UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM
For
the Fiscal Year Ended
For the Transition Period from ______________to ______________
(Exact name of registrant as specified in its charter)
(State or other jurisdiction of incorporation) |
(Commission File Number) |
(IRS Employer Identification No.) |
(Address of Principal Executive Offices)
Registrant’s
telephone number, including area code:
Securities registered pursuant to Section 12(b) of the Act: None
Securities registered pursuant to Section 12(g) of the Act: Common Stock, Par value $0.001
Indicate
by a check mark if the registrant is a well-known seasoned issuer, as defined by Rule 405 of the Securities Act. Yes ☐
Indicate
by a check mark whether the registrant is not required to file reports pursuant to Section 13 or Section 15 (d) of the Securities Exchange
Act. Yes ☐
Indicate
by check mark whether the registrant has (1) filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange
Act of 1934 during the past 12 months (or for such shorter period that the registrant was required to file such reports) (2) has been
subject to such filing requirement for the past 90 days.
Indicate
by check mark whether the registrant has submitted electronically on its corporate Web site, if any, every Interactive Data File required
to be submitted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter
period that the registrant was required to submit such files).
Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K (§ 229.405 of this chapter) is not contained herein, and will not be contained, to the best of registrant’s knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K.
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,” “smaller reporting company” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
Large Accelerated Filer | ☐ | 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 ☐
Indicate the number of Shares of outstanding of each of the Registrant’s classes of common stock, as of the latest practicable date:
The aggregate market value of the common equity held by non-affiliates of
the Registrant (assuming for these purposes, but without conceding, that all executive officers and Directors are “affiliates”
of the Registrant) as of March 31, 2023, the last business day of the Registrant’s most recently completed fiscal quarter, was $
As of April 12, 2023, the Registrant had shares of common stock issued and outstanding.
TABLE OF CONTENTS
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FORWARD-LOOKING STATEMENTS
For purposes of this Annual Report, the terms “GEX,” “GEX Management,” “the Company,” “we,” “us,” and “our,” refer to GEX Management, Inc., a Texas Corporation, and its consolidated subsidiaries unless the context clearly indicates otherwise. Included in this Annual Report are “forward-looking statements” within the meaning of the U.S. Private Securities Litigation Reform Act of 1995 or by the U.S. Securities and Exchange Commission in its rules, regulations and releases, regarding, among other things, all statements other than statements of historical facts contained in this report, including statements regarding our future financial position, business strategy and plans and objectives of management for future operations. The words “believe,” “may,” “estimate,” “continue,” “anticipate,” “intend,” “should,” “plan,” “could,” “target,” “potential,” “is likely,” “will,” “expect” and similar expressions, as they relate to us, are intended to identify forward-looking statements. We have based these forward-looking statements largely on our current expectations and projections about future events and financial trends that we believe may affect our financial condition, results of operations, business strategy and financial needs. In addition, our past results of operations do not necessarily indicate our future results.
From time to time, we also provide forward-looking statements in other materials we release to the public, as well as oral forward-looking statements. Such statements relate to our current expectations, projections and assumptions about our business, the economy and future events or conditions. They do not relate strictly to historical or current facts.
Forward-looking statements are not guarantees and involve risks, uncertainties and assumptions that are difficult to predict. Actual results may differ materially from past results and from those indicated by such forward-looking statements if known or unknown risks or uncertainties materialize, or if underlying assumptions prove inaccurate. These risks and uncertainties include, among other things:
■ | our ability to execute our business plans or growth strategy; | |
■ | the nature of investment and acquisition opportunities we are pursuing, and the successful execution of such investments and acquisitions; | |
■ | our ability to successfully integrate acquired businesses and realize synergies; | |
■ | variations in our results of operations; | |
■ | our ability to accurately forecast the revenue under our contracts; | |
■ | competition for our services; | |
■ | our failure to maintain a high level of client retention or the unexpected reduction in scope or termination of key contracts with major clients; | |
■ | client dissatisfaction, our non-compliance with contractual provisions or regulatory requirements; | |
■ | our inability to manage our relationships with our clients; | |
■ | pending or threatened litigation; | |
■ | unfavorable outcomes in legal proceedings; | |
■ | our ability to generate sufficient cash to cover our interest and principal payments under our note payable, or to borrow or use credit; | |
■ | unexpected changes in tax laws, regulations or guidance and unexpected changes in our effective tax rate; and | |
■ | the market price of our common stock. |
Other sections of this report may include additional factors which could adversely affect our business and financial performance. New risk factors emerge from time to time and it is not possible for us to anticipate all the relevant risks to our business, and we cannot assess the impact of all such risks on our business or the extent to which any risk, or combination of risks, may cause actual results to differ materially from those contained in any forward-looking statements. Those factors include, among others, those matters disclosed in this Annual Report on Form 10-K.
Except as otherwise required by applicable laws and regulations, we undertake no obligation to publicly update or revise any forward-looking statements or the risk factors described in this report, whether as a result of new information, future events, changed circumstances or any other reason after the date of this report. Neither the Private Securities Litigation Reform Act of 1995 nor Section 27A of the Securities Act of 1933 provides any protection to us for statements made in this report. You should not rely upon forward-looking statements as predictions of future events or performance. We cannot assure you that the events and circumstances reflected in the forward-looking statements will be achieved or occur. Although we believe that the expectations reflected in the forward-looking statements are reasonable, we cannot guarantee future results, levels of activity, performance or achievements.
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PART I
ITEM 1. BUSINESS
History and Development 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.
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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.
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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.
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Business Operations
GEX Management is a Dallas-based management consulting firm that offers a wide range of business operational services to clients. The company’s capabilities are geared towards helping organizations optimize their processes and improve their overall efficiency. Some of the business operational service streams and capabilities of GEX Management are listed below:
Strategy Consulting Services
Strategy and Business Planning: GEX Management helps organizations develop and implement effective business strategies and plans. This includes market analysis, strategic planning, business model development, and more. The goal is to help businesses identify opportunities for growth and develop strategies that will enable them to achieve their goals.
Process Optimization: GEX Management assists clients in identifying and improving their core business processes. This includes process mapping, process improvement, and process automation. By optimizing processes, businesses can reduce costs, improve quality, and enhance customer satisfaction.
Project Management: GEX Management provides project management services to help businesses plan, execute, and control their projects. This includes project planning, scheduling, budgeting, risk management, and more. The goal is to help businesses deliver projects on time, within budget, and to the satisfaction of stakeholders.
Change Management: GEX Management helps organizations manage change effectively. This includes change planning, stakeholder engagement, communication planning, and more. The goal is to help businesses implement change smoothly and minimize disruption to their operations.
Performance Improvement: GEX Management assists clients in improving their overall performance. This includes performance analysis, benchmarking, and performance improvement planning. The goal is to help businesses identify areas for improvement and implement solutions that will enable them to achieve their performance objectives.
Organizational Design and Development: GEX Management helps businesses optimize their organizational design and development. This includes organizational structure design, job analysis, role design, and more. The goal is to help businesses create an organizational structure that supports their strategic objectives and enables them to achieve their goals.
Overall, GEX Management’s strategy consulting and business operational service streams and capabilities are focused on helping businesses optimize their processes, improve their performance, and achieve their strategic objectives. By leveraging GEX Management’s expertise, businesses can enhance their competitiveness, increase their profitability, and achieve sustainable growth.
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Enterprise Technology Consulting Services
In addition to strategy consulting, GEX Management also provides technology consulting services to several Fortune 100 clients. The company’s technology consulting streams and capabilities are geared towards helping organizations leverage technology to improve their processes, enhance their customer experience, and drive growth.
Some of the technology consulting streams and capabilities of GEX Management are listed below:
Digital Transformation: GEX Management helps organizations transform their operations using digital technologies. This includes digital strategy development, digital capability assessment, and digital roadmap creation. The goal is to help businesses leverage digital technologies to improve their customer experience, streamline their processes, and increase their efficiency.
Cloud Computing: GEX Management provides cloud computing services to help businesses leverage cloud-based technologies. This includes cloud strategy development, cloud infrastructure design, cloud migration planning, and more. The goal is to help businesses reduce their infrastructure costs, increase their flexibility, and improve their scalability.
Data Analytics: GEX Management assists clients in leveraging data analytics to gain insights into their business operations. This includes data analytics strategy development, data visualization, and data modeling. The goal is to help businesses make better decisions based on data-driven insights.
Cybersecurity: GEX Management provides cybersecurity services to help businesses protect their information assets. This includes cybersecurity risk assessments, cybersecurity strategy development, and cybersecurity implementation. The goal is to help businesses mitigate cybersecurity risks and ensure the confidentiality, integrity, and availability of their information assets.
Digital Marketing: GEX Management helps organizations improve their digital marketing capabilities. This includes digital marketing strategy development, social media management, email marketing, and more. The goal is to help businesses improve their customer engagement and increase their online visibility.
Overall, GEX Management’s technology consulting streams and capabilities are focused on helping businesses leverage technology to improve their processes, enhance their customer experience, and drive growth. By leveraging GEX Management’s expertise, businesses can enhance their competitiveness, increase their profitability, and achieve sustainable growth in the digital age.
Business Strategy
Our business strategy is focused on several key elements that we believe are critical to our success:
● | Focus on High-Value Services: We focus on providing high-value consulting services that help our clients achieve their strategic objectives. By focusing on these high-value services, we are able to differentiate ourselves from our competitors and provide our clients with unique insights and expertise. | |
● | Leverage Technology: We are constantly exploring new technologies and tools that can help us provide better and more efficient consulting services to our clients. This includes developing our own proprietary AI-powered platform that can be used to enhance our existing consulting offerings and provide clients with additional insights and value. | |
● | Partner with Private Equity Firms: We have developed a strong reputation as a trusted partner to private equity firms seeking to enhance the performance of their portfolio companies. By partnering with these firms, we are able to leverage their deep industry expertise and resources to provide our clients with additional value and insights. |
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● | Expand our Geographic Reach: We are constantly exploring opportunities to expand our geographic reach and enter new markets. This includes opening new offices in strategic locations and developing partnerships with local firms to provide our clients with on-the-ground expertise and insights. | |
● | Attract and Retain Top Talent: Our success depends on our ability to attract and retain top talent. We have developed a strong culture that emphasizes collaboration, innovation, and continuous learning, and we offer competitive compensation packages and career advancement opportunities to our employees. |
We believe that our business strategy is well-positioned to help us achieve our long-term growth objectives. By focusing on high-value consulting services, leveraging technology, partnering with private equity firms, expanding our geographic reach, and attracting and retaining top talent, we are confident that we can continue to deliver strong results for our clients and shareholders.
Marketing and Sales
GEX Management adopts a multi-faceted marketing and sales approach to drive revenue growth and build brand awareness. The company uses various channels to reach potential clients, including digital marketing, social media, industry events, referrals, and targeted advertising.
Digital Marketing: GEX Management leverages various digital marketing channels, including search engine optimization (SEO), email marketing, and pay-per-click (PPC) advertising, to drive traffic to its website and generate leads. The company also uses data analytics to measure the effectiveness of its marketing efforts and optimize its strategy accordingly.
Social Media: GEX Management maintains a strong social media presence on platforms such as LinkedIn, Twitter, and Facebook to engage with potential clients and share thought leadership content. The company also runs targeted social media advertising campaigns to reach specific audiences.
Industry Events: GEX Management participates in industry events and conferences to connect with potential clients and showcase its expertise. The company also hosts its own events, such as webinars and thought leadership sessions, to educate clients and generate leads.
Referrals: GEX Management relies on referrals from satisfied clients and industry contacts to generate new business. The company has developed strong relationships with its clients by delivering high-quality services, which in turn has led to repeat business and referrals.
Targeted Advertising: GEX Management uses targeted advertising to reach specific audiences, such as private equity firms, venture capitalists, and business owners. The company also uses account-based marketing (ABM) to focus its marketing efforts on specific target accounts and decision-makers within those organizations.
Sales Approach: GEX Management’s sales approach is focused on building long-term relationships with clients by delivering value and exceeding expectations. The company employs a consultative sales approach, taking the time to understand clients’ unique needs and challenges before proposing solutions. GEX Management’s sales team consists of experienced professionals with deep industry knowledge and expertise.
GEX Management’s marketing and sales approach is designed to build brand awareness, generate leads, and build long-term relationships with clients. The company’s multi-faceted approach ensures that it reaches potential clients through various channels, while its consultative sales approach focuses on delivering value and building trust with clients.
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Industry and Competitors
GEX Management operates in the management consulting industry, which is highly competitive and characterized by a large number of established players as well as emerging niche firms. The industry is driven by demand for specialized consulting services that help organizations improve performance, manage risks, and optimize operations. The primary customers of management consulting firms are businesses, government agencies, and non-profit organizations.
The industry is highly fragmented, with many small firms offering specialized services to specific sectors or niches. However, larger consulting firms such as McKinsey & Company, Bain & Company, and Boston Consulting Group dominate the market with their strong brand recognition, global presence, and broad range of services.
GEX Management competes with a variety of consulting firms, ranging from large global consulting firms to small niche firms. The Company’s competitive advantage lies in its ability to offer a full spectrum of services across multiple industries, as well as its flexible and adaptable approach to meeting client needs.
To remain competitive, GEX Management must continue to focus on developing and enhancing its expertise, technology capabilities, and client relationships. The Company will need to remain agile in response to evolving industry trends and new competition, and continue to build a strong brand and reputation in the market.
Environmental Concerns
As a professional services company, federal, state or local laws that regulate the discharge of materials into the environment do not impact us.
Other Events
The occurrence of an uncontrollable event such as the COVID-19 pandemic may negatively affect our operations. A pandemic typically results in social distancing, travel bans and quarantine, and this may limit access to our facilities, customers, management, support staff and professional advisors. These factors, in turn, may not only impact our operations, financial condition and demand for our goods and services but our overall ability to react timely to mitigate the impact of this event. 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.
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Number of Employees
As of December 31, 2022 we had 35 full time employees.
ITEM 1A. RISK FACTORS
As a Smaller Reporting Company, we are not required to provide the information required by this item.
ITEM 1B. UNRESOLVED STAFF COMMENTS
None.
ITEM 2. PROPERTIES
Corporate Office
As of December 31, 2022, GEX’s corporate offices were located at 3662 W. Camp Wisdom Road, Dallas, Texas 75237.
Other Property
As of December 31, 2022, GEX does not have interest in material assets involving real estate and fixed equipment.
ITEM 3. 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 4. MINE SAFETY DISCLOSURES
Not applicable.
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PART II
ITEM 5. MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED SHAREHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES
Market Information
Our common stock is included in the OTC Pink Sheets, under the symbol GXXM. The table below summarizes the high and low closing sales prices per share for our common stock for the periods indicated, as reported on OTC. These amounts have been adjusted to reflect the 4 for 3 stock split of our common stock effected on December 12, 2017 and the 1 for 10,000 reverse stock split of our common stock effected on May 18 2020. The Company began trading on June 13, 2017 and therefore has no activity prior to the Quarter ended June 30, 2017.
Quarter Ended | March 31, | June 30, | September 30, | December 31, | ||||||||||||
Fiscal Year 2022 | ||||||||||||||||
High | $ | 0.006 | $ | 0.0105 | $ | 0.033 | $ | 0.0007 | ||||||||
Low | $ | 0.005 | $ | 0.0095 | $ | 0.0021 | $ | 0.0005 | ||||||||
Fiscal Year 2021 | ||||||||||||||||
High | $ | 0.012 | $ | 0.006 | $ | 0.08 | $ | 0.055 | ||||||||
Low | $ | 0.008 | $ | 0.005 | $ | 0.06 | $ | 0.043 | ||||||||
Fiscal Year 2020 | ||||||||||||||||
High | $ | 1.0 | $ | 1.0 | $ | 1.0 | $ | 0.0620 | ||||||||
Low | $ | 0.3 | $ | 0.5 | $ | 0.0260 | $ | 0.0203 | ||||||||
Fiscal Year 2019 | ||||||||||||||||
High | $ | 0.002 | $ | 0.0002 | $ | 0.0001 | $ | 0.0001 | ||||||||
Low | $ | 0.0016 | $ | 0.0001 | $ | 0.0001 | $ | 0.0001 | ||||||||
Fiscal Year 2018 | ||||||||||||||||
High | $ | 3.48 | $ | 1.86 | $ | 1.15 | $ | 0.212 | ||||||||
Low | $ | 3.408 | $ | 1.50 | $ | 1.15 | $ | 0.212 | ||||||||
Fiscal Year 2017 | ||||||||||||||||
High | $ | — | $ | 8.60 | $ | 10.50 | $ | 8.25 | ||||||||
Low | $ | — | $ | 1.40 | $ | 6.02 | $ | 3.41 |
Shareholders
As of December 31, 2022, there were approximately 86 holders of record of our common stock. This number does not include shareholders for whom shares were held in “nominee” or “street name.”
Dividends
No Dividends were declared for the Fiscal year 2021.
ITEM 6. SELECTED FINANCIAL DATA
As a Smaller Reporting Company, we are not required to report selected financial data.
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ITEM 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
Our Business
GEX Management is a management consulting and technology business services company providing client employers and their employees with a broad portfolio of related products and services. We provide both long and short-term consulting solution services, including enterprise strategy and technology consulting, enterprise project management; and Human Capital Management (HCM) solution capabilities.
Business Operations
GEX Management works continuously to expand its service offerings to its clients in order to assist them to achieve their respective business goals. Our unique and tailored approach, coupled with an ever-expanding array of services, has significantly differentiated the Company from competitors. GEX likewise distinguished itself in the market via accessible and exceptional client support ensuring that we will not only gain new clients but will retain those we currently have, resulting in long-term sustainability. Clients typically initiate service by means of a three-month agreement with the Company. The contract thereby automatically renews until terminated with a 30-day notice by either party.
Critical Accounting Policies
The Company’s financial statements were prepared in conformity with U.S. generally accepted accounting principles. As such, management is required to make certain estimates, judgments and assumptions that they believe are reasonable based upon the information available. These estimates and assumptions affect the reported amounts of assets and liabilities at the date of the consolidated financial statements and the reported amounts of income and expense during the periods presented.
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.
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Results of Operations for the Year Ended December 31, 2022 Compared to the Year Ended December 31, 2021
Revenues
During fiscal year 2022, GEX Management, Inc. achieved significant revenue growth, with total revenue increasing from $1,301,949 in fiscal year 2021 to $2,270,535 in 2022, representing a year-over-year growth rate of approximately 74%. This growth was driven by several factors, including an expanding client base, increased project volume, and the successful execution of strategic initiatives.
Expanding Client Base
One of the key drivers of GEX Management’s revenue growth was an expanding client base. The company was successful in attracting new clients across a range of industries, including technology, healthcare, and financial services. This was due in part to the company’s strong reputation for delivering high-quality consulting services, as well as its ability to provide customized solutions tailored to each client’s unique needs.
Increased Project Volume
GEX Management also experienced increased project volume during the fiscal year, which contributed to the company’s overall revenue growth. This was due in part to the company’s ability to efficiently manage projects and deliver high-quality results to its clients. The company was successful in leveraging its expertise across a range of consulting services, including business transformation, technology consulting, and operational improvement, to deliver value to its clients and generate new business opportunities.
Successful Execution of Strategic Initiatives
Finally, GEX Management’s revenue growth was driven by the successful execution of strategic initiatives. This included the development and launch of a proprietary AI-powered technology platform, which enhanced the company’s ability to deliver customized solutions to its clients and differentiate itself from competitors. Additionally, the company continued to invest in talent development and training programs, which enabled it to attract and retain high-quality consulting professionals.
Looking forward, GEX Management remains committed to driving growth and delivering value to its clients. The company is well-positioned to continue expanding its client base and increasing project volume, leveraging its expertise across a range of consulting services. Additionally, the company is focused on continuing to invest in its technology platform and talent development programs to ensure it remains at the forefront of the consulting industry and can continue delivering innovative solutions to its clients.
Overall, GEX Management’s fiscal year 2022 was marked by significant revenue growth, driven by expanding client base, increased project volume, and successful execution of strategic initiatives. The company remains committed to driving growth and delivering value to its clients, and is well-positioned to continue expanding its business and establishing itself as a leader in the consulting industry.
Cost of Services and Gross Profit
During fiscal year 2022, GEX Management, Inc. experienced a significant increase in its cost of revenue, which rose from $494,865 in fiscal year 2021 to $1,132,416 in 2022. This increase in cost of revenue impacted the company’s gross margin, which decreased from 62% in fiscal year 2021 to 50.2% in fiscal year 2022. The increase in cost of revenue was primarily driven by several factors, including higher personnel costs, increased project volume, and investments in technology and infrastructure.
Higher Personnel Costs
One of the primary drivers of the increase in cost of revenue was higher personnel costs. GEX Management continued to invest in its talent development programs and initiatives aimed at attracting and retaining high-quality consulting professionals. As a result, the company incurred higher salaries and benefits expenses, as well as increased costs related to recruiting and training new employees.
Increased Project Volume
GEX Management also experienced increased project volume during the fiscal year, which contributed to the increase in cost of revenue. This was due in part to the company’s ability to efficiently manage projects and deliver high-quality results to its clients. However, as project volume increased, the company also incurred higher expenses related to project management and delivery, including travel, supplies, and other project-related costs.
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Investments in Technology and Infrastructure
Finally, GEX Management also invested heavily in technology and infrastructure during the fiscal year, which contributed to the increase in cost of revenue. The company has been developing a proprietary AI-powered technology platform, which required significant investment in research and development, as well as ongoing maintenance and support costs. Additionally, the company invested in upgrading its infrastructure and systems to support its growing business operations and expanding client base.
Looking forward, GEX Management remains committed to investing in its people, processes, and technology to drive growth and deliver value to its clients. While the increase in cost of revenue impacted the company’s gross margin during the fiscal year, the company believes that these investments are necessary to support its continued growth and success in the consulting industry.
Overall, GEX Management’s fiscal year 2022 was marked by a significant increase in cost of revenue, driven by higher personnel costs, increased project volume, and investments in technology and infrastructure. While these factors impacted the company’s gross margin, GEX Management remains committed to investing in its business to drive growth and deliver value to its clients.
Operating Expense
During fiscal year 2022, GEX Management, Inc. experienced a significant decrease in its general and administrative (G&A) expenses, which declined from $6,067,833 in fiscal year 2021 to $1,467,457 in 2022. This decrease in operating expenses was primarily driven by several factors, including improved cost management, streamlining of business processes, and reduced marketing and advertising expenses.
Improved Cost Management
One of the primary drivers of the decrease in G&A expenses was improved cost management. GEX Management focused on optimizing its operational processes, identifying areas of inefficiency, and implementing cost-saving measures. This led to a reduction in expenses related to rent, utilities, office supplies, and other general business expenses.
Streamlining of Business Processes
Another factor contributing to the decrease in G&A expenses was the streamlining of business processes. GEX Management implemented new software tools and systems to automate and streamline administrative tasks, reducing the need for manual labor and streamlining operations. This led to a reduction in expenses related to personnel costs and administrative overhead.
Reduced Marketing and Advertising Expenses
Finally, GEX Management also reduced its marketing and advertising expenses during the fiscal year, which contributed to the decrease in G&A expenses. The company focused on leveraging its existing network and client base to generate new business, reducing the need for expensive marketing campaigns and other promotional activities.
Looking forward, GEX Management remains committed to optimizing its cost structure and improving operational efficiency to drive profitability and growth. The company will continue to invest in technology and systems to automate and streamline administrative tasks, reducing the need for manual labor and lowering administrative overhead. Additionally, the company will continue to focus on leveraging its existing client base and network to generate new business, reducing the need for expensive marketing campaigns and other promotional activities.
Overall, GEX Management’s fiscal year 2022 was marked by a significant decrease in G&A expenses, driven by improved cost management, streamlining of business processes, and reduced marketing and advertising expenses. The company remains committed to optimizing its cost structure and improving operational efficiency to drive profitability and growth, while continuing to focus on delivering high-quality consulting services to its clients.
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Net Loss
During fiscal year 2022, GEX Management, Inc. experienced a significant decrease in its net loss, which declined from $6,208,977 in fiscal year 2021 to $1,125,342 in 2022. This decrease in net loss was primarily driven by several factors, including increased revenue, improved cost management, and a reduction in operating expenses.
Increased Revenue
One of the primary drivers of the decrease in net loss was an increase in revenue. GEX Management was able to significantly expand its revenue from $1,301,949 in fiscal year 2021 to $2,270,535 in 2022, driven by increased demand for its consulting services and expansion into new markets. This increase in revenue helped to offset the company’s operating expenses, leading to a reduction in net loss.
Improved Cost Management
Another factor contributing to the decrease in net loss was improved cost management. GEX Management focused on optimizing its operational processes, identifying areas of inefficiency, and implementing cost-saving measures. This led to a reduction in expenses related to rent, utilities, office supplies, and other general business expenses. Additionally, the company implemented new software tools and systems to automate and streamline administrative tasks, reducing the need for manual labor and streamlining operations.
Reduction in Operating Expenses
Finally, GEX Management also saw a significant reduction in its operating expenses during the fiscal year, which contributed to the decrease in net loss. The company was able to reduce its general and administrative (G&A) expenses considerably in 2022, primarily due to improved cost management and streamlining of business processes.
Looking forward, GEX Management remains committed to driving revenue growth, improving cost management, and reducing operating expenses to drive profitability and growth. The company will continue to focus on delivering high-quality consulting services to its clients, while optimizing its cost structure and improving operational efficiency to drive profitability and growth.
Overall, GEX Management’s fiscal year 2022 was marked by a significant decrease in net loss, driven by increased revenue, improved cost management, and a reduction in operating expenses. The company remains committed to driving profitability and growth by delivering high-quality consulting services to its clients, while optimizing its cost structure and improving operational efficiency.
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.
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A summary of our cash flows for the twelve months ended December 31, was as follows:
2022 | 2021 | |||||||
Net cash used in operating activities | $ | (6,615,976 | ) | $ | (4,501,364 | ) | ||
Net cash used in investing activities | - | - | ||||||
Net cash provided by financing activities | 6,348,521 | 1,550,357 | ||||||
Net increase(decrease) in cash and cash equivalents | $ | (267,455 | ) | $ | 341,197 |
Net cash in operating activities was a use of $6,615,976 for the twelve months ended December 31, 2022 as compared to $4,501,364 cash in operating activities for the twelve months ended December 31, 2021. The increase in cash used in operating activities was in part due to the Company focusing on significantly expanding the business development effort, streamlined operating costs, marketed high margin customer contracts, deployed business acquisition capital and rationalizing expenses to support long term growth.
Net cash provided by financing activities of $6,348,521 for the twelve months ended December 31, 2022 was primarily from debt /debt like instruments in the balance sheet.
Net cash used in investing activities for the twelve months ended December 31, 2022 was $0.
ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
Not applicable.
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
The Company’s financial statements as of December 31, 2017 had been audited by Pinnacle Accountancy Group of Utah (a d/b/a of Heaton & Company, PLLC, “Heaton & Co”) independent registered public accountants.
On August 21, 2019, the Board of Directors of GEX Management, Inc (the “Company”) approved the engagement of Slack and Company, LLC (“Slack & Co.”) as the Company’s new independent registered public accounting firm for the year ending December 31, 2018.
On January 15, 2020, the Board of Directors of GEX Management, Inc (the “Company”) approved the re-engagement of Slack and Company, LLC (“Slack & Co.”) as the Company’s independent registered public accounting firm for the year ending December 31, 2019.
On January 15, 2021, the Board of Directors of GEX Management, Inc (the “Company”) approved the re-engagement of Slack and Company, LLC (“Slack & Co.”) as the Company’s independent registered public accounting firm for the year ending December 31, 2020.
On January 15, 2022, the Board of Directors of GEX Management, Inc (the “Company”) approved the engagement of Hudgens CPA (“Hudgens”) as the Company’s independent registered public accounting firm for the year ending December 31, 2021 and 2020.
On January 15, 2023, the Board of Directors of GEX Management, Inc (the “Company”) approved the re-engagement of Hudgens CPA (“Hudgens”) as the Company’s independent registered public accounting firm for the year ending December 31, 2022.
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURES
During the year ended December 31, 2022 and December 31, 2021, there were no (1) disagreements (as defined in Item 304(a)(1)(iv) of Regulation S-K and related instructions) with Hudgens on any matter of accounting principles or practices, financial statement disclosure, or auditing scope or procedure, which disagreements, if not resolved to the satisfaction of Hudgens, would have caused Hudgens to make reference to the subject matter of the disagreement in their reports, or (2) reportable events (as defined in Item 304(a)(1)(v) of Regulation S-K). The audit reports of Hudgens on the Company’s consolidated financial statements for the year ended December 31, 2022 and December 31 2021, did not contain any adverse opinion or disclaimer of opinion, nor were they qualified or modified as to uncertainty, audit scope or accounting principles.
The Company has provided Hudgens with a copy of the disclosures it is making in this Current Report on Form 10-K prior to its filing with the Securities and Exchange Commission (“SEC”)
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ITEM 9A. CONTROLS AND PROCEDURES
Evaluation of Disclosure Controls and Procedures
In accordance with Exchange Act Rules 13a-15 and 15a-15, the management of GEX Management Inc, with the participation of our Chief Executive Officer, has evaluated the effectiveness of our disclosure controls and procedures as of the end of the period covered by this report. Based on that evaluation, our Chief Executive Officer has concluded that our disclosure controls and procedures were effective in ensuring that information required to be disclosed in reports filed or submitted under the Securities Exchange Act of 1934, as amended, was recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms.
In addition, there were no changes in our internal control over financial reporting that occurred during the period covered by this report that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.
Our management has concluded that our disclosure controls and procedures were effective to provide reasonable assurance that material information about the company is made known to them by others within our organization, particularly during the period in which this report was being prepared.
However, any system of controls, however well designed and operated, can provide only reasonable, not absolute, assurance that the objectives of the system are met. Further, any evaluation of the effectiveness of controls and procedures is subject to various risks and uncertainties, including the risk that controls or procedures may become inadequate because of changes in conditions, or that the degree of compliance with policies or procedures may deteriorate over time. As a result, management’s evaluation of controls and procedures is subject to the risk that controls or procedures may not be effective in detecting or preventing misstatements in financial or other information.
Management’s Annual Report on Internal Control Over Financial Reporting
Our management is responsible for establishing and maintaining adequate internal control over financial reporting. Under the supervision of our Chief Executive Officer, the Company conducted an evaluation of the effectiveness of our internal control over financial reporting as of December 31, 2022 using the criteria established in Internal Control—Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO).
A material weakness is a deficiency, or combination of deficiencies, in internal control over financial reporting, such that there is a reasonable possibility that a material misstatement of the Company’s annual or interim financial statements will not be prevented or detected on a timely basis. In its assessment of the effectiveness of internal control over financial reporting as of December 31, 2022, the Company determined that there were control deficiencies that constituted material weaknesses under COSO and SEC rules are, as described below:
(1) lack of a functioning audit committee and lack of a majority of independent directors on the Company’s board of directors, resulting in ineffective oversight in the establishment and monitoring of required internal controls and procedures; (2) inadequate segregation of duties consistent with control objectives; and (3) insufficient written policies and procedures for accounting and financial reporting with respect to the requirements and application of US GAAP and SEC disclosure requirements. The aforementioned potential material weaknesses were identified by the Company’s Chief Executive Officer in connection with the preparation of our financial statements as of December 31, 2022 and communicated the matters to our management and board of directors.
ITEM 9B. OTHER INFORMATION
None.
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PART III
ITEM 10. DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE
The following table lists the names and ages of the executive officers and directors a of the Company as of December 31, 2022.
Name | Age | Position | Held Since | |||
Sri Vanamali | 41 | President, CEO & CFO | October 2022 | |||
3662 W. Camp Wisdom Road | ||||||
Dallas, Texas 75237 | ||||||
Joseph Frontiere | 33 | Director | July 2021 | |||
Dallas, Texas 75237 | ||||||
Shaheed Bailey | 36 | Director | October 2018 | |||
3662 W. Camp Wisdom Road | ||||||
Dallas, TX 75237 |
Srikumar Vanamali, age 41, is an experienced post-MBA executive with close to 20 years of top-tier, diverse experience in strategy and technology consulting, compliance consulting investment banking and professional business services. Mr. Vanamali has been leading the Company’s Corporate Strategy functions since June 2018. Prior to that, from January 2017 through May 2018, he worked as a private equity principal and an investment banker at NMS Capital, a L.A.-based firm focusing on capital markets and M&A. Before joining NMS Capital, he was a Management Consultant for Sharp Decisions Inc, a business services company through which he provided consulting services to Toyota Financial Services from November 2014 through December 2016. Prior to this, he was a Consultant and Technology Lead at Infosys, a global consulting firm, from November 2003 through June 2012. Mr. Vanamali earned a Bachelor’s in Engineering, Computer Science from the University of Madras, in Chennai, Tamil Nadu, India, in 2003, and an MBA from UCLA Anderson School of Management, in Los Angeles, California, in 2014. In October 2022, Mr. Vanamali became the Chief Executive Officer of GEX Management, Inc. Prior to that, he served in the role of President of GEX Management from July 2021 till October 2022. Prior to that, he served as the Chief Executive Officer and Executive Director for GEX Management, Inc., from October 2018 till July 2021.
Joseph Frontiere, age 33, had been serving as Director of the Company since July 2021. Prior to that, from July 2021 to October 2022, he served as CEO of GEX Management. Prior to that, from June 2010 through September 2012, he served as a CEO of Lorde Global, a company that provided strategic consulting services.
Shaheed Bailey, age 35, had been serving as Managing Partner of Greenpoint Capital Partners., a private equity firm that helps middle market companies raise equity/debt capital and locate strategic and value strategic acquisitions, and provides consulting for cost cutting, tax savings and growth strategies since October 2012. Prior to that, from June 2010 through September 2012, he served as a Sales Consultant/Partner for Sales Consultants of Morris County, a company that provided strategic consulting services. Before joining Sales Consultants of Morris County, he was a Private Banker with Wells Fargo Bank from July 2008 through April 2010. In October 2018, Mr. Bailey became the Interim Chief Investment Officer and Director for GEX Management, Inc., and currently serves as a Director.
Section 16(a) Beneficial Ownership Reporting Compliance
Section 16(a) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), requires our executive officers and directors, and persons who beneficially own more than ten percent of our common stock, to file initial reports of ownership and reports of changes in ownership with the SEC. Executive officers, directors and greater than ten percent beneficial owners are required by SEC regulations to furnish us with copies of all Section 16(a) forms they file.
We believe that as of the date of this report they were all current in their 16(a) reports.
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Board of Directors
Our Board of Directors currently consists of three members. Our Board of Directors has affirmatively determined that there are currently no independent directors serving on our board.
Committees of the Board of Directors
Audit Committee
We do not have a standing audit committee of the Board of Directors. Management has determined not to establish an audit committee at present because of our limited resources and limited operating activities do not warrant the formation of an audit committee or the expense of doing so. We do not have a financial expert serving on the Board of Directors or employed as an officer based on management’s belief that the cost of obtaining the services of a person who meets the criteria for a financial expert under Item 401(e) of Regulation S is beyond its limited financial resources and the financial skills of such an expert are simply not required or necessary for us to maintain effective internal controls and procedures for financial reporting in light of the limited scope and simplicity of accounting issues raised in its financial statements at this stage of its development.
Governance, Compensation and Nominating Committee
We do not have a standing governance, compensation and nominating committee of the Board of Directors. Management has determined not to establish governance, compensation and nominating committee at present because of our limited resources and limited operations do not warrant such a committee or the expense of doing so.
Code of Ethics
The Company has adopted the following code of ethics for officers, directors and employees:
- | Show respect towards others in the workplace |
- | Conduct all business activities in a fair and ethical manner |
- | Work dutifully and responsibly for the Company’s shareholders and stakeholders |
Limitation of Liability of Directors
Pursuant to the Texas Business Organizations Code, our Amended and Restated Articles of Incorporation exclude personal liability for our Directors for monetary damages based upon any violation of their fiduciary duties as Directors, except as to liability for any breach of the duty of loyalty, acts or omissions not in good faith or which involve intentional misconduct or a knowing violation of law, or any transaction from which a Director receives an improper personal benefit. This exclusion of liability does not limit any right which a Director may have to be indemnified and does not affect any Director’s liability under federal or applicable state securities laws.
Legal Proceedings
During the past ten years, none of our current directors, executive officers or persons nominated to become directors or executive officers:
(1) A petition under the Federal bankruptcy laws or any state insolvency law was filed by or against, or a receiver, fiscal agent or similar officer was appointed by a court for the business or property of such person, or any partnership in which he was a general partner at or within two years before the time of such filing, or any corporation or business association of which he was an executive officer at or within two years before the time of such filing;
(2) Such person was convicted in a criminal proceeding or is a named subject of a pending criminal proceeding (excluding traffic violations and other minor offenses);
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(3) Such person was the subject of any order, judgment, or decree, not subsequently reversed, suspended or vacated, of any court of competent jurisdiction, permanently or temporarily enjoining him from, or otherwise limiting, the following activities:
(i) Acting as a futures commission merchant, introducing broker, commodity trading advisor, commodity pool operator, floor broker, leverage transaction merchant, any other person regulated by the Commodity Futures Trading Commission, or an associated person of any of the foregoing, or as an investment adviser, underwriter, broker or dealer in securities, or as an affiliated person, director or employee of any investment company, bank, savings and loan association or insurance company, or engaging in or continuing any conduct or practice in connection with such activity;
(ii) Engaging in any type of business practice; or
(iii) Engaging in any activity in connection with the purchase or sale of any security or commodity or in connection with any violation of Federal or State securities laws or Federal commodities laws;
(4) Such person was the subject of any order, judgment or decree, not subsequently reversed, suspended or vacated, of any Federal or State authority barring, suspending or otherwise limiting for more than 60 days the right of such person to engage in any activity described in paragraph (f)(3)(i) of this section, or to be associated with persons engaged in any such activity;
(5) Such person was found by a court of competent jurisdiction in a civil action or by the Commission to have violated any Federal or State securities law, and the judgment in such civil action or finding by the Commission has not been subsequently reversed, suspended, or vacated;
(6) Such person was found by a court of competent jurisdiction in a civil action or by the Commodity Futures Trading Commission to have violated any Federal commodities law, and the judgment in such civil action or finding by the Commodity Futures Trading Commission has not been subsequently reversed, suspended or vacated;
(7) Such person was the subject of, or a party to, any Federal or State judicial or administrative order, judgment, decree, or finding, not subsequently reversed, suspended or vacated, relating to an alleged violation of:
(i) Any Federal or State securities or commodities law or regulation; or
(ii) Any law or regulation respecting financial institutions or insurance companies including, but not limited to, a temporary or permanent injunction, order of disgorgement or restitution, civil money penalty or temporary or permanent cease-and-desist order, or removal or prohibition order; or
(iii) Any law or regulation prohibiting mail or wire fraud or fraud in connection with any business entity; or
(8) Such person was the subject of, or a party to, any sanction or order, not subsequently reversed, suspended or vacated, of any self-regulatory organization (as defined in Section 3(a)(26) of the Exchange Act (15 U.S.C. 78c(a)(26))), any registered entity (as defined in Section 1(a)(29) of the Commodity Exchange Act (7 U.S.C. 1(a)(29))), or any equivalent exchange, association, entity or organization that has disciplinary authority over its members or persons associated with a member.
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Material Changes to the Procedures by which Security Holders May Recommend Nominees
There have been no material changes to the procedures by which security holders may recommend nominees to the registrants Board of Directors.
ITEM 11. EXECUTIVE COMPENSATION
Compensation of Executive Officers
The following summary compensation table sets forth all compensation awarded to, earned by, or paid to the named executive officers paid by us during the fiscal years ended December 31, 2022 in all capacities for the accounts of our executives, including the Chief Executive Officer (“CEO”):
The following officers received the following compensation for the years ended December 31, 2022. These officers have employment contracts with the Company.
Name and principal position | Year | Salary | Bonus | Stock Awards |
Option Awards |
Non-equity incentive |
Nonqualified deferred |
All
other compensation | ||||||||||
Sri Vanamali, | 2022 | $ | 200,000 | None | None | None | None | None | None | |||||||||
President, CEO | 2021 | $ | 200,000 | None | None | None | None | None | None |
Employment Agreements
We have employment agreements in place with each of the above referenced officers of the Company.
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Compensation of Directors
Directors do not receive any compensation for their services as directors. The Board of Directors has the authority to establish the compensation of directors. No amounts have been paid to, or accrued to, directors in such capacity.
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED SHAREHOLDER MATTERS
The following table lists the number of shares of Common Stock of our Company and, with respect to our officers, directors and principal stockholder, shares of our Super Voting Preferred Stock, as of May 14, 2020 that are beneficially owned by (i) each person or entity known to our Company to be the beneficial owner of more than 5% of the outstanding Common Stock; (ii) each officer and director of our Company; and (iii) all officers and directors as a group. Information relating to beneficial ownership of Common Stock and Super Voting Preferred Stock by our principal stockholders and management is based upon information furnished by each person using “beneficial ownership” concepts under the rules of the Securities and Exchange Commission. Under these rules, a person is deemed to be a beneficial owner of a security if that person has or shares voting power, which includes the power to vote or direct the voting of the security, or investment power, which includes the power to vote or direct the voting of the security. The person is also deemed to be a beneficial owner of any security of which that person has a right to acquire beneficial ownership within sixty (60) days. Under the rules of the SEC, more than one person may be deemed to be a beneficial owner of the same securities, and a person may be deemed to be a beneficial owner of securities as to which he/she may not have any pecuniary beneficial interest. Except as noted below, each person has sole voting and investment power. Beneficial ownership is determined in accordance with the rules of the SEC and includes voting or investment power with respect to the shares. Except as otherwise indicated, and subject to applicable community property laws, the persons named in the table have sole voting and investment power with respect to all shares of our common stock held by them.
Name of Stockholder | Number of Shares of Common Stock | Number of Super Voting Preferred Stock | Number of Stockholders |
Percentage Voting | ||||||||||||
Sri Vanamali | 0 | 800,000 | 0 | 51.0 | % | |||||||||||
Total | 0 | 800,000 | 0 | 51.0 | % |
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED PARTY TRANSACTIONS AND DIRECTOR INDEPENDENCE
The Company does not have any related party transactions at this time.
The Company does not have any independent directors serving on the Board of Directors.
ITEM 14. PRINCIPAL ACCOUNTANT FEES AND SERVICES
Audit Fees
The aggregate fees incurred for professional services rendered by our auditors, for the audit of our annual financial statements and review of the financial statements included in our Form S-1, Form 10-K and Form 10-Q or services
that are normally provided by the accountant in connection with statutory and regulatory filings or engagements for the year ended December 31, 2022 was $15,000.
Audit Related Fees
None.
Tax Fees
None.
All Other Fees
None.
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PART IV
ITEM 15. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES
Exhibits
31.1 | Certification of the Company’s Principal Executive Officer and Principal Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 | |
32.1 | Certification of the Company’s Principal Executive Officer and Principal Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. | |
101.INS | Inline XBRL Instance Document | |
101.SCH | Inline XBRL Taxonomy Extension Schema Document | |
101.CAL | Inline XBRL Taxonomy Extension Calculation Linkbase Document | |
101.DEF | Inline XBRL Taxonomy Extension Definition Linkbase Document | |
101.LAB | Inline XBRL Taxonomy Extension Label Linkbase Document | |
101.PRE | Inline XBRL Taxonomy Extension Presentation Linkbase Document | |
104 | Cover Page Interactive Data File (embedded within the Inline XBRL document) |
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SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) 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 on April 17, 2023.
GEX Management, Inc. | ||
By: | /s/ Sri Vanamali | |
Sri Vanamali | ||
Chief Executive Officer |
Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this Annual Report on Form 10-K to be signed on its behalf by the undersigned hereunto duly authorized.
Name | Title | Date | |||
By: | /s/ Sri Vanamali | Chief Executive Officer and Chairman of the Board | April 17, 2023 | ||
Sri Vanamali |
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GEX MANAGEMENT, INC.
INDEX TO CONSOLIDATED FINANCIAL STATEMENTS
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REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To The Board of Directors and Stockholders of
GEX Management, Inc.
Opinion on the Financial Statements
We have audited the accompanying balance sheet of GEX Management, Inc. (the Company) as of December 31, 2022 and 2021, and the related statement of operations, shareholders’ deficit, and cash flows for each of the two years ended December 31, 2022 and December 31, 2021, and the related notes (collectively referred to as the financial statements). In our opinion, the financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2022 and 2021, and the results of its operations and its cash flows for each of the two years ended December 31, 2022 and December 31, 2021, in conformity with accounting principles generally accepted in the United States of America.
Going Concern Matter
The accompanying financial statements have been prepared assuming that the Company will continue as a going concern. As discussed in Note 2 to the financial statements, the Company has suffered recurring losses from operations and has a net capital deficiency that raises substantial doubt about its ability to continue as a going concern. Management’s plans in regard to these matters are also described in Note 2. The financial statements do not include any adjustments that might result from the outcome of this uncertainty.
Basis for Opinion
These financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on the Company’s financial statements based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. As part of our audits, we are required to obtain an understanding of internal control over financial reporting, but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting. Accordingly, we express no such opinion.
Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audits provide a reasonable basis for our opinion.
Critical Audit Matters
The critical audit matters communicated below are matters arising from the current period audit of the financial statements that were communicated or required to be communicated to the audit committee and that: (1) relate to accounts or disclosures that are material to the financial statements and (2) involved our especially challenging, subjective, or complex judgments. The communication of critical audit matters does not alter in any way our opinion on the financial statements, taken as a whole, and we are not, by communicating the critical audit matters below, providing separate opinions on the critical audit matters or on the accounts or disclosures to which they relate. We have determined that there were no critical audit matters.
/s/
|
|
www.hudgenscpas.com | |
We have served as the Company’s auditor since 2021. | |
April 15, 2023 |
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GEX Management, Inc.
Consolidated Balance Sheets
December 31, 2022 and 2021
2022 | 2021 | |||||||
Assets | ||||||||
Current Assets: | ||||||||
Cash and cash equivalents | $ | $ | ||||||
Accounts receivable, net | ||||||||
Other current assets and prepaids | ||||||||
Total Current Assets | $ | $ | ||||||
Total Assets | $ | $ | ||||||
Liabilities and Shareholders’ Deficit | ||||||||
Current Liabilities: | ||||||||
Accounts payable | $ | $ | ||||||
Related party payables | ||||||||
Accrued expenses | ||||||||
Accrued interest payable | ||||||||
Convertible notes payable, net | ||||||||
Settlement Payable | ||||||||
Line of credit – related party | ||||||||
Notes Payable | ||||||||
Total Current Liabilities | ||||||||
Total Liabilities | ||||||||
Shareholders’ Deficit | ||||||||
Common stock, $ | par value; shares authorized, at December 31, 2022 and December 31, 2021 there were and issued and outstanding, respectively||||||||
Additional Paid-In-Capital | ||||||||
Accumulated Deficit | ( | ) | ( | ) | ||||
Total Shareholders’ Deficit | ( | ) | ( | ) | ||||
Total Liabilities and Shareholders’ Deficit | $ | $ |
See accompanying notes to the consolidated financial statements.
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GEX Management, Inc.
Consolidated Statements of Operations Years Ended
December 31, 2022 and 2021
2022 | 2021 | |||||||
Revenues | $ | $ | ||||||
Cost of Revenues | ||||||||
Gross Profit | ||||||||
Operating Expenses: | ||||||||
General and administrative | ||||||||
Total Operating Expenses | ||||||||
Total Operating Loss | ( | ) | ( | ) | ||||
Other Income (Expense) | ||||||||
Gain (loss) on Extinguishment of Debt | ( | ) | ||||||
Interest Expense | ( | ) | ( | ) | ||||
Credit charges and debt adjustments | ( | ) | ( | ) | ||||
Other Income (Expense) | ( | ) | ( | ) | ||||
Net Other Income (Expense) | ( | ) | ( | ) | ||||
Net Loss | $ | ( | ) | $ | ( | ) | ||
Income per common share: | ||||||||
Net loss per common share – basic and diluted | $ | ( | ) | $ | ( | ) | ||
Weighted Average Shares: | ||||||||
Basic and diluted |
See accompanying notes to the consolidated financial statements.
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GEX Management, Inc.
Consolidated Statement of Changes in Shareholders’ Deficit
Years Ended December 31, 2022 and 2021
Common | Additional Paid-In- | Accumulated | ||||||||||||||||||
Shares | Amount | Capital | Deficit | Total | ||||||||||||||||
Balance December 31, 2019 | $ | $ | $ | ( | ) | $ | ( | ) | ||||||||||||
Shares issued for services | ||||||||||||||||||||
Shares issued of for debt conversions | ||||||||||||||||||||
Net loss | - | ( | ) | ( | ) | |||||||||||||||
Balance at December 31, 2020 | $ | $ | $ | ( | ) | $ | ( | ) | ||||||||||||
Shares issued for warrants | ||||||||||||||||||||
Issuance of Common Shares for Debt Conversions | ||||||||||||||||||||
Net Loss | ( | ) | ( | ) | ||||||||||||||||
Balance at December 31, 2021 | $ | $ | $ | ( | ) | $ | ( | ) | ||||||||||||
Shares issued for warrants | ||||||||||||||||||||
Issuance of Common Shares for Debt Conversions | ||||||||||||||||||||
Net Loss | ( | ) | ( | ) | ||||||||||||||||
Balance at December 31, 2022 | $ | $ | $ | ( | ) | $ | ) |
See accompanying notes to the consolidated financial statements.
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GEX Management, Inc.
Consolidated Statements of Cash Flow
Years Ended December 31, 2022 and 2021
2022 | 2021 | |||||||
Operating Activities: | ||||||||
Net Loss | $ | ( | ) | ( | ) | |||
Adjustments to reconcile net loss to net cash used by operating activities: | ||||||||
Depreciation and Amortization | ||||||||
Gain/loss on Extinguishment of Debt | ||||||||
Amortization of debt discount | ||||||||
Change in Assets and Liabilities: | ||||||||
Accounts Receivable | ( | ) | ||||||
Other Current Assets | ( | ) | ||||||
Other Assets | ( | ) | ||||||
Related Party Payable | ||||||||
Accounts Payable | ||||||||
Accrued Expenses | ( | ) | ||||||
Accrued Interest Payable | ( | ) | ||||||
Net Cash Used by Operating Activities | $ | ( | ) | ( | ) | |||
Financing Activities: | ||||||||
Proceeds from convertible notes payable | ||||||||
Net Cash Provided by Financing Activities | $ | $ | ||||||
Net increase in cash and cash equivalents | $ | ( | ) | $ | ||||
Cash and cash equivalents | ||||||||
Cash and cash equivalents at beginning of year | ||||||||
Cash and cash equivalents at end of year | $ | $ | ||||||
Supplemental Disclosures: | ||||||||
Non-Cash Investing and Financing Activities: | ||||||||
Common Shares Issued for Debt Conversions | $ | $ | ||||||
Beneficial conversion feature | $ |
See accompanying notes to the consolidated financial statements.
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GEX Management, Inc.
Notes to the Consolidated Financial Statements
December 31, 2022
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 business 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 2016, and changed its name to GEX Management, Inc. in April 2016.
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
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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.
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.
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. The Company had
Accounts Receivable
Accounts receivable consists of accrued services and consulting receivables due from customers. 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. Write-offs are recorded at the time when a customer receivable is deemed uncollectible.
Impairment of 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. The Company evaluated the long-lived assets as of December 31, 2022 and determined that the long lived assets should be fully impaired as they no longer held future value. As a result, the Company recorded an impairment expense in the amount
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Revenue Recognition
GEX enters into contracts with its clients for management consulting 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.
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.
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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 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 as of December 31, 2022, statements of operations or cash flows for the periods ended December 31 2022.
NOTE 2. GOING CONCERN
The accompanying financial statements have been prepared on a going concern basis. The working capital of the Company is currently negative and raises substantial doubt of the ability for the Company to continue. The Company requires capital for its operational activities. The Company’s ability to raise additional capital through the future issuances of common stock is unknown. The obtainment of additional financing, the successful development of the Company’s plan of operations, and its ultimate transition to the attainment of profitable operations are necessary for the Company to continue operations. The ability to successfully resolve these factors raise substantial doubt about the Company’s ability to continue as a going concern. The financial statements of the Company do not include any adjustments that may result from the outcome of these aforementioned uncertainties.
Management plans to continue funding operations through issuance of financing and issuance of securities until operations become profitable. However, there can be no assurance that the Company will be successful in its efforts to raise the capital necessary to continue as a going concern.
During year ended December 31, 2022, the Company’s financial results and operations were not materially adversely impacted by the COVID-19 pandemic. The extent to which the Company’s future financial results could be impacted by the COVID-19 pandemic depends on future developments that are highly uncertain and cannot be predicted at this time. The Company is not aware of any specific event or circumstance that would require an update to its estimates or judgments or a revision of the carrying value of its assets or liabilities.
These estimates may change, as new events occur, and additional information is obtained. Actual results could differ materially from these estimates under different assumptions or
conditions.
To date, the Company has not experienced any significant economic impact due to COVID-19.
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NOTE 3. STOCKHOLDERS’ EQUITY
General
On September 21, 2020, the Company issued shares of common stock related to a convertible note conversion.
On September 23, 2020, the Company issued shares of common stock related to a convertible note conversion.
On September 24, 2020, the Company issued shares of common stock related to a convertible note conversion.
On September 25, 2020, the Company issued shares of common stock related to a convertible note conversion.
On September 29, 2020, the Company issued shares of common stock related to a convertible note conversion.
On October 6, 2020, the Company issued shares of common stock related to a convertible note conversion.
On October 16, 2020, the Company issued shares of common stock related to a convertible note conversion.
On November 2, 2020, the Company issued shares of common stock related to a convertible note conversion.
On December 3, 2020, the Company issued shares of common stock related to a convertible note conversion.
On December 8, 2020, the Company issued shares of common stock related to a convertible note conversion.
On December 10, 2020, the Company issued shares of common stock related to a convertible note conversion.
On December 10, 2020, the Company issued shares of common stock related to a convertible note conversion.
On December 14, 2020, the Company issued shares of common stock related to a convertible note conversion.
On December 15, 2020, the Company issued shares of common stock related to a convertible note conversion.
On December 17, 2020, the Company issued shares of common stock related to a convertible note conversion.
On December 21, 2020, the Company issued shares of common stock related to a convertible note conversion.
On December 15, 2020, the Company issued shares of common stock related to a convertible note conversion.
On December 24, 2020, the Company issued shares of common stock related to a convertible note conversion.
On December 24, 2020, the Company issued shares of common stock related to a convertible note conversion.
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On December 28, 2020, the Company issued shares of common stock related to a convertible note conversion.
On December 29, 2020, the Company issued shares of common stock related to a convertible note conversion.
On December 30, 2020, the Company issued shares of common stock related to a convertible note conversion.
On December 31, 2020, the Company issued shares of common stock related to a convertible note conversion.
During
the year ended December 31, 2020, the Company issued
In January 2021, the Company issued a total of shares of common stock related to a convertible note conversions.
In February 2021, the Company issued a total of shares of common stock related to a convertible note conversions.
In March 2021, the Company issued a total of shares of common stock related to a convertible note conversions.
In April 2021, the Company issued a total of shares of common stock related to convertible notes.
In May 2021, the Company issued a total of shares of common stock related to convertible notes.
In June 2021, the Company issued a total of shares of common stock related to convertible notes.
In July 2021, the Company issued a total of shares of common stock related to convertible notes.
In August 2021, the Company issued a total of shares of common stock related to convertible notes.
In September 2021, the Company issued a total of shares of common stock related to convertible notes.
In December 2021, the Company issued a total of shares of common stock related to convertible notes.
In January 2022, the Company issued a total of shares of common stock related to convertible notes.
In February 2022, the Company issued a total of shares of common stock related to convertible notes.
In March 2022, the Company issued a total of shares of common stock related to convertible notes.
In April 2022, the Company issued a total of shares of common stock related to convertible notes.
In July 2022, the Company issued a total of shares of common stock related to convertible notes.
In August 2022, the Company issued a total of shares of common stock related to convertible notes.
In September 2022, the Company issued a total of shares of common stock related to convertible notes.
In November 2022, the Company issued a total of shares of common stock related to convertible notes.
In December 2022, the Company issued a total of shares of common stock related to convertible notes.
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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 $
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 $
On
April 26, 2018, the Company entered into a convertible note payable for $
On
August 8, 2018, the Company entered into a convertible note payable for $
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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
The
Company owed a director of the Company $
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 $
NOTE 7. SUBSEQUENT EVENTS
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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 annual report on Form 10-K 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: April 17, 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 Annual Report on Form 10-K of GEX Management, Inc. (the “Company”), for the financial year ended December 31, 2022, 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: April 17, 2023 | By: | /s/ Sri Vanamali |
Name: | Sri Vanamali | |
Title: | Chief Executive Officer |
Consolidated Balance Sheets (Parenthetical) - $ / shares |
Dec. 31, 2022 |
Dec. 31, 2021 |
---|---|---|
Statement of Financial Position [Abstract] | ||
Common stock, par value | $ 0.001 | $ 0.001 |
Common stock, shares authorized | 100,000,000,000 | 100,000,000,000 |
Common stock, shares issued | 592,462,070 | 172,478,025 |
Common stock, shares outstanding | 592,462,070 | 172,478,025 |
Consolidated Statements of Operations - USD ($) |
12 Months Ended | |
---|---|---|
Dec. 31, 2022 |
Dec. 31, 2021 |
|
Income Statement [Abstract] | ||
Revenues | $ 2,270,535 | $ 1,301,949 |
Cost of Revenues | 1,132,416 | 494,865 |
Gross Profit | 1,138,119 | 807,084 |
Operating Expenses: | ||
General and administrative | 1,467,457 | 6,067,833 |
Total Operating Expenses | 1,467,457 | 6,067,833 |
Total Operating Loss | (329,337) | (5,260,749) |
Other Income (Expense) | ||
Gain (loss) on Extinguishment of Debt | (600,000) | |
Interest Expense | (15,120) | (162,233) |
Credit charges and debt adjustments | (671,408) | (142,947) |
Other Income (Expense) | (109,477) | (43,048) |
Net Other Income (Expense) | (796,005) | (948,228) |
Net Loss | $ (1,125,342) | $ (6,208,977) |
Income per common share: | ||
Net loss per common share – basic and diluted | $ (0.002) | $ (0.04) |
Weighted Average Shares: | ||
Basic and diluted | 592,462,070 | 175,173,661 |
DESCRIPTION OF BUSINESS AND SIGNIFICANT ACCOUNTING POLICIES |
12 Months Ended |
---|---|
Dec. 31, 2022 | |
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. (“GEX”, the “Company”, “we”, “our”, “us”) is a professional business 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 2016, and changed its name to GEX Management, Inc. in April 2016.
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.
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.
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. The Company had no cash equivalents as of December 31, 2022, and 2021, respectively.
Accounts Receivable
Accounts receivable consists of accrued services and consulting receivables due from customers. 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. Write-offs are recorded at the time when a customer receivable is deemed uncollectible.
Impairment of 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. The Company evaluated the long-lived assets as of December 31, 2022 and determined that the long lived assets should be fully impaired as they no longer held future value. As a result, the Company recorded an impairment expense in the amount
Revenue Recognition
GEX enters into contracts with its clients for management consulting 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.
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 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 as of December 31, 2022, statements of operations or cash flows for the periods ended December 31 2022.
|
GOING CONCERN |
12 Months Ended |
---|---|
Dec. 31, 2022 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
GOING CONCERN | NOTE 2. GOING CONCERN
The accompanying financial statements have been prepared on a going concern basis. The working capital of the Company is currently negative and raises substantial doubt of the ability for the Company to continue. The Company requires capital for its operational activities. The Company’s ability to raise additional capital through the future issuances of common stock is unknown. The obtainment of additional financing, the successful development of the Company’s plan of operations, and its ultimate transition to the attainment of profitable operations are necessary for the Company to continue operations. The ability to successfully resolve these factors raise substantial doubt about the Company’s ability to continue as a going concern. The financial statements of the Company do not include any adjustments that may result from the outcome of these aforementioned uncertainties.
Management plans to continue funding operations through issuance of financing and issuance of securities until operations become profitable. However, there can be no assurance that the Company will be successful in its efforts to raise the capital necessary to continue as a going concern.
During year ended December 31, 2022, the Company’s financial results and operations were not materially adversely impacted by the COVID-19 pandemic. The extent to which the Company’s future financial results could be impacted by the COVID-19 pandemic depends on future developments that are highly uncertain and cannot be predicted at this time. The Company is not aware of any specific event or circumstance that would require an update to its estimates or judgments or a revision of the carrying value of its assets or liabilities.
These estimates may change, as new events occur, and additional information is obtained. Actual results could differ materially from these estimates under different assumptions or conditions.
To date, the Company has not experienced any significant economic impact due to COVID-19.
|
STOCKHOLDERS’ EQUITY |
12 Months Ended |
---|---|
Dec. 31, 2022 | |
Equity [Abstract] | |
STOCKHOLDERS’ EQUITY | NOTE 3. STOCKHOLDERS’ EQUITY
General
On September 21, 2020, the Company issued shares of common stock related to a convertible note conversion.
On September 23, 2020, the Company issued shares of common stock related to a convertible note conversion.
On September 24, 2020, the Company issued shares of common stock related to a convertible note conversion.
On September 25, 2020, the Company issued shares of common stock related to a convertible note conversion.
On September 29, 2020, the Company issued shares of common stock related to a convertible note conversion.
On October 6, 2020, the Company issued shares of common stock related to a convertible note conversion.
On October 16, 2020, the Company issued shares of common stock related to a convertible note conversion.
On November 2, 2020, the Company issued shares of common stock related to a convertible note conversion.
On December 3, 2020, the Company issued shares of common stock related to a convertible note conversion.
On December 8, 2020, the Company issued shares of common stock related to a convertible note conversion.
On December 10, 2020, the Company issued shares of common stock related to a convertible note conversion.
On December 10, 2020, the Company issued shares of common stock related to a convertible note conversion.
On December 14, 2020, the Company issued shares of common stock related to a convertible note conversion.
On December 15, 2020, the Company issued shares of common stock related to a convertible note conversion.
On December 17, 2020, the Company issued shares of common stock related to a convertible note conversion.
On December 21, 2020, the Company issued shares of common stock related to a convertible note conversion.
On December 15, 2020, the Company issued shares of common stock related to a convertible note conversion.
On December 24, 2020, the Company issued shares of common stock related to a convertible note conversion.
On December 24, 2020, the Company issued shares of common stock related to a convertible note conversion.
On December 28, 2020, the Company issued shares of common stock related to a convertible note conversion.
On December 29, 2020, the Company issued shares of common stock related to a convertible note conversion.
On December 30, 2020, the Company issued shares of common stock related to a convertible note conversion.
On December 31, 2020, the Company issued shares of common stock related to a convertible note conversion.
During the year ended December 31, 2020, the Company issued 24,915. shares of common stock to service providers. The shares were valued at the closing market price on their respective grant dates for a total value of $
In January 2021, the Company issued a total of shares of common stock related to a convertible note conversions.
In February 2021, the Company issued a total of shares of common stock related to a convertible note conversions.
In March 2021, the Company issued a total of shares of common stock related to a convertible note conversions.
In April 2021, the Company issued a total of shares of common stock related to convertible notes.
In May 2021, the Company issued a total of shares of common stock related to convertible notes.
In June 2021, the Company issued a total of shares of common stock related to convertible notes.
In July 2021, the Company issued a total of shares of common stock related to convertible notes.
In August 2021, the Company issued a total of shares of common stock related to convertible notes.
In September 2021, the Company issued a total of shares of common stock related to convertible notes.
In December 2021, the Company issued a total of shares of common stock related to convertible notes.
In January 2022, the Company issued a total of shares of common stock related to convertible notes.
In February 2022, the Company issued a total of shares of common stock related to convertible notes.
In March 2022, the Company issued a total of shares of common stock related to convertible notes.
In April 2022, the Company issued a total of shares of common stock related to convertible notes.
In July 2022, the Company issued a total of shares of common stock related to convertible notes.
In August 2022, the Company issued a total of shares of common stock related to convertible notes.
In September 2022, the Company issued a total of shares of common stock related to convertible notes.
In November 2022, the Company issued a total of shares of common stock related to convertible notes.
In December 2022, the Company issued a total of shares of common stock related to convertible notes.
|
NOTES PAYABLE |
12 Months Ended |
---|---|
Dec. 31, 2022 | |
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.
|
RELATED PARTY TRANSACTIONS |
12 Months Ended |
---|---|
Dec. 31, 2022 | |
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 December 31, 2021 and December 31, 2020, 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. On September 1, 2021, the line of credit was extended to September 1, 2023.
The Company owed a director of the Company $660,919 and $172,567 for reimbursable expenses as of December 31, 2022 and December 31, 2021, respectively.
|
COMMITMENTS AND CONTINGENCIES |
12 Months Ended |
---|---|
Dec. 31, 2022 | |
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.
|
SUBSEQUENT EVENTS |
12 Months Ended |
---|---|
Dec. 31, 2022 | |
Subsequent Events [Abstract] | |
SUBSEQUENT EVENTS | NOTE 7. SUBSEQUENT EVENTS |
DESCRIPTION OF BUSINESS AND SIGNIFICANT ACCOUNTING POLICIES (Policies) |
12 Months Ended |
---|---|
Dec. 31, 2022 | |
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.
|
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.
|
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. The Company had no cash equivalents as of December 31, 2022, and 2021, respectively.
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Accounts Receivable | Accounts Receivable
Accounts receivable consists of accrued services and consulting receivables due from customers. 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. Write-offs are recorded at the time when a customer receivable is deemed uncollectible.
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Impairment of Long-Lived Assets | Impairment of 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. The Company evaluated the long-lived assets as of December 31, 2022 and determined that the long lived assets should be fully impaired as they no longer held future value. As a result, the Company recorded an impairment expense in the amount
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Revenue Recognition | Revenue Recognition
GEX enters into contracts with its clients for management consulting 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.
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.
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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.
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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.
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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 as of December 31, 2022, statements of operations or cash flows for the periods ended December 31 2022.
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DESCRIPTION OF BUSINESS AND SIGNIFICANT ACCOUNTING POLICIES (Details Narrative) - USD ($) |
Dec. 31, 2022 |
Dec. 31, 2021 |
---|---|---|
Accounting Policies [Abstract] | ||
Cash equivalents | $ 0 | $ 0 |
STOCKHOLDERS’ EQUITY (Details Narrative) - USD ($) |
1 Months Ended | 12 Months Ended | ||||||||||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Dec. 31, 2020 |
Dec. 30, 2020 |
Dec. 29, 2020 |
Dec. 28, 2020 |
Dec. 24, 2020 |
Dec. 21, 2020 |
Dec. 17, 2020 |
Dec. 15, 2020 |
Dec. 14, 2020 |
Dec. 10, 2020 |
Dec. 08, 2020 |
Dec. 03, 2020 |
Nov. 02, 2020 |
Oct. 16, 2020 |
Oct. 06, 2020 |
Sep. 29, 2020 |
Sep. 25, 2020 |
Sep. 24, 2020 |
Sep. 23, 2020 |
Sep. 21, 2020 |
Dec. 31, 2022 |
Nov. 30, 2022 |
Sep. 30, 2022 |
Aug. 31, 2022 |
Jul. 31, 2022 |
Apr. 30, 2022 |
Mar. 31, 2022 |
Feb. 28, 2022 |
Jan. 31, 2022 |
Dec. 31, 2021 |
Sep. 30, 2021 |
Aug. 31, 2021 |
Jul. 31, 2021 |
Jun. 30, 2021 |
May 31, 2021 |
Apr. 30, 2021 |
Mar. 31, 2021 |
Feb. 28, 2021 |
Jan. 31, 2021 |
Dec. 31, 2020 |
|
Short-Term Debt [Line Items] | ||||||||||||||||||||||||||||||||||||||||
Stock issued during period shares issued for services | 131,717 | |||||||||||||||||||||||||||||||||||||||
Stock issued during period value issued for services | $ 24,915 | |||||||||||||||||||||||||||||||||||||||
Convertible Note [Member] | ||||||||||||||||||||||||||||||||||||||||
Short-Term Debt [Line Items] | ||||||||||||||||||||||||||||||||||||||||
Number of common shares issued for debt conversion | 141,118 | 272,828 | 240,884 | 81,633 | 105,658 | 84,153 | 81,481 | 84,153 | 72,700 | 76,691 | 72,860 | 69,583 | 66,294 | 51,170 | 60,693 | 57,808 | 39,085 | 336,134 | 31,872 | 30,409 | 27,479,758 | 75,133,436 | 7,857,243 | 66,491,311 | 2,278,716 | 19,700,000 | 19,758,900 | 16,464,637 | 9,775,136 | 15,310,308 | 1,720,213 | 27,291,759 | 25,599,299 | 24,611,656 | 9,404,717 | 14,216,850 | 19,758,900 | 16,464,637 | 9,775,136 | |
Convertible Note One [Member] | ||||||||||||||||||||||||||||||||||||||||
Short-Term Debt [Line Items] | ||||||||||||||||||||||||||||||||||||||||
Number of common shares issued for debt conversion | 209,643 | 100,636 | 72,860 |
NOTES PAYABLE (Details Narrative) - USD ($) |
1 Months Ended | ||||||||||||||||||||||||
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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] | |||||||||||||||||||||||||
Short-Term Debt [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] | |||||||||||||||||||||||||
Short-Term Debt [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] | |||||||||||||||||||||||||
Short-Term Debt [Line Items] | |||||||||||||||||||||||||
Convertible promissory note, principal amount | $ 1,000,000 | $ 200,000 | |||||||||||||||||||||||
Interest rate | 10.00% | 10.00% | |||||||||||||||||||||||
Total proceeds from notes | $ 887,500 | $ 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 |
RELATED PARTY TRANSACTIONS (Details Narrative) - USD ($) |
Mar. 01, 2015 |
Dec. 31, 2022 |
Dec. 31, 2021 |
Dec. 31, 2020 |
---|---|---|---|---|
Collaborative Arrangement and Arrangement Other than Collaborative [Line Items] | ||||
Line of credit amount | $ 483,677 | $ 483,677 | $ 483,677 | |
Due to related parties current | $ 660,919 | $ 172,567 | ||
Credit Agreement [Member] | ||||
Collaborative Arrangement and Arrangement Other than Collaborative [Line Items] | ||||
Interest rate during period | 6.00% |
COMMITMENTS AND CONTINGENCIES (Details Narrative) |
12 Months Ended |
---|---|
Dec. 31, 2019
USD ($)
| |
EMA Financial [Member] | |
Payments for legal settlements | $ 195,250 |
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