What changed in this filing

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Item 7. Management’s Discussion and Analysis

2023-03-31 compared with 2022-03-31 · 280 added, 316 removed, 176 unchanged (77% of the section changed)

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financial information may not be indicative of our future performance.

for Maslow EOR services and field talent is dependent upon general economic conditions and labor trends.

The United States economic backdrop

took a negative turn in the first quarter 2020 as COVID 19 (“COVID”) profoundly changed the business landscape.

orders which was federally mandated and later left to states and companies themselves to self-regulate in order to prevent the spread

of COVID, meant many Maslow workers could not perform their type of work from home (e.g., video, sound, lighting crew, makeup-artists).

This was because a large portion of Maslow employees were assigned to field, location, or studio filming projects for our clients that

require close contact with others.

Consequently, our business suffered as our revenues dropped from $38,444 in 2019 to $29,202 in 2020.

In the first quarter of 2020 our performance, which was negatively impacted in the last 2 weeks of the quarter, saw a $500 increase over

the comparative first quarter of 2019, with $8,801 to $8,301.

For the remaining three quarters MMG saw quarterly 2020 declines of 46%,

38.5%, and 13.7% respectively compared to 2019.

despite the revenue decline year over year by 24%, MMG’s gross profit fell only by 14.6% as our margins increased due to our burgeoning

higher margin media and IT staffing businesses.

This was evident in our 2020 annual gross margin percentage of 11.9% being 12.4% improvement

than the 10.6% derived in 2019.

But what could not be managed proportionately in 2020 was our SG&A which rose 49.5% to $4,462 as

public company costs added $1,532, which represented 104% of the $1,477 SG&A increase in 2020 over 2019.

we received $5,216 in Payroll Protection Plan (“PPP”) funds, which enabled our business to be able to reduce the number of

job cuts and in some cases keep customer assigned employees working.

2021 many companies were slow to have their employees return to an office or group setting from a work from home paradigm which continued

to hamper our business.

Vaccines were rolled out so by the end of the Spring 2021, many states had lifted restrictions and MMG customers

began having media employees back in the studio and in the field.

However, several clients had vaccine and or mask mandates that some

of our workers opted not to qualify resulting in a loss of revenue.

More impactfully, the Company began to feel the ill effects of a

full year’s loss of some DirecTV programming from February 2020, and customers who left MMG altogether, to either eliminate media

activities for foreseeable future, offshore or insource their media departments.

The 6 largest attritted customers represented a $4,385

loss of revenue in 2021 over 2020, with DirecTV accounting for $1,204.

Since the estimated loss of programming was estimated to be $4,000,

DirecTV otherwise increased use of existing services at approximately $2,796.

Also positive was MMG recognizing new client revenue

in 2021 of $1,315 and existing customers increasing their business with us by $4,765.

are hopeful that the dissemination of vaccines and the waning of serious COVID cases will result in resumption of a normally functioning

economy which will continue to enable our clients to return their payrolls to normal levels that in turn, will continue ours and an overall

economic rebound.

However, no assurance can be given on if and when this will happen or what impact it will have on our business.

far as cash is concerned, in 2021 our cash positioned strengthened due to our receiving forgiveness (Per the IRS on June 6, 2021)

for the PPP loan we received in May 2020, and the Employee Retention Credit (ERC) which we were eligible for in the first 3 quarters

of 2021 and received $1,253 in active payroll credits and refunds.

Overall, our ERC refunds for quarters one through three totaled

However, the Internal Revenue Service (IRS) withheld $718 of our ERC entitlements that were filed via 941X forms,

to apply to our 1120 tax liability, leaving us $2,494 remaining due to us in deferred ERC refunds, which as of March 28, 2022,

we have yet to receive.

was a challenging year for Reliability and our wholly owned operational entity Maslow Media Group.

Although our revenues declined by

$521 or 2.1% to 2021 and by 12% or $3,507 to 2020;

conversely though, our gross profits of $3,494 were $228 over 2021 and $20 over 2020’s

The more attractive gross profit on lower revenues is reflected by our ever-increasing gross margin which reached 13.6% in 2022

versus 12.4% in 2001 and 11.9% in 2020.

This was the fourth consecutive year that MMG’s gross margin percentage has increased and

represents an 8.7% compounded annual growth rate (CAGR) over the last three of those years.

consistent improvement of gross margins has been driven by renewal pricing increases, changes in volume discounts, billing for added

overhead, equipment rental price increases, and client mix in which a greater share of our business has shifted to more favorable company

time, effort and expense put into the arbitration proceedings (see section1) in the first half of 2022 detracted from officer focus on

sales, our strategic focus and thus distracted from our ability to fully drive stockholder value.

In the fourth quarter, MMG

made changes to the sales organization with the intent on driving more immediate new business.

The arbitration award has assisted the

Company in attracting many new additions to our corporate team.

These additions to our team will assist us in strengthening client relationships

while providing a better employee experience for our talent working in the field.

for Maslow EOR services has not recovered to pre-2020 COVID 19 (“COVID”) levels as the Media business was profoundly impacted

by the stay at home and vaccination mandates.

Maslow’s clients have been slower to return to full schedules even as federal, state

and local governments have lifted COVID-19 restrictions.

Some mask and vaccine mandates still impact the total number of MMG employees

assigned to our clients.

Consequently, our business has been slow to recover to 2019 levels when our revenues were $38,444.

quarter of 2020 our performance, compared to the same period in 2019 saw an increase of $500 with $8,801 to $8,301 despite a swoon in

the last two weeks of the quarter when stay at home orders from state and the Federal Government began taking effect.

addition to the impact of the pandemic, some of our larger clients have experienced internal reorganization, show cancellations, and

budget reductions that have impacted their utility of our services.

For instance, one client cancelled two nationally syndicated shows

that we had been staffing.

Regardless, COVID-19 and the response to the pandemic took its toll as the remaining three quarters MMG saw

quarterly 2020 declines of 46%, 38.5%, and 13.7% respectively compared to 2019, and ended up 2020 with $29,202 in revenue.

2021 we realized an additional decline of revenue down 10.1% from 2020 levels to $26,246.

Besides the slower return to work nature of

the media business, there was a mix of new and more active clients, and those who had large downward budget shifts.

final three quarters of revenue performance in 2021 were on par with 2020 with $20,452 realized over $20,401 in 2020, demonstrating the

strength of the 2020 first quarter that was abruptly halted by the pandemic.

So, in essence ¾ of 2021 revenue was on par with

However, most of MMG’s larger clients were slow to ramp back up, and we suffered steep long-term revenue declines due to

client attrition, internal reorganizations or budget cuts (i.e., Client A), an insourcing of their media needs, offshoring altogether,

or cut altogether This paradigm has not allowed for revenues to begin returning to pre-COVID-19 2019 levels.

The 6 largest attritted

customers represented a $4,385 loss of revenue in 2021 over 2020, with Client B accounting for another $1,204.

Client B had actually

eliminated certain programming resulting in an estimated $4,000 loss in 2021 annual revenue.

Client B’s 2021 to 2020 annual net

revenue decline wound up being $1,204 as they increased revenue activity by $2,796 in other areas of their business.

2022, MMG seemed poised to be on pace to beat 2021’s annual revenue total of $26,246, but an abrupt curtailment of staffing over

the holidays lasting approximately 2 weeks by five of our top 6 clients, resulted in a steep decline in revenue especially when compared

to the previous 2 years also making December of 2022 the lowest revenue month of 2022.

MMG revenues in December 2022 comparative to 2021

were down $1,401 or 46% and $1,169 or 41% to December 2020.

a result, annual revenue slipped by $521 to $25,725 compared to $26,246 in the year ending December 31, 2021.

despite the revenue decline in 2022 to 2021 year over year by 2%, MMG’s gross profit increased by $228 or 7% in the year ending

December 31, 2022, compared to a year ago, as our margins continue to ascend to new heights on the strength of our EOR business that

saw margins increase to 12% in the year ended December 31, 2022, from 9.8% in the year ended December 31, 2021.

Since EOR revenue in

2022 of $21,894 represents 85.1% of our overall revenue, this business segment clearly drove our company margin improvement.

improved EOR margins can be attributed to four factors, two within and two outside our control;

changes in pricing upon client renewals,

new pricing for equipment rentals, larger margin clients dominating the product mix, and greater use of W2 employees by our clients which

yield on average 1.2% higher margins.

It also helped that we maintained strong non-EOR margins at 22.3%.

Thus, our annual gross margin

percentage of 13.6% represented a fourth consecutive year of growth;

comparing 12.4% and 11.9% in 2021 and 2020 respectively and 10.6%

what could not be managed proportionately in 2021 was our SG&A which rose 23.3% to $4,400 as corporate non-operational costs, consisting

mostly of public company and legal costs added $1,451, which represented $548 of the $820 SG&A increase when comparing the year ending

December 31, 2022, to the same period in 2021.

Operationally SG&A at $2,949 was $285 over the $2,665 in SG&A spend in 2021.

far as cash is concerned, in 2022 our cash position remained strong due to our receiving $1,651 in Employee Retention Credits (ERC) from

the first quarter of 2021.

We are still due $1,174 from the second quarter 2021 that was filed via a 941X form and received by the IRS

in December 2021.

We accrued an additional $26 for interest using the IRS interest schedule.

working capital though has assumed repayment of Vivos Debtors which as of December 31, 2022, was $8,645.

Our adjusted working

capital excluding the $4,985 in Vivos Debtor notes is $4,376.

2021, we bolstered our business development department adding a vice president of sales with extensive industry experience and

a second account executive.

Meanwhile the Company’s executives and its board of directors worked together on managing costs with

the rest of our organization tightening it’s proverbial belt by overall eliminating $484 in employee wages, tax and benefits from

Some positions were eliminated and reclassed, payroll cycles consolidated, and non-essential spend ceased, to reduce overhead costs

continued impact of the COVID pandemic cannot be precisely predicted.

We do know that virtual staffing is no longer a limited niche for

certain companies and certain positions.

Virtual scenarios are also favored by generation Z which values work-life balance as one of

the most important factors when deciding on a company to work for.

Considering the perks that remote working offers, and the keen interest

shown by employees from different age groups, we believe that remote working will be prevalent in 2022 and beyond.

This paradigm however

should not adversely impact MMG, in that whether media jobs are filled virtually or not, MMG has the pipeline of talent to fill these

diversified roles.

Our adjusted working capital

excluding the $5,251 in Vivos Debtor notes is $3,394.

are investing in new technologies and bringing on additional staffing professionals to grow the staffing side of our business in 2023.

EOR has been the Company’s primary focus for a long time and 2023 brings a focus on growing our Direct Hire, Staffing & Recruiting

That said, our determination of what service to bring to each client depends on individual needs.

But when it comes to non-media

staffing, we certainly can focus more on IT and administrative opportunities with our existing customers while opening up new opportunities.

the Vivos Matter award has been settled the Company may contemplate moving forward with its original plans to increase outstanding shares

by authorizing new ones or via a reverse split to acquire synergistic staffing companies to grow more quickly.

The Company would also

like to move to the OTCQB and or OTCQX on its way to eventually being listed on the NASDAQ Exchange.

The Company continues to work towards

meeting all of the requirements to pursue up listing the OTC-QB or OTC-QX exchanges.

Once collection of the Vivos Debtors has taken place,

MMG may consider moving forward with this initiative.

staffing is no longer a limited niche for certain companies and certain positions.

Virtual scenarios are also favored by Generation Z

which values work-life balance as one of the most important factors when deciding on a company to work for.

Considering the perks that

remote working offers, and the keen interest shown by employees from different age groups, we believe that remote working will be prevalent

in 2023 and beyond.

This paradigm however should not adversely impact MMG, in that whether media jobs are filled virtually or not, MMG

has the pipeline of talent to fill these diversified roles.

we believe given the changing nature in specialized staffing there exists a greater opportunity to expand our EOR business as it offers

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While we will continue to focus on growing the contingent staffing

side of our business, our splash into Permanent Placement or Direct Hire, has opened up a new avenue in business of diversified relationships

(Media, IT, and finance and administrative roles) that have strengthened our gross margins and has the potential to grow and flourish.

hiring of talent for our existing clients has always been a part of our business model, but more often than not, however it was done

by transitioning a contingent worker to a full-time position which contractually based on time of service has not resulted in any incremental

revenue for the company.

we are now finding success fulfilling this need on the front end of the employment life cycle for new clients and existing ones, having

added $167 in high margin revenue in 2021.

side of our business, our splash into Direct Hire staffing, has opened up a new avenue in business of diversified relationships (Media,

IT, and finance and administrative roles) that have strengthened our gross margins and has the potential to grow and flourish.

focus on traditional staffing has resulted in some early success in filling client Direct Hire needs, having added $167 in high margin

revenue in 2022.

focus reflects our desire to shift our portfolio toward a higher margin, higher value proposition.

a result, we have continued to move forward with our diversified offerings and future specialization staffing strategy, updating our

already expert operating model and organizing our business to more easily acquire and maintain client accounts.

already expert operating model and organizing our business to maximize acquisition and retention of client accounts.

concern is the low probably of maintaining the National Football League’s (NFL) RedZone channel programming after this past season

ended in January 2023.

Client B, which had the rights to its own RedZone broadcast since 2005, lost those rights as a result of Google/YouTube’s $14

billion, 7-year deal for “Sunday Ticket” rights.

Consequently, the NFL will only offer the version of the “NFL RedZone”

channel produced by the NFL Network next season.

we staff other events for Client B, the loss of this programming could impact MMG between $2-$3M in annual revenue.

MMG will continue

to pursue other opportunities at Client B and the continued staffing of sports programming of this type.

is a national provider of employer of record, recruiting and staffing services, consisting of media and IT resources.

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and Multimedia Production:

With 32 years of experience, the Company’s subsidiary, Maslow, offer script to screen expertise

With 35 years of experience, the Company’s subsidiary, Maslow offers script to screen expertise

including producers, audio engineers, editors, broadcasters, makeup artists, camera crews, Gaffers and grips, drone operators and

Also referred to as Direct Hires, we strategically recruit and fill a variety of fulltime roles for our customers which

is only limited by our recruiting capabilities which are diversified.

Also referred to as Direct Hires, we strategically recruit and fill a variety of fulltime roles for our customers which is

only limited by our recruiting capabilities which are diversified.

Company’s subsidiary, The Maslow Media Group, Inc.

(“Maslow”) is currently the only earning entity for the business.

(“Maslow”) is currently the only operating entity for the business.

After our Merger in October 2019, non-operational expenses (e.g., public company fees, D&O insurance, investor relations, etc.) were

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had revenues totaling $25,725 in 2022, which was a 2% decrease over $26,246 in 2021.

The $2,956 decline can be attributed to several

factors including the COVID-19 impact which undoubtedly was profound but difficult to measure given there is no way to know what level

of growth existing clients may have had or revenue potential of new clients.

Maslow lost $8,354 to accounts with declining revenues => $100, including terminated accounts totaling $4,385 or 52% of the

but conversely added $4,765 from new or growing accounts that had at least $100 more in revenue in 2021 from 2020.

DirecTV cancelled Sirius-XM programming in February 2020 that we believe had a negative impact of $4,000 on revenue.

However overall,

DirecTV year over year revenue declined by only $1,204 as the Red Zone added another week due to the NFL’s expanded 17 game schedule.

attrition cited above at $4,385 may not be permanent as many clients hire Maslow for special events and some have elected to offshore

or insource its media or IT workforce which may not work out long term.

The decision to leave Maslow or not use Maslow services in 2021

by these six clients was not attributable to Maslow’s pricing, service, or performance.

the 6 attritted accounts, 3 were IQS legacy customers totaling $1,352 or 31% of the attritted total.

The largest was Lifetouch

which elected to offshore at the end of 2020 resulting is a 2021 over 2020 revenue loss of $991.

saw 11 MMG customers increase revenue year over year by =>$100, resulting in $4,765 revenue increase.

This includes 17 accounts representing

$1,315 in new customer revenue, which includes two accounts which actually began with marginal revenue late in 2020.

a revenue contribution standpoint our top 10 clients represented $22,417 which is 85.4% of 2021 revenues, which was an increase in top

10 revenue reliance as in 2020 the top 10 represented 78.4% of revenue at $23,160.

in rebates were issued in December 2021 which was $9 more than a year ago when they were $24 in 2020.

The $521 decline can be attributed to several factors

including the slower return to normal work schedules for our media EOR and staffing customers from COVID-19 shutdowns and work from home

Maslow lost $4,529 to 10 accounts with declining revenues => $100, which mostly declines in revenue by Client E as they moved their

creative business to an overseas competitor and Client A, which scaled back and moved several EOR staff to the Client A payroll.

clients scaled back their media budgets.

we added $4,290 from 8 accounts that had => $100 in revenue in 2022 from 2021.

Client C stepped up their programs as did Client B,

and several others in the insurance, education, and healthcare space.

a revenue contribution standpoint our top 10 clients represented $22,940 which is 86.1% of 2022 revenues which is an increase in top

10 revenue reliance as in 2021 the top 10 represented 85.5%, or 21,628.

2020 saw a 78.4% top 10 reliance of revenue at $23,160.

in rebates were issued in December 2022 which was $2 less than a year ago when they were $33 in 2021.

following tables summarize key components of our results of operations for the periods indicated, both in dollars and as a percentage

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Income tax benefit (expense)

Non-controlling interest in consolidated affiliates

Net Income (Loss)

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Video and Multimedia Production

Permanent Placement

Direct Hire (Formerly Permanent Placement)

Total Revenue

In 2020 we showed $35 as Other revenue which has been reclassified

as an EOR revenue for presentation purposes.

of Record (EOR) Revenues :

EOR represented 81.3% of our revenue in 2021 as opposed to 80.8% in 2020 and 89.6% in 2019.

to 2021 EOR decline from $34,613 to $21,346 can be attributed to this business segment being hit the hardest by COVID-19 with

large accounts not fully recovered to 2019 levels, and attritted clients.

The burgeoning Media Staffing revenue by $1,135 also impacted

the level of EOR’s revenue concentration.

Employer of Record (EOR) Revenues :

represented 85.1% of our revenue in 2022 as opposed to 81.3% in 2021 and 80.8% in 2020.

The 2020 to 2022 EOR increase in revenue contribution

can be attributed to this business segment showing signs of returning to pre COVID-19 levels and a lack of growth in our Staffing, Video

Production, and Direct Hire performance.

Client A had the largest EOR revenue decline of any client at $1,427, which can be attributed

to a slate of employees moving from our payroll to Client A’s.

However, Client C and Client B increased their EOR revenue by a combined

This $451 revenue variance among the three clients makes up 78.7% of the year over year EOR revenue increase 2022 over 2021.

and Staffing Revenues :

Whereas our IT Staffing business weathered a steep decline in approximately $2,000 from $2,571 to $571,

our Media Staffing division did make up 60% of the decline delivering $1,135 in incremental revenue over its 2020 performance.

Thus, Media Staffing at $3,042 represented 11.6% of total 2021 annual revenue whereas it only represented 6.5% based on its $1,907 in

revenue in 2020.

decline in IQS business was in motion prior to Reliability’s acquisition of IQS from the Vivos Group in December 2019.

over quarter revenue decline had begun in in the third quarter 2019 when run rate revenue dropped from $3,696 to $3,419.

In the fourth

quarter 2019 this decline had reached a run rate of $3,004.

This decline has continued for another 8 quarters ending December 2021, with

COVID-19 in the 2 nd quarter 2020 having the most profound impact as business dropped 19.4% to a run rate of $2,574, and then

in the 4th quarter 2020 by 30.9% once it became apparent Lifetouch was offshoring its IT software assurance business which had delivered

$999 in 2020 despite COVID.

This brought the 2021 first quarter run rate down to $1,096.

reason there was no bounce back for this business segment in Q4 2020 was a combination of what we still believe is the temporary loss

of two clients, Inspire Brands and Accruent, who both began implementing temporary hiring freezes in early 2020.

This resulted in a $745

revenue loss in 2020, and Abbott Labs through vendor management firm Tapfin, of losing 7 staffing positions to permanent offers.

Staffing revenues declined by $145 or 4.2% to $3,468.

IT Staffing declined by $287 while our Media Staffing

division increased revenues by $1436 over its 2021 performance.

Thus, Media Staffing at $3,176 represented 12.3% of total 2022 annual

revenue, whereas it represented 11.6% of 2021 annual revenue and 6.5% of 2020 revenue.

The Media Staffing increase, however, was driven

to a degree by our reclassing staffing activities to Video Production clients after 2021.

We believe the approximate impact of this change

If we look at performance in that light, our Media Staffing declined by an equal amount to IT at $287 in the year ended December

31, 2022, to the same period a year ago.

One notable lost account was one which hired us to staff a government contract it elected not

This led to a $131 loss in 2022 revenue when compared to 2021.

and Multimedia Production Revenues :

Video Production which includes managed services and project freelance work, was relatively

flat in achieving $1,121 in revenue in 2021 against $1,125 a year earlier.

This business has a number of US government contracts with

the US House of Representatives leading the pack with $112 in 2021 revenue.

Gross profit represents revenues from services less cost of services expenses, which consist of payroll, payroll taxes,

benefits, payroll-related insurance, union benefits, field talent, recruiting software and reimbursable costs for out-of-pocket items.

our gross profits did not decline as much on a percentage basis in relation to our revenue decline.

Whereas our revenue declined $2,956

or 10.1%, our gross profit decreased by $208 or 6% from $3,474 to $3,266.

was due to a gross margin improvement from 11.9% to 12.4% as Permanent Placements alone accounted entirely for 50 basis point rise in

delivering $164 in gross profit which was after only $3 in incremental COR.

Although we experienced positive margin increases in our

EOR and Video Productions business segments, the loss of higher margin IT staffing volume and with some margin erosion in our Media Staffing

business neutralized that gain.

EOR’s revenue declined by $2,253 its gross margin improved 60 basis points to 9.8% from 9.2% in 2020.

Our Media Staffing however

saw its gross margins decline from 22.8% to 21.2% as a consequence of being more competitive to win new business as our staffing revenues

increased by 59.5% or $1,135.

The combined $4,900 in 2021 non EOR revenue garnered a gross profit margin of 24.1% which did not compare

quite as favorably in gross margin to 2020’s $5,603 in non EOR revenue which garnered a margin percentage of 24.1%.

This was because our IT Staffing revenue dropped by $2,000 and its gross margin from 30.5% to 27%.

Video Production, which includes managed services and project freelance work, was down sharply

in revenue in 2022, garnering $264 against $1,121 a year earlier.

However, if we factor the estimated $383 that was reclassed to Media

Staffing in 2022, the revenue would have been recorded as $648 and the decline to 2021 revenue would be $473 versus $856.

business was hurt by loss of a customer which provided $119 in revenue in 2021, and reduced demand for production activities by the U.S.

Environmental Protection Agency (EPA) and The US House of Representatives with the former revenues at $90 for year ending December 31,

2022, from $270 in same period 2021, and the latter down 19% from $457 in 2021 to $370 in 2022.

Gross profit represents revenues from services less cost of services expenses also referred to as Cost of Revenue (COR),

which consist of payroll, payroll taxes, benefits, payroll-related insurance, union benefits, field talent, recruiting software license

fees and reimbursable costs for out-of-pocket items.

Gross Profits rose in 2022 by $228 or 7% to $3,494 from $3,266 in the year ended December 31, 2021.

gross margin is the percentage of revenue after Cost of Revenue (COR).

Gross margins increasing to 13.6% in 2022 from 12.4%

in 2021 was the catalyst of our gross profit growth.

This was the fourth consecutive year in which MMG has been able to increase its

gross margins, with the compounded annual growth rate (CAGR) of such increases being 7.2%.

Since 2019, the CAGR is 8.6%.

margin improvement was driven entirely by our EOR margins increasing 2.2 points to 12% from 9.8% in 2021.

The only other business segment

margin improvement was Video Production moving to 23.7% from 19.4%, but this was because of exodus of account revenue to staffing described

with the overall impact not being significant because the Video Production contribution to revenue is only 1%.

margins which were 9.2% in 2020, have risen to 12% due to price changes to large clients at their contract renewal, a mix in client revenue

favoring those with higher contractual margins, increased use of higher margin W2 over 1099 workers, and equipment rental pricing change

which enabled our gross profits to increase by $51 making up 22% of our $228 gross profit improvement 2022 over 2021.

Media Staffing, however, saw its gross margins decline 2 points from 22.3% to 20.3% as a consequence of having taken on over $600 in Video

Production revenue at lower margins, and the roles being filled in 2022 having tighter margins.

IT Staffing also saw a decline to 21.4%

in 2022 from 26.9% in 2021.

But this was the result of far few resources being brought to bear at lower price points leading to margin

This paradigm can reverse itself as this business becomes revitalized.

General and Administrative Expenses (“SG&A”) :

SG&A expenses decreased for second straight year

this time by $895 to $3,567 from $4,462 in 2020, $903 of which were related to non-operational corporate costs, with approximately $339

of which were public company based and $132 were for outside legal fees associated with our Vivos Group dispute.

Otherwise, our operational

SG&A decrease in 2021 over 2020 was only $231.

overall SG&A savings were in wages and benefits of $484 in 2021 over 2020, which can be attributed to elimination of our General

Counsel post, reorganization of IQS into Maslow Media, favorable replacement costs for departed overhead resources, and not filling

certain open posts.

We did however add two business development personnel.

Non-operational

corporate costs for 2021 were $903 or 42.6% less than they totaled in 2020 when they were $1,567.

These are costs classified as

such after the Company went public via the reverse merger in October 2019.

The 2021 savings drivers were salary, payroll tax, and benefits

all totaling $348, and outside counsel (legal) at $326, investor relations at $43 and insurance at $15;

all cost reductions respectively

2021 over 2020.

Interest income from related parties increased by $162 from $112 to $274, as a result of employing the

contractual default interest rate on Vivos Debtor notes receivable which began 2021 and applied to eligible periods prior, with a note

balance of $4,258 and ended with $4,985 which included a $454 net increase in principal due to $478 Libertas payment minus $24 for presumed

IQS bad debt recovery.

SG&A expenses increased $833 to $4,400 from $3,567

largely because of $605 in legal and other professional service fees associated with the Vivos Matter and Arbitration.

non-operational costs inclusive of the $605 were $1,451, were $548 greater in 2022 than in the same period ending December 31, 2021.

$343 of the $1,451 were public company related costs.

inclusive of commissions, payroll tax, and bonus rose $110 in the year ending December 31, 2022, compared to same period in 2021.

increases by department were driven by client service salaries up $55 as we added headcount and leadership to enable sales to focus on

customer acquisition solely.

Human resource (HR) department, which includes field support rose $19 and the executives by $35.

sales and marketing salaries were down by $32 and accounting and finance down $15.

Staff health benefits were up $81 due to rising premium

costs and because we had a large credit for unused portion of our 2020 subsidy booked in 2021.

only other notable variances were commercial legal were up by $46 in 2022 over 2021, mainly due to union negotiations, recruiting

software subscriptions up $35 and recruiting costs increasing by $32.

The greatest cost decrease was amortization, down $34

since there were no longer any intangible assets to amortize as the balance was written off entirely in 2021.

SG&A costs in 2022 were $2,949 which was $284 greater or 10.7% than the $2,665 operational SG&A costs in 2021.

The largest increase

in spend was on health benefits for all SG&A employees at $81.

Operational salaries (inclusive of payroll taxes, leave and bonus

only) were $24 higher in 2022 over 2021.

Interest income from related parties decreased by $42 from $274 to $232, as a result of last year’s accrued interest

income including adjustments to prior periods based on the proper default rates and dates.

Maslow earned an additional $23 mostly for

the delay in first quarter ERC receipts which were not paid until August 31, 2022, accrued another $3 for a miscalculation of interest

owed and $26 to cover the earned portion through December 31, 2022, for the second quarter 2021 ERC for $1,174 that we still await payment.

Income (Expense):

Other income was $9,681 as the Company took the PPP long term debt to other

once it was forgiven in June 2021, and the $4,465 in ERC refunds.

Interest expense, decreased by $242 from $281 to $39 as $35 of $57 credited in accrued PPP interest was recorded in

2020, and reliance on factoring was minimized in large part to the benefit of having ERC applied to payrolls from the end of the second

quarter through the third quarter.

Overall, factoring interest totaled $71;

and interest on business insurance was $2.

Income tax expense was $984 compared to a $230 tax credit as 2020 yielded a net operating loss (NOL) of $789 and

2021 net income of $7,893.

Other income was $223 as the catalyst was the Company receiving $211 in additional ERC funds from our 941X

submission for the first quarter 2021, that we thought to be ineligible when it was filed.

In the year ending December 31, 2021, MMG

booked $9,681 in Other Income (Expense) as combined PPP loan forgiveness and ERC refunds minus $688 for writing down goodwill and remaining

intangible asset for IQS were aggregated.

Interest expense, increased $132 from $39 to $171 as our borrowing base was higher in 2022 versus 2021, our factoring

interest rate rose from 6% to 9.5% over the course of 2022, and last year our interest expense total included $35 in accrued PPP interest

Thus, the adjusted increase in cost variance interest in 2022 would be $97.

Income tax expense in 2022 was $170 compared to $984 a year ago for the year ending December 31, 2021.

Despite the Net

Loss of $739, taxes were posted for additional taxes owed the federal and state governments for 2021’s tax returns which were not

filed until mid-October 2022.

There were also penalties and interest charged on the late portion of what was owed the IRS.

AND CAPITAL RESOURCES

working capital requirements are driven predominantly by EOR field talent payments, SG&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 Business

Capital (TBC).

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 of December 31, 2021, 74% of our $5,592 in A/R was current compared to 63% out of $6,629 which was

current in on December 31, 2020.

17.9% is 1 to 30 days past due compared to 26% a year ago, 4.6% between 31 and 60 days past due versus

8% in 2020, and 3.6% greater than 60 days versus 3% at end of 2020.

associated with factoring, legal costs associated with the Vivos Matter, and client accounts receivable receipts.

Since receipts from

client payments are on average 69 days behind payments to field talent, working capital requirements can be periodically challenged.

We have a Factoring Facility with Gulf Coast Bank which advances 93% of our eligible receivables at an advance rate of 15 basis points,

an interest rate of prime plus 2%., with our prime floor rate at 4%.

As of December 31, 2022, 66.3% of our $5,750 in accounts receivable

was current compared to 70% out of $5,592 which was current in on December 31, 2021.

As of December 31, 2022, 21.2% is 1 to 30 days past

due compared to 17.9% a year ago, 11.6% between 31 and 60 days past due versus 4.7% in 2021, and 1% greater than 60 days versus 3.6%

at the end of 2021.

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

Triumph enabling access to the 7% unfactored portion.

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 no

longer provides credit if an account obligor pays more than 120 days after the invoice date.

Gulf Bank (“Gulf”) enabling access to the 7% unfactored portion.

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 TBC no longer provides 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,

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obligation in December 2019.

After numerous failed collection attempts, on February 25, 2020, the Company initiated an action

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

July 2021, Maslow paid $475 to Libertas to settle a portion of Vivos Group debt which had included Maslow as a signer going back to 2018.

The “Liquidation Agreement,” was supposed to shield the Company from this debt as part of the Merger Agreement;

but the Vivos

Group refused to comply with the agreed upon terms.

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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No assurance can be given as to when this might take

May 5, 2020, Maslow received $5,216 loan through the Paycheck Protection Program (the “PPP”) with a term of two (2) years

and an interest rate of 1% per annum.

The PPP provides that the Company may apply for forgiveness of this loan if the loan proceeds were

used for payroll and certain other specified operating expenses while maintaining specified headcount requirements.

The accrued interest

on the PPP loan as of December 31, 2020, was $34.

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

had lessened.

June 10, 2021, MMG received notification by the Small Business Administration (“SBA”) of forgiveness of its PPP 2020 Loan

totaling $5,216.

The forgiveness included the deferred interest of $59 totaling $5,275 in principal and interest.

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

Consequently, Maslow 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.

Maslow has to return $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 2022.

the past three years MMG received eligible forgiven PPP Loan totaling $5,216, ERC cash of $3,501 out of eligible $4,676, which has bolstered

working capital enabling us to invest in software, build A/R reserves, and hire needed resources for operations.

of December 31, 2022, our working capital was $8,645 compared to $9,361 in 2021 and $5,970 at the end of 2020.

ERC of $4,450

in 2021 enabled the Company to build A/R reserves as the PPP funds in 2020 were employed to pay salaries of both outsourced and SG&A

Once the $2,494 in ERC is fully refunded, the Company will have sufficient capital resources, but these are based on government

stimulus programs.

anticipate approximately $500 in additional SG&A costs in 2022, when compared with 2021 relating to increase in sales and marketing

head count and additional operational and payroll automation to meet growth objectives.

Once the $1,174 in ERC

is fully refunded, the Company will have more sufficient capital resources, but these are based on government stimulus programs.

anticipate approximately $350 in incremental SG&A costs in 2023 as we invest in growth as heads will be added for sales, recruiting

and marketing as well as a new system to improve lifecycle management of payroll and benefits for our clients.

We expect these incremental

costs to exceed the reduction in legal fees which in 2023 will not be nearly as intensive as they were in 2022 when we prepared and participated

in a multi week arbitration.

We also expect costs in service areas to be up based on inflation.

summary of our operating, investing and financing activities are shown in the following table:

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payroll and expenses.

2021, net cash provided by operating activities was $2,505, an increase $4,575 compared with ($2,070) for 2020.

This increase is primarily

attributable to cash change driven by ERC netting $3,414 (Net Income of $7,893 minus PPP Forgiveness of $5,216), plus ERC tax

payable for drawing in the 4 th quarter of $841.

2022, net cash provided by operating activities was ($1,427), a decrease of $3,932 compared with $2,505 for 2021.

This decrease is primarily

attributable to net loss and decreases in accounts payable, accrued payroll, accrued expenses, and income tax payable.

The holiday season

impact on revenue also decreased the need for cash to pay 1099 and W2 workers.

used in investing activities consists primarily of cash paid for capital expenditures.

used in financing activities in 2022 was $1,639 as compared to cash employed for same purpose totaling ($2,544) in 2021.

was due to the Company in 2020 receiving $5,216 in PPP offset by $853 in repayments from the issuance of convertible notes starting in

June of 2019 and return of cash flows from short-term borrowing via our factoring vehicle.

In 2021, Maslow borrowed $6,436 from TBC,

but repatriated $8,489 and paid $475 to Libertas on behalf of the Vivos Group and $37 in early part of year to pay back a term

loan from TBC (See Item 1) which led to the 2021 $2,544 financing activity deficit.

swing of (3,726) was due to operational cash deficiencies cited above due predominantly legal costs for arbitration and now recovery

of final award.

A year ago, MMG received ERC cash support in the third and portion of the fourth quarter until the policy change

led to our having to return $842 in January 2022.

For the year, Maslow borrowed $13,972 but repatriated $11,342.

SHEET ARRANGEMENTS

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an ongoing basis, management evaluates its estimates, including those related to revenue recognition, collectability of accounts receivable,

impairment of goodwill and intangible assets, contingencies, litigation, income taxes, stock option expense, and other liabilities.

based its estimates and judgments on historical experiences and on various other factors believed to be reasonable under the circumstances.

Actual results under circumstances and conditions different than those assumed could result in differences from the estimated amounts

in the consolidated financial statements.

January 1, 2019, the Company adopted the new accounting standard ASC 606, Revenue from Contracts with Customers, for all open

contracts and related amendments as of December 31, 2019, using the modified retrospective method.

The adoption had no impact to the

reported results.

Company recognizes revenue in accordance with ASC 606, the core principle of which is that an entity should recognize revenue to depict

the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be

entitled to receive in exchange for those goods or services.

To achieve this core principle, five basic criteria must be met before revenue

can be recognized:

(1) identify the contract with a customer;

(2) identify the performance obligation(s) in the contract;

(3) determine

the transaction price;

(4) allocate the transaction price to performance obligation(s) in the contract;

and (5) recognize revenue when

or as the Company satisfies a performance obligation.

contingencies, litigation, income taxes, and other liabilities.

Management based its estimates and judgments on historical experiences

and on various other factors believed to be reasonable under the circumstances.

Actual results under circumstances and conditions different

than those assumed could result in differences from the estimated amounts in the consolidated financial statements.

Company accounts for revenues when both parties to the contract have approved the contract, the rights and obligations of the parties

are identified, payment terms are identified, and collectability of consideration is probable.

and payment terms are identified, and collectability of consideration is probable.

Payment terms vary by client and the services

derive our revenues from four segments:

EOR, Recruiting and Staffing (temporary), Permanent Placement (Direct Hire) and Video and Multimedia

Revenues are recognized when promised services are delivered to client, in an amount that reflects the consideration we expect

to be entitled to in exchange for those services.

Revenues as presented on the consolidated statements of operations represent services

rendered to client less variable consideration, such as sales adjustments and allowances.

Reimbursements, including those related to

out-of-pocket expenses, are also included in revenues, and equivalent amounts of reimbursable expenses are included in cost of services.

EOR, Recruiting and Staffing (temporary), Direct Hire (Formerly referred to as Permanent

Placement) and Video and Multimedia Production.

Revenues are recognized when promised services are delivered to a client, in an

amount that reflects the consideration we expect to be entitled to in exchange for those services.

Revenues as presented on the

consolidated statements of operations represent services rendered to client less variable consideration, such as sales adjustments

and allowances.

Reimbursements, including those related to out-of-pocket expenses, are also included in revenues, and equivalent

amounts of reimbursable expenses are included in cost of services.

record revenue on a gross basis as a principal versus on a net basis as an agent in the presentation of revenues and expenses.

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for by client.

staffing revenues is accounted for as a single performance obligation satisfied over time because the customer simultaneously receives

staffing revenues are accounted for as a single performance obligation satisfied over time because the customer simultaneously receives

and consumes the benefits of the Company’s performance on an hourly basis.

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as we have the right to payment in an amount that corresponds directly with the value of performance completed to date.

placement revenue is recognized on the date the candidate’s full-time employment with the customer has commenced.

is invoiced on the start date, and the contract stipulates payment due under varying terms, typically 90 days.

The contract with the

customer stipulates a guarantee period whereby the Company will replace the candidate for free of charge if the employee is terminated

within that 90-day period.

As such, the Company’s performance obligations are satisfied upon commencement of the employment, at

which point control has transferred to the customer.

Hire (formerly referred to as Permanent Placement) revenue is recognized on the date the candidate’s full-time employment with

the customer has commenced.

The customer is invoiced on the start date, and the contract stipulates payment due under varying terms,

typically 90 days.

The contract with the customer stipulates a guarantee period whereby the Company will replace the candidate free

of charge if the employee is terminated within that 90-day period.

As such, the Company’s performance obligations are satisfied

upon commencement of employment, at which point control has transferred to the customer.

recorded as a liability, are established to estimate these losses.

Fees to client are generally calculated as a percentage of the new

Fees to clients are generally calculated as a percentage of the new

worker’s annual compensation.

No fees for permanent placement services are charged to employment candidates.

and Multimedia Production revenues from contracts with client are recognized in the amount to which we have a right to invoice when the

No fees for Direct Hire services are charged to employment candidates.

and Multimedia Production revenues from contracts with clients are recognized in the amount to which we have a right to invoice when the

services are rendered by our field talent.

Company holds intangible assets with finite lives.

Intangible assets with finite useful lives are amortized over their respective estimated

useful lives, ranging from three to ten years, based on a pattern in which the economic benefit of the respective intangible asset is

intangible assets recognized in conjunction with acquisitions are recorded at fair value.

Significant unobservable inputs are used to

determine the fair value of the identifiable intangible assets based on the income approach valuation model whereby the present worth

and anticipated future benefits of the identifiable intangible assets were discounted back to their net present value.

Company evaluates the recoverability of intangible assets whenever events or changes in circumstances indicate that an intangible asset’s

carrying amount may not be recoverable.

The Company annually evaluates the remaining useful lives of all intangible assets to determine

whether events and circumstances warrant a revision to the remaining period of amortization.

The Company determined that there were impairment

indicators for these assets during the year ended December 31, 2021, and thus impaired $170 in remaining carrying value of IQS

based intangible assets.

represents the difference between the enterprise value/cash paid less the fair value of all recognized net asset fair values including

identifiable intangible asset values in a business combination.

The Company reviews goodwill for impairment annually during the fourth

quarter or whenever events or changes in circumstances indicate the carrying value of goodwill may not be recoverable.

Based on annual

testing, the Company has determined that there was goodwill impairment during the year ended December 31, 2021.

the Company recorded a goodwill impairment adjustment of $518 upon finalizing the detailed step two impairment analysis for the IQS segment

that led to a decrease in revenue ($2,000) in 2021 from 2020.

In total the Company recorded $688 in goodwill and intangible impairment

charges for the IQS business segment.

Company first evaluates qualitative factors to determine whether it is more likely than not (that is, a likelihood of more than 50 percent)

that the fair value of the reporting unit is less than its carrying amount, including goodwill.

If after qualitatively assessing the

totality of events or circumstances, the Company determines that it is not more likely than not that the fair value of the reporting

unit is less than its carrying amount, then further testing is unnecessary.

If after assessing the totality of events or circumstances,

the Company determines that it is more likely than not that the fair value of the reporting unit is less than its carrying amount, the

Company then estimates the fair value of the reporting unit and compares the fair value of the reporting unit with its carrying amount,

including goodwill, as discussed below.

assessing whether it is more likely than not that an indefinite-lived intangible asset is impaired, the Company assesses relevant events

and circumstances that could affect the significant inputs used to determine the fair value.

quantitative impairment test for an indefinite-lived intangible asset consists of a comparison of the fair value of the asset with its

carrying amount.

If the carrying amount of an intangible asset exceeds its fair value, the Company shall recognize an impairment loss

in an amount equal to that excess.

quantitative goodwill impairment test involves a two-step process.

In the first step, the Company compares the fair value of each reporting

unit to its carrying value.

If the fair value of the reporting unit exceeds its carrying value, goodwill is not impaired, and no further

testing is required.

If the fair value of the reporting unit is less than the carrying value, The Company must perform the second step

of the impairment test to measure the amount of impairment loss.

In the second step, the reporting unit’s fair value is allocated

to all of the assets and liabilities of the reporting unit, including any unrecognized intangible assets, in a hypothetical analysis

that calculates the implied fair value of goodwill in the same manner as if the reporting unit was being acquired in a business combination.

If the implied fair value of the reporting unit’s goodwill is less than the carrying value, the difference is recorded as an impairment

ACCOUNTING PRONOUCEMENTS

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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-K

Item 7. Management’s Discussion and Analysis