Close

Form 10-K/A GEX MANAGEMENT, INC. For: Dec 31

November 30, 2022 6:08 AM EST

Get instant alerts when news breaks on your stocks. Claim your 1-week free trial to StreetInsider Premium here.
0001681556 true FY 0001681556 2021-01-01 2021-12-31 0001681556 2022-11-29 0001681556 2021-12-31 0001681556 2020-12-31 0001681556 2020-01-01 2020-12-31 0001681556 us-gaap:CommonStockMember 2019-12-31 0001681556 us-gaap:AdditionalPaidInCapitalMember 2019-12-31 0001681556 us-gaap:RetainedEarningsMember 2019-12-31 0001681556 2019-12-31 0001681556 us-gaap:CommonStockMember 2020-12-31 0001681556 us-gaap:AdditionalPaidInCapitalMember 2020-12-31 0001681556 us-gaap:RetainedEarningsMember 2020-12-31 0001681556 us-gaap:CommonStockMember 2020-01-01 2020-12-31 0001681556 us-gaap:AdditionalPaidInCapitalMember 2020-01-01 2020-12-31 0001681556 us-gaap:RetainedEarningsMember 2020-01-01 2020-12-31 0001681556 us-gaap:CommonStockMember 2021-01-01 2021-12-31 0001681556 us-gaap:AdditionalPaidInCapitalMember 2021-01-01 2021-12-31 0001681556 us-gaap:RetainedEarningsMember 2021-01-01 2021-12-31 0001681556 us-gaap:CommonStockMember 2021-12-31 0001681556 us-gaap:AdditionalPaidInCapitalMember 2021-12-31 0001681556 us-gaap:RetainedEarningsMember 2021-12-31 0001681556 GXXM:ConvertibleNoteMember 2020-09-20 2020-09-21 0001681556 GXXM:ConvertibleNoteMember 2020-09-22 2020-09-23 0001681556 GXXM:ConvertibleNoteMember 2020-09-22 2020-09-24 0001681556 GXXM:ConvertibleNoteMember 2020-09-22 2020-09-25 0001681556 GXXM:ConvertibleNoteMember 2020-09-22 2020-09-29 0001681556 GXXM:ConvertibleNoteMember 2020-10-05 2020-10-06 0001681556 GXXM:ConvertibleNoteMember 2020-10-10 2020-10-16 0001681556 GXXM:ConvertibleNoteMember 2020-10-29 2020-11-02 0001681556 GXXM:ConvertibleNoteMember 2020-11-29 2020-12-03 0001681556 GXXM:ConvertibleNoteMember 2020-12-01 2020-12-08 0001681556 GXXM:ConvertibleNoteMember 2020-12-01 2020-12-10 0001681556 GXXM:ConvertibleNoteOneMember 2020-12-01 2020-12-10 0001681556 GXXM:ConvertibleNoteMember 2020-12-09 2020-12-14 0001681556 GXXM:ConvertibleNoteMember 2020-12-09 2020-12-15 0001681556 GXXM:ConvertibleNoteMember 2020-12-09 2020-12-17 0001681556 GXXM:ConvertibleNoteMember 2020-12-20 2020-12-21 0001681556 GXXM:ConvertibleNoteOneMember 2020-12-09 2020-12-15 0001681556 GXXM:ConvertibleNoteMember 2020-12-20 2020-12-24 0001681556 GXXM:ConvertibleNoteOneMember 2020-12-20 2020-12-24 0001681556 GXXM:ConvertibleNoteMember 2020-12-20 2020-12-28 0001681556 GXXM:ConvertibleNoteMember 2020-12-20 2020-12-29 0001681556 GXXM:ConvertibleNoteMember 2020-12-20 2020-12-30 0001681556 GXXM:ConvertibleNoteMember 2020-12-20 2020-12-31 0001681556 GXXM:ConvertibleNoteMember 2021-01-01 2021-01-31 0001681556 GXXM:ConvertibleNoteMember 2021-02-01 2021-02-28 0001681556 GXXM:ConvertibleNoteMember 2021-03-01 2021-03-31 0001681556 GXXM:ConvertibleNoteMember 2021-04-01 2021-04-30 0001681556 GXXM:ConvertibleNoteMember 2021-05-01 2021-05-31 0001681556 GXXM:ConvertibleNoteMember 2021-06-01 2021-06-30 0001681556 GXXM:ConvertibleNoteMember 2021-07-01 2021-07-31 0001681556 GXXM:ConvertibleNoteMember 2021-08-01 2021-08-31 0001681556 GXXM:ConvertibleNoteMember 2021-09-05 2021-09-30 0001681556 GXXM:ConvertibleNoteMember 2021-12-01 2021-12-31 0001681556 GXXM:ConvertibleNoteMember us-gaap:CommonStockMember us-gaap:InvestorMember 2021-12-31 0001681556 us-gaap:WarrantMember 2021-12-31 0001681556 us-gaap:WarrantMember 2020-12-31 0001681556 GXXM:ConvertibleNotesMember 2018-12-31 0001681556 GXXM:ConvertibleNotesMember 2019-12-31 0001681556 GXXM:ConvertibleNotesMember 2018-01-01 2018-12-31 0001681556 GXXM:ConvertibleNotesMember 2019-01-01 2019-12-31 0001681556 GXXM:ConvertiblePromissoryNoteMember 2021-06-09 0001681556 GXXM:ConvertiblePromissoryNoteMember 2021-06-07 2021-06-09 0001681556 GXXM:ConvertiblePromissoryNoteMember 2021-06-25 0001681556 GXXM:ConvertiblePromissoryNoteMember 2021-06-23 2021-06-25 0001681556 GXXM:ConvertiblePromissoryNoteMember 2021-07-08 0001681556 GXXM:ConvertiblePromissoryNoteMember 2021-07-06 2021-07-08 0001681556 GXXM:ConvertiblePromissoryNoteMember 2021-08-09 0001681556 GXXM:ConvertiblePromissoryNoteMember 2021-08-06 2021-08-09 0001681556 GXXM:ConvertiblePromissoryNoteMember 2021-08-10 0001681556 GXXM:ConvertiblePromissoryNoteMember 2021-08-06 2021-08-10 0001681556 GXXM:ConvertiblePromissoryNoteOneMember 2021-08-10 0001681556 GXXM:ConvertiblePromissoryNoteOneMember 2021-08-06 2021-08-10 0001681556 GXXM:ConvertiblePromissoryNoteMember 2021-08-20 0001681556 GXXM:ConvertiblePromissoryNoteMember 2021-08-17 2021-08-20 0001681556 GXXM:ConvertiblePromissoryNoteMember 2021-09-01 0001681556 GXXM:ConvertiblePromissoryNoteMember 2021-08-27 2021-09-01 0001681556 GXXM:ConvertiblePromissoryNoteOneMember 2021-09-01 0001681556 GXXM:ConvertiblePromissoryNoteOneMember 2021-08-27 2021-09-01 0001681556 GXXM:ConvertiblePromissoryNoteTwoMember 2021-09-01 0001681556 GXXM:ConvertiblePromissoryNoteTwoMember 2021-08-27 2021-09-01 0001681556 GXXM:ConvertiblePromissoryNoteThreeMember 2021-09-01 0001681556 GXXM:ConvertiblePromissoryNoteThreeMember 2021-08-27 2021-09-01 0001681556 GXXM:ConvertiblePromissoryNoteMember 2021-09-02 0001681556 GXXM:ConvertiblePromissoryNoteMember 2021-08-27 2021-09-02 0001681556 GXXM:ConvertiblePromissoryNoteMember 2021-09-08 0001681556 GXXM:ConvertiblePromissoryNoteMember 2021-09-06 2021-09-08 0001681556 GXXM:ConvertiblePromissoryNoteOneMember 2021-09-08 0001681556 GXXM:ConvertiblePromissoryNoteOneMember 2021-09-06 2021-09-08 0001681556 GXXM:ConvertiblePromissoryNoteMember 2021-09-09 0001681556 GXXM:ConvertiblePromissoryNoteMember 2021-09-06 2021-09-09 0001681556 GXXM:CreditAgreementMember 2015-03-01 2015-03-01 0001681556 us-gaap:CommonStockMember us-gaap:SubsequentEventMember 2022-01-01 2022-04-30 0001681556 us-gaap:CommonStockMember us-gaap:SubsequentEventMember 2022-04-30 iso4217:USD xbrli:shares iso4217:USD xbrli:shares xbrli:pure utr:sqft

 

 

 

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

FORM 10-K/A

 

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

 

For the Fiscal Year Ended December 31, 2021

 

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)

 

Texas   001-38288   56-2428818

(State or other jurisdiction

of incorporation)

 

(Commission

File Number)

 

(IRS Employer

Identification No.)

 

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.

 

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
       
Non-Accelerated Filer Smaller Reporting Company
       
Emerging growth company    

 

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

 

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

 

Indicate the number of Shares of outstanding of each of the Registrant’s classes of common stock, as of the latest practicable date: As of November 29, 2022, the Registrant had 516,588,823 shares of common stock outstanding.

 

 

 

 

 

  

EXPLANATORY NOTE

 

This Amendment No. 2 (“Amendment No. 2”) to the Annual Report on Form 10-K of GEX Management, Inc. (together with the subsidiaries, the “Company”, “we”, “our”, or “us”) for the fiscal year ended December 31, 2021 filed with the Securities and Exchange Commission on August 1, 2022 (the “2021 Annual Report”), is to amend Part II (Item 9A) with updated notes related to the effectiveness of internal controls and with the updated audit report and related information as reviewed by the Independent Registered Public Accounting Firm per the requirements of Form 10-K.

 

In addition, this Amendment amends Item 6 of Part II to include new certifications being provided with this Amendment pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

 

 

 

 

TABLE OF CONTENTS

 

  PART I  
     
Item 1. Business 4
Item 1A. Risk Factors 7
Item 1B. Unresolved Staff Comments 7
Item 2. Description of Properties 7
Item 3. Legal Proceedings 7
Item 4. Mine Safety Disclosures 7
     
  PART II  
     
Item 5. Market for Registrant’s Common Equity, Related Shareholder Matters and Issuer Purchases of Equity Securities 8
Item 6. Selected Financial Data 8
Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations 9
Item 7A. Quantitative and Qualitative Disclosures about Market Risk 11
Item 8. Financial Statements and Supplementary Data 11
Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure 12
Item 9A. Controls and Procedures 12
Item 9B. Other Information 12
     
  PART III  
     
Item 10. Directors, Executive Officers and Corporate Governance 13
Item 11. Executive Compensation 16
Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Shareholder Matters 17
Item 13. Certain Relationship and Related Transactions and Director Independence 17
Item 14. Principal Accounting Fees and Services 17
     
  PART IV  
     
Item 15. Exhibits and Financial Statement Schedules 18

 

2

 

 

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.

 

3

 

 

PART I

 

ITEM 1. BUSINESS

 

History and Development of Business

 

GEX Management, Inc. was originally formed in 2004 by Carl Dorvil 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 current management of GEX under the guidance of CEO, 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. As a result of management efforts, GEX Management was invited in February 2019 to be a Preferred Supplier to Insight Global (www.insightglobal.com), 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 .. As a direct result of the high market demand for experienced technology consultants via its multiple supplier programs, the GEX team has interviewed and is in the process of procuring 45 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 and are expected to be fully staffed by its corporate clients by Q4 2021. Additionally, GEX plans to hire and place more than 100 enterprise consultants over the next 18 - 24 month period to satisfy its growing pipeline of future contracts. As a result of these market initiatives, GEX forecasts to potentially achieve approximately $20- $25M in gross billings over the next 18-24 month period, assuming all projected contracts are fully placed on projects that have been currently identified by the GEX supplier program pipeline and businesses begin to re-open as the pandemic related restrictions are removed.

 

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 the last two years. This contract has resulted in enormous growth opportunities for GEX and is expected to significantly expand growth in future periods as well. GEX has also 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 is 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.

 

In addition to these planned strategic growth initiatives which had started to build momentum in 2019 and gained significant traction in 2021, 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. As part of this balance sheet “clean-up” initiative, on February 8 2019, GEXM and the G&C Family LLC executed a “Deed in Lieu of Foreclosure” agreement the terms of which would allow GEXM to release ownership of the Arkansas building under AMAST LLC to the G&C Family Group, LLC in return for cancellation of the $1,300,000 real estate lien note secured by the building along with any and all accrued interest payable on the note as of the date of the agreement. Additionally, on March 5, 2019, one of GEX’s promissory note holders proceeded to execute its rights to enforce the liens on the Setco property through a foreclosure process which resulted in the note holder taking possession of the Setco property resulting in the elimination of a $500,000 note and any accrued interest on the principal amount and the elimination of $1,125,000 Setco real estate lien note made to Setco along with any accrued interests from the Company books. Furthermore, GEX has been able to significantly reduce the overall debt and debt like instruments on the balance sheet through strategic conversions of convertible notes to common equity initiated by the convertible note issuers throughout 2019, 2020 and 2021 and settlement or elimination of certain MCA and debt like instruments. This focus on balance sheet cleanup and to stay significantly “asset-lite” is expected to achieve material results by Q2 2022, 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.

 

4

 

 

Business Operations

 

GEX Management is a progressive and growing provider of business services, consulting and staffing solutions to corporations across the nation. We provide both long and short-term consulting and staffing solution services, including corporate consulting, enterprise strategy and technology consulting, enterprise project management; grey, white and blue collar staffing solutions and Human Capital Management (HCM) solution capabilities.

 

GEX Management is strategically purposed to provide tailored business service products and services to our clients. Our client-responsive approach is a key differentiator in the industry.

 

Specific services are described below:

 

 

5

 

 

Business Strategy

 

Our objective is to become a leading management consulting, technology and business services company, and to continuously expand our client base. We seek to achieve this objective by continuing to implement our business strategy, which includes the primary elements enumerated below.

 

Marketing and Sales

 

Our comprehensive marketing efforts are fluid, adaptive, and results-driven. They comprise both traditional and non- traditional channels including print collateral, website, video, PowerPoint presentations, digital ads, social media posts and press releases. We likewise employ a small sales team. We strategically target large and medium sized businesses

that require the services we provide. Previously, a significant amount of corporate revenue has been derived through client referrals and management’s personal relationships. Our plan is to continue to leverage these important relationships while expanding our brand reach by means of integrated marketing campaigns, more timely, informative, and effectual messaging, and greater collaboration between marketing and sales in order to increase both client and sales growth.

 

Industry and Competitors

 

The Professional Staffing industry is highly fragmented, resulting in robust competition. Competition affects our success in both the market segments we currently serve, as well as the new market segments we may enter in the future. We compete with several large management and technology consulting companies that provide identical services to those GEX Management provides; some offer additional services. The financial and marketing resources of some of our competitors exceed those of GEX Management. Businesses primarily select a service provider based on price point/value, innovative/flexible product offerings, and quality of customer service.

 

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.

 

6

 

 

Number of Employees

 

As of December 31, 2021 we had 15 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, 2021, GEX’s corporate offices were located at 3662 W. Camp Wisdom Road, Dallas, Texas 75237.

 

Other Property

 

As of December 31, 2021, 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 5. DEFAULTS UPON SENIOR SECURITIES

 

In connection with the Merchant Cash Advances, the company has occasionally defaulted on making certain daily interest payments as a result of lack of immediate access to capital to fulfill short term payment obligations related to these MCAs. As a result of these defaults in timely payments, Confession of Judgements have been filed by some of these MCAs in the New York district courts and GEX is currently in the process of negotiating settlement terms on monies owed to these parties. As a result of the highly irregular and unregulated nature of the Merchant Cash Advance industry, current management has taken the decision to move away from these cash advance opportunities introduced by the prior finance teams and will, going forward, solely rely on more traditional and regulated sources of financing available within the investment and regulated capital markets. Additionally, current management has determined it to be necessary to cease active business discussions with MCAs and proceed with settlement discussions to reduce or eliminate the monies owed to the MCAs and related parties in a timely manner. The management has also hired a legal team to contest some of these Confession of Judgements which the management believes were incorrectly filed by the MCAs. The potential inability of the Company to satisfy these MCA obligations or settle in a timely manner could result in a significant impact on the financial and operational health of the company which could also potentially result in the company pursuing Chapter 11 bankruptcy and /or similar legal avenues if it is not able to settle these outstanding MCA obligations in a timely manner. While the management team has already begun these settlement conversations and is hopeful of reaching all resolutions in a timely manner, there can be no guarantee that such a settlement will be reached any time soon.

 

ITEM 4. MINE SAFETY DISCLOSURES

 

Not applicable.

 

7

 

 

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 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, 2021, 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.

 

8

 

 

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

 

Staffing Services and Professional Services

 

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

 

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

 

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

 

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

 

All staffing and consulting workers 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.

 

9

 

 

Results of Operations for the Year Ended December 31, 2021 Compared to the Year Ended December 31, 2020

 

Revenues

 

Revenues for the year ended December 31, 2021 and 2020 were $1,315,669 and $750,682, respectively. The 75% increase in year over year sales is attributable to a significant expansion in client footprints, aggressive business development efforts and a focus on higher end management and technology consulting business expansion and growth opportunities. Additionally, the management has put in processes in place to strengthen internal controls such as, (1) adherence to established contract markups through enforcement of systematic and auto-invoicing processes to minimize manual errors and enforcing timely invoice submission to clients (2) frequent follow ups by the executive management team to ensure invoices and receivables are tracked and closed in a timely manner, and (3) timely alerts to customers to notify on upcoming billing cycles and payment dues. All of these efforts have resulted in a strong

 

Cost of Services and Gross Profit

 

The Company’s gross profit in 2021 was $820,971 compared to $636,965 in 2020. The 29% increase in gross margin was primarily due to signing more consulting contracts in 2021 compared to 2020 and also significant cost rationalization efforts associated with customer contracts relating to our business services in 2021 compared to 2020 and prior periods.

 

Operating Expense

 

Total operating expense in the years ended December 31, 2021 and 2020 were $2,719,876 and $680,202 respectively. The increased expenses reflect the increased operating expenses associated with higher staff addition and costs related to greater volume of customer contracts relating to our business services in 2021 compared to 2020

 

Net Loss

 

Net loss for the years ended December 31, 2021 and 2020 was $6,052,523 and $224,947, respectively. The higher losses for 2021 compared to 2020 was attributable to increased operating expenses and non-operating expenses resulting from the loss on debt extinguishment and impairment of long-lived assets.

 

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, 2022. Management believes that it has been historically difficult for minority and women owned businesses to get access to reasonably price capital at scale which creates an opportunity to invest into these companies and receive a greater than average return for our shareholders. However, the opportunity to make a significant return for our investors is so overwhelmingly compelling that 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 intends to move away from these expensive debt like obligations and rely on other traditional and non-traditional debt instruments primarily in the form of convertible notes as well as explore 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.

 

10

 

 

A summary of our cash flows for the twelve months ended December 31, was as follows:

 

   2021   2020 
Net cash used in operating activities  $(948,045)  $(93,192)
Net cash used in investing activities   -    - 
Net cash provided by financing activities   1,048,067    95,570 
Net increase(decrease) in cash and cash equivalents  $130,997   $2,378 

 

Net cash in operating activities was a use of $2,140,047 for the twelve months ended December 31, 2021 as compared to $461,038 cash in operating activities for the twelve months ended December 31, 2020. The increase in cash used in operating activities was in part due to higher operating expenses in 2021 as the Company focused 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 $1,048,067 for the twelve months ended December 31, 2021 was primarily from debt /debt like instruments in the balance sheet.

 

Net cash used in investing activities for the twelve months ended December 31, 2021 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.

 

11

 

 

ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURES

 

During the year ended December 31, 2020 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, 2021 and December 31 2020, 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”)

 

ITEM 9A. CONTROLS AND PROCEDURES

 

Management’s Annual Report on Internal Control over Financial Reporting

 

Our management is responsible for establishing and maintaining adequate internal control over financial reporting, as such term is defined in Rules 13a-15(f) and 15d-15(f) of the Exchange Act. 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, 2021 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, 2021, 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 Financial Officer in connection with the preparation of our financial statements as of December 31, 2021 and communicated the matters to our management and board of directors.

 

Management is currently evaluating remediation plans for the above control deficiency. Accordingly, the Company concluded that this control deficiency resulted in a reasonable possibility that a material misstatement of the annual or interim financial statements will not be prevented or detected on a timely basis by the company’s internal controls.

 

As a result of the material weaknesses described above, management has concluded that the Company did not maintain effective internal control over financial reporting as of December 31, 2021 based on criteria established in Internal Control—Integrated Framework issued by COSO.

 

ITEM 9B. OTHER INFORMATION

 

None.

 

12

 

 

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, 2021.

 

Name   Age   Position   Held Since
Joseph Frontiere   32   CEO & CFO   October 2021
3662 W. Camp Wisdom Road            
Dallas, Texas 75237            
             
Sri Vanamali   39   President, Director   October 2018
3662 W. Camp Wisdom Road            
Dallas, Texas 75237            
             
Shaheed Bailey   35   Director   October 2018
3662 W. Camp Wisdom Road            
Dallas, TX 75237            

 

Joseph Frontiere, age 32, had been serving as CEO and CFO of the Company since October 2021. Prior to that, from June 2010 through September 2012, he served as a CEO of Lorde Global, a company that provided strategic consulting services.

 

Srikumar Vanamali, age 39, 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 2018, Mr. Vanamali became the Chief Executive Officer and Executive Director for GEX Management, Inc., and currently serves in the role of President.

 

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 in these roles.

 

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.

 

13

 

 

Board of Directors

 

Our Board of Directors currently consists of two 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);

 

14

 

 

(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.

 

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.

 

15

 

 

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, 2020 in all capacities for the accounts of our executives, including the Chief Executive Officer (“CEO”) and Interim Chief Operating Officer (“Interim COO”):

 

The following officers received the following compensation for the years ended December 31, 2020. These officers have employment contracts with the Company.

 

Name and principal position  Year  Salary   Bonus  Stock Awards  Option Awards 

Non-equity

incentive plan compensation

 

Nonqualified

deferred compensation

  All other compensation
Joseph Frontiere,  2021   -   None  None  None  None  None  None
CEO  2020   -   None  None  None  None  None  None
                           
Sri Vanamali,  2021  $200,000   None  None  None  None  None  None
President  2020  $200,000   None  None  None  None  None  None
                           
Shaheed Bailey,  2019   -   None  None  None  None  None  None
Interim Chief Investment Officer  2019   -   None  None  None  None  None  None

 

   Option Awards  Stock Awards
Name and principal position  Number of Securities Underlying Unexercised options (#) exercisable   Number of Securities Underlying Unexercised options (#) Unexercisable  Equity incentive plan awards 

Option

exercise

price

  

Option expiration

date

  Number of share awards that have not vested
Srikumar Vanamali, President   300,000   None  None  $1   N/A  None
Shaheed Bailey, Interim CIO   300,000   None  None  $1   N/A  None

 

Employment Agreements

 

We have employment agreements in place with each of the above referenced officers of the Company.

 

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.

 

16

 

 

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 Votes Held by Common

Stockholders

  

 

Percentage of

Voting Equity (1)(3)

 
Joseph Frontiere, (1)   0    400,000    0    25.5%
Sri Vanamali (2)   0    400,000    0    25.5%
All directors and officers as a group (2 persons)   0    800,000         51.0%
Total   0    800,000    0    51.0%

 

(1) Based upon 49,542,110 shares of Common Stock and 800,000 Super Voting Preferred Stock issued and outstanding as of April 15, 2021, Mr. Frontiere’s voting stock represents 25.5% or 12,633,238 shares of voting capital stock. Mr. Frontiere is the CEO of the Company.
(2) Based upon 49,542,110 shares of Common Stock and 800,000 Super Voting Preferred Stock issued and outstanding as of April 15, 2021. Mr. Vanamali’s voting stock is 25.5% or 12,633,238 shares of voting capital stock. Mr. Vanamali is the President of the Company.
(3) Includes shares of Common Stock and Super Voting Preferred Stock owned by our officers and directors as a group (2 persons).

 

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, 2021 was $15,000.

 

Audit Related Fees

 

None.

 

Tax Fees

 

None.

 

All Other Fees

 

None.

 

17

 

 

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)

 

18

 

 

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 November 30, 2022.

 

  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  November 30, 2022
  Sri Vanamali        

 

19

 

 

GEX MANAGEMENT, INC.

 

INDEX TO CONSOLIDATED FINANCIAL STATEMENTS

 

Report of Independent Registered Public Accounting Firm (PCAOB ID: 6849) 21
Consolidated Balance Sheets as of December 31, 2021 and 2020 22
Consolidated Statements of Operations for the Years Ended December 31, 2021 and 2020 23
Consolidated Statement of Changes in Shareholders’ Deficit for the Years Ended December 31, 2021 and 2020 24
Consolidated Statements of Cash Flows for the Years Ended December 31, 2021 and 2020 25
Notes to the Consolidated Financial Statements for the Years Ended December 31, 2021 and 2020 26

 

20

 

 

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, 2021 and 2020, and the related statement of operations, shareholders’ deficit, and cash flows for each of the years in the two-year period ended 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, 2021 and 2020, and the results of its operations and its cash flows for each of the years in the two-year period ended 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/ Hudgens CPA, PLLC  
www.hudgenscpas.com  
We have served as the Companys auditor since 2021.  
Houston, Texas  
July 29, 2022  

 

21

 

 

GEX Management, Inc.

Consolidated Balance Sheets

December 31, 2021 and 2020

 

   2021   2020 
Assets          
Current Assets:          
Cash and cash equivalents  $137,638   $6,641 
Accounts receivable, net   170,380    211,222 
Other current assets and prepaids   5,682    107,289 
Total Current Assets  $313,700   $325,152 
Other assets   -    3,131,545 
Total Assets  $313,700   $3,456,697 
Liabilities and Shareholders’ Deficit          
Current Liabilities:          
Accounts payable  $30,206   $10,833 
Related party payables   

172,567

    

141,592

 
Accrued expenses   352,176    233,688 
Accrued interest payable   74,270    99,445 
Convertible notes payable, net   980,290    634,290 
Settlement Payable   195,250    195,250 
Line of credit – related party   483,677    483,677 
Notes Payable   

3,174,977

    

3,174,977

 
Total Current Liabilities   5,463,413    4,973,752 
Total Liabilities   5,463,413    4,973,752 
Shareholders’ Deficit          
Common stock, $0.001 par value; 100,000,000,000 shares authorized, at December 31, 2021 and December 31, 2020 there were 172,478,025 and 3,616,044 issued and outstanding, respectively   172,478    3,616 
Additional Paid-In-Capital   7,536,452    5,285,449 
Accumulated Deficit   (12,858,643)   (6,806,120)
Total Shareholders’ Deficit   (5,149,713)   (1,517,055)
Total Liabilities and Shareholders’ Deficit  $313,700   $3,456,697 

 

See accompanying notes to the consolidated financial statements.

 

22

 

 

GEX Management, Inc.

Consolidated Statements of Operations Years Ended

December 31, 2021 and 2020

 

   2021   2020 
Revenues  $1,315,669   $750,682 
Cost of Revenues   494,698    113,717 
Gross Profit   820,971    636,965 
Operating Expenses:          
General and administrative   2,719,876    680,202 
Total Operating Expenses   2,719,876    680,202 
Total Operating Loss   (1,898,905)   (43,237)
Other Income (Expense)          
Gain (loss) on Extinguishment of Debt   (607,605)   340,551 
Impairment expense   

(2,917,945

)   

-

 
Interest Expense   (613,703)   (125,438)
Derivative Gain (Loss)   -    (521,289)
Other Income (Expense)   (14,356)   123,866
Net Other Income (Expense)   (4,153,618)   (181,530)
Net Loss  $(6,052,523)  $(224,947)
Income per common share:          
Net loss per common share – basic and diluted  $(0.04)  $(0.07)
           
Weighted Average Shares:          
Basic and diluted   167,316,519    3,163,044 

 

See accompanying notes to the consolidated financial statements.

 

23

 

 

GEX Management, Inc.

Consolidated Statement of Changes in Shareholders’ Deficit

Years Ended December 31, 2021 and 2020

 

                     
   Common       Additional
Paid-In-
   Accumulated     
   Shares   Amount   Capital   Deficit   Total 
Balance December 31, 2019   590,351   $1,043   $5,207,921   $(6,581,173)  $(1,372,209)
Shares issued for services   131,717    132    24,783    -    24,915 
Shares issued of for debt conversions   2,440,976    2,441    52,745    -    55,186 
Net loss   

-

    

-

    

-

    

(224,947

)   

(224,947

)
Balance at December 31, 2020   3,616,044   $3,616   $5,285,449   $(6,806,120)  $(1,517,055)
                          
Beneficial Conversion Feature   -    -    1,334,143    -    1,334,143 
Issuance of Common Shares for Debt Conversions   168,861,981    168,862    916,860    -    1,085,722 
Net Loss                  (6,052,523)   (6,052,523)
Balance at December 31, 2021   172,478,025   $172,478   $7,536,452   $(12,858,643)  $(5,149,713)

 

See accompanying notes to the consolidated financial statements.

 

24

 

 

GEX Management, Inc.

Consolidated Statements of Cash Flow

Years Ended December 31, 2021 and 2020

 

   2021   2020 
Operating Activities:           
           
Net Loss   $(6,052,523)   (224,947)
Adjustments to reconcile net loss to net cash used by operating activities:           
Depreciation and Amortization    213,600    230,314 
Gain/loss on Extinguishment of Debt    607,605    (340,551
Amortization of debt discount   

539,433

    - 
Impairment   

2,917,945

    

-

 
Stock based compensation   

-

    

24,915

 
Gain /Loss on Derivative Instruments         521,289
Change in Assets and Liabilities:           
Accounts Receivable    40,842    (203,755)
Other Current Assets   101,607   111,838 
Other Assets   -   -
Accounts Payable    19,373    22,922 
Accrued Expenses    118,488    (50,112)
Accrued Interest Payable    74,270    (185,105)
Net Cash Used by Operating Activities   $(1,419,360)   (93,192)
Financing Activities:           
Proceeds from convertible notes payable   1,550,357    95,570
           
Net Cash Provided by Financing Activities   $1,550,357   $95,570
Net increase in cash and cash equivalents   $130,997   $2,378
Cash and cash equivalents           
Cash and cash equivalents at beginning of year    6,641    4,263 
Cash and cash equivalents at end of year   $137,638   $6,641 
Supplemental Disclosures:           
           
Non-Cash Investing and Financing Activities:           
Common Shares Issued for Debt Conversions  $1,085,722   $55,186 
Beneficial conversion feature  $1,334,143   - 

 

See accompanying notes to the consolidated financial statements.

 

25

 

 

GEX Management, Inc.

Notes to the Consolidated Financial Statements

December 31, 2021

 

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.

 

26

 

 

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, 2021, and 2020, 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, 2021 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 professional 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.

 

Staffing Services and Professional Services

 

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

 

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

 

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

 

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

 

Income Taxes

 

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

 

27

 

 

Fair Value Measurements

 

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

 

Earnings Per Share

 

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

 

Reclassifications

 

Certain prior year amounts have been reclassified to conform to the current year presentation. Such reclassifications have had no effect on the financial position as of December 31, 2021, statements of operations or cash flows for the periods ended December 31 2021.

 

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, 2021, 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.

 

28

 

 

NOTE 3. STOCKHOLDERS’ EQUITY

 

General

 

On September 21, 2020, the Company issued 30,409 shares of common stock related to a convertible note conversion.

 

On September 23, 2020, the Company issued 31,872 shares of common stock related to a convertible note conversion.

 

On September 24, 2020, the Company issued 336,134 shares of common stock related to a convertible note conversion.

 

On September 25, 2020, the Company issued 39,085 shares of common stock related to a convertible note conversion.

 

On September 29, 2020, the Company issued 57,808 shares of common stock related to a convertible note conversion.

 

On October 6, 2020, the Company issued 60,693 shares of common stock related to a convertible note conversion.

 

On October 16, 2020, the Company issued 51,170 shares of common stock related to a convertible note conversion.

 

On November 2, 2020, the Company issued 66,294 shares of common stock related to a convertible note conversion.

 

On December 3, 2020, the Company issued 69,583 shares of common stock related to a convertible note conversion.

 

On December 8, 2020, the Company issued 72,860 shares of common stock related to a convertible note conversion.

 

On December 10, 2020, the Company issued 76,691 shares of common stock related to a convertible note conversion.

 

On December 10, 2020, the Company issued 72,860 shares of common stock related to a convertible note conversion.

 

On December 14, 2020, the Company issued 72,700 shares of common stock related to a convertible note conversion.

 

On December 15, 2020, the Company issued 84,153 shares of common stock related to a convertible note conversion.

 

On December 17, 2020, the Company issued 81,481 shares of common stock related to a convertible note conversion.

 

On December 21, 2020, the Company issued 84,153 shares of common stock related to a convertible note conversion.

 

On December 15, 2020, the Company issued 100,636 shares of common stock related to a convertible note conversion.

 

On December 24, 2020, the Company issued 105,658 shares of common stock related to a convertible note conversion.

 

On December 24, 2020, the Company issued 209,643 shares of common stock related to a convertible note conversion.

 

29

 

 

On December 28, 2020, the Company issued 81,633 shares of common stock related to a convertible note conversion.

 

On December 29, 2020, the Company issued 240,884 shares of common stock related to a convertible note conversion.

 

On December 30, 2020, the Company issued 272,828 shares of common stock related to a convertible note conversion.

 

On December 31, 2020, the Company issued 141,118 shares of common stock related to a convertible note conversion.

 

During the year ended December 31, 2020, the Company issued 131,717 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 $24,915.

 

In January 2021, the Company issued a total of 9,775,136 shares of common stock related to a convertible note conversions.

 

In February 2021, the Company issued a total of 16,464,637 shares of common stock related to a convertible note conversions.

 

In March 2021, the Company issued a total of 19,758,900 shares of common stock related to a convertible note conversions.

 

In April 2021, the Company issued a total of 14,216,850 shares of common stock related to convertible notes.

 

In May 2021, the Company issued a total of 9,404,717 shares of common stock related to convertible notes.

 

In June 2021, the Company issued a total of 24,611,656 shares of common stock related to convertible notes.

 

In July 2021, the Company issued a total of 25,599,299 shares of common stock related to convertible notes.

 

In August 2021, the Company issued a total of 27,291,759 shares of common stock related to convertible notes.

 

In September 2021, the Company issued a total of 1,720,213 shares of common stock related to convertible notes.

 

In December 2021, the Company issued a total of 15,310,308 shares of common stock related to convertible notes.

 

During the year ended December 31, 2021, The Company issued 330,000,000 warrants to purchase common stock to investors in connection with the issuance of convertible notes payable. The warrants have a weighted average remaining term of 5 years and a weighted average exercise price of $0.0035 per share.

 

Total warrants outstanding and exercisable as of December 31, 2021 and December 31, 2020 were 330,000,000 and zero, respectively.

 

30

 

 

NOTE 4. NOTES PAYABLE

 

In 2018, the Company entered into several notes secured by future receivables of the Company. The Lender declared bankruptcy and the Company has made no payments on the notes since fiscal year 2019. The notes are recorded on the balance sheet in the amount of $3174,977.

 

During fiscal years 2018 and 2019, the Company entered into multiple convertible notes with various lenders. The notes were convertible at a fixed price of $2.50 per share and contained interest rates of 8% per annum. The notes all contained a term of 1 year. During fiscal year 2021, all of these notes were settled for shares of common stock and contained various penalties that resulted in the loss on debt extinguishment totaling $607,605.

 

On June 9, 2021, the Company entered into a convertible promissory note in the amount of $80,000 bearing interest at 10% per annum with a term of 1 year. The principal and any accrued interest is convertible at the option of the holder at any time from the date of issuance at a fixed price of $0.0035 per share. Additionally, the note holder was granted 22,857,143 warrants at an exercise price of $0.0035 per share. The Company evaluated the note for a beneficial conversion feature and determined that a full discount of $80,000 should be recorded against the note based on the market price on the date of issuance.

 

On June 25, 2021 the Company entered into a convertible promissory note in the amount of $110,000 bearing interest at 10% per annum with a term of 1 year. The principal and any accrued interest is convertible at the option of the holder at any time from the date of issuance at a fixed price of $0.0035 per share. Additionally, the note holder was granted 31,428,571 warrants at an exercise price of $0.0035 per share. The Company evaluated the note for a beneficial conversion feature and determined that a full discount of $110,000 should be recorded against the note based on the market price on the date of issuance.

 

On July 8, 2021 the Company entered into a convertible promissory note in the amount of $600,000 bearing interest at 10% per annum with a term of 1 year. The principal and any accrued interest is convertible at the option of the holder at any time from the date of issuance at a fixed price of $0.0035 per share. The Company evaluated the note for a beneficial conversion feature and determined that a discount of $188,571 should be recorded against the note based on the market price on the date of issuance.

 

On August 9, 2021 the Company entered into a convertible promissory note in the amount of $295,000 bearing interest at 10% per annum with a term of 1 year. The principal and any accrued interest is convertible at the option of the holder at any time from the date of issuance at a fixed price of $0.0035 per share. Additionally, the note holder was granted 84,285,714 warrants at an exercise price of $0.0035 per share. The Company evaluated the note for a beneficial conversion feature and determined that a full discount of $295,000 should be recorded against the note based on the market price on the date of issuance.

 

On August 10, 2021, the Company entered into a convertible promissory note in the amount of $100,000 bearing interest at 10% per annum with a term of 1 year. The principal and any accrued interest is convertible at the option of the holder at any time from the date of issuance at a fixed price of $0.0035 per share. Additionally, the note holder was granted 28,571,429 warrants at an exercise price of $0.0035 per share. The Company evaluated the note for a beneficial conversion feature and determined that a full discount of $100,000 should be recorded against the note based on the market price on the date of issuance.

 

On August 10, 2021, the Company entered into a convertible promissory note in the amount of $95,000 bearing interest at 10% per annum with a term of 1 year. The principal and any accrued interest is convertible at the option of the holder at any time from the date of issuance at a fixed price of $0.0035 per share. Additionally, the note holder was granted 21,142,857 warrants at an exercise price of $0.0035 per share. The Company evaluated the note for a beneficial conversion feature and determined that a full discount of $95,000 should be recorded against the note based on the market price on the date of issuance.

 

On August 20, 2021, the Company entered into a convertible promissory note in the amount of $100,000 bearing interest at 10% per annum with a term of 1 year. The principal and any accrued interest is convertible at the option of the holder at any time from the date of issuance at a fixed price of $0.0035 per share. Additionally, the note holder was granted 28,571,429 warrants at an exercise price of $0.0035 per share. The Company evaluated the note for a beneficial conversion feature and determined that a full discount of $100,000 should be recorded against the note based on the market price on the date of issuance.

 

31

 

 

On September 1, 2021, the Company entered into a convertible promissory note in the amount of $27,500 bearing interest at 10% per annum with a term of 1 year. The principal and any accrued interest is convertible at the option of the holder at any time from the date of issuance at a fixed price of $0.0035 per share. Additionally, the note holder was granted 7,857,143 warrants at an exercise price of $0.0035 per share. The Company evaluated the note for a beneficial conversion feature and determined that a full discount of $27,500 should be recorded against the note based on the market price on the date of issuance.

 

On September 1, 2021, the Company entered into a convertible promissory note in the amount of $55,000 bearing interest at 10% per annum with a term of 1 year. The principal and any accrued interest is convertible at the option of the holder at any time from the date of issuance at a fixed price of $0.0035 per share. Additionally, the note holder was granted 15,714,286 warrants at an exercise price of $0.0035 per share. The Company evaluated the note for a beneficial conversion feature and determined that a full discount of $55,000 should be recorded against the note based on the market price on the date of issuance.

 

On September 1, 2021, the Company entered into a convertible promissory note in the amount of $27,500 bearing interest at 10% per annum with a term of 1 year. The principal and any accrued interest is convertible at the option of the holder at any time from the date of issuance at a fixed price of $0.0035 per share. Additionally, the note holder was granted 7,857,143 warrants at an exercise price of $0.0035 per share. The Company evaluated the note for a beneficial conversion feature and determined that a full discount of $27,500 should be recorded against the note based on the market price on the date of issuance.

 

On September 1, 2021, the Company entered into a convertible promissory note in the amount of $27,500 bearing interest at 10% per annum with a term of 1 year. The principal and any accrued interest is convertible at the option of the holder at any time from the date of issuance at a fixed price of $0.0035 per share. Additionally, the note holder was granted 7,857,143 warrants at an exercise price of $0.0035 per share. The Company evaluated the note for a beneficial conversion feature and determined that a full discount of $27,500 should be recorded against the note based on the market price on the date of issuance.

 

On September 2, 2021, the Company entered into a convertible promissory note in the amount of $155,000 bearing interest at 10% per annum with a term of 1 year. The principal and any accrued interest is convertible at the option of the holder at any time from the date of issuance at a fixed price of $0.0035 per share. Additionally, the note holder was granted 44,285,714 warrants at an exercise price of $0.0035 per share. The Company evaluated the note for a beneficial conversion feature and determined that a full discount of $155,000 should be recorded against the note based on the market price on the date of issuance.

 

On September 8, 2021, the Company entered into a convertible promissory note in the amount of $55,000 bearing interest at 10% per annum with a term of 1 year. The principal and any accrued interest is convertible at the option of the holder at any time from the date of issuance at a fixed price of $0.0035 per share. Additionally, the note holder was granted 15,714,286 warrants at an exercise price of $0.0035 per share. The Company evaluated the note for a beneficial conversion feature and determined that a full discount of $55,000 should be recorded against the note based on the market price on the date of issuance.

 

On September 8, 2021, the Company entered into a convertible promissory note in the amount of $16,500 bearing interest at 10% per annum with a term of 1 year. The principal and any accrued interest is convertible at the option of the holder at any time from the date of issuance at a fixed price of $0.0035 per share. Additionally, the note holder was granted 4,714,286 warrants at an exercise price of $0.0035 per share. The Company evaluated the note for a beneficial conversion feature and determined that a full discount of $16,500 should be recorded against the note based on the market price on the date of issuance.

 

On September 9, 2021, the Company entered into a convertible promissory note in the amount of $11,000 bearing interest at 10% per annum with a term of 1 year. The principal and any accrued interest is convertible at the option of the holder at any time from the date of issuance at a fixed price of $0.0035 per share. Additionally, the note holder was granted 3,142,857 warrants at an exercise price of $0.0035 per share. The Company evaluated the note for a beneficial conversion feature and determined that a full discount of $55,000 should be recorded against the note based on the market price on the date of issuance.

 

32

 

 

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. The line of credit is currently in default.

 

The Company owed a director of the Company $172,567 and $141,592 for reimbursable expenses as of December 31, 2021 and December 31, 2020, respectively.

 

NOTE 6. COMMITMENTS AND CONTINGENCIES

 

Litigation

 

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

 

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

 

NOTE 7. SUBSEQUENT EVENTS

 

Between January and April 2022, the Company has issued 242,628,908 shares of common stock for conversions of convertible notes based upon a conversion price of $0.0035.

 

33

ATTACHMENTS / EXHIBITS

ex31-1.htm

ex32-1.htm

INLINE XBRL TAXONOMY EXTENSION SCHEMA DOCUMENT

INLINE XBRL TAXONOMY EXTENSION CALCULATION LINKBASE DOCUMENT

INLINE XBRL TAXONOMY EXTENSION DEFINITION LINKBASE DOCUMENT

INLINE XBRL TAXONOMY EXTENSION LABEL LINKBASE DOCUMENT

INLINE XBRL TAXONOMY EXTENSION PRESENTATION LINKBASE DOCUMENT

IDEA: R1.htm

IDEA: R2.htm

IDEA: R3.htm

IDEA: R4.htm

IDEA: R5.htm

IDEA: R6.htm

IDEA: R7.htm

IDEA: R8.htm

IDEA: R9.htm

IDEA: R10.htm

IDEA: R11.htm

IDEA: R12.htm

IDEA: R13.htm

IDEA: R14.htm

IDEA: R15.htm

IDEA: R16.htm

IDEA: R17.htm

IDEA: R18.htm

IDEA: R19.htm

IDEA: R20.htm

IDEA: form10-ka_htm.xml

IDEA: Financial_Report.xlsx

IDEA: FilingSummary.xml

IDEA: MetaLinks.json



Serious News for Serious Traders! Try StreetInsider.com Premium Free!

You May Also Be Interested In





Related Categories

SEC Filings