What changed in this filing

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Item 2. Management’s Discussion and Analysis

2022-08-15 compared with 2022-05-16 · 103 added, 66 removed, 118 unchanged (59% of the section changed)

77 unchanged sentences

OF OPERATIONS

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.

for the three months ended June 30, 2022, was $6,481, which was $1,407 or 27.7% greater than for the same period in 2021 with second quarter

revenue at $5,074.

EOR grew by $1,534 or 38.5% to $5,515, which represented 85.1% of second quarter revenue.

grew $86 to $898 in the second quarter of 2022, but approximately $106 of this total was based on two reassignments of specific

US government projects from Video Production to Media Staffing.

Staffing, a subset of Staffing, grew beyond benefitting for $106 in reclassed Video Production project revenue from a year ago, with

second quarterly revenues of $824 compared to $676 a year ago, an increase of $148.

The reclass was merely taking recurring non

project revenue previously classified as Video Production and reassigning it appropriately to Media Staffing.

The impact in 2022 was

$106 in the second quarter.

IT Staffing, the other subset, declined comparatively in the second quarter 2022 to 2021 by $62,

garnering $74 in 2022.

Production would have had a decline in revenue outside the $106 deemed not be staffing work, had remained, as that segment produced $68 in revenue compared

to $250 in the second quarter 2021.

Placement failed to post revenue in the quarter ending June 30, 2022.

the six months ended June 30, 2022, revenue totaled $12,264 compared to $10,868 in the same period a year ago, resulting in $1,396 in

incremental revenue comparably.

revenues produced an even larger comparative gain in the first half of 2022 compared to 2021, with $10,288 for the six months ended June

30, 2022, compared to $8,478 a year ago.

This is an increase of $1,810 or 21.3%, which represented 83.9% of the Company’s total

year to date (YTD) revenue through June 30.

increased as well when comparing six-month performance ending June 30, 2022, to same period in 2021, by $126 to a total of $1,822.

represented a 7.4% increase over 2021’s Staffing Revenue of $1,696 through the six months ending June 30, 2021.

Staffing grew $397 to $1,683 with $206 attributable to the reassignment of two client projects previously credited to Video Production.

Production revenue compared unfavorably to the same period in 2021, with revenues of $115 compared to $661 in

2021, a $546 drop.

If adjusted for the reclassification of work credited to it in 2021, Video Production would have dropped by

of Revenue / 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.

profit for the three-month period ending June 30, 2022, was $887 representing 13.7% of revenues, which is a $169 improvement over the

$718 in gross profit MMG earned in 2021’s second quarter when the gross margin reached 14.1%.

quarter over quarter gross margin (“GM”) percentage drop can be partially attributed to the strength of the aforementioned

EOR revenue increase of $1,534, which resulted in EOR dominating the four business segments by accounting for 85.1% of the business versus

78.5% in the second quarter 2021;

as EOR business GM percentage was 11.7% to the rest which totaled 22.7%, the over quarterly average

slipped from a year ago.

EOR’s 11.7%, margin was strong compared with 10.4% in the first quarter 2022, 10.1% in the second quarter a year ago and a 9.8%

average for all of 2021.

This improvement can be attributed to some pricing changes negotiated with several key clients, and the client

mix being favorable as clients with slightly higher margins contributed more heavily to the quarter.

This is not expected to be the case

throughout 2022.

Staffing gross profit grew modestly by $6 to $191, as volume had more to do with the growth than gross margin percentage as Staffing

margins declined by 80 basis points to 20.7%.

IT Staffing dropped approximately 1% in gross margin percentage to 27.8%.

to date 2022, the Company’s gross profit improved by $153 or 10.5% to $1,616 compared to 2021.

margin percentage fell slightly to 13.2% from 13.5%.

experienced a margin boost year to date to 11.1% compared to 10.1% through June 30, 2021.

Video Production’s YTD GM % also

improved to 24.9% from 20.9% a year ago.

Media Staffing GM % has slipped to 21.9% versus 24.5% in the six months ended June 30,

Gross Profit in Media Staffing for the nine months ending June 30, however rose to $368 from $314 as volumes

and Administrative (“G&A”)

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.

and administrative (“G&A”) expenses for the three months ended June 30, 2022, were $1,097, as compared to $878 in the

comparable period in 2021, representing a $220 or 25.1% increase.

This increase was predominantly the result of having an estimated $107

in arbitration related costs, employee salaries and benefits ratcheting up by $64 or 9.4% from the second quarter 2021, and contracted

labor and recruiting costs increasing by $33 comparatively from a year ago.

the six months ending June 30, 2022, G&A was $2,402 compared with $1,688 a year ago, an increase of $714 or 29.7%.

However, the legal

and consulting costs associated with our arbitration (See Note 1) represented $506 in totality, a $419 increase in like costs associated

with the Vivos Matter from a year ago.

MMG salaries and benefits increased $201 with sales and client services department non incentive

based compensation increasing $127, as we increased our investment in these two vital groups.

The other areas of spend increase were

commissions to drive sales and recruiting totaling $33;

bonus accrued at $72 as we move to tie more compensation to performance-based

commercial legal $19;

recruiting software $15;

and travel $11.

Company incurred $66 in interest charges for financing (factoring) its invoices in the first six months of 2022 compared with $63 in

the same period a year ago, In the second quarter MMG incurred $36 in interest changes compared to

$18 in the same period a year ago as MMG increased its average position under finance from $1.3M a year ago to $2.5M in the second quarter

Income (Expense)

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

benefitted from $1 in corporate credit card rebate in the second quarter 2022.

For the six months ended June 3, 2021, MMG had $0 in other

income compared to a year ago when MMG earned $8,042 in other income courtesy of $5,273 in the PPP Forgiveness which included the recovery

of accrued interest, and $2,769 In Employee Retention Credits (ERC).

AND CAPITAL RESOURCES

working capital requirements are driven predominantly by EOR field talent payments, G&A salaries, public company costs, interest

associated with factoring, and client accounts receivable receipts.

Since receipts from client payments are on average 70 days behind

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

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.

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.

working capital requirements are driven primarily by EOR field talent payments, G&A salaries, public company costs, interest associated

with factoring, and client accounts receivable receipts.

Since receipts from client payments are on average 70 days behind payments to

field talent, working capital requirements can be periodically challenged.

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

Our Days Outstanding (DSO) for the trailing 12 months ending June 30, 2022, is at 64 comparable to 62 DSO for the trailing

twelve months ending June 30, 2021.

2021, a few of our large clients began demanding 90-day terms.

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

our DSO since 2019.

Despite these challenges, our DSO in the second quarter ending June 30, 2022, improved to 65 from 80 in the first

three months of 2022.

looking at A/R aging in relation to due date, as of June 30, 2022, 77.4% or $3,620 of our $4,668 in total trade receivables were <

31 days aged, compared to 97.6% a year ago.

This has much to do with extended payment terms to our larger clients as well as delays of

up to 30 days 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 has a balance of $92 at the end of the second quarter 2022, mainly because we deposited $725 for our

2021 expected tax liability.

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

1 unchanged sentence

Because certain large clients have changed their payment practices announcing 60-

and 90-day terms amounting to a unilateral extension to contractual terms by 30-60 days, we can be adversely impacted since Triumph does

not provide credit if an account obligor pays more than 120 days after the invoice date.

and 90-day terms amounting to a unilateral extension to contractual terms by 30-60 days, we can experience an adverse cash flow impact

since Triumph does not provide credit if an account obligor pays more than 120 days after the invoice date.

primary uses of cash are for payments to field talent, corporate, and staff employees, related payroll liabilities, operating expenses,

public company costs, including but not limited to, general and professional liability and directors and officer’s liability insurance

public company costs, including but not limited to, general and professional liability and directors’ and officers’ liability insurance

premiums, legal fees, filing fees, auditor and accounting fees, stock transfer services, and board compensation;

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

Debtors as of June 30, 2022, had notes receivable totaling $5,094 including default on a $3,000 promissory note and on a $750 tax obligation

in December 2019.

24 unchanged sentences

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.

of June 30, 2022, our working capital was $8,608 compared to $9,361 on December 31, 2021, and compared to $9,361 on December 31,

Our adjusted working capital at the end of June 2022, excluding the notes receivable related to the Vivos Debtors totals

$3,514 compared to $3,605 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