What changed in this filing

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Item 2. Management’s Discussion and Analysis

2023-11-14 compared with 2023-08-14 · 106 added, 84 removed, 111 unchanged (63% of the section changed)

77 unchanged sentences

OF OPERATIONS

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.

for the three months ended September 30, 2023 were $5,341, which was $1,123 or 17.4% less than for the same period in 2022 with revenue

18.7% or $1,027 of the drop can be attributed to the EOR business segment as its third quarter revenues dropped to $4,467

The primary reasons for the EOR downturn were four clients that were down $1,339 in aggregate revenue for reasons of:

losing a high-profile sports television rights to a competitive bid process, one converting more than ten of our employees from our payroll

to theirs, and two reducing their programming due to budgetary reasons.

and Staffing revenues dipped by $138 from $848 in the period ending September 30, 2022 to $710 comparatively in 2023, while Video Production

and Direct Hire revenues were up a combined $42 in the quarter ending September 30, 2023 to the comparable period a year ago.

was up $10 to $83 while Media Staffing dipped $148 to $627 in the third quarter 2023.

The Media Staffing decline was related in part

to the EOR client fall off and the loss of a client with whom we acted in a subcontractor capacity, when our client, the incumbent, failed

to win a renewal bid by the end customer.

the nine-month period ending September 30, 2023, revenues at $15,992 in 2023 are $2,737 or 14.6% off of 2022’s nine-month $18,729

The decline paradigm has been somewhat consistent throughout the year as the reasons cited for the third quarter variance

can be cited with the programming declines by most corporate clients widened.

Overall, seven larger clients accounted for a 2023 year-to-date

negative revenue variance of $3,162 due to the combination of employee conversions, lost programming and decisions to reduce same, and

in one case a lost bid by the primary.

for the nine-month period ending September 30, 2023, EOR and Staffing revenues were down comparatively to the same period in 2022, by

$2,543 and $33, respectively, Video Production revenues have increased by $123 to $299 or 69% and Direct Hire by $16 to $115 or 16.8%.

Both increases have played a part in the continuing increase in the overall business’ gross margin as explained in the next section.

of Revenue / Gross Profit

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%.

profit for the three-month period ending September 30, 2023 was $772 representing 14.5% of revenues, which was $119 lower than the $891

in gross profit MMG earned in 2022’s third quarter when the gross margin was at 13.8%.

margin improvement can be attributed to EOR client mix increasing its contribution percentage, several Staffing clients delivering over

twice their normal volume of business at 24% margins, and the overall mix shifted to Media and IT Staffing as opposed to EOR, which has

peaked at 12.5% for the quarter.

through September 30, 2023, our gross profit margins exceed those of 2022 over the same period 13.9% to 13.4% for a variety of reasons.

Renewed agreements have enabled pricing increases, especially impacting EOR which YTD is up to 12.2% as compared with 11.6% through the

first nine months a year ago.

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

of the year compressing margins.

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.

with EOR segment mix decline means a higher percentage of our revenue is subject to the higher margin Media and IT Staffing, Video Production,

and Direct Hire businesses.

Both Video Production and Direct Hire combine for $33 in year-to-date improvement in gross profit in 2023

over 2022, garnering an average of 39.8% in gross margin percentage in 2023.

and Administrative (“G&A”)

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.

$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.

and administrative expenses for the three months ended September 30, 2023 were $998 compared to $941 in the same period in 2022,

representing a $57 or 6.1% increase.

Loaded salaries had an $84 unfavorable comparison to Q3 2022.

Commissions, however, were down

$35 of the $84 wage increase is in the area of Sales where we have bolstered our team.

The other force driving an increase in

payroll is bonus accruals, which are artificially higher because a year ago at this time, we credited back $62 in over accrued bonuses from

non-salary SG&A total of $168 was $25 favorable (14%) to $193 a year ago.

The most significant positive variance in the third quarter

2023 versus 2022 were legal expenses, which were down by $32.

the nine months ended September 30, 2023, SG&A costs are $2,842, which are $501 (15%) lower than they were in the same period in

2022 when they landed on $3,343.

The cost savings of $501 were derived mostly as a result of the reduction in arbitration related costs

Other major favorable variances were loaded wages $80, with $87 coming from a lower bonus accrual in part because of write back

of over accrued 2022 bonuses, and $35 derived from our business insurance package.

Conversely, there were cost increases of $69 for a

mostly marketing related costs, $56 for staff events and development, when comparing the period ending September 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

Company incurred $12 in interest charges for financing specific client invoices in the third quarter 2023 compared with $46 in factoring

the same period a year ago.

The Company satisfied its factoring obligations in early July, due to a strong cash position, but engaged

the Buyer Initiated Payment Agreement (“BIP”) with American Express (“Amex”) because the average APR has been

an estimated 6.8% (dependent on days clients actually pay their invoice) compared with the prime rate having risen to 8.5% and the factoring

cost at a contractual 11.22%.

the nine months ended September 30, 2023, the combined interest and factoring costs are $77 compared with $111 a year ago.

Income (Expense)

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.

Income/Expense in the third quarter was ($13) compared with $210 in the third quarter 2022.

The $13 growth was due to

legal expenses related to restructuring layoffs.

Prior to the third quarter, $55 of the Other Expenses have been to contest the SWC

lawsuit, and $65 to address another non-operating related legal matter that has now been settled.

Thus, in the nine months ending

September 30, 2023, Other Expenses total $133.

Comparatively, a year ago when receiving the first quarter 2021 ERC payment, the

Company recorded an additional $210 in what was thought to be an ineligible portion of the ERC calculation, which in fact was not

and received by the IRS during the third quarter 2022.

AND CAPITAL RESOURCES

6 unchanged sentences

floor rate at 4%.

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.

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.

Our Days Outstanding (DSO) for the trailing 12 months ending September 30, 2023 has improved to 53 compared to 57 in

the second quarter 2022, and a DSO of 66 for the trailing twelve months ending March 31, 2022.

12-month DSO has averaged 65 since June 2021 through the first quarter 2023, 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.

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,

Additionally,

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.

events have a profound impact on improving our working capital and lowering our DSO which is now at 53, as this combination of pre-pays

and arrangement enabling bank debits and credits to roll straight to A/R as opposed to credits to our factoring liability, have bolstered

our quick and current ratios as well.

BIP program has also lowered our cost of capital in that our effective APR for the period ending September 30, 2023 was estimated at

6.8% versus the 11.22% Gulf can now charge on an annualized basis.

looking at A/R aging in relation to payments to due date, as of September 30, 2023, 78.6% of our $2,653 in total trade A/R was current

and only 4.2% is past 60 days aged, compared to 73.6% and 8.7% a year ago, respectively.

We continue to collect our aged invoices, not

having to account for bad debt > $200 in the past 5 years.

federal and state tax liability is $5 as of September 30, 2023 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

11 unchanged sentences

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.

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

Common Stock and use shares of Company Common Stock as currency to acquire other business revenues.

However, all 300 million authorized

shares of Company Common Stock were issued in connection with the Merger.

No shares are expected to become available to the Company until

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

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

Debtors as of September 30, 2023 had notes receivable totaling $5,417, including default on a $3,000 promissory note and on a $750 tax

obligation in December 2019.

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

Company Common Stock and use shares of Company Common Stock as currency to acquire other business revenues.

However, all 300 million

authorized shares of Company Common Stock were issued in connection with the Merger.

No shares are expected to become available to

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

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 MMG 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 ERC cash of $4,676, which has bolstered working capital

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

2 unchanged sentences

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

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.

of September 30, 2023, our working capital was $8,040, compared to $8,645 at the end of December 2022.

Our adjusted working capital at

the end of September 2023, excluding the notes receivable related to the Vivos Debtors totals $2,623 compared to 3,394 at the end of

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