GEX MANAGEMENT, INC. [GXXM] Filings

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-K

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

For the Fiscal Year Ended December 31, 2023

☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934

For the Transition Period from ______________to ______________

GEX MANAGEMENT, INC.

(Exact name of registrant as specified in its charter)

3662 W. Camp Wisdom Road

Dallas, Texas 75237

(Address of Principal Executive Offices)

Registrant’s telephone number, including area code: 877-210-4396

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 ☐ No ☒

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 ☐ No ☒

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. Yes ☒ No ☐

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). Yes ☒ No ☐

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. Yes ☐ No ☒

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

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. ☒

If securities are registered pursuant to Section 12(b) of the Act, indicate by check mark whether the financial statements of the registrant included in the filing reflect the correction of an error to previously issued financial statements. ☐

Indicate by check mark whether any of those error corrections are restatements that required a recovery analysis of incentive-based compensation received by any of the registrant’s executive officers during the relevant recovery period pursuant to §240.10D-1(b). ☐

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

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, 2024, the last business day of the Registrant’s most recently completed fiscal quarter, was $240,561 (based on the closing sale price of the Registrant’s Common Stock on that date.

As of April 25, 2024, the Registrant had 2,405,609,162 shares of common stock issued and outstanding.

TABLE OF CONTENTS

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:

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.

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:

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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.

Business Operations

GEX Management is a Dallas-based management consulting and staffing 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.

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:

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.

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.

Number of Employees

As of December 31, 2023 we had 25 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, 2023, GEX’s corporate offices were located at 3662 W. Camp Wisdom Road, Dallas, Texas 75237.

Other Property

As of December 31, 2023, 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 and have been involved in legal proceedings, lawsuits and/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.

As discussed in NOTE 8 to the financial statements, the Company was involved in the following proceedings:

On September 13, 2019, a Judgment by Confession was entered in New York against the Company for $195,250 due to EMA Financial, LLC (“EMA”), a former convertible debtholder, for then-outstanding convertible notes in default, accrued interest and fees. On April 11, 2022, the court awarded a second judgment totaling $20,333. On or around October 5, 2021, a $200,000 payment was made to EMA Financial, and the parties entered into a Mutual Settlement and Release Agreement on August 15, 2022. The agreement called for payment of outstanding interest of $52,496 through August 10, 2022, to be paid as follows: $26,248 due on August 15, 2022, $13,124 due on September 12, 2022, and $13,124 due on October 12, 2022. The Company paid these amounts in 2022, and a Satisfaction of Judgment was entered by EMA on January 23, 2023. As of December 31,2023 and 2022, accrued interest under this agreement totaling $0 and $34,137, respectively, was included in accrued liabilities.

On October 16, 2018, C6 Capital, LLC (“C6”) obtained a Confession of Judgment for $534,655 against the Company. in Ontario County Supreme Court in the State of New York (Case No. 120802-2018 entitled C6 CAPITAL LLC - v. - GEX MANAGEMENT INC et al) related to previous merchant cash advance arrangements. On September 28, 2021, the Company commenced litigation (Case No. 130736-2021 entitled GEX MANAGEMENT INC et al v. C6 CAPITAL FUNDING LLC) against C6 but was unable to successfully vacate, settle or otherwise resolve the original judgment. As of each December 31, 2023 and 2022, the Company owed $534,655 on this judgment.

On March 22, 2019, Business Merchant Funding (“BMF”) obtained a Confession of Judgment for $151,191 against the Company. in Ontario County Supreme Court in the State of New York (Case No. 123479-2019 entitled BUSINESS MERCHANT FUNDING v. GEX MANAGEMENT INC et al) related to previous merchant cash advance arrangements. On September 28, 2021, the Company commenced litigation (Case No. 130737-2021 entitled GEX MANAGEMENT INC et al v. BUSINESS MERCHANT FUNDING LLC) against BMF, successfully vacating the judgment on February 17, 2022, resulting in a gain of $151,191 in 2022. As of each December 31, 2023 and 2022, the Company owed $0 on this judgment.

On October 9, 2018, EIN Cap., Inc. (“EIN”) obtained two Confessions of Judgment each for $471,591, totaling $943,182, against the Company. in Erie County Supreme Court in the State of New York (Case Nos. 815900-2018 and 815919-2018 each entitled EIN CAP, INC - v. - GEX MANAGEMENT INC/GEX MANAGEMENT INC DBA MYEASYHQ/ ATHERIA LLC/DORVIL FINANCIAL GROUP LLC/QUANTUM ENERGY & FINANCE LLC/GEX INSTITUTE LLC/SUCCESS TRAINING INSTITUTE LLC/GROUP EXCELLENCE MANGEMENT LLC/GROUP EXCELLENCE LLC/SUCCESS DYNASTY LLC/US CONSOLIDATE et al) related to previous merchant cash advance arrangements. On September 28, 2021, the Company commenced litigation (Case No. 813479-2021 entitled GEX MANAGEMENT, INC. et al v. EIN CAP INC.) against EIN. In November 2022, the EIN and the Company agreed to settle all three of proceedings for $50,000, resulting in a gain of $893,182 in 2021. In 2022, a payment was made for $12,500, and EIN agreed to accept a $30,000 payment to settle the remaining $37,500 balance. As of each December 31, 2022 and 2021, the Company owed $0 on this matter.

On April 25, 2023, the Workers’ Compensation Board of the State of New York obtained a judgment against the Company in the amount of $22,000 in the Albany County Supreme Court (Case No. 903715-23 entitled Workers’ Compensation Board of the State of New York vs GEX MANAGEMENT INC). As of December 31, 2023, $22,000 was outstanding on this judgment.

ITEM 4. MINE SAFETY DISCLOSURES

Not applicable.

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.

Shareholders

As of December 31, 2023, there were approximately 111 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 year ended December 31, 2023.

ITEM 6. SELECTED FINANCIAL DATA

As a Smaller Reporting Company, we are not required to report selected financial data.

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

GEX enters into contracts with its clients for management consulting and staffing 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, or as consultants work hours for hourly contracts, and the contracts generally have a term of one year with an automatic renewal after 12 months.

Management Consulting and Staffing Services

GEX Management recognizes revenue for its management consulting services in accordance with ASC 606 - Revenue from Contracts with Customers. The Company recognizes revenue under ASC 606, using the following five-step model, which requires that the Company: (1) identify a contract with the customer, (2) identify the performance obligations in the contract, (3) determine the transaction price, (4) allocate the transaction price to performance obligations and (5) recognize revenue as performance obligations are satisfied.

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 and rates to complete a given 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 as consultants perform the services.

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.

Results of Operations for the Year Ended December 31, 2023 Compared to the Year Ended December 31, 2022

Revenues

In 2023, the Company recognized $2,095,545 of revenue, as compared to $2,338,979 in 2022, for a decrease of $243,434 or 10%. The decrease in revenue is due to fluctuations as client needs changed.

Cost of Services and Gross Margins

In 2023, costs of revenues increased to $1,366,674, as compared to $1,234,243 in 2022, for an increase of $132,431 or 11%. This increase in cost of revenue impacted the company’s gross margin, which decreased from 47% in fiscal year 2022 to 35% in fiscal year 2023. The increase in cost of revenue was primarily driven by higher personnel costs.

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.

Operating Expenses

Operating expenses declined from $1,070,583 in 2022 to $809,639 in 2023, representing a decrease of $260,944 or 24%. 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.

Net Operating Loss

During fiscal year 2022, the Company’s generated net operating losses of $80,768 in 2023 and net operating income of $34,153 in 2022, for a change of $114,921 or 336%. This change in net loss was primarily driven by a decrease in revenue, net of improved cost management and a broader reduction in operating expenses.

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.

Other Income/(Expense)

In 2023, the Company recognized net other income of $481,055, as compared to $43,540,351 in 2022, for a decrease of $43,059,296 or 99%. This change was primarily driven by substantial changes in fair value of the derivative liability on the Company’s convertible debt, which resulted from a significant dilution-driven decline in the Company’s stock price in 2022 and 2023 that impacted key inputs used to value the derivative liability. The remaining changes in net other expense resulted from interest expense on convertible debt and losses on judgments.

Net Income

The Company generated net income of $400,287 during the year ended December 31, 2023, as compared to $43,574,504 for the year ended December 31, 2022, representing a decrease of $43,174,217 or 99%. The net income and substantial year-over-year change were primarily driven by accounting for derivative liabilities associated with the Company’s convertible debt.

Liquidity and Capital Resources

As shown in the accompanying financial statements as of December 31, 2023, the Company had $18,173 of cash and $499,160 of current assets, as compared to total current liabilities of $4,688,364, has incurred substantial recurring operating losses, and had an accumulated deficit of $17,500,100. Furthermore, the Company’s revenue and profits have historically been insufficient to generate positive cash flow, and there can be no assurances of future revenues or sufficient profits to fund operations.

The accompanying financial statements have been prepared assuming that the Company will continue as a going concern, however, the above conditions raise substantial doubt about the Company’s ability to continue as a going concern. The financial statements do not include any adjustments to reflect the possible future effect on the recoverability and classification of assets or the amounts and classifications of liabilities that may result should the Company be unable to continue as a going concern.

Given these factors, the Company frequently requires financing from outside parties, and management intends to pursue outside capital through debt and equity vehicles. The Company currently has no firm 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.

The Company has identified several potential financing sources necessary to fund operations. From time to time, management has taken short-term factoring and working capital loans against present and future receivables to timely fund the growth of the company. Management has eliminated this 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 revenues 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.

A summary of our cash flows for the twelve months ended December 31, 2023 and 2022 is as follows:

Net cash used in operating activities was $52,870 for the twelve months ended December 31, 2023, as compared to $237,945 of cash used in operating activities for the twelve months ended December 31, 2022, for a decrease of $185,075 or 78%. Cash used in operations decreased significantly due to reduced operating costs.

Net cash provided by financing activities was $0 for the twelve months ended December 31, 2023, as compared to $55,000 for the twelve months ended December 31, 2022, representing a decrease of $55,000 or 100%. The decrease was primarily due to no new convertible debt issuances in 2023.

ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

Not applicable.

ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

GEX MANAGEMENT, INC.

INDEX TO CONSOLIDATED FINANCIAL STATEMENTS

Report of Independent Registered Public Accounting Firm

To the shareholders and the board of directors of GEX Management, Inc.

Opinion on the Financial Statements

We have audited the accompanying consolidated balance sheets of GEX Management, Inc. as of December 31, 2023 and 2022, the related statements of operations, stockholders’ equity (deficit), and cash flows for the years then ended, 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, 2023 and 2022, and the results of its operations and its cash flows for the years then ended, in conformity with accounting principles generally accepted in the United States.

Substantial Doubt about the Company’s Ability to Continue as a Going Concern

The accompanying financial statements have been prepared assuming that the Company will continue as a going concern. As discussed in Note 3 to the financial statements, the Company’s significant operating losses raise substantial doubt about its ability to continue as a going concern. 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 audit. 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 audit 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 audit 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 audit 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 audit provides a reasonable basis for our opinion.

/S/ BF Borgers CPA PC

BF Borgers CPA PC (PCAOB ID 5041)

We have served as the Company’s auditor since 2023

Lakewood, CO

April 25, 2024

GEX Management, Inc.

Consolidated Balance Sheets

December 31, 2023 and 2022

See accompanying notes to the consolidated financial statements.

GEX Management, Inc.

Consolidated Statements of Operations Years Ended

December 31, 2023 and 2022

See accompanying notes to the consolidated financial statements.

GEX Management, Inc.

Consolidated Statement of Changes in Shareholders’ Deficit

Years Ended December 31, 2023 and 2022

See accompanying notes to the consolidated financial statements.

GEX Management, Inc.

Consolidated Statements of Cash Flow

Years Ended December 31, 2023 and 2022

See accompanying notes to the consolidated financial statements.

GEX Management, Inc.

Notes to the Consolidated Financial Statements

December 31, 2023