10-Q

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

(Mark One)

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

For the quarterly period ended March 31, 2018

OR

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

Commission File Number 333-213470

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.)

12001 N. Central Expressway, Suite 825

Dallas, Texas 75243

(Address of principal executive offices)

(877) 210-4396

(Issuer's telephone number)

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

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 [X] No [ ]

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate website, if any, every Interactive Data File required to be submitted and posted 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 and post such files). Yes [X] No [ ]

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer”, “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 [X]	Emerging Growth Company [X]

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

As of May 14, 2018 there were 11,797,231 shares of the registrant’s common stock, par value $0.001 per share, outstanding.

1

PART I

ITEM 1. FINANCIAL STATEMENTS

GEX Management, Inc.

Consolidated Balance Sheets

ASSETS

	March 31, 2018			December 31, 2017
	(Unaudited)
Current Assets:
Cash and Cash Equivalents	$	471,837		$	410,096
Accounts Receivable, net		257,079			91,532
Accounts Receivable – Related Party		30,771			30,771
Other Current Assets		65,285			88,749
Total Current Assets		824,972			621,148
Property and Equipment (Net)		2,446,222			2,463,377
Other Assets		4,471			4,471
TOTAL ASSETS	$	3,275,665		$	3,088,996
LIABILITIES AND SHAREHOLDERS’ EQUITY
Current Liabilities:
Accounts Payable	$	15,455		$	48,280
Accrued Expenses		59,704			20,514
Accrued Interest Payable		12,642			7,433
Notes Payable Current Portion		802,129			56,649
Total Current Liabilities		889,930			132,876
Non-Current Liabilities
Notes Payable		1,239,706			1,254,271
Line of Credit – Related Party		352,100			352,100
Total Long Term Liabilities		1,591,806			1,606,371
TOTAL LIABILITIES		2,481,736			1,739,247
SHAREHOLDERS’ EQUITY
Preferred Stock, $0.001 par value, 20,000,000 shares
authorized, 0 shares issued and outstanding		—			—
Common Stock, $0.001 par value, 200,000,000 shares
authorized, 11,797,231 and 11,797,231 shares issued and
Outstanding as March 31, 2018 and December 31, 2017, respectively		11,797			11,797
Additional Paid-in-Capital		2,651,178			2,651,178
Accumulated Deficit		(1,869,046	)		(1,313,226	)
TOTAL SHAREHOLDERS’ EQUITY		793,929			1,349,749
TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY	$	3,275,665		$	3,088,996

The accompanying notes are an integral part of these unaudited consolidated financial statements. 

2

GEX Management, Inc.

Consolidated Statements of Operations

Three Months Ended March 31, 2018 and 2017

(Unaudited)

	Three Months Ended March 31, 2018			Three Months Ended March 31, 2017
Revenues	$	3,578,575		$	150,640
Revenues – Related Party		—			20,000
Total Revenues(1)		3,578,575			170,640
Cost of Revenues		3,817,972			298,650
Gross Profit (Loss)		(239,397	)		(128,010	)
Operating Expenses
Depreciation		19,654			144
Selling and Advertising		19,194			10,327
General and Administrative		270,585			171,788
Total Operating Expenses		309,433			182,259
Total Operating Income (Loss)		(548,830	)		(310,269	)
Other Income (Expense)
Other Income		654			—
Rental Income		37,910			—
Interest (Expense)		(45,554	)		(5,373	)
Total Other Income (Expense)		(6,990	)		(5,373	)
Net income (loss) before income taxes		(555,820	)		(315,642	)
Provision for income taxes		—			—
NET INCOME (LOSS)	$	(555,820	)	$	(315,642	)
BASIC and DILUTED
Weighted Average Shares Outstanding		11,797,231			11,066,132
Earnings (Loss) per Share	$	(0.05	)	$	(0.03	)

⁽¹⁾ Gross billings of $3,988,002 and $0 less payroll and payroll tax cost related to PEO clients of $1,098,898 and $0 for the three months ended 2018 and 2017, respectively.

 The accompanying notes are an integral part of these unaudited consolidated financial statements.

3

GEX Management, Inc.

Consolidated Statements of Cash Flow

(Unaudited)

	Three Months Ended			Three Months Ended
	March 31, 2018			March 31, 2017
Cash Flows (used by) Operating Activities:
Net Loss	$	(555,820	)	$	(315,642	)
Adjustments to reconcile net loss to net cash
(used in) operating activities:
Depreciation and Amortization		17,155			144
Shares Issued for Services		—			50,000
Changes in assets and liabilities:
Accounts receivable		(165,547	)		47,203
Accounts receivable – Related Party		—			321
Other current assets		23,464			959
Accounts payable		(32,824	)		6,077
Accrued expenses		39,189			(19,434	)
Accrued expenses – Related Party		—			(22,500	)
Accrued interest payable		5,209			5,373
Net cash (used in) operating activities		(669,174	)		(247,499	)
Cash Flows from (used in) Investing Activities:
Purchase of customer contracts		—			(37,500	)
Net cash (used in) Investing Activities:		—			(37,500	)
Cash Flows from (used in) Financing Activities:
Proceeds from sale of common stock		—			282,088
Proceeds from notes payable		772,500			—
Payments on notes payable		(41,585	)		—
Net cash provided by financing activities		730,915			282,088
NET INCREASE (DECREASE) IN CASH		61,741			(2,911	)
CASH AT BEGINNING OF PERIOD		410,096			307,395
CASH AT END OF PERIOD	$	471,837		$	304,484
SUPPLEMENTAL DISCLOSURES:
Income taxes paid	$	—		$	—
Interest paid	$	40,345		$	5,373

 The accompanying notes are an integral part of these unaudited consolidated financial statements.

4

GEX Management, Inc.

Notes to Consolidated Financial Statements

March 31, 2018

(Unaudited)

NOTE 1. DESCRIPTION OF BUSINESS AND SIGNIFICANT ACCOUNTING POLICIES

Organization and Description of Business

GEX Management, Inc. (“GEX”, the “Company”, “we”, “our”, “us”) is a professional services company that was originally formed in 2004 as Group Excellence Management, LLC d/b/a MyEasyHQ. The Company converted from a limited liability company to a C corporation in March of 2016, and changed its name to GEX Management, Inc. in April of 2016.

On January 25, 2017, GEX obtained its license to operate as a Professional Employer Organization (“PEO”), and we began offering PEO services in April 2017. The Company formed GEX Staffing, LLC (“GEX Staffing”) in March 2017. The initial funding and first transactions occurred in GEX Staffing in September 2017. The consolidated financials include the accounts of GEX Staffing, LLC. Staffing and PEO services make up a majority of our revenue.

On December 29, 2017 GEX purchased 100% of the membership interest in AMAST Consulting, LLC (“AMAST”), which owned a multi-use office building in Lowell, Arkansas, which had an occupancy rate of 100% at the time of the acquisition. The terms of the Agreement to purchase AMAST include the fulfillment of the lease obligations of the current tenants, as well as the assumption of the debt that is collateralized by the building and associated property. The consolidated financials include the assets and debt of AMAST.

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. 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.

The accompanying interim, unaudited consolidated financial statements and related financial information should be read in conjunction with the audited financial statements and the related notes thereto for the year ended December 31, 2017 included in the Company’s Form 10-K, filed with the SEC on April 10, 2018.

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.

5

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. The Company did not write off any accounts receivable in the three months ended March 31, 2018 or 2017.

Property and Equipment

Property and Equipment, net is carried at the cost of purchase, acquisition or construction, and is depreciated over the estimated useful lives of the assets. Assets acquired in a business combination are stated at estimated fair value. Costs associated with repair and maintenance are expensed as they are incurred. Costs associated with improvements which extend the life, increase the capacity or improve the efficiency of our property and equipment are capitalized and depreciated over the remaining life of the related asset. Depreciation and amortization are provided using the straight-line methods over the useful lives of the assets as follows:

	Useful Life
Buildings	30 Years
Office Furniture & Equipment	5 Years

Impairment of Long-Lived Assets

The Company records an impairment of long-lived assets used in operations, other than goodwill, 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.

6

Revenue Recognition

Effective on January 1, 2018, the Company adopted Accounting Standards Update (“ASU”) No. 2014-09, Revenue from Contracts with Customers (Topic 606). ASU No. 2014-09 outlines a single, comprehensive revenue recognition model for revenue derived from contracts with customers and it supersedes the prior revenue recognition guidance, including prior guidance that is industry-specific. Under ASU No. 2014-09, an entity recognizes revenue for the transfer of promised goods or services to customers in an amount that reflects the consideration for which the entity expects to be entitled in exchange for those goods or services. The Company adopted ASU No. 2014-09 using the modified retrospective method, which applies to only the most current period presented in the financial statements. There were no significant changes to the Company's existing revenue recognition policies as a result of adopting ASU 2014-09.

GEX enters into contracts with its clients for professional services, staffing and/or PEO services. GEX's contract stipulates the rate and price charged to each client. GEX's contracts for these services are generally cancellable at any time by either party with 30-days’ written notice. GEX fulfills its performance obligations each month, and the contracts generally have a term of one year with an automatic renewal after 12 months. The duration between invoicing and when GEX completes its contractual, performance obligations are satisfied is not significant. For the Company's PEO services, payment is generally due on the date the invoice is sent to the client. For staffing and professional services payment is generally due 30 days after the invoice is sent to the client. GEX does not have significant financing components or significant payment terms.

GEX's revenue is generally recognized ratably, month-to-month as co-employees or staffed employees perform their service at the client's worksite. Generally, GEX's PEO clients are invoiced concurrently with each payroll of its co-employees, and clients that utilize GEX's staffing and back office services are billed concurrently with each payroll or on a monthly basis.

PEO Services

Professional Employment Organization (“PEO”) service revenues represent the fees charged to clients for administering payroll and payroll tax transactions for our clients’ Co-Employed Employees (“CEEs”), access to our HR and benefits administration services, consulting related to employment and benefit law compliance and general employment consulting related fees. PEO service revenues are recognized in the period the PEO services are performed as stipulated in the Client Service Agreement (“CSA”), where these fees are fixed or determinable, when the PEO client is invoiced and collectability is reasonably assured.

GEX is not considered the primary obligor with respect to CEE’s payroll and payroll tax payments and therefore, these payments are not reflected as either revenue or expense in our statements of operations.

PEO-related revenues also include revenues generated from insurance administration for our PEO clients. These insurance-related revenues include insurance-related billings, as well as administrative fees that GEX collects from PEO clients and withholds from CEEs for health benefit insurance plans provided by third-party insurance carriers. Insurance-related revenues are recognized over the period the insurance coverage is provided and where collectability is reasonably assured.

Staffing Services and Professional Services

Staffing services revenue is derived from supplying temporary staff to clients. Temporary staff generally consists of temporary workers working under a contract for a fixed period of time, or on a specific client project. The temporary staff includes both GEX employees and third-parties contracted by GEX.

Temporary staff are provided to clients through a Staffing Service Agreement (‘SSA’) involving a specified service that the temporary staff will provide to the client. When GEX is the principal or primary obligor for the temporary staff, GEX records the gross amount of the revenue and expense from the SSA.

7

GEX is generally the primary obligor when GEX is responsible for the fulfillment of services under the SSA, even if the temporary staff are not employees of GEX. This typically occurs when GEX contracts third-parties to fulfill all or part of the SSA with the client, but GEX remains the holder of the credit risk associated with the SSA, and GEX has total discretion in establishing the pricing under the SSA.

All other Professional Services revenues are recognized in the period the services are performed as stipulated in the client’s Outsourcing Agreement, when the client is invoiced, and collectability is reasonably assured. Revenue recognition for arrangements with multiple deliverables constituting a single unit of accounting is recognized generally over the greater of the term of the arrangement or the expected period of performance.

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. The Company has no potentially dilutive common shares.

Earnings per share information has been retroactively adjusted to reflect the stock split that occurred in November 2017, and the incremental value of the newly issued shares were recorded with the offset to additional paid-in capital.

NOTE 2. OTHER CURRENT ASSETS

At March 31, 2018 and December 31, 2017 Other Current Assets were as follows:

	Mar 31, 2018		Dec 31, 2017
Other Current Assets:
Prepaids	$	57,997	$	116,623
Other Current Assets		7,288		2,709
Acquired Customer Contracts		—		37,500
Accumulated Amortization		—		(68,083	)
Total Other Current Assets	$	65,285	$	88,749

8

In 2017, the Company purchased customer contracts on March 31, 2017 and in April started amortizing those contracts along with other contracts entered into in the 2nd quarter of 2017. There was no amortization expense recorded in the quarter ended March 31, 2017. The Company fully amortized the contracts at December 31, 2017 so recorded no amortization in the three months ended March 31, 2018.

NOTE 3. EARNINGS PER SHARE 

Earnings per share are calculated in accordance with ASC 260 “Earnings per Share.”  The weighted average number of common shares outstanding during each period is used to compute basic earnings (loss) per share.  Diluted earnings per share are computed using the weighted average number of shares and potentially dilutive common shares outstanding. Potentially dilutive common shares are additional common shares assumed to be exercised. As of March 31, 2018 and March 31, 2017, the Company had no potentially dilutive shares.

NOTE 4. STOCKHOLDERS’ EQUITY 

General

The Company is authorized to issue 200,000,000 common shares at a par value of $0.001 per share. These shares have full voting rights.  At March 31, 2018 and December 31, 2017 there were 11,797,231 and 11,797,231 common shares outstanding, respectively.

The Company is authorized to issue 20,000,000 preferred shares at a par value of $0.001 per share. These shares have full voting rights.  At March 31, 2018 and December 31, 2017 there were no preferred shares outstanding. The preferred stock ranks senior to the common stock of the Company in each case with respect to dividend distributions and distributions of assets upon the liquidation, dissolution or winding up of the Company whether voluntary or involuntary.

NOTE 5. NOTES PAYABLE

At March 31, 2018 and December 31, 2017 Notes Payable were as follows:

	Mar 31, 2018			Dec 31, 2017
Note Payable:
Note Payable – Real Estate Lien Note, 4.5% interest rate, $9,540.13 monthly principal and interest payments, balloon
payment due March 22, 2022	$	1,296,995		$	1,310,920
Note Payable:
Note payable– Forty weekly payments of $26,654		1,012,741			—
Less Discount on Note Payable		(267,901)			—
Note Payable:
Note Payable- Related Party, 6% interest rate, $500,000
Line of Credit, due March 31, 2019		352,100			352,100
Total Notes Payable	$	2,393,935		$	1,663,020
Less: Current Portion		(802,129	)		(56,649	)
Long-Term Notes Payable	$	1,591,806		$	1,606,371

On March 6, 2018, the Company entered into an Agreement to sell $1,066,050 of the Company's future receipts for $772,500 to provide liquidity for the Company's expansion opportunities. This agreement is personally guaranteed by Carl Dorvil, the Company's Chief Executive Officer and Chairman. The Company also incurred $23,175 in origination fees related to this transaction. The discount on this note that was amortized to interest expense was $25,649 for the quarter ended March 31, 2018. The full amount of the note is due within twelve months.

The Real Estate Lien Note had a balance of $1,296,995. The following is a schedule of the minimum principal payments required under the loan as of March 31, 2018:

Year Ended		Amount
Remainder of 2018	$	42,724
2019		59,252
2020		61,973
2021		64,821
2022		67,798
2023 and beyond		1,000,427
Total	$	1,296,995

9

NOTE 6. ACCOUNTS RECEIVABLE AND CONCENTRATION OF CREDIT RISK

As of March 31, 2018 and December 31, 2017 one customer made up 21% and three customers made up 86% of the Company’s outstanding accounts receivable balance, respectively of which 11% and 25% were related party receivables as of March 31, 2018 and December 31, 2017, respectively.

For the three months ended March 31, 2018 and March 31, 2017 two customers accounted for 73% and three customers accounted for 92% of the Company’s net revenue, respectively of which 0% and 12% were related party revenues for the three months ended March 31, 2018 and 2017, respectively.

NOTE 7. PROPERTY AND EQUIPMENT

The Company had the following property and equipment as of March 31, 2018 and December 31, 2017:

	March 31, 2018			Dec 31, 2017
Land	$	333,778		$	333,778
Buildings		2,125,642			2,125,642
Office Equipment		5,844			5,844
Total Fixed Assets		2,465,264			2,465,264
Accumulated Depreciation		(19,042	)		(1,887	)
Property and Equipment, net	$	2,446,222		$	2,463,377

Depreciation expense for the three months ended March 31, 2018 and 2017 was $17,155 and $144, respectively.

NOTE 8. RELATED PARTY TRANSACTIONS

Policy on Related Party Transactions

The Company has a formal, written policy that includes procedures intended to ensure compliance with the related party provisions in common practice for public companies. For purposes of the policy, a “related party transaction” is a transaction in which the Company participates and in which a related party (including all of GEX’s directors and executive officers) has a direct or indirect material interest. Any transaction exceeding the 1% threshold, and any transaction involving consulting, financial advisory, legal or accounting services that could impair a director’s independence, must be approved by the Board of Directors. Any related party transaction in which an executive officer or a Director has a personal interest, must be approved by the Board of Directors, following appropriate disclosure of all material aspects of the transaction.

Related Party Transactions

Debt Agreements

On March 1, 2015 the Company entered into a Line of Credit Agreement with P413. P413 agreed to loan the Company up to $500,000 at a rate of 6%. GEX’s CEO, Carl Dorvil, is a majority member interest owner in P413. This line of credit has a balance of $352,100 and $352,100 at March 31, 2018 and December 31, 2017, respectively. On May 2, 2018, this line of credit was extended to April 1, 2020.

Professional Service Agreements

On March 1, 2015 the Company entered into an Outsourcing Agreement with P413 Management, LLC (“P413”) to provide back office services to P413. GEX’s CEO, Carl Dorvil, is a majority member interest owner in P413. The Company reported no revenues under this Agreement for the three months ended March 31, 2018 and 2017, respectively.

10

On September 1, 2015 the Company entered into an Outsourcing Agreement with Vicar Capital Advisors, LLC (“Vicar”) to provide back office services to Vicar. GEX’s CEO, Carl Dorvil, is a majority member interest owner in Vicar. The Company reported no revenues under this Agreement ,and $16,000 for the three months ended March 31, 2018 and 2017, respectively.

Revenues

For the three months ended March 31, 2018 and 2017 the Company had no revenues from related parties, and $16,000, respectively.

NOTE 9. COMMITMENTS AND CONTINGENCIES

The following are the minimum obligations under the lease related to the Company’s Corporate office as of March 31, 2018:

Year ended		Amount
Remainder of 2018	$	48,180
2019		60,225
Total	$	108,405

The Company owns a multi-use office building in Lowell, Arkansas which is leased to various tenants. The minimum rental income to be collected as of March 31, 2018 is as follows:

Year Ended		Amount
	Remainder of 2018	$	109,680
	2019		128,157
	2020		37,616
	Total	$	275,453

The Company recognized rental income of $37,910 and no rental income for the three months ended March 31, 2018 and 2017, respectively.

NOTE 10. SUBSEQUENT EVENTS

In April 2018, the Company entered into three discounted Notes Payable agreements to sell its future accounts receivable and revenues to provide liquidity for the Company's expansion opportunities. On April 18, the Company entered into an Agreement to sell $490,000 of the Company's future accounts receivable for $350,000. On April 25, 2018, the Company entered into an Agreement to sell $299,800 of the Company's future accounts receivable for $200,000. On April 25, 2018, the Company entered into an Agreement to sell $374,750 of the Company's future accounts receivable for $250,000. These Agreements are personally guaranteed by Carl Dorvil, the Company's Chief Executive Officer and Chairman and by Chelsea Christopherson, the Company's President and Chief Operating Officer.

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 discount to the then current market value of the Company’s stock commencing six months after issuance at the sole discretion of the holders of the Notes. In April and May 2018, the Company borrowed $200,000 under the Notes, and received $177,500 after giving effect to discounts of 10% and 12.5% for each note.

On May 2, 2018, the Company purchased a 25% interest in Payroll Express, LLC, a California limited liability company for $500,000 in cash. Additionally, the Company has the right, but not the obligation,to purchase an additional 25% interest under similar terms.

11

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 Form 10-K for the year ended December 31, 2017.

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 Professional Employer Organization (PEO), Staffing and Professional Services Company that provides services and general business consulting to companies for a variety of their “back office” 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: IT support, accounting and bookkeeping, human resources and business consultation and optimization.

Results of Operations

The three months ended March 31, 2018 compared to the three months ended March 31, 2017

Revenue

Our revenue for the three months ended March 31, 2018 was $3,578,575 compared to $170,640 for the three months ended March 31, 2017 due primarily to an increase in customer contracts relating to its PEO and staffing services. On January 1, 2018, we adopted ASU No. 2014-09, Revenue from Contracts with Customers (Topic 606) using the modified retrospective method, which applies to only the most current period presented in the financial statements. There were no significant changes to the Company's existing revenue recognition policies as a result of adopting ASU 2014-09. Furthermore, we do not anticipate significant changes will result in our business relating to the adoption of ASU 2014-09.

Cost of Revenues

Cost of revenue increased to $3,817,972 for the three months ended March 31, 2018 from $298,650 for the three months ended March 31, 2017. This was primarily due to two reasons. Firstly, an increase in contracted staff due to an increase in customer contracts for staffing services, and secondly, the Company continues to build up its personnel dedicated to servicing the Company’s PEO and staffing clients.

12

Operating Expense

Total operating expenses for the three months ended March 31, 2018 were $309,432 compared to the operating cost for the three months ended March 31, 2017 of $182,259. This increase is primarily due to the additional, corporate personnel hired to facilitate the general growth of the Company.

Other Income (Expense)

Other income (expense) for the three months ended March 31, 2018 consisted of interest expense of $45,554, rental income of $37,910 and other income of $654, compared to other expense for the three months ended March 31, 2017 of $5,373 consisting totally of interest expense. Rental income increased due to the acquisition of the building in Lowell, Arkansas.

Liquidity and Capital Resources

The Company has sufficient liquidity to operate at current levels for the next twelve months.

Cash increased by $61,741 to $471,837 as of March 31, 2018 as compared to $410,096 at December 31, 2017. The increase was due to $772,500 in proceeds received from a discounted Note Payable in the form of the sale of future receipts, which was partially offset by the use of cash in operating activities. A summary of our cash flows for the three months ended March 31, was as follows:

	2018			2017
Net cash used in operating activities	$	(669,174	)	$	(247,499	)
Net cash used in investing activities		—			(37,500	)
Net cash provided by financing activities		730,915			282,088
Net increase in cash and cash equivalents	$	61,741		$	(2,911	)

Net cash used in operating activities was $669,174 for the three months ended March 31, 2018 as compared to $247,499 cash used in operating activities for the three months ended March 31, 2017. The increase in cash used in operating activities was in part due to higher net losses in 2018 as the Company invested in corporate office personnel and the related benefits to support growth. Additionally, working capital requirements increased primarily as a result of the growth of the Company’s business.

Net cash provided by financing activities of $730,915 for the three months ended March 31, 2018 came from the net proceeds from a discounted note payable agreement for the purchase and sale of the Company’s future receipts, which was partially offset by payments on other debt. Net cash provided by financing activities of $282,088 for the three months ended March 31, 2017 came from the sale of common stock related to a public offering pursuant to an effective registration statement.

Subsequent to March 31, 2018, the Company received $909,000 in net proceeds from financing arrangements including discounted notes payable from the sales of future revenues and accounts receivable, and the issuance of convertible notes payable. These short-term financing arrangements were made in order to support the future growth plans of the Company, and to provide liquidity for operating activities. Management expects to refinance any of the remaining balances not paid in full by maturity.

Item 6. Exhibits

A list of exhibits filed with this report is listed in the Index following the signature page, and they are incorporated into this Item 6 by reference.

Exhibit Number
31.1	Certification of Chief Executive Officer, pursuant to Rule 13a-14(a) of the Exchange Act, as enacted by Section 302 of the Sarbanes-Oxley Act of 2002.
31.2	Certification of Chief Financial Officer, pursuant to Rule 13a-14(a) of the Exchange Act, as enacted by Section 302 of the Sarbanes-Oxley Act of 2002.
32.1	Certification of Chief Executive Officer, pursuant to 18 United States Code Section 1350, as enacted by Section 906 of the Sarbanes-Oxley Act of 2002.
32.2	Certification of Chief Financial Officer, pursuant to 18 United States Code Section 1350, as enacted by Section 906 of the Sarbanes-Oxley Act of 2002.
101	XBRL

13

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. 

By: /s/ Carl Dorvil

Carl Dorvil, Chief Executive Officer

Date:  May 15, 2018

By: /s/ Dario Saintus

Dario Saintus, Interim Chief Financial Officer

Date:  May 15,2018

14

EX-31.1

Exhibit 31.1

CERTIFICATION

I, Carl Dorvil, certify that:

1. I have reviewed this quarterly report on Form 10-Q 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. The registrant’s other certifying officer(s) and I are 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 our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us 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 our 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 our 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 (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the 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: May 15, 2018
	/s/ Carl Dorvil
	Carl Dorvil
	Chief Executive Officer

EX-31.2

Exhibit 31.2

CERTIFICATION

I, Dario Saintus, certify that:

1. I have reviewed this quarterly report on Form 10-Q 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. The registrant’s other certifying officer(s) and I are 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 our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us 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 our 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 our 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 (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the 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: May 15, 2018
	/s/ Dario Saintus
	Dario Saintus
	Interim Chief Financial Officer

EX-32.1

Exhibit 32.1

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 of GEX Management, Inc. (the “Company”) on Form 10-Q for the period ending March 31, 2018, (the “Report”), as filed with the Securities and Exchange Commission on the date hereof, I, Carl Dorvil, Chairman of the Board and Chief Executive Officer of the Company, certify, pursuant to 18 U.S.C. §1350, as adopted pursuant to §906 of the Sarbanes-Oxley Act of 2002, to the best of my knowledge, that:

1. The Report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended; and

2. The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

/s/ Carl Dorvil

Carl Dorvil

Chief Executive Officer

May 15, 2018

EX-32.2

Exhibit 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 of GEX Management, Inc. (the “Company”) on Form 10-Q for the period ending March 31, 2018, (the “Report”), as filed with the Securities and Exchange Commission on the date hereof, I, Clayton Carter, Chief Financial Officer of the Company, certify, pursuant to 18 U.S.C. §1350, as adopted pursuant to §906 of the Sarbanes-Oxley Act of 2002, to the best of my knowledge, that:

1. The Report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended; and

2. The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

/s/ Dario Saintus

Dario Saintus

Interim Chief Financial Officer

May 15, 2018

XML

Document and Entity Information - shares	3 Months Ended
	Mar. 31, 2018	May 14, 2018
Document and Entity Information
Entity Registrant Name	GEX MANAGEMENT, INC.
Document Type	10-Q
Document Period End Date	Mar. 31, 2018
Amendment Flag	false
Entity Central Index Key	0001681556
Current Fiscal Year End Date	--12-31
Entity Common Stock, Shares Outstanding		11,797,231
Entity Filer Category	Smaller Reporting Company
Entity Current Reporting Status	Yes
Entity Voluntary Filers	No
Entity Well-known Seasoned Issuer	No
Document Fiscal Year Focus	2018
Document Fiscal Period Focus	Q1

XML

Balance Sheets - USD ($)	Mar. 31, 2018	Dec. 31, 2017
Current Assets:
Cash and Cash Equivalents	$ 471,837	$ 410,096
Accounts Receivable	257,079	91,532
Accounts Receivable – Related Party	30,771	30,771
Other Current Assets	65,285	88,749
Total Current Assets	824,972	621,148
Property, Plant and Equipment (Net)	2,446,222	2,463,377
Other Assets	4,471	4,471
TOTAL ASSETS	3,275,665	3,088,996
Current Liabilities:
Accounts Payable	15,455	48,280
Accrued Expenses	59,704	20,514
Accrued Interest Payable	12,642	7,433
Notes Payable Current Portion	802,129	56,649
Total Current Liabilities	889,930	132,876
Non-Current Liabilities
Notes Payable	1,239,706	1,254,271
Line of Credit – Related Party	352,100	352,100
Total Long Term Liabilities	1,591,806	1,606,371
TOTAL LIABILITIES	2,481,736	1,739,247
SHAREHOLDERS’ EQUITY
Preferred Stock, $0.001 par value, 20,000,000 shares authorized, 0 shares issued and outstanding	0	0
Common Stock, $0.001 par value, 200,000,000 shares authorized, 11,797,231 and 11,797,231 shares issued and outstanding as March 31, 2018 and December 31, 2017, respectively	11,797	11,797
Additional Paid-in-Capital	2,651,178	2,651,178
Accumulated Deficit	(1,869,046)	(1,313,226)
TOTAL SHAREHOLDERS’ EQUITY	793,929	1,349,749
TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY	$ 3,275,665	$ 3,088,996

XML

Balance Sheets (Parenthetical) - $ / shares	Mar. 31, 2018	Dec. 31, 2017
Statement of Financial Position [Abstract]
Preferred stock shares par value	$ 0.001	$ 0.001
Preferred stock shares authorized	20,000,000	20,000,000
Preferred stock shares issued	0	0
Preferred stock shares outstanding	0	0
Common stock shares par value	$ .001	$ 0.001
Common stock shares authorized	200,000,000	200,000,000
Common stock shares issued	11,797,231	11,797,231
Common stock shares outstanding	11,797,231	11,797,231

XML

Statements of Operations - USD ($)		3 Months Ended
		Mar. 31, 2018	Mar. 31, 2017
Income Statement [Abstract]
Revenues		$ 3,578,575	$ 150,640
Revenues – Related Party		0	20,000
Total Revenues	[1]	3,578,575	170,640
Cost of Revenues		3,817,972	298,650
Gross Profit (Loss)		(239,397)	(128,010)
Operating Expenses
Depreciation and Amortization		19,654	144
Selling and Advertising		19,194	10,327
General and administrative expenses		270,585	171,788
Total Operating Expenses		309,433	182,259
Total Operating Income (Loss)		(548,830)	(310,269)
Other Income (Expense)
Other Income		654	0
Rental Income		37,910	0
Interest (Expense)		(45,554)	(5,373)
Total Other Income (Expense)		(6,990)	(5,373)
Net income (loss) before income taxes		(555,820)	(315,642)
Provision for income taxes		0	0
NET INCOME (LOSS)		$ (555,820)	$ (315,642)
BASIC and DILUTED
Weighted Average Shares Outstanding		11,797,231	11,066,132
Earnings (Loss) per Share		$ (0.05)	$ (0.03)

[1] Gross billings of $3,988,002 and $0 less payroll and payroll tax cost related to PEO clients of $1,098,898 and $0 for the three months ended 2018 and 2017, respectively.

XML

Consolidated Statements of Cash Flow - USD ($)	3 Months Ended
	Mar. 31, 2018	Mar. 31, 2017
Cash Flows (used by) Operating Activities:
Net Loss	$ (555,820)	$ (315,642)
Adjustments to reconcile net loss to net cash (used in) operating activities:
Depreciation and Amortization	17,155	144
Shares Issued for Services	0	50,000
Changes in assets and liabilities:
Accounts receivable	(165,547)	47,203
Accounts receivable – Related Party	0	321
Other current assets	23,464	959
Accounts Payable	(32,824)	6,077
Accrued expenses	39,189	(19,434)
Accounts payable – Related Party	0	(22,500)
Accrued interest payable	5,209	5,373
Net cash (used in) operating activities	(669,174)	(247,499)
Cash Flows from (used in) Investing Activities:
Purchase of customer contracts	0	(37,500)
Net cash (used in) investing activities	0	(37,500)
Cash Flows from (used in) Financing Activities:
Proceeds from sale of common stock	0	282,088
Proceeds from notes payable	772,500	0
Payments on notes payable	(41,585)	0
Net cash provided by financing activities	730,915	282,088
NET INCREASE (DECREASE) IN CASH	61,741	(2,911)
CASH AT BEGINNING OF PERIOD	410,096	307,395
CASH AT END OF PERIOD	471,837	304,484
SUPPLEMENTAL DISCLOSURES:
Income taxes paid	0	0
Interest paid	$ 40,345	$ 5,373

XML

1. DESCRIPTION OF BUSINESS AND SIGNIFICANT ACCOUNTING POLICIES

3 Months Ended

Mar. 31, 2018

Description Of Business And Significant Accounting Policies

DESCRIPTION OF BUSINESS AND SIGNIFICANT ACCOUNTING POLICIES

Organization and Description of Business

GEX Management, Inc. (“GEX”, the “Company”, “we”, “our”, “us”) is a professional services company that was originally formed in 2004 as Group Excellence Management, LLC d/b/a MyEasyHQ. The Company converted from a limited liability company to a C corporation in March of 2016, and changed its name to GEX Management, Inc. in April of 2016.

On January 25, 2017, GEX obtained its license to operate as a Professional Employer Organization (“PEO”), and we began offering PEO services in April 2017. The Company formed GEX Staffing, LLC (“GEX Staffing”) in March 2017. The initial funding and first transactions occurred in GEX Staffing in September 2017. The consolidated financials include the accounts of GEX Staffing, LLC. Staffing and PEO services make up a majority of our revenue.

On December 29, 2017 GEX purchased 100% of the membership interest in AMAST Consulting, LLC (“AMAST”), which owned a multi-use office building in Lowell, Arkansas, which had an occupancy rate of 100% at the time of the acquisition. The terms of the Agreement to purchase AMAST include the fulfillment of the lease obligations of the current tenants, as well as the assumption of the debt that is collateralized by the building and associated property. The consolidated financials include the assets and debt of AMAST.

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. 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.

The accompanying interim, unaudited consolidated financial statements and related financial information should be read in conjunction with the audited financial statements and the related notes thereto for the year ended December 31, 2017 included in the Company’s Form 10-K, filed with the SEC on April 10, 2018.

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. The Company did not write off any accounts receivable in the three months ended March 31, 2018 or 2017.

Property and Equipment

Property and Equipment, net is carried at the cost of purchase, acquisition or construction, and is depreciated over the estimated useful lives of the assets. Assets acquired in a business combination are stated at estimated fair value. Costs associated with repair and maintenance are expensed as they are incurred. Costs associated with improvements which extend the life, increase the capacity or improve the efficiency of our property and equipment are capitalized and depreciated over the remaining life of the related asset. Depreciation and amortization are provided using the straight-line methods over the useful lives of the assets as follows:

	Useful Life
Buildings	30 Years
Office Furniture & Equipment	5 Years

Impairment of Long-Lived Assets

The Company records an impairment of long-lived assets used in operations, other than goodwill, 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

Effective on January 1, 2018, the Company adopted Accounting Standards Update (“ASU”) No. 2014-09, Revenue from Contracts with Customers (Topic 606). ASU No. 2014-09 outlines a single, comprehensive revenue recognition model for revenue derived from contracts with customers and it supersedes the prior revenue recognition guidance, including prior guidance that is industry-specific. Under ASU No. 2014-09, an entity recognizes revenue for the transfer of promised goods or services to customers in an amount that reflects the consideration for which the entity expects to be entitled in exchange for those goods or services. The Company adopted ASU No. 2014-09 using the modified retrospective method, which applies to only the most current period presented in the financial statements. There were no significant changes to the Company's existing revenue recognition policies as a result of adopting ASU 2014-09.

GEX enters into contracts with its clients for professional services, staffing and/or PEO services. GEX's contract stipulates the rate and price charged to each client. GEX's contracts for these services are generally cancellable at any time by either party with 30-days’ written notice. GEX fulfills its performance obligations each month, and the contracts generally have a term of one year with an automatic renewal after 12 months. The duration between invoicing and when GEX completes its contractual, performance obligations are satisfied is not significant. For the Company's PEO services, payment is generally due on the date the invoice is sent to the client. For staffing and professional services payment is generally due 30 days after the invoice is sent to the client. GEX does not have significant financing components or significant payment terms.

GEX's revenue is generally recognized ratably, month-to-month as co-employees or staffed employees perform their service at the client's worksite. Generally, GEX's PEO clients are invoiced concurrently with each payroll of its co-employees, and clients that utilize GEX's staffing and back office services are billed concurrently with each payroll or on a monthly basis.

PEO Services

Professional Employment Organization (“PEO”) service revenues represent the fees charged to clients for administering payroll and payroll tax transactions for our clients’ Co-Employed Employees (“CEEs”), access to our HR and benefits administration services, consulting related to employment and benefit law compliance and general employment consulting related fees. PEO service revenues are recognized in the period the PEO services are performed as stipulated in the Client Service Agreement (“CSA”), where these fees are fixed or determinable, when the PEO client is invoiced and collectability is reasonably assured.

GEX is not considered the primary obligor with respect to CEE’s payroll and payroll tax payments and therefore, these payments are not reflected as either revenue or expense in our statements of operations.

PEO-related revenues also include revenues generated from insurance administration for our PEO clients. These insurance-related revenues include insurance-related billings, as well as administrative fees that GEX collects from PEO clients and withholds from CEEs for health benefit insurance plans provided by third-party insurance carriers. Insurance-related revenues are recognized over the period the insurance coverage is provided and where collectability is reasonably assured.

Staffing Services and Professional Services

Staffing services revenue is derived from supplying temporary staff to clients. Temporary staff generally consists of temporary workers working under a contract for a fixed period of time, or on a specific client project. The temporary staff includes both GEX employees and third-parties contracted by GEX.

Temporary staff are provided to clients through a Staffing Service Agreement (‘SSA’) involving a specified service that the temporary staff will provide to the client. When GEX is the principal or primary obligor for the temporary staff, GEX records the gross amount of the revenue and expense from the SSA.

GEX is generally the primary obligor when GEX is responsible for the fulfillment of services under the SSA, even if the temporary staff are not employees of GEX. This typically occurs when GEX contracts third-parties to fulfill all or part of the SSA with the client, but GEX remains the holder of the credit risk associated with the SSA, and GEX has total discretion in establishing the pricing under the SSA.

All other Professional Services revenues are recognized in the period the services are performed as stipulated in the client’s Outsourcing Agreement, when the client is invoiced, and collectability is reasonably assured. Revenue recognition for arrangements with multiple deliverables constituting a single unit of accounting is recognized generally over the greater of the term of the arrangement or the expected period of performance.

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. The Company has no potentially dilutive common shares.

Earnings per share information has been retroactively adjusted to reflect the stock split that occurred in November 2017, and the incremental value of the newly issued shares were recorded with the offset to additional paid-in capital.

XML

2. OTHER CURRENT ASSETS

3 Months Ended

Mar. 31, 2018

Other Assets [Abstract]

OTHER CURRENT ASSETS

At March 31, 2018 and December 31, 2017 Other Current Assets were as follows:

	Mar 31, 2018		Dec 31, 2017
Other Current Assets:
Prepaids	$	57,997	$	116,623
Other Current Assets		7,288		2,709
Acquired Customer Contracts		—		37,500
Accumulated Amortization		—		(68,083	)
Total Other Current Assets	$	65,285	$	88,749

In 2017, the Company purchased customer contracts on March 31, 2017 and in April started amortizing those contracts along with other contracts entered into in the 2nd quarter of 2017. There was no amortization expense recorded in the quarter ended March 31, 2017. The Company fully amortized the contracts at December 31, 2017 so recorded no amortization in the three months ended March 31, 2018.

XML

3. EARNINGS PER SHARE

3 Months Ended

Mar. 31, 2018

Earnings Per Share [Abstract]

EARNINGS PER SHARE

Earnings per share are calculated in accordance with ASC 260 “Earnings per Share.”  The weighted average number of common shares outstanding during each period is used to compute basic earnings (loss) per share.  Diluted earnings per share are computed using the weighted average number of shares and potentially dilutive common shares outstanding. Potentially dilutive common shares are additional common shares assumed to be exercised. As of March 31, 2018 and March 31, 2017, the Company had no potentially dilutive shares.

XML

4. STOCKHOLDERS’ EQUITY

3 Months Ended

Mar. 31, 2018

SHAREHOLDERS’ EQUITY

STOCKHOLDERS’ EQUITY

General

The Company is authorized to issue 200,000,000 common shares at a par value of $0.001 per share. These shares have full voting rights.  At March 31, 2018 and December 31, 2017 there were 11,797,231 and 11,797,231 common shares outstanding, respectively.

The Company is authorized to issue 20,000,000 preferred shares at a par value of $0.001 per share. These shares have full voting rights.  At March 31, 2018 and December 31, 2017 there were no preferred shares outstanding. The preferred stock ranks senior to the common stock of the Company in each case with respect to dividend distributions and distributions of assets upon the liquidation, dissolution or winding up of the Company whether voluntary or involuntary.

XML

5. NOTES PAYABLE

3 Months Ended

Mar. 31, 2018

Notes Payable [Abstract]

NOTES PAYABLE

At March 31, 2018 and December 31, 2017 Notes Payable were as follows:

	Mar 31, 2018			Dec 31, 2017
Note Payable:
Note Payable – Real Estate Lien Note, 4.5% interest rate, $9,540.13 monthly principal and interest payments, balloon
payment due March 22, 2022	$	1,296,995		$	1,310,920
Note Payable:
Note payable– Forty weekly payments of $26,654		1,012,741			—
Less Discount on Note Payable		(267,901)			—
Note Payable:
Note Payable- Related Party, 6% interest rate, $500,000
Line of Credit, due March 31, 2019		352,100			352,100
Total Notes Payable	$	2,393,935		$	1,663,020
Less: Current Portion		(802,129	)		(56,649	)
Long-Term Notes Payable	$	1,591,806		$	1,606,371

On March 6, 2018, the Company entered into an Agreement to sell $1,066,050 of the Company's future receipts for $772,500 to provide liquidity for the Company's expansion opportunities. This agreement is personally guaranteed by Carl Dorvil, the Company's Chief Executive Officer and Chairman. The Company also incurred $23,175 in origination fees related to this transaction. The discount on this note that was amortized to interest expense was $25,649 for the quarter ended March 31, 2018. The full amount of the note is due within twelve months.

The Real Estate Lien Note had a balance of $1,296,995. The following is a schedule of the minimum principal payments required under the loan as of March 31, 2018:

Year Ended		Amount
Remainder of 2018	$	42,724
2019		59,252
2020		61,973
2021		64,821
2022		67,798
2023 and beyond		1,000,427
Total	$	1,296,995

XML

6. ACCOUNTS RECEIVABLE AND CONCENTRATION OF CREDIT RISK

3 Months Ended

Mar. 31, 2018

Accounts Receivable And Concentration Of Credit Risk

ACCOUNTS RECEIVABLE AND CONCENTRATION OF CREDIT RISK

As of March 31, 2018 and December 31, 2017 one customer made up 21% and three customers made up 86% of the Company’s outstanding accounts receivable balance, respectively of which 11% and 25% were related party receivables as of March 31, 2018 and December 31, 2017, respectively.

For the three months ended March 31, 2018 and March 31, 2017 two customers accounted for 73% and three customers accounted for 92% of the Company’s net revenue, respectively of which 0% and 12% were related party revenues for the three months ended March 31, 2018 and 2017, respectively.

XML

7. PROPERTY AND EQUIPMENT

3 Months Ended

Mar. 31, 2018

Property And Equipment

PROPERTY AND EQUIPMENT

The Company had the following property and equipment as of March 31, 2018 and December 31, 2017:

	March 31, 2018			Dec 31, 2017
Land	$	333,778		$	333,778
Buildings		2,125,642			2,125,642
Office Equipment		5,844			5,844
Total Fixed Assets		2,465,264			2,465,264
Accumulated Depreciation		(19,042	)		(1,887	)
Property and Equipment, net	$	2,446,222		$	2,463,377

Depreciation expense for the three months ended March 31, 2018 and 2017 was $17,155 and $144, respectively.

XML

8. RELATED PARTY TRANSACTIONS

3 Months Ended

Mar. 31, 2018

Related Party Transactions [Abstract]

RELATED PARTY TRANSACTIONS

Policy on Related Party Transactions

The Company has a formal, written policy that includes procedures intended to ensure compliance with the related party provisions in common practice for public companies. For purposes of the policy, a “related party transaction” is a transaction in which the Company participates and in which a related party (including all of GEX’s directors and executive officers) has a direct or indirect material interest. Any transaction exceeding the 1% threshold, and any transaction involving consulting, financial advisory, legal or accounting services that could impair a director’s independence, must be approved by the Board of Directors. Any related party transaction in which an executive officer or a Director has a personal interest, must be approved by the Board of Directors, following appropriate disclosure of all material aspects of the transaction.

Related Party Transactions

Debt Agreements

On March 1, 2015 the Company entered into a Line of Credit Agreement with P413. P413 agreed to loan the Company up to $500,000 at a rate of 6%. GEX’s CEO, Carl Dorvil, is a majority member interest owner in P413. This line of credit has a balance of $352,100 and $352,100 at March 31, 2018 and December 31, 2017, respectively. On May 2, 2018, this line of credit was extended to April 1, 2020.

Professional Service Agreements

On March 1, 2015 the Company entered into an Outsourcing Agreement with P413 Management, LLC (“P413”) to provide back office services to P413. GEX’s CEO, Carl Dorvil, is a majority member interest owner in P413. The Company reported no revenues under this Agreement for the three months ended March 31, 2018 and 2017, respectively.

On September 1, 2015 the Company entered into an Outsourcing Agreement with Vicar Capital Advisors, LLC (“Vicar”) to provide back office services to Vicar. GEX’s CEO, Carl Dorvil, is a majority member interest owner in Vicar. The Company reported no revenues under this Agreement ,and $16,000 for the three months ended March 31, 2018 and 2017, respectively.

Revenues

For the three months ended March 31, 2018 and 2017 the Company had no revenues from related parties, and $16,000, respectively.

XML

9. COMMITMENTS AND CONTINGENCIES

3 Months Ended

Mar. 31, 2018

Commitments And Contingencies

COMMITMENTS AND CONTINGENCIES

The following are the minimum obligations under the lease related to the Company’s Corporate office as of March 31, 2018:

Year ended		Amount
Remainder of 2018	$	48,180
2019		60,225
Total	$	108,405

The Company owns a multi-use office building in Lowell, Arkansas which is leased to various tenants. The minimum rental income to be collected as of March 31, 2018 is as follows:

Year Ended		Amount
	Remainder of 2018	$	109,680
	2019		128,157
	2020		37,616
	Total	$	275,453

The Company recognized rental income of $37,910 and no rental income for the three months ended March 31, 2018 and 2017, respectively.

XML

10. SUBSEQUENT EVENTS

3 Months Ended

Mar. 31, 2018

Subsequent Events [Abstract]

SUBSEQUENT EVENTS

In April 2018, the Company entered into three discounted Notes Payable agreements to sell its future accounts receivable and revenues to provide liquidity for the Company's expansion opportunities. On April 18, the Company entered into an Agreement to sell $490,000 of the Company's future accounts receivable for $350,000. On April 25, 2018, the Company entered into an Agreement to sell $299,800 of the Company's future accounts receivable for $200,000. On April 25, 2018, the Company entered into an Agreement to sell $374,750 of the Company's future accounts receivable for $250,000. These Agreements are personally guaranteed by Carl Dorvil, the Company's Chief Executive Officer and Chairman and by Chelsea Christopherson, the Company's President and Chief Operating Officer.

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 discount to the then current market value of the Company’s stock commencing six months after issuance at the sole discretion of the holders of the Notes. In April and May 2018, the Company borrowed $200,000 under the Notes, and received $177,500 after giving effect to discounts of 10% and 12.5% for each note.

On May 2, 2018, the Company purchased a 25% interest in Payroll Express, LLC, a California limited liability company for $500,000 in cash. Additionally, the Company has the right, but not the obligation, to purchase an additional 25% interest under similar terms.

XML

1. DESCRIPTION OF BUSINESS AND SIGNIFICANT ACCOUNTING POLICIES (Policies)

3 Months Ended

Mar. 31, 2018

Description Of Business And Significant Accounting Policies Policies

Organization and Description of Business

GEX Management, Inc. (“GEX”, the “Company”, “we”, “our”, “us”) is a professional services company that was originally formed in 2004 as Group Excellence Management, LLC d/b/a MyEasyHQ. The Company converted from a limited liability company to a C corporation in March of 2016, and changed its name to GEX Management, Inc. in April of 2016.

On January 25, 2017, GEX obtained its license to operate as a Professional Employer Organization (“PEO”), and we began offering PEO services in April 2017. The Company formed GEX Staffing, LLC (“GEX Staffing”) in March 2017. The initial funding and first transactions occurred in GEX Staffing in September 2017. The consolidated financials include the accounts of GEX Staffing, LLC. Staffing and PEO services make up a majority of our revenue.

On December 29, 2017 GEX purchased 100% of the membership interest in AMAST Consulting, LLC (“AMAST”), which owned a multi-use office building in Lowell, Arkansas, which had an occupancy rate of 100% at the time of the acquisition. The terms of the Agreement to purchase AMAST include the fulfillment of the lease obligations of the current tenants, as well as the assumption of the debt that is collateralized by the building and associated property. The consolidated financials include the assets and debt of AMAST.

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. 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.

The accompanying interim, unaudited consolidated financial statements and related financial information should be read in conjunction with the audited financial statements and the related notes thereto for the year ended December 31, 2017 included in the Company’s Form 10-K, filed with the SEC on April 10, 2018.

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. The Company did not write off any accounts receivable in the three months ended March 31, 2018 or 2017.

Property and Equipment

Property and Equipment, net is carried at the cost of purchase, acquisition or construction, and is depreciated over the estimated useful lives of the assets. Assets acquired in a business combination are stated at estimated fair value. Costs associated with repair and maintenance are expensed as they are incurred. Costs associated with improvements which extend the life, increase the capacity or improve the efficiency of our property and equipment are capitalized and depreciated over the remaining life of the related asset. Depreciation and amortization are provided using the straight-line methods over the useful lives of the assets as follows:

	Useful Life
Buildings	30 Years
Office Furniture & Equipment	5 Years

Impairment of Long-Lived Assets

The Company records an impairment of long-lived assets used in operations, other than goodwill, 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

Effective on January 1, 2018, the Company adopted Accounting Standards Update (“ASU”) No. 2014-09, Revenue from Contracts with Customers (Topic 606). ASU No. 2014-09 outlines a single, comprehensive revenue recognition model for revenue derived from contracts with customers and it supersedes the prior revenue recognition guidance, including prior guidance that is industry-specific. Under ASU No. 2014-09, an entity recognizes revenue for the transfer of promised goods or services to customers in an amount that reflects the consideration for which the entity expects to be entitled in exchange for those goods or services. The Company adopted ASU No. 2014-09 using the modified retrospective method, which applies to only the most current period presented in the financial statements. There were no significant changes to the Company's existing revenue recognition policies as a result of adopting ASU 2014-09.

GEX enters into contracts with its clients for professional services, staffing and/or PEO services. GEX's contract stipulates the rate and price charged to each client. GEX's contracts for these services are generally cancellable at any time by either party with 30-days’ written notice. GEX fulfills its performance obligations each month, and the contracts generally have a term of one year with an automatic renewal after 12 months. The duration between invoicing and when GEX completes its contractual, performance obligations are satisfied is not significant. For the Company's PEO services, payment is generally due on the date the invoice is sent to the client. For staffing and professional services payment is generally due 30 days after the invoice is sent to the client. GEX does not have significant financing components or significant payment terms.

GEX's revenue is generally recognized ratably, month-to-month as co-employees or staffed employees perform their service at the client's worksite. Generally, GEX's PEO clients are invoiced concurrently with each payroll of its co-employees, and clients that utilize GEX's staffing and back office services are billed concurrently with each payroll or on a monthly basis.

PEO Services

Professional Employment Organization (“PEO”) service revenues represent the fees charged to clients for administering payroll and payroll tax transactions for our clients’ Co-Employed Employees (“CEEs”), access to our HR and benefits administration services, consulting related to employment and benefit law compliance and general employment consulting related fees. PEO service revenues are recognized in the period the PEO services are performed as stipulated in the Client Service Agreement (“CSA”), where these fees are fixed or determinable, when the PEO client is invoiced and collectability is reasonably assured.

GEX is not considered the primary obligor with respect to CEE’s payroll and payroll tax payments and therefore, these payments are not reflected as either revenue or expense in our statements of operations.

PEO-related revenues also include revenues generated from insurance administration for our PEO clients. These insurance-related revenues include insurance-related billings, as well as administrative fees that GEX collects from PEO clients and withholds from CEEs for health benefit insurance plans provided by third-party insurance carriers. Insurance-related revenues are recognized over the period the insurance coverage is provided and where collectability is reasonably assured.

Staffing Services and Professional Services

Staffing services revenue is derived from supplying temporary staff to clients. Temporary staff generally consists of temporary workers working under a contract for a fixed period of time, or on a specific client project. The temporary staff includes both GEX employees and third-parties contracted by GEX.

Temporary staff are provided to clients through a Staffing Service Agreement (‘SSA’) involving a specified service that the temporary staff will provide to the client. When GEX is the principal or primary obligor for the temporary staff, GEX records the gross amount of the revenue and expense from the SSA.

GEX is generally the primary obligor when GEX is responsible for the fulfillment of services under the SSA, even if the temporary staff are not employees of GEX. This typically occurs when GEX contracts third-parties to fulfill all or part of the SSA with the client, but GEX remains the holder of the credit risk associated with the SSA, and GEX has total discretion in establishing the pricing under the SSA.

All other Professional Services revenues are recognized in the period the services are performed as stipulated in the client’s Outsourcing Agreement, when the client is invoiced, and collectability is reasonably assured. Revenue recognition for arrangements with multiple deliverables constituting a single unit of accounting is recognized generally over the greater of the term of the arrangement or the expected period of performance.

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. The Company has no potentially dilutive common shares.

Earnings per share information has been retroactively adjusted to reflect the stock split that occurred in November 2017, and the incremental value of the newly issued shares were recorded with the offset to additional paid-in capital.

XML

1. DESCRIPTION OF BUSINESS AND SIGNIFICANT ACCOUNTING POLICIES (Tables)

3 Months Ended

Mar. 31, 2018

Description Of Business And Significant Accounting Policies Tables

Property and equipment useful life

	Useful Life
Buildings	30 Years
Office Furniture & Equipment	5 Years

XML

2. OTHER CURRENT ASSETS (Tables)

3 Months Ended

Mar. 31, 2018

Other Current Assets Tables

Other Current Assets

	Mar 31, 2018		Dec 31, 2017
Other Current Assets:
Prepaids	$	57,997	$	116,623
Other Current Assets		7,288		2,709
Acquired Customer Contracts		—		37,500
Accumulated Amortization		—		(68,083	)
Total Other Current Assets	$	65,285	$	88,749

XML

5. NOTES PAYABLE (Tables)

3 Months Ended

Mar. 31, 2018

Notes Payable Tables

Notes payable

	Mar 31, 2018			Dec 31, 2017
Note Payable:
Note Payable – Real Estate Lien Note, 4.5% interest rate, $9,540.13 monthly principal and interest payments, balloon
payment due March 22, 2022	$	1,296,995		$	1,310,920
Note Payable:
Note payable– Forty weekly payments of $26,654		1,012,741			—
Less Discount on Note Payable		(267,901)			—
Note Payable:
Note Payable- Related Party, 6% interest rate, $500,000
Line of Credit, due March 31, 2019		352,100			352,100
Total Notes Payable	$	2,393,935		$	1,663,020
Less: Current Portion		(802,129	)		(56,649	)
Long-Term Notes Payable	$	1,591,806		$	1,606,371

Schedule of the minimum principal payments

Year Ended		Amount
Remainder of 2018	$	42,724
2019		59,252
2020		61,973
2021		64,821
2022		67,798
2023 and beyond		1,000,427
Total	$	1,296,995

XML

7. PROPERTY AND EQUIPMENT (Tables)

3 Months Ended

Mar. 31, 2018

Property And Equipment Tables

Property and equipment

	March 31, 2018			Dec 31, 2017
Land	$	333,778		$	333,778
Buildings		2,125,642			2,125,642
Office Equipment		5,844			5,844
Total Fixed Assets		2,465,264			2,465,264
Accumulated Depreciation		(19,042	)		(1,887	)
Property and Equipment, net	$	2,446,222		$	2,463,377

XML

9. COMMITMENTS AND CONTINGENCIES (Tables)

3 Months Ended

Mar. 31, 2018

Commitments And Contingencies Tables

Minimum obligations under the lease

Year ended		Amount
Remainder of 2018	$	48,180
2019		60,225
Total	$	108,405

Minimum rental income to be collected

Year Ended		Amount
	Remainder of 2018	$	109,680
	2019		128,157
	2020		37,616
	Total	$	275,453

XML

1. DESCRIPTION OF BUSINESS AND SIGNIFICANT ACCOUNTING POLICIES (Details Narrative)	3 Months Ended
	Mar. 31, 2018
Buildings
Useful life	30 years
Office Furniture & Equipment
Useful life	5 years

XML

2. OTHER CURRENT ASSETS (Details) - USD ($)	Mar. 31, 2018	Dec. 31, 2017
Other Current Assets Details
Prepaids	$ 57,997	$ 116,623
Other Current Assets	7,288	2,709
Acquired Customer Contracts	0	37,500
Accumulated Amortization	0	(68,083)
Net Other Current Assets	$ 65,285	$ 88,749

XML

4. STOCKHOLDERS’ EQUITY (Details Narrative) - $ / shares	Mar. 31, 2018	Dec. 31, 2017
Stockholders Equity Details Narrative
Common stock shares authorized	200,000,000	200,000,000
Common stock shares par value	$ .001	$ 0.001
Common stock shares outstanding	11,797,231	11,797,231
Preferred stock shares authorized	20,000,000	20,000,000
Preferred stock shares par value	$ 0.001	$ 0.001
Preferred stock shares outstanding	0	0

XML

5. NOTES PAYABLE (Details) - USD ($)	Mar. 31, 2018	Dec. 31, 2017
Notes Payable Details
Note Payable - Real Estate Lien Note, 4.5% interest rate, $9,540.13 monthly principal and interest payments, balloon payment due March 22, 2022	$ 1,296,995	$ 1,310,920
Note payable- Forty weekly payments of $26,654	1,012,741	0
Less Discount on Note Payable	(267,901)	0
Note Payable- Related Party, 6% interest rate, $500,000 Line of Credit, due March 31, 2019	352,100	352,100
Total Notes Payable	2,393,935	1,663,020
Less: Current Portion	(802,129)	(56,649)
Long-Term Notes Payable	$ 1,591,806	$ 1,606,371

XML

5. NOTE PAYABLE (Details 1)	Mar. 31, 2018 USD ($)
Notes to Financial Statements
Remainder of 2018	$ 42,724
2019	59,252
2020	61,973
2021	64,821
2022	67,798
2023 and beyond	1,000,427
Total	$ 1,296,995

XML

6. ACCOUNTS RECEIVABLE AND CONCENTRATION OF CREDIT RISK (Details Narrative)	3 Months Ended	12 Months Ended
	Mar. 31, 2018	Dec. 31, 2017
Accounts Receivable | One Customer
Concentration risk	21.00%
Accounts Receivable | Three Customers
Concentration risk		86.00%
Revenue | Three Customers
Concentration risk		92.00%
Revenue | Two Customers
Concentration risk	73.00%

XML

7. PROPERTY AND EQUIPMENT (Details) - USD ($)	Mar. 31, 2018	Dec. 31, 2017
Fixed Assets	$ 2,465,264	$ 2,465,264
Accumulated Depreciation	(19,042)	(1,887)
Property and Equipment, net	2,446,222	2,463,377
Land
Fixed Assets	333,778	333,778
Buildings
Fixed Assets	2,125,642	2,125,642
Office Equipment
Fixed Assets	$ 5,844	$ 5,844

XML

7. PROPERTY AND EQUIPMENT (Details Narrative) - USD ($)	3 Months Ended
	Mar. 31, 2018	Mar. 31, 2017
Property And Equipment Details Narrative
Depreciation expense	$ 17,155	$ 144

XML

8. RELATED PARTY TRANSACTIONS (Details Narrative) - USD ($)	3 Months Ended
	Mar. 31, 2018	Mar. 31, 2017	Dec. 31, 2017
Revenues	$ 0	$ 16,000
Agreement 1
Agreement balance payable	352,100		$ 352,100
Agreement 2
Revenues	0	0
Agreement 3
Revenues	$ 0	$ 16,000

XML

9. COMMITMENTS AND CONTINGENCIES (Details)	Mar. 31, 2018 USD ($)
Commitments And Contingencies Details
Remainder of 2018	$ 48,180
2019	60,225
Total	$ 108,405

XML

9. COMMITMENTS AND CONTINGENCIES (Details 1)	Mar. 31, 2018 USD ($)
Commitments And Contingencies Details 1
Remainder of 2018	$ 109,680
2019	128,157
2020	37,616
Total	$ 275,453

XML

9. COMMITMENTS AND CONTINGENCIES (Details Narrative) - USD ($)	3 Months Ended
	Mar. 31, 2018	Mar. 31, 2017
Commitments And Contingencies Details Narrative
Rental income	$ 37,910	$ 0