Reliability Inc - 10-K

ITEM 1A. RISK FACTORS

There are numerous and varied risks that may prevent us from achieving our goals, including those described below. You should carefully consider the risks described below and the other information included in this Annual Report on Form 10-K, including our consolidated financial statements and related notes. Our business, financial condition, and results of operations could be harmed by any of the following risks. If any of the events or circumstances described below were to occur, our business, financial condition, and results of operations could be materially adversely affected. As a result, the trading price of our common stock could decline, and investors could lose part or all of their investment. The risks below are not the only risks we face. Additional risks not currently known to us or that we currently deem to be immaterial may also adversely affect our business, financial condition, or results of operations. All dollar amounts presented in this Form 10-K, unless otherwise specified, are expressed in thousands.

Impact of Economic Conditions and Global Instability

Demand for staffing and employer-of-record (“EOR”) services is closely tied to general economic conditions and client workforce needs. Economic downturns, labor market weakness, reductions in client spending, or industry-specific contractions may cause clients to reduce their use of our services, terminate engagements, or seek pricing concessions, any of which could reduce our revenue and profitability.

In addition, broader events such as inflationary pressures, high interest rates, geopolitical instability, economic sanctions, public health events, or other disruptions may adversely affect clients’ operations, vendor payment behavior, and workforce demand. These conditions may also increase our operating costs, including compensation, benefits, insurance, and financing costs, and could adversely affect our business, financial condition, and results of operations.

RISKS RELATED TO OUR COMPANY

Our business model requires significant working capital

Our business requires significant working capital, and delays in client payments or reduced access to receivables-based financing could adversely affect our liquidity.

The Company utilizes receivables purchase programs with certain financial institutions. These arrangements may be accounted for as sales of financial assets under ASC 860 when control is surrendered; however, changes in structure or facts could result in a different accounting outcome. The classification of these arrangements requires judgment and is based on an evaluation of factors including control over the transferred assets and the Company’s continuing involvement. Changes in the structure of these arrangements or in the Company’s assessment of the applicable accounting criteria could result in a different accounting treatment, which could impact the Company’s reported financial position, results of operations, and cash flows.

A significant portion of our services involves employing field talent and funding payroll, employment taxes, and benefit-related obligations before we collect payment from clients. As a result, our liquidity is sensitive to the timing of client payments, customer concentration, and the availability and cost of receivables-based financing arrangements, including factoring.

If clients delay payment, dispute invoices, reduce usage of our services, or become unable to pay amounts owed, our cash flow may be adversely affected. If receivables-based financing is reduced or becomes more expensive (including due to concentration limits, eligibility requirements, or other program restrictions), we may experience liquidity constraints. Such constraints could impair our ability to fund payroll and operating needs and increase financing costs, which could adversely impact our business, financial condition, and results of operations.

We may not be able to raise additional capital on acceptable terms, if at all, and equity financings may dilute existing shareholders.

We have ongoing needs for working capital to fund operations, invest in systems and personnel, pay costs associated with being a public company, and pursue strategic initiatives. We may be required to raise additional funds through equity or debt financing. While we may be able to obtain additional debt or equity financing, such financing may be available only on terms that are costly, include restrictive covenants, require significant collateral, or result in substantial dilution to existing shareholders.

Any future sale or issuance of equity securities would dilute existing shareholders and could be at prices substantially below the prices at which our shares trade. If additional debt is incurred, we may be subject to meaningful debt service obligations and covenants that could restrict our operations and liquidity. If we are unable to raise capital or generate adequate cash from operations, we may be required to reduce costs, delay initiatives, forego business opportunities, or pursue other alternatives that could materially adversely affect our business.

Our capital structure and potential future issuances of shares, including shares held in treasury, could dilute existing shareholders and adversely affect the market price of our common stock.

We may seek to raise capital, pursue acquisitions, recapitalize the Company, or fund strategic initiatives through the issuance of equity securities, including shares currently held in treasury, or through the issuance of convertible securities or warrants.

The sale or issuance of a substantial number of shares of common stock, or the perception that such sales may occur, could adversely affect the market price of our common stock and increase volatility. Any such issuance would dilute existing shareholders and could reduce earnings per share or voting power. In addition, the availability of treasury shares for reissuance may create an overhang that could negatively impact investor perception or market pricing.

Our revenue and accounts receivable are highly concentrated among a small number of customers, and the loss of, or reduction in business from, one or more major customers could materially adversely affect our results.

We depend on a limited number of customers for a significant portion of our revenue. For the year ended December 31, 2025, our two largest customers represented approximately 58.4% of total revenue, and our top five customers represented approximately 76.7% of total revenue. A substantial portion of our revenue is derived from EOR arrangements with large institutional clients.

The loss of, or a substantial reduction in business from, any of these customers, whether due to budget reductions, internalization of workforce needs, program changes, competitive pressures, regulatory developments, or other factors, could significantly reduce our revenue and adversely affect our operating results. We may not be able to replace lost revenue on a timely basis, or at all.

In addition, and consequently, accounts receivable is concentrated among a small number of customers. If one or more major customers delays payment, disputes invoices, or becomes unable to pay, our liquidity and working capital could be materially adversely affected.

Our business is sensitive to economic downturns, and clients may reduce their use of our services or delay payments.

Because demand for staffing and workforce solutions is sensitive to changes in the level of economic activity, our business may suffer during an economic downturn. When demand drops, our operating results may be impacted unfavorably because selling and administrative expenses may not decline as quickly as revenue. In addition, during downturns clients may slow vendor payments, seek more flexible payment terms, dispute charges, or become unable to pay their obligations. These factors could significantly affect our business, financial condition, and results of operations.

We are exposed to employment-related claims and costs, and litigation or regulatory actions could be costly and adversely affect our business.

Our business model involves employing individuals and placing them in client work environments over which we have limited control. As the employer of record for many placements, we assume certain risks and potential liabilities, including claims relating to discrimination, harassment, workplace safety incidents, wage and hour compliance (including meal and rest break requirements), overtime classifications, worker classification standards, immigration matters, employee benefits, wrongful termination, background screening, privacy, and other employment-related matters.

Certain jurisdictions, including California and New York, provide for representative actions, statutory penalties, and enhanced remedies for technical or administrative violations of wage and hour laws. Even inadvertent errors in payroll practices or compliance procedures may result in claims, investigations, fines, penalties, settlements, and / or defense costs.

As a result, we may incur fines, penalties, damages, legal fees, and other costs, and we may be subject to negative publicity. Litigation and regulatory matters can be expensive, time-consuming, and distracting to management, and could materially adversely affect our business, financial condition, and results of operations.

We assume payroll and related obligations for our employees and are exposed to client credit risk.

We generally assume responsibility for payroll and related obligations for field talent, including the payment of wages and certain employment taxes. These obligations are fixed regardless of whether clients make payments in accordance with their contractual terms. If clients fail to pay on a timely basis or at all, we may be required to fund payroll and related obligations using working capital or financing sources, which could materially adversely affect our liquidity and results of operations.

Workers’ compensation and other insurance costs may increase and reduce our margins and liquidity.

We are responsible for workers’ compensation and other insurance costs for both staff employees and field talent. Premiums, claims frequency and severity, medical cost inflation, actuarial estimates, and changes in insurance markets or regulations may increase costs. There can be no assurance that we will be able to increase fees charged to clients in a timely manner or in amounts sufficient to cover increased insurance-related costs. Increased costs could reduce margins, increase working capital requirements, and materially adversely affect our business, financial condition, and results of operations.

Government regulation could increase compliance costs and expose us to penalties or liability.

Our business is subject to numerous federal, state, local, and, in some cases, international laws and regulations, including employment, wage and hour, paid leave, workplace safety, unemployment insurance, worker classification, data privacy, and other requirements. Because we place employees across multiple jurisdictions, compliance can be complex and resource intensive. Changes in law, increased enforcement activity, or failures in compliance processes could result in fines, penalties, litigation, and reputational harm, and could materially adversely affect our business, financial condition, and results of operations.

The success of our business depends on our ability to attract and retain qualified employees and field talent.

Our success depends on our ability to attract and retain qualified personnel, including recruiters, sales and client service staff, and field talent with skills demanded by clients. Competition for qualified personnel may intensify, compensation levels may increase, and the available pool of qualified talent may be limited to certain specialties. If we cannot attract and retain qualified personnel, the quality of our services may deteriorate, our ability to grow may be constrained, and our business and results of operations may be materially adversely affected.

Our business depends on key members of management, and the loss of their services could disrupt operations.

Our future success depends in part on the experience and leadership of key members of our management team. The loss of one or more key personnel, or difficulties in recruiting and retaining qualified management and operational personnel, could disrupt operations, adversely affect customer relationships, delay strategic initiatives, and materially adversely affect our business, financial condition, and results of operations.

Cybersecurity incidents or data breaches could disrupt operations and expose the Company to liability.

We collect, store, and transmit sensitive employee and client information. Security controls and practices may not prevent improper access to, or disclosure of, confidential information, including personally identifiable information. Cybersecurity incidents may occur through a variety of means, including malware, ransomware, social engineering, credential compromise, or system vulnerabilities.

Any incident that results in unauthorized access, disclosure, or loss of data could harm our reputation, result in contractual or regulatory liability, and increase costs, which could materially adversely affect our business, financial condition, and results of operations. In addition, data privacy and cybersecurity regulations are evolving and may increase compliance costs.

The Company could face disruption and increased costs from outsourcing or the use of third-party service providers.

We rely on third-party providers and may outsource certain functions. Transitioning processes to third parties or offshore resources may create risks of errors, omissions, service disruptions, or control failures. Any such issues could negatively impact clients, damage our reputation, and result in liability or loss of customers.

Our acquisition strategy creates risks, and acquisitions may not be successful.

We may pursue acquisitions of businesses, assets, or technologies. We may fail to identify attractive targets or may be unable to complete acquisitions on acceptable terms. Acquisitions involve risks, including integration difficulties, diversion of management attention, overvaluation, unanticipated liabilities, impairment of goodwill or intangibles, disruption to customer or employee relationships, and challenges in maintaining internal controls. If acquisitions are not successful, our business and results of operations could be materially adversely affected.

Our operations across numerous geographies may be affected by natural disasters, travel disruptions, or other events beyond our control.

We operate in multiple jurisdictions and may be affected by natural disasters, severe weather, travel disruptions, terrorism, war, public health events, or other factors beyond our control. These events could adversely affect our ability to service clients, impact employees and vendors, disrupt operations, and materially adversely affect our business, financial condition, and results of operations.

RISKS RELATED TO OWNERSHIP OF COMMON STOCK

The market price of our common stock may be volatile or may decline regardless of our operating performance.

The market price of our common stock has been, and may continue to be, volatile. The market price may fluctuate significantly due to factors beyond our control, including fluctuations in operating results, lack of analyst coverage, the OTC market environment, “penny stock” rules, sales of significant blocks of stock, general market conditions, and other events.

In addition, stock markets have experienced extreme price and volume fluctuations that have affected the market prices of equity securities of many companies. If we were to become involved in securities litigation, it could subject us to substantial costs, divert resources and management attention, and adversely affect our business, results of operations, and financial condition.

Our common stock is subject to “penny stock” rules, which may reduce liquidity and increase transaction costs for investors.

Our common stock may be deemed a “penny stock” under SEC rules. The application of “penny stock” rules and FINRA sales practice requirements may reduce the ability of broker-dealers to recommend or execute transactions in our common stock, which could reduce liquidity, increase transaction costs for investors, and adversely affect the market price of our common stock.

We do not intend to pay dividends for the foreseeable future.

We have never declared or paid cash dividends on our common stock and do not intend to pay cash dividends in the foreseeable future. We anticipate retaining any future earnings for use in our business.

RISKS RELATED TO OUR PREVIOUS STATUS AS A SHELL COMPANY

Restrictions on reliance on Rule 144 applicable to former shell companies may limit resale of restricted securities.

Rule 144 may be unavailable for the resale of securities issued by an issuer that is a shell company or was previously a shell company, unless certain conditions are met, including continued compliance with Exchange Act reporting requirements. If we fail to meet these conditions, resale of restricted securities under Rule 144 may be limited, which could adversely affect liquidity for holders of restricted securities.

We may have contingent liabilities arising from actions taken by prior owners or related parties that were not disclosed to us at the time of the Merger.

Although we believe previously identified matters have been resolved, prior owners of Maslow and related entities entered into financing arrangements, guarantees, and litigation matters in which Maslow was included as a borrower, guarantor, or named party without the knowledge of current management at the time of the Merger. While certain of these matters have been settled, there can be no assurance that additional undisclosed liabilities, guarantees, or claims will not arise. If we become subject to such obligations, the resulting legal costs, settlements, or judgments could materially adversely affect our business, financial condition, and results of operations.

RISKS RELATED TO BEING A PUBLIC COMPANY

Costs and risks associated with being a public company, including compliance with internal control requirements, may adversely affect our business.

As a public company, we incur significant legal, accounting, governance, and compliance costs and demands on management. We are required to maintain effective disclosure controls and internal controls over financial reporting, including compliance with Section 404 of the Sarbanes-Oxley Act. Although we are currently exempt from auditor attestation requirements applicable to larger issuers, compliance with these requirements requires significant management attention and financial resources. If we fail to maintain effective internal controls, identify material weaknesses, are unable to recruit and retain qualified accounting and finance personnel, or fail to timely prepare and file required reports, we could be required to restate financial statements, become subject to regulatory scrutiny, lose investor confidence, and experience a decline in our stock price.

Evolving disclosure, governance, and compliance requirements applicable to public companies may increase costs and require ongoing modifications to our practices, diverting management time and resources from operating the business.

OTC Listing + Exchange Eligibility

Our common stock is not listed on a national securities exchange, and an active trading market may not develop.

Our common stock is quoted on the OTC Markets platform, and the Company currently files periodic reports with the Securities and Exchange Commission. Our securities are not listed on a national securities exchange such as the New York Stock Exchange or Nasdaq, and we do not currently meet the quantitative listing standards required for such exchanges. There can be no assurance that we will qualify for or obtain a listing on a national securities exchange or maintain quotation on a higher tier of the OTC Markets platform in the future.

Trading in securities quoted on OTC markets is generally less liquid than trading on national securities exchanges. Limited trading volume, a relatively small public float, and reduced market visibility may make it difficult for investors to buy or sell our common stock at desired prices. These factors may also contribute to significant volatility in the market price of our common stock and could adversely affect our ability to raise capital or use equity securities as consideration in acquisitions or other strategic transactions.

In addition, our common stock may be deemed a “penny stock” under applicable SEC rules. Broker-dealers effecting transactions in penny stocks are subject to additional regulatory requirements, including enhanced disclosure obligations and suitability determinations. These requirements may discourage broker-dealer participation in trading our securities and could further limit liquidity and market activity in our common stock.

ITEM 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

The following discussion and analysis of our results of operations and financial condition should be read in conjunction with our consolidated financial statements and related notes appearing elsewhere in this Annual Report on Form 10-K. This section includes several forward-looking statements, within the meaning of the Private Securities Litigation Reform Act of 1995, that reflect our current views with respect to future events and financial performance. All statements that address expectations or projections about the future, including, but not limited to, statements about our plans, strategies, adequacy of resources and future financial results (such as revenue, gross profit, operating profit, cash flow), are forward-looking statements. Some of the forward-looking statements can be identified by words like “anticipates,” “believes,” “expects,” “may,” “will,” “can,” “could,” “should,” “intends,” “project,” “predict,” “plans,” “estimates,” “goal,” “target,” “possible,” “potential,” “would,” “seek,” and similar references to future periods. These statements are not a guarantee of future performance and involve a number of risks, uncertainties and assumptions that are difficult to predict. Because these forward-looking statements are based on estimates and assumptions that are subject to significant business, economic and competitive uncertainties, many of which are beyond our control or are subject to change, actual outcomes and results may differ materially from what is expressed or forecasted in these forward-looking statements. Important factors that could cause actual results to differ materially from these forward-looking statements include, but are not limited to: our ability to access the capital markets by pursuing additional debt and equity financing to fund our business plan and expenses; our continued inability to issue additional shares of equity securities; negative outcome of pending and future claims and litigation and our ability to comply with our contractual covenants, including in respect of our debt; potential loss of clients and possible rejection of our business model and/or sales methods; weakness in general economic conditions and levels of capital spending by customers in the industries we serve; weakness or volatility in the financial and capital markets, which may result in the postponement or cancellation of our customers’ projects or the inability of our customers to pay our fees; delays or reductions in U.S. government spending; credit risks associated with our customers; competitive market pressures; the availability and cost of qualified labor; our level of success in attracting, training and retaining qualified management personnel and other staff employees; changes in tax laws and other government regulations, including the impact of health care reform laws and regulations; the possibility of incurring liability for our business activities, including, but not limited to, the activities of our temporary employees; our performance on customer contracts; and government policies, legislation or judicial decisions adverse to our businesses. Readers are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date hereof. We assume no obligation to update such statements, whether as a result of new information, future events or otherwise, except as required by law. We recommend readers to carefully review the entirety of this Annual Report, including the “Risk Factors” in Item 1A of this Annual Report and the other reports and documents we file from time to time with the Securities and Exchange Commission (“SEC”), particularly our Quarterly Reports on Form 10-Q and our reports on Form 8-K.

The following discussion and analysis of our financial condition and results of operations, our expectations regarding the future performance of our business and the other non-historical statements in the discussion and analysis are forward-looking statements. These forward-looking statements are subject to risks, uncertainties and other factors including those described in “Item 1A. Risk Factors” of this Annual Report on Form 10-K. Our actual results may differ materially from those contained in any forward-looking statements. You should read the following discussion together with our audited consolidated financial statements and related notes thereto and other financial information included in this Annual Report on Form 10-K. All dollar amounts presented in this Form 10-K, unless otherwise specified, are expressed in thousands.

Our financial information may not be indicative of our future performance.

EXECUTIVE OVERVIEW

Non-GAAP Financial Measures

The Company uses Operating Income Before Interest, Taxes, Depreciation and Amortization (“OIBITDA”) as a supplemental measure of operating performance.

We define OIBITDA as operating income (loss) before interest, taxes (incl. franchise and state minimum taxes), depreciation and amortization and certain corporate overhead expenses associated primarily public company governance, compliance and legacy legal matters.

OIBITDA is not a measure of financial performance under U.S. GAAP and should not be considered a substitute for net income (loss) or operating income (loss). However, management believes OIBITDA provides investors with useful information to evaluate core operating results by excluding the effects of non-cash depreciation and amortization and certain corporate expenses associated with maintaining the Company’s public reporting structure.

Management uses OIBITDA to evaluate operating performance, prepare budgets and forecasts, and assess performance relative to internal targets.

A reconciliation of net income (loss), the most directly comparable GAAP measure, to OIBITDA is presented below:

December 31,

Operating Income

Depreciation and amortization

State & local taxes

Corporate public company expense

Operational performance comparison for the years ended December 31, 2025, and 2024 are as follows:

December 31,

Revenue

Gross profit

OIBITDA

Income (loss) before income taxes

Net income (loss)

Certain state minimum taxes were reclassified from SG&A to income tax expense in 2025 to conform with current period presentation.

2025 Financial Performance Overview

In 2025, MMG generated revenue of $20,717, a decline of $3,265 (13.6%) from $23,982 in 2024. The decrease was primarily attributable to reduced EOR revenue; however, performance in our staffing segment improved meaningfully year-over-year. Staffing revenue increased by $771 (23.4%) and staffing gross margin expanded to 23.0% from 18.7% in 2024.

Total gross profit declined to $2,952 from $3,192 in 2024, a decrease of $240 (7.5%). Importantly, the decline in gross profit was proportionally less than the decline in revenue, resulting in an overall 90 basis point gross margin improvement to 14.2% in 2025 compared to 13.3% in 2024.

Selling, General and Administrative expenses decreased by $117 to $3,782 (3.0%) in 2025, compared to $3,899 in 2024. Interest income of $514 exceeded interest expense of $105 during 2025, but other expense totaled $229, consisting primarily of legal fees associated with recovery of arbitration awards and $73 in loss on sale of receivables, an improvement of $20 compared to $249 of other expense recorded in 2024 .

Enterprise Client Performance

Our top five enterprise clients remained active in 2025, each generating at least $1,000 in revenue, consistent with the prior year.

Our largest client generated $6,535 in revenue in 2025, an increase of $1,116 (20.6 %) over 2024, nearly matching the prior year’s record level.

Our second-largest client generated $5,565 in revenue, a decline of $888 (13.8%) compared to 2024.

Our third-largest client in 2025 was previously ranked fourth in 2024. Revenue from this client increased modestly by $29 (2.0%) to $1,429. The shift in ranking was primarily attributable to a significant decline from our prior third-largest client, whose revenue decreased by $2,214 (65.3%) to $1,177.

Gross Profit and Margin Analysis

Although total gross profit declined by $240 in 2025, consolidated gross margin improved to 14.2% from 13.3% in 2024, reflecting favorable changes in revenue mix and improved performance within the Staffing segment.

The 90 basis point increase in gross margin was driven by the following factors:

Growth in Staffing revenue and margin expansion contributed approximately 190  basis points of positive impact. This improvement was largely driven by expansion in managed services and consulting activity, which increased by $1,653, from $964 in 2024 to $2,617 in 2025, generating approximately $221 of incremental gross profit.

Increased utilization of lower-margin 1099 EOR contractors , which negatively impacted consolidated gross margin by approximately 90  basis points.

Lower Direct Hire performance , partially offset by improvement in Video Production margins, resulting in a net negative impact of approximately 10 basis points.

Over the past seven years, MMG has meaningfully improved gross margin, increasing from 10.3% in 2018 to a peak of 14.2% in 2023. In 2024, this trend was temporarily interrupted as growth in discounted 1099 EOR revenue reduced consolidated margin to 13.3%. In 2025, consolidated margin returned to 14.2%, matching the Company’s historical peak.

Within the EOR 1099 segment, gross profit declined from $2,445 in 2024 to $1,933 in 2025, representing an 11.8% gross margin. This mix shift reduced consolidated margin by approximately 70 basis points.

Offsetting this pressure, Staffing gross profit increased by $317 on revenue growth of $771, resulting in gross margin expansion from 18.7% in 2024 to 23.0% in 2025. Within Staffing, W-2 placements generated $338 of incremental gross profit year over year, on $813 of additional revenue, producing a 23.4% gross margin compared with 18.8% in 2024.

The largest contributor to margin improvement within Staffing was the Company’s managed services business, which generated approximately $221 of incremental gross profit and contributed approximately 150  basis points of consolidated margin improvement. Late-year consulting activity contributed an additional 10 basis points, bringing the combined managed services and consulting impact to approximately 160 basis points of consolidated margin expansion.

Overall, the positive impact from Staffing margin expansion (approximately +190 basis points), partially offset by 1099 EOR mix pressure and modest Direct Hire and Video Production changes, resulted in a net 90 basis point improvement in consolidated gross margin year-over-year.

Operational Transition and Outlook

During 2025, the Company continued to incur legal expenses and devote executive resources to matters involving the Vivos Group. Legal costs associated with these matters totaled $159 and were recorded within Other Income (Expense) (see Results of Operations). Following execution of a settlement agreement on February 16, 2026, management expects legal costs associated with award recovery and related proceedings to decline in 2026.

Maslow had historically generated positive operating income as reflected in OIBITDA (See ITEM 7) prior to 2025. In 2025, however, Maslow saw an operational loss and landed with OIBITDA of ($43), compared to OIBITDA of $2 in 2024 and $57 in 2023. Management views 2025 as a transitional year characterized by revenue contraction in certain service lines, expansion of staffing activities, cost realignment initiatives, and restructuring of the sales organization intended to support future growth.

Outlook for 2026

The Company enters 2026 with a streamlined cost structure, strengthened sales leadership, and a renewed focus on higher-margin service lines. During the second half of 2025, management implemented targeted cost reductions and selectively outsourced certain administrative functions to improve operational efficiency and enhance operating leverage. These actions are expected to better position the Company to scale revenue without a proportional increase in fixed costs .

In 2025, the Company invested in commercial leadership, including the hiring of a Vice President of Sales and a Client Development Manager with media staffing expertise. An additional experienced sales resource is expected to join in early 2026. The Company has been invited to participate in several competitive RFP processes and is expanding its reach beyond traditional media verticals. Based on current pipeline visibility, management anticipates revenue growth in 2026 relative to 2025, subject to client demand and broader economic conditions.

Staffing Solutions, including managed services and direct hire, are expected to represent an increasing proportion of revenue. These service lines historically generate higher gross margins than EOR services and are expected to contribute positively to blended margin performance. While EOR remains an important foundational revenue stream, management’s strategy is to gradually rebalance revenue mix toward higher-margin staffing and managed services offerings.

Improved profitability is a key objective for 2026. Management expects to reduce operating losses compared to 2025 through revenue growth, margin mix enhancement, and disciplined cost management. Hiring plans remain targeted primarily toward revenue-generating roles, with additional expansion contingent upon sustained growth.

The Company continues to actively manage working capital and liquidity. Receivables-based financing arrangements remain an integral component of payroll funding operations, and management evaluates funding sources based on cost of capital, timing, and client concentration considerations. Capital discipline will remain central to operational decision-making.

As discussed in Items 1A and Item 3, treasury shares may provide future capital structure flexibility, including potential use in equity financing transactions or strategic acquisitions. Given current liquidity priorities, management views acquisition activity in 2026 as opportunistic rather than near-term dependent.

The Company successfully transitioned to the OTC-ID market tier during 2025 and continues to evaluate potential advancement to higher OTC tiers, including OTCQB or OTCQX, subject to meeting applicable requirements and strategic considerations. Management remains focused on strengthening operating performance as the primary driver of long-term shareholder value.

COMPANY OVERVIEW

Maslow is a workforce management solution provider with proven capabilities delivering employer of record (EOR), Staffing Solutions services, consisting of media, IT, and administrative resources. We provide services to clients primarily within the United States of America.

Our services consist of:

Employer of Record (“EOR”): A unique workforce solution for any organization who seeks efficiency in employee administrative management including payroll and benefits, labor risk associated with compliance with federal-state and local regulations including Fair Labor Standards Act (“FLSA”), in onboarding and offboarding employees, and in managing benefit costs. One major difference in this service offering is that our customers usually source the talent and MMG hires and leases the employees to our customers.

Staffing Solutions: Staffing covering a wide variety of specialties: media, information technology (“IT”), accounting and finance, HR, marketing, sales, and other administrative personnel. Staffing Solutions includes a variety of types including temporary, contracted, managed services and consulting.

Video and Multimedia Production: 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 more.

Direct Hire: We strategically recruit and fill a variety of full-time roles for our customers which is only limited by our recruiting capabilities, which are already quite diverse.

The Company’s subsidiary, The Maslow Media Group, Inc., 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 assigned at the corporate level. This enables a more pristine, focused view of the operational side of the business we refer to as Operational Income Before Interest, Taxes, Depreciation, and Amortization (OIBITDA).

RESULTS OF OPERATIONS

Maslow generated revenues of $20,717 for the year ending December 31, 2025, representing a decrease of $3,265 (13.6%) compared to $23,982 for the year ended December 31, 2024.

The decline was primarily attributable to reduced activity from two of our largest clients. One client experienced funding constraint resulting in a revenue decrease of $2,214 (65.3%), while another client generated $5,565 in revenue in 2025, representing a decrease of $888 (13.8%) compared to 2024. Additionally, three clients that ceased conducting business with the Company during 2024 accounted for approximately $1,398 of the year-over-year revenue decline.

Our top ten clients represented 19,270, or approximately 93.0%, of total revenue in 2025, compared to $21,269, or 89.1%, of total revenue in 2024.

In December 2025, rebates totaling $13 were issued to customers that achieved contractual revenue thresholds, compared to $70 in 2024. This total changed not due to lower revenues but due to an agreed excluded class of revenue.

The following tables summarize key components of our results of operations for the periods indicated, both in dollars and as a percentage of revenues, and were derived from our consolidated financial statements.

December 31,

Revenue

Cost of services

Gross profit

Selling, general and administrative expenses

Operating loss

Interest income

Interest income from related parties

Interest expense

Other income (expense)

Income/(Loss) before taxes

Income tax benefit (expense)

Net Income (Loss)

Revenues: By Segment

% of Revenue

% of Revenue

EOR

Staffing Solutions

Video and Multimedia Production

Direct Hire

Total Revenue

Employer of Record (EOR) Revenues : Employer of Record (“EOR”) revenue totaled $16,400 in 2025 compared to $20,382 in 2024, representing a decrease of $3,982 (19.5%). EOR revenue represented 79.2% of total revenue in 2025 compared to 85.0% in 2024.

The decrease was primarily attributable to reduced activity from one significant enterprise client, which accounted for approximately $2,190 of the decline. Approximately $700 of the decline related to clients that ceased operations with the Company during 2024. An additional $463 resulted from a client transitioning personnel to a managed staffing arrangement. Other client-level demand fluctuations accounted for the remaining variance.

Revenue declines among EOR clients totaled approximately $5,650, partially offset by approximately $2,119 of increased activity among other clients.

Staffing Solutions Revenues : Staffing revenue increased $771 (23.4%) to $4,072 in 2025 from $3,301 in 2024. Staffing represented 19.7% of total revenue in 2025 compared to 13.8% in 2024. The increase reflects continued expansion in Media Staffing and improved demand across select accounts.

Video and Multimedia Production Revenues : Revenue from video production services, including managed services and project-based freelance work, increased by $4, from $204 in 2024 to $208 in 2025. This segment represented 1% of total revenue, compared to 10 bps lower at 0.9% in 2024.

Gross Profit: Gross profit for 2025 was $2,952 compared to $3,192 in 2024, representing a decrease of $240 or 7.5%. Despite lower revenue, consolidated gross margin improved to 2023 levels at 14.2% in 2025 from 13.3% in 2024.

The overall margin improvement was driven primarily by:

Increased contribution from Staffing Solutions, which grew by $771 (23.4%) and represented 19.7% of total revenue compared to 13.8% in 2024.

Expansion in Staffing Solutions gross margins to 23.0% from 18.7% in 2024.

The Managed Service Staffing component alone drove 1.5 % of total business margin improvement

Improved margins within Video Production services.

Managed services expanded in 2024 and 2025 to 2,617 from approx.$84 in 2023, carrying gross margins of 25.3% in 2025. Couple this with $17 in revenue at 41.5% margin consulting-based staffing, and staffing margin expanded by 4.4%, with the aforementioned 1.6% in overall margin expansion.

EOR gross margin declined to 11.8% in 2025 from 12.0% in 2024. The decrease was primarily attributable to:

Revenue mix shift, including approximately $1.5 million of lower-margin 1099 contractor project activity;

Increased workers’ compensation expense of approximately $34 due to higher experience modification factors; and

Portfolio contraction of standard-margin revenue, which reduced operating leverage.

Non-EOR gross margins improved to 23.6% from 20.8 % in 2024.

Selling, General and Administrative Expenses (“SG&A”): SG&A expenses decreased by $117 (3.0%) to $3,782 in 2025 compared to $3,899 in 2024. The most significant driver of the decrease was lower salary and benefits expense of $260, primarily consisting of bonus reductions of $127, wage savings of $102, payroll tax reductions of $11, and lower health benefit costs of $17. As a result, loaded salary and wages as a percentage of total SG&A decreased from 72.9% in 2024 to 68.4% in 2025.

Other key drivers of changes in SG&A were as follows:

Contract Services decrease by $17 or 35.4 %

Business Insurance package decrease by $13 or 6.6%

Marketing & Promotion expense decrease by $10 or 18.9%

Legal fees and no-fault settlement increased costs by $163

Software increased by $22 or 12.1%

Accounting Fees associated with tax and PCAOB audit requirements increased by $12 or 7.8%

From an MMG operational perspective, SG&A costs were down $202 or 6.2% in 2025 from 2024. Loaded Salaries, inclusive of benefits, commissions, payroll tax, and bonus were favorable by $186 in the year ending December 31, 2025, compared to same period in 2024. Marketing, Contract services and Business Taxes were favorable by $18, $17 and $12 , respectively while Software costs increased by $22. $14 of the Business Tax decrease was a reclassification to state income taxes in 2025.

Corporate costs, which consist of nonoperational and mostly public costs, were $86 or 13.1% greater in 2025 to 2024. This sole driver was an employment related settlement for $125 which included another $38 in associated legal fees. Otherwise, loaded salaries were down $75, and business insurance favorable by $12. Cost increases were in the areas of accounting by $9 and $8 for web services.

Interest Income : Interest income from related parties rose by $57, to $509 from $452, as adjustments were made to interest in 2024 based on re-interpretation of the awards.

Maslow also earned $5 in FDIC insured money market interest versus the $18 in interest income earned in 2024 which included $14 from a federal tax refund (2016–2020) and $4 from the same money market account.

Other Income (Expense): In 2025, the Company recorded net other expense of $229, compared to $249 in 2024, representing a year-over-year improvement of $20. The composition of other income (expense) differed significantly between periods.

In 2025, other expense included $72 of losses on receivables sold under the Company’s receivables purchase programs and $157 of legal costs associated with recovery of the Vivos arbitration award.

In contrast, 2024 included $379 of non-operational costs, primarily consisting of legal fees and settlements related to receivership activities ($143), restructuring costs ($121), and Vivos-related matters ($115). These costs were partially offset by $127 of recoveries related to previously overpaid IRS interest and penalties, as well as a $3 credit card rebate.

Recurring items common to both periods were minimal and included nominal credit card rebates of $1 in 2025 and $3 in 2024.

Interest Expense: Interest expense was lower by $3 from $108 in 2024 to $105 in 2025 as the need for using our Gulf Coast factoring facility was partially supplanted by the sales of receivable programs. Lower interest rates also helped as the average Gulf rate was 10.3% in 2025 compared to approximately 11.3% in 2024.

Income Taxes: The Company recorded no federal income tax expense in 2025 or 2024 primarily due to net operating loss carryforwards and a full valuation allowance against deferred tax assets. State income tax expense for 2025 is $14 versus $0 in 2024.

LIQUIDITY AND CAPITAL RESOURCES

Overview

As of December 31, 2025, the Company’s primary sources of liquidity consisted of cash on hand, cash generated from operations, receivables purchase arrangements, and access to invoice factoring facilities. The Company’s primary liquidity requirements include funding payroll and related costs for field talent, operating expenses, professional fees, and compliance costs associated with operating as a public company.

Because payroll and related employment costs are generally funded prior to the collection of client receivables, the Company’s working capital requirements are sensitive to client payment timing, revenue concentration, and fluctuations in business activity.

Operating Cash Flow and Working Capital

During 2025, the Company incurred a net loss of $664. Although gross margins improved year-over-year, revenue contraction reduced overall gross profit dollars and contributed to pressure on operating cash flow.

Accounts receivable levels fluctuate based on revenue volume and client payment cycles. Certain enterprise clients operate on extended payment terms, and payment timing variability may cause short-term working capital compression. In addition, seasonal revenue patterns and year-end billing cycles may impact interim liquidity.

Management actively monitors weekly cash flow projections and payroll funding requirements. The Company has historically utilized receivables-based financing arrangements to bridge the timing difference between payroll funding and client collections.

Receivables Financing and Factoring Arrangements

The Company maintains a receivables factoring facility with Gulf Coast Business Credit 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 above prime.

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

In 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.

Under 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.

Under the MUFG arrangement invoices are purchased at a discount based on a rate at approximately 235 basis points over SOFR for the expected collection period, typically at 60 days.

Compared to traditional factoring, both the JPM and MUFG programs provide a lower cost of capital for these receivables but typically results in funding within five to ten days of invoice approval rather than immediate advance.

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

Liquidity Sensitivities

The Company’s liquidity is primarily influenced by:

Revenue concentration among large enterprise clients;

Client payment timing and extended payment terms;

Payroll funding requirements for field talent;

Seasonal fluctuations in activity; and

Operating losses.

Receivables based financing arrangements are a consistent component of the Company’s payroll funding process due to the timing differences between payroll obligations and client collections. As revenue volumes declined during 2025 and operating losses reduced available working capital, reliance on both of these financing arrangements increased. While such arrangements provide essential liquidity, they increase financing costs and may adversely impact operating results.

Outlook and Liquidity Sufficiency

Management has prepared cash flow projections covering the twelve-month period following issuance of these financial statements. Based on current revenue expectations, modest growth assumptions, stable gross margin performance, and anticipated operating expenses adjusted for inflationary trends, management believes that existing receivables-based financing arrangements and projected operating cash flows will provide sufficient liquidity to meet anticipated obligations as they become due over the next twelve months.

These projections are subject to inherent uncertainty, including revenue variability, client payment timing, and continued access to receivables-based financing. Material adverse changes in these factors could require additional financing or further cost containment measures.

Capital Structure and Strategic Flexibility

In February 2026, the Company entered into a settlement agreement with members of the Vivos Group providing for the transfer of previously issued shares of the Company’s common stock to the Company in satisfaction of certain related-party obligations. The Company has filed a motion seeking entry of a consent judgment to effectuate the transfer of these shares through the Company’s transfer agent .

Upon completion of the transfer process, the return of these shares is expected to simplify the Company’s capital structure and may provide additional flexibility to pursue recapitalization initiatives, strategic transactions, or equity-based financing opportunities if deemed appropriate by management and the Board .

The Company continues to evaluate opportunities to improve operating leverage, enhance gross margin mix, and optimize working capital efficiency.

As of December 31, 2025, our working capital was $6,646 compared to $7,296 on December 31, 2024. Adjusted Working Capital (excluding $6,357 in Notes Receivable) was $290 versus $1,449 at the end of 2024.

In 2026, we do anticipate SG&A to be relatively stable as some of cost cuts that were made in administrative support staff will have a greater impact with an estimate loaded salary run rate of $126. We expect to add more Sales, Recruiting and Human Resource resources in 2026, which will likely be the source of most cost increases. We also factored in price increases due to inflation but at a lower rate than a year ago.

For 2025, a summary of our operating, investing, and financing activities is shown in the following table :

December 31,

Net cash provided by (used in) operating activities

Net cash used in investing activities

Net cash provided by (used in) financing activities

Net change in cash and cash equivalents

Operating Activities

Cash flows from operating activities primarily consist of net income (loss), adjusted for non-cash items such as depreciation and amortization, as well as changes in working capital. The key factors influencing cash inflows and outflows include factoring, accounts receivable, and accrued payroll and expenses.

In 2025, net cash afforded in operating activities was $1,889, representing an increase of $4,476 compared to net cash outlay of $2,587 in 2024. This increase was primarily driven by a $3,166 decrease in trade receivables as billing in last quarter was down approximately $580 and cash conversion via collection acceleration was approximately $2,510 Accrued expenses and deferred revenue were cash positive at $36 and $27, respectively. Offsetting cash decreases were in the form of accrued third party-related interest of $510, accrued payroll at $190, and the net loss after taxes of $651.

Investing Activities

Cash used in investing activities consisted of $11 for laptops in contrast to the $68 invested in 2024 for implementation of ADP Workforce Now, $52 and $16 for laptops.

Financing Activities

Net Cash repatriated for financing activities was $1,917 in contrast to the $2,355 borrowed net balance in 2024.

Factoring proceeds were $8,299 and repayments were $10,220 in 2025. Repayments, hence increased by $3,290 over the $6,930 returned to Gulf in 2024. In 2025, borrowing was $833 lower than 2024 when it was $9,132.

OFF-BALANCE SHEET ARRANGEMENTS

We had no material off-balance sheet arrangements that have, or are likely to have, a current or future material effect on our operations.

CRITICAL ACCOUNTING POLICIES AND ESTIMATES

We have identified the policies listed below as critical to our business and the understanding of our results of operations. For a detailed discussion of the application of these and other accounting policies, see Note 3 in the Notes to the Consolidated Financial Statements of this Annual Report on Form 10-K. The preparation of consolidated financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the consolidated financial statements, and the reported amounts of revenues and expenses during the reporting periods.

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

REVENUE RECOGNITION

The 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. Payment terms vary by client and the services offered.

We derive our revenues from four segments: EOR, Staffing Solutions, Direct Hire 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 in the consolidated statements of operations represent services rendered to client less variable consideration, such as sales adjustments and allowances. Reimbursements often related to out-of-pocket expenses, and equipment leasing are also included in revenues, and equivalent amounts of reimbursable expenses and leased costs are included in cost of services.

We record revenue on a gross basis as a principal versus on a net basis as an agent in the presentation of revenues and expenses. We have concluded that gross reporting is appropriate because we (i) have the risk of identifying and hiring qualified workers, (ii) have the discretion to select the workers and establish their price and duties and (iii) we bear the risk for services that are not fully paid for by client.

Temporary 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. The contracts stipulate weekly billing, and the Company has elected the “as invoiced” practical expedient to recognize revenue based on the hours incurred at the contractual rate as we have the right to payment in an amount that corresponds directly with the value of performance completed to date.

Direct Hire 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 30 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 the first 90-day period. As such, the Company’s performance obligations are satisfied upon commencement of employment, at which point control is transferred to the customer.

Allowances, recorded as a liability, are established to estimate these losses. Fees to clients are generally calculated as a percentage of the new worker’s annual compensation. No fees for Direct Hire services are charged to employment candidates.

Video 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.

RECENT ACCOUNTING PRONOUNCEMENTS

For a discussion of recent accounting pronouncements and their potential effect on our results of operations and financial condition, refer to Note 3 in the Notes to the Consolidated Financial Statements of this Annual Report on Form 10-K.