What changed in this filing

/stocks — the workspaceLOADING

Item 2. Management’s Discussion and Analysis

2026-05-20 compared with 2025-11-14 · 132 added, 201 removed, 78 unchanged (81% of the section changed)

63 unchanged sentences

ACCOUNTING POLICIES AND COMMENTS RELATED TO OPERATIONS

discussion and analysis of our financial condition and results of operations are based upon our financial statements, which have

been prepared in accordance with accounting principles generally accepted in the United States (“U.S.

The preparation

of these financial statements requires management to make estimates and judgments that affect the reported amounts of assets,

liabilities, revenues, and expenses.

These estimates are based on historical experience and other factors believed to be reasonable

under the circumstances.

discussion and analysis of our financial condition and results of operations are based upon our financial statements, which have been

prepared in accordance with accounting principles generally accepted in the United States (“U.S.

The preparation of these

financial statements requires management to make estimates and judgments that affect the reported amounts of assets, liabilities, revenues,

and expenses.

These estimates are based on historical experience and other factors believed to be reasonable under the circumstances.

Actual results could differ from these estimates under different assumptions or conditions.

have been no material changes or developments in the Company’s evaluation of the accounting estimates and the underlying assumptions

or methodologies that it believes to be Critical Accounting Policies and Estimates as disclosed in its Form 10-K for the year ended December

Discussion included in the Form 10-K for the year ended December 31, 2024, includes discussion of various factors and items related to

the Company’s results of operations and liquidity.

There have been no other significant changes in most of the factors discussed

in the Form 10-K and many of the items discussed in the Form 10-K are relevant to 2025 operations;

thus, the reader of this report should

read Management’s Discussion included in Form 10-K for the year ended December 31, 2024.

There have been no material changes or developments in the Company’s

evaluation of its critical accounting policies and estimates from those disclosed in the Form 10-K for the year ended December 31, 2025.

Management’s Discussion included in the Form 10-K discusses various

factors and trends relating to the Company’s results of operations, liquidity and capital resources.

Many of those factors and trends

remain relevant to the Company’s operations and financial condition for the three months ended March 31, 2026.

Accordingly, this

Quarterly Report on Form 10-Q should be read in conjunction with the Company’s Form 10-K for the year ended December 31, 2025.

OF OPERATIONS

for the three months ended September 30, 2025 were $5,417, a decrease of $813 or 13.1% compared to $6,230 in the third quarter of 2024.

The decline was primarily attributable to our

Employer of Record (EOR) segment, which generated $4,299 in revenue during the quarter, compared to $5,293 a year ago, a decrease of

$994 or 18.8%.

The shortfall exceeded the consolidated revenue decline by $186 or 22.9%, reflecting the segment’s

disproportionate impact on overall performance.

Two of the Company’s three largest EOR clients

from the prior year experienced a combined $1,243 decrease in revenue, representing 124.7% of the total quarterly decline and 123.5% of

the EOR-specific decline.

One of these clients accounted for $967 (97.1%) of the total reduction, primarily due to decreased media spending

in the off-cycle election year and further reductions linked to policy changes enacted by the Department of Government Efficiency (DOGE),

which curtailed project funding and related staffing levels.

Conversely, Staffing revenue grew for the third consecutive

quarter, increasing $231 (28.1%) to $1,053 in the third quarter of 2025 compared to

$822 in the same period 2024.

increase was primarily driven by two clients:

The start of a newly won

bid from a quasi-governmental organization initiating a managed services agreement in late July 2024, generating $212 more in revenue

which was $56 more than it generated in the third quarter 2025.

A long-standing private

sector client that transitioned a portion of its EOR population to managed staffing services, contributing $244 to third quarter

Staffing revenue.

Production produced $65 in revenue compared to $87 in the third quarter 2024, a decrease of $22 (25.3%) from $87 in the prior-year

Our Direct Hire business did not generate any revenue for the third quarter, a decrease of $28 compared to the same period

the nine-month period ended September 30, 2025, revenues were $14,882, compared to $17,566 in the same period in 2024, a decline of

$2,684 (15.3%), but a lower rate of decline than was seen a quarter ago when the year-to-date revenue comparison to 2024 was a

negative 21.9%.

Approximately $1,856 (47.5%) of the decrease was attributable to the aforementioned large media client that

significantly reduced its spend due to 2025 being a non-election year and then experienced an unexpected cut in government-related

Additionally,

a top client reduced spending by $423 in the nine months ending September 30 but indicated that they expect spending to restore to

the pace it was on a year ago.

year ago, we ceased supporting one client engagement, and a portion of another, due to elevated risk exposure associated with their activities.

This action resulted in an approximate loss of $541 in revenue over the none-month period, but it reflects our commitment to maintaining

prudent operational oversight.

EOR revenue over the nine months ending September 30, 2025 fell by $3,481 or 23.0%, our Staffing segment revenue improved by $881, increasing

to $3,083 from $2,202 (40.0%).

This growth was largely driven by the previously mentioned quasi-governmental client, which accounted

for 59.3% of the year-over-year increase and a restructured contract with a major broadcasting client, transitioning it from EOR to a

Managed Staffing Services model which began in April.

Video Production and Direct Hire experienced modest declines over the nine-month period, falling by a combined $84 (32.8%).

did not post revenue for the first time since the fourth quarter of 2022.

for the three months ended March 31, 2026 were $5,551, an increase of $805, or 17.0%, compared to $4,746 for the three months ended March

revenue increased $740, or 19.7%, to $4,495 from $3,755 in the prior-year quarter.

The increase was primarily driven by growth from our

top client (A), which increased $1,096, or 94.0%.

revenue increased $65, or 7.0%, to $997 from $932 in the prior-year quarter.

The increase was primarily attributable to higher revenue

from 2 of our top 10 clients, which increased revenue contributions by $96 (30.5%), and $68 (41.7%).

These increases were partially offset

by lower activity from certain other staffing clients.

Production revenue increased $10, or 20.4%, to $59 from $49 in the prior-year quarter.

The increase was primarily attributable to two

new clients who accounted for $16 in revenue.

Direct Hire revenue decreased $10 to $0 from $10 in the prior-year

quarter, representing a 100% decrease.

of Revenue / Gross Profit

Months Ended September 30, 2025 vs.

profit for the three months ended September 30, 2025 was $749, a decrease of $85 (10.2%) from $834 in the prior year period.

the decline in absolute dollars, consolidated gross margin improved to 13.8% from 13.4% in 3Q24, reflecting an ongoing mix shift toward

higher-margin services.

Margin expansion moderated versus 15.1% in 2Q25 due to items noted below.

EOR media project (contracted high-volume discounts).

A $1.37 million EOR media project that started late September and concluded in

early October was priced at high-volume, discounted markups.

The project reduced 3Q25 margins by 80 basis points (“bps”).

of Record (EOR)

gross profit declined $170 year-over-year, and unit margin fell to 11.0% (from 12.1% in 3Q24).

The decrease reflects (i) the discounted

media project noted above and (ii) client volume rebates contractually triggered at spend thresholds.

Additionally, mix pressure from

reduced volumes at certain higher-margin EOR clients accounted for roughly 20 basis points of the year-over-year margin decline.

gross profit increased $121 to $265 (up 84.0%) from $144 in 3Q24, exceeding the 2Q25 year-over-year increase of $109 (from $143 to $252,

Staffing gross margin rose to 25.2% from 17.5% in 3Q24.

The improvement was driven by, (a) lower-than-anticipated direct delivery

costs against a stable revenue base at a single client and (b) a media client that migrated from an EOR delivery model to a managed service

Together, these two client streams represented approximately 43.3% of Staffing revenue in the quarter and produced ~35.8% margins.

Prospectively, we expect normalized margins of approximately 25% on these streams;

if all else were equal to 3Q25, overall Staffing margin

would be approximately 20.5%.

Production & Direct Hire

Production generated $13 of gross profit on $65 of revenue (19.8% margin) versus $23 of gross profit on $87 of revenue (26.4% margin)

Direct Hire generated no gross profit in 3Q25 compared with $26 in 3Q24, which reduced consolidated gross margin by approximately

50 basis points year-over-year.

Months Ended September 30, 2025 vs.

profit for the nine-month period ended September 30, 2025 was $2,103, a decrease of $243 (10.4%) from $2,346 in the prior-year period.

Despite the lower gross profit, consolidated gross margin improved by 70 basis points to 14.1% from 13.4% in the nine months ended September

30, 2024, reflecting a favorable mix shift of lower margin Employer of Record (“EOR”) to stronger Staffing segment profitability.

mix shift toward higher-margin Staffing revenue, coupled with Staffing gross margin expansion to 22.2% from 18.6%, contributed approximately

$109 in incremental gross profit year-over-year.

Absent this mix/margin lift, gross profit would have been roughly $111 lower.

of Record (EOR)

gross profit declined $462 (25.3%) to $1,365 from $1,827 in the prior year period.

EOR gross margin decreased to 11.7% from 12.1%.

drivers were:

Lower spend from two of the three largest 2024 EOR clients

and attrition at one account;

Rebates that are earned by clients that hit revenue thresholds;

Reduced volumes at several higher-margin EOR clients;

A media client’s transition to a managed-service model;

A large project that lifted revenue but had lower contracted

have also expanded much for the same reasons cited in the quarterly performance with the nine-month GM reaching 22.2% compared to 18.6%

This improvement has been partly attributable to a short-term fixed-fee client arrangement that temporarily lowered our delivery

costs, adding an estimated $96 to gross profit and 175 basis points to the segment margin.

Excluding this temporary benefit, Staffing gross margin

would have approximately 20.5%.

Notably, three key clients now on fixed-fee arrangements account for approximately 63.4% of Staffing revenue

and are averaging 20.9% margin year-to-date, versus two clients comprising approximately 44.2% in 2024 at an 18.4% margin.

Production & Direct Hire

Production gross profit at $34 is $1 better than a year ago, with gross margins improving to 22.8% from 18.6% as 2024’s gross margin

was handicapped largely due to a one-time credit adjustment extended to a top-tier client as a goodwill gesture early last year.

Hire gross profit at $21 through nine months is $54 or 72.0% lower from this point a year ago.

Margins have declined by 5.5 basis

points to 90.0% due to a new policy in 2025 which applies a flat recruiting software allocation versus the estimated percentage of

use previously employed.

Months Ended March 31, 2026 vs.

profit and margin both increased in the first quarter 2026 compared to the same period in the prior year.

Gross profit increased

$129, or 20.1%, to $770 from $641, while gross margin improved to 13.9% from 13.5%.

The improvement reflected a more favorable

client and service mix, pricing realization, and improved execution within certain managed service arrangements.

of Record (“EOR”) gross profit rose by $30 to $482 or 6.6% primarily driven by an $815 increase in 1099-related revenue,

partially offset by a $60 decline in W-2 related revenue.

As a result of the higher concentration of lower-margin 1099 labor, EOR

gross margin decreased to 10.7% from 12.0% in the prior-year quarter.

Margin compression was further impacted by discounted volume

pricing structures associated with certain larger client engagements.

gross profit and gross margins expanded significantly during the quarter.

Staffing gross profit increased to $270 from $167 in the prior-year quarter, representing a 61.7% increase.

gross margin increased to 27.1%, compared to 17.9% in the prior-year quarter, representing the segment’s highest quarterly gross

margin in more than ten years.

The improvement was primarily driven by higher-margin managed service arrangements and improved delivery

efficiencies.

Managed service engagements generated approximately $669 in revenue and $199 in gross profit, representing gross margins

of approximately 29.8%.

Additionally, certain client engagements benefited from lower-than-anticipated delivery costs and improved resource

One newer client engagement generated approximately $21 in revenue with gross margins approaching 35.7%.

Production gross profit improved to $18 from $13 in the prior-year quarter, resulting in gross margin expansion

to 30.5% from 26.5%.

The increase primarily reflected strategic pricing initiatives and improved execution efficiencies.

and Administrative (“G&A”)

and administrative (“G&A”) expenses for the three months ended September 30, 2025 were $977, an increase of $19 or 19.8%

and administrative (“G&A”) expenses for the three months ended March 31, 2026 were $856, a decrease of $167, or 16.3%,

compared to $1,023 in the same period of 2025.

The increase was primarily attributable to a one-time $125 accrual related to a legal settlement recognized in September, along with $21 in related legal fees.

Excluding these items, G&A expenses would have been

approximately $122 lower year-over-year, representing a 13.2% decrease.

Salary-related costs declined $100 (16.8%), driven by a $45

bonus reversal, $39 in lower wages from the first phase of headcount reduction, and $19 in lower health and welfare benefits.

expenses increased $124, reflecting the settlement accrual and incremental legal costs.

the nine months ended September 30, 2025, G&A expenses were $2,966, an increase of $75 or 2.6% compared to $2,891 in the prior-year

Loaded salaries decreased $125, driven by $77 in eliminated 2025 bonus accruals, $16 in lower wages, $30 in reduced benefits,

and $13 in lower accrued leave.

Within non-salary costs (excluding the legal settlement impact), payroll fees rose $33 due to a prior-year

first-quarter fee holiday, and business license and non-income taxes increased $16 following the initiation of these charges in mid-2024.

In addition, recruiting software expenses rose $10, and enterprise software costs increased $12, reflecting higher subscription pricing

and reinstated sales-prospecting SaaS tools.

These increases were partially offset by a $21 reduction in contract services compared to

2024, when an external recruiting contractor was engaged.

expenses related to the settlement totaled $161 out of $176 in total legal costs for the year.

Excluding the settlement accrual

and related fees, G&A expenses would have declined by approximately $86 or 3.0% year-over-year.

Company incurred $43 in interest expense during the three months ended September 30, 2025, compared to $27 for the same period in 2024.

For the nine months ended September 30, 2025, total interest expense was $131, up from $62 in the prior-year period.

These amounts reflect

charges related to financing, invoice factoring, and the use of an advance rate (BIP) program against client receivables.

The year-over-year

increase in interest expense is primarily attributable to the need to finance a greater portion of bi-weekly payroll obligations through

external sources.

While the volume of factored invoices rose, the Company’s average cost of capital declined during 2025, due to

a lower prime rate environment and the favorable impact of structured receivables purchase programs.

The decrease was primarily attributable to cost reduction measures implemented during

the fourth quarter of 2025, which were fully realized during the first quarter of 2026.

salaries, including payroll taxes and benefits, decreased $164 year-over-year, primarily driven by a $102 reduction in wages and a $17

reduction in payroll taxes and benefits.

In addition, the prior-year quarter included bonus accruals of $45, which were subsequently

reversed later in 2025, compared to no bonus accruals in the current-year quarter.

savings were realized in liability insurance, marketing, payroll processing, and administrative fees, which collectively declined by

approximately $40 compared to the prior-year quarter.

These reductions were partially offset by a $28 increase in contract services expense,

reflecting the Company’s strategic use of lower-cost outsourced resources to support operations following workforce reductions.

expense for the three months ended March 31, 2026 was $20, compared to $52 in the same period of 2025.

The decrease primarily reflected

lower borrowing costs associated with the Company’s receivables purchase programs and a decline in market interest rates.

the quarter, approximately 30% of the Company’s accounts receivable were funded through structured receivables purchase arrangements,

which reduced the need to factor funds, resulting in lower interest and factoring fees.

Income (Expense)

non-operational one time or short-term costs, in the third quarter totaled $62 consisting solely of Receiver costs versus $68 which included

restructuring-based employee matters and other Vivos related legal charges, in the same period 2024.

A year ago, there were Receiver

and arbitration award related costs being reclassed from SG&A legal.

In the fourth quarter of 2024, we closed out the employee and

the SWC matters.

The most recent employee-related settlement was booked to G&A legal.

the nine months ended September 30, 2025, Other Expense was $132 consisting exclusively of receivership activities, compared to $297

which consisted of SWC, and employee severance and related legal fees.

expense totaled $76 during the three months ended March 31, 2026, consisting primarily of $43 of legal expenses related to the Vivos

The remaining $33 was attributable to the losses on sale of receivables associated with the Company’s receivables

purchase programs.

Although the volume of receivables sold was comparative to the prior year period, the Company’s overall cost of capital declined due to

lower prime rates and comparatively favorable rates available under the receivables purchase programs.

comparison, other expense totaled $26 during the three months ended March 31, 2025, consisting primarily of $23 related to

the Vivos matter and $3 associated with the disposal of technology-related assets.

currently expects legal expenses associated with the Vivos matter to substantially conclude during the second quarter of 2026.

AND CAPITAL RESOURCES

1 unchanged sentence

salaries, public company expenses, interest on financing arrangements, legal fees related to the enforcement of arbitration awards against

the Vivos Group, and the timing of collections on client accounts receivable.

Because client payments, on average, lag field talent payroll

by approximately 47 days, working capital demands can fluctuate and occasionally present short-term challenges.

principal sources of liquidity include cash generated from operations via accounts receivable collections, borrowings under our Factoring

Facility with Gulf, and, more recently, three separate receivables purchase arrangements.

These arrangements function similarly to factoring

but operate through supplier payment programs facilitated by client-affiliated financial institutions.

of our larger clients over the past few years have adopted extended payment terms, 60 to 90 days.

amounting to unilateral

term extensions of 30 to 60 days.

To mitigate the impact of these changes, we adopted Receivable

Purchase Programs with MUFG and JPMorgan.

Combined with our factoring facility and biweekly prepayments

(averaging approximately $62 every two weeks), these programs have materially improved our cash conversion cycle.

Our Days Sales

Outstanding (DSO) improved from 66 days at the beginning of 2023 to 49 days by March 2024 and has averaged 50 days since.

trailing twelve months ended September 30, 2025, our DSO remained strong at 47 compared to 52 in the prior year period.

Receivable Purchase Programs enable MMG to receive payment for 100% of client-approved invoices, net of a flat interest rate.

the MUFG program, rates vary based on daily invoice volume, with higher volume reducing the effective rate.

The JPM agreement,

executed on April 23, 2025, purchases invoices from one of the Company’s largest client’s and provides payment within 15

days of approval, at the Secured Overnight Financing Rate (SOFR) plus 80 basis points.

Based on a SOFR of 3.98% as of November 12,

2025, the effective annualized rate is approximately 4.78%, substantially below the Company’s average 10.5% factoring rate

(tied to the 7.00% prime rate as of November 14, 2025).

factoring facility with Gulf advances 93% of eligible receivables, subject to a 15-basis point advance fee and an interest rate of prime

plus 2%, with a floor prime rate of 4%.

These financing arrangements, combined with the portion of client business that pays in advance

of payroll (approximately $56 every two weeks), help offset the impact of

approximately 32% of our revenue coming from clients on 90-day terms, some of which involve delayed issuance of purchase orders.

of September 30, 2025, 99.1% of accounts receivable were current or less

than 30 days past due, compared to 98.7% a year earlier.

Our long-term credit performance remains strong, with total bad debt over the

past five years amounting to just one hundred and eighty dollars.

primary uses of cash include payments to field talent, corporate and staff employee payroll and related liabilities, operating expenses,

public company costs (including D&O and general liability insurance premiums, SEC filing and audit fees, legal and professional services,

stock transfer agent costs, and board compensation), as well as factoring and borrowing-related interest, taxes, and debt service.

the Vivos Group (which has concluded as of early April), and the timing of collections on client accounts receivable.

Because client

payments, on average, lag field talent payroll by approximately 60 days (not adjusted for invoice purchase programs), working capital

demands can fluctuate and occasionally present short-term challenges.

to the nature of our EOR business, where most contracted talent are W-2 employees paid known amounts on varying schedules, cash inflows

2 unchanged sentences

financing to ensure timely fulfillment of payroll and other obligations.

of September 30, 2025, the Vivos Debtors owed the Company $6,228 in notes receivable, which includes a $3,000 defaulted promissory note

and a $750 unpaid tax obligation dating back to December 2019.

the Maslow–Reliability merger, the Company anticipated accessing capital markets and using its common stock as acquisition currency.

However, all 300 million authorized shares of common stock were issued in connection with the merger.

No additional shares are expected

to become available until the legal dispute with the Vivos Debtors and the broader Vivos Group is resolved.

Once resolved, the Company

may pursue either an increase in authorized shares or a reverse stock split to create capacity for future capital raises or acquisitions.

is no assurance as to the timing of such actions.

of September 30, 2025, our working capital totaled $6,565, compared to $7,296 as of December 31, 2024 and $7,536 on September 30, 2024.

Adjusting for the notes receivable related to the Vivos Debtors, our working capital stood at $337, compared to $1,449 as of December

31, 2024 and $1,709 on September 30, 2024.

principal sources of liquidity include cash generated from operations via accounts receivable collections, borrowings under our Factoring

Facility with Gulf, and two separate receivables purchase arrangements.

These arrangements function similarly to factoring but operate

through supplier payment programs facilitated by client-affiliated financial institutions.

primary uses of cash include payments to field talent, corporate and staff employee payroll and related liabilities, operating expenses,

public company costs (including D&O and general liability insurance premiums, SEC filing and audit fees, legal and professional services,

stock transfer agent costs, and board compensation), as well as factoring and borrowing-related interest, taxes, and debt service.

Several larger clients previously extended payment terms from approximately

30 days to between 60 and 90 days, increasing working capital demands and lengthening the Company’s cash conversion cycle.

mitigate the impact of these extended payment terms, the Company utilized lower cost receivables purchase

programs with MUFG and JPMorgan, in addition to its factoring facility and client prepayment arrangements, which currently average

approximately $25 biweekly.

Collectively, these programs materially improved liquidity and accelerated cash conversion.

result, trailing twelve months Days Sales Outstanding (DSO) improved from 50 days at the end of March 2025 to 29 days by March 31,

Financing and Factoring Arrangements

Company maintains a receivables factoring facility with Gulf to provide working capital liquidity.

Under this arrangement,

eligible invoices are sold or advanced at a specified percentage of face value, with fees based on advance rates and interest spreads

provides immediate liquidity but requires settlement upon ultimate client payment, and the effective cost of capital is influenced by

client payment timing.

2025, the Company also began utilizing receivables purchase programs administered by JPMorgan (“JPM”) and MUFG Bank Ltd.

(“MUFG”) for certain invoices related to a large enterprise client.

the JPM arrangement, invoices are purchased at a discount based on a rate at approximately 80 basis points over SOFR for the expected

collection period, typically ranging from 100 to 105 days.

In the first quarter 2026 the SOFR rate average was 3.66%, resulting in our

average basis being 4.46% APR.

the MUFG arrangement invoices are purchased at a discount based on a rate of approximately 235 basis points over SOFR for the expected

collection period, typically at 60 days.

With SOFR averaging 3.66% in the first quarter, our MUFG average rate was 6.01%.

to traditional factoring, both the JPM and MUFG programs provide a lower cost of capital for these receivables but typically result

in funding within five to ten days after invoice approval rather than immediate advance.

Company evaluates funding alternatives based on cost of capital, timing requirements, and concentration exposure.

of March 31, 2026, 90.9% of accounts receivable were current or less than 30 days past due, compared to 96.3% a year earlier.

Our long-term

credit performance remains strong, with total bad debt over the past seven years amounting to just over two thousand three hundred dollars.

Structure and Strategic Flexibility

Following the MMG–Reliability merger, all

300 million authorized shares of the Company’s common stock had been issued in connection with the transaction and related matters.

Effective April 2, 2026, pursuant to the previously

disclosed settlement with the Vivos Group, 253,292,210 shares of the Company’s common stock were transferred to the Company.

April 7, 2026, the Company was notified by Equiniti Shareholder Services, LLC, its transfer agent, that the transfers had been completed

effective April 2, 2026.

Following the transfer, the shares were no longer outstanding.

The reduction in outstanding shares provides the

Company with increased flexibility to pursue future capital raising activities, mergers and acquisitions, investments in business development

and technology infrastructure, other strategic transactions and growth-oriented initiatives, and general working capital purposes.

As of March 31, 2026, working capital totaled

$6,532, compared to $6,646 as of December 31, 2025 and $6,966 as of March 31, 2025.

Excluding the related-party notes receivable associated

with the Vivos Group, which were subsequently satisfied through the share transfer completed effective April 2, 2026, adjusted working

capital would have been $110 as of March 31, 2026, compared to $290 as of December 31, 2025 and $993 as of March 31, 2025.

Quantitative and Qualitative Disclosures About Market Risk

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