What changed in this filing

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Item 2. Management’s Discussion and Analysis

2022-05-16 compared with 2021-11-15 · 68 added, 99 removed, 116 unchanged (59% of the section changed)

77 unchanged sentences

OF OPERATIONS

for the three months ended September 30, 2021, was $6,941 which was $740 or 12% greater than for the same period in 2020 which was $6,201.

EOR led the revenue uptick by delivering $5,705 or 82% of the quarterly revenue.

This was a $831 or 17%, improvement over the

third quarter in 2020.

IQS the Company’s IT staffing division saw a revenue decline of $410 or 82% from the same period a year

ago which offset the improvement in revenue by the Media Staffing division which was up $267 or 44% from the same period a year ago.

Permanent Placement which was not an earning center in 2020 contributed $38 which was $8 more than the second quarter.

Although IT staffing

revenues do not include IT direct placements made by the Company, which are considered Permanent Placement these are among the diverse

resources we provide clients along with finance and accounting, and Media.

The Company expects an increase in this activity as certain

new clients are asking us for this service.

Production’s $236 in revenue was $21 higher than the third quarter in 2020 as new clients more than filled the void of those with

declining demand due to COVID-19.

the nine months ended September 30, revenue totaled $17,809 which was $2,390 less than a year ago, or a 12% decrease when compared to

the prior year.

Business segments with the largest declines in the nine-month period ending September 30, 2021, when compared to a year

earlier, were EOR at $1,678 or 11% and IQS which derived $1,593 less, a 76% decline.

EOR was largely negatively impacted by COVID-19,

which has seen some of our larger clients not yet return to full strength on site.

IQS’s experienced the loss of its largest

customer Lifetouch, which informed the Company in the fall of 2020 that it had decided to offshore their IT software quality assurance

professionals effective January 1, 2021, resulting in declines of revenue of $874 year to date, when compared to same period in 2020.

Meanwhile Tapfin, which is the vendor management solution for Abbott Labs, has converted a number of IQS’s employees to their staff

and have not renewed other employee resulting in a year-to-date loss of revenue of $380.

In order to offset these lost revenues, the

Company has begun focusing business development resources on growing the IT staffing business in the second half of 2021.

Media Staffing has increased its nine-month revenue to $2,158 from $1,445, a $713 or 49% improvement.

This is due to the acquisition

of 7 new clients by our revamped 6-month-old sales team, which added $546 and an increased demand for this service ($167) by our existing

clients, driven by our expertise in delivering top rated media talent to our customers.

Production’s nine-month revenue performance also saw an improvement to the same period a year ago by $101, with revenues

totaling $897.

for the three months ended March 31, 2022, was $5,783 which was $11 or 0.2% less than for the same period in 2021 with revenue at $5,794.

Video Production and IT staffing had the greatest negative impact, falling $218 (comparatively) and $209 in year over year quarterly

grew, delivering $4,773 versus $4,500 in the first quarter ending March 31, 2021.

The $273 or 6.1% increase resulted in EOR revenue garnering

82.5% of the quarterly revenue, which was consistent with its fourth quarter 2021 performance.

designated Video Production revenues formerly included adhoc freelance production/media staffing.

With our staffing solutions expanding

in 2022, we now separate all staffing solutions into its respective category.

Video production will now only consist of project-based

These solutions include global crewing, production management to include in studio and on location projects as well as postproduction

change which had an estimated $145 impact in the first quarter contributed to a $363 decline in Video Production revenue, to a total

of $48, in the first quarter 2022 to its first quarter comparative of $411 in 2021.

Conversely, Media Staffing revenue grew $250

or 41% to $860 in the first quarter 2022.

Placement, which became a new segment in the second quarter 2021, posted $39 in revenue in the quarter ending March 31, 2022.

of Revenue / Gross Profit

profit for the three-month period ending September 30, 2021, was $803 representing 11.6% of revenues, which was $149 greater than in

2020’s third quarter when the gross margin was at 10.5%.

Staffing which saw a 44.2% increase in revenue had strong margins at 21.1%, while Permanent Placement margins were greater than 90%.

EOR margins were compressed by just over 1 point to 9.1% due to contractual incentives given to certain clients for reaching predetermined

revenue levels, and a high level of sick leave paid by the company to its outsourced employees.

to date 2021, the Company’s gross margin percentage improved to 12.7% from 11.9% which can be attributed mainly to Media and IT

Staffing margins being > 21% and Permanent Placement which so far have enjoyed margins north of 90%.

Absent our Media Staffing year

over year Growth and Permanent Placement Revenue, our margins year to date for the period ending September 30, 2021, would be half a

point lower at 12.2%.

margin improvement in EOR, Media Staffing and Video Production year over year contributed $82 in gross profit, representing 4.7% of 2020

first half gross profit.

profit for the three-month period ending March 31, 2022, was $730 representing 12.6% of revenues, which was $17 lower from the $747 in

gross profit MMG earned in 2021’s first quarter when the gross margin was at 12.9%.

Placement margins were at 89%, IT Staffing at 19.4%, Media Staffing at 23%, and EOR at 10.4%.

Lower comparative margin can be attributed

to a loss of an estimated $69 in IT staffing gross profit due to the segment’s decline in business.

EOR increasing its share of

revenue from 77.7% to 82.5%;

at a lower-than-average margin of 10.4%, also attributed to the slight year over year margin contraction.

margins tend to be stronger at the beginning of the year before volume incentives kick in for a few of our larger clients thus causing

some relational margin compression.

Video Production which saw a number of its 2021 clients or work portions moved appropriately over

to Media Staffing, had a negative margin on only $47 in revenue due to a cost overrun on a job order.

and Administrative (“G&A”)

and administrative expenses for the three months ended September 30, 2021, were $866, as compared to $1,086 in the comparable period

in 2020, representing a 20.3% reduction.

This was also a reduction of $12 from our prior quarter ending on June 30, 2021.

The $220 decrease

in comparative three-month periods can be attributed directly to savings in salary and benefit costs by $109, and outside legal costs

Over the nine-month period ending September 30, 2021, management has trimmed $884 or 25.7% of G&A costs, as they

represent 14.3% of revenue as opposed to 17% a year ago.

The reduction was achieved while increasing the sales portion of G&A in

the last 6 months ending September 30, 2021 by $174 as the Company has added additional sales resources.

Company recognized interest expense in the amount of $15 during the three months ended September 30, 2021, compared to $30 or 50% during

the same prior year period.

For the nine-month period ending September 30, 2021, MMG interest costs were $78 compared to $283 for the

same nine-month period a year earlier, representing a $205, or 72% savings.

This cost reduction is directly attributed to a significantly

reduced reliance on the factoring line that had an outstanding ending Q3 2021 balance of $939 compared to $1,043 at conclusion of second

quarter 2020.

The reduced reliance on factoring is attributed to the Earned Income Credit (“ERC”) which enabled the Company

to reduce its payroll cost obligations by $1,156 during the third quarter.

when compared to the second quarter 2021, MMG’s $939 factoring balance was $853 higher.

This was largely because of our need to

finance $475 to pay Vivos Group outside debt.

The other factor was that the $86 balance at the end of June 2021 was exceedingly

low as our average year to date balance had been around $530.

and administrative expenses for the three months ended March 31, 2022, were $1,305, as compared to $810 in the comparable period in 2021,

representing a $495 or 61.1% increase.

This increase was predominantly the result of having an estimated $350 in arbitration related

Employee salaries and benefits were comparatively up approximately $137 to a year ago as both the sales and client services departments

were bolstered with new talent.

Sales added two heads resulting in $76 in additional salaries and commissions when comparing first quarter

2022 to 2021.

Client Services new hires added $36 in comparative salary in the quarter ending March 31, 2022, to the same period in 2021.

Thus, those two cost increases make up $487 of the $495 year over year variance.

Company incurred $29 in interest charges for financing (factoring) it’s invoices in the first quarter 2022 compared with $45 in

the same period a year ago.

MMG has been in a better cash position hence a reduced need to rely on factoring.

Income (Expense)

by ERC other income for the three-month period ending September 30, 2021, which totaled $1,813 resulting in the Company experiencing

third quarter pre-tax net income of $1,816 compared to a $429 pre-tax net loss a year earlier.

the nine-month period ending September 30, 2021, the PPP forgiveness of $5,216 and the ERC’s totaling $4,674 enabled the

Company to experience pre-tax net earnings of $9,725 compared to a loss of $1,221 in the comparable period of the prior year.

made a charitable contribution of $3 in the first quarter 2022.

AND CAPITAL RESOURCES

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payments to field talent, working capital requirements can be periodically challenged.

We have a Factoring Facility with TBC, whereas

TBC advances 93% of our eligible receivables at an advance rate of 15 basis points, an interest rate of prime plus 2%., and our prime

floor rate at 4%.

As a result of the impact of the COVID-19 pandemic, our clients may be more likely to be delinquent in their payments.

However, to date, we have not seen any adverse change in our collections, with our Days Outstanding (DSO) for first nine months of 2021

at 59 comparable to the 61 DSO for period ending December 31, 2020.

By June 2020 our DSO increased to 67 from 60 in 2019 as several of

our large clients began demanding 60-to-90-day terms.

Delays in receipt of purchase orders also had an adverse impact on DSO.

the pendulum over the past 3 quarters has swung favorably as only 3.5% of $4,405 in Accounts Receivable (“A/R”) was >

31 days past invoice due dates, with only 1% > 60.

looking at A/R aging in relation to invoice date, as of September 30, 2021, 56.3% of our $4,405 in total A/R was < 31 days aged, compared

We have a Factoring Facility with Triumph,

whereas Triumph advances 93% of our eligible receivables at an advance rate of 15 basis points, an interest rate of prime

plus 2%., and our prime floor rate at 4%.

Our Days Outstanding (DSO) for the trailing 12 months ending March 31, 2022, is at 61 comparable

to 60 DSO for the trailing twelve months ending March 31, 2021.

2019 several of our large clients began demanding 60-to-90-day terms.

Delays in receipt of purchase orders also had an adverse impact

This seems to affect MMG in the first quarter as for the 3 months ending March 31, 2022, our DSO improved 54 to 53 compared to

the same 3-month period in 2021.

looking at A/R aging in relation to due date, as of March 31, 2022, 88.2% of our $4,660 in total trade A/R was < 31 days aged, compared

to 97.6% a year ago.

Company has an additional $3,221 in other receivables associated with our ERC eligibility for the first three quarters of 2021.

our Federal and state tax liability has now increased to $1,030.

This has much to do with larger clients delaying payments and up to 30 days delay on receiving purchase orders after

the invoice has been prepared.

MMG management is working on ways to speed back up the cash conversion process outside of financing.

Federal and state tax liability increased to $688.

primary sources of liquidity are cash generated from operations via accounts receivable and borrowings under our Factoring Facility with

11 unchanged sentences

inflows do not typically align with these required payments, resulting in temporary cash challenges, which is why we employ factoring.

Debtors as of September 30, 2021, had notes receivable totaling $4,949 including default on a $3,000 promissory note and on a $750 tax

obligation in December 2019.

After numerous failed collection attempts, on February 17, 2020, the Company initiated an action in the

Circuit Court of Montgomery County Maryland against Naveen Doki and the Vivos Holdings for non-payment.

Debtors as of March 31, 2022, had notes receivable totaling $5,039 including default on a $3,000 promissory note and on a $750 tax obligation

in December 2019.

After numerous failed collection attempts, on February 17, 2020, the Company initiated an action in the Circuit Court

of Montgomery County Maryland against Dr.

Doki and the Vivos Holdings for non-payment.

was also anticipated that following the Merger, the Company would both access the capital markets by selling additional shares of Company

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was informed by the SBA that it had met the requirements and that both the $5,216 and of accrued interest totaling $57 were forgiven

funds bolstered our working capital and enabled us to bring back employees and continue to serve our clients even though their requirements

had lessened.

of September 30, 2021, our working capital was $9,417, compared to $5,970 at the end of December 2020, $7,991 as of September

30, 2020, and $566 as of March 30, 2020, approximately one month before the PPP funds were received.

The PPP funds enabled the

Company to build A/R reserves since PPP funds were employed to pay salaries of both outsourced and G&A employees during the covered

24-week period between May and October 2020.

Our adjusted working capital at the end of September 2021, excluding the notes receivable

related to the Vivos Debtors totaling $4,949, was $4,865.

our first three-quarter revenues in 2021 were 80% or less than they were in 2019, the Company was eligible for the Employee Retention

Consequently, MMG received $155 in direct payroll credits from the IRS via its payroll provider Paycom in the late 2 nd quarter

and $1,086 in the third quarter.

MMG returned $842 to the IRS for payroll credits received in the 4 th quarter once the program

ended retroactively in mid-November 2021.This payment was made to the IRS through Paycom, the Company’s payroll provider in January

these programs bolstered our working capital and enabled us to bring back employees and continue to serve our clients.

of March 31, 2022, our working capital was $8,815, compared to $5,971 at the end of March 2021.

Our adjusted working capital at the end

of March 2022, excluding the notes receivable related to the Vivos Debtors totals $3,776 compared to 1,663 a year earlier.

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-Q

Item 2. Management’s Discussion and Analysis