Our Business
GEX Management is a management consulting and technology business services
company providing client employers and their employees with a broad portfolio of
related products and services. We provide both long and short-term consulting
solution services, including enterprise strategy and technology consulting,
enterprise project management; and Human Capital Management (HCM) solution
capabilities.
Business Operations
GEX Management works continuously to expand its service offerings to its clients
in order to assist them to achieve their respective business goals. Our unique
and tailored approach, coupled with an ever-expanding array of services, has
significantly differentiated the Company from competitors. GEX likewise
distinguished itself in the market via accessible and exceptional client support
ensuring that we will not only gain new clients but will retain those we
currently have, resulting in long-term sustainability. Clients typically
initiate service by means of a three-month agreement with the Company. The
contract thereby automatically renews until terminated with a 30-day notice by
either party.
Critical Accounting Policies
The Company's financial statements were prepared in conformity with U.S.
generally accepted accounting principles. As such, management is required to
make certain estimates, judgments and assumptions that they believe are
reasonable based upon the information available. These estimates and assumptions
affect the reported amounts of assets and liabilities at the date of the
consolidated financial statements and the reported amounts of income and expense
during the periods presented.
Revenue Recognition
Management Consulting Services
GEX Management recognizes revenue for its management consulting services in
accordance with ASC 606 - Revenue from Contracts with Customers.
Revenue is recognized when control of the services is transferred to the client
and the consideration for the services is expected to be collected. Control is
transferred when the client is able to direct the use of and obtain
substantially all of the benefits from the services provided.
The revenue recognized is based on the transaction price, which is the amount of
consideration that GEX expects to be entitled to in exchange for providing the
services. The transaction price is determined based on the estimated costs to
complete the project, as well as the estimated profit margin on the project.
GEX Management typically enters into contracts with clients that specify the
scope of services to be provided, the time period for which the services will be
provided, and the fees for the services. Revenue is recognized over the period
during which the services are provided, generally on a straight-line basis over
the term of the contract.
If there are any changes to the scope of the services or the fees for the
services, GEX Management will assess whether these changes constitute a
modification of the original contract. If a modification is deemed to exist, GEX
will reassess the transaction price and adjust the revenue recognized
accordingly.
GEX Management also considers any variable consideration, such as performance
bonuses or penalties, when recognizing revenue. If the amount of variable
consideration cannot be estimated reliably, it will be excluded from the
transaction price until it can be reliably estimated.
In summary, GEX Management recognizes revenue for its management consulting
services in accordance with ASC 606, based on the transfer of control of
services to the client and the expected consideration to be collected. Revenue
is recognized over the period during which the services are provided and is
adjusted for any changes in scope or fees.
All employees are completely vetted by the company to ensure their employment
terms are in adherence to all applicable state. federal and immigration laws.
Additionally, GEX Management carries professional liability and fidelity/crime
insurance to protect against risks involving working at third party client
locations that require the workers to handle sensitive client data and
equipment.
13
Results of Operations for the Year Ended December 31, 2022 Compared to the Year
Ended December 31, 2021
Revenues
During fiscal year 2022, GEX Management, Inc. achieved significant revenue
growth, with total revenue increasing from $1,301,949 in fiscal year 2021 to
$2,270,535 in 2022, representing a year-over-year growth rate of approximately
74%. This growth was driven by several factors, including an expanding client
base, increased project volume, and the successful execution of strategic
initiatives.
Expanding Client Base
One of the key drivers of GEX Management's revenue growth was an expanding
client base. The company was successful in attracting new clients across a range
of industries, including technology, healthcare, and financial services. This
was due in part to the company's strong reputation for delivering high-quality
consulting services, as well as its ability to provide customized solutions
tailored to each client's unique needs.
Increased Project Volume
GEX Management also experienced increased project volume during the fiscal year,
which contributed to the company's overall revenue growth. This was due in part
to the company's ability to efficiently manage projects and deliver high-quality
results to its clients. The company was successful in leveraging its expertise
across a range of consulting services, including business transformation,
technology consulting, and operational improvement, to deliver value to its
clients and generate new business opportunities.
Successful Execution of Strategic Initiatives
Finally, GEX Management's revenue growth was driven by the successful execution
of strategic initiatives. This included the development and launch of a
proprietary AI-powered technology platform, which enhanced the company's ability
to deliver customized solutions to its clients and differentiate itself from
competitors. Additionally, the company continued to invest in talent development
and training programs, which enabled it to attract and retain high-quality
consulting professionals.
Looking forward, GEX Management remains committed to driving growth and
delivering value to its clients. The company is well-positioned to continue
expanding its client base and increasing project volume, leveraging its
expertise across a range of consulting services. Additionally, the company is
focused on continuing to invest in its technology platform and talent
development programs to ensure it remains at the forefront of the consulting
industry and can continue delivering innovative solutions to its clients.
Overall, GEX Management's fiscal year 2022 was marked by significant revenue
growth, driven by expanding client base, increased project volume, and
successful execution of strategic initiatives. The company remains committed to
driving growth and delivering value to its clients, and is well-positioned to
continue expanding its business and establishing itself as a leader in the
consulting industry.
Cost of Services and Gross Profit
During fiscal year 2022, GEX Management, Inc. experienced a significant increase
in its cost of revenue, which rose from $494,865 in fiscal year 2021 to
$1,132,416 in 2022. This increase in cost of revenue impacted the company's
gross margin, which decreased from 62% in fiscal year 2021 to 50.2% in fiscal
year 2022. The increase in cost of revenue was primarily driven by several
factors, including higher personnel costs, increased project volume, and
investments in technology and infrastructure.
Higher Personnel Costs
One of the primary drivers of the increase in cost of revenue was higher
personnel costs. GEX Management continued to invest in its talent development
programs and initiatives aimed at attracting and retaining high-quality
consulting professionals. As a result, the company incurred higher salaries and
benefits expenses, as well as increased costs related to recruiting and training
new employees.
Increased Project Volume
GEX Management also experienced increased project volume during the fiscal year,
which contributed to the increase in cost of revenue. This was due in part to
the company's ability to efficiently manage projects and deliver high-quality
results to its clients. However, as project volume increased, the company also
incurred higher expenses related to project management and delivery, including
travel, supplies, and other project-related costs.
14
Investments in Technology and Infrastructure
Finally, GEX Management also invested heavily in technology and infrastructure
during the fiscal year, which contributed to the increase in cost of revenue.
The company has been developing a proprietary AI-powered technology platform,
which required significant investment in research and development, as well as
ongoing maintenance and support costs. Additionally, the company invested in
upgrading its infrastructure and systems to support its growing business
operations and expanding client base.
Looking forward, GEX Management remains committed to investing in its people,
processes, and technology to drive growth and deliver value to its clients.
While the increase in cost of revenue impacted the company's gross margin during
the fiscal year, the company believes that these investments are necessary to
support its continued growth and success in the consulting industry.
Overall, GEX Management's fiscal year 2022 was marked by a significant increase
in cost of revenue, driven by higher personnel costs, increased project volume,
and investments in technology and infrastructure. While these factors impacted
the company's gross margin, GEX Management remains committed to investing in its
business to drive growth and deliver value to its clients.
Operating Expense
During fiscal year 2022, GEX Management, Inc. experienced a significant decrease
in its general and administrative (G&A) expenses, which declined from $6,067,833
in fiscal year 2021 to $1,467,457 in 2022. This decrease in operating expenses
was primarily driven by several factors, including improved cost management,
streamlining of business processes, and reduced marketing and advertising
expenses.
Improved Cost Management
One of the primary drivers of the decrease in G&A expenses was improved cost
management. GEX Management focused on optimizing its operational processes,
identifying areas of inefficiency, and implementing cost-saving measures. This
led to a reduction in expenses related to rent, utilities, office supplies, and
other general business expenses.
Streamlining of Business Processes
Another factor contributing to the decrease in G&A expenses was the streamlining
of business processes. GEX Management implemented new software tools and systems
to automate and streamline administrative tasks, reducing the need for manual
labor and streamlining operations. This led to a reduction in expenses related
to personnel costs and administrative overhead.
Reduced Marketing and Advertising Expenses
Finally, GEX Management also reduced its marketing and advertising expenses
during the fiscal year, which contributed to the decrease in G&A expenses. The
company focused on leveraging its existing network and client base to generate
new business, reducing the need for expensive marketing campaigns and other
promotional activities.
Looking forward, GEX Management remains committed to optimizing its cost
structure and improving operational efficiency to drive profitability and
growth. The company will continue to invest in technology and systems to
automate and streamline administrative tasks, reducing the need for manual labor
and lowering administrative overhead. Additionally, the company will continue to
focus on leveraging its existing client base and network to generate new
business, reducing the need for expensive marketing campaigns and other
promotional activities.
Overall, GEX Management's fiscal year 2022 was marked by a significant decrease
in G&A expenses, driven by improved cost management, streamlining of business
processes, and reduced marketing and advertising expenses. The company remains
committed to optimizing its cost structure and improving operational efficiency
to drive profitability and growth, while continuing to focus on delivering
high-quality consulting services to its clients.
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Net Loss
During fiscal year 2022, GEX Management, Inc. experienced a significant decrease
in its net loss, which declined from $6,208,977 in fiscal year 2021 to
$1,125,342 in 2022. This decrease in net loss was primarily driven by several
factors, including increased revenue, improved cost management, and a reduction
in operating expenses.
Increased Revenue
One of the primary drivers of the decrease in net loss was an increase in
revenue. GEX Management was able to significantly expand its revenue from
$1,301,949 in fiscal year 2021 to $2,270,535 in 2022, driven by increased demand
for its consulting services and expansion into new markets. This increase in
revenue helped to offset the company's operating expenses, leading to a
reduction in net loss.
Improved Cost Management
Another factor contributing to the decrease in net loss was improved cost
management. GEX Management focused on optimizing its operational processes,
identifying areas of inefficiency, and implementing cost-saving measures. This
led to a reduction in expenses related to rent, utilities, office supplies, and
other general business expenses. Additionally, the company implemented new
software tools and systems to automate and streamline administrative tasks,
reducing the need for manual labor and streamlining operations.
Reduction in Operating Expenses
Finally, GEX Management also saw a significant reduction in its operating
expenses during the fiscal year, which contributed to the decrease in net loss.
The company was able to reduce its general and administrative (G&A) expenses
considerably in 2022, primarily due to improved cost management and streamlining
of business processes.
Looking forward, GEX Management remains committed to driving revenue growth,
improving cost management, and reducing operating expenses to drive
profitability and growth. The company will continue to focus on delivering
high-quality consulting services to its clients, while optimizing its cost
structure and improving operational efficiency to drive profitability and
growth.
Overall, GEX Management's fiscal year 2022 was marked by a significant decrease
in net loss, driven by increased revenue, improved cost management, and a
reduction in operating expenses. The company remains committed to driving
profitability and growth by delivering high-quality consulting services to its
clients, while optimizing its cost structure and improving operational
efficiency.
Liquidity and Capital Resources
The Company has identified several potential financing sources in order to raise
the capital necessary to fund operations through December 31, 2023. Management
had in the past taken short term working capital loans against future
receivables in order to timely fund the growth of the company. Management has
eliminated this past practice and currently relies on other traditional and
non-traditional debt instruments primarily in the form of convertible notes as
well as is exploring various other alternatives including debt and equity
financing vehicles, strategic partnerships, government programs that may be
available to the Company, as well as trying to generate additional sales and
increase margins. However, at this time the Company has no commitments to obtain
any additional funds, and there can be no assurance such funds will be available
on acceptable terms or at all. If the Company is unable to obtain additional
funding, the Company's financial condition and results of operations may be
materially adversely affected and the Company may not be able to continue
operations.
Additionally, even if the Company raises sufficient capital through additional
equity or debt financing, strategic alternatives or otherwise, there can be no
assurances that the revenue or capital infusion will be sufficient to enable it
to develop its business to a level where it will be profitable or generate
positive cash flow. If the Company incurs additional debt, a substantial portion
of its operating cash flow may be dedicated to the payment of principal and
interest on such indebtedness, thus limiting funds available for business
activities. The terms of any debt securities issued could also impose
significant restrictions on the Company's operations. Broad market and industry
factors may seriously harm the market price of our common stock, regardless of
our operating performance, and may adversely impact our ability to raise
additional funds. Similarly, if the Company's common stock is delisted from the
public exchange markets, it may limit its ability to raise additional funds.
In addition, at this time we cannot predict the impact of COVID-19 on our
ability to obtain financing necessary for the Company to fund its working
capital requirements.
16
A summary of our cash flows for the twelve months ended December 31, was as
follows:
2022 2021
Net cash used in operating activities $ (6,615,976 ) $ (4,501,364 )
Net cash used in investing activities - -
Net cash provided by financing activities 6,348,521 1,550,357
Net increase(decrease) in cash and cash equivalents $ (267,455 ) $ 341,197
Net cash in operating activities was a use of $6,615,976 for the twelve months
ended December 31, 2022 as compared to $4,501,364 cash in operating activities
for the twelve months ended December 31, 2021. The increase in cash used in
operating activities was in part due to the Company focusing on significantly
expanding the business development effort, streamlined operating costs, marketed
high margin customer contracts, deployed business acquisition capital and
rationalizing expenses to support long term growth.
Net cash provided by financing activities of $6,348,521 for the twelve months
ended December 31, 2022 was primarily from debt /debt like instruments in the
balance sheet.
Net cash used in investing activities for the twelve months ended December 31,
2022 was $0.
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GEX MANAGEMENT, INC. 
