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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

FORM 10-Q/A

 

(Mark One)

 

☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

 

For the quarterly period ended March 31, 2023

 

OR

 

☐ TRANSITION REPORT UNDER SECTION 13 OF 15(d) OF THE EXCHANGE ACT OF 1934

 

For the transition period from ______to_____

 

Commission File Number 001-38288

 

GEX MANAGEMENT, INC.

(Exact name of registrant as specified in its charter)

 

Texas   56-2428818
(State or other jurisdiction
of incorporation)		   (IRS Employer
Identification No.)

 

3662 W. Camp Wisdom Road

Dallas, Texas 75237

(Address of principal executive offices)

 

(877) 210-4396

(Issuer’s telephone number)

 

N/A

(Former name, former address and former fiscal year, if changed since last report)

 

Securities registered pursuant to Section 12(b) of the Act:

 

Title of each class   Trading Symbol(s)   Name of each exchange on which registered
Common Stock   GXXM   OTC Pink

 

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐

 

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐

 

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “non-accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act:

 

Large Accelerated Filer ☐ Accelerated Filer ☐  
Non-Accelerated Filer ☐ Smaller Reporting Company ☒ Emerging Growth Company ☒

 

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to section 13(a) of the Exchange Act. ☐

 

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒

 

As of May 22, 2023 there were 784,620,041 shares of the registrant’s common stock outstanding.

 

 

 

 
 

 

EXPLANATORY NOTE

 

The purpose of this Amendment No. 1 to our Quarterly Report on Form 10-Q for the period ended March 31, 2023, as filed with the Securities and Exchange Commission on May 23, 2023, is to furnish the interactive data files as Exhibit 101 to the Form 10-Q. Exhibit 101 to this Amendment No. 1 provides the following items from the Form 10-Q formatted in XBRL (Extensible Business Reporting Language): (i) our consolidated balance sheets, (ii) our consolidated statements of income, (iii) our consolidated statements of stockholders' equity (deficit), (iv) our consolidated statements of cash flows, (v) the notes to our consolidated financial statements and (vi) the schedule to our consolidated financial statements.

 

No other changes have been made to the Form 10-Q other than those described above. This Amendment No. 1 does not reflect subsequent events occurring after the original filing date of the Form 10-Q or modify or update in any way disclosures made in the Form 10-Q

 

 

 

 

GEX MANAGEMENT, INC.

 

FORM 10-Q

FOR THE QUARTERLY PERIOD ENDED MARCH 31, 2023

 

TABLE OF CONTENTS

 

  PAGE
PART I - FINANCIAL INFORMATION  
Item 1. Financial Statements (Unaudited) 3
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations 16
Item 3. Quantitative and Qualitative Disclosures About Market Risk 17
Item 4. Controls and Procedures 17
   
PART II - OTHER INFORMATION  
Item 1. Legal Proceedings 18
Item 1A. Risk Factors 18
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds 18
Item 3. Defaults Upon Senior Securities 18
Item 4. Mine Safety Disclosures 18
Item 5. Other Information 18
Item 6. Exhibits 19
   
SIGNATURES 20

 

2
 

 

PART I – FINANCIAL INFORMATION

 

ITEM 1. FINANCIAL STATEMENTS

 

The accompanying unaudited financial statements have been prepared in accordance with accounting principles generally accepted in the United States and the rules of the Securities and Exchange Commission (“SEC”), and should be read in conjunction with the financial statements and notes thereto contained in our Annual Report on Form 10-K for the fiscal year ended December 31, 2022, which we filed with the SEC (“Annual Report”), as updated in subsequent filings we have made with the SEC. In the opinion of management, all adjustments, consisting of normal recurring adjustments, necessary for a fair presentation of financial position and the results of operations for the periods presented have been reflected herein. The results of operations for the periods presented are not necessarily indicative of the results to be expected for the full year.

 

3
 

 

GEX MANAGEMENT, INC.

 

CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

 

TABLE OF CONTENTS

 

  Page
Consolidated Financial Statements (Unaudited) 4
Consolidated Balance Sheets as of March 31, 2023 and December 31, 2022 (Unaudited) 5
Consolidated Statements of Operations for the three months ended March 31, 2023 and 2022 (Unaudited) 6
Consolidated Statements of Cash Flows for the three months ended March 31, 2023 and 2022 (Unaudited) 7
Notes to Unaudited Consolidated Financial Statements 8

 

4
 

 

GEX Management, Inc.

Consolidated Balance Sheets

(Unaudited)

 

   March 31, 2023   December 31, 2022 
         
ASSETS          
Current Assets:          
Cash and Cash Equivalents  $82,899   $80,383 
Accounts Receivable, net   360,959    345,639 
Other Current Assets   39,293    36,793 
Total Current Assets   483,151    462,814 
           
TOTAL ASSETS  $483,151   $462,814 
           
LIABILITIES AND SHAREHOLDERS’ DEFICIT          
           
Current Liabilities:          
Accounts payable  $944,826   $253,286 
Related party payables   -    660,919 
Accrued expenses   233,688    233,688 
Debt/Debt like Instruments- Short term   692,607    692,607 
Total Current Liabilities   1,871,120    1,840,499 
           
TOTAL LIABILITIES   1,871,120    1,840,499 
           
SHAREHOLDERS’ DEFICIT          
Common Stock issued and Outstanding as March 31, 2023 and December 31, 2022, respectively   592,916    592,916 
Additional Paid In Capital   12,169,839    12,169,839 
Retained Deficit   (14,150,724)   (14,140,439)
TOTAL SHAREHOLDERS’ EQUITY (DEFICIT)   (1,387,969)   (1,377,685)
           
TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY (DEFICIT)   483,151    462,814 

 

See accompanying notes to the unaudited consolidated financial statements.

 

5
 

 

GEX Management, Inc.

Consolidated Statements of Operations (Unaudited)

 

   Three Months Ended   Three Months Ended 
   March 31, 2023   March 31, 2022 
         
Revenues  $527,615   $518,861 
           
Cost of Revenues   368,080    188,295 
Gross Profit (Loss)   159,535    330,566 
           
Depreciation and Amortization   -    - 
General and Administrative   153,854    471,375 
Total Operating Expenses   153,854    471,375 
           
Total Operating Income (Loss)   5,681    (140,809)
           
Other Income (Expense)   (15,966)   (103,212)
Interest Income( Expenses)   -    (11,888)
Net Other Income (Expense)   (15,966)   (115,101)
           
NET INCOME (LOSS)   (10,285)   (255,910)
           
BASIC and DILUTED          
Weighted Average Shares Outstanding   27,479,758    49,161,717 
Earnings (loss) per Share  $(0.00)  $(0.00)

 

See accompanying notes to the unaudited consolidated financial statements.

 

6
 

 

GEX Management, Inc.

Consolidated Statements of Cash Flows (Unaudited)

 

   Three Months Ended   Three Months Ended 
   March 31, 2023   Mar 31, 2022 
Cash Flows (used by) Operating Activities:          
Net Loss  $(10,285)   (255,910)
Adjustments to reconcile net loss to net cash (used in) operating activities:          
Changes in assets and liabilities:          
Accounts receivable   (15,320)   (64,995)
Other current assets   (2,500)   - 
Other liabilities   590,132    319,511 
Accounts Payable   691,540    (4,166)
Accrued expenses and other payables   (660,919)   - 
           
Net cash (used in) operating activities   592,649    (5,561)
           
Cash Flows from (used in) Financing Activities:          
Proceeds from common stock/APIC        764,218 
Proceeds from short term notes payable (net)   (648,367)   (648,367)
Net cash provided by financing activities   (648,367)   115,851 
NET INCREASE (DECREASE) IN CASH   (55,718)   110,290 
CASH AT BEGINNING OF PERIOD   138,618    28,327 
CASH AT END OF PERIOD   82,899    138,618 

 

See accompanying notes to the unaudited consolidated financial statements.

 

7
 

 

GEX Management, Inc.

Notes to Condensed Consolidated Financial Statements
For the Three Months Ended March 31, 2023 and 2022
(Unaudited)

 

NOTE 1. DESCRIPTION OF BUSINESS AND SIGNIFICANT ACCOUNTING POLICIES

 

Organization and Description of Business

 

GEX Management, Inc. was originally formed in 2004 as Group Excellence Management, LLC. d/b/a MyEasyHQ. In March of 2016, it was converted from a limited liability company into a C corporation and changed its name to GEX Management, Inc.

 

GEX Management initially began operations as a Professional Services Company providing back office support to third-party clients. In 2016 GEX Management revised its business model to provide staffing and back-office services to a wide variety of industries in order to expand the Company’s footprint, thereby building on the previous 12-year history of exceptional client service. Over the next few years, GEX Management experienced tremendous growth in sales and customer pipeline - staffing business grew by over 1600%+ from 2016 to 2017 with the firm being named among the “fastest growing public companies in the North Texas region” by the Dallas Morning News, while also significantly expanding its client footprints across multiple staffing, business consulting and PEO opportunities.

 

In 2019, the management of GEX under the leadership of Sri Vanamali set strategic goals to revise the business model to expand into areas of higher margin and growth particularly in the area of Technology and Strategy Consulting Services. In Q4 2019, GEX signed a contract with one of the fastest growing, VC backed social video platform to provide key corporate and strategy consulting services – an initiative that the CEO was personally involved with in developing and growing the strategic business relationship over two years. This contract resulted in enormous growth opportunities for GEX and significantly expanded growth in future periods as well. GEX signed additional contracts to provide interim “CFO” and “CEO” consulting services to various high growth public and private companies, resulting in doubling of sales within a year and achieving an astounding double digit expansion in gross margins despite the pandemic related recessionary business environment. Furthermore, GEX has been in talks with multiple companies to identify synergistic acquisition opportunities to fuel organic and inorganic growth and fulfil the corporate objective of becoming a top tier business and technology focused firm while also developing a long term and sustainable technology centric business model. Management expects these growth initiatives to help the firm eventually achieve strong and stable revenue growth while also achieving sustainable long-term profitability by targeting a higher margin, lower cost model and relying on less expensive debt instruments to help reduce the burden across the firm’s capital structure.

 

Beginning 2020. under Sri Vanamali’s executive leadership, GEX Management has built its core competency to provide value creation services as a key operating partner to private equity firms and strategic operators by focusing on several key areas:

 

  ● Industry Expertise: GEX Management has developed deep expertise in several industries, including technology, healthcare, niche manufacturing, industrials energy, and more. This expertise enables the company to understand the unique challenges and opportunities facing businesses in these industries, and to provide tailored solutions that drive value creation.
  ● Data-Driven Approach: GEX Management uses AI based data-driven analysis to identify opportunities for value creation in its clients’ businesses. This includes analyzing financial and operational data to identify areas for improvement, and developing strategies to drive growth and profitability.
  ● Operational Expertise: GEX Management has a team of experienced consultants with a strong background in operational management. This expertise enables the company to provide practical solutions that address operational inefficiencies and improve overall performance.
  ● Network of Strategic Partners: GEX Management has developed a network of strategic partners, including technology vendors, service providers, and other consulting firms. This network enables the company to provide comprehensive solutions to its clients, leveraging the expertise of its partners as needed.
  ● Culture of Innovation: GEX Management fosters a culture of innovation, encouraging its consultants to think creatively and develop new solutions to meet its clients’ needs. This approach enables the company to stay ahead of industry trends and provide cutting-edge solutions to its clients.

 

The strategic roadmap for GEX Management in providing value creation services as a key operating partner to PE firms in 2023 involves expanding its industry expertise and developing new partnerships to support its growth. The company plans to deepen its expertise in key sectors such as healthcare and technology, while also expanding into new sectors such as retail, industrials and consumer goods. Additionally, GEX Management plans to develop new partnerships with technology vendors and other service providers to offer its clients a broader range of solutions. Through these initiatives, GEX Management aims to continue providing exceptional value creation services to its clients and maintaining its position as a leading management consulting firm.

 

Under Mr. Vanamali’s stewardship, Phase 1 of the GEX strategic roadmap implemented in Q1 2019 involved building out the Management Consulting business model, while Phase II beginning in Q2 2020 involved accelerating the GEX MSP partnership model to expand our enterprise corporate client base. In Q1 2023, Mr. Vanamali announced Phase III of GEX Management’s strategic roadmap, which involved building out a proprietary AI-powered technology platform and product base to complement its full spectrum of strategy consulting and enterprise consulting business suite offerings. This initiative represents a significant investment for the company and is designed to enhance its ability to provide value creation services to strategics and private equity clients in several key ways:

 

Improved Data Analytics: The AI-powered platform will enable GEX Management to leverage advanced data analytics to identify opportunities for value creation in its clients’ businesses. The platform will use machine learning algorithms to analyze large data sets and identify patterns and trends that are not easily detectable through traditional data analysis methods.

 

8
 

 

Enhanced Operational Efficiency: The platform will also enable GEX Management to automate many of its operational processes, allowing the company to provide faster and more efficient service to its clients. This will include automating data collection and analysis, as well as streamlining project management and communication with clients.

 

Customized Solutions: The platform will allow GEX Management to provide customized solutions to its clients based on their specific needs and challenges. The platform will be designed to adapt to each client’s unique business environment, providing tailored recommendations that are specifically designed to drive value creation.

 

Competitive Advantage: The AI-powered platform will provide GEX Management with a significant competitive advantage over other consulting firms. By leveraging advanced data analytics and automation, the company will be able to provide faster and more accurate solutions to its clients, enabling it to differentiate itself in the highly competitive consulting market.

 

GEX Management’s Phase 3 initiative is considered a hypergrowth strategy because it is designed to leverage technology and innovation to drive rapid expansion and growth for the company. By building a proprietary AI-powered platform, the company is positioning itself to capture a larger share of the consulting market and establish itself as a leader in the industry.

 

There are several key factors that are expected to contribute to the hypergrowth potential of this initiative:

 

  ● Scalability: The AI-powered platform will enable GEX Management to scale its operations more efficiently and effectively. By automating many of its operational processes and leveraging advanced data analytics, the company will be able to handle a larger volume of clients and projects without significantly increasing its staffing levels.
  ● Competitive Advantage: The AI-powered platform will provide GEX Management with a significant competitive advantage over other consulting firms. This will enable the company to attract new clients and expand its business more quickly than its competitors.
  ● Market Demand: There is a strong market demand for AI-powered solutions in the consulting industry. By developing a proprietary platform that leverages advanced AI and data analytics, GEX Management is positioning itself to capitalize on this demand and capture a larger share of the market.
  ● Value Proposition: The AI-powered platform will enable GEX Management to provide more efficient, customized, and accurate solutions to its clients. This will enhance the company’s value proposition and position it as a leader in the industry, driving further growth and expansion.

 

The development of an AI-powered technology platform is a key component of GEX Management’s value proposition to strategic and private equity clients. The platform will enable the company to provide more efficient, customized, and accurate solutions to its clients, helping them to achieve their strategic goals and drive value creation. Additionally, the platform will help GEX Management to differentiate itself in the highly competitive consulting market, positioning the company as a leader in the industry and a valuable partner to private equity firms seeking to maximize their returns on investment.

 

Under Sri Vanamali’s executive leadership, GEX Management was invited in February 2019 to be a Preferred Supplier to Insight Global, one of the world’s largest Managed Service Providers (MSPs) to Fortune 100 Companies in the Enterprise Technology Consulting space. The first consultant that GEX hired through this Preferred Supplier initiative was successfully placed at a large PA based financial services firm to provide Business and Quality Analysis professional services to the client. Subsequently, GEX placed its second enterprise consultant at the world’s leading Fortune 100 CRM Company at its headquarters in San Francisco and subsequently several more highly skilled Enterprise Technology Consultants at leading Fortune 500 retail, healthcare, manufacturing and technology clients across the country.

 

Subsequently, GEX Management has achieved significant growth by expanding its client base through partnerships with top-tier technology MSPs such as Robert Half, Insight Global, TekFortune, and Aegean. These partnerships have allowed GEX to offer its consulting services to a wide range of clients, including some of the biggest names in various industries.

 

9
 

 

The end clients for whom GEX consultants provide services include leading companies such as Salesforce, Anthem, Walmart, United Airlines, Disney, Marriott, Paramount, Morgan Stanley, and Carlyle Group, among others. This diverse client base has provided GEX with the opportunity to work with clients across a wide range of industries, allowing the company to gain valuable experience and knowledge that it can leverage to provide high-quality services to its clients. Through its strong relationships with its MSP partners and its focus on providing exceptional service to its clients, GEX has been able to expand its client base and increase its revenue significantly. The company has also been able to leverage its expertise and experience to develop new service offerings and expand into new markets, further driving its growth and success. Moving forward, GEX plans to continue building on its success by expanding its partnerships with leading MSPs and identifying new opportunities to serve its clients’ needs. The company will also continue to invest in its technology platform and product base to ensure it can provide the most innovative and effective solutions to its clients.

 

As a direct result of the high market demand for experienced technology consultants via its multiple supplier programs, the GEX team has interviewed and has acquired over 30 highly experienced enterprise technology consultants with expertise across a wide array of functions (Enterprise Architects, Project Managers, Systems Integration Developers, Quality Assurance Specialists and Business Systems Analysts) who have been identified for various short to long term projects. Additionally, GEX plans to hire and place a large pool of enterprise consultants over the next 18 - 24 month period to satisfy its growing pipeline of future contracts.

 

In addition to these planned strategic growth initiatives across both strategy and technology consulting, , management has been focusing on materially improving its balance sheet by significantly reducing or eliminating the debt or debt like instruments related to convertible notes and asset related liens introduced in 2018 while simultaneously exploring opportunities to reduce or eliminate the high interest MCA related toxic debt instruments that resulted in significant interest expenses to the company and a burden to operating capital. Under the balance sheet clean up initiative, GEX Management has focused on reducing its liabilities and improving its financial health. The company has taken several actions to achieve this, including:

 

  ● Debt restructuring: GEX Management has restructured its debt to reduce the amount of outstanding debt and lower the interest rate, resulting in lower interest expense and improved cash flow.
  ● Expense reduction: The company has implemented cost-cutting measures to reduce expenses and improve profitability, such as renegotiating contracts and reducing non-essential expenses.
  ● Asset divestiture: GEX Management has sold non-core assets to generate cash and reduce debt.
  ● Improved collections: The company has improved its collections process to ensure timely payment of receivables and reduce outstanding balances.

 

As a result of these actions, GEX Management has been able to significantly reduce its liabilities from $7,116,854 in fiscal year 2021 to $1,840,499 in 2022. This has a positive impact on the company’s financial health and reduces the risk of insolvency. It also improves the company’s ability to secure financing at lower interest rates, which can result in lower borrowing costs and improved profitability.

 

This focus on balance sheet cleanup and to stay significantly “asset-lite” is expected to achieve material results by Q2 2023, at which point GEX would be primed for its next phase of strategic growth initiatives by deploying equity and non-toxic debt instruments towards organic and inorganic opportunities. Finally, management believes that the material elimination of MCA and related debt like instruments will be a critical first step prior to rebuilding a robust revenue pipeline as this will require strong working capital and favorable leverage covenants to sustain operations in the long term as well as reduce liabilities related to attachment to future receivables. While management efforts to settle these instruments are aggressively underway, the inability or failure by the firm to completely address any toxic debt instruments could result in management pursuing a restructuring program or similar initiatives to bring the balance sheet within reasonable covenant parameters to allow the firm to continue operating efficiently in the coming years without exposing future customers to significant business risks associated with these toxic instruments. As part of this long term strategy, management has already begin putting processes in place to protect the company via a robust internal restructuring program and will be announcing the outcome of these intra-company restructuring efforts that will protect the interests of investors and shareholders alike over the long term and also streamline the corporate structure to be synergistic with the management’s long term vision for the company.

 

10
 

 

Material Definitive Agreements

 

No Material Agreements have been executed by the Company during this reporting period.

 

Basis of Presentation

 

Our financial statements have been prepared in conformity with accounting principles generally accepted in the United States (“GAAP”), as well as the applicable regulations and rules of the Securities and Exchange Commission (“SEC”). This requires management to make estimates and assumptions that affect the amounts reported in the financial statements and their accompanying notes. The actual results could differ from those estimates.

 

Principles of Consolidation

 

The consolidated financial statements include the accounts of GEX Management, Inc. and its wholly owned subsidiaries. Intercompany accounts and transactions have been eliminated in consolidation.

 

There have been no significant changes to our accounting policies that have a material impact on our financial statements and accompanying notes.

 

Use of Estimates

 

The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect certain reported amounts and disclosures. Accordingly, actual results could differ from those estimates.

 

Cash and Cash Equivalents

 

Cash and cash equivalents include cash in banks and short-term investments with original maturities of three months or less.

 

Accounts Receivable

 

Accounts receivable consists of accrued services and consulting receivables due from customers and are unsecured. The receivables are generally due within 30 to 45 days after the date of the invoice. Accounts receivable is carried at their face amount, less an allowance for doubtful accounts. GEX’s policy is not to charge interest on receivables after the invoice becomes past due. Write-offs are recorded at the time when a customer receivable is deemed uncollectible.

 

Related Parties

 

Parties are considered to be related to the Company if the parties, directly or indirectly, through one or more intermediaries, control, are controlled by, or are under common control with the Company. Related parties also include principal owners of the Company, its management, members of the immediate families of principal owners of the Company and its management and other parties with which the Company may deal with if one party controls or can significantly influence the management or operating policies of the other to an extent that one of the transacting parties might be prevented from fully pursuing its own separate interests.

 

Long-Lived Assets

 

The Company records an impairment of long-lived assets used in operations, other than goodwill, and its equity method investments when events or circumstances indicate that the asset might be impaired and the estimated undiscounted cash flows to be generated by those assets over their remaining lives are less than the carrying amount of those items. The net carrying value of assets not recoverable is reduced to fair value, which is typically calculated using the discounted cash flow method.

 

11
 

 

Revenue Recognition

 

Management Consulting Services

 

GEX Management recognizes revenue for its management consulting services in accordance with ASC 606 - Revenue from Contracts with Customers.

 

Revenue is recognized when control of the services is transferred to the client and the consideration for the services is expected to be collected. Control is transferred when the client is able to direct the use of and obtain substantially all of the benefits from the services provided.

 

The revenue recognized is based on the transaction price, which is the amount of consideration that GEX expects to be entitled to in exchange for providing the services. The transaction price is determined based on the estimated costs to complete the project, as well as the estimated profit margin on the project.

 

GEX Management typically enters into contracts with clients that specify the scope of services to be provided, the time period for which the services will be provided, and the fees for the services. Revenue is recognized over the period during which the services are provided, generally on a straight-line basis over the term of the contract.

 

If there are any changes to the scope of the services or the fees for the services, GEX Management will assess whether these changes constitute a modification of the original contract. If a modification is deemed to exist, GEX will reassess the transaction price and adjust the revenue recognized accordingly.

 

GEX Management also considers any variable consideration, such as performance bonuses or penalties, when recognizing revenue. If the amount of variable consideration cannot be estimated reliably, it will be excluded from the transaction price until it can be reliably estimated.

 

In summary, GEX Management recognizes revenue for its management consulting services in accordance with ASC 606, based on the transfer of control of services to the client and the expected consideration to be collected. Revenue is recognized over the period during which the services are provided and is adjusted for any changes in scope or fees.

 

All employees are completely vetted by the company to ensure their employment terms are in adherence to all applicable state. federal and immigration laws. Additionally, GEX Management carries professional liability and fidelity/crime insurance to protect against risks involving working at third party client locations that require the workers to handle sensitive client data and equipment.

 

Income Taxes

 

The Company uses the liability method in the computation of income tax expense and the current and deferred income taxes payable. A valuation allowance is provided for the amount of deferred tax assets that, based on available evidence, are not expected to be realized.

 

Fair Value Measurements

 

ASC Topic 820 defines fair value, establishes a framework for measuring fair value in generally accepted accounting principles, and requires certain disclosures about fair value measurements. In general, fair value of financial instruments is based upon quoted market prices, where available. If such quoted market prices are not available, fair value is based upon internally developed models that primarily use, as inputs, observable market-based parameters. Valuation adjustments may be made to ensure that financial instruments are recorded at fair value. These adjustments may include amounts to reflect counterparty credit quality and the Company’s credit worthiness, among other things, as well as unobservable parameters.

 

Earnings Per Share

 

Earnings per share are calculated in accordance with ASC 260 “Earnings per Share”. Basic income (loss) per share is computed by dividing the period income (loss) available to common shareholders by the weighted average number of common shares outstanding. Diluted earnings (loss) per share is computed by dividing the income (loss) available to common share-holders by the weighted average number of common shares outstanding plus additional common shares that would have been outstanding if dilutive potential common shares had been issued. For purposes of this calculation, common stock dividends, warrants and options to acquire common stock, would be considered common stock equivalents in periods in which they have a dilutive effect and are excluded from this calculation in periods in which these are anti-dilutive to the net loss per share.

 

12
 

 

Reclassifications

 

Certain prior year amounts have been reclassified to conform to the current year presentation. Such reclassifications have had no effect on the financial position of the Company.

 

Note 2. Going Concern

 

To date, the Company has funded its operations primarily through public and private offerings of common stock, our line of credit, short- term discounted and convertible notes payable. The Company has identified several potential financing sources in order to raise the capital necessary to fund operations.

 

In addition to the aforementioned current sources of capital that will provide additional short-term liquidity, the Company is currently exploring various other alternatives including debt and equity financing vehicles, strategic partnerships, government programs that may be available to the Company, as well as trying to generate additional sales and increase margins. However, at this time the Company has no commitments to obtain any additional funds, and there can be no assurance such funds will be available on acceptable terms or at all. If the Company is unable to obtain additional funding and improve its operations, the Company’s financial condition and results of operations may be materially adversely affected and the Company may not be able to continue operations, which raises substantial doubt about its ability to continue as a going concern. Additionally, even if the Company raises sufficient capital through additional equity or debt financing, strategic alternatives or otherwise, there can be no assurances that the revenue or capital infusion will be sufficient to enable it to develop its business to a level where it will be profitable or generate positive cash flow. If the Company raises additional funds through the issuance of equity or convertible debt securities, the percentage ownership of our stockholders could be significantly diluted, and these newly issued securities may have rights, preferences or privileges senior to those of existing stockholders. If the Company incurs additional debt, a substantial portion of its operating cash flow may be dedicated to the payment of principal and interest on such indebtedness, thus limiting funds available for business activities. The terms of any debt securities issued could also impose significant restrictions on the Company’s operations. Broad market and industry factors may seriously harm the market price of our common stock, regardless of our operating performance, and may adversely impact our ability to raise additional funds. Similarly, if the Company’s common stock is delisted from the public exchange markets, it may limit its ability to raise additional funds.

 

The consolidated financial statements for the twelve months ended December 31, 2022 and three months ended March 31, 2023 were prepared on the basis of a going concern which contemplates that the Company will be able to realize assets and discharge liabilities in the normal course of business. Accordingly, they do not give effect to adjustments that would be necessary should the Company be required to liquidate its assets. The ability of the Company to meet its total liabilities of 1,871,120 and to continue as a going concern is dependent upon the availability of future funding, continued growth in billings and sales contracts, and the Company’s ability to profitably meet its after-sale service commitments with its existing customers. The financial statements do not include any adjustments that might result from the outcome of these uncertainties.

 

In addition, at this time we cannot predict the impact of COVID-19 on our ability to obtain financing necessary for the Company to fund its working capital requirements. Also, it may hamper our efforts to comply with our filing obligations with the Securities and Exchange Commission.

 

13
 

 

NOTE 3. STOCKHOLDERS’ EQUITY

 

During the 3 months ended March 31, 2023, the Company issued 102613,194 shares of common stock for conversions of notes payable. The notes were converted within the terms of the original note agreements and therefore, no gain or loss was recognized on the conversions.

 

NOTE 4. NOTES PAYABLE

 

On April 26, 2018, the Company entered into two Securities Purchase Agreements, pursuant to which the Company issued Convertible Promissory Notes (“the Notes”) with principal amounts totalling up to $1,000,000, bearing interest at 10% per annum. The total amounts of the Notes that can be funded (consideration that can be loaned to the Company) is up to $887,500, after discounts of $112,500 prorated over the term of the Notes. Amounts borrowed by the Company mature in twelve months after the date of funding and can be prepaid up to six months after issuance subject to prepayment penalties and approval by the Note holders. Any amounts outstanding on the Notes can be converted into Common Stock at a conversion price of $2.50 per share for the first six months and at a discount of up to 50% thereafter to the then current market value of the Company’s stock commencing six months after issuance. Conversion is at the sole discretion of the holders of the Notes. In May 2018, the Company borrowed $200,000 under the Notes, and received $175,000 after giving effect to discounts of 10% for each note and origination fees. The Company incurred a total of $5,000 related to origination fees on the Notes. Additionally, the Company issued 50,000 warrant shares for debt issuance costs at an exercise price of $4.00 per share. The warrants are exercisable for five years and had a fair market value of $31,852 on the date of issuance. The Notes bear interest at 10% per annum. On April 26, 2018, the Company entered into a convertible note payable for $146,681 bearing interest at 10% per annum.

 

On April 26, 2018, the Company entered into two Securities Purchase Agreements, pursuant to which the Company issued Convertible Promissory Notes (“the Notes”) with principal amounts totaling up to $1,000,000, bearing interest at 10% per annum. The total amounts of the Notes that can be funded (consideration that can be loaned to the Company) is up to $887,500, after discounts of $112,500 prorated over the term of the Notes. Amounts borrowed by the Company mature in twelve months after the date of funding and can be prepaid up to six months after issuance subject to prepayment penalties and approval by the Note holders. Any amounts outstanding on the Notes can be converted into Common Stock at a conversion price of $2.50 per share for the first six months and at a discount of up to 50% thereafter to the then current market value of the Company’s stock commencing six months after issuance. Conversion is at the sole discretion of the holders of the Notes. In May 2018, the Company borrowed $200,000 under the Notes, and received $175,000 after giving effect to discounts of 10% for each note and origination fees. The Company incurred a total of $5,000 related to origination fees on the Notes. Additionally, the Company issued 50,000 warrant shares for debt issuance costs at an exercise price of $4.00 per share. The warrants are exercisable for five years and had a fair market value of $31,852 on the date of issuance. The Notes bear interest at 10% per annum. On April 26, 2018, the Company entered into a convertible note payable for $146,681 bearing interest at 10% per annum. All principal and interest is due on April 26, 2019.

 

On April 26, 2018, the Company entered into a convertible note payable for $146,681 bearing interest at 10% per annum. All principal and interest is due on April 26, 2019. On August 1, 2018, the Company entered into a convertible note payable for $226,000 bearing interest at 12% per annum. All principal and interest is due on January 27, 2019.

 

14
 

 

On August 8, 2018, the Company entered into a convertible note payable for $85,000 bearing interest at 10% per annum. All principal and interest is due on August 8, 2019. On August 14, 2018, the Company entered into a convertible note payable for $250,000 bearing interest at 10% per annum. All principal and interest is due on May 6, 2019. On August 24, 2018, the Company entered into a convertible note payable for $85,000 bearing interest at 10% per annum. All principal and interest is due on August 24, 2019. On August 29, 2018, the Company entered into a convertible note payable for $112,750 bearing interest at 10% per annum. All principal and interest is due on August 29, 2019. On January 18 2019, the Company entered into a convertible note payable for $226,000 bearing interest at 12% per annum. All principal and interest is due on July 18, 2019. On February 15, 2019, the Company entered into a convertible note payable for $43,000 bearing interest at 10% per annum. All principal and interest is due on February 15, 2020. On April 16, 2019, the Company entered into a convertible note payable for $38,000 bearing interest at 10% per annum. All principal and interest is due on April 16, 2020. On March 25, 2019, the Company entered into a convertible note payable for $50,000 bearing interest at 12% per annum. All principal and interest is due on March 25, 2020. On September 27, 2019, the Company entered into a convertible note payable for $45,000 bearing interest at 10% per annum. All principal and interest is due on March 27, 2020. On October 12, 2019, the Company entered into a convertible note payable for $100,000 bearing interest at 10% per annum. All principal and interest is due on October 12, 2020. On February 8, 2021, the Company entered into a convertible note payable for $53,500 bearing interest at 10% per annum. All principal and interest is due on February 8, 2022. On March 19, 2021, the Company entered into a convertible note payable for $38,500 bearing interest at 10% per annum. All principal and interest is due on March 19, 2022. On April 20, 2021, the Company entered into a convertible note payable for $43,750 bearing interest at 10% per annum. All principal and interest is due on April 20, 2022. On June 9, 2021, the Company entered into a convertible note payable for $43,750 bearing interest at 10% per annum. All principal and interest is due on June 9, 2022. On June 9, 2021, the Company entered into a convertible note payable for $88,000 bearing interest at 12% per annum. All principal and interest is due on June 9, 2022. On June 25, 2021, the Company entered into a convertible note payable for $110,000 bearing interest at 12% per annum. All principal and interest is due on June 25, 2022. On August 6, 2021, the Company entered into a convertible note payable for $110,000 bearing interest at 8% per annum. All principal and interest is due on August 6, 2022. On August 9, 2021, the Company entered into a convertible note payable for $333,333.33 bearing interest at 12% per annum. All principal and interest is due on August 9, 2022. On August 10, 2021, the Company entered into a convertible note payable for $200,000.00 bearing interest at 12% per annum. All principal and interest is due on August 10, 2022. On August 20, 2021, the Company entered into a convertible note payable for $100,000.00 bearing interest at 12% per annum. All principal and interest is due on August 20, 2022. On September 1, 2021, the Company entered into a convertible note payable for $27,500 bearing interest at 8% per annum. All principal and interest is due on September 1, 2022. On September 1, 2021, the Company entered into a convertible note payable for $55,000 bearing interest at 8% per annum. All principal and interest is due on September 1, 2022. On September 2, 2021, the Company entered into a convertible note payable for $155,000 bearing interest at 12% per annum. All principal and interest is due on September 2, 2022. On September 9, 2021, the Company entered into a convertible note payable for $11,000 bearing interest at 8% per annum. All principal and interest is due on September 9, 2022.

 

NOTE 5. RELATED PARTY TRANSACTIONS

 

On March 1, 2015, the Company entered into a Line of Credit Agreement with P413 at an interest rate of 6%. This line of credit has a balance of $483,677 at March 31, 2022 and December 31, 2021, respectively. On May 2, 2018, this line of credit was extended to April 1, 2020. On September 1, 2018, the line of credit was extended to September 1, 2020. The line of credit is currently in default.

 

The Company owed a director of the Company $172,567 and $172,567 for reimbursable expenses as of March 31, 2022 and December 31, 2021, respectively.

 

NOTE 6. COMMITMENTS AND CONTINGENCIES

 

Litigation

 

From time to time, claims are made against the Company in the ordinary course of its business, which could result in litigation. Claims and associated litigation are subject to inherent uncertainties and unfavorable outcomes could occur, such as monetary damages, fines, penalties, or injunctions prohibiting the Company from selling one or more products or engaging in other activities. The occurrence of an unfavorable outcome in any specific period could have a material adverse effect on the Company’s results of operations for that period or future periods.

 

In 2019, a judgement was received against the Company awarding EMA Financial, a former note holder of the Company, settlement of default notes payable, accrued interest and fees in the amount of $195,250. The amount is recorded on the balance sheet as of December 31, 2021, and December 31, 2020. The Company paid the full amount due under the judgement during fiscal year 2022.

 

NOTE 7. SUBSEQUENT EVENTS

 

15
 

 

ITEM 2 - Management’s Discussion and Analysis of Financial Condition and Results of Operations

 

You should read the following discussion of our financial condition and results of operations in conjunction with our financial statements and the related notes included elsewhere in this report and in our Annual Report on Form 10-K for the year ended December 31, 2022.

 

Forward-Looking Statements

 

This report contains forward-looking statements within the meaning of Section 27A of the Securities Act and Section 21E of the Securities Exchange Act of 1934, as amended, or the Exchange Act. Forward-looking statements are often identified by the use of words such as, but not limited to, “anticipate,” “believe,” “can,” “continue,” “could,” “estimate,” “expect,” “intend,” “may,” “plan,” “project,” “seek,” “should,” “strategy,” “target,” “will,” “would” and similar expressions or variations intended to identify forward- looking statements. These statements are not guarantees of future performance, but are based on management’s expectations as of the date of this report and assumptions that are inherently subject to uncertainties, risks and changes in circumstances that are difficult to predict. Forward-looking statements involve known and unknown risks, uncertainties and other factors that may cause actual results, performance or achievements to be materially different from any future results, performance or achievements. All information provided in this report is as of the date of this report and the Company undertakes no duty to update this information except as required by law.

 

General

 

GEX Management, Inc., a Texas corporation (the “Company,” “GEX,” “we,” “our,” “us,” and words of similar import) is a Staffing and Professional Services Company that provides services and general business consulting to companies for a variety of their staffing needs. We generate substantially all of our revenue from the staffing and other professional services we offer. These professional services, in addition to staffing, include: Strategy and technology consulting, accounting and bookkeeping, human resources and business consultation and optimization.

 

Results of Operations

 

The three months ended March 31, 2023 compared to the three months ended March 31, 2022

 

Revenue

 

Our revenue for the three months ended March 31, 2023 was $527,615 compared to $518,861 for the three months ended March 31, 2022. This increase in year over year sales is attributable to a significant expansion in client footprints, aggressive business development efforts and a focus on higher end management and technology consulting business expansion and growth opportunities under the guidance of the CEO, Sri Vanamali.

 

Operating Expense

 

Total operating expenses for the three months ended March 31, 2023 was $153,854 compared to the operating cost for the three months ended March 31, 2022 of $471,375. The lower expenses for this period are due to operational efficiencies and less administrative costs during the current period.

 

Liquidity and Capital Resources

 

The Company has identified several potential financing sources in order to raise the capital necessary to fund operations through December 31, 2023. Management had in the past taken short term working capital loans against future receivables in order to timely fund the growth of the company. Management has eliminated this past practice and currently relies on other traditional and non-traditional debt instruments primarily in the form of convertible notes as well as is exploring various other alternatives including debt and equity financing vehicles, strategic partnerships, government programs that may be available to the Company, as well as trying to generate additional sales and increase margins. However, at this time the Company has no commitments to obtain any additional funds, and there can be no assurance such funds will be available on acceptable terms or at all. If the Company is unable to obtain additional funding, the Company’s financial condition and results of operations may be materially adversely affected and the Company may not be able to continue operations.

 

Additionally, even if the Company raises sufficient capital through additional equity or debt financing, strategic alternatives or otherwise, there can be no assurances that the revenue or capital infusion will be sufficient to enable it to develop its business to a level where it will be profitable or generate positive cash flow. If the Company incurs additional debt, a substantial portion of its operating cash flow may be dedicated to the payment of principal and interest on such indebtedness, thus limiting funds available for business activities. The terms of any debt securities issued could also impose significant restrictions on the Company’s operations. Broad market and industry factors may seriously harm the market price of our common stock, regardless of our operating performance, and may adversely impact our ability to raise additional funds. Similarly, if the Company’s common stock is delisted from the public exchange markets, it may limit its ability to raise additional funds.

 

In addition, at this time we cannot predict the impact of COVID-19 on our ability to obtain financing necessary for the Company to fund its working capital requirements.

 

16
 

 

Off-Balance Sheet Arrangements

 

We have not entered into any off-balance sheet financing arrangements and have not formed any special purpose entities. We have not guaranteed any debt or commitments of other entities or entered into any options on non-financial assets.

 

Contractual Obligations

 

We are a smaller reporting company as defined by Rule 12b-2 of the Exchange Act and are not required to provide the information under this item.

 

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

 

We are a smaller reporting company as defined by Rule 12b-2 of the Exchange Act and are not required to provide the information under this item.

 

ITEM 4. CONTROLS AND PROCEDURES

 

Evaluation of Disclosure Controls and Procedures

 

Management is responsible for establishing and maintaining adequate disclosure controls and procedures as defined in Rules 13a-15 (e) or 15d-15(e) under the Securities Exchange Act of 1934, as amended (the “Exchange Act”). Our disclosure controls and procedures are designed to ensure that information required to be disclosed in reports filed under the Exchange Act, is recorded, processed, summarized and reported within the time periods specified in the rules and forms of the Securities and Exchange Commission, and that such information is accumulated and communicated to management, including our Chief Executive Officer / Chief Financial Officer, as appropriate, to allow timely decisions regarding required disclosure and to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with U.S. generally accepted accounting principles. Our management, under the supervision and with the participation of our Interim Chief Executive Officer / Interim Chief Financial Officer, evaluated the effectiveness of the design and operation of our disclosure controls and procedures as of the end of the period covered by this quarterly report on Form 10-Q. Based upon this assessment, we determined that as of the end of period covered by this quarterly report on Form 10-Q our disclosure controls and procedures were ineffective.

 

Changes in Internal Control over Financial Reporting

 

There has been no changes in our internal control procedures over financial reporting identified in connection with the evaluation we conducted of the effectiveness of our internal control over financial reporting as of March 31, 2020, that occurred during our first quarter that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.

 

17
 

 

PART II – OTHER INFORMATION

 

ITEM 1. LEGAL PROCEEDINGS

 

It is possible that from time to time in the ordinary course of business we may be or we may have been involved in legal proceedings, lawsuits or investigations, which could potentially have an adverse impact on our reputation, business and financial condition and divert the attention of our management from the operation of our business. In the opinion of our Board of Directors, any such legal proceedings or lawsuits that we have been involved with in the past or may be involved with are not expected to have a material adverse effect on our financial situation or results of operations..

 

ITEM 1A. RISK FACTORS

 

We are a smaller reporting company as defined by Rule 12b-2 of the Exchange Act and are not required to provide the information under this item.

 

ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS

 

Not applicable

 

ITEM 3. DEFAULTS UPON SENIOR SECURITIES

 

Not applicable

 

ITEM 4. MINE SAFETY DISCLOSURES

 

Not applicable.

 

ITEM 5. OTHER INFORMATION

 

None

 

18
 

 

ITEM 6. EXHIBITS

 

In reviewing the agreements included as exhibits to this Quarterly Report, please remember that they are included to provide you with information regarding their terms and are not intended to provide any other factual or disclosure information about the Company or the other parties to the agreements. The agreements may contain representations and warranties by each of the parties to the applicable agreement. These representations and warranties have been made solely for the benefit of the parties to the applicable agreement and:

 

● should not in all instances be treated as categorical statements of fact, but rather as a way of allocating the risk to one of the parties if those statements prove to be inaccurate;
   
● have been qualified by disclosures that were made to the other party in connection with the negotiation of the applicable agreement, which disclosures are not necessarily reflected in the agreement;
   
● may apply standards of materiality in a way that is different from what may be viewed as material to you or other investors; and
   
● were made only as of the date of the applicable agreement or such other date or dates as may be specified in the agreement and are subject to more recent developments.

 

Accordingly, these representations and warranties may not describe the actual state of affairs as of the date they were made or at any other time. Additional information about the Company may be found elsewhere in this Form 10-Q and the Company’s other public filings, which are available without charge through the SEC’s website at http://www.sec.gov.

 

The following exhibits are included as part of this report:

 

Exhibit No.  

SEC

Report
Reference No.

   Description
31.1/31.2   *   Certification of Principal Executive Officer pursuant to Exchange Act Rules 13a-14(a) and 15d-14(a), as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
32.1/32.2   *   Certifications of Principal Executive Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

101.INS

101.SCH

101.CAL

101.DEF

101.LAB

101.PRE

  

*

*

*

*

*

*

  

Inline XBRL Instance Document

Inline XBRL Taxonomy Extension Schema Document

Inline XBRL Taxonomy Extension Calculation Linkbase Document

Inline XBRL Taxonomy Extension Definition Linkbase Document

Inline XBRL Taxonomy Extension Label Linkbase Document

Inline XBRL Taxonomy Extension Presentation Linkbase Document

104   *   Cover Page Interactive Data File (embedded within the Inline XBRL document)

 

19
 

 

SIGNATURES

 

Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

 

  GEX MANAGEMENT, INC.
   
Dated: August 21, 2023 By: /s/ Sri Vanamali
  Name:  Sri Vanamali
  Title: Chief Executive Officer

 

20

 

 

EXHIBIT 31.1/31.2

 

CERTIFICATION OF CHIEF EXECUTIVE OFFICER AND CHIEF FINANCIAL OFFICER

PURSUANT TO SECTION 302 OF THE SARBANES-OXLEY ACT AND RULE 13A-14(A)

OR 15D-14(A) UNDER THE SECURITIES EXCHANGE ACT OF 1934

 

I, Sri Vanamali, certify that:

 

1. I have reviewed this quarterly report on Form 10-Q/A of GEX Management, Inc.
   
2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
   
3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
   
4. I am responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
   
  (a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under my supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to me by others within those entities, particularly during the period in which this report is being prepared;
     
  (b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under my supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
     
  (c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report my conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
     
  (d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and
     
5. I have disclosed, based on my most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of registrant’s board of directors (or persons performing the equivalent functions):
   
  (a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
     
  (b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

 

Date: August 21, 2023 /s/ Sri Vanamali
  Sri Vanamali
  Chief Executive Officer

 

 

 

 

EXHIBIT 32.1/32.2

 

CERTIFICATION PURSUANT TO

18 U.S.C. SECTION 1350,

AS ADOPTED PURSUANT TO

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

 

In connection with the Quarterly Report on Form 10-Q/A of GEX Management, Inc. (the “Company”), for the quarter ended March 31, 2023, as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, Sri Vanamali, Chief Executive Officer and Chief Financial Officer, of the Company, certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that:

 

  (1) The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and
     
  (2) The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

 

A signed original of this written statement required by Section 906 has been provided to the Company and will be retained by the Company and furnished to the Securities and Exchange Commission or its staff upon request.

 

Date: August 21, 2023 By: /s/ Sri Vanamali
  Name: Sri Vanamali
  Title: Chief Executive Officer

 

 

 

v3.23.2
Cover - shares
 3 Months Ended
Mar. 31, 2023
May 22, 2023
Cover [Abstract]    
Document Type 10-Q/A  
Amendment Flag true  
Amendment Description The purpose of this Amendment No. 1 to our Quarterly Report on Form 10-Q for the period ended March 31, 2023, as filed with the Securities and Exchange Commission on May 23, 2023, is to furnish the interactive data files as Exhibit 101 to the Form 10-Q. Exhibit 101 to this Amendment No. 1 provides the following items from the Form 10-Q formatted in XBRL (Extensible Business Reporting Language): (i) our consolidated balance sheets, (ii) our consolidated statements of income, (iii) our consolidated statements of stockholders' equity (deficit), (iv) our consolidated statements of cash flows, (v) the notes to our consolidated financial statements and (vi) the schedule to our consolidated financial statements.  
Document Quarterly Report true  
Document Transition Report false  
Document Period End Date Mar. 31, 2023  
Document Fiscal Period Focus Q1  
Document Fiscal Year Focus 2023  
Current Fiscal Year End Date --12-31  
Entity File Number 001-38288  
Entity Registrant Name GEX MANAGEMENT, INC.  
Entity Central Index Key 0001681556  
Entity Tax Identification Number 56-2428818  
Entity Incorporation, State or Country Code TX  
Entity Address, Address Line One 3662 W. Camp Wisdom Road  
Entity Address, City or Town Dallas  
Entity Address, State or Province TX  
Entity Address, Postal Zip Code 75237  
City Area Code 877  
Local Phone Number 210-4396  
Title of 12(b) Security Common Stock  
Trading Symbol GXXM  
Entity Current Reporting Status Yes  
Entity Interactive Data Current Yes  
Entity Filer Category Non-accelerated Filer  
Entity Small Business true  
Entity Emerging Growth Company true  
Elected Not To Use the Extended Transition Period false  
Entity Shell Company false  
Entity Common Stock, Shares Outstanding   784,620,041
v3.23.2
Consolidated Balance Sheets (Unaudited) - USD ($)
Mar. 31, 2023
Dec. 31, 2022
Current Assets:    
Cash and Cash Equivalents $ 82,899 $ 80,383
Accounts Receivable, net 360,959 345,639
Other Current Assets 39,293 36,793
Total Current Assets 483,151 462,814
TOTAL ASSETS 483,151 462,814
Current Liabilities:    
Accounts payable 944,826 253,286
Related party payables $ 660,919
Other Liability, Current, Related and Nonrelated Party Status [Extensible Enumeration] Related Party [Member] Related Party [Member]
Accrued expenses $ 233,688 $ 233,688
Debt/Debt like Instruments- Short term 692,607 692,607
Total Current Liabilities 1,871,120 1,840,499
TOTAL LIABILITIES 1,871,120 1,840,499
SHAREHOLDERS’ DEFICIT    
Common Stock issued and Outstanding as March 31, 2023 and December 31, 2022, respectively 592,916 592,916
Additional Paid In Capital 12,169,839 12,169,839
Retained Deficit (14,150,724) (14,140,439)
TOTAL SHAREHOLDERS’ EQUITY (DEFICIT) (1,387,969) (1,377,685)
TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY (DEFICIT) $ 483,151 $ 462,814
v3.23.2
Consolidated Statements of Operations (Unaudited) - USD ($)
 3 Months Ended
Mar. 31, 2023
Mar. 31, 2022
Income Statement [Abstract]    
Revenues $ 527,615 $ 518,861
Cost of Revenues 368,080 188,295
Gross Profit (Loss) 159,535 330,566
Depreciation and Amortization
General and Administrative 153,854 471,375
Total Operating Expenses 153,854 471,375
Total Operating Income (Loss) 5,681 (140,809)
Other Income (Expense) (15,966) (103,212)
Interest Income( Expenses) (11,888)
Net Other Income (Expense) (15,966) (115,101)
NET INCOME (LOSS) $ (10,285) $ (255,910)
BASIC and DILUTED    
Weighted Average Shares Outstanding 27,479,758 49,161,717
Earnings (loss) per Share $ (0.00) $ (0.00)
v3.23.2
Consolidated Statements of Cash Flows (Unaudited) - USD ($)
 3 Months Ended
Mar. 31, 2023
Mar. 31, 2022
Cash Flows (used by) Operating Activities:    
Net Loss $ (10,285) $ (255,910)
Changes in assets and liabilities:    
Accounts receivable (15,320) (64,995)
Other current assets (2,500)
Other liabilities 590,132 319,511
Accounts Payable 691,540 (4,166)
Accrued expenses and other payables (660,919)
Net cash (used in) operating activities 592,649 (5,561)
Cash Flows from (used in) Financing Activities:    
Proceeds from common stock/APIC   764,218
Proceeds from short term notes payable (net) (648,367) (648,367)
Net cash provided by financing activities (648,367) 115,851
NET INCREASE (DECREASE) IN CASH (55,718) 110,290
CASH AT BEGINNING OF PERIOD 138,618 28,327
CASH AT END OF PERIOD $ 82,899 $ 138,618
v3.23.2
DESCRIPTION OF BUSINESS AND SIGNIFICANT ACCOUNTING POLICIES
 3 Months Ended
Mar. 31, 2023
Accounting Policies [Abstract]  
DESCRIPTION OF BUSINESS AND SIGNIFICANT ACCOUNTING POLICIES

NOTE 1. DESCRIPTION OF BUSINESS AND SIGNIFICANT ACCOUNTING POLICIES

 

Organization and Description of Business

 

GEX Management, Inc. was originally formed in 2004 as Group Excellence Management, LLC. d/b/a MyEasyHQ. In March of 2016, it was converted from a limited liability company into a C corporation and changed its name to GEX Management, Inc.

 

GEX Management initially began operations as a Professional Services Company providing back office support to third-party clients. In 2016 GEX Management revised its business model to provide staffing and back-office services to a wide variety of industries in order to expand the Company’s footprint, thereby building on the previous 12-year history of exceptional client service. Over the next few years, GEX Management experienced tremendous growth in sales and customer pipeline - staffing business grew by over 1600%+ from 2016 to 2017 with the firm being named among the “fastest growing public companies in the North Texas region” by the Dallas Morning News, while also significantly expanding its client footprints across multiple staffing, business consulting and PEO opportunities.

 

In 2019, the management of GEX under the leadership of Sri Vanamali set strategic goals to revise the business model to expand into areas of higher margin and growth particularly in the area of Technology and Strategy Consulting Services. In Q4 2019, GEX signed a contract with one of the fastest growing, VC backed social video platform to provide key corporate and strategy consulting services – an initiative that the CEO was personally involved with in developing and growing the strategic business relationship over two years. This contract resulted in enormous growth opportunities for GEX and significantly expanded growth in future periods as well. GEX signed additional contracts to provide interim “CFO” and “CEO” consulting services to various high growth public and private companies, resulting in doubling of sales within a year and achieving an astounding double digit expansion in gross margins despite the pandemic related recessionary business environment. Furthermore, GEX has been in talks with multiple companies to identify synergistic acquisition opportunities to fuel organic and inorganic growth and fulfil the corporate objective of becoming a top tier business and technology focused firm while also developing a long term and sustainable technology centric business model. Management expects these growth initiatives to help the firm eventually achieve strong and stable revenue growth while also achieving sustainable long-term profitability by targeting a higher margin, lower cost model and relying on less expensive debt instruments to help reduce the burden across the firm’s capital structure.

 

Beginning 2020. under Sri Vanamali’s executive leadership, GEX Management has built its core competency to provide value creation services as a key operating partner to private equity firms and strategic operators by focusing on several key areas:

 

  ● Industry Expertise: GEX Management has developed deep expertise in several industries, including technology, healthcare, niche manufacturing, industrials energy, and more. This expertise enables the company to understand the unique challenges and opportunities facing businesses in these industries, and to provide tailored solutions that drive value creation.
  ● Data-Driven Approach: GEX Management uses AI based data-driven analysis to identify opportunities for value creation in its clients’ businesses. This includes analyzing financial and operational data to identify areas for improvement, and developing strategies to drive growth and profitability.
  ● Operational Expertise: GEX Management has a team of experienced consultants with a strong background in operational management. This expertise enables the company to provide practical solutions that address operational inefficiencies and improve overall performance.
  ● Network of Strategic Partners: GEX Management has developed a network of strategic partners, including technology vendors, service providers, and other consulting firms. This network enables the company to provide comprehensive solutions to its clients, leveraging the expertise of its partners as needed.
  ● Culture of Innovation: GEX Management fosters a culture of innovation, encouraging its consultants to think creatively and develop new solutions to meet its clients’ needs. This approach enables the company to stay ahead of industry trends and provide cutting-edge solutions to its clients.

 

The strategic roadmap for GEX Management in providing value creation services as a key operating partner to PE firms in 2023 involves expanding its industry expertise and developing new partnerships to support its growth. The company plans to deepen its expertise in key sectors such as healthcare and technology, while also expanding into new sectors such as retail, industrials and consumer goods. Additionally, GEX Management plans to develop new partnerships with technology vendors and other service providers to offer its clients a broader range of solutions. Through these initiatives, GEX Management aims to continue providing exceptional value creation services to its clients and maintaining its position as a leading management consulting firm.

 

Under Mr. Vanamali’s stewardship, Phase 1 of the GEX strategic roadmap implemented in Q1 2019 involved building out the Management Consulting business model, while Phase II beginning in Q2 2020 involved accelerating the GEX MSP partnership model to expand our enterprise corporate client base. In Q1 2023, Mr. Vanamali announced Phase III of GEX Management’s strategic roadmap, which involved building out a proprietary AI-powered technology platform and product base to complement its full spectrum of strategy consulting and enterprise consulting business suite offerings. This initiative represents a significant investment for the company and is designed to enhance its ability to provide value creation services to strategics and private equity clients in several key ways:

 

Improved Data Analytics: The AI-powered platform will enable GEX Management to leverage advanced data analytics to identify opportunities for value creation in its clients’ businesses. The platform will use machine learning algorithms to analyze large data sets and identify patterns and trends that are not easily detectable through traditional data analysis methods.

 

 

Enhanced Operational Efficiency: The platform will also enable GEX Management to automate many of its operational processes, allowing the company to provide faster and more efficient service to its clients. This will include automating data collection and analysis, as well as streamlining project management and communication with clients.

 

Customized Solutions: The platform will allow GEX Management to provide customized solutions to its clients based on their specific needs and challenges. The platform will be designed to adapt to each client’s unique business environment, providing tailored recommendations that are specifically designed to drive value creation.

 

Competitive Advantage: The AI-powered platform will provide GEX Management with a significant competitive advantage over other consulting firms. By leveraging advanced data analytics and automation, the company will be able to provide faster and more accurate solutions to its clients, enabling it to differentiate itself in the highly competitive consulting market.

 

GEX Management’s Phase 3 initiative is considered a hypergrowth strategy because it is designed to leverage technology and innovation to drive rapid expansion and growth for the company. By building a proprietary AI-powered platform, the company is positioning itself to capture a larger share of the consulting market and establish itself as a leader in the industry.

 

There are several key factors that are expected to contribute to the hypergrowth potential of this initiative:

 

  ● Scalability: The AI-powered platform will enable GEX Management to scale its operations more efficiently and effectively. By automating many of its operational processes and leveraging advanced data analytics, the company will be able to handle a larger volume of clients and projects without significantly increasing its staffing levels.
  ● Competitive Advantage: The AI-powered platform will provide GEX Management with a significant competitive advantage over other consulting firms. This will enable the company to attract new clients and expand its business more quickly than its competitors.
  ● Market Demand: There is a strong market demand for AI-powered solutions in the consulting industry. By developing a proprietary platform that leverages advanced AI and data analytics, GEX Management is positioning itself to capitalize on this demand and capture a larger share of the market.
  ● Value Proposition: The AI-powered platform will enable GEX Management to provide more efficient, customized, and accurate solutions to its clients. This will enhance the company’s value proposition and position it as a leader in the industry, driving further growth and expansion.

 

The development of an AI-powered technology platform is a key component of GEX Management’s value proposition to strategic and private equity clients. The platform will enable the company to provide more efficient, customized, and accurate solutions to its clients, helping them to achieve their strategic goals and drive value creation. Additionally, the platform will help GEX Management to differentiate itself in the highly competitive consulting market, positioning the company as a leader in the industry and a valuable partner to private equity firms seeking to maximize their returns on investment.

 

Under Sri Vanamali’s executive leadership, GEX Management was invited in February 2019 to be a Preferred Supplier to Insight Global, one of the world’s largest Managed Service Providers (MSPs) to Fortune 100 Companies in the Enterprise Technology Consulting space. The first consultant that GEX hired through this Preferred Supplier initiative was successfully placed at a large PA based financial services firm to provide Business and Quality Analysis professional services to the client. Subsequently, GEX placed its second enterprise consultant at the world’s leading Fortune 100 CRM Company at its headquarters in San Francisco and subsequently several more highly skilled Enterprise Technology Consultants at leading Fortune 500 retail, healthcare, manufacturing and technology clients across the country.

 

Subsequently, GEX Management has achieved significant growth by expanding its client base through partnerships with top-tier technology MSPs such as Robert Half, Insight Global, TekFortune, and Aegean. These partnerships have allowed GEX to offer its consulting services to a wide range of clients, including some of the biggest names in various industries.

 

 

The end clients for whom GEX consultants provide services include leading companies such as Salesforce, Anthem, Walmart, United Airlines, Disney, Marriott, Paramount, Morgan Stanley, and Carlyle Group, among others. This diverse client base has provided GEX with the opportunity to work with clients across a wide range of industries, allowing the company to gain valuable experience and knowledge that it can leverage to provide high-quality services to its clients. Through its strong relationships with its MSP partners and its focus on providing exceptional service to its clients, GEX has been able to expand its client base and increase its revenue significantly. The company has also been able to leverage its expertise and experience to develop new service offerings and expand into new markets, further driving its growth and success. Moving forward, GEX plans to continue building on its success by expanding its partnerships with leading MSPs and identifying new opportunities to serve its clients’ needs. The company will also continue to invest in its technology platform and product base to ensure it can provide the most innovative and effective solutions to its clients.

 

As a direct result of the high market demand for experienced technology consultants via its multiple supplier programs, the GEX team has interviewed and has acquired over 30 highly experienced enterprise technology consultants with expertise across a wide array of functions (Enterprise Architects, Project Managers, Systems Integration Developers, Quality Assurance Specialists and Business Systems Analysts) who have been identified for various short to long term projects. Additionally, GEX plans to hire and place a large pool of enterprise consultants over the next 18 - 24 month period to satisfy its growing pipeline of future contracts.

 

In addition to these planned strategic growth initiatives across both strategy and technology consulting, , management has been focusing on materially improving its balance sheet by significantly reducing or eliminating the debt or debt like instruments related to convertible notes and asset related liens introduced in 2018 while simultaneously exploring opportunities to reduce or eliminate the high interest MCA related toxic debt instruments that resulted in significant interest expenses to the company and a burden to operating capital. Under the balance sheet clean up initiative, GEX Management has focused on reducing its liabilities and improving its financial health. The company has taken several actions to achieve this, including:

 

  ● Debt restructuring: GEX Management has restructured its debt to reduce the amount of outstanding debt and lower the interest rate, resulting in lower interest expense and improved cash flow.
  ● Expense reduction: The company has implemented cost-cutting measures to reduce expenses and improve profitability, such as renegotiating contracts and reducing non-essential expenses.
  ● Asset divestiture: GEX Management has sold non-core assets to generate cash and reduce debt.
  ● Improved collections: The company has improved its collections process to ensure timely payment of receivables and reduce outstanding balances.

 

As a result of these actions, GEX Management has been able to significantly reduce its liabilities from $7,116,854 in fiscal year 2021 to $1,840,499 in 2022. This has a positive impact on the company’s financial health and reduces the risk of insolvency. It also improves the company’s ability to secure financing at lower interest rates, which can result in lower borrowing costs and improved profitability.

 

This focus on balance sheet cleanup and to stay significantly “asset-lite” is expected to achieve material results by Q2 2023, at which point GEX would be primed for its next phase of strategic growth initiatives by deploying equity and non-toxic debt instruments towards organic and inorganic opportunities. Finally, management believes that the material elimination of MCA and related debt like instruments will be a critical first step prior to rebuilding a robust revenue pipeline as this will require strong working capital and favorable leverage covenants to sustain operations in the long term as well as reduce liabilities related to attachment to future receivables. While management efforts to settle these instruments are aggressively underway, the inability or failure by the firm to completely address any toxic debt instruments could result in management pursuing a restructuring program or similar initiatives to bring the balance sheet within reasonable covenant parameters to allow the firm to continue operating efficiently in the coming years without exposing future customers to significant business risks associated with these toxic instruments. As part of this long term strategy, management has already begin putting processes in place to protect the company via a robust internal restructuring program and will be announcing the outcome of these intra-company restructuring efforts that will protect the interests of investors and shareholders alike over the long term and also streamline the corporate structure to be synergistic with the management’s long term vision for the company.

 

 

Material Definitive Agreements

 

No Material Agreements have been executed by the Company during this reporting period.

 

Basis of Presentation

 

Our financial statements have been prepared in conformity with accounting principles generally accepted in the United States (“GAAP”), as well as the applicable regulations and rules of the Securities and Exchange Commission (“SEC”). This requires management to make estimates and assumptions that affect the amounts reported in the financial statements and their accompanying notes. The actual results could differ from those estimates.

 

Principles of Consolidation

 

The consolidated financial statements include the accounts of GEX Management, Inc. and its wholly owned subsidiaries. Intercompany accounts and transactions have been eliminated in consolidation.

 

There have been no significant changes to our accounting policies that have a material impact on our financial statements and accompanying notes.

 

Use of Estimates

 

The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect certain reported amounts and disclosures. Accordingly, actual results could differ from those estimates.

 

Cash and Cash Equivalents

 

Cash and cash equivalents include cash in banks and short-term investments with original maturities of three months or less.

 

Accounts Receivable

 

Accounts receivable consists of accrued services and consulting receivables due from customers and are unsecured. The receivables are generally due within 30 to 45 days after the date of the invoice. Accounts receivable is carried at their face amount, less an allowance for doubtful accounts. GEX’s policy is not to charge interest on receivables after the invoice becomes past due. Write-offs are recorded at the time when a customer receivable is deemed uncollectible.

 

Related Parties

 

Parties are considered to be related to the Company if the parties, directly or indirectly, through one or more intermediaries, control, are controlled by, or are under common control with the Company. Related parties also include principal owners of the Company, its management, members of the immediate families of principal owners of the Company and its management and other parties with which the Company may deal with if one party controls or can significantly influence the management or operating policies of the other to an extent that one of the transacting parties might be prevented from fully pursuing its own separate interests.

 

Long-Lived Assets

 

The Company records an impairment of long-lived assets used in operations, other than goodwill, and its equity method investments when events or circumstances indicate that the asset might be impaired and the estimated undiscounted cash flows to be generated by those assets over their remaining lives are less than the carrying amount of those items. The net carrying value of assets not recoverable is reduced to fair value, which is typically calculated using the discounted cash flow method.

 

 

Revenue Recognition

 

Management Consulting Services

 

GEX Management recognizes revenue for its management consulting services in accordance with ASC 606 - Revenue from Contracts with Customers.

 

Revenue is recognized when control of the services is transferred to the client and the consideration for the services is expected to be collected. Control is transferred when the client is able to direct the use of and obtain substantially all of the benefits from the services provided.

 

The revenue recognized is based on the transaction price, which is the amount of consideration that GEX expects to be entitled to in exchange for providing the services. The transaction price is determined based on the estimated costs to complete the project, as well as the estimated profit margin on the project.

 

GEX Management typically enters into contracts with clients that specify the scope of services to be provided, the time period for which the services will be provided, and the fees for the services. Revenue is recognized over the period during which the services are provided, generally on a straight-line basis over the term of the contract.

 

If there are any changes to the scope of the services or the fees for the services, GEX Management will assess whether these changes constitute a modification of the original contract. If a modification is deemed to exist, GEX will reassess the transaction price and adjust the revenue recognized accordingly.

 

GEX Management also considers any variable consideration, such as performance bonuses or penalties, when recognizing revenue. If the amount of variable consideration cannot be estimated reliably, it will be excluded from the transaction price until it can be reliably estimated.

 

In summary, GEX Management recognizes revenue for its management consulting services in accordance with ASC 606, based on the transfer of control of services to the client and the expected consideration to be collected. Revenue is recognized over the period during which the services are provided and is adjusted for any changes in scope or fees.

 

All employees are completely vetted by the company to ensure their employment terms are in adherence to all applicable state. federal and immigration laws. Additionally, GEX Management carries professional liability and fidelity/crime insurance to protect against risks involving working at third party client locations that require the workers to handle sensitive client data and equipment.

 

Income Taxes

 

The Company uses the liability method in the computation of income tax expense and the current and deferred income taxes payable. A valuation allowance is provided for the amount of deferred tax assets that, based on available evidence, are not expected to be realized.

 

Fair Value Measurements

 

ASC Topic 820 defines fair value, establishes a framework for measuring fair value in generally accepted accounting principles, and requires certain disclosures about fair value measurements. In general, fair value of financial instruments is based upon quoted market prices, where available. If such quoted market prices are not available, fair value is based upon internally developed models that primarily use, as inputs, observable market-based parameters. Valuation adjustments may be made to ensure that financial instruments are recorded at fair value. These adjustments may include amounts to reflect counterparty credit quality and the Company’s credit worthiness, among other things, as well as unobservable parameters.

 

Earnings Per Share

 

Earnings per share are calculated in accordance with ASC 260 “Earnings per Share”. Basic income (loss) per share is computed by dividing the period income (loss) available to common shareholders by the weighted average number of common shares outstanding. Diluted earnings (loss) per share is computed by dividing the income (loss) available to common share-holders by the weighted average number of common shares outstanding plus additional common shares that would have been outstanding if dilutive potential common shares had been issued. For purposes of this calculation, common stock dividends, warrants and options to acquire common stock, would be considered common stock equivalents in periods in which they have a dilutive effect and are excluded from this calculation in periods in which these are anti-dilutive to the net loss per share.

 

 

Reclassifications

 

Certain prior year amounts have been reclassified to conform to the current year presentation. Such reclassifications have had no effect on the financial position of the Company.

 
v3.23.2
Going Concern
 3 Months Ended
Mar. 31, 2023
Organization, Consolidation and Presentation of Financial Statements [Abstract]  
Going Concern

Note 2. Going Concern

 

To date, the Company has funded its operations primarily through public and private offerings of common stock, our line of credit, short- term discounted and convertible notes payable. The Company has identified several potential financing sources in order to raise the capital necessary to fund operations.

 

In addition to the aforementioned current sources of capital that will provide additional short-term liquidity, the Company is currently exploring various other alternatives including debt and equity financing vehicles, strategic partnerships, government programs that may be available to the Company, as well as trying to generate additional sales and increase margins. However, at this time the Company has no commitments to obtain any additional funds, and there can be no assurance such funds will be available on acceptable terms or at all. If the Company is unable to obtain additional funding and improve its operations, the Company’s financial condition and results of operations may be materially adversely affected and the Company may not be able to continue operations, which raises substantial doubt about its ability to continue as a going concern. Additionally, even if the Company raises sufficient capital through additional equity or debt financing, strategic alternatives or otherwise, there can be no assurances that the revenue or capital infusion will be sufficient to enable it to develop its business to a level where it will be profitable or generate positive cash flow. If the Company raises additional funds through the issuance of equity or convertible debt securities, the percentage ownership of our stockholders could be significantly diluted, and these newly issued securities may have rights, preferences or privileges senior to those of existing stockholders. If the Company incurs additional debt, a substantial portion of its operating cash flow may be dedicated to the payment of principal and interest on such indebtedness, thus limiting funds available for business activities. The terms of any debt securities issued could also impose significant restrictions on the Company’s operations. Broad market and industry factors may seriously harm the market price of our common stock, regardless of our operating performance, and may adversely impact our ability to raise additional funds. Similarly, if the Company’s common stock is delisted from the public exchange markets, it may limit its ability to raise additional funds.

 

The consolidated financial statements for the twelve months ended December 31, 2022 and three months ended March 31, 2023 were prepared on the basis of a going concern which contemplates that the Company will be able to realize assets and discharge liabilities in the normal course of business. Accordingly, they do not give effect to adjustments that would be necessary should the Company be required to liquidate its assets. The ability of the Company to meet its total liabilities of 1,871,120 and to continue as a going concern is dependent upon the availability of future funding, continued growth in billings and sales contracts, and the Company’s ability to profitably meet its after-sale service commitments with its existing customers. The financial statements do not include any adjustments that might result from the outcome of these uncertainties.

 

In addition, at this time we cannot predict the impact of COVID-19 on our ability to obtain financing necessary for the Company to fund its working capital requirements. Also, it may hamper our efforts to comply with our filing obligations with the Securities and Exchange Commission.

 

 
v3.23.2
STOCKHOLDERS’ EQUITY
 3 Months Ended
Mar. 31, 2023
Equity [Abstract]  
STOCKHOLDERS’ EQUITY

NOTE 3. STOCKHOLDERS’ EQUITY

 

During the 3 months ended March 31, 2023, the Company issued 102613,194 shares of common stock for conversions of notes payable. The notes were converted within the terms of the original note agreements and therefore, no gain or loss was recognized on the conversions.

 
v3.23.2
NOTES PAYABLE
 3 Months Ended
Mar. 31, 2023
Debt Disclosure [Abstract]  
NOTES PAYABLE

NOTE 4. NOTES PAYABLE

 

On April 26, 2018, the Company entered into two Securities Purchase Agreements, pursuant to which the Company issued Convertible Promissory Notes (“the Notes”) with principal amounts totalling up to $1,000,000, bearing interest at 10% per annum. The total amounts of the Notes that can be funded (consideration that can be loaned to the Company) is up to $887,500, after discounts of $112,500 prorated over the term of the Notes. Amounts borrowed by the Company mature in twelve months after the date of funding and can be prepaid up to six months after issuance subject to prepayment penalties and approval by the Note holders. Any amounts outstanding on the Notes can be converted into Common Stock at a conversion price of $2.50 per share for the first six months and at a discount of up to 50% thereafter to the then current market value of the Company’s stock commencing six months after issuance. Conversion is at the sole discretion of the holders of the Notes. In May 2018, the Company borrowed $200,000 under the Notes, and received $175,000 after giving effect to discounts of 10% for each note and origination fees. The Company incurred a total of $5,000 related to origination fees on the Notes. Additionally, the Company issued 50,000 warrant shares for debt issuance costs at an exercise price of $4.00 per share. The warrants are exercisable for five years and had a fair market value of $31,852 on the date of issuance. The Notes bear interest at 10% per annum. On April 26, 2018, the Company entered into a convertible note payable for $146,681 bearing interest at 10% per annum.

 

On April 26, 2018, the Company entered into two Securities Purchase Agreements, pursuant to which the Company issued Convertible Promissory Notes (“the Notes”) with principal amounts totaling up to $1,000,000, bearing interest at 10% per annum. The total amounts of the Notes that can be funded (consideration that can be loaned to the Company) is up to $887,500, after discounts of $112,500 prorated over the term of the Notes. Amounts borrowed by the Company mature in twelve months after the date of funding and can be prepaid up to six months after issuance subject to prepayment penalties and approval by the Note holders. Any amounts outstanding on the Notes can be converted into Common Stock at a conversion price of $2.50 per share for the first six months and at a discount of up to 50% thereafter to the then current market value of the Company’s stock commencing six months after issuance. Conversion is at the sole discretion of the holders of the Notes. In May 2018, the Company borrowed $200,000 under the Notes, and received $175,000 after giving effect to discounts of 10% for each note and origination fees. The Company incurred a total of $5,000 related to origination fees on the Notes. Additionally, the Company issued 50,000 warrant shares for debt issuance costs at an exercise price of $4.00 per share. The warrants are exercisable for five years and had a fair market value of $31,852 on the date of issuance. The Notes bear interest at 10% per annum. On April 26, 2018, the Company entered into a convertible note payable for $146,681 bearing interest at 10% per annum. All principal and interest is due on April 26, 2019.

 

On April 26, 2018, the Company entered into a convertible note payable for $146,681 bearing interest at 10% per annum. All principal and interest is due on April 26, 2019. On August 1, 2018, the Company entered into a convertible note payable for $226,000 bearing interest at 12% per annum. All principal and interest is due on January 27, 2019.

 

 

On August 8, 2018, the Company entered into a convertible note payable for $85,000 bearing interest at 10% per annum. All principal and interest is due on August 8, 2019. On August 14, 2018, the Company entered into a convertible note payable for $250,000 bearing interest at 10% per annum. All principal and interest is due on May 6, 2019. On August 24, 2018, the Company entered into a convertible note payable for $85,000 bearing interest at 10% per annum. All principal and interest is due on August 24, 2019. On August 29, 2018, the Company entered into a convertible note payable for $112,750 bearing interest at 10% per annum. All principal and interest is due on August 29, 2019. On January 18 2019, the Company entered into a convertible note payable for $226,000 bearing interest at 12% per annum. All principal and interest is due on July 18, 2019. On February 15, 2019, the Company entered into a convertible note payable for $43,000 bearing interest at 10% per annum. All principal and interest is due on February 15, 2020. On April 16, 2019, the Company entered into a convertible note payable for $38,000 bearing interest at 10% per annum. All principal and interest is due on April 16, 2020. On March 25, 2019, the Company entered into a convertible note payable for $50,000 bearing interest at 12% per annum. All principal and interest is due on March 25, 2020. On September 27, 2019, the Company entered into a convertible note payable for $45,000 bearing interest at 10% per annum. All principal and interest is due on March 27, 2020. On October 12, 2019, the Company entered into a convertible note payable for $100,000 bearing interest at 10% per annum. All principal and interest is due on October 12, 2020. On February 8, 2021, the Company entered into a convertible note payable for $53,500 bearing interest at 10% per annum. All principal and interest is due on February 8, 2022. On March 19, 2021, the Company entered into a convertible note payable for $38,500 bearing interest at 10% per annum. All principal and interest is due on March 19, 2022. On April 20, 2021, the Company entered into a convertible note payable for $43,750 bearing interest at 10% per annum. All principal and interest is due on April 20, 2022. On June 9, 2021, the Company entered into a convertible note payable for $43,750 bearing interest at 10% per annum. All principal and interest is due on June 9, 2022. On June 9, 2021, the Company entered into a convertible note payable for $88,000 bearing interest at 12% per annum. All principal and interest is due on June 9, 2022. On June 25, 2021, the Company entered into a convertible note payable for $110,000 bearing interest at 12% per annum. All principal and interest is due on June 25, 2022. On August 6, 2021, the Company entered into a convertible note payable for $110,000 bearing interest at 8% per annum. All principal and interest is due on August 6, 2022. On August 9, 2021, the Company entered into a convertible note payable for $333,333.33 bearing interest at 12% per annum. All principal and interest is due on August 9, 2022. On August 10, 2021, the Company entered into a convertible note payable for $200,000.00 bearing interest at 12% per annum. All principal and interest is due on August 10, 2022. On August 20, 2021, the Company entered into a convertible note payable for $100,000.00 bearing interest at 12% per annum. All principal and interest is due on August 20, 2022. On September 1, 2021, the Company entered into a convertible note payable for $27,500 bearing interest at 8% per annum. All principal and interest is due on September 1, 2022. On September 1, 2021, the Company entered into a convertible note payable for $55,000 bearing interest at 8% per annum. All principal and interest is due on September 1, 2022. On September 2, 2021, the Company entered into a convertible note payable for $155,000 bearing interest at 12% per annum. All principal and interest is due on September 2, 2022. On September 9, 2021, the Company entered into a convertible note payable for $11,000 bearing interest at 8% per annum. All principal and interest is due on September 9, 2022.

 
v3.23.2
RELATED PARTY TRANSACTIONS
 3 Months Ended
Mar. 31, 2023
Related Party Transactions [Abstract]  
RELATED PARTY TRANSACTIONS

NOTE 5. RELATED PARTY TRANSACTIONS

 

On March 1, 2015, the Company entered into a Line of Credit Agreement with P413 at an interest rate of 6%. This line of credit has a balance of $483,677 at March 31, 2022 and December 31, 2021, respectively. On May 2, 2018, this line of credit was extended to April 1, 2020. On September 1, 2018, the line of credit was extended to September 1, 2020. The line of credit is currently in default.

 

The Company owed a director of the Company $172,567 and $172,567 for reimbursable expenses as of March 31, 2022 and December 31, 2021, respectively.

 
v3.23.2
COMMITMENTS AND CONTINGENCIES
 3 Months Ended
Mar. 31, 2023
Commitments and Contingencies Disclosure [Abstract]  
COMMITMENTS AND CONTINGENCIES

NOTE 6. COMMITMENTS AND CONTINGENCIES

 

Litigation

 

From time to time, claims are made against the Company in the ordinary course of its business, which could result in litigation. Claims and associated litigation are subject to inherent uncertainties and unfavorable outcomes could occur, such as monetary damages, fines, penalties, or injunctions prohibiting the Company from selling one or more products or engaging in other activities. The occurrence of an unfavorable outcome in any specific period could have a material adverse effect on the Company’s results of operations for that period or future periods.

 

In 2019, a judgement was received against the Company awarding EMA Financial, a former note holder of the Company, settlement of default notes payable, accrued interest and fees in the amount of $195,250. The amount is recorded on the balance sheet as of December 31, 2021, and December 31, 2020. The Company paid the full amount due under the judgement during fiscal year 2022.

 
v3.23.2
SUBSEQUENT EVENTS
 3 Months Ended
Mar. 31, 2023
Subsequent Events [Abstract]  
SUBSEQUENT EVENTS

NOTE 7. SUBSEQUENT EVENTS
v3.23.2
DESCRIPTION OF BUSINESS AND SIGNIFICANT ACCOUNTING POLICIES (Policies)
 3 Months Ended
Mar. 31, 2023
Accounting Policies [Abstract]  
Basis of Presentation

Basis of Presentation

 

Our financial statements have been prepared in conformity with accounting principles generally accepted in the United States (“GAAP”), as well as the applicable regulations and rules of the Securities and Exchange Commission (“SEC”). This requires management to make estimates and assumptions that affect the amounts reported in the financial statements and their accompanying notes. The actual results could differ from those estimates.

 
Principles of Consolidation

Principles of Consolidation

 

The consolidated financial statements include the accounts of GEX Management, Inc. and its wholly owned subsidiaries. Intercompany accounts and transactions have been eliminated in consolidation.

 

There have been no significant changes to our accounting policies that have a material impact on our financial statements and accompanying notes.

 
Use of Estimates

Use of Estimates

 

The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect certain reported amounts and disclosures. Accordingly, actual results could differ from those estimates.

 
Cash and Cash Equivalents

Cash and Cash Equivalents

 

Cash and cash equivalents include cash in banks and short-term investments with original maturities of three months or less.

 
Accounts Receivable

Accounts Receivable

 

Accounts receivable consists of accrued services and consulting receivables due from customers and are unsecured. The receivables are generally due within 30 to 45 days after the date of the invoice. Accounts receivable is carried at their face amount, less an allowance for doubtful accounts. GEX’s policy is not to charge interest on receivables after the invoice becomes past due. Write-offs are recorded at the time when a customer receivable is deemed uncollectible.

 
Related Parties

Related Parties

 

Parties are considered to be related to the Company if the parties, directly or indirectly, through one or more intermediaries, control, are controlled by, or are under common control with the Company. Related parties also include principal owners of the Company, its management, members of the immediate families of principal owners of the Company and its management and other parties with which the Company may deal with if one party controls or can significantly influence the management or operating policies of the other to an extent that one of the transacting parties might be prevented from fully pursuing its own separate interests.

 
Long-Lived Assets

Long-Lived Assets

 

The Company records an impairment of long-lived assets used in operations, other than goodwill, and its equity method investments when events or circumstances indicate that the asset might be impaired and the estimated undiscounted cash flows to be generated by those assets over their remaining lives are less than the carrying amount of those items. The net carrying value of assets not recoverable is reduced to fair value, which is typically calculated using the discounted cash flow method.

 

 
Revenue Recognition

Revenue Recognition

 

Management Consulting Services

 

GEX Management recognizes revenue for its management consulting services in accordance with ASC 606 - Revenue from Contracts with Customers.

 

Revenue is recognized when control of the services is transferred to the client and the consideration for the services is expected to be collected. Control is transferred when the client is able to direct the use of and obtain substantially all of the benefits from the services provided.

 

The revenue recognized is based on the transaction price, which is the amount of consideration that GEX expects to be entitled to in exchange for providing the services. The transaction price is determined based on the estimated costs to complete the project, as well as the estimated profit margin on the project.

 

GEX Management typically enters into contracts with clients that specify the scope of services to be provided, the time period for which the services will be provided, and the fees for the services. Revenue is recognized over the period during which the services are provided, generally on a straight-line basis over the term of the contract.

 

If there are any changes to the scope of the services or the fees for the services, GEX Management will assess whether these changes constitute a modification of the original contract. If a modification is deemed to exist, GEX will reassess the transaction price and adjust the revenue recognized accordingly.

 

GEX Management also considers any variable consideration, such as performance bonuses or penalties, when recognizing revenue. If the amount of variable consideration cannot be estimated reliably, it will be excluded from the transaction price until it can be reliably estimated.

 

In summary, GEX Management recognizes revenue for its management consulting services in accordance with ASC 606, based on the transfer of control of services to the client and the expected consideration to be collected. Revenue is recognized over the period during which the services are provided and is adjusted for any changes in scope or fees.

 

All employees are completely vetted by the company to ensure their employment terms are in adherence to all applicable state. federal and immigration laws. Additionally, GEX Management carries professional liability and fidelity/crime insurance to protect against risks involving working at third party client locations that require the workers to handle sensitive client data and equipment.

 
Income Taxes

Income Taxes

 

The Company uses the liability method in the computation of income tax expense and the current and deferred income taxes payable. A valuation allowance is provided for the amount of deferred tax assets that, based on available evidence, are not expected to be realized.

 
Fair Value Measurements

Fair Value Measurements

 

ASC Topic 820 defines fair value, establishes a framework for measuring fair value in generally accepted accounting principles, and requires certain disclosures about fair value measurements. In general, fair value of financial instruments is based upon quoted market prices, where available. If such quoted market prices are not available, fair value is based upon internally developed models that primarily use, as inputs, observable market-based parameters. Valuation adjustments may be made to ensure that financial instruments are recorded at fair value. These adjustments may include amounts to reflect counterparty credit quality and the Company’s credit worthiness, among other things, as well as unobservable parameters.

 
Earnings Per Share

Earnings Per Share

 

Earnings per share are calculated in accordance with ASC 260 “Earnings per Share”. Basic income (loss) per share is computed by dividing the period income (loss) available to common shareholders by the weighted average number of common shares outstanding. Diluted earnings (loss) per share is computed by dividing the income (loss) available to common share-holders by the weighted average number of common shares outstanding plus additional common shares that would have been outstanding if dilutive potential common shares had been issued. For purposes of this calculation, common stock dividends, warrants and options to acquire common stock, would be considered common stock equivalents in periods in which they have a dilutive effect and are excluded from this calculation in periods in which these are anti-dilutive to the net loss per share.

 

 
Reclassifications

Reclassifications

 

Certain prior year amounts have been reclassified to conform to the current year presentation. Such reclassifications have had no effect on the financial position of the Company.
v3.23.2
DESCRIPTION OF BUSINESS AND SIGNIFICANT ACCOUNTING POLICIES (Details Narrative) - USD ($)
Mar. 31, 2023
Dec. 31, 2022
Dec. 31, 2021
Accounting Policies [Abstract]      
Liabilities current $ 1,871,120 $ 1,840,499 $ 7,116,854
v3.23.2
Going Concern (Details Narrative) - USD ($)
Mar. 31, 2023
Dec. 31, 2022
Organization, Consolidation and Presentation of Financial Statements [Abstract]    
Total liabilities $ 1,871,120 $ 1,840,499
v3.23.2
STOCKHOLDERS’ EQUITY (Details Narrative)
 3 Months Ended
Mar. 31, 2023
shares
Convertible Note [Member]  
Short-Term Debt [Line Items]  
Number of common shares issued for debt conversion 102,613,194
v3.23.2
NOTES PAYABLE (Details Narrative) - USD ($)
 1 Months Ended
Sep. 09, 2021
Sep. 02, 2021
Sep. 01, 2021
Aug. 20, 2021
Aug. 10, 2021
Aug. 09, 2021
Aug. 06, 2021
Jun. 25, 2021
Jun. 09, 2021
Apr. 20, 2021
Mar. 19, 2021
Feb. 08, 2021
Oct. 12, 2019
Sep. 27, 2019
Apr. 16, 2019
Mar. 25, 2019
Feb. 15, 2019
Jan. 18, 2019
Aug. 29, 2018
Aug. 24, 2018
Aug. 14, 2018
Aug. 08, 2018
Aug. 02, 2018
Apr. 26, 2018
May 31, 2018
Convertible Notes Payable [Member]                                                  
Debt Instrument [Line Items]                                                  
Convertible promissory note, principal amount $ 11,000 $ 155,000 $ 27,500 $ 100,000.00 $ 200,000.00 $ 333,333.33 $ 110,000 $ 110,000 $ 43,750 $ 43,750 $ 38,500 $ 53,500 $ 100,000 $ 45,000 $ 38,000 $ 50,000 $ 43,000 $ 226,000 $ 112,750 $ 85,000 $ 250,000 $ 85,000 $ 226,000 $ 146,681  
Interest rate 8.00% 12.00% 8.00% 12.00% 12.00% 12.00% 8.00% 12.00% 10.00% 10.00% 10.00% 10.00% 10.00% 10.00% 10.00% 12.00% 10.00% 12.00% 10.00% 10.00% 10.00% 10.00% 12.00% 10.00%  
Debt instrument, maturity date Sep. 09, 2022 Sep. 02, 2022 Sep. 01, 2022 Aug. 20, 2022 Aug. 10, 2022 Aug. 09, 2022 Aug. 06, 2022 Jun. 25, 2022 Jun. 09, 2022 Apr. 20, 2022 Mar. 19, 2022 Feb. 08, 2022 Oct. 12, 2020 Mar. 27, 2020 Apr. 16, 2020 Mar. 25, 2020 Feb. 15, 2020 Jul. 18, 2019 Aug. 29, 2019 Aug. 24, 2019 May 06, 2019 Aug. 08, 2019 Jan. 27, 2019 Apr. 26, 2019  
Convertible Notes Payable One [Member]                                                  
Debt Instrument [Line Items]                                                  
Convertible promissory note, principal amount     $ 55,000           $ 88,000                                
Interest rate     8.00%           12.00%                                
Debt instrument, maturity date     Sep. 01, 2022           Jun. 09, 2022                                
Two Securities Purchase Agreements [Member]                                                  
Debt Instrument [Line Items]                                                  
Convertible promissory note, principal amount                                               $ 1,000,000 $ 200,000
Interest rate                                               10.00% 10.00%
Total proceeds from notes                                                 $ 175,000
Discount on notes                                               $ 112,500  
Debt conversion price per share                                               $ 2.50  
Debt discount percentage                                               50.00%  
Debt origination fee                                                 $ 5,000
Warrant shares issued for debt issuance costs                                                 50,000
Warrant shares issued for debt issuance costs, exercise price per share                                                 $ 4.00
Warrants and outstanding term                                                 5 years
Fair value of warrants                                                 $ 31,852
Two Securities Purchase Agreements [Member] | Maximum [Member]                                                  
Debt Instrument [Line Items]                                                  
Total proceeds from notes                                               $ 887,500  
v3.23.2
RELATED PARTY TRANSACTIONS (Details Narrative) - USD ($)
Mar. 01, 2015
Mar. 31, 2023
Dec. 31, 2022
Mar. 31, 2022
Dec. 31, 2021
Related Party Transaction [Line Items]          
Line of credit amount       $ 483,677 $ 483,677
Due to related parties current   $ 660,919    
Related Party [Member]          
Related Party Transaction [Line Items]          
Due to related parties current       $ 172,567 $ 172,567
Credit Agreement [Member]          
Related Party Transaction [Line Items]          
Interest rate during period 6.00%        
v3.23.2
COMMITMENTS AND CONTINGENCIES (Details Narrative)
 12 Months Ended
Dec. 31, 2019
USD ($)
EMA Financial [Member]  
Payments for legal settlements $ 195,250
Gex Management (CE) (USOTC:GXXM)
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