spending on or defer new projects. As a
result, our customer base and revenues may decline.

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

     A significant portion of our revenues are derived from a relatively limited
number of clients. For example, during the first quarter of fiscal year 2001,
our ten most significant clients accounted for approximately 67% 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 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 the assignments;

     -    consultant turnover, utilization rates and billing rates;

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     -    the loss of key consultants, which could cause clients to end their
          relationship 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

     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 our
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.

THE TELECOMMUNICATIONS INDUSTRY HAS RECENTLY EXPERIENCED DECLINING RESULTS OF
OPERATIONS AND A REDUCTION IN THE AVAILABILITY OF INVESTMENT CAPITAL, AND
INDUSTRY CONDITIONS COULD HARM OUR BUSINESS.

     Our future operating results could be affected by declining results of
operations among telecommunications companies as well as client financial
difficulties. 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 and there have been several bankruptcy filings.

     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. As a
result, current industry conditions could harm our business, financial condition
and results of operations.

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 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


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would decline.

THE MARKET IN WHICH WE COMPETE IS INTENSELY COMPETITIVE AND ACTIONS BY OUR
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;

        -   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


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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 such 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 OUR 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 will 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 our customers' needs, lost business may
result and our financial performance will suffer.

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;


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        -   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;

        -   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

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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 subject matter experts 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.

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 MAY BE 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


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       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 existing business; and

     - adverse effects on the financial statements, including one-time
       write-offs, ongoing charges for amortization of goodwill 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 INTELLECTUAL PROPERTY COULD HARM OUR COMPETITIVE
POSITION AND 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 not protect
proprietary rights as fully as in the United States. Unauthorized disclosure of
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

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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
OUR 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,
the 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 the
Company.

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 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 taxable and non-taxable
short-term investments, the earnings of which are subject to interest rate
fluctuations. The average invested balance during the thirteen weeks ended March
31, 2001 was approximately $73.1 million. We make no attempt to hedge this risk.

Part II. Other Information

Item 1.  Legal Proceedings

     TMNG has not been subject to any material new litigation or claims against
the Company since the time of TMNG's 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


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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 6.  Exhibits and Reports on Form 8-K

         (a) Exhibits

             None.

         (b) Reports on Form 8-K

             TMNG did not file any Reports on Form 8-K during the quarter ended
             March 31, 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             May 15, 2001
-------------------------------   Officer
Richard P. Nespola                (Principal executive officer)

/s/ DONALD E. KLUMB               Chief Financial Officer and            May 15, 2001
-------------------------------   Treasurer
Donald E. Klumb                   (Principal financial officer
                                  and principal accounting
                                  officer)



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