<PAGE>

                                  UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20549

                                    FORM 10-K

                                   (MARK ONE)

            [X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
                         SECURITIES EXCHANGE ACT OF 1934

                   FOR THE FISCAL YEAR ENDED DECEMBER 29, 2001

                                       OR

          [ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
                         SECURITIES EXCHANGE ACT OF 1934

          FOR THE TRANSITION PERIOD FROM ____________ TO ____________ .

                             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 NUMBER)

                             7300 COLLEGE BOULEVARD,
                     SUITE 302, OVERLAND PARK, KANSAS 66210
               (ADDRESS OF PRINCIPAL EXECUTIVE OFFICES) (ZIP CODE)

       REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE: (913) 345-9315

           SECURITIES REGISTERED PURSUANT TO SECTION 12(b) OF THE ACT:

     TITLE OF EACH CLASS               NAME OF EACH EXCHANGE ON WHICH REGISTERED
     -------------------               -----------------------------------------
COMMON STOCK (.001 PAR VALUE)                   NASDAQ NATIONAL MARKET

        SECURITIES REGISTERED PURSUANT TO SECTION 12(g) OF THE ACT: NONE.

Indicate by check mark whether the Registrant (1) has filed all reports 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 by check mark if disclosure of delinquent filers pursuant to Item 405
of Regulation S-K is not contained herein, and will not be contained, to the
best of Registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any amendment to this
Form 10-K. YES [X] NO [ ]

The aggregate market value of the voting stock held by non-affiliates of the
Registrant, as of March 20, 2002 was approximately $57.5 million. As of March
20, 2002, the Registrant had 33,209,960 shares of common stock, par value $0.001
per share (the Common Stock), issued and outstanding.

                       DOCUMENTS INCORPORATED BY REFERENCE

The information required to be provided in Part III (Items 10, 11, 12, and 13)
of this Annual Report on Form 10-K is hereby incorporated by reference from the
Company's Definitive 2002 Proxy Statement which will be filed with the
Securities and Exchange Commission within 120 days of the end of the Company's
fiscal year.

<PAGE>

                       THE MANAGEMENT NETWORK GROUP, INC.

                                    FORM 10-K

                                TABLE OF CONTENTS

<TABLE>
<CAPTION>
                                                                        PAGE
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<S>       <C>                                                           <C>
                                     PART I

Item 1.   Business....................................................    3
Item 2.   Property....................................................   16
Item 3.   Legal Proceedings...........................................   16
Item 4.   Submission of Matters to a Vote of Security Holders.........   16

                                     PART II

Item 5.   Market for Registrant's Common Equity and Related
          Stockholder Matters.........................................   16
Item 6.   Selected Consolidated Financial Data........................   17
Item 7.   Management's Discussion and Analysis of Financial Condition
          and Results of Operations...................................   19
Item 7A.  Quantitative and Qualitative Disclosures About Market
          Risk........................................................   25
Item 8.   Consolidated Financial Statements...........................   26

                                    PART III

Item 9.   Changes in and Disagreements With Accountants on Accounting
          and Financial Disclosure....................................   46
Item 10.  Directors and Executive Officers of the Registrant..........   46
Item 11.  Executive Compensation......................................   48
Item 12.  Security Ownership of Certain Beneficial Owners and
          Management..................................................   49
Item 13.  Certain Relationships and Related Transactions..............   49
Item 14.  Exhibits, Financial Statement Schedules and Reports on
          Form 8-K....................................................   49
SIGNATURES............................................................   49
</TABLE>


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                                     PART I

ITEM 1. BUSINESS

GENERAL

Founded in 1990, The Management Network Group, Inc. (TMNG or the Company), a
Delaware corporation, provides management consulting services to the global
communications and e-business industries, including communications service
providers, technology companies and financial services firms in North America,
Western Europe, Latin America, Asia and other major international markets. TMNG
believes it is unique in its capability to provide a comprehensive business
solution to the communications industry, including strategy consulting and
business planning, product/service concept development and launch, business
model transformation, management support, process and operations infrastructure
development and improvement, and OSS (operations support system) enablement.
TMNG has consulting experience with virtually all major aspects of managing a
global communications company, from strategy to product concept and launch
through order entry, service provisioning, billing, customer care and retention.

TMNG has developed its capabilities to provide a comprehensive solution through
a strategic plan which evaluated the trends occurring in the communications
industry, including most recently, consolidation and business model
transformation resulting from substantially reduced financial support from the
capital markets. TMNG completed two key acquisitions to better position the
Company in the wake of consolidation and re-positioning of its key provider
clients. Those acquisitions were The Weathersby Group, Inc. and Cambridge
Strategic Management Group, Inc. These two organizations focus on strategy and
new product launch initiatives to the global communications industry. We believe
these acquisitions position TMNG uniquely in the market when evaluating clients'
capabilities, while providing key distribution channel elements for the
historical core of TMNG services.

TMNG also utilizes knowledge of service providers' needs to help the software
and technology companies that serve the communications industry to define
strategies, position product offerings, develop applications, respond to
requests for proposals and implement their solutions within the service provider
environment. Recently, TMNG expanded its offering for managed services
outsourcing organizations to provide domain expertise and business process
outsourcing models to facilitate service level agreements and drive cost
reductions. We have also expanded our relationships with off-shore development
firms located primarily in the Asian market that provide high quality, low cost
solutions to the industry. Finally, TMNG facilitates the evaluation of proposed
investments in communications companies and related technology companies by
investment banking and private equity firms by providing prospect validation,
due diligence and post-investment support services.

The Company capitalizes on industry expertise and proprietary toolsets to
provide strategic, management, marketing and operational support to clients.
TMNG's toolsets are consulting guidelines and processes created and updated by
TMNG consultants based on their experience over many consulting engagements.
These toolsets assist clients to improve productivity, gain competitive
advantage, reduce time to market and market entry risk, and increase revenues
and profits. TMNG's services are provided by highly experienced consultants who
average over fifteen years of industry experience. The Company has worked with
numerous global clients, focusing primarily on North America, Western Europe and
Latin America.

The Company maintains a unique technology agnostic and vendor neutral position
to make unbiased evaluations and recommendations that are based on a thorough
knowledge of each solution and each client's situation. Therefore, TMNG is able
to capitalize on extensive experience across complex multi-technology
communications systems environments (front and back office) to provide the most
sound and practical recommendations to clients.

MARKET OVERVIEW

In general, the demand for consulting services increased during the 1990's, and
the overall trend is expected to continue during the next decade. During the
last decade, this trend was especially prevalent for consulting services of
communications and e-commerce consulting firms. The key force that contributed
to this was the growth of


                                       3
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wireline communications providers resulting from the global deregulation of the
communications industry throughout the 1990's. The deregulation of the
communications industry resulted in increased competition by the creation of:
increased demand for fiber and capacity by the new market entrants; a massive
influx of capital to fund carrier entrants and allow existing firms to purchase
aggressively from one another as they expanded; rapid internet growth, spurring
broadband internet access services, digital subscriber line (DSL) internet
access and unbundled local loops that forged the way for wholesale DSL business
models; and technological innovations, allowing new service offerings in the
areas of voice, data, video and content.

During the same period, the wireless communications industry experienced
tremendous growth as personal communications services (PCS) auctions in the
United States and universal mobile telecommunications system (UMTS) broadband
spectrum auctions in Europe resulted in new providers, additional services, and
improved technology. Customer penetration resulted in both residential and
business customers, and services were expanded to include data offerings.

Beginning in 2000 and continuing throughout 2001, various communications
providers began experiencing disappointing financial performances, leading to a
steep decline in the equity value of the entire sector, a decline in financial
support by capital markets, and a number of emerging companies filing for
bankruptcy or becoming distressed. Because the communications companies often
purchased services from one another, the bankruptcies led to a vicious cycle of
industry-wide destabilization with each successive bankruptcy jeopardizing
another company's liquidity position. Additionally, the massive inflow of
capital in communications during the 1990's resulted in an inflated market
scenario, where once solid business models were now ill-equipped to function and
adjust to the macroeconomic environment. The cycle was further perpetuated by
the over saturation of new market entrants where supply far exceeded levels
sustainable by the market, creating pressure for consolidation and funding
contraction. As a result, the industry experienced further destabilizing
bankruptcies.

As macroeconomic forces destabilized the communications industry, outside
consulting services for communications were negatively impacted, including ours.
In 2001, communications companies continued to reduce their demand for external
consultants, seeking instead to utilize more internal resources, or in some
cases delayed capital expenditures related to the launching of new products and
services, particularly in the networks and systems areas. This resulted in a
substantial decline in our revenue and profits during 2001 (See "Risk Factors"
and Item 7, "Management's Discussion and Analysis").

Today the communications industry has reached a point where the bankruptcies and
market consolidations have resulted in fewer market participants. The remaining
companies have an opportunity to increase their percentage of market share,
however they will now compete with comparable large providers. As the capital
markets have not been accessible, companies have focused on improved capital
utilization, maximization of their return on investment, and the uniqueness of
their product offerings. Communications companies continue to cut costs, but
there have been indications that some have begun resuming their launching of new
product offerings, particularly in data and broadband, and have strategically
changed business models, all in an effort to return to growth, profitability,
and improved cash flows. TMNG's value proposition in the current economic
environment is to assist mature companies with the various changes in the
industry, and to assist new entrants in the market with the various challenges
the environment presents, as well as their product offerings.

It has been our experience that because the expertise needed by communications
companies to address the market's needs is typically outside their core
competencies, they must either recruit and employ experts or retain outside
specialists. We believe due to the range of expertise required and the time
associated with hiring and training new personnel, bringing expertise in-house
is often not a viable option. When retaining outside specialists, communications
companies need experts that fully understand the communications industry and can
provide timely and unbiased advice and recommendations. We intend to continue
responding to that need.

BUSINESS STRATEGY

The Company's objective is to establish itself as the communications consulting
company of choice to communications service providers, technology companies, and
financial services and investment banking firms. The following are key
strategies the Company has adopted to pursue this objective.


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- Global transformation

The Company's number one focus is on serving the large, mature, global service
providers. As discussed in the Market Overview section, these providers face
enormous challenges. For many, the revenues from their core business offerings
are declining. Technology and migration to internet protocol solutions is
dramatically reducing pricing power for prime offerings. We believe these global
service providers are in need of assistance in strategically repositioning their
companies and migrating to new offerings in the areas of broadband, content and
services. We believe these global service providers are also in need of
assistance in reducing existing cost structures supporting their present
declining service offerings. TMNG's core offerings are strategically focused on
enhancing customer revenue and reducing customer cost through this
transformation.

- Continue to build the TMNG brand

The Company plans to continue building and communicating the TMNG brand, further
positioning the Company as the consultancy of choice for the global
communications industry. An aggressive advertising campaign, direct marketing
efforts, and other marketing initiatives are underway to continue building
awareness of TMNG and communicating our key strengths, including our uniquely
high level of experienced consultants, our focus on the global communication
industry, our end-to-end solution and our commitment to bringing clients a
positive return on their investment.

- Expand end-to-end solutions

The Company plans to continue expanding its end-to-end solutions offerings, both
by organic expansion and through acquisitions. Organic expansion involves
launching new products and services and generating revenues through jointly
developed offerings by the Company and its subsidiaries. Organic expansion will
also focus on offerings geared towards increasing clients' efficiencies to
increase their returns on investment. The Company has already expanded its
offerings through the acquisition of The Weathersby Group, Inc. (now TMNG
Marketing) in late 2000. TMNG Marketing provides a full spectrum of marketing
consulting services, including customer relationship management (CRM) and
market research, that takes clients from the point of product concept to
customer acquisition and retention. In 2001, the Company acquired Tri-Com
Computer Services, Inc. ("Tri-Com") to create a new wholly owned TMNG
subsidiary, TMNG Technologies. TMNG Technologies provides end-to-end OSS, data
center, systems solutions, data sourcing, legacy integration and middleware
implementation. Additionally, in March 2002, TMNG acquired Cambridge Strategic
Management Group, Inc. ("CSMG"). This newest acquisition provides a wide range
of business strategy services including analyses of industry and competitive
environments; product and distribution strategies; finance, including business
case development, modeling, cost analysis and benchmarking; and due diligence
and risk assessment. The Company plans to continue extending its product
offerings to the communications industry.

- Focused and effective retention and recruitment

TMNG plans to further enhance its business model to accommodate the anticipated
need for consulting services generated by anticipated industry growth when the
industry turns around as we expect. The key elements of the business model
include attracting and retaining high quality, experienced consultants and
creating business processes that can be duplicated worldwide. The Company
reinvigorates existing skill sets of its consultants with proprietary toolsets
that provide methodologies they use to augment their experience and help analyze
and solve clients' problems. TMNG utilizes a network of eRooms to serve as a
knowledge base, enabling consultant collaboration on engagements and providing
support information and updates of TMNG current toolsets and releases of next
generation tools. TMNG aggressively recruits new skill sets as well, to utilize
in the development of new service offerings to customers. Finally, the Company
continues to manage its flexible and unique employee and independent subject
matter expert model to maximize skill set offerings, while minimizing the effect
of unbillable consultant time.

- Expand geographic reach to serve clients' global needs

The Company plans to continue expansion geographically to deliver services and
solution capabilities to client


                                       5
<PAGE>

companies located around the world. In Western Europe and Latin America, we
believe the competitive market expertise of TMNG's U.S. consultants can be a key
factor for foreign companies facing the business issues associated with
deregulation and competition. TMNG's expertise in Europe can also play a key
role for U.S. companies seeking a presence in European business.

SERVICES

Our service offering is dedicated to carriers/service providers,
technology/consulting/software companies, and investment/private equity firms.
Services provided include:

- Business Strategy and Planning. The Company provides a wide range of business
strategy services including analyses of industry and competitive markets;
product and distribution strategies; finance, including business case
development; modeling, cost analysis and benchmarking; and overall risk
assessment.

- Marketing and Customer Relationship Management. The Company provides
strategies and solutions to customers in the analysis of markets and the
definition of technical product requirements. Through the utilization of the
Company's Marketing Assessment Process (MAP(TM)) and CRM2(TM)toolsets, offerings
include the development and revision of strategic plans, including customer
acquisition opportunities and customer loyalty and retention programs;
assistance with the definition of goals; and the establishment and growth of a
company's brand name.

- Operating System Support (OSS). The Company assists customers from the point
of acquisition of their own customers, through latter phases of customer
billings, collections, and accounts receivable management. Through the
utilization of the Company's Lexicon(R) and Carried to Billed to Invoiced
(C-B-I(TM)) toolsets, offerings include the development of business and
operational processes, specification of requirements, selection of vendors and
implementation and testing of the solution.

- Revenue Assurance. The Company provides solutions to assist with opportunities
throughout the customer's revenue cycle. Services provided by the Company's
toolset, Quality Business Controls (QBC(R)), assist with the customer activation
and validation process, bill production and distribution, and receivables
management. Additionally, the Company recently launched its Revenue Guardian(TM)
program, which provides a detailed evaluation of the customer's revenue
impacting processes, identifies short and long-term opportunities for revenue
improvement, quantifies anticipated savings and defines and prioritizes the
initiatives to achieve those savings.

- Corporate Investment Services. The Company provides a wide range of corporate
investment services to investment/private equity firms in connection with
investments and mergers and acquisitions in the communications industry.
Services include evaluation of management teams and business plans,
identification of strengths and weakness of the company, and analyses of
companies' financial models, systems, products and operational and business
processes. Post-investment support is also provided to help customers in the
optimization of their investment. The Company recently launched its Operational
Performance Appraisal (OPA(TM)) toolset as well, which features an assessment of
communications companies' revenue assurance, network inventory, network
operations, order management and provisioning, disaster recovery planning and
e-commerce operations and products. The appraisal seeks to help companies
optimize asset utilization, including network assets and inventory. In addition,
OPA seeks to maximize revenue and minimize associated costs and determine if the
providers' customers are being served effectively.

- Networks. The Company offers auditing, engineering and operations support
systems expertise to plan, maintain, manage, upgrade, reconfigure, expand,
down-size or improve a customer's voice, data and internet protocol (IP)
networks, in response to communications companies reductions in staff in the
engineering and/or network operations areas. Existing network asset inventories
are utilized to identify unused or under-utilized assets to redistribute the
assets as needed in assisting customers produce revenue while managing costs.

- Business Model Transformation. The Company utilizes a semblance of our
individual service offerings to provide solutions to the companies in the
communications industry that have restructured and repositioned their product
offerings, and to provide a complete end-to-end solution for their new
offerings.


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COMPETITION

The market for communications consulting services is highly fragmented and
changing rapidly. TMNG faces competition from major business and strategy
consulting firms, the consulting arms of accounting and other professional
services organizations, large systems integration firms and major global
outsourcing firms, offshore development firms from the Asian markets, equipment
and software firms that have added service offerings, and customers' internal
resources. Many of these competitors are large organizations that provide a
broad range of services to companies in many industries, including the
communications industry. Many of these competitors have significantly greater
financial, technical and marketing resources and greater name recognition than
TMNG. TMNG believes it has a competitive advantage due to its single focus on
the communications industry, and the comprehensive offerings it provides to its
customers. TMNG also believes the profile complement of its professionals
represents a competitive advantage. TMNG's strategy team is comprised of senior
professionals from the academic world complemented by teams of consultants from
the communications industry averaging 15 years of experience.

The Company has faced, and expects to continue to face, additional competition
from new entrants into the communications consulting markets. The Company has
also experienced increased price competition, particularly from larger firms
that have the financial resources to aggressively price engagements that they
have a particular interest in obtaining. Increased competition could result in
further price reductions, fewer client projects, underutilization of
consultants, reduced operating margins, and loss of market share.

With the communications industry experiencing significant economic challenge,
contraction and consolidation, we believe our principal competitive factor is
the ability to enhance client revenue and asset management opportunities and
provide solutions that provide return on investment. In addition, consistency in
responsiveness to the needs of customers, quality and reliability of
consultants, price, project management capability and technical expertise are
the competitive factors we face. The Company's ability to compete depends in
part on performance, a focused service offering formula, the price/value formula
of TMNG service offerings, responsiveness to customer needs and the ability to
hire, retain, and motivate key personnel.

EMPLOYEES

TMNG's ability to recruit and retain experienced, highly qualified and highly
motivated personnel has contributed greatly to the Company's historical success
and will be critical in the future. The Company offers a flexible recruiting
model that enhances the ability to attract consultants and to effectively manage
utilization. TMNG's consultants may work as employees, independent subject
matter experts or as contingent employees. Contingent employees receive
company-paid medical insurance, vacation and other employee benefits. Instead of
receiving a regular salary, however, contingent employees will only be paid for
time spent working on consulting projects for customers or working on internal
projects. Generally, TMNG will offer contingent employment to independent
subject matter experts who are frequently subcontracted into consulting
projects, and have a skill set/offering that is in high demand. TMNG's current
base of independent subject matter experts have specialized expertise in
discrete areas of communications, and TMNG typically deploys these resources
only when their unique expertise/offering is required.

As of December 29, 2001, TMNG utilized approximately 427 consultants. Of these,
147 were employee consultants and approximately 280 were working on engagements
for TMNG as independent subject matter experts. In addition to the consultants,
TMNG has an administrative staff of approximately 31 employees in the accounting
and finance, marketing, recruiting, information technology, human resources and
administrative areas.

BUSINESS SEGMENTS

With the acquisition of Tri-Com in September 2001, management believes the
Company has two segments, only one of which is separately reportable: The
Management Consulting Services segment, and All Other. Management Consulting
Services includes business strategy and planning, marketing and customer
relationship management, operating system support, revenue assurance, corporate
investment services, networks, and business model transformation. All Other
consists of computer hardware commission and rebates received in an agency
capacity in connection with the procurement of hardware for third parties. The
accounting policies for the segments are the same as those described in the
summary of significant accounting policies. Management evaluates performance
based upon operating earnings before interest income (expense), foreign currency
transaction gains (losses), extraordinary items, if any, and income taxes
excluding equity related charges and goodwill and intangibles amortization.
Management also evaluates trade accounts receivable as part of their overall
assessment of the segments' performance. There are no intersegment sales.
Revenues from external customers, a measurement of profit or loss and total
assets for each segment are disclosed in Note 4 to the consolidated financial
statements (see Item 8).

MAJOR CUSTOMERS

As of December 29, 2001, TMNG has provided services to approximately 475
customers. In addition, if customers served by CSMG not previously served by
TMNG are included, the combined number of customers would be approximately 600.
The Company depends on a small number of key customers for a significant portion
of revenues. For fiscal year 2001, revenues from AT&T Corporation and SBC
Communications, Inc. each accounted for more than 10 percent of revenues, and in
the aggregate accounted for more than 24 percent of revenues. Also during fiscal
year 2001, our top ten customers accounted for approximately 60.6% of total
revenue. TMNG generally provides discounted pricing for large projects on fixed
commitments with long-term customers. Because

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TMNG's clients typically engage services on a project basis, their needs for
services vary substantially from period to period. TMNG continues to concentrate
on large global communications companies and seeks to offer broad and
diversified services to these customers. The Company anticipates that operating
results will continue to depend on volume services to a relatively small number
of communication service providers and technology vendors. However, we will
continue to offer services to the new market entrants.

INTELLECTUAL PROPERTY

TMNG's success is dependent, in part, upon proprietary processes and
methodologies, and the Company relies upon a combination of copyright, trade
secret, and trademark law to protect intellectual property. Additionally,
employees and consultants are required to sign non-disclosure agreements to
assist the Company in protecting its intellectual property. The Company has
obtained federal registration for nine trademarks and one copyright in the
United States and has filed applications to register nine other marks in the
United States. It is possible that third parties may challenge TMNG trademark
applications.

The Company does not have any patent protection for the proprietary
methodologies used by TMNG consultants. TMNG does not currently anticipate
applying for patent protection for these toolsets and methodologies.

SEASONALITY

In the past, the Company has experienced seasonal fluctuations in revenue in the
fourth quarter due primarily to the fewer number of business days because of the
holiday periods occurring in that quarter. The Company may continue to
experience fluctuations in revenue in the fourth quarter and may experience
fluctuations in summer and other vacation periods as the Company expands
internationally.

RISK FACTORS

Our business, operating results, and financial condition are subject to numerous
risks, uncertainties, and contingencies, many of which are beyond our control.
The following important factors, among others, could cause actual results to
differ materially from those contemplated in forward-looking statements made in
this Annual Report on Form 10-K or presented elsewhere by management from time
to time. Investors are urged to consider these risk factors when evaluating an
investment in the Company.

WE FOCUS ALMOST EXCLUSIVELY ON SERVING THE COMMUNICATIONS INDUSTRY, WHICH HAS
RECENTLY EXPERIENCED DECLINING RESULTS OF OPERATIONS AND A REDUCTION IN THE
AVAILABILITY OF INVESTMENT CAPITAL. ADVERSE INDUSTRY CONDITIONS HAVE RESULTED IN
DECLINING DEMAND FOR OUR SERVICES AND COULD CONTINUE TO HARM OUR BUSINESS

We have derived almost all of our revenues from consulting engagements within
the communications 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 throughout 2001, many
communications companies, including carriers, equipment manufacturers and other
industry participants have reported declining results of operations and
liquidity, and there have been numerous bankruptcy filings. These events
resulted in a substantial decline in our revenues and profits in 2001. Our
future operating results could continue to be affected by continuing declines in
results of operations and continuing financial difficulties among communications
companies. In addition to continuing decreases in demand for our services,
future client financial difficulties and/or bankruptcies could require us to
write-off receivables that are in excess of our bad debt reserves, which would
harm our results of operations in future fiscal periods. Client bankruptcies
combined with future bankruptcies could also create an at-risk situation on
collected balances for professional services near the bankruptcy filing date. In
addition, the worsening conditions in the communications 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
communications 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 may continue to harm our
business, financial condition and results of operations.


                                       8
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A significant customer committed to a consulting service agreement for which
$7.4 million of consulting fees are required to be utilized in fiscal year 2002.
That customer is experiencing financial difficulties. If the customer is unable
to meet its commitment, that could harm our results of operations in future
fiscal periods.

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 SUBSTANTIALLY REDUCE
REVENUES AND HARM OUR BUSINESS AND LIQUIDITY

We derive a substantial portion of our revenues from a relatively limited number
of clients. For example, during fiscal year 2001, revenues from our ten most
significant clients accounted for approximately 60.6% of revenues. The services
required by any one client may be affected by industry consolidation or adverse
industry conditions, 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 re-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. This is especially true under present economic
conditions impacting the communications industry, a typical result being fewer
opportunities and discounted pricing. Factors that could cause quarterly
fluctuations include:

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

- the size and scope of assignments;

- the form of customer contracts changing primarily from time and materials to
  fixed price or contingent fee, based on project results;

- 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, industry downturns or similar events;

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

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

- fluctuations in the communications 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.


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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 HAVE MADE SEVERAL ACQUISITIONS AND MAY CONTINUE TO MAKE ACQUISITIONS, WHICH
ENTAIL RISKS THAT COULD HARM OUR FINANCIAL PERFORMANCE OR STOCK PRICE, AND MAY
BE DILUTIVE TO EXISTING SHAREHOLDERS

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;

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

- paying too much for an acquired company.

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

In addition, the Financial Accounting Standards Board (FASB) has issued
Statement of Financial Accounting Standards ("SFAS") No. 141 "Business
Combinations" which is to be adopted for all business combinations initiated
after June 30, 2001, and SFAS No. 142 "Accounting for Goodwill and Intangibles",
which prohibits the amortization of all goodwill after fiscal year 2001. The
impact of SFAS 142 will require the annual evaluation of goodwill to determine
if an impairment of goodwill has occurred. If an impairment of goodwill is
deemed to have occurred, this could negatively affect our consolidated results
of operations. The Company is currently assessing what impact, if any, these
accounting standards might have on the Company's consolidated financial
statements.

IF CURRENT MARKET CONDITIONS WITHIN THE COMMUNICATIONS INDUSTRY CONTINUE, OUR
FINANCIAL POSITION AND LIQUIDITY MAY BE DIMINISHED, AND FUNDING FROM THE CAPITAL
MARKETS MAY NOT BE AVAILABLE.

The contraction of the communications industry negatively impacted the Company's
revenues and profitability in 2001. The Company believes it currently has
sufficient cash resources, however, if existing funds are utilized in operations
and acquisitions, it may be difficult to raise additional capital.

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 communications industry. Competition
for these consultants may result in significant increases in our costs to
attract and 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. Any inability to recruit new consultants or retain existing consultants
could impair our ability to service existing engagements or undertake new
engagements. If we are unable to attract and retain quality 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


                                       10
<PAGE>
The market for consulting services to communications 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
communications industry, and local or regional firms specializing in
communications services. In addition, major global outsourcing firms like
International Business Machines Corporation (IBM), Electronic Data Systems
Corporation (EDS) and Computer Sciences Corporation (CSC) have become more
significant competitors recently due to the outsource of certain business
support system (BSS) and operating support system (OSS) operations to them. Some
of these competitors have also formed strategic alliances with communications
and technology companies serving the industry. We also compete with internal
resources of our clients. Although non-exhaustive, a partial list of our
competitors includes:

- American Management Systems;

- Accenture;

- Booz-Allen & Hamilton;

- The Boston Consulting Group;

- Cap Gemini Ernst & Young;

- KPMG;

- PricewaterhouseCoopers; and

- McKinsey & Company.

Many information technology-consulting firms also maintain significant practice
groups devoted to the communications 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 ORGANIC GROWTH IN OUR BUSINESS PRIOR TO 2001, AND HAVE
ACQUIRED SEVERAL COMPANIES IN RECENT FISCAL YEARS. IF OUR BUSINESS GROWS IN THE
FUTURE AND OUR OPERATING RESULTS IMPROVE, OUR OPERATIONAL INFRASTRUCTURE MAY NOT
BE ABLE TO SUPPORT GROWTH AND INTEGRATION


                                       11
<PAGE>
If industry conditions improve and we experience a period of rapid growth in
the future, managerial and operational resources may be strained. Additionally,
the consolidation of corporate and administrative functions in connection with
acquisition integration may also strain leadership and resources. To support any
future 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;

- maintain and expand our financial management information systems; and

- effectively integrate operational, financial and management controls, report
  systems and procedures.

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 communications market. If we are unable to anticipate or respond
adequately to customer 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;


                                       12
<PAGE>

- 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;

- changes in foreign communications markets;

- increased cost of marketing and servicing international clients;

- 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 our business plan in
foreign markets. If we are unable to achieve anticipated levels of revenues from
international operations, our overall revenues and profitability may decline.

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

Although revenues derived from our international engagements declined in 2001,
they 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.

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,
marketing, 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.


                                       13
<PAGE>

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 communications 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 a significant percentage 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.

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 at least
$1.85 million for breach of contract, breach of fiduciary duties and negligence.
In addition, this litigation seeks to recover $320,000 in consulting fees paid
by the former client.

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

The market price of our common stock is volatile and has declined significantly
from its initial public offering price. Our stock price could continue to
decline or fluctuate in response to a variety of factors, including:

- variations in quarterly operating results;

- announcements of technological innovations that render talent outdated;

- future trends in the communications 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;


                                       14
<PAGE>

- any further reduction in our revenues or profits during 2002; and

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

In addition, the stock market itself experiences significant price and volume
fluctuations. These fluctuations particularly affect the market prices of the
securities of many high technology and communications companies. Our stock price
tends to track the stock price of communications companies, which declined
substantially in 2001 and may continue to be depressed in 2002. These broad
market fluctuations could continue to harm the market price of our common stock.

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 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 HAVE SUBSTANTIAL
CONTROL OVER OUR VOTING STOCK 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
our outstanding common stock (and their affiliates) own 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 of our assets) and to control
our management and affairs. 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 our 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. Our stockholders may also 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.


                                       15
<PAGE>

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

Our certificate of incorporation, 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.

FINANCIAL INFORMATION ABOUT FOREIGN AND DOMESTIC OPERATIONS

For information about foreign and domestic operations, see Note 4 of Notes to
Consolidated Financial Statements.

ITEM 2. PROPERTY

The Company's principal executive offices are located in a 4,305 square foot
facility in Overland Park, Kansas. This facility houses the executive, corporate
and administrative offices and is under a lease which expires in August 2005. In
addition to the executive offices, the Company also leases an 8,175 square foot
facility in Bethesda, Maryland for its TMNG Marketing subsidiary, a 14,996
square foot facility in Lanham, Maryland for its TMNG Technology subsidiary, and
a 21,884 square foot facility in Boston, Massachusetts acquired in the
transaction with Cambridge Strategic Management Group, Inc. The Company plans to
close its Lanham office during the first quarter of 2002.

ITEM 3. LEGAL PROCEEDINGS

The Company is involved in legal proceedings and litigation arising in the
ordinary course of business. In addition, customer bankruptcies could result in
a claim on collected balances for professional services near the bankruptcy
filing date. While resolution of legal proceedings, claims and litigation may
have an impact on the financial results for the period in which it is resolved,
the Company believes that the ultimate disposition of these matters will not
have a material adverse effect upon its consolidated results of operations, cash
flows or financial position.

In June 1998, the bankruptcy trustee of a former client, Communications Network
Corporation, sued TMNG for a total of $320,000 in the U.S. Bankruptcy Court in
New York seeking recovery of $160,000 alleging an improper payment of consulting
fees paid by the former client during the period from July 1, 1996, when an
involuntary bankruptcy proceeding was initiated against the former client,
through August 6, 1996, when the former client agreed to an order for relief in
the bankruptcy proceeding, and $160,000 in consulting fees paid by the former
client after August 6, 1996.

The bankruptcy trustee has also sued TMNG for at least $1.85 million for breach
of contract, breach of fiduciary duties and negligence. Although assurance
cannot be given as to the ultimate outcome of this proceeding, TMNG believes the
Company has meritorious defenses to the claims made by the bankruptcy trustee,
including particularly the claims for breach of contract, breach of fiduciary
duty and negligence, and that the ultimate resolution of this matter will not
materially harm our business.

ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

No matters were submitted to a vote of security holders during the fourth
quarter of 2001.

                                     PART II

ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER MATTERS


                                       16
<PAGE>

TMNG's Common Stock is quoted on the Nasdaq National Market under the symbol
TMNG. The high and low closing price per share for the Common Stock for the
fiscal years ending December 29, 2001 and December 30, 2000 by quarter were as
follows:

<TABLE>
<CAPTION>
                                            High           Low
<S>                                        <C>           <C>
First quarter, fiscal year 2001            $14.19        $ 4.50
Second quarter, fiscal year 2001           $ 7.38        $ 3.10
Third quarter, fiscal year 2001            $ 6.97        $ 4.86
Fourth quarter, fiscal year 2001           $ 7.20        $ 5.65

                                            High           Low
First quarter, fiscal year 2000            $40.38        $22.00
Second quarter, fiscal year 2000           $39.50        $12.00
Third quarter, fiscal year 2000            $38.00        $19.44
Fourth quarter, fiscal year 2000           $21.00        $ 7.00
</TABLE>

The above information reflects inter-dealer prices, without retail mark-up,
mark-down or commissions and may not necessarily represent actual transactions.

As of March 20, 2002, the closing price of our Common Stock was $5.50 per share.
At such date, there were approximately 165 holders of record of the Company's
Common Stock.

Holders of Common Stock are entitled to receive ratably such dividends, if any,
as may be declared by the Board of Directors out of funds legally available
therefor. To date, TMNG has not paid any cash dividends on its Common Stock and
does not expect to declare or pay any cash or other dividends in the foreseeable
future.

ITEM 6. SELECTED CONSOLIDATED FINANCIAL DATA

The selected consolidated financial data presented below have been derived from
the Company's consolidated financial statements. The data presented below should
be read in conjunction with Item 7. -- Management's Discussion and Analysis of
Financial Condition and Results of Operations, Item 8. -- Consolidated Financial
Statements and the notes thereto and other financial information appearing
elsewhere in this Annual Report on Form 10-K.

<TABLE>
<CAPTION>
                                                                              FISCAL YEAR ENDED
                                                         ----------------------------------------------------------------
                                                         December 31,  January 2,  January 1,  December 30,  December 29,
                                                             1997         1999        2000         2000          2001
                                                                       (IN THOUSANDS, EXCEPT PER SHARE DATA)
<S>                                                      <C>           <C>         <C>         <C>           <C>
CONSOLIDATED STATEMENTS OF OPERATIONS DATA:

Revenues ............................................      $ 20,184     $ 32,103    $ 50,322     $ 77,727      $ 54,832
Cost of services:
  Direct cost of services ...........................        11,384       17,411      26,109       40,396        27,347
  Equity related charges ............................                        239       2,780        5,519         2,322
                                                           --------     --------    --------     --------      --------
          Total cost of services ....................        11,384       17,650      28,889       45,915        29,669
                                                           --------     --------    --------     --------      --------
Gross profit ........................................         8,800       14,453      21,433       31,812        25,163

Operating expenses:
  Selling, general and administrative expenses ......         3,280        6,158       9,777       16,024        16,767
  Equity related charges ............................                         22       1,998        1,564           843
  Goodwill and intangibles amortization .............                                                 621         1,996
                                                           --------     --------    --------     --------      --------
          Total operating expenses ..................         3,280        6,180      11,775       18,209        19,606
                                                           --------     --------    --------     --------      --------
Income from operations ..............................         5,520        8,273       9,658       13,603         5,557

Other income (expense):
  Interest income ...................................             6           18         277        3,327         2,433
</TABLE>


                                       17
<PAGE>

<TABLE>
<S>                                                      <C>           <C>         <C>         <C>           <C>
  Interest expense ..................................           (30)      (2,054)     (1,998)                       (14)
  Other, net ........................................             8           88         (68)        (152)           (8)
                                                           --------     --------    --------     --------      --------
          Total other income (expense) ..............           (16)      (1,948)     (1,789)       3,175         2,411
Income before provision for income taxes and
  extraordinary item ................................         5,504        6,325       7,869       16,778         7,968
Provision for income taxes ..........................                     (3,282)     (3,208)      (6,711)       (2,360)
                                                           --------     --------    --------     --------      --------
Income before extraordinary item ....................         5,504        3,043       4,661       10,067         5,608
Extraordinary item, net of taxes ....................                                   (200)
                                                           --------     --------    --------     --------      --------
Net income ..........................................      $  5,504     $  3,043    $  4,461     $ 10,067      $  5,608
                                                           ========     ========    ========     ========      ========

Net income before extraordinary item per common share
  Basic .............................................      $   0.24     $   0.14    $   0.20     $   0.36      $   0.19
                                                           ========     ========    ========     ========      ========
  Diluted ...........................................      $   0.24     $   0.13    $   0.20     $   0.34      $   0.18
                                                           ========     ========    ========     ========      ========
Net income per common share
  Basic .............................................      $   0.24     $   0.14    $   0.19     $   0.36      $   0.19
                                                           ========     ========    ========     ========      ========
  Diluted ...........................................      $   0.24     $   0.13    $   0.19     $   0.34      $   0.18
                                                           ========     ========    ========     ========      ========
Weighted average common shares outstanding
  Basic .............................................        22,500       22,500      23,056       28,110        29,736
                                                           ========     ========    ========     ========      ========
  Diluted ...........................................        22,500       22,944      23,807       29,208        30,774
                                                           ========     ========    ========     ========      ========
Pro forma provision for income taxes ................      $ (2,202)    $ (2,530)
                                                           ========     ========
Pro forma net income ................................      $  3,302     $  3,795
                                                           ========     ========
S corporation distributions .........................      $  2,600     $  4,664
                                                           ========     ========
</TABLE>


<TABLE>
<CAPTION>
                                                                 FISCAL YEAR ENDED
                                            ----------------------------------------------------------------
                                            December 31,  January 2,  January 1,  December 30,  December 29,
                                                1997         1999        2000         2000          2001
                                            ------------  ----------  ----------  ------------  ------------
<S>                                         <C>           <C>         <C>         <C>           <C>
CONSOLIDATED BALANCE SHEET DATA:

Net working capital .....................     $ 4,689     $  6,025      $61,419     $ 89,148     $ 94,569
Total assets ............................       5,483       11,006       67,382      119,429      129,042
Total debt (including current debt) .....                   26,017                                    338
Total Stockholders' Equity (deficiency in
  assets) ...............................     $ 4,709     $(18,271)     $63,437     $111,472     $123,992
</TABLE>


Before February 12, 1998, the Company was a subchapter S corporation and,
accordingly, federal and state income taxes were paid at the stockholder level
only. Upon consummation of a leveraged recapitalization in 1998, the Company
terminated its subchapter S corporation status and, accordingly became subject
to federal and state income taxes. The pro forma income statement information
reflects adjustments to historical net income as if the Company had not elected
subchapter S corporation status for federal and state income tax purposes.

On November 22, 1999, the Securities and Exchange Commission declared TMNG's
Registration Statement on Form S-1 (File No. 333-87383) 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. Net proceeds to
TMNG, after deducting underwriting discounts and commissions of $5.5 million and
offering expenses of $1.6 million, were $71.6 million.

On November 29, 1999 TMNG used $22.3 million of the proceeds from its initial
public offering to repay all indebtedness.

On August 2, 2000, the Securities and Exchange Commission declared TMNG's
Registration Statement on Form S-


                                       18
<PAGE>

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
$20.9 million. Proceeds were used for working capital, general corporate
purposes and as possible consideration for acquisitions.

On September 5, 2000, the Company completed its acquisition of The Weathersby
Group, Inc. ("TWG"), a Maryland corporation. The acquisition resulted in a total
purchase price of approximately $19.2 million consisting of $11.2 million cash
and $8.0 million in TMNG stock. Additionally, TMNG incurred direct costs of $1.5
million related to the acquisition.

On September 5, 2001, the Company completed its acquisition of Tri-Com, a
Maryland corporation. The acquisition resulted in a total purchase price of
approximately $5.2 million consisting of $1.8 million cash and $3.0 million in
TMNG stock. Additionally, TMNG incurred direct costs of approximately $160,000
related to the acquisition and recorded this amount as an increase to purchase
price. In addition to the above-mentioned costs, TMNG recorded approximately
$216,000 as an increase to purchase price in connection with the exchange of
the Company's stock options for vested stock appreciation rights held by
Tri-Com employees at the time of the acquisition.

On March 6, 2002, the Company completed its acquisition of CSMG, a Delaware
corporation. The acquisition resulted in a total purchase price of
approximately $46.5 million consisting of $33.0 million cash and $13.5 million
in TMNG stock.

ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS

FORWARD-LOOKING STATEMENTS

Cautionary statement regarding forward-looking information

With the exception of historical information, this report on Form 10-K contains
forward-looking statements as defined in the Private Securities Litigation
Reform Act of 1995 and identified by such words as "will be," "intend,"
"continue," "believe," "may," "expect," "hope," "anticipate," "goal," "forecast"
or other comparable terms. The Company's actual financial condition, results of
operations or business may vary materially from those contemplated by such
forward looking statements and involve various risks and uncertainties,
including but not limited to those discussed in Item 1, "Business - Risk
Factors." Investors are cautioned not to place undue reliance on any
forward-looking statements.

The following discussion should be read in conjunction with the Consolidated
Financial Statements and Notes thereto of the Company included in this Annual
Report on Form 10-K. The forward-looking statements included in this discussion
and elsewhere in this Form 10-K involve risks and uncertainties, including
anticipated financial performance, business prospects, industry trends,
shareholder returns and other matters, which reflect management's best judgment
based on factors currently known. Actual results and experience could differ
materially from the anticipated results and other expectations expressed in the
Company's forward-looking statements as a result of a number of factors,
including but not limited to those discussed in this Item and in Item 1
"Business - Risk Factors."

OVERVIEW

TMNG reports its financial data where each quarter is 13 weeks and ends on a
Saturday. As a result, the fiscal year end is the Saturday which is 13 weeks
from the end of the third fiscal quarter. Fiscal years 2001 and 2000 therefore
ended on December 29, 2001 and December 30, 2000, respectively. The words fiscal
year refer to the fiscal year most closely coinciding with the related calendar
year.

Revenues consist of consulting fees for professional services and related
expense reimbursements. A substantial majority of all consulting services are
contracted on a time and materials basis not to exceed a negotiated contract


                                       19
<PAGE>
price. Fixed price contracts generally involve immaterial amounts and are of a
short duration. Substantially all revenues are recognized in the period in which
the service is performed. Generally a client relationship begins with a
short-term engagement utilizing a few consultants. TMNG's sales strategy focuses
on building long-term relationships with both new and existing clients to gain
additional engagements within existing accounts and referrals for new clients.
Strategic alliances with other companies are also used to sell services. TMNG
anticipates that the Company will continue to do so in the future. Because TMNG
is a consulting company, the Company experiences fluctuations in revenues
derived from clients during the course of a project lifecycle. As a result, the
volume of work performed for specific clients varies from period to period and a
major client from one period may not use TMNG services in another period. In
addition, clients generally may end their engagements with little or no penalty
or notice. If a client engagement ends earlier than expected, the Company must
re-deploy professional service personnel as any resulting unbillable time could
harm margins.

Cost of services consists primarily of client-related compensation for
consultants who are employees and amortization of equity related non-cash
charges incurred in connection with pre-initial public offering grants of equity
securities primarily to consultants, as well as fees paid to independent subject
matter expert organizations and related expense reimbursements. Employee
compensation includes certain unbillable time, training, vacation time, benefits
and payroll taxes. Annual gross margins have ranged from 40.9% to 45.9% during
the period from 1997 to 2001. Margins are primarily impacted by the type of
consulting services provided, the size of service contracts and negotiated
volume discounts, changes in TMNG pricing policies and those of competitors,
utilization rates of consultants and independent subject matter experts; and
employee and independent subject matter expert costs associated with a
competitive labor market.

Operating expenses include selling, general and administrative expenses as well
as equity related non-cash amortization charges incurred in connection
principally with pre-initial public offering grants of equity securities
primarily to principals and certain senior executives. Sales and marketing
expenses consist primarily of personnel salaries, bonuses, and related costs for
direct client sales efforts and marketing staff. The Company primarily uses a
relationship sales model in which partners, principals and senior consultants
generate revenues. In addition, sales and marketing expense includes costs
associated with marketing collateral, product development, trade shows and
advertising. To increase market awareness of the Company, TMNG intends to
continue to expand its direct and indirect marketing and advertising efforts,
both domestically and internationally. General and administrative expenses
consist mainly of accounting and recruiting personnel costs, insurance, rent,
and outside professional services incurred in the normal course of business.

CRITICAL ACCOUNTING POLICIES

The significant accounting policies of TMNG are summarized in Note 1 to the
consolidated financial statements included in Item 8 of this report.

While the selection and application of any accounting policy may involve some
level of subjective judgments and estimates, we believe the following accounting
policies are the most critical to our consolidated financial statements,
potentially involve the most subjective judgments in their selection and
application, and are the most susceptible to uncertainties and changing
conditions:

     -    Allowance for Doubtful Accounts

     -    Impairment of Goodwill and Other Intangibles

     -    Revenue Recognition

Allowance for Doubtful Accounts - Substantially all of our receivables are owed
by companies in the communications industry, whose recent challenges are
described in Item 1, "Business." We typically bill customers for our services
after all or a portion of the services have been performed and require
customers to pay immediately. We attempt to control our credit risk by being
diligent in credit approvals, limiting the amount of credit extended to
customers and monitoring our customers' payment record and credit status as
work is being performed for them.

We recorded bad debt expense in the amounts of $812,000, $1,004,000 and $706,000
for fiscal years 2001, 2000 and 1999, respectively, and our allowance for
doubtful accounts totaled $517,000, $766,000 and $350,000 at the end of fiscal
years 2001, 2000 and 1999, respectively. The calculation of these amounts are
based on our judgment about the anticipated default rate on receivables owed to
us as of the end of the reporting period. That judgment was based on our
uncollected account experience in prior years and our ongoing evaluation of the
credit status of our customers and the communications industry in general.

We have endeavored to mitigate our credit risk by concentrating our marketing
efforts on the largest and most stable companies in the communications industry
and by tightly controlling the amount of credit provided to customers. If we are
unsuccessful in these efforts, or if more of our customers file for bankruptcy
or experience financial difficulties, it is possible that our allowance for
doubtful accounts will be insufficient and we will have a greater bad debt loss
than the amount we reserved, which would adversely affect our cash flow and
financial performance.

Impairment of Goodwill and Other Intangibles - Goodwill and other intangibles
arising from our acquisitions are subjected to periodic review for impairment.
Any impairment charge would be based on the most recent estimates of the
recoverability of the recorded goodwill and intangibles balances. If the value
we assigned to goodwill and other intangibles acquired in an acquisition was
higher than the amounts we currently would expect to realize from the acquired
company, we would be required to write down these assets, which would adversely
affect our financial position and results of operations.

Revenue Recognition - Historically, most of our consulting practice contracts
have been on a fee-for-services basis, in which customers are billed for time
and materials expended in performing their contracts. We have recognized revenue
from customer contracts in the period in which our services are performed.

As we adapt to changes in the communications consulting industry, we may be
required to, or may elect to, enter into more fixed fee or contingent fee
contracts with our customers, in which our compensation could be based on
savings or other variable results achieved, rather than time spent. These types
of contracts are typically more results-oriented and are subject to greater risk
than traditional fee-for-service contracts. CSMG, which we acquired in March
2002, has entered into a significant number of contingent fee consulting
contracts in the past and may continue to do so in the future. Judgments about
the timing and amount of revenue recognized on contingent fee contracts are more
subjective, and are subject to greater uncertainties, than traditional
fee-for-services contracts. Due to the contingent nature of the engagements, the
timing and amount of revenue recognized on contingent fee contracts may be
subject to adjustment or deferral, which could adversely affect our consolidated
financial position, results of operations and liquidity.

RESULTS OF OPERATIONS

FISCAL 2001 COMPARED TO FISCAL 2000

                                    REVENUES

Revenues decreased 29.5% to $54.8 million for fiscal year 2001 from $77.7
million for fiscal year 2000. The decrease in revenues was due primarily to a
deferral or reduction of management consulting demand by the communications and
technology industry resulting primarily from adverse macroeconomic events in
this sector during 2001, including reductions in capital funding, business
failures, and industry restructurings and reorganizations. Additionally, our
international revenue base decreased to 11.7% of total revenues in fiscal year
2001 compared to 23.4% in fiscal year 2000, primarily due to the additional
domestic revenue generated by our recently acquired subsidiaries, TMNG
Marketing, Inc. and TMNG Technologies, Inc., and the decline in services
provided to international customers related to similar adverse macroeconomic
events in those markets. Non-consulting revenues recognized by TMNG Technologies
represented 1.1% of consolidated revenues for fiscal year 2001, and related to
agency commissions received on hardware sales.

                                COST OF SERVICES

Direct cost of services decreased 32.3% to $27.3 million for fiscal year 2001
from $40.4 million for fiscal year 2000. As a percentage of revenues, our gross
margin on direct cost of services was 50.1% for fiscal year 2001


                                       20
<PAGE>

compared to 48.0% for fiscal year 2000. The increase in gross margin as a
percentage of revenue was attributable primarily to cost reductions negotiated
with most of our vendors and the settlement of a customer contract commitment.

Non-cash stock based compensation charges were $2.3 million and $5.5 million for
fiscal year 2001 and fiscal year 2000, respectively. Of the $2.3 million
compensation charges related to fiscal year 2001, $1.2 million was recorded in
connection with pre-initial public offering grants of stock options to employees
and non-employee consultants, offset by a $578,000 credit representing a
reversal of previously recorded expense attributable to the forfeiture and
cancellation of unvested stock options during fiscal year 2001, and $1.7 million
was recorded in connection with the warrant issued during the fourth quarter of
1999. The primary reason for the decrease in non-cash stock based compensation
charges for fiscal year 2001 compared to fiscal year 2000 was the reduction in
the amortization of the deferred compensation charges recorded in connection
with pre-initial public offering grants of non-qualified stock options and the
warrant. These net charges increased costs of services as a percentage of
revenue by 4.2% and 7.1% for fiscal year 2001 and fiscal year 2000,
respectively.

                               OPERATING EXPENSES

In total, operating expenses increased to $19.6 million for fiscal 2001, or 7.7%
from $18.2 million for fiscal year 2000. The major components of this increase
were $1.9 million of goodwill amortization reflecting a full year of
amortization on the acquisition of TMNG Marketing, Inc. recorded in fiscal year
2001, versus $621,000 of goodwill amortization recorded in fiscal year 2000, a
$721,000 decrease in non-cash stock based compensation charges in fiscal year
2001 compared to fiscal year 2000, and a $743,000 increase in selling, general
and administrative expense primarily related to increased personnel costs. As a
percentage of revenues, selling, general and administrative expenses increased
to 30.6% for fiscal year 2001 from 20.6% of revenues for fiscal year 2000. This
percentage increase was primarily 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,
including additional integration of acquisitions to address the economic slow
down within the communications industry. Additionally, late in the third quarter
of fiscal year 2001, three of our executive officers, Richard Nespola, Micky Woo
and Ralph Peck reduced their aggregate base cash compensation by approximately
$450,000 in exchange for grants of non-statutory stock options at fair market
value, contributing to the decrease in selling, general and administrative
expenses. Results of management's cost reduction initiatives gained traction in
the second half of fiscal year 2001, as selling, general and administrative
expenses in that half were essentially the same as selling, general and
administrative expenses reported in the second half of fiscal year 2000.
Management continues to evaluate cost reduction opportunities to better match
revenues and costs in the adverse economic environment.

Non-cash stock based compensation charges of $843,000 and $1.6 million for
fiscal year 2001 and 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 1.5% and 2.0% for fiscal year 2001 and
fiscal year 2000, respectively. The decrease in non-cash stock based
compensation charges for fiscal year 2001 compared to fiscal year 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 $2.4 million and $3.3 million for fiscal year 2001 and
fiscal year 2000, respectively, and represented interest earned on invested
balances. Interest income decreased during fiscal year 2001 due primarily to the
Federal Reserve Bank reducing interest rates during the period, which was
partially offset by larger invested cash balances, and the Company's shift to
tax-exempt investments and the lower interest rates associated with these
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 losses were $8,000 and $152,000 for fiscal year 2001 and fiscal year
2000, respectively. The net loss of $152,000 in fiscal year 2000 related
primarily to foreign currency transaction losses incurred on projects


                                       21
<PAGE>

performed overseas during that year.

                                  INCOME TAXES

Provision for income taxes for fiscal year 2001 as a percentage of pretax income
was 29.6% compared to 40.0% for 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.

FISCAL 2000 COMPARED TO FISCAL 1999

                                    REVENUES

Revenues increased 54.5% to $77.7 million for fiscal year 2000 from $50.3
million for fiscal year 1999. The increase in revenues was due primarily to an
increase in consulting services performed for our new and existing clients
during the period, and increased billing rates of our consultants. Additionally,
international revenue increased 30.9% to $18.2 million for fiscal year 2000 from
$13.9 million for fiscal year 1999, primarily due to an increase in European
business. Additionally, revenues increased due to the purchase of The Weathersby
Group, Inc., an acquisition that closed on September 5, 2000. This acquisition
was accounted for as a purchase, so TWG's revenues for the period from the
closing through the end of the year are included in TMNG's consolidated
revenues.

                                COST OF SERVICES

Direct costs of services increased to $40.4 million for fiscal year 2000 from
$26.1 million for fiscal year 1999. As a percentage of revenues, our gross
margin on services was 48.0% for fiscal year 2000 compared to 48.1% for fiscal
year 1999.

Non-cash stock based compensation charges were $5.5 million and $2.8 million for
fiscal year 2000 and fiscal year 1999, respectively. These equity charges relate
to stock options and warrants granted in 1999 and previously. Of the $5.5
million compensation charges related to fiscal year 2000, $2.7 million was
recorded in connection with the issuance of stock options to employees and
non-employee consultants and $2.8 million was recorded in connection with the
warrant issued during the fourth quarter of 1999. These charges represented 7.1%
of revenues for fiscal year 2000 compared to 5.5% for fiscal year 1999.

                               OPERATING EXPENSES

Selling, general and administrative expenses increased to $16.6 million for
fiscal year 2000, or 69.4% from $9.8 million for fiscal year 1999. Selling,
general and administrative expenses increased to 21.4% of revenues for fiscal
year 2000, from 19.4% of revenues for fiscal year 1999. We incurred an increase
in selling, general and administrative expenses primarily due to the personnel
and technology costs associated with the increased administrative staffing
required to manage and support the growth of the organization, as well as the
amortization of goodwill recorded in connection with The Weathersby Group, Inc.
acquisition.

Non-cash stock based compensation charges of $1.6 million and $2.0 million for
fiscal year 2000 and fiscal year 1999, respectively, were recorded primarily in
connection with the issuance of stock options in fiscal year 1999 and previously
to our senior executives, principals, administration and non-employee directors.
These charges represented 2.0% of revenues for fiscal year 2000, compared to
4.0% of revenues for fiscal year 1999.

                            OTHER INCOME AND EXPENSES

Interest income increased to $3.3 million for the fiscal year 2000, compared to
$277,000 for the fiscal year 1999. Interest income increased primarily due to
the interest received on the net proceeds of the initial public and secondary
offerings. We invest in short-term, high-grade investment instruments.


                                       22
<PAGE>

Interest expense decreased to $0 for fiscal year 2000, compared to $2.0 million
for fiscal year 1999. Interest expense decreased primarily due to the
extinguishment of debt in the fourth quarter of 1999. On November 29, 1999, all
outstanding indebtedness was repaid with $22.3 million of the proceeds from our
November 23, 1999 initial public offering.

Other, net totaled losses of $152,000 and $68,000 for fiscal year 2000 and
fiscal year 1999, respectively, and increased primarily due to foreign currency
transaction losses incurred on overseas projects performed during fiscal year
2000.

                                  INCOME TAXES

Provision for income taxes remained consistent for fiscal year 2000 and fiscal
year 1999 at 40.0% and 40.8%, respectively.

FISCAL 1999 COMPARED TO FISCAL 1998

                                    REVENUES

Revenues increased 56.7% to $50.3 million for fiscal year 1999 from $32.1
million for fiscal year 1998. The increase was primarily attributable to a net
increase in consulting services. The increase in consulting services was due
primarily to a significant increase in services provided to a major customer,
which was offset in part by negotiated volume discounts. Fiscal year 1999
revenues included revenues from services provided to one large customer, which
accounted for 39.6% of revenues during that period. International revenue
expanded to 27.7% of revenues in fiscal year 1999 compared to 16.2% for fiscal
year 1998, primarily due to an increase in European business.

                                COST OF SERVICES

Direct cost of services increased to $26.1 million for fiscal year 1999 from
$17.4 million for fiscal year 1998. Direct cost of services as a percent of
revenue decreased from 54.2% for fiscal year 1998 to 51.9% for fiscal year 1999.
Direct gross margins improved because the consultant mix changed to include more
employees in fiscal year 1999 compared to fiscal year 1998. A greater portion of
full-time employees at a relatively constant utilization rate tends to improve
gross margins because of their overall lower fixed salary compared to the higher
variable costs paid to independent subject matter experts. The margin
improvement provided by increasing the full-time employee base was slightly
offset by discounted customer pricing associated with large engagements.

Non-cash stock based compensation charges of $2.8 million and $239,000 for
fiscal year 1999 and fiscal year 1998, respectively, were recorded in connection
with the issuance of stock options to employees and non-employee consultants.
These charges reduced gross margin by 5.5% in fiscal year 1999.

                               OPERATING EXPENSES

Selling, general and administrative expenses increased to $9.8 million for
fiscal year 1999 from $6.2 million for fiscal year 1998. Selling, general and
administrative expense as a percentage of revenue increased to 19.4% for fiscal
year 1999 from 19.2% for fiscal year 1998. The Company incurred an increase in
marketing costs primarily as a result of an increase in sales bonuses associated
with implementation of a revised incentive program for consultants and increased
revenues for fiscal year 1999. TMNG incurred an increase in selling, general and
administrative expense primarily due to the personnel and facility costs
associated with opening a new corporate office in the third quarter of fiscal
year 1998 and increased administrative staffing to manage and support the growth
of the organization. TMNG also hired managing directors to lead the European and
Canadian subsidiaries at the beginning of fiscal year 1999. In addition, the
Company established reserves of $160,000 for a potential claim brought against
TMNG by a trustee in bankruptcy for a former client.

Non-cash stock based compensation charges of $2.0 million and $22,000 for fiscal
year 1999 and fiscal year 1998,


                                       23
<PAGE>

respectively, were recorded in connection with the issuance of stock options to
partners, principals and certain senior executives and non-employee directors.
These charges increased operating expenses as a percentage of revenue by 4.0% in
fiscal year 1999.

                            OTHER INCOME AND EXPENSES

Interest expense decreased to $2.0 million for fiscal year 1999, compared to
$2.1 million for fiscal year 1998. Interest expense primarily related to $24.0
million of borrowings under our term loans incurred in connection with the
recapitalization in February 1998 and borrowings on the revolving credit
facility. On November 29, 1999, all outstanding indebtedness was repaid with
$22.3 million of the proceeds from the November 23, 1999 initial public
offering. In conjunction with the early extinguishment of debt, deferred
financing charges of $200,000, net of tax, were written-off and recorded as an
extraordinary loss in the fourth quarter of fiscal year 1999.

                                  INCOME TAXES

Provision for income taxes for fiscal year 1999 as a percentage of pretax income
was 40.8% compared to 51.9% for fiscal year 1998. The 51.9% effective tax rate
for fiscal year 1998 exceeded the statutory federal income tax rate primarily
due to the establishment of net deferred taxes upon conversion to a C
corporation on February 12, 1998 in connection with the leveraged
recapitalization and state income taxes. These increases in income tax expense
were partially reduced by the exclusion of net income prior to February 12,
1998, representing S corporation net income. Prior to the conversion to a C
corporation on February 12, 1998, TMNG did not report tax expense as an S
corporation.

SUMMARY OF QUARTERLY RESULTS OF OPERATIONS -- UNAUDITED

<TABLE>
<CAPTION>
                                                                          QUARTER ENDED
                                                      -----------------------------------------------------
                                                      APRIL 1,      JULY 1,     SEPTEMBER 30,  DECEMBER 30,
                                                        2000         2000           2000           2000
                                                      --------      -------     -------------  ------------
<S>                                                   <C>           <C>         <C>            <C>
Revenues .......................................      $ 16,402      $ 19,464      $ 20,003       $ 21,858
                                                      ========      ========      ========       ========
Gross profit ...................................      $  5,957      $  7,354      $  8,462       $ 10,039
                                                      ========      ========      ========       ========
Net income .....................................      $  1,678      $  2,253      $  3,060       $  3,076
                                                      ========      ========      ========       ========
Basic net income per common share ..............      $   .061      $   .082      $   .108       $   .105
                                                      ========      ========      ========       ========
Diluted net income per common share ............      $   .059      $   .079      $   .104       $   .102
                                                      ========      ========      ========       ========
</TABLE>


<TABLE>
<CAPTION>
                                                                          QUARTER ENDED
                                                      -----------------------------------------------------
                                                      MARCH 31,      JUNE 30,   SEPTEMBER 29,  DECEMBER 29,
                                                        2001          2001          2001           2001
                                                      --------      --------    -------------  ------------
<S>                                                   <C>           <C>         <C>            <C>
Revenues .......................................      $ 18,334      $ 13,691      $ 12,231       $ 10,576
                                                      ========      ========      ========       ========
Gross profit ...................................      $  8,377      $  6,092      $  5,826       $  4,869
                                                      ========      ========      ========       ========
Net income .....................................      $  2,337      $  1,428      $  1,131       $    713
                                                      ========      ========      ========       ========
Basic net income per common share ..............      $   .079      $   .048      $   .038       $   .024
                                                      ========      ========      ========       ========
Diluted net income per common share ............      $   .077      $   .047      $   .037       $   .023
                                                      ========      ========      ========       ========
</TABLE>


                                       24
<PAGE>

LIQUIDITY AND CAPITAL RESOURCES

Net cash provided by operating activities was $20.9 million, $10.0 million and
$5.0 million for fiscal year 2001, fiscal year 2000 and fiscal year 1999,
respectively. Of the $20.9 million of net cash provided by operating activities
in 2001, $5.6 million represented an increase due to earnings, with the
remainder 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 $5.6 million, $12.3 million and
$443,000 for fiscal year 2001, fiscal year 2000 and fiscal year 1999,
respectively. Cash used for acquisitions was $4.7 million and $11.6 million in
fiscal year 2001 and fiscal year 2000, respectively, and relates to the Tri-Com
Computer Services, Inc. and The Weathersby Group, Inc. acquisitions,
respectively. Capital expenditures of $724,000, $713,000 and $443,000 for fiscal
years 2001, 2000 and 1999, respectively, relate to the capitalization of
leasehold improvements, computer equipment and software by the Company.
Additionally, during fiscal 2001 the Company made loans to three officers of
TMNG, Inc., of which $200,000 was outstanding as of December 29, 2001. The
maximum available borrowings under the loan agreements between the three
officers and the Company are $1,300,000 in total.

Net cash provided by financing activities was $509,000, $21.4 million and $46.0
million for fiscal years 2001, 2000 and 1999, respectively. Cash provided in
fiscal year 2001 related to proceeds from the exercise of employee stock options
as well as common stock issued by the Company as part of its employee stock
purchase program. Net proceeds from the Company's secondary public offering was
$20.9 million in fiscal year 2000. Net proceeds from the Company's initial
public offering was $71.6 million in fiscal year 1999. Approximately $22.3
million of the proceeds from the initial public offering was used to repay
outstanding debt.

At December 29, 2001, TMNG had approximately $86.4 million in cash and cash
equivalents which was reduced to $53.4 million subsequent to the acquisition
discussed below. TMNG believes it has sufficient cash to meet anticipated cash
requirements, including anticipated capital expenditures and consideration for
possible acquisitions, for at least the next 12 months. The Company has
established a flexible model that provides a lower fixed cost structure than
most consulting firms, enabling TMNG to scale operating cost structures more
quickly based on market conditions.

On March 6, 2002, TMNG acquired Cambridge Strategic Management Group, Inc.
("CSMG") of Boston, Massachusetts. In an asset purchase agreement between TMNG
and CSMG and the ultimate shareholder of CSMG, TMNG agreed to pay, in exchange
for the business and primary assets of CSMG, an amount equal to $46.5 million,
as the initial purchase price, payable in 2,892,800 newly-issued and
unregistered shares of common stock, representing $13.5 million, calculated in
accordance with the provisions of the Asset Purchase Agreement at a fixed price
of $4.66 per share, and $33.0 million cash consideration. Funding for the
acquisition was provided by available cash resources.

During fiscal year 2001, one member of the TMNG board of directors was also a
director of a customer with which TMNG did business. Additionally, during fiscal
year 2001, TMNG performed services for one customer of which one member of the
TMNG board of directors owns a partial equity interest. The Company earned
revenues from these customers of approximately $2.3 million. Additionally,
during fiscal year 2001, TMNG made payments of approximately $70,000 to a legal
firm of which one member of the TMNG board of directors owns a partial equity
interest. Such payments were for legal services related to matters arising in
the normal course of business. The above transactions were conducted on an
arms-length basis.

ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

The Company does not invest excess funds in derivative financial instruments or
other market rate sensitive instruments for the purpose of managing its foreign
currency exchange rate risk. The Company invests excess funds in short-term
investments, the yield of which is exposed to interest rate market risk.

The Company does not have material exposure to market related risks. Foreign
currency exchange rate risk may become material given U.S. dollar to foreign
currency exchange rate changes and significant increases in international
engagements denominated in the local currency of the Company's clients.


                                       25
<PAGE>
ITEM 8. CONSOLIDATED FINANCIAL STATEMENTS

                          INDEPENDENT AUDITORS' REPORT


TO THE BOARD OF DIRECTORS OF

The Management Network Group, Inc.
Overland Park, Kansas

We have audited the accompanying consolidated balance sheets of The Management
Network Group, Inc. and subsidiaries as of December 29, 2001 and December 30,
2000 and the related consolidated statements of income and comprehensive income,
stockholders' equity and cash flows for the fiscal years ended December 29,
2001, December 30, 2000 and January 1, 2000. These financial statements are the
responsibility of the Company's management. Our responsibility is to express an
opinion on these financial statements based on our audits.

We conducted our audits in accordance with auditing standards generally accepted
in the United States of America. Those standards require that we plan and
perform the audit to obtain reasonable assurance about whether the financial
statements are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audits provide a
reasonable basis for our opinion.

In our opinion, such consolidated financial statements present fairly, in all
material respects, the financial position of the companies as of December 29,
2001 and December 30, 2000, and the results of their operations and their cash
flows for the fiscal years ended December 29, 2001, December 30, 2000 and
January 1, 2000 in conformity with accounting principles generally accepted in
the United States of America.


                                        /s/  DELOITTE & TOUCHE LLP

                                        Kansas City, Missouri
                                        February 13, 2002
                                        (except as to Note 13, which is as of
                                        March 6, 2002)


                                       26
<PAGE>
                       THE MANAGEMENT NETWORK GROUP, INC.

                           CONSOLIDATED BALANCE SHEETS
                        (IN THOUSANDS, EXCEPT SHARE DATA)

                                     ASSETS


<TABLE>
<CAPTION>
                                                                            DECEMBER 30,     DECEMBER 29,
                                                                               2000             2001
                                                                            ------------     ------------
<S>                                                                         <C>              <C>
CURRENT ASSETS:
  Cash and cash equivalents ..........................................       $  70,583        $  86,396
  Receivables:
     Accounts receivable .............................................          17,985            8,518
     Accounts receivable -- unbilled .................................           8,023            2,962
                                                                             ---------        ---------
                                                                                26,008           11,480
     Less: Allowance for doubtful accounts ...........................            (766)            (517)
                                                                             ---------        ---------
                                                                                25,242           10,963
     Other assets ....................................................           1,280            2,071
                                                                             ---------        ---------
          Total current assets .......................................          97,105           99,430
                                                                             ---------        ---------
Property and Equipment, net ..........................................           1,298            1,686
Goodwill, net ........................................................          18,016           22,147
Intangibles, net .....................................................                            1,191
Deferred Tax Asset ...................................................           3,010            4,080
Other assets .........................................................                              508
                                                                             ---------        ---------
Total Assets .........................................................       $ 119,429        $ 129,042
                                                                             =========        =========
CURRENT LIABILITIES:
  Trade accounts payable .............................................       $   1,282        $     210
  Accrued payroll, bonuses and related expenses ......................           4,722            1,393
  Other accrued liabilities ..........................................           1,953            3,258
                                                                             ---------        ---------
          Total current liabilities ..................................           7,957            4,861
                                                                             ---------        ---------
Noncurrent liabilities ...............................................                              189

STOCKHOLDERS' EQUITY;
  Common stock:
     Voting -- $.001 par value, 100,000,000 shares authorized;
     29,465,808 shares issued and outstanding on December 30,
     2000, 30,204,919 shares issued and outstanding on
     December 29, 2001 ...............................................              29               30
  Preferred stock -- $.001 par value, 10,000,000 shares
     authorized; no shares issued or outstanding
  Additional paid-in capital .........................................         136,917          141,451
  Accumulated deficit ................................................         (22,071)         (16,463)
  Accumulated other comprehensive income --
   Foreign currency translation adjustment ...........................              35               17
  Unearned compensation ..............................................          (3,438)          (1,043)
                                                                             ---------        ---------
          Total stockholders' equity .................................         111,472          123,992
                                                                             ---------        ---------
Total Liabilities and Stockholders' Equity ...........................       $ 119,429        $ 129,042
                                                                             =========        =========
</TABLE>

                 See notes to consolidated financial statements.


                                       27
<PAGE>

                       THE MANAGEMENT NETWORK GROUP, INC.

           CONSOLIDATED STATEMENTS OF INCOME AND COMPREHENSIVE INCOME
                      (IN THOUSANDS, EXCEPT PER SHARE DATA)


<TABLE>
<CAPTION>
                                                                           FISCAL YEAR ENDED
                                                               -----------------------------------------
                                                               JANUARY 1,     DECEMBER 30,  DECEMBER 29,
                                                                  2000           2000           2001
                                                               ----------     ----------    ------------
<S>                                                            <C>            <C>           <C>
Revenues .................................................      $ 50,322       $ 77,727       $ 54,832
Cost of Services:
  Direct cost of services ................................        26,109         40,396         27,347
  Equity related charges .................................         2,780          5,519          2,322
                                                                --------       --------       --------
          Total cost of services .........................        28,889         45,915         29,669
                                                                --------       --------       --------
Gross Profit .............................................        21,433         31,812         25,163
Operating Expenses:
  Selling, general and administrative ....................         9,777         16,024         16,767
  Equity related charges .................................         1,998          1,564            843
  Goodwill and intangibles amortization ..................                          621          1,996
                                                                --------       --------       --------
          Total operating expenses .......................        11,775         18,209         19,606
                                                                --------       --------       --------
Income From Operations ...................................         9,658         13,603          5,557
Other Income (Expense):
  Interest income ........................................           277          3,327          2,433
  Interest expense .......................................        (1,998)                          (14)
  Other, net .............................................           (68)          (152)            (8)
                                                                --------       --------       --------
          Total other income (expense) ...................        (1,789)         3,175          2,411
                                                                --------       --------       --------
Income Before Provision for Income Taxes and Extraordinary
  Item ...................................................         7,869         16,778          7,968
Provision for Income Taxes ...............................        (3,208)        (6,711)        (2,360)
                                                                --------       --------       --------
Income Before Extraordinary Item .........................         4,661         10,067          5,608
Extraordinary Item .......................................
  Loss on debt extinguishment, net of tax benefit of $133           (200)
                                                                --------       --------       --------
Net Income ...............................................         4,461         10,067          5,608
Other Comprehensive Income (Loss) --
  Foreign currency translation adjustment.................            (4)            37            (18)
                                                                --------       --------       --------
Comprehensive Income .....................................      $  4,457       $ 10,104        $ 5,590
                                                                ========       ========        =======
Income Before Extraordinary Item Per Common Share
  Basic ..................................................      $   0.20       $   0.36       $   0.19
                                                                ========       ========       ========
  Diluted ................................................      $   0.20       $   0.34       $   0.18
                                                                ========       ========       ========
Net Income Per Common Share
  Basic ..................................................      $   0.19       $   0.36       $   0.19
                                                                ========       ========       ========
  Diluted ................................................      $   0.19       $   0.34       $   0.18
                                                                ========       ========       ========
Shares Used in Calculation of Income Before Extraordinary
  Item and Net Income Per Common Share
  Basic ..................................................        23,056         28,110         29,736
                                                                ========       ========       ========
  Diluted ................................................        23,807         29,208         30,774
                                                                ========       ========       ========
</TABLE>


                 See notes to consolidated financial statements.


                                       28
<PAGE>

                       THE MANAGEMENT NETWORK GROUP, INC.

                      CONSOLIDATED STATEMENTS OF CASH FLOWS
                                 (IN THOUSANDS)


<TABLE>
<CAPTION>
                                                                             FISCAL YEAR ENDED
                                                                 -----------------------------------------
                                                                 JANUARY 1,    DECEMBER 30,   DECEMBER 29,
                                                                    2000           2000           2001
                                                                 ----------    -----------    ------------
<S>                                                              <C>           <C>            <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
  Net income ...............................................      $  4,461       $ 10,067       $  5,608
  Add-back: Extraordinary item .............................           200
                                                                  --------       --------       --------
  Income before extraordinary item .........................         4,661         10,067          5,608
  Adjustments to reconcile income before extraordinary item
    to net cash provided by operating activities:
    Depreciation and amortization ..........................           275            910          2,543
    Stock option and bonus share compensation ..............         4,778          7,083          3,165
    Income tax benefit(increase) realized upon
     exercise of stock options .............................           412          1,499             (9)
    Provision for deferred income taxes ....................        (1,952)        (1,847)           111
    Loss on disposition of assets ..........................             2
    Other changes in operating assets and liabilities, net
      of business acquisitions:
      Accounts receivable ..................................        (2,057)        (6,279)         9,546
      Accounts receivable -- unbilled ......................        (1,612)        (3,160)         5,100
      Other assets .........................................          (995)          (127)          (659)
      Trade accounts payable ...............................           (71)        (1,377)        (1,592)
      Trade accounts payable -- related party ..............          (332)
      Accrued liabilities ..................................         1,857          3,182         (2,917)
                                                                  --------       --------       --------
         Net cash provided by operating activities .........         4,966          9,951         20,896
                                                                  --------       --------       --------
CASH FLOWS FROM INVESTING ACTIVITIES:
  Acquisition of business, net of cash acquired ............                      (11,555)        (4,650)
  Acquisition of property and equipment, net................          (443)          (713)          (724)
  Loans to officers, net....................................                                        (200)
                                                                  --------       --------       --------
         Net cash used in investing activities .............          (443)       (12,268)        (5,574)
                                                                  --------       --------       --------
CASH FLOWS FROM FINANCING ACTIVITIES:
  Net borrowings under revolving credit facility ...........        (2,017)
  Issuance of common stock, net of expenses ................        71,618         20,875            221
  Payments made on long-term obligations ...................       (24,000)                          (48)
  Exercise of options ......................................           444            475            336
                                                                  --------       --------       --------
         Net cash provided by financing activities                  46,045         21,350            509
                                                                  --------       --------       --------
Effect of exchange rate on cash and cash equivalents .......            (4)            27            (18)
                                                                  --------       --------       --------
Net increase in cash and cash equivalents ..................        50,564         19,060         15,813
Cash and cash equivalents, beginning of period .............           959         51,523         70,583
                                                                  --------       --------       --------
Cash and cash equivalents, end of period ...................      $ 51,523       $ 70,583       $ 86,396
                                                                  ========       ========       ========
Supplemental disclosure of cash flow information:
  Cash paid during period for interest .....................      $  2,324       $              $     14
                                                                  ========       ========       ========
  Cash paid during period for taxes ........................      $  5,140       $  6,357       $  2,385
                                                                  ========       ========       ========
Supplemental disclosure of non-cash investing and financing
  transactions-

  Acquisition of business:
    Fair value of assets acquired ..........................                     $  3,664       $  3,655
    Liabilities incurred or assumed ........................                     $ (2,275)      $ (1,652)
    Common stock issued ....................................                     $  8,000       $  3,000
</TABLE>


                 See notes to consolidated financial statements.


                                       29
<PAGE>

                       THE MANAGEMENT NETWORK GROUP, INC.

                 CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
                        (In thousands, except share data)


<TABLE>
<CAPTION>
                                                              COMMON STOCK
                                                            $.0406 PAR 1997;
                                                            NO PAR COMMENCING
                                                            FEBRUARY 12, 1998
                                                               $.001 PAR
                                                               COMMENCING
                                                            AUGUST 27, 1999
                                                                 VOTING                    ADDITIONAL
                                                      ---------------------------            PAID-IN
                                                        SHARES          AMOUNT               CAPITAL
                                                      -----------     -----------          -----------
<S>                                                   <C>             <C>                  <C>
Balance, January 3, 1999                               22,500,000     $    18,631                   --
Issuance of options                                                                        $    11,203
Exercise of options                                       231,169                                  444
Stock compensation                                                                               1,416
Other comprehensive income --
 Foreign currency translation adjustment
Issuance of common stock, net                           4,686,201               4               72,054
Tax benefit due to exercise of stock options                                                       412
Adjustment to reflect change in par value                                 (18,608)              18,608
Net income

                                                      -----------     -----------          -----------
Balance, January 1, 2000                               27,417,370              27              104,137
Issuance of options                                                                                144
Exercise of options                                       276,183                                  475
Cancellation of options                                                                           (982)
Exercise and amortization of warrant                      424,098               1                2,819
Stock compensation                                                                                 (49)
Other comprehensive income --
 Foreign currency translation adjustment
Issuance of common stock, net                           1,000,000               1               20,874
Tax benefit due to exercise of stock options                                                     1,499
Acquisition of subsidiary                                 348,157                                8,000
Net income

                                                      -----------     -----------          -----------
Balance, December 30, 2000                             29,465,808              29              136,917
Exercise of options                                       196,433                                  336
Cancellation of options                                                                           (954)
Amortization of warrant cost                                                                     1,721
Employee stock purchase plan                               52,261                                  222
Stock compensation                                                                                 (25)
Other comprehensive income --
 Foreign currency translation adjustment
Stock options issued in exchange for Tri-Com SAR's                                                 244
Reduction of tax benefit due to exercise of
 stock options                                                                                      (9)
Acquisition of subsidiary                                 490,417               1                2,999
Net income

                                                      -----------     -----------          -----------
Balance, December 29, 2001                             30,204,919     $        30          $   141,451
                                                      ===========     ===========          ===========
</TABLE>


<TABLE>
<CAPTION>
                                                                      ACCUMULATED
                                                                        OTHER
                                                       RETAINED      COMPREHENSIVE
                                                       EARNINGS         INCOME          UNEARNED
                                                       (DEFICIT)       (LOSSES)       COMPENSATION       TOTAL
                                                      -----------    -------------    ------------   -------------
<S>                                                   <C>            <C>              <C>            <C>
Balance, January 3, 1999                              $   (36,599)   $          2     $      (305)   $    (18,271)
Issuance of options                                                                       (11,203)
Exercise of options                                                                                           444
Stock compensation                                                                          2,921           4,337
Other comprehensive income --
 Foreign currency translation adjustment                                       (4)                             (4)
Issuance of common stock, net                                                                              72,058
Tax benefit due to exercise of stock options                                                                  412
Adjustment to reflect change in par value
Net income                                                  4,461                                           4,461

                                                      -----------     -----------     -----------     -----------
Balance, January 1, 2000                                  (32,138)             (2)         (8,587)         63,437
Issuance of options                                                                          (144)
Exercise of options                                                                                           475
Cancellation of options                                                                       982
Exercise and amortization of warrant                                                                        2,820
Stock compensation                                                                          4,311           4,262
Other comprehensive income --
 Foreign currency translation adjustment                                       37                              37
Issuance of common stock, net                                                                              20,875
Tax benefit due to exercise of stock options                                                                1,499
Acquisition of subsidiary                                                                                   8,000
Net income                                                 10,067                                          10,067

                                                      -----------     -----------     -----------     -----------
Balance, December 30, 2000                                (22,071)             35          (3,438)        111,472
Exercise of options                                                                                           336
Cancellation of options                                                                       954
Amortization of warrant cost                                                                                1,721
Employee stock purchase plan                                                                                  222
Stock compensation                                                                          1,469           1,444
Other comprehensive income --
 Foreign currency translation adjustment                                      (18)                            (18)
Stock options issued in exchange for Tri-Com SAR's                                            (28)            216
Reduction of tax benefit due to exercise of
 stock options                                                                                                 (9)
Acquisition of subsidiary                                                                                   3,000
Net income                                                  5,608                                           5,608

                                                      -----------     -----------     -----------     -----------
Balance, December 29, 2001                            $   (16,463)    $        17     $    (1,043)    $   123,992
                                                      ===========     ===========     ===========     ===========
</TABLE>


                 See notes to consolidated financial statements


                                       30
<PAGE>

                       THE MANAGEMENT NETWORK GROUP, INC.

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

1. ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Nature of Operations -- The Management Network Group, Inc. ("TMNG" or the
"Company") was formed on April 1, 1993 as a management consulting firm
specializing in global competitive communications. Primary services include
providing management consulting services to wireless and wireline communications
carriers in all industry segments, and the technology and investment firms that
support the communications industry. A majority of the Company's revenues are to
customers in the United States, however the Company also provides services to
customers in Europe, specifically the United Kingdom, and other foreign
countries. The Company's business is international in scope with corporate
offices in Overland Park, Kansas.

Principles of Consolidation -- The consolidated statements include the accounts
of TMNG and its wholly-owned subsidiaries, The Management Network Group Europe
Ltd. ("TMNG-Europe"), formed on March 19, 1997, based in the United Kingdom; The
Management Network Group Canada Ltd. ("TMNG-Canada"), formed on May 14, 1998,
based in Toronto, Canada; TMNG.com, Inc., formed in June 1999; TMNG Marketing,
Inc. acquired on September 5, 2000; and TMNG Technologies, Inc. acquired on
September 5, 2001. All significant intercompany accounts and transactions have
been eliminated in consolidation.

Fiscal Year -- The Company has a 52/53 week fiscal year ending on the Saturday
nearest December 31. The fiscal years ended December 29, 2001, December 30, 2000
and January 1, 2000 each had 52 weeks and are referred to herein as fiscal year
2001, 2000 and 1999, respectively. TMNG-Europe and TMNG-Canada maintain year-end
dates of December 31.

Revenue Recognition -- Time and materials service revenues and related time and
materials service costs are recorded in the period in which the service is
performed. Fixed price service contract revenues and related costs are
recognized upon contract completion under the completed contract method.

The Company enters into both time and materials and fixed price contracts with
its customers. A substantial majority of TMNG's contracts are based upon time
and materials not to exceed total contract price. Under a time and materials
contract the customer pays a negotiated hourly or daily rate for all services
performed plus expenses incurred. Under a fixed price contract the customer pays
a predetermined fixed price for all services performed regardless of the
professional time required. Fixed price contracts generally involve immaterial
amounts and are of short duration.

Cash and Cash Equivalents -- Cash and cash equivalents include cash on hand and
short-term investments with original maturities of three months or less when
purchased.

Fair Value of Financial Instruments -- The fair value of current financial
instruments approximates the carrying value because of the short maturity of
these instruments.

Property and Equipment -- Property and equipment are stated at cost less
accumulated depreciation and amortization. Maintenance and repairs are charged
to expense as incurred. Depreciation is based on the estimated useful lives of
the assets and is computed using the straight-line method. Asset lives range
from three to seven years for computers and equipment. Leasehold improvements
are capitalized and amortized over the life of the lease.

Goodwill -- The Company recorded $18,652,000 of goodwill in connection with the
acquisition of The Weathersby Group, Inc. ("TWG") and has reported the goodwill
as cost less accumulated amortization using the straight-line method over ten
years. The Company recorded goodwill amortization of $1,865,000 and $621,000 in
fiscal years 2001 and 2000, respectively. Additionally, the Company has
preliminarily recorded $5,981,000 of goodwill in connection with the acquisition
of Tri-Com Computer Services, Inc. ("Tri-Com"). The Company has not recorded
goodwill amortization in connection with this item in accordance with the
provisions of a recently issued accounting pronouncement. The Company, using its
best estimates based on reasonable and supportable assumptions and projections,
reviews for impairment long-lived assets and certain identifiable intangibles to
be held and used whenever events or changes in circumstances indicate that the
carrying amount of its assets might not be recoverable, and has concluded no
financial statement adjustment is required.

                                       31
<PAGE>
 Intangibles - Intangible assets are stated at cost less accumulated
amortization, and represent customer lists acquired from Tri-Com, a subsidiary
purchased by the company in September 2001. Amortization is based on an
estimated useful life of four years and is amortized on a straight-line basis.
During fiscal year 2001, amortization expense totaled $108,000.

Income Taxes -- The Company recognizes a liability or asset for the deferred tax
consequences of temporary differences between the tax basis of assets or
liabilities and their reported amounts in the financial statements. A valuation
allowance is provided when, in the opinion of management, it is more likely than
not that some portion or all of a deferred tax asset will not be realized.

Use of Estimates -- The preparation of financial statements in conformity with
accounting principles generally accepted in the United States of America
requires management to make estimates and assumptions that affect the reported
amounts of assets and liabilities and disclosure of contingent assets and
liabilities at the date of the financial statements and the reported amounts of
revenues and expenses during the reporting period. Actual results could differ
from those estimates.

Foreign Currency Transactions and Translation -- TMNG-Europe and TMNG-Canada
both conduct business primarily denominated in their respective local currency.
Assets and liabilities have been translated to U.S. dollars at the period-end
exchange rate. Revenue and expenses have been translated at exchange rates which
approximate the average of the rates prevailing during each period. Translation
adjustments are reported as a separate component of other comprehensive income
in the consolidated statements of stockholders' equity. Realized and unrealized
exchange gains and losses included in results of operations were insignificant
for all periods presented.

Stock-Based Compensation -- The Company accounts for stock based compensation
for employees and certain non-employee directors in accordance with the
provisions of Accounting Principles Board Opinion ("APB") No. 25, "Accounting
for Stock Issued to Employees" and related Interpretations and for stock-based
compensation for non-employees in accordance with Statement of Financial
Accounting Standards ("SFAS") No. 123, "Accounting for Stock-Based
Compensation."

Warrant Grant -- On October 29, 1999, the Company issued a significant customer
a warrant to purchase 500,000 shares of common stock at an exercise price of
$2.00 per share. The expected fair value of this warrant is approximately $5.2
million, of which $1.7 million and $2.8 million has been recognized as equity
related charges in operations in fiscal years 2001 and 2000, respectively, with
the remainder to be recognized as future equity related charges in operations.
Equity related expense for each quarterly reporting period is recognized as the
greater of total expense attributable to the warrant, amortized on a
straight-line basis over a period of 36 months, or total expense attributable to
the warrant, amortized on a ratable basis as a percentage of the significant
customer's consulting fees earned during the period, divided by $22 million.
Additionally on December 10, 1999, the Company entered into a consulting
services agreement with this customer under which such customer committed to $22
million of consulting fees over a three-year period commencing January 1, 2000.
On November 8, 2000, the customer exercised the warrant. As of December 29,
2001, $14.6 million of consulting fees had been recognized in connection with
the agreement. There can be no certainty that the remaining $7.4 million of
consulting services will be purchased.

Net Income Per Share -- Basic net income per share was computed by dividing net
income by the weighted average number of common shares outstanding for the
period. Diluted net income per share reflects the potential dilution of


                                       32
<PAGE>
securities by adding other common stock equivalents, including stock options
and the warrant, in the weighted average number of common shares outstanding for
a period, if dilutive.

The reconciliation of the net income and weighted average common shares
outstanding included in the computation of basic and diluted net income per
common share for fiscal years 1999, 2000 and 2001 is as follows (amounts in
thousands except per share data).

<TABLE>
<CAPTION>
                                                                      FISCAL         FISCAL         FISCAL
                                                                       YEAR           YEAR           YEAR
                                                                       1999           2000           2001
                                                                     --------       --------       --------
<S>                                                                  <C>            <C>            <C>
Net income for basic and diluted earnings per share:
  Income before taxes and extraordinary item ..................      $  7,869       $ 16,778       $  7,968
  Income tax provision ........................................        (3,208)        (6,711)        (2,360)
                                                                     --------       --------       --------
  Income before extraordinary item ............................         4,661         10,067          5,608
  Extraordinary item ..........................................          (200)
                                                                     --------       --------       --------
  Net income ..................................................      $  4,461       $ 10,067       $  5,608
                                                                     ========       ========       ========

Weighted average shares of common stock outstanding:
  Weighted average shares of common stock outstanding for
     basic earnings per share .................................        23,056         28,110         29,736
  Effect of stock options .....................................           659            946          1,038
  Effect of warrant  ..........................................            92            152
                                                                     --------       --------       --------
  Weighted average shares of common stock outstanding for
     diluted earnings per share ...............................        23,807         29,208         30,774
                                                                     ========       ========       ========
Basic earnings per share:
  Income before extraordinary item ............................      $   0.20       $   0.36       $   0.19
  Extraordinary item ..........................................         (0.01)
                                                                     --------       --------       --------
  Net income ..................................................      $   0.19       $   0.36       $   0.19
                                                                     ========       ========       ========
Diluted earnings per share:
  Income before extraordinary item ............................      $   0.20       $   0.34       $   0.18
  Extraordinary item ..........................................         (0.01)
                                                                     --------       --------       --------
  Net income ..................................................      $   0.19       $   0.34       $   0.18
                                                                     ========       ========       ========
</TABLE>


New Accounting Standards - In June 2001, the Financial Accounting Standards
Board ("FASB") issued SFAS No. 141 "Business Combinations". The Statement is to
be adopted for all business combinations initiated after June 30, 2001.
Management has adopted this pronouncement for the acquisition of Tri-Com as
discussed in footnote 2.

In June 2001, the FASB issued SFAS No. 142 "Accounting for Goodwill and
Intangible Assets". In accordance with certain provisions of the Statement,
goodwill acquired after June 30, 2001 is not amortized and accordingly, the
goodwill recorded in the Tri-Com acquisition described above has not been
amortized. All provisions of the Statement are required to be applied in the
fiscal year beginning after December 15, 2001, to all goodwill and other
intangible assets recognized in an entity's balance sheet at the beginning of
that fiscal year. Management of the Company has not evaluated the provisions of
the Statement, and consequently has not determined what impact, if any, its
application might have on the Company's consolidated financial statements.

Additionally, the FASB has recently issued SFAS No. 143, "Accounting for Asset
Retirement Obligations" and SFAS No. 144, "Accounting for the Impairment or
Disposal of Long-Lived Assets". SFAS No. 143 establishes accounting standards
for recognition and measurement of a liability for an asset retirement
obligation and the associated asset retirement cost. SFAS No. 144 supercedes
SFAS No. 121 and establishes accounting standards for long-lived assets and
long-lived assets to be


                                       33
<PAGE>
disposed of. SFAS No. 143 is effective for fiscal years beginning after June 15,
2002, thus, the Company will adopt this standard for its 2003 fiscal year. SFAS
No. 144 is effective for fiscal years beginning after December 15, 2001, and is
thus effective for the Company's fiscal year 2002. The Company does not believe
the adoption of these Standards will have a material impact, if any, on the
Company's consolidated financial position and results of operations.

2. BUSINESS COMBINATIONS

On September 5, 2001, the Company completed its acquisition of Tri-Com, a
Maryland corporation. Tri-Com provides a full range of technology and systems
solutions to the communications industry. Consulting services offered include
providing end-to-end operating support system ("OSS"), data center, systems
solutions, data sourcing, legacy integration and middleware implementation. In
addition, Tri-Com periodically receives commissions on hardware purchases,
whereby customers utilize Tri-Com as an agent in procuring computer hardware and
equipment. The primary reason for the acquisition was for TMNG to further expand
its offering, enabling the Company's specialists to take an engagement from
strategy, to marketing and operational definition, and to OSS enablement.

The acquisition, recorded under the purchase method of accounting, included the
purchase of all outstanding shares of Tri-Com, which resulted in a total
purchase price of approximately $5.2 million for the equity and assumption of
liabilities exceeding Tri-Com's net assets. Consideration consisted of $1.8
million cash and 490,417 shares of TMNG common stock valued at $3.0 million.
TMNG incurred direct costs of approximately $160,000 related to the acquisition
and recorded this amount as an increase to purchase price. In addition to the
above-mentioned costs, TMNG recorded approximately $216,000 as an increase to
purchase price in connection with the exchange of the Company's stock options
for vested stock appreciation rights held by Tri-Com employees at the time of
acquisition. The operating results of Tri-Com have been included in the
Consolidated Condensed Statements of Income and Comprehensive Income from the
date of acquisition.

The following table summarizes the estimated fair value of the assets acquired
and liabilities assumed as of the date of acquisition. These allocations are
preliminary and subject to revision, which is not expected to be material, based
on the final determination of appraised and other fair values.

                              At September 5, 2001
                                     ($000s)

<TABLE>
<S>                                                       <C>
Current assets                                            $   564
Property, plant and equipment                                 194
Covenant not to compete                                       203
Deferred taxes (current)                                      587
Deferred taxes (non-current)                                  807
Customer lists                                              1,300
Goodwill                                                    5,981
                                                          -------
Total assets acquired                                       9,636

Current liabilities                                         1,426
Long-term debt                                                226
                                                          -------
Total liabilities assumed                                   1,652

Liabilities settled                                         2,799
                                                          -------
Net assets acquired                                       $ 5,185
                                                          =======
</TABLE>


                                       34
<PAGE>

Of the $203,000 assigned to the covenant not to compete, no residual value has
been identified with this asset. The covenant not to compete has an estimated
remaining useful life of approximately 2 years and is amortized on a
straight-line basis.

Of the $1,300,000 assigned to customer lists, no residual value has been
identified with this asset. The customer lists have an estimated remaining
useful life of approximately 4 years and are being amortized on a straight-line
basis.

The transaction was recorded under Internal Revenue Code Section 368, resulting
in non-deductible goodwill for income tax purposes.

On September 5, 2000, the Company completed its acquisition of TWG, a Maryland
corporation. TWG provides a full range of marketing consulting services to
various U.S. communications companies. Consulting services offered include
product development and positioning, strategy, customer relationship management
("CRM") and loyalty programs, communications, and channel management, among
other services. The acquisition, recorded under the purchase method of
accounting, included the purchase of all outstanding shares of TWG, which
resulted in a total purchase price of approximately $19.2 million consisting of
$11.2 million cash and $8.0 million in TMNG stock. Additionally, TMNG incurred
direct costs of $1.5 million related to the acquisition. The purchase price has
been allocated to assets acquired and liabilities assumed based on estimated
fair value at the date of acquisition. The excess of the purchase price over the
estimated fair value of the net assets acquired has been recorded as goodwill of
$18.6 million and is being amortized over ten years on a straight-line basis.

The following unaudited pro forma results of operations assumes that the Tri-Com
and TWG acquisitions occurred at the beginning of the year preceding each
acquisition. The pro forma results of operations require various assumptions
including an assumption that the same amount of goodwill would have been
recognized had the transactions occurred at the beginning of the year preceding
each acquisition without regard to the then current levels of business activity
of Tri-Com and TWG and without regard to any operating efficiencies or other
synergies. Consequently, the pro forma results of operations are not necessarily
indicative of the operating results which would have occurred if the business
combinations had been in effect on the dates indicated or which may result in
the future.

<TABLE>
<CAPTION>
                                                                 (unaudited)
                                                   -----------------------------------------
                                                              Fiscal Year Ended
(in thousands, except per share amounts)           January 1,    December 30,   December 29,
                                                      2000           2000          2001
                                                   ----------    ------------   -----------
<S>                                                <C>           <C>            <C>
Total revenues                                      $ 61,443      $ 102,553      $ 59,615
Income before extraordinary item                    $  4,021      $   9,442      $  4,686
Income before extraordinary item,
 excluding goodwill amortization                    $  4,940      $  10,560      $  4,686
Net income                                          $  3,821      $   9,442      $  4,686
Basic income before extraordinary item per
 common share                                       $   0.17      $    0.33      $   0.16
Diluted income before extraordinary item per
 common share                                       $   0.17      $    0.32      $   0.15
Basic net income per common share                   $   0.16      $    0.33      $   0.16
Diluted net income per common share                 $   0.16      $    0.32      $   0.15
</TABLE>

3. CAPITAL STRUCTURE

On September 5, 2001, the Company completed its acquisition of Tri-Com, a
Maryland corporation, and issued 490,417 shares of the Company's voting common
stock in connection with the purchase. The fair market value of the issued stock
was approximately $3.0 million.


                                       35
<PAGE>

On September 5, 2000, the Company completed its acquisition of The Weathersby
Group, Inc. (TWG), a Maryland corporation, and issued 348,157 shares of the
Company's voting common stock in connection with the purchase. The fair market
value of the issued stock was approximately $8.0 million.

On August 2, 2000, the Company closed a secondary public offering of 3,000,000
shares of common stock, including 1,000,000 shares offered by the Company. The
net proceeds to the Company from the secondary public offering, after deducting
applicable underwriting discounts and offering expenses, was approximately $20.9
million. Of the remaining shares, approximately 1,800,000 were offered by
Behrman Capital II, LP (Behrman) and the balance was offered by certain other
selling stockholders. The Company did not receive any of the proceeds from the
sales of the shares sold by the existing stockholders.

On November 22, 1999, the Company completed an initial public offering of
5,307,250 shares of Common Stock at an initial offering price of $17.00 per
share. Of the 5,307,250 shares of Common Stock offered, 4,615,000 shares were
issued and sold by the Company and 692,250 shares were sold by existing
stockholders. Prior to the initial public offering, there was no public market
for the Company's capital stock.

The Company did not receive any of the proceeds from the sales of the shares
sold by the existing stockholders. The net proceeds to the Company from the
initial public offering, after deducting applicable underwriting discounts and
offering expenses, was approximately $71.6 million. Approximately $22.3 million
of the net proceeds to the Company was used to repay outstanding debt.

4. MAJOR CUSTOMERS, BUSINESS SEGMENTS AND SIGNIFICANT GROUP CONCENTRATIONS OF
   CREDIT RISK

The Company has identified its segments based on the way management organizes
the Company to assess performance and make operating decisions regarding the
allocation of resources.

With the acquisition of Tri-Com in September 2001, management believes the
Company has two segments, only one of which is separately reportable: The
Management Consulting Services segment, and All Other. Management Consulting
Services includes business strategy and planning, marketing and customer
relationship management, operating system support, revenue assurance, corporate
investment services, networks, and business model transformation. All Other
consists of computer hardware commission and rebates received in an agency
capacity in connection with the procurement of hardware for third parties. The
accounting policies for the segments are the same as those described in the
summary of significant accounting policies. Management evaluates performance
based upon operating earnings before interest income (expense), foreign currency
transaction gains (losses), extraordinary items, if any, and income taxes
excluding equity related charges and goodwill and intangibles amortization.
Management also evaluates trade accounts receivable as part of their overall
assessment of the segments' performance. There are no intersegment sales.

Summarized financial information concerning the Company's reportable segments
is shown in the following table (amounts in thousands):

<Table>
<Caption>
                                      Management        All   Not Assigned
                                  Consulting Services  Other   to Segments   Total
                                  -------------------  -----  ------------  --------
<S>                               <C>                  <C>     <C>           <C>
FISCAL YEAR 2001


Net sales to external customers          $54,236       $596                  $ 54,832
Income from operations                   $10,171       $547    $ (5,161)     $  5,557
Total assets                             $11,111       $ 40    $117,891      $129,042


FISCAL YEAR 2000

Net sales to external customers          $77,727                             $ 77,727
Income from operations                   $21,307               $ (7,704)     $ 13,603
Total assets                             $25,473               $ 93,956      $119,429

FISCAL YEAR 1999

Net sales to external customers          $50,322                             $ 50,322
Income from operations                   $14,436               $ (4,778)     $  9,658
Total assets                             $12,933               $ 54,449      $ 67,382
</Table>

Segment assets include both billed and unbilled trade accounts receivable, net
of allowances, and certain other assets. Assets not assigned to segments
include cash and cash equivalents, property and equipment, goodwill and
intangible assets and deferred tax assets.

Reconciling information between reportable segments and the Company's totals is
shown in the following table (amounts in thousands):

<Table>
<Caption>
                                                        FISCAL          FISCAL          FISCAL
                                                         YEAR            YEAR            YEAR
                                                         2001            2000            1999
                                                        -------         -------         -------
<S>                                                     <C>             <C>             <C>
Operating earnings
Total operating earnings for reportable segments        $10,718         $21,307         $14,436
Equity related charges                                   (3,165)         (7,083)         (4,778)
Goodwill and intangibles amortization                    (1,996)           (621)
                                                        -------         -------         -------
Income from operations                                  $ 5,557         $13,603         $ 9,658
                                                        =======         =======         =======
</Table>

Major customers in terms of significance to TMNG's revenues (i.e. in excess of
10% of revenues) for fiscal years 1999, 2000 and 2001, and accounts receivable
as of December 30, 2000 and December 29, 2001 were as follows (amounts in
thousands):

<TABLE>
<CAPTION>
                                        REVENUES                       ACCOUNTS RECEIVABLE
                          ------------------------------------     ---------------------------
                           FISCAL        FISCAL        FISCAL
                            YEAR          YEAR          YEAR       DECEMBER 30,   DECEMBER 29,
                            1999          2000          2001          2000            2001
                          --------      --------      --------     ----------     ------------
<S>                       <C>           <C>           <C>          <C>            <C>
Customer A .........      $ 19,925      $ 13,929                     $ 1,469
Customer B .........      $  7,322
Customer C .........                                   $ 7,185                      $ 2,360
Customer D .........                                   $ 6,220                      $   546
</TABLE>

Revenues from our ten most significant customers accounted for approximately
85%, 68% and 61% of revenues for fiscal years 1999, 2000 and 2001,
respectively.

Substantially all of TMNG's receivables are obligations of companies in the
communications industry. The Company generally does not require collateral or
other security on their accounts receivable. The credit risk on these accounts
is controlled through credit approvals, limits and monitoring procedures.

Revenues earned in the United States and internationally based on the location
where the services are performed for fiscal year 1999, fiscal year 2000 and
fiscal year 2001 are as follows (amounts in thousands):


                                       36
<PAGE>

<TABLE>
<CAPTION>
                                FISCAL YEAR 1999           FISCAL YEAR 2000            FISCAL YEAR 2001
                            -------------------------   ----------------------      ----------------------
                                           INCOME
                                        BEFORE INCOME                  INCOME                      INCOME
                                          TAXES AND                    BEFORE                      BEFORE
                                        EXTRAORDINARY                  INCOME                      INCOME
                            REVENUES        ITEM        REVENUES       TAXES        REVENUES       TAXES
                            --------    -------------   --------      --------      --------      --------
<S>                         <C>           <C>           <C>           <C>           <C>           <C>
United States ........      $ 36,375      $  5,688      $ 59,519      $ 12,847      $ 48,402      $  7,034
International:
  United Kingdom .....         1,567           245         7,585         1,638         5,546           806
  Other ..............         1,021           159           482           104           392            57
  Canada .............         2,211           346         2,078           448           295            43
  Ireland ............         1,826           286           965           208           141            20
  Switzerland ........         7,322         1,145         5,034         1,087            56             8
  Argentina ..........                                     2,064           446
                            --------      --------      --------      --------      --------      --------
          Total ......      $ 50,322      $  7,869      $ 77,727      $ 16,778      $ 54,832      $  7,968
                            ========      ========      ========      ========      ========      ========
</TABLE>

No significant long-lived assets are deployed outside the United States.

5. PROPERTY AND EQUIPMENT

<TABLE>
<CAPTION>
                                                        DECEMBER 30,  DECEMBER 29,
                                                           2000          2001
                                                        ------------  ------------
<S>                                                     <C>           <C>
                                                                  (000'S)
Furniture and fixtures.................................    $  354        $  564
Software and computer equipment........................     1,260         1,889
Leasehold improvements.................................       164           241
                                                           ------        ------
                                                            1,778         2,694
Less: Accumulated depreciation and amortization........       480         1,008
                                                           ------        ------
                                                           $1,298        $1,686
                                                           ======        ======
</TABLE>

Depreciation and amortization expense on property and equipment was
approximately $161,000, $289,000 and $530,000 for fiscal years 1999, 2000 and
2001, respectively.

6. INCOME TAXES

For fiscal years 1999, 2000 and 2001, the income tax provision consists of the
following (amounts in thousands):

<TABLE>
<CAPTION>
                                             FISCAL         FISCAL         FISCAL
                                              YEAR           YEAR           YEAR
                                              1999           2000           2001
                                            --------       --------       --------
<S>                                         <C>            <C>            <C>
Federal
  Current ............................      $  3,602       $  5,270       $  1,267
  Deferred tax benefit ...............        (1,708)        (1,507)           (12)
                                            --------       --------       --------
                                               1,894          3,763          1,255
State
  Current ............................           990          1,523            486
  Deferred tax benefit ...............          (244)          (215)            (2)
                                            --------       --------       --------
                                                 746          1,308            484
Foreign
  Current ............................           568          1,765            496
  Deferred tax (benefit) expense .....                         (125)           125
                                            --------       --------       --------
                                                 568          1,640            621
                                            --------       --------       --------
Total ................................      $  3,208       $  6,711       $  2,360
                                            ========       ========       ========
</TABLE>


                                       37
<PAGE>

The following is a reconciliation between the provision for income taxes and the
amounts computed at the statutory federal income tax rate (amounts in
thousands):

<TABLE>
<CAPTION>
                                                FISCAL YEAR          FISCAL YEAR            FISCAL YEAR
                                                    1999                  2000                   2001
                                             -----------------     -----------------     -----------------
                                              AMOUNT       %        AMOUNT       %        AMOUNT       %
                                             --------     ----     --------     ----     --------     ----
<S>                                          <C>          <C>      <C>          <C>      <C>          <C>
Computed expected federal income
 tax expense ..........................      $  2,754     35.0     $  5,872     35.0     $  2,789     35.0
State income tax expense, net of
 federal benefit ......................           437      5.6          839      5.0          316      4.0
Other .................................            17      0.2                                (55)    (0.7)
Tax-exempt investment income ..........                                                      (690)    (8.7)
                                             --------     ----     --------     ----     --------     ----
          Total .......................      $  3,208     40.8     $  6,711     40.0     $  2,360     29.6
                                             ========     ====     ========     ====     ========     ====
</TABLE>

Items giving rise to the provision for deferred income taxes (benefit) are as
follows (amounts in thousands):

<TABLE>
<CAPTION>
                                                       FISCAL         FISCAL         FISCAL
                                                        YEAR           YEAR           YEAR
                                                        1999           2000           2001
                                                      --------       --------       --------
<S>                                                   <C>            <C>            <C>
Bad debt reserve ...............................      $    (94)      $   (158)      $    441
Stock option compensation expense ..............        (1,492)        (1,168)          (133)
Change from cash to accrual tax basis accounting          (262)          (274)          (274)
Goodwill .......................................                          (83)          (249)
Valuation allowance ............................                         (125)
Other ..........................................          (104)           (39)           326
                                                      --------       --------       --------
          Total ................................      $ (1,952)      $ (1,847)      $    111
                                                      ========       ========       ========
</TABLE>

The significant components of deferred income tax assets and liabilities and the
related balance sheet classifications, as of December 30, 2000 and December 29,
2001 are as follows (amounts in thousands):


<TABLE>
<CAPTION>
                                                        DECEMBER 30,   DECEMBER 29,
                                                            2000           2001
                                                        ------------   ------------
<S>                                                     <C>            <C>
Current deferred tax assets (liabilities):
  Accounts receivable .............................      $    299       $    156
  Accrued expenses ................................           127            209
  Change from cash to accrual tax basis
     accounting -- current portion ................          (274)
                                                         --------       --------
          Net current deferred tax asset ..........      $    152       $    365
                                                         ========       ========
Non-current deferred tax assets (liabilities):
  Stock option compensation expense ...............      $  2,765       $  2,898
  TMNG -- Europe -- cumulative net operating losses           125
  Goodwill ........................................            83            332
  Reserves ........................................            64            104
  Subsidiary net operating loss carryover .........                          730
  Other ...........................................           (27)            16
                                                         --------       --------
          Net non-current deferred tax asset ......      $  3,010       $  4,080
                                                         ========       ========
</TABLE>



                                       38
<PAGE>
On September 5, 2001, the Company acquired Tri-Com Computer Services, Inc., and
allocated fair value of approximately $1.4 million to deferred tax assets as
follows (amounts in thousands):

<TABLE>
<S>                                                     <C>
Current deferred tax assets:
   Accounts receivable ...........................      $   298
   Accrued expenses ..............................          215
   Vacation accrual ..............................           29
   Restructuring costs ...........................           30
   Other .........................................           15
                                                        -------
          Net current deferred tax asset .........      $   587
                                                        =======
Non-current deferred tax assets:
   Net operating loss ............................      $   761
   Covenant not to compete .......................           45
   Other .........................................            1
                                                        -------
       Net non-current deferred tax asset ........      $   807
                                                        =======
</TABLE>
7. OPERATING LEASES

The Company leases office facilities and an automobile under non-cancelable
operating leases expiring at various dates through August 2005. Total rental
expense was approximately $110,000, $253,000 and $553,000 for fiscal year 1999,
fiscal year 2000 and fiscal year 2001, respectively. As of December 29, 2001,
the future minimum payments under operating leases are as follows (amounts in
thousands):

<TABLE>
<CAPTION>
FISCAL YEAR
-----------
<S>                                                             <C>
2002........................................................    $  660
2003........................................................       590
2004........................................................       206
2005........................................................        70
                                                                ------
                                                                $1,526
                                                                ======
</TABLE>

8. STOCK OPTION PLAN AND STOCK BASED COMPENSATION

The Company has 4,794,000 shares of the Company's Common Stock authorized for
issuance under the Company's 1998 Equity Incentive Plan (the 1998 Plan). The
1998 Plan, a shareholder approved plan, provides the Company's Common Stock for
the granting of incentive stock options and nonqualified stock options to
employees, and nonqualified stock options to employees, directors and
consultants. Incentive stock options are granted at an exercise price of not
less than fair value per share of the common stock on the date of grant as
determined by the board of directors. Vesting and exercise provisions are
determined by the board of directors. As of December 29, 2001, all options
granted under the 1998 Plan were non-qualified stock options. Options granted
under the 1998 Plan generally become exercisable over a three to four year
period beginning on the date of grant. Options granted


                                       39
<PAGE>

under the 1998 Plan have a maximum term of ten years.

FISCAL YEAR 1998 OPTIONS GRANTED -- 1998 PLAN

<TABLE>
<CAPTION>
                                                                                          WEIGHTED
                                                             WEIGHTED     WEIGHTED        AVERAGE
                                                   NUMBER    AVERAGE    AVERAGE FAIR     REMAINING
                                                     OF      EXERCISE   VALUE AT DATE   CONTRACTUAL
                                                   SHARES     PRICE       OF GRANT      LIFE (YEARS)
                                                   -------   --------   -------------   ------------
<S>                                                <C>       <C>        <C>             <C>
Exercise price equals fair market value:
  Granted during fiscal year 1998............      889,750    $1.48         $1.48            --
  Outstanding at January 2, 1999.............      889,750    $1.48         $1.48            --
  Exercisable at January 2, 1999.............           --       --            --            --
  Outstanding at January 1, 2000.............      736,081    $1.48         $1.48          8.50
  Options forfeited during fiscal year
     1999....................................       22,500    $1.48         $1.48            --
  Exercisable at January 1, 2000.............      189,581    $1.48         $1.48            --
  Exercised during fiscal year 1999..........      131,169    $1.48         $1.48            --
  Outstanding at December 30, 2000...........      547,434    $1.48         $1.48          7.51
  Options forfeited during fiscal year
     2000....................................       32,501    $1.48         $1.48            --
  Exercisable at December 30, 2000...........      293,340    $1.48         $1.48            --
  Exercised during fiscal year 2000..........      156,146    $1.48         $1.48            --
  Outstanding at December 29, 2001...........      419,266    $1.48         $1.48          6.48
  Options forfeited during fiscal year
     2001....................................       11,251    $1.48         $1.48            --
  Exercisable at December 29, 2001...........      419,266    $1.48         $1.48            --
  Exercised during fiscal year 2001..........      116,917    $1.48         $1.48            --

Exercise price less than fair market value:
  Granted during fiscal year 1998............      210,000    $1.52         $3.50            --
  Outstanding at January 2, 1999.............      210,000    $1.52         $3.50            --
  Exercisable at January 2, 1999.............           --       --            --            --
  Outstanding at January 1, 2000.............      210,000    $1.52         $3.50          9.00
  Exercisable at January 1, 2000.............       70,000    $1.52         $3.50            --
  Outstanding at December 30, 2000...........      174,168    $1.52         $3.50          8.00
  Options forfeited during fiscal year
     2000....................................        3,334    $1.48         $3.50            --
  Exercisable at December 30, 2000...........       45,831    $1.53         $3.50            --
  Exercised during fiscal year 2000.......          32,498    $1.48         $3.50            --
  Outstanding at December 29, 2001...........      154,168    $1.53         $3.50          7.00
  Exercisable at December 29, 2001...........       85,832    $1.53         $3.50            --
  Exercised during fiscal year 2001..........       20,000    $1.48         $3.50            --
</TABLE>

FISCAL YEAR 1999 OPTIONS GRANTED -- 1998 PLAN

<TABLE>
<CAPTION>
                                                                                            WEIGHTED
                                                              WEIGHTED     WEIGHTED         AVERAGE
                                                   NUMBER     AVERAGE    AVERAGE FAIR      REMAINING
                                                     OF       EXERCISE   VALUE AT DATE    CONTRACTUAL
                                                   SHARES      PRICE       OF GRANT      LIFE (YEARS)
                                                  ---------   --------   -------------   ------------
<S>                                               <C>         <C>        <C>             <C>
Exercise price equal to fair market value:
  Granted during fiscal year 1999..........          10,000   $32.63        $32.63             --
  Outstanding at January 1, 2000...........          10,000   $32.63        $32.63          10.00
  Exercisable at January 1, 2000...........              --       --            --             --
  Outstanding at December 30, 2000.........          10,000   $32.63        $32.63           9.00
  Exercisable at December 30, 2000.........              --       --            --             --
  Outstanding at December 29, 2001.........          10,000   $32.63        $32.63           8.00
  Exercisable at December 29, 2001.........           2,500   $32.63        $32.63             --
</TABLE>


                                       40
<PAGE>

<TABLE>
<S>                                               <C>         <C>        <C>             <C>
Exercise price less than fair market value:
  Granted during fiscal year 1999..........       1,174,625    $2.38        $10.62             --
  Outstanding at January 1, 2000...........       1,074,625    $2.37        $10.71           9.69
  Exercisable at January 1, 2000...........          37,500    $2.00        $ 8.90             --
  Exercised during fiscal year 1999........         100,000    $2.50        $ 9.68             --
  Outstanding at December 30, 2000.........         897,836    $2.35        $10.62           8.69
  Options forfeited during fiscal year
   2000....................................          89,250    $2.68        $11.91             --
  Exercisable at December 30, 2000.........         201,842    $2.37        $10.44             --
  Exercised during fiscal year 2000........          87,539    $2.23        $10.29             --
  Outstanding at December 29, 2001.........         741,090    $2.43        $10.48           7.68
  Options forfeited during fiscal year
     2001..................................          90,012    $2.00        $11.82             --
  Exercisable at December 29, 2001.........         342,168    $2.46        $10.53             --
  Exercised during fiscal year 2001........          66,734    $2.00        $ 9.53             --
</TABLE>

FISCAL YEAR 2000 OPTIONS GRANTED -- 1998 PLAN

<TABLE>
<CAPTION>
                                                                                          WEIGHTED
                                                             WEIGHTED     WEIGHTED        AVERAGE
                                                   NUMBER    AVERAGE    AVERAGE FAIR      REMAINING
                                                     OF      EXERCISE   VALUE AT DATE    CONTRACTUAL
                                                   SHARES     PRICE       OF GRANT      LIFE (YEARS)
                                                   -------   --------   -------------   ------------
<S>                                               <C>        <C>         <C>            <C>
Exercise price equals fair market value:
  Granted during fiscal year 2000.........        1,173,500   $20.23        $20.23             --
  Outstanding at December 30, 2000........        1,160,000   $20.22        $20.22           9.43
  Exercisable at December 30, 2000........          200,000   $22.56        $22.56             --
  Options forfeited during fiscal year
     2000.................................           13,500   $21.42        $21.42             --
  Outstanding at December 29, 2001........        1,078,750   $20.16        $20.16           8.44
  Options forfeited during fiscal year
     2001.................................           81,250   $21.01        $21.01             --
  Exercisable at December 29, 2001........          419,688   $21.02        $21.02             --


Exercise price less than fair market value:
  Granted during fiscal year 2000..........           2,500   $20.00        $22.56
  Outstanding at December 30, 2000.........           2,500   $20.00        $22.56           9.04
  Exercisable at December 30, 2000.........              --       --            --             --
  Outstanding at December 29, 2001.........           2,500   $20.00        $22.56           8.04
  Exercisable at December 29, 2001.........             625   $20.00        $22.56             --
</TABLE>

FISCAL YEAR 2001 OPTIONS GRANTED -- 1998 PLAN

<TABLE>
<CAPTION>
                                                                                          WEIGHTED
                                                             WEIGHTED     WEIGHTED        AVERAGE
                                                   NUMBER    AVERAGE    AVERAGE FAIR      REMAINING
                                                     OF      EXERCISE   VALUE AT DATE    CONTRACTUAL
                                                   SHARES     PRICE       OF GRANT      LIFE (YEARS)
                                                   -------   --------   -------------   ------------
<S>                                               <C>        <C>        <C>             <C>
Exercise price equals fair market value:
  Granted during fiscal year 2001.........        1,577,212   $ 5.09        $ 5.09             --
  Outstanding at December 29, 2001........        1,567,212   $ 5.05        $ 5.05           9.40
  Exercisable at December 29, 2001........               --       --            --             --
  Options forfeited during fiscal year
     2001.................................           10,000   $10.85        $10.85             --
</TABLE>

The Company has 2,500,000 shares of the Company's Common Stock authorized for
issuance under the 2000 Supplemental Stock Plan (the 2000 Plan). The plan
provides the Company's common stock for the granting of nonqualified stock
options to employees and is not subject to shareholder approval. Vesting and
exercise provisions


                                       41
<PAGE>

are determined by the board of directors. Options granted under the plan become
exercisable over a four year period beginning on the date of grant and have a
maximum term of ten years.

FISCAL YEAR 2000 OPTIONS GRANTED -- 2000 PLAN

<TABLE>
<CAPTION>
                                                                                           WEIGHTED
                                                               WEIGHTED     WEIGHTED        AVERAGE
                                                     NUMBER    AVERAGE    AVERAGE FAIR     REMAINING
                                                       OF      EXERCISE   VALUE AT DATE   CONTRACTUAL
                                                     SHARES     PRICE       OF GRANT      LIFE (YEARS)
                                                     -------   --------   -------------   ------------
<S>                                                 <C>        <C>        <C>             <C>
Exercise price equals fair market value:
  Granted during fiscal year 2000.........          295,000   $18.70        $18.70             --
  Outstanding at December 30, 2000........          295,000   $18.70        $18.70           9.73
  Exercisable at December 30, 2000........               --       --            --             --
  Outstanding at December 29, 2001........          222,000   $19.05        $19.05           8.73
  Options forfeited during fiscal year
     2001.................................           73,000   $17.63        $17.63             --
  Exercisable at December 29, 2001........           55,500   $19.05        $19.05             --
</TABLE>

FISCAL YEAR 2001 OPTIONS GRANTED -- 2000 PLAN

<TABLE>
<CAPTION>
                                                                                           WEIGHTED
                                                               WEIGHTED     WEIGHTED        AVERAGE
                                                     NUMBER    AVERAGE    AVERAGE FAIR     REMAINING
                                                       OF      EXERCISE   VALUE AT DATE   CONTRACTUAL
                                                     SHARES     PRICE       OF GRANT      LIFE (YEARS)
                                                     -------   --------   -------------   ------------
<S>                                               <C>          <C>        <C>             <C>
Exercise price equals fair market value:
  Granted during fiscal year 2001.........        2,109,642     $5.03         $5.03            --
  Outstanding at December 29, 2001........        1,943,114     $4.95         $4.95          9.52
  Exercisable at December 29, 2001........               --        --            --            --
  Options forfeited during fiscal year
     2001.................................          166,528     $6.00         $6.00            --

Exercise price less than fair market value:
  Granted during fiscal year 2001..........          53,200     $5.50         $6.12
  Outstanding at December 29, 2001.........          53,200     $5.50         $6.12          9.72
  Exercisable at December 29, 2001.........              --        --            --            --
</TABLE>

At December 29, 2001, the Company had outstanding a total of 6,191,300 options
to acquire shares with a weighted average exercise price of $7.56 and a weighted
average remaining contractual life of 8.78 years. Of these options, 1,325,579
were exercisable at December 29, 2001 with a weighted average exercise price of
$8.73.

The Company follows APB No. 25 to account for the employee stock purchase plan
and for employee and certain non-employee director's stock options. In fiscal
year 2001, the Company granted 53,200 stock options at less than fair value in
exchange for stock appreciation rights held by employees of Tri-Com (See Note
2). In connection with APB 25 grants issued in fiscal years 1999, 2000 and 2001,
the Company recorded unearned compensation of approximately $11.2 million,
$144,000 and $29,000, respectively, representing the difference between the
exercise price and the fair value of the common stock on the dates such stock
options were granted. Such amounts are being amortized by charges to operations
on a graded vesting method over the corresponding vesting period of each
respective option, generally three to four years.

The Company recognizes compensation cost over the vesting periods. These options
have resulted in equity related charges to operations of approximately $4.3
million, $4.3 million and $1.4 million for fiscal years 1999,


                                       42
<PAGE>


2000 and 2001, respectively. These expenses have been allocated among various
expense categories.

During fiscal year 2000, the Company initiated an employee stock purchase plan
for all eligible employees. Under the plan, shares of the Company's common stock
may be purchased at six-month intervals at 85% of the lower of the fair market
value on the first day of the enrollment period or on the last day of each
six-month period. Employees may purchase shares through a payroll deduction
program having a value not exceeding 15% of their gross compensation during an
offering period. During fiscal year 2001, 52,261 shares were purchased under the
plan. At December 29, 2001, 176,000 shares were reserved for future issuance.
The employee stock purchase plan is classified as a non-compensatory plan under
APB 25.

The Company accounts for its stock option awards to independent subject matter
experts and other non-employees in accordance with the fair value measurement
provision of SFAS No. 123, Accounting for Stock Based Compensation. Under SFAS
123, stock options are valued at grant date using the Black-Scholes option
pricing model, and this expense is recognized ratably over the vesting period.
Consequently, the expense of these options is recognized in the current and
future reporting periods based on the fair value at the end of each period. The
fair value of each option grant during fiscal years 1999, 2000 and 2001 was
estimated on the date of grant using the Black-Scholes option pricing model with
the following assumptions:

<TABLE>
<CAPTION>
                                   FISCAL YEAR 1999    FISCAL YEAR 2000       FISCAL YEAR 2001
                                   ----------------    ----------------       ----------------
<S>                                <C>                 <C>                    <C>
Expected volatility factor.....           60%                 95%                   114%
Risk-free interest rate........      4.56% - 5.60%       4.86% - 6.69%          1.98% - 4.22%
Expected life of options.......         5 years             5 years                5 years
Expected life of stock issued
 under employee stock purchase
 plan..........................                       0.5 years - 2.0 years  0.5 years - 2.0 years
Expected dividend rate.........            0%                  0%                     0%
</TABLE>

If compensation cost for the Company's APB 25 grants and the employee stock
purchase plan had been determined under SFAS No. 123, based upon the fair value
at the grant date, consistent with the Black-Scholes option pricing methodology
using the assumptions above, the Company's net income for fiscal years 1999,
2000 and 2001 would have decreased by approximately $280,000, $4.2 million and
$6.9 million, respectively.

For purposes of pro forma disclosures, the estimated fair value of options is
amortized to pro forma expense over the options' vesting period. The following
table contains pro forma information for fiscal years 1999, 2000 and 2001 (in
thousands, except per share amounts):

<TABLE>
<CAPTION>
                                                        FISCAL        FISCAL        FISCAL
                                                         YEAR          YEAR          YEAR
                                                         1999          2000          2001
                                                       --------      --------      --------
<S>                                                    <C>           <C>           <C>
Net Income before extraordinary item:
  As reported ...................................      $  4,661      $ 10,067      $  5,608
                                                       ========      ========      ========
  Pro forma .....................................      $  4,381      $  5,867      $ (1,260)
                                                       ========      ========      ========

Basic and diluted net income before extraordinary
  item per share:
  Basic .........................................      $   0.20      $   0.36      $   0.19
                                                       ========      ========      ========
  Diluted .......................................      $   0.20      $   0.34      $   0.18
                                                       ========      ========      ========

Basic and diluted pro forma net income before
  extraordinary item per share:
  Basic .........................................      $   0.19      $   0.21      $  (0.04)
                                                       ========      ========      ========
  Diluted .......................................      $   0.18      $   0.20      $  (0.04)
                                                       ========      ========      ========
</TABLE>


                                       43
<PAGE>
During fiscal year 1999, the Company issued 71,201 shares of common stock
representing bonus compensation to certain employees. The Company calculated
expense related to these shares at the fair value of the shares at the date of
issuance. Accordingly, compensation expense of $441,000 was charged to
operations in 1999. There were no such issuances in fiscal years 2001 and 2000.

9. LOANS TO OFFICERS

During the third quarter of fiscal year 2001, three executive officers of the
Company received stock options at fair market value in lieu of receiving their
cash base compensation. Additionally, to assist in meeting the cash flow needs
of the officers who reduced their compensation, the Company provided lines of
credit, collateralized by Company common stock held by such officers. The
maximum available borrowings under the loan agreements between the three
officers and the Company are $1,300,000 in total. Borrowings against the line of
credit at December 29, 2001 totaled $200,000. In accordance with the loan
provisions, the interest rate charged on the loans is equal to the Applicable
Federal Rate (AFR), as announced by the Internal Revenue Service, for short-term
obligations (with annual compounding) in effect for the month in which the
advance is made, until fully paid.

10. RELATED PARTY TRANSACTIONS

During fiscal year 2001, one member of the TMNG board of directors was also a
director of a customer with which TMNG did business. Additionally, during fiscal
year 2001, TMNG performed services for one customer of which one member of the
TMNG board of directors owns a partial equity interest. Prior to fiscal year
2001, four members of the TMNG board of directors were also directors of
customers with which TMNG did business. During fiscal year 1999, fiscal year
2000 and fiscal year 2001, the Company earned revenues from these customers of
approximately $2.6 million, $16.1 million, and $2.3 million, respectively.
Receivables from these customers at December 30, 2000 were approximately
$1.3 million. No such receivables were outstanding at December 29, 2001.

During fiscal year 1999, TMNG made payments of approximately $105,000 to a
company owned by a significant stockholder of TMNG. Such payments were for
services rendered under consulting agreements between TMNG and the respective
affiliated company and/or shareholder. These expenses were classified as
selling, general and administrative in the accompanying consolidated statements
of income and comprehensive income.

During fiscal years 1999, 2000 and 2001, TMNG made payments of approximately
$238,000, $432,000 and $70,000 to a legal firm of which one member of the TMNG
board of directors owns a partial equity interest. Such payments were for legal
services rendered in connection with the Company's equity offerings and for
other matters arising in the normal course of business. The costs associated
with the equity offerings were classified as a component of additional paid-in
capital, and the costs associated with business matters arising in the normal
course of business were classified as selling, general and administrative
in the consolidated statements of income and comprehensive income.

11. CONTINGENCIES

In June 1998, the bankruptcy trustee of a former client, Communications Network
Corporation, sued TMNG for a total of $320,000 in the U.S. Bankruptcy Court in
New York seeking recovery of $160,000 alleging an improper payment of
consulting fees paid by the former client during the period from July 1, 1996,
when an involuntary bankruptcy proceeding was initiated against the former
client, through August 6, 1996, when the former client agreed to an order for
relief in the bankruptcy proceeding, and $160,000 in consulting fees paid by
the former client after August 6, 1996.

The bankruptcy trustee has also sued TMNG for at least $1.85 million for breach
of contract, breach of fiduciary duties and negligence. Although assurance
cannot be given as to the ultimate outcome of this proceeding, TMNG believes
the Company has meritorious defenses to the claims made by the bankruptcy
trustee, including particularly the claims for breach of contract, breach of
fiduciary duty and negligence, and that the ultimate resolution of this matter
will not materially harm our business.

The Company may become involved in various legal and administrative actions
arising in the normal course of business. These could include actions raised by
taxing authorities challenging the employment status of consultants


                                       44
<PAGE>

utilized by the Company. In addition, customer bankruptcies could result in a
claim on collected balances for professional services near the bankruptcy filing
date. While the resolution of any of such actions, claims, or the matter
described above may have an impact on the financial results for the period in
which it is resolved, the Company believes that the ultimate disposition of
these matters will not have a material adverse effect upon its consolidated
results of operations, cash flows or financial position.

12. QUARTERLY RESULTS OF OPERATIONS (UNAUDITED)

In management's opinion, the interim financial data below reflect all
adjustments necessary to fairly state the results of the interim period
presented. Adjustments are of a normal recurring nature necessary for a fair
presentation of the information for the periods presented. Results of any one or
more quarters are not necessarily indicative of annual results or continuing
trends.

<TABLE>
<CAPTION>
                                                                   2001 QUARTERS ENDED
                                                  -------------------------------------------------------
                                                  March 31,      June 30,     September 29,  December 29,
                                                  --------       --------     -------------  ------------
<S>                                               <C>            <C>          <C>            <C>
Revenues ...................................      $ 18,334       $ 13,691       $ 12,231       $ 10,576
Cost of Services:
  Direct cost of services ..................         9,544          6,892          5,774          5,137
  Equity related charges ...................           413            707            631            570
                                                  --------       --------       --------       --------
          Total cost of services ...........         9,957          7,599          6,405          5,707
                                                  --------       --------       --------       --------
Gross Profit ...............................         8,377          6,092          5,826          4,869
Operating Expenses:
  Selling, general and administrative ......         5,310          3,837          4,023          3,770
  Depreciation and amortization ............                          600            574            649
  Equity related charges ...................           198            261            211            173
                                                  --------       --------       --------       --------
          Total operating expenses .........         5,508          4,698          4,808          4,592
                                                  --------       --------       --------       --------
Income From Operations .....................         2,869          1,394          1,018            277
Other Income:

  Interest income ..........................           721            692            611            410
  Other, net ...............................           (15)            (3)            (6)             2
                                                  --------       --------       --------       --------
          Total other income ...............           706            689            605            412
                                                  --------       --------       --------       --------
Income Before Provision for Income Taxes ...         3,575          2,083          1,623            689
Provision for Income (Taxes) Benefit .......        (1,238)          (655)          (492)            24
                                                  --------       --------       --------       --------
Net Income .................................         2,337          1,428          1,131            713
Other Comprehensive Income --
  Foreign currency translation adjustment ..           (45)            (3)            18             12
                                                  --------       --------       --------       --------
Comprehensive Income .......................      $  2,292       $  1,425       $  1,149       $    725
                                                  ========       ========       ========       ========
Net Income Per Common Share
  Basic ....................................      $   0.08       $   0.05       $   0.04       $   0.02
                                                  ========       ========       ========       ========
  Diluted ..................................      $   0.08       $   0.05       $   0.04       $   0.02
                                                  ========       ========       ========       ========
Shares Used in Calculation of Net Income Per
 Common Share
  Basic ....................................        29,490         29,560         29,737         30,161
                                                  ========       ========       ========       ========
  Diluted ..................................        30,276         30,491         30,756         31,396
                                                  ========       ========       ========       ========
</TABLE>

With the acquisition of Tri-Com in September 2001, the Company determined it had
two segments of which one was reportable. See Note 4 for segment information for
fiscal years 2001, 2000 and 1999. The quarterly results of operations have not
been restated to disclose segment information. Revenues from external customers
and operating income for the Management Consulting Services segment in the
quarter ended December 29, 2001 were approximately $10.3 million and $1.4
million, respectively.

                                       45
<PAGE>



<TABLE>
<CAPTION>
                                                                   2000 QUARTERS ENDED
                                                  -------------------------------------------------------
                                                  April 1,        July 1,     September 30,  December 30,
                                                  --------       --------     -------------  ------------
<S>                                               <C>            <C>          <C>            <C>
Revenues ...................................      $ 16,402       $ 19,464       $ 20,003       $ 21,858
Cost of Services:
  Direct cost of services ..................         8,529         10,109         10,300         11,458
  Equity related charges ...................         1,916          2,001          1,241            361
                                                  --------       --------       --------       --------
          Total cost of services ...........        10,445         12,110         11,541         11,819
                                                  --------       --------       --------       --------
Gross Profit ...............................         5,957          7,354          8,462         10,039
Operating Expenses:
  Selling, general and administrative ......         3,471          3,977          4,344          4,853
  Equity related charges ...................           418            392            392            362
                                                  --------       --------       --------       --------
          Total operating expenses .........         3,889          4,369          4,736          5,215
                                                  --------       --------       --------       --------
Income From Operations .....................         2,068          2,985          3,726          4,824
Other Income (Expense):

  Interest income ..........................           849            777          1,279            422
  Other, net ...............................          (135)             8             95           (120)
                                                  --------       --------       --------       --------
          Total other income (expense) .....           714            785          1,374            302
                                                  --------       --------       --------       --------
Income Before Provision for Income Taxes and
 Extraordinary item ........................         2,782          3,770          5,100          5,126
Provision for Income Taxes .................        (1,104)        (1,517)        (2,040)        (2,050)
                                                  --------       --------       --------       --------
Net Income .................................         1,678          2,253          3,060          3,076
Other Comprehensive Income --
  Foreign currency translation adjustment ..           (16)           (29)            13             69
                                                  --------       --------       --------       --------
Comprehensive Income .......................      $  1,662       $  2,224       $  3,073       $  3,145
                                                  ========       ========       ========       ========
Net Income Per Common Share
  Basic ....................................      $   0.06       $   0.08       $   0.11       $   0.11
                                                  ========       ========       ========       ========
  Diluted ..................................      $   0.06       $   0.08       $   0.10       $   0.10
                                                  ========       ========       ========       ========
Shares Used in Calculation of Net Income Per
 Common Share
  Basic ....................................        27,425         27,460         28,305         29,253
                                                  ========       ========       ========       ========
  Diluted ..................................        28,651         28,690         29,572         30,036
                                                  ========       ========       ========       ========
</TABLE>

13. SUBSEQUENT EVENT

On March 6, 2002, The Management Network Group, Inc. announced the acquisition
of Cambridge Strategic Management Group, Inc. ("CSMG") of Boston, Massachusetts.
In an asset purchase agreement between TMNG and CSMG, TMNG agreed to pay, in
exchange for the business and primary assets of CSMG, an amount equal to $46.5
million as the initial purchase price, payable in approximately 2.9 million
newly-issued and unregistered shares of common stock representing $13.5 million,
calculated in accordance with the provisions of the Asset Purchase Agreement at
a fixed price of $4.66 per share, and $33.0 million cash consideration. The
transaction was structured as a taxable transaction for Federal income tax
purposes, and included $5.4 million in cash consideration to the seller
representing a sharing of tax consequence. The purchase price also included $5.2
million representing the working capital purchased from CSMG. The initial
purchase price will be subject to final adjustment based on the balances of the
working capital items at the date of close.

                                    PART III

ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE

None.

ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT

Election of Directors and Section 16(a) Beneficial Ownership Reporting
Compliance to be contained in the Proxy Statement are hereby incorporated by
reference.

The following table sets forth certain information regarding executive officers
and directors as of December 29, 2001:


                                       46
<PAGE>

<TABLE>
<CAPTION>
                   NAME                      AGE             POSITION
                   ----                      ---             --------
<S>                                          <C>    <C>
 Grant G. Behrman(1)........................  47    Chairman of the Board
 Richard P. Nespola.........................  57    President, Chief Executive
                                                    Officer and Director
 Ralph R. Peck..............................  51    Vice President
 Micky K. Woo...............................  48    Vice President and
                                                     Director
 Amanda M. Weathersby.......................  47    Vice President
 Donald E. Klumb............................  39    Vice President and Chief
                                                    Financial Officer
 Christopher D. Mitchell....................  40    Secretary
 William M. Matthes(1)......................  41    Director
 Mario M. Rosati(2).........................  55    Director
 Andrew D. Lipman(2)........................  50    Director
 Roy A. Wilkens(1)(2).......................  58    Director
</TABLE>

(1) Member of the compensation committee

(2) Member of the audit committee

Grant G. Behrman has served as the Chairman of the Board since February 1998.
Mr. Behrman currently serves as Managing Partner of Behrman Capital, a private
equity firm, and was a founding partner of that firm. Prior to founding Behrman
Capital, Mr. Behrman was a founding member of Morgan Stanley's Venture Capital
Group where he worked from 1981 to 1991, and a consultant with the Boston
Consulting Group from 1977 to 1981. Mr. Behrman is a director of Brooks
Equipment Corp., Inc. Esoterix, Inc., Executive Greetings, Inc. and several
other private companies. Mr. Behrman received an M.B.A. with distinction from
the Wharton Graduate School of Business in 1977. Mr. Behrman received his
undergraduate degree in Business from the University of the Witwatersrand (South
Africa).

Richard P. Nespola has served as President and Chief Executive Officer and
founded TMNG in 1990. Prior to founding TMNG, from 1989 to 1990, Mr. Nespola
served as Senior Vice President and Chief Operating Officer of Telesphere
Communications, a communications service provider. From 1986 through 1989, he
held the positions of Vice President of Financial Operations and Senior Vice
President of Strategic Markets and Product Pricing at Sprint. He also served as
the Senior Director of Revenue and Treasury Operations at MCI from 1982 to 1986.
Mr. Nespola is also a frequent chair of industry forums and noted conference
speaker. Mr. Nespola received his B.A. and his M.B.A. from Long Island
University.

Ralph R. Peck has served as Vice President and has been a partner with TMNG
since August 1991. From 1986 to 1988, Mr. Peck was a Director of Revenue
Management at Sprint and the Senior Manager for both West Coast Financial
Operations Revenue and Treasure Systems Management at MCI from 1984 to 1986. In
these positions, Mr. Peck had responsibility for billing systems, billing center
management, revenue and treasury management, new product development, and
customer database conversions. Mr. Peck received his B.S.B.A. from American
University.

Micky K. Woo has served as Vice President and as a director, and he has been a
partner with TMNG since December 1991. Prior to joining TMNG, Mr. Woo served
from June 1989 to November 1999 as Vice President of Information Systems and
Revenue Assurance at Telesphere Communications, a communications service
provider. From 1987 to 1989, Mr. Woo was the Director of Revenue and Treasury
Management at Sprint and from 1983 to 1987 he served in management at MCI,
including Senior Manager of Receivables Management, Senior Manager of the East
Coast Billing Center, and the Senior Manager of Revenue Reporting and Analysis.
Prior to entering the telecommunications industry, Mr. Woo was a consultant with
Price Waterhouse. Mr. Woo received his B.A. in Computer Science and an M.A. in
accounting from the University of Iowa.

Amanda M. Weathersby has served as Vice President since joining TMNG in
September 2000. Ms. Weathersby is the founder of The Weathersby Group, Inc., a
marketing consulting firm, which she led over ten years prior to joining TMNG.
Prior the founding The Weathersby Group, Ms. Weathersby served as the Vice
President of Product


                                       47
<PAGE>
Management and Product Development at Sprint, Inc. and served in senior roles
with MCI. Ms. Weathersby received her B.A. in English from Lawrence University.

Donald E. Klumb has served as Vice President and Chief Financial Officer since
July 1999. From June 1998 to July 1999, Mr. Klumb was a partner at Deloitte &
Touche LLP and headed the firm's Midwest telecommunications and high technology
practice. From 1992 to 1998, he was a senior manager with Deloitte & Touche LLP.
Mr. Klumb received his B.S. in accounting from the University of
Wisconsin-Milwaukee and is a certified public accountant.

Christopher D. Mitchell has served as Secretary since September 1999. Since
February 1995, Mr. Mitchell has been a partner in the Palo Alto, California law
firm of Wilson Sonsini Goodrich & Rosati, one of the premier legal firms for
high technology companies. From April 1989 through January 1995, Mr. Mitchell
was an associate with the firm. Mr. Mitchell received his B.A. from Haverford
College and his J.D. from the University of Minnesota.

William M. Matthes has served as a director since February 1998. Mr. Matthes
joined Behrman Capital, a private equity firm, in April 1996 and has served as a
Managing Partner of Behrman Capital since January 1999. Prior to joining Behrman
Capital, Mr. Matthes was Chief Operating Officer of Holsted Marketing, Inc., a
direct marketing company from July 1994 to April 1996. From December 1989 to
July 1994, Mr. Matthes was a General Partner at Brentwood Associates, a private
equity firm. Mr. Matthes currently serves on the board of iStar Financial (NYSE:
SFI) and several private companies. Mr. Matthes received his M.B.A. from Harvard
Business School in 1986 where he was both a Baker Scholar and a Loeb Rhoades
Fellow. Mr. Matthes also received his A.B. in Economics from Stanford
University, where he graduated with honors and distinction.

Mario M. Rosati has served as a director since June 1999. Mr. Rosati is a member
of the executive committee of Wilson, Sonsini, Goodrich & Rosati. He has been
with the law firm since 1971, first as an associate and then as a member since
1975. He is a member of the board of directors of Aehr Test Systems, a
semiconductor equipment company, Genus, Inc., a semiconductor equipment company,
Sanmina Corporation, an electronics contract manufacturing company, Symyx
Technologies, a combinatorial materials science company, and Vivus, Inc., a
medical device company. Mr. Rosati received his B.A. from the University of
California at Los Angeles and his J.D. from the University of California at
Berkeley, Boalt Hall School of Law.

Andrew D. Lipman joined our board of directors in May, 2000. Mr. Lipman is the
senior partner of the Telecommunications Group and the Vice Chairman of the law
firm of Swidler Berlin Shereff Friedman LLP. For more than ten years, while
maintaining his partnership at Swidler Berlin Shereff Friedman LLP, Mr. Lipman
also served as Senior Vice President, Legal and Regulatory Affairs for MFS
Communications. Mr. Lipman sits on the following Boards: Nuskin Enterprises, a
cosmetics and nutritional manufacturer and marketer; Allegiance Telecom, a
communications carrier; DSET, a telecommunications software provider; NHC, a
telecommunications robotics equipment manufacturer and International Worldwide
Cellular, an international cellular telephone distributor. Mr. Lipman is a
graduate of the University of Rochester (summa cum laude) and the Stanford Law
School.

Roy A. Wilkens has served as a director since June 1999. In 1985, Mr. Wilkens
founded WilTel, Inc., a wholesale communications carrier, a subsidiary of The
Williams Companies, an oil and gas pipeline company. Mr. Wilkens was the Chief
Executive Officer of WilTel Inc. from 1985 to 1995. In 1995, Wiltel was acquired
by LDDS Communications, a predecessor company to MCI Worldcom, and Mr. Wilkens
remained as Chief Executive Officer of Wiltel until 1997. Prior to 1985, Mr.
Wilkens served as the President of Williams Pipeline Company, a subsidiary of
The Williams Companies. In 1992, President George Bush appointed Mr. Wilkens to
the National Security Telecommunications Advisory Council. He has also served as
chairman of both the Competitive Telecommunications Association and the National
Telecommunications Network. Mr. Wilkens is a member of the board of directors of
McLeodUSA Incorporated, a CLEC, Orillion Corp., a software provider to the
telecommunications industry, and UniDial, Inc., a long distance
telecommunications services provider.

ITEM 11. EXECUTIVE COMPENSATION

Executive Compensation to be contained in the Proxy Statement is hereby
incorporated by reference.


                                       48
<PAGE>

ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

Security Ownership of Certain Beneficial Owners and Management to be contained
in the Proxy Statement is hereby incorporated by reference.

ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

Certain Relationships and Transactions with Related Persons to be contained in
the Proxy Statement is hereby incorporated by reference.

                                     PART IV

ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K

(a) The following documents are filed as part of this Annual Report on Form
10-K:

(1) The response to this portion of Item 14 is set forth in Item 8 of Part II
hereof.

(2) Financial Statement Schedules.

Schedules for which provision is made in the applicable accounting regulations
of the Securities and Exchange Commission are not required under the related
instructions or are inapplicable and therefore have been omitted.

(3) Exhibits

See accompanying Index to Exhibits. The Company will furnish to any stockholder,
upon written request, any exhibit listed in the accompanying Index to Exhibits
upon payment by such stockholder of the Company's reasonable expenses in
furnishing any such exhibit.

(b) Reports on Form 8-K

None.

                                   SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange
Act of 1934, the Registrant has duly caused this Report on Form 10-K to be
signed on its behalf by the undersigned, thereunto duly authorized, in the City
of Overland Park, State of Kansas, on the 29th day of March 2002.

                       THE MANAGEMENT NETWORK GROUP, INC.


                   By:       /s/ RICHARD P. NESPOLA
                      ------------------------------------
                                 Richard P. Nespola
                            President and Chief Executive
                                       Officer


                                       49
<PAGE>

                                POWER OF ATTORNEY

KNOW ALL PERSONS BY THESE PRESENTS, that each person whose signature appears
below hereby constitutes and appoints Richard P. Nespola as his
attorney-in-fact, each with full power of substitution, for him or her in any
and all capacities, to sign any and all amendments to this Report on Form 10-K,
and to file the same, with exhibits thereto and other documents in connection
therewith, with the Securities and Exchange Commission, hereby ratifying and
confirming our signatures as they may be signed by our said attorney to any and
all amendments to said Report.

Pursuant to the requirements of the Securities Exchange Act of 1934, this Report
on Form 10-K has been signed by the following persons in the capacities and on
the dates indicated:

<TABLE>
<CAPTION>
            SIGNATURE                         TITLE                  DATE
            ---------                         -----                  ----
<S>                              <C>                            <C>
    /s/ RICHARD P. NESPOLA        President, Chief Executive    March 29, 2002
------------------------------       Officer and Director
        Richard P. Nespola           (Principal executive
                                            officer)

    /s/ DONALD E. KLUMB          Chief Financial Officer and    March 29, 2002
-------------------------------       Treasurer (Principal
        Donald E. Klumb               financial officer and
                                      principal accounting
                                            officer)

    /s/ MICKY K. WOO                       Director             March 29, 2002
-------------------------------
        Micky K. Woo

    /s/ GRANT G. BEHRMAN                   Director             March 29, 2002
-------------------------------
        Grant G. Behrman

    /s/ WILLIAM M. MATTHES                 Director             March 29, 2002
-------------------------------
        William M. Matthes

    /s/ ANDREW LIPMAN                      Director             March 29, 2002
-------------------------------
        Andrew Lipman

    /s/ ROY A. WILKENS                     Director             March 29, 2002
-------------------------------
        Roy A. Wilkens

    /s/ MARIO M. ROSATI                    Director             March 29, 2002
-------------------------------
        Mario M. Rosati
</TABLE>


                                       50
<PAGE>

                                INDEX TO EXHIBITS

The following is a list of exhibits filed as part of this report.

<TABLE>
<CAPTION>
EXHIBIT
NUMBER                       DESCRIPTION OF DOCUMENT
-------                      -----------------------
<S>        <C>
INDEX TO EXHIBITS

 3.1*      Certificate of Incorporation of the registrant

 3.2*      Bylaws of the registrant

 4.1*      Specimen Common Stock Certificate

 4.2*      Warrant dated October 29, 1999 issued to Williams
           Communications Group

10.1*      Registration Rights Agreement dated January 7, 1998 among
           the registrant and certain investors

10.2*      Form of Indemnification Agreement between the registrant and
           each of its Directors and Officers

10.3*      1998 Equity Incentive Plan and form of agreements thereunder

10.4*      1999 Employee Stock Purchase Plan and form of agreements
           thereunder

10.5*      Consulting Services Agreement between the registrant and
           Williams Communications Group, Inc. dated November 5, 1997

10.6*      Credit Agreement, including revolving credit notes and term notes,
           dated February 12, 1998 among the registrant and certain guarantors,
           lenders and agents

10.7*      Lease between Lighton Plaza L.L.C. and the registrant dated April 23,
           1998

10.8*      Noncompetition Agreement between the registrant and certain parties
           dated February 12, 1998.

10.9*      Employment Agreement between the registrant and Richard Nespola dated
           February 12, 1998.

10.10*     Employment Agreement between the registrant and Micky Woo dated
           February 12, 1998.

10.11*     Employment Agreement between the registrant and Ralph Peck dated
           February 12, 1998.

10.12*     Employment Agreement between the registrant and Donald Klumb dated
           September 9, 1999

10.13*     Amended Lease Agreement between Lighton Plaza L.L.C. and the
           registrant dated December 21, 2000

10.14*     Lease between The American Occupational Therapy Association, Inc. and
           The Weathersby Group, Inc. dated January 18, 1999

10.15*     Amended Lease Agreement between The American Occupational Therapy
           Association, Inc. and TWG Marketing, Inc. dated December 5, 2000
</TABLE>


                                       51
<PAGE>

<TABLE>
<S>        <C>
10.16*     2000 Supplemental Stock Plan and form of agreements thereunder

10.17      Lease between HANSON PALMER II ASSOCIATES LIMITED PARTNERSHIP and Tri-
           Com Computer Services, Inc. dated January 20, 1998

10.18      Amended Lease Agreement between Hanson Palmer II Associated Limited
           Partnership and Tri-Com Computer Services, Inc. dated April 15, 1999

21.1       List of subsidiaries of TMNG, Inc.

23.1       Consent of Deloitte & Touche LLP

24.1       Power of attorney (see page 50)
</TABLE>


* Previously filed


                                       52