What changed in this filing

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Item 2. Management’s Discussion and Analysis

2023-08-14 compared with 2023-05-15 · 88 added, 72 removed, 107 unchanged (60% of the section changed)

77 unchanged sentences

OF OPERATIONS

for the three months ended March 31, 2023, were $5,199 which was $584 or 10.1% less than for the same period in 2022 with revenue at

The EOR segment had the greatest negative impact, falling $500 to $2,273 from $4,773 in year over year quarterly revenue.

reason for the dip was that a year ago one client had a creative project that employed a significant number of freelance workers we provided.

It was a project carried over from 2021 that ended in January 2022.

Another reason was one client converted 7 of our employees from our

payroll to theirs.

and Staffing revenues dipped by $158 from $923 in the period ending March 31, 2022, to $765 comparatively in 2023, while Direct Hire

revenues were off the first quarter pace set in 2022 by $9 landing on $30 versus $39 a year ago.

Production grew, however, delivering $131 in the first quarter 2023 versus $48 in the first quarter ending March 31, 2022, which was

a $83 or 173% increase.

It was the highest quarterly revenue total for Video Production since the quarter ending December 31, 2021, which

this business segment then garnered $263 in revenue.

for the three months ended June 30, 2023 were $5,452, which was $1,029 or 15.9% less than for the same period in 2022 with revenue at

18.4% or $1,017 of the drop can be attributed to the EOR business segment as second quarter revenues dropped to $4,499 from $5,516.

The primary reasons for the EOR second-quarter downturn were that one large client converted more than ten of our employees from our payroll

to theirs, another client has had declines in programming.

and Staffing revenues dipped by $35 from $898 in the period ending June 30, 2022 to $863 comparatively in 2023, while Direct Hire

revenues were up $22 in the quarter ending June 30, 2023 to the comparable period a year ago when that business segment did not

complete any placements.

Media Staffing would have increased revenues if not for the loss of a client for which we acted as a

subcontractor (explained below in Gross Profit section).

Production produced the same revenue, $68 in the second quarter 2023, that it did a year ago in in the second quarter ending June 30,

the six-month period ending June 30, 2023, revenues at $10,651 in 2023 are $1,613 or 13.2% off of 2022’s $12,264 performance.

paradigm is the same as in the second quarter in that $1,344 of the $1,613 decline or 83% was based on the lower revenue performance

of the same three aforementioned clients.

of Revenue / Gross Profit

profit for the three-month period ending March 31, 2023, was $711 representing 13.7% of revenues, which was $19 lower than the $730 in

gross profit MMG earned in 2022’s first quarter when the gross margin was at 12.6%.

catalyst for the 110-basis point quarter over quarter jump was EOR, as first quarter margins increased from 10.4% in 2022 to 11.9% in

Otherwise, comparatively, first quarter 2023 to 2022:

Direct Hire margins were at 77.1% as opposed to 89.6%, as recruiting resources

were required for a longer term than a year ago;

IT Staffing was 22.6% vs.

19.4% in 2022;

Media Staffing at 19.7% vs.

Production at 18.7% vs.

a negative margin due to a cost overrun a year ago.

profit for the three-month period ending June 30, 2023 was $740 representing 13.6% of revenues, which was $147 lower than the $887 in

gross profit MMG earned in 2022’s second quarter when the gross margin was at 13.7%.

slight margin dip can be attributed to a resource that we added last year in the third quarter to support a client directly and the

other the loss of a client with whom we acted in a subcontractor capacity.

The client failed to win a renewal bid by the end

This had a 20-basis impact on the overall gross profit margin in the second quarter 2023.

to date through June 30, 2023, our gross profit margins exceed those of 2022 over the same period 13.6% to 13.2%.

The catalyst of the

gross margin percentage improvement is EOR - up close to 1% at 12.1%.

margins tend to be lower at the beginning of the year as variable costs, such as federal and state unemployment taxes, reset at the beginning

EOR margins tend to increase throughout the year as these variable costs are exhausted throughout the year.

early 2023 several EOR contracts were extended resulting in a slight improvement in margins and our customer mix continues to be more

weighted to clients that have more favorable pricing terms than those that previously dominated sales.

EOR margins tend to increase throughout the year as these variable costs are exhausted.

In late 2022 and early 2023, several

EOR contracts were extended, resulting in a slight improvement in margins.

Overall, our customer mix continues to be more weighted to

clients that have more favorable pricing terms than those that previously dominated sales.

and Administrative (“G&A”)

and administrative expenses for the three months ended March 31, 2023, were $933 compared to $1,305 in the same period in 2022, representing

and administrative expenses for the three months ended June 30, 2023 were $911 compared to $1,097 in the same period in 2022, representing

a $186 or 17% decrease.

$309 of the $378 was a result in the reduction in arbitration related costs.

Commercial legal dropped $21 as

Employee salaries and benefits were comparatively down $135 as 2022 bonus accrual was $104 higher than approved for payment, loaded

salaries (including benefits and taxes) were down $18 and commissions down $13 compared to a year ago.

A savings of $17 was derived from

our business insurance package as a new less costly D&O insurance policy with greater benefits was put into place.

Conversely contract

service cost increased by $50, Staff events by $26, staff development by $13 and recruiting software by $12.

expect increases in payroll as certain roles have been contracted and sales and sales support had headcount changes in mid-March.

Company incurred $44 in interest charges for financing (factoring) its invoices in the first quarter 2023 compared with $29 in the same

period a year ago, as the prime interest rate soared from 3.5% at the end of the first quarter 2022 to 8% by end of the first quarter

Our interest rate is 2 points greater than prime, meaning comparatively our costs went from approximately 5.5% to 10%.

$139 of the $186 is from the reduction in arbitration related costs, while employee salaries and benefits were

comparatively down $36 as commissions were cut by $22, and business insurance costs trimmed by $10 when comparing the second quarter

2023 to 2022.

the six months ended June 30, 2023, SG&A costs of $1,844 were $558 (23.2%) lower than they were in the same period in 2022 when they

landed on $2,402.

A savings of $460 was derived as a result of the reduction in arbitration related costs.

Other major favorable variances

were loaded wages $165, with $135 coming from a lower bonus accrual and offset of over accrued 2022 bonuses, and $27 derived from our

business insurance package.

Conversely, there were cost increases of $75 for a combination of contract services and marketing costs,

$36 for staff events and development, when comparing the period ending June 30, 2023 with the same period in 2022.

expect increases in payroll as certain roles have been contracted and sales and sales support continue to evolve.

Company incurred $22 in interest charges for financing and factoring its invoices in the second quarter 2023 compared with $36 in the

same period a year ago, as average borrowing was at $605 for the quarter as compared with $2,500 in 2022.

Buyer Initiated Payment Agreement (“BIP”) with American Express

(“Amex”) interest totaled approximately

Income (Expense)

Income in the first quarter was under $1 compared with $3 in the first quarter 2022.

Income/Expense in the second quarter was ($119) compared with $0 in the second quarter 2022.

Other expenses were split as approximately

half was to cover legal fees for the Second Wind matter (see Note 6 above) and half to address another non-operating related legal matter.

AND CAPITAL RESOURCES

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floor rate at 4%.

Our Days Outstanding (DSO) for the trailing 12 months ending March 31, 2023, is at 66 comparable to 61 DSO for the

trailing twelve months ending March 31, 2022.

is because 53% of our revenue is from clients that over the past 3 years began demanding 90-day terms.

Our Days Outstanding (DSO) for the trailing 12 months ending June 30, 2023 is at 57 comparable to 64 DSO for the trailing

twelve months ending March 31, 2022.

12-month DSO has averaged 64 since January 2020 as some of our largest clients have 60 to 90-day terms.

Delays in receipt of purchase

orders also has had an adverse impact on DSO.

Alternatively, we have had an increase over the past 12 months in client advances

which now average approximately $260 a month vs.

$60 prior in 2022.

looking at A/R aging in relation to payments to due date, as of March 31, 2023, 74.9% of our $3,224 in total trade A/R was

current and 91.4% was < 31 days aged, compared to 68.5% and 88.2% a year ago, respectively.

Our > 60 days aged invoices represent

$48 or 1.5% of our total A/R.

Federal and state tax liability is $5 compared to $688 a year ago, and $6 as of December 31, 2022.

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

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 Gulf does

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

However, in April 2023, we entered into a BIP

with Amex which enables MMG to be advanced 100% of purchase order approved invoices minus a flat interest

rate percentage that is based on that day’s submitted invoice volume.

The greater the volume the lower the interest rate charged.

This has a profound impact on DSO as this arrangement enables bank debits and credits to A/R as opposed to credits to factoring short

term debt with impact to A/R only once the client pays the invoice.

BIP program has also lowered our cost of capital in that our effective APR for the period ending June 30, 2023 was 5.9% versus the 10.33%

Gulf charges on annualized basis.

Alternatively,

we have had an increase over the past 12 months in client advances which averaged approximately $211 a month.

looking at A/R aging in relation to payments to due date, as of June 30, 2023, 89.2% of our $1,631 in total trade A/R was current and

99% was < 31 days aged, compared to 64.1% and 77.6% a year ago, respectively.

Our > 60 days aged invoices represent $16 or 1% of

our total A/R.

This improvement mostly can be attributed to our use of the Amex BIP program as described above.

federal and state tax liability is $5 compared to $6 as of December 31, 2022.

primary sources of liquidity are cash generated from operations via accounts receivable and borrowings under our BIP agreement with Amex

and our Factoring Facility with Gulf enabling access to the 7% unfactored portion.

The BIP agreement enables MMG to accelerate cash on

accounts with 90-day terms.

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

4 unchanged sentences

and debt payments.

we are an EOR with the majority of contracted talent paid as W-2 employees who are paid known amounts, but on inconsistent schedules;

cash 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, 2023, had notes receivable totaling $ 5,327 including default on a $3,000 promissory note and on a $750 tax obligation

we are an Employer of Record with the majority of contracted talent paid as W-2 employees who are paid known amounts, but on inconsistent

our cash inflows do not typically align with these required payments, resulting in temporary cash challenges, which is why

we employ factoring.

Debtors as of June 30, 2023 had notes receivable totaling $5,348, including default on a $3,000 promissory note and on a $750 tax obligation

in December 2019.

5 unchanged sentences

the legal dispute with the Vivos Debtors and Vivos Group is resolved.

At that point, the Company can decide whether to amend the Company’s

Certificate of Formation to increase the number of authorized shares of Company Common Stock or approve a reverse-split of the outstanding

shares of Company Common Stock to provide additional shares for these purposes.

No assurance can be given as to when this might take

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.

On April 29, 2023, we

received a check from the IRS for $1,203 to pay for our second quarter 2021’s eligible ERC 941X submission.

At that point, the Board and/or the shareholders can decide whether

to amend the Company’s Certificate of Formation to increase the number of authorized shares of Company Common Stock or approve

a reverse-split of the outstanding shares of Company Common Stock to provide additional shares for these purposes.

Under the Arbitration

Award, it is possible that shares may be returned to treasury which may give the Board greater flexibility in selling shares or using

shares to acquire other businesses.

No timetable has been set as to when any of these events might take place.

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

enabling us to invest in software and hire needed resources for operations.

On April 29, 2023, we received our final ERC check from the

IRS for $1,203 which was for our second quarter 2021’s eligible ERC 941X submission and eligible interest.

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

of March 31, 2023, our working capital was $8,457, compared to $8,815 at the end of March 2022.

This includes the $1,174 in ERC

principal and additional interest received on April 28, 2023.

Our adjusted working capital at the end of March 2023, excluding the

notes receivable related to the Vivos Debtors totals $3,130 compared to 3,776 a year earlier.

of June 30, 2023, our working capital was $8,220, compared to $8,645 at the end of December 2022.

Our adjusted working capital at the

end of June 2023, excluding the notes receivable related to the Vivos Debtors totals $2,871 compared to 3,394 at the end of 2022.

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