UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington,
D.C. 20549
__________________
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
Date of report (Date of earliest event reported): July 30, 2018
| GEX MANAGEMENT, INC. |
(Exact Name of Registrant as Specified in Charter)
| Texas | 001-38288 | 56-2428818 |
(State or Other Jurisdiction of Incorporation) |
(Commission File Number) | (IRS Employer Identification No.) |
12001 N. Central Expressway, Suite 825 Dallas, Texas 75243 | |||
| (Address of Principal Executive Offices) | |||
| Registrant’s telephone number, including area code: (877) 210-4396 | |||
N/A | |||
| (Former Name of Former Address, if Changed Since Last Report) | |||
Check
the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant
under any of the following provisions (see General Instruction A.2. below):
[ ] Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
[ ] Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
| [ ] | Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) |
| [ ] | Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) |
Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).
Emerging growth company [x]
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. [ ]
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Item 1.01. Entry into a Material Definitive Agreement.
On July 30, 2018, GEX Management, Inc., a Texas corporation (the “Company”), entered into a binding letter of intent (the “LOI”) with Endeavor Plus, Inc., a [__________] corporation in the healthcare business (“Endeavor”), pursuant to which it is anticipated that the shareholders of Endeavor (the “Endeavor Shareholders”) will exchange 100% of the issued and outstanding shares of capital stock of Endeavor for an aggregate of 13,000,000 restricted shares of the Company’s common stock, $0.001 par value per share (the “Share Exchange”). As a result of the Share Exchange, Endeavor would become a wholly owned subsidiary of the Company. The parties intend for the Share Exchange to qualify as a tax-free reorganization under Section 368 of the Internal Revenue Code of 1986, as amended.
The Company and Endeavor expect to enter into a definitive agreement for the Share Exchange (“Share Exchange Agreement”) by September 30, 2018, and to consummate the Share Exchange on or before December 31, 2018.
The closing of the Share Exchange is subject to timely delivery by Endeavor of required audited and interim financial statements prepared in compliance with generally accepted accounting principles (GAAP), the Company’s satisfactory completion of due diligence review of Endeavor, and other customary closing conditions.
The LOI may be terminated (a) automatically, if the parties do not enter into a Share Exchange Agreement by September 30, 2018, as such date may be extended by mutual consent of the parties; (b) by the Company if the results of its due diligence inquiry are unsatisfactory; or (c) automatically upon the parties’ entry into the Share Exchange Agreement.
The foregoing summary of the LOI does not purport to be complete and is qualified in its entirety by reference to the LOI, a copy of which is filed as Exhibit 10.1 to this report and incorporated herein by reference.
Item 7.01. Regulation FD Disclosure.
On August 1, 2018, the Company issued a press release with respect to the signing of the LOI. The press release is attached to this Current Report on Form 8-K as Exhibit 99.1 and is incorporated herein by reference.
The information in this Item 7.01 of this Form 8-K, including Exhibit 99.1 attached hereto, is being furnished and shall not be deemed “filed” for the purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), nor shall it be deemed incorporated by reference in any filing of ours under the Securities Act of 1933, as amended, or the Exchange Act, whether made before or after the date hereof, except as shall be expressly set forth by specific reference to this Form 8-K in such filing.
Forward Looking Statements
This filing includes “forward-looking statements.” All statements other than statements of historical facts included or incorporated herein may constitute forward-looking statements. Actual results could vary significantly from those expressed or implied in such statements and are subject to a number of risks and uncertainties. Although we believe that the expectations reflected in the forward-looking statements are reasonable, we can give no assurance that such expectations will prove to be correct. The forward-looking statements involve risks and uncertainties that affect our operations, financial performance, and other factors as discussed in our filings with the Securities and exchange Commission (“SEC”). Among the factors that could cause results to differ materially are those risks discussed in the periodic reports we file with the SEC, including our Annual Report on Form 10-K for the year ended December 31, 2017. You are urged to carefully review and consider the cautionary statements and other disclosures made in those filings, specifically those under the heading “Risk Factors.” We do not undertake any duty to update any forward-looking statement except as required by law.
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Item 9.01. Financial Statements and Exhibits.
(d) Exhibits
| Exhibit Number | Description | |
| 10.1 | Letter of Intent, dated July 30, 2018 | |
| 99.1 | Press Release, dated August 1, 2018 |
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
| Date: August 3, 2018 | GEX MANAGEMENT, INC. | ||
| By: | /s/ Carl Dorvil | ||
| Name: Carl Dorvil | |||
| Title: Chief Executive Officer | |||
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Exhibit 10.1
BINDING
LETTER OF INTENT
GEX MANAGEMENT, INC. AND
ENDEAVOR PLUS, INC.
This binding letter of intent ("LOI”), dated as of July 30, 2018, sets forth the understanding and preliminary agreement by and between GEX Management, Inc., a public company organized under the laws of the State of Texas (“GXXM”), on the one hand, and Endeavor Plus, Inc., a private healthcare company with offices located in New York, NY ("Endeavor"), on the other hand. GXXM and Endeavor are sometimes referred to individually, as a “Party” and collectively, as the “Parties.”
WHEREAS, the Parties are entering into this LOI for the express purpose of GXXM acquiring 100% of the capital stock of Endeavor pursuant to a definitive share exchange agreement, which the Parties reasonably expect to be executed and delivered on or about September 30, 2018 (the “Definitive Agreement” or “SEA”); and
WHEREAS, Endeavor understands that: (i) GXXM is a public company with shares subject to quotation on the OTCQB under the symbol “GXXM;” and (ii) GXXM is a current reporting company filing reports with the United States Securities and Exchange Commission (the “SEC”) under the Securities Exchange Act of 1934 (the “Exchange Act”); and
WHEREAS, the Parties agree that pending the execution of the Definitive Agreement, and as a condition to the closing of the Share Exchange (s defined below) (the “Closing”), Endeavor shall deliver to GXXM, not later than December 31, 2018, the audited financial statements of Endeavor, prepared by its independent public accountants for Endeavor’s years-ended December 31, 2017 and 2016 (the “Audited Financial Statements”) which shall be in compliance with GAAP and/or PCAOB, and in a form acceptable by the SEC, and such interim unaudited financial statements as are required in connection with applicable laws, prepared in accordance with GAAP and/or PCAOB (the “Interim Financial Statements”); and
WHEREAS, the Parties agree that under this LOI and subject to the Definitive Agreement, GXXM shall: (i) issue to the shareholders and/or designees of Endeavor (the “Endeavor Holders”) restricted shares of common stock of GXXM (the “GXXM Shares”) as set forth in Section 2 below; (ii) appoint Mr. Pat Dileo as a member of the GXXM Board of Directors and as CEO of Endeavor Plus which shall become a wholly-owned subsidiary of GXXM upon the Closing; and (iii) GXXM and Endeavor shall have equal representation on the Board of Directors of GXXM upon the Closing.
1. The Closing. Upon the Closing, GXXM will acquire 100% of Endeavor’s issued and outstanding capital stock (the "Endeavor Shares") owned by the Endeavor Holders in exchange for the issuance of the GXXM Shares as set forth in Section 2 below, upon which, Endeavor will become a wholly owned subsidiary of GXXM (the “Share Exchange”). It is anticipated that the share exchange will be structured to qualify as a tax-free reorganization pursuant to Section 368 of the Internal Revenue Code.
2. Share Exchange. Upon the Closing, and subject to the delivery by Endeavor and/or the Endeavor Holders of the Endeavor Shares, the Endeavor Holders shall receive a total of thirteen million (13,000,000) restricted GXXM Shares in exchange for all of the Endeavor Shares. It is hereby agreed that upon Closing, GXXM will not have in excess of Fifteen Million (15,000.000) GXXM Shares issued and outstanding.
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3. Additional Terms and Conditions of the Closing. Consummation of the Share Exchange will be subject to the following terms and conditions:
(a) A Definitive Agreement satisfactory to GXXM and Endeavor shall be executed as soon as practicable but not later than September 30, 2018 unless the Parties agree in writing to extend the date. The Definitive Agreement shall contain terms, conditions, representations and warranties, covenants and legal opinions normal and appropriate for a transaction of the type contemplated, including, without limitation, those summarized in this LOI;
(b) Upon signing the Definitive Agreement and closing of the Share Exchange, GXXM shall prepare and file with the SEC all appropriate documents including, but not limited to, any required Current Reports on Form 8-K, with disclosure under Items 1.01, 3.02 and 5.02, as applicable, together with applicable exhibits and a Schedule 13D.
(c) Upon and as a condition of the Closing, Endeavor shall deliver or cause to be delivered to GXXM, as necessary, a description of Endeavor's business and Endeavor's Audited Financial Statements and Interim Financial Statements prepared in accordance with the applicable rules and regulations of the SEC ("SEC"). Endeavor shall also provide such other information and disclosure that GXXM may require for inclusion in its filings with the SEC under the Exchange Act and the rules and regulations of the SEC.
(d) Each Party and their respective agents, attorneys and representatives shall have full and free access to the properties, books and records of the other Party (the confidentiality of which the requesting Party agrees to retain with full confidentiality) for purposes of conducting investigations of the other Party;
(e) The Parties shall have received all permits, authorizations, regulatory approvals and third-party consents, if any, necessary for the consummation of the SEA and Closing of the Share Exchange and all applicable legal requirements shall have been satisfied;
(f) It is hereby agreed that Endeavor’s current officers and directors shall use their reasonable best efforts to preserve intact the business organization and employees and other business relationships of Endeavor; shall continue to operate in the ordinary course of business and maintain its books, records and accounts in accordance with generally accepted accounting principles, consistent with past practice; shall use its reasonable best efforts to maintain Endeavor's current financial condition and shall not declare or make any dividend or stock distributions.
(g) Disclosure. Without the prior written consent of GXXM, which consent will not be unreasonably withheld, Endeavor will, and each Party hereto will cause its directors, officers, shareholders, employees, agents, other representatives and affiliates not to, disclose to any person the fact that discussions or negotiations are taking place concerning the transactions contemplated hereby, the status thereof, or the existence of this LOI and the terms thereof, unless in the opinion of such Party disclosure is required to be made by applicable law, regulation or court order, and such disclosure is made after prior consultation with GXXM.
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(h) Access to Endeavor. Endeavor will give GXXM and its representatives full access to any personnel and all properties, documents, contracts, books, records and operations of Endeavor relating to its business. Endeavor will furnish GXXM with copies of documents and with such other information as GXXM may reasonably request
4. Expenses. Each Party shall have independent counsel and as such all legal fees and expenses shall be borne by each Party.
5. Conduct of Business of Endeavor Pending Closing. Until consummation or termination of the Closing of the Share Exchange, Endeavor will conduct its business only in the ordinary course and none of the assets of Endeavor shall be sold or disposed of except in the ordinary course of its business.
6. Representations and Warranties. The Definitive Agreement will contain representations and warranties customary to transactions of this type, including without limitation, representations and warranties by Endeavor and, if appropriate, the Endeavor Holders, on the one hand, and GXXM, on the other hand as to: (a) the accuracy and completeness of the Endeavor's Audited and Interim Financial Statements and the GXXM financial statements filed with the SEC in its Exchange Act Reports; (b) disclosure of Endeavor's material contracts, commitments and liabilities, direct or contingent; (c) the physical condition, suitability, ownership and absence of liens, claims and other adverse interests with respect to the Endeavor's assets; (d) the valid right, title and interest of the Endeavor Holders of their Endeavor Shares; (e) the absence of undisclosed liabilities with respect to Endeavor, other than as set forth in the Audit and Interim Financial Statements, and liabilities incurred in the ordinary course of business since that date of the Interim Financial Statements; (f) the absence of a material adverse change in the condition (financial or otherwise), business, properties, assets or prospects of Endeavor and GXXM, as the case may be; (g) absence of pending or threatened litigation (other than disclosed in writing), investigations or other matters affecting the SEC; (h) the compliance by Endeavor and GXXM with laws and regulations applicable to its business and obtaining all licenses and permits required for its business; and (i) the due incorporation, organization, valid existence, good standing and capitalization of Endeavor and GXXM.
7. Enforceable Agreement; Compliance with Applicable Laws. This LOI shall constitute an enforceable agreement between the Parties, and shall serve as the Agreement until such time as the Definitive Agreement may be prepared, however, not later than September 30, 2018 unless extended by mutual written agreement of the Parties. The Parties agree to use their respective best efforts to negotiate a mutually acceptable Definitive Agreement and to consummate the Closing of the Definitive Agreement on or before December 31, 2018, unless extended by mutual written agreement of the Parties. It is the understanding of the Company and Seller that all matters referred to in this LOI are conditioned upon compliance with applicable Federal and state securities laws and other applicable laws.
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8. Exclusivity; Due Diligence. From and after the date of the execution of this LOI through and including [September 30, 2018] (which date may be extended by mutual written consent of the Parties) (the “Exclusivity Period”), Endeavor hereby covenants and agrees that it will not enter into any transaction that would preclude the consummation of the Share Exchange consistent with the terms set forth in this LOI, nor will Endeavor enter into any discussions or negotiations with respect thereto with any person other than GXXM. GXXM shall have the right, upon prior written notice to Endeavor, to terminate its obligations hereunder at any time if the results of its due diligence inquiry are unsatisfactory to GXXM, in its sole discretion, and in such event, neither party shall have any liability or obligation to the other party.
9. Termination and Effects of Termination. The obligations of the Parties to each other under this LOI shall terminate upon the first to occur of (i) the expiration of the Exclusivity Period, (ii) termination by GXXM pursuant to Section 8 of this LOI, or (iii) the execution and delivery of a definitive Share Exchange Agreement among the GXXM, Endeavor and the Endeavor Holders, provided that the provisions and obligations of the parties created by Sections 10 and 11 hereof shall survive the termination of this LOI..
10. Governing Law. This LOI shall be governed and construed in accordance with the laws of the State of Texas, without giving effect to principles of conflicts or choice of laws thereof.
11. Confidentiality. Each of the parties to this LOI agrees to maintain the confidentiality of the terms of this LOI and the Share Exchange, and not to use any information it may learn about the other party for any purpose other than to consummate the Share Exchange. Further, no disclosure of any information concerning this LOI, the Share Exchange or any confidential information delivered by either party to the other pursuant to this LOI or the Share Exchange shall be disclosed to any other person unless such disclosure is reasonably necessary in connection with the purposes of this LOI and until such other person shall have first executed and delivered a written confidentiality agreement (or is otherwise legally bound by reasonably comparable confidentiality obligations existing under contract or pursuant to the terms of his or her work with any party to this LOI) by which such person agrees to hold in confidence such confidential information. The obligations of the parties (and of such other persons to whom confidential information is delivered) pursuant to this paragraph shall continue indefinitely, except as otherwise required by applicable law, governmental regulation, stock exchange rule or court order. The parties may publish a press release upon [signing/closing], the contents of which will be subject to the prior approval of both parties, not to be unreasonably withheld or delayed.
12. Notices. Any notices, consents, waivers, or other communications required or permitted to be given under the terms of this LOI must be in writing and will be deemed to have been delivered (i) upon receipt, when delivered personally; (ii) upon confirmation of receipt, when sent by facsimile or electronic mail; (iii) upon receipt when sent by U.S. certified mail, return receipt requested, or (iv) one (1) day after deposit with a nationally recognized overnight delivery service, in each case properly addressed to the party to receive the same. The addresses and facsimile numbers for such communications shall be:
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If to Endeavor:
Endeavor Plus, Inc.
394 Broadway Floor Five
New York, NY 10013
Attn.: Pat Dileo
Title: President and Chief Executive Officer
Telephone: (732)_423-5520
Facsimile: (732) 732-929-1530
Email: pdileo@endeavorplus.com
If to GXXM:
GEX Management, Inc.
12001 N. Central Expressway, Suite 825
Dallas, Texas 75243
Attn: Carl Dorvil
Title: Chief Executive Officer
Telephone: (469) 583-8453
Facsimile: (___) _______________
Email: cdorvil@gexmanagement.com
If to GXXM, with a copy to (does not constitute service):
Crone Law Group, P.C.
830 Third Avenue, 5th Floor
New York, NY 10022
Attn: Eric C. Mendelson, Esq.
Telephone: (646) 278-0886
Facsimile: (212) 840-8560
Email: emendelson@cronelawgroup.com
or to such other address as such party may indicate by a written notice delivered to the other party hereto.
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(Signatures on Following Page)
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IN WITNESS WHEREOF, the parties hereto have caused this LOI to be duly executed as of the date first written above.
| GEX MANAGEMENT, INC. | ENDEAVOR PLUS, INC. | |
| /s/: Carl Dorvil | /s/: Pat Dileo | |
| Name: Carl Dorvil | Name: Pat Dileo | |
| Title: Chief Executive Officer | Title: Chief Executive Officer |
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Exhibit 99.1
GEX Management, Inc.'s PEO Collaborates with Leading Health Insurance Administrator to Bring Innovative and Affordable Health Care Options to Small Group Employers
NEW YORK, Aug. 1, 2018 /PRNewswire/ -- GEX Management, Inc. (GEX), a reporting public company (OTCBB symbol GXXM), and Endeavor Plus, Inc. (EPI), a full-service health insurance and benefit company, executed on July 27, 2018 a binding 'LETTER OF INTENT' to finalize, on and or before September 30, 2018, a timely strategic merger Agreement whereby EPI becomes a wholly-owned subsidiary of GEX.
EPI, a healthcare-related company which provides third-party insurance plan administration services, and GEX, a Dallas-based licensed Professional Employer Organization (PEO), have agreed on a plan to deliver comprehensive and cost-effective health insurance through various distribution channels.
Pat Dileo, EPI's CEO, stated that, "$377 billion in annual premiums is being paid by employers directly to insurance carriers. Expanding the distribution of health insurance through the PEO channel, especially to smaller/mid-sized group employers, helps simplify plan administration and helps create more competitive and cost-effective employee benefit plans. In today's tight labor market, this is an imperative for many small businesses that compete for skilled labor."
GEX Management CEO, Carl Dorvil, further stated that, "PEO services are a tremendous resource that have a positive impact on the robust economy and continued economic growth. Adding health insurance along with the services of the PEO makes it even easier for employers to ensure the health and well-being of their employees."
"Due to skyrocketing insurance premiums and fewer plan choices, we are witnessing a decrease in the number of participants in ACA exchanges in this country, and we now see that Association Health Plans are being used to replace the exchanges," Dileo further stated. "This puts PEOs in an advantageous position to help small group employers attract and retain employees in a competitive labor market by providing affordable and manageable health insurance and voluntary benefits."
About Endeavor Plus
Endeavor Plus is a third-party administrator and a medical stop-loss reinsurance company that offers a specially-designed health plan that provides comprehensive major medical health insurance/stop-loss reinsurance with funded health savings accounts, various voluntary employee benefits and an open network of medical providers.
About GEX Management
GEX Management, Inc. is a licensed Professional Employer Organization (PEO) and a Professional Services Company providing comprehensive back-office services to clients including HR, Payroll, Risk & Compliance, Executive Consulting and provides progressive and complete solutions for employee management and operational needs.
Information on Forward Looking Statements
The statements contained herein that are not historical facts are forward-looking statements within the meaning of the federal securities laws (Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934). You can identify such forward-looking statements by the words "expects," "intends," "plans," "projects," "believes," "estimates," "likely," "possibly," "probably," "goal," "opportunity," "objective," "target," "assume," "outlook," "guidance," "predicts," "appears," "indicator" and similar expressions. Forward-looking statements involve a number of risks and uncertainties. In the normal course of business, GEX Management, Inc., in an effort to help keep our stockholders and the public informed about our operations, may from time to time issue such forward-looking statements, either orally or in writing. Generally, these statements relate to business plans or strategies, projected or anticipated benefits or other consequences of such plans or strategies, or projections involving anticipated revenues, earnings, profits, pricing, operating expenses or other aspects of operating results. We base the forward-looking statements on our expectations, estimates, and projections at the time such statements are made. These statements are not guarantees of future performance and involve risks and uncertainties that we cannot predict. In addition, we have based many of these forward-looking statements on assumptions about future events that may prove to be inaccurate. The actual results of the future events described in such forward-looking statements could differ materially from those stated in such forward-looking statements.