Attached files
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| EX-32 - Global Diversified Marketing Group Inc. | ex32.htm |
| EX-31 - Global Diversified Marketing Group Inc. | ex31.htm |
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K
(Mark One)
| [X] | ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the fiscal year ended December 31, 2020
| [ ] | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the transition period from to
Commissions file number 000-5889
GLOBAL DIVERSIFIED MARKETING GROUP INC.
(Exact name of registrant as specified in its charter)
| Delaware | 82-3707673 | |
(State or other jurisdiction of incorporation or organization) |
(I.R.S. Employer Identification No.) |
4042 Austin Boulevard, Suite B Island Park, New York 11558
(Address of principal executive offices) (zip code)
Registrant’s telephone number, including area code: 800-500-5996
Securities registered pursuant to Section 12(b) of the Act: None
Securities registered pursuant to Section 12(g) of the Exchange Act:
Common Stock, $.0001 par value per share
(Title of class)
Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act
[ ] Yes [X] No
Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act.
[ ] Yes [X] No
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.
[X] Yes [ ] No
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (Section 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).
[X] Yes [ ] No
Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K (Section 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.
[X] Yes [ ] No
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer”, “accelerated filer”, “non-accelerated filer”, and “smaller reporting company” in Rule 12b-2 of the Exchange Act.
| Large Accelerated filer [ ] | Accelerated filer [ ] | |
| Non-accelerated filer [ ] | Smaller reporting company [X] | |
| 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 [X] No
State the aggregate market value of the voting and non-voting common equity held by non-affiliates computed by reference to the price at which the common equity was last sold, or the average bid and asked price of such common equity, as of the last business day of the registrant’s most recently completed second fiscal quarter. $___________
Indicate the number of shares outstanding of each of the registrant’s classes of common stock as of the latest practicable date.
| Class | Outstanding at February_____ , 2021 | |
| Common Stock, par value $0.0001 | 13,575,376 | |
| Documents incorporated by reference: | None |
PART I
| Item 1. | Business |
Global Diversified Marketing Group Inc. (the “Company”) operates as a global multi-line consumer packaged goods (“CPG”) company with branded product lines and is a food and snack manufacturer, marketer and distributor through its subsidiary Global Diversified Holdings, Inc (“GDHI”) in the United States, Canada, and Europe. The Company operates in the snack market segment and offers Italian Wafers, French Madeleines, Coconut Wafer Bites, Italian Filled Croissants, shelf-stable Macarons, and other gourmet snacks. The Company sells its products directly through various distribution channels comprising specialty, grocery retailers, food service distributors, direct store delivery (“DSD”) as well as vending, pantry, and the micro-market segment. Company attends global food trade shows to seek out innovative and unique snacks products. Once the Company identifies products that fit within its distribution channels, company will enter into a non-exclusive manufacturing contract with a third party to produce products under the Company’s own trademarked brands for sale in the United States and/or global markets. Currently, the Company maintains five trademarks for its brands; each of which can and may cover numerous product lines with a variety of unique identifiers (known as SKU’s) offered under that brand name. The Company has non-contractual on-going relationships with many Fortune 500 companies including club and retail chain stores. The Company sells directly to these companies which purchase the items from the Company and distribute the items to their stores. The Company also sells and distributes to DSD distributors and food-service distributors which in turn service vending machine channels as well as micro-markets and coffee pantries.
The Company sells its products throughout the United States and global markets to buyers which typically represent recognized large retail chain stores. The products are then distributed by the chains to their local outlets. The Company seeks out and develops snacks and gourmet foods to brand under its trademarks based on management’s beliefs as to consumer demand. The Company works closely with buyers to evaluate products with the intent to identify products that have likely customer demand.
The Company intends to continue to seek to develop additional gourmet foods and snack products under its trademarked brands and to expand the Company’s offering portfolio by identifying, producing, and marketing new products. Management believes that the strategy of acquiring small regional brands and adding these to the Company’s national distribution can prove beneficial for the Company.
In December 2019, a novel strain of coronavirus was reported to have surfaced in Wuhan, China, which has and is continuing to spread throughout China and other parts of the world, including the United States. On January 30, 2020, the World Health Organization declared the outbreak of the coronavirus disease (COVID-19) a “Public Health Emergency of International Concern.” On January 31, 2020, U.S. Health and Human Services Secretary Alex M. Azar II declared a public health emergency for the United States to aid the U.S. healthcare community in responding to COVID-19, and on March 11, 2020 the World Health Organization characterized the outbreak as a “pandemic”. The significant outbreak of COVID-19 has resulted in a widespread health crisis that has adversely affect the economies and financial markets worldwide, and has adversely affected our business, results of operations and financial condition. While we are unable to quantify the impact, we are aware that our restrictions on access to retail stores and other commercial activities has had an adverse effect on our results.
During 2020 we increased our revenue 26.1% above 2019 levels. We believe our revenue increase in 2020 would have been in excess of what we recorded had we not experienced the impact of Covid-19.
On January 27, 2021 we announced that we had successfully secured placement with a National Club Store Chain “Store Chain” for our premium snack to be stocked and sold in the Northeast Region. The initial order we received amounted to $282,880. We expect to receive additional orders although there can be no assurances.
Vending Operations
In addition to placing its products with large retail specialty chains, the Company supplies products to vending channels throughout the United States through food service distributors. These vending machines are located in malls, service stations, and schools. The Company works with vending companies that have, in the aggregate, more than 100,000 machines nationwide. The Company supplies vending companies with products. The Company works directly with some vending companies and with others through its food service distributors. The broker pre-sells the products and the distributor services the accounts. When the distributor services the accounts, the distributor buys the product directly Vending machine sales represent approximately 6% to 9% of our revenues.
Products and Trademarked Brands
The Company currently has five trademark brands. Each brand encompasses numerous SKUs that are brought to the market from time to time. The Company produces its products primarily on an “on request” basis from its retail chain buyers for sale through such chains.
The Company’s trademark brands are listed on the left below with sample products for several of the trademarked brands itemized:
| Biscottelli - | 250g Wafers, | |
| Mini Wafers, Filled | ||
| Croissants, Macarons | ||
| Dolcibono | 250g Wafers | |
| BonBons de Paris | Plain French Madeleines | |
| Marble French | ||
| Madeleines | ||
| Coco Bliss | Coconut Wafer Bites | |
| Fruttata | Jams (R&D stage), Fruit Snacks | |
| (R&D) |
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Retail Chain Buyers
The primary distribution of the Company’s products is through specialty retail chains. The Company works with the buying office that determines placement for the Company’s products. The retail will then distribute the products to its retail outlets.
Marketing
Management believes that the Company’s products appeal to a wide range of consumers, including most age brackets. The young snackers, classified as those being between the ages of 18-34, tend to consume more snacks than average adults but the gourmet foods reach the broader adult market. The senior market tends to reduce snacks and gourmet foods.
The Company anticipates that its marketing strategy will use the internet and social media including Facebook, Instagram, and Twitter. The Company’s distribution channels consist of retailers, distributors, online e-commerce, and vending companies. The Company’s marketing strategy is primarily targeted at the vendors and retail chain stores. The Company intends to utilize social media to create direct consumer interest in its products.
The Company anticipates utilizing the following opportunities to further their marketing program and to obtain information to adjust and modify, as needed, the marketing program.:
Networking. Networking is a low-cost but often effective means for the Company to generate partnerships and growth while bolstering personal commitments to the Company. Management will join wholesalers’ associations to network with other food manufacturers and distributors.
Trade Shows. The Company plans to attend trade shows and exhibitions related to the food manufacturing industry, such as SIAL, PLMA Amsterdam, Thaifex, Fancy Food, CIBUS, ISM, and ANUGA among others. Through attendance at conventions and trade shows, management remains knowledgeable and informed about advancements, trends, and issues of concern in the market.
Direct Sales. The Company plans to employ a dedicated sales team to enact precise sales and promotional efforts in the near future.
Social Media and Food Blogging. The Company will manage its brands on social media sites, such as Facebook, Instagram, and Twitter. Twitter has proven an effective platform to conduct customer satisfaction surveys as well as solicit customer feedback on food products.
The rise in popularity of the food blogging community has given consumers a massive platform on which to share their opinion and make their voices heard. This has led to a rise in consumer concerns about food, with increasing emphasis being placed on healthy eating and organic produce. The Company will use food blogging websites to promote its products and highlight benefits that appeal to a new generation of socially-aware consumers.
Websites. A well-optimized website has been constructed, with proper site structure, page layout, and clear and easy navigation, along with targeted keywords embedded throughout the site to ensure prominent search engine placement and saturation. The Company’s websites www.360worldsnacks.com, www.biscottelli.com, www.gdmginc.com, www.dolcibono.com, www.fruttatasnacks.com are important marketing assets.
The Company anticipates that it will primarily target teens and adults up to age 65. The primary target market is “Young Snackers” that are 18-34 years old and tend to eat more snacks than other age groups. The trend of snacks between meals is especially strong with millennials and younger Americans. A quarter of American millennials, age 23 to 40, reported eating four or more times a day, compared to just 10% of Gen X and 9% of Baby Boomers. The Company believes that the senior age bracket (over 65) is not a strong snack market.
Competition
The snack food industry in the United States is very competitive, particularly in the savory and salty snack segment. In the United States, a study conducted by the Packaging Strategies reported that snacks account for 51% of all food sales, and 92% of adults in the US have snacked within the last 24 hours.
The Company has observed an increased demand for “healthy” snacks. In the United States, companies are finding success in the “snackable” fruit and vegetable category, such as grapes or baby carrots.
A challenge facing entrants in the snack and gourmet food market is the dominance of leading snack food producers, particularly the industry leader PepsiCo. Large producers may experience a high degree of brand and consumer loyalty and typically possess sufficient capital to invest in extensive advertising and promotions to obtain a greater market share. Furthermore, companies such as PepsiCo often benefit from higher profit margins when compared with small- to medium-sized operators, enabling them to lower their product prices and to engage in price-based competition with competitors. Multinational producers may also experience lower per-unit costs due to economies of scale and scope.
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Trading Market
The Company trades under symbol “GDMK”.
Corporate History
The Company, formerly known as Dense Forest Acquisition Corporation, was incorporated in Delaware on December 1, 2017, and changed its name as part of a subsequent change in control. The Company filed a registration statement on Form 10 with the Securities and Exchange Commission (“SEC”) on January 19, 2018, registering its common stock by which it became a public reporting company sixty days thereafter.
Dense Forest Acquisition Corporation filed a Form 8-K noticing the filing with the State of Delaware of an amendment to its Certificate of Incorporation to change its name to Global Diversified Marketing Group, Inc. as part of a change in control of the Company. On June 13, 2018, the Company effected a change in control with the resignation of the then officers and directors, contribution back to the Company of 19,500,000 shares of the 20,000,000 outstanding shares of its common stock, and the appointment of new officers and directors. On June 14, 2018, the new management of the Company issued 12,500,000 shares of its common stock to Paul Adler, the then president of the Company.
On November 26, 2018, the Company effected the acquisition of Global Diversified Holdings, Inc., a private New York snack and gourmet food company, (“GDHI”) by the Company with the issuance of shares of the Company’s common stock in exchange for the outstanding shares of common stock of GDHI. GDHI became a wholly-owned operating subsidiary of the Company (the “Acquisition”). The transaction is accounted for as a combination of entities under common control since the date of the Acquisition.
Prior to the Acquisition, the Company had no business and no operations. Pursuant to the Acquisition, the Company acquired the operations and business plan of GDHI. The discussion hereinafter of the business and operations of the Company refer to the Company subsequent to the Acquisition of GDHI and all such discussions primarily report the operations of its now subsidiary unless otherwise so indicated.
Employees
The Company has only one executive officer and one staff employee.
Subsidiaries
The wholly-owned subsidiary, Global Diversified Holdings, Inc., is the Company’s only subsidiary.
| Item 2. | Properties |
The Company has its office headquarters at 4042 Austin Boulevard, Suite B, Island Park, New York 11558. The Company entered into a 60-month lease in October 2016 to rent 1,000 SF for $19,680 per year. The lease contains one five year renewal option with escalator clauses. The Company utilizes a 3PL warehouse in Port Reading , New Jersey. The Company’s website is www.360worldsnacks.com. Management believes that its present facilities are adequate for its needs and that if it was required to do so, it could obtain similar facilities at a similar cost.
| Item 3. | Legal Proceedings |
There are no pending, threatened or actual legal proceedings in which the Company is a party.
| Item 4. | Mine Safety Disclosures. |
Not applicable.
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PART II
| Item 5. | Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities |
Our Common Stock is quoted on the over the counter “pink sheets” under the trading symbol “GDMK.” Trading volume in our Common Stock is very limited. As a result, the trading price of our Common Stock is subject to significant fluctuations.
There can be no assurance that a liquid market will develop in the foreseeable future.
Transfer of our common stock may also be restricted under the securities or blue sky laws of certain states and foreign jurisdictions. Consequently, investors may not be able to liquidate their investments and should be prepared to hold the common stock for an indefinite period of time.
The following table sets forth the high and low bid quotations for our Common Stock as reported on the pink sheets for the periods indicated.
| Fiscal 2019 | $ High | $ Low | ||||||
| First Quarter | N/A | N/A | ||||||
| Second Quarter | N/A | N/A | ||||||
| Third Quarter | N/A | N/A | ||||||
| Fourth Quarter | N/A | N/A |
| Fiscal 2020 | $ High | $ Low | ||||||
| First Quarter | N/A | N/A | ||||||
| Second Quarter | $ | 2.15 | $ | 2.05 | ||||
| Third Quarter | $ | 2.80 | $ | 0.12 | ||||
| Fourth Quarter | $ | 0.90 | $ | 0.40 | ||||
As of February 12, 2021 the closing price of our Common Stock was $2.90 per share.
| Item 6. | Selected Financial Data |
As a smaller reporting company, we are not required to provide this information
| Item 7. | Management’s Discussion and Analysis of Financial Condition and Results of Operations |
Prior to the acquisition of GDHI as a subsidiary, the Company had no operations other than the administrative operations involved with the change in control. The information discussed herein below reflects the results of the Company’s subsidiary, GDHI, an operating company in the snack and gourmet food production, marketing, and distribution industry.
Discussion of the Years Ended 2020 and 2019
Revenues and Cost of Sales
Sales for the year ended December 31, 2020 were $1,660,726 compared to sales in 2019 of $1,317,092, an increase of $343,634 or approximately 26.1%. Our sales increases in the 2020 period is attributable to the addition of new customers, new products as well as increased sales to existing customers; offset by the impact of Covid-19.
Historically, the Company has relied on a small number of customers to generate a large portion of its revenue. In 2020, four customers accounted for 91% of the Company revenues. In 2019, the same four customers accounted for 91% of the Company’s revenues. Loss of any one of these four customers would have a material adverse impact on the Company’s profitability and liquidity.
For the year ended December 31, 2020, gross profit was $660,815 or 39.8% of revenue compared to gross profit of $371,002 or 28.2% of revenue. The increase in gross profit as a percentage of sales (“gross margin”) is attributable to improved buying efficiencies at higher levels of revenue.
Operating expenses
Operating expenses for the year ended December 31, 2020, were $26,821,661 compared to $492,031 for the same period ended December 31, 2019. The 2020 period includes a non-cash charge of $26,020,400 in stock-based compensation related to the issuance of the Series A Preferred Stock with super-voting rights to the Company’s chief executive officer, and $168,529 in non-cash charges to professional expenses due to the issuance of restricted common shares to consultants and investment bankers, see Note 3. Capital Stock.
Excluding the charges of $26,020,400 and $168,529, operating expenses were $632,732 during the year ended December 31, 2020 compared to $492,031 or an increase of $140,701. This increase in 2020 is primarily attributable to increased advertising expenses of approximately $74,000 in the 2020 period to help support sales levels, increased warehouse storage charges of approximately $21,700; increased Amazon selling fees approximately $35,000 offset by reductions of approximately $35,000 in other general and administrative expenses.
Other income and (expense)
Other income and expense is comprised of other income items and interest expense. Other income was $5,785 for the year ended December 31, 2020, compared to $29,955 in other expense during the same period ended December 30, 2019. The improvement in other income and expense of $35,740 is attributable to the recording of income for the forgiveness of $28,642 in PPP loans, 11,442 in employee retention credits related to the governments COVID relief plans offset by an increase in interest expense of $ 4,344 over prior year levels.
Liquidity and Capital Resources
As of December 31, 2020, and 2019, the Company had $62,555 and $22,291 in cash on hand, respectively. Net cash used in operating activities was $41,597 compared to $21,663 for the same period ended December 31, 2019. The increase in net cash used in operating activities is primarily attributable to a reduction in operating losses in 2020 (after deducting non-cash stock compensation expense) compared to the 2019 period; more than offset by an increase in inventory levels.
Cash flows from financing activities increased to $71,969 for the period ended December 31, 2020, compared to $22,439 during the same period ended December 31, 2019. The increase in net cash provided from financing activities is attributable to the receipt of $149,900 in government PPP and EIDL loans in 2020 compared to zero in 2019, offset by a net reduction in loans payable of $77,931 in 2020 compared to loans of $22,269 during the comparable period in 2019.
A large portion of the Company’s liquidity in 2020 was provided by the SBA COVID-19 loans thus allowing the Company to reduce its reliance on factoring. Additionally, in the second half of the year the Company became marginally profitable from operations compared to losses in previous comparable periods In the event the Company cannot maintain its profitability going forward, it will have to rely on additional factoring or other sources of financing such as debt or equity. There can be no assurances that other forms of financing on reasonable terms, or continued higher levels of factoring will be available to the Company in the future.
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Seasonality
The Company’s business is not subject to seasonality.
Off-Balance Sheet Arrangements.
The Company has no off-balance sheet arrangements that have or are reasonably likely to have a current or future effect on its financial condition, changes in financial condition, revenues or expenses, results of operations, liquidity, capital expenditures or capital resources.
Critical Accounting Policies
The financial statements of the Company have been prepared in accordance with accounting principles generally accepted in the United States. The preparation of these financial statements requires making estimates and judgments that affect the reported amounts of assets, liabilities, revenues and expenses, and related disclosure of contingent assets and liabilities. The estimates are based on historical experience and on various other assumptions that are believed to be reasonable under the circumstances, the results of which form the basis of making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources. Actual results may differ from these estimates under different assumptions or conditions.
Going Concern
The Company’s independent auditor has indicated substantial doubt about the Company continuing as a going concern based on the Company’s accumulated deficit and accrued liabilities. As of December 31, 2020, the Company had negative working capital of $68,612 and had a stockholder’s deficit of $51,366.
The consolidated financials have been prepared assuming that the Company will continue as a going concern and, accordingly, do not include any adjustments that might result from the outcome of this uncertainty. If the Company is in fact unable to continue as a going concern, the shareholders may lose some or all of their investment in the Company.
| Item 8. | Financial Statements and Supplementary Data |
The financial statements for the year ended December 31, 2020, and 2019 are attached included in this report beginning on page F-1.
| Item 9. | Changes in and Disagreements with Accountants on Accounting and Financial Disclosure |
There were no disagreements with the Company’s accountants on accounting or financial disclosure for the period covered by this report.
| Item 9A. | Controls and Procedures |
Pursuant to Rules adopted by the Securities and Exchange Commission, the Company evaluated the effectiveness of the design and operation of its disclosure controls and procedures pursuant to Exchange Act Rules. This evaluation was done as of the end of the fiscal year under the supervision and with the participation of the Company’s principal executive officer (who is also the principal financial officer). There have been no significant changes in internal controls or in other factors that could significantly affect internal controls subsequent to the date of the evaluation. Based upon that evaluation, the principal officer believes that the Company’s disclosure controls and procedures are effective in gathering, analyzing, and disclosing information needed to ensure that the information required to be disclosed by the Company in its periodic reports is recorded, summarized, and processed timely. The principal executive officer is directly involved in the day-to-day operations of the Company.
Management’s Report of Internal Control over Financial Reporting
The Company is responsible for establishing and maintaining adequate internal control over financial reporting in accordance with Rule 13a-15 of the Securities Exchange Act of 1934. The Company’s sole officer, its president, conducted an evaluation of the effectiveness of the Company’s internal control over financial reporting as of December 31, 2020, based on the criteria established in Internal Control-Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (2013). Based on this evaluation, management concluded that the Company’s internal control over financial reporting was effective as of December 31, 2020, based on those criteria. A control system can provide only reasonable, not absolute, assurance that the objectives of the control system are met and no evaluation of controls can provide absolute assurance that all control issues have been detected.
BF Borgers CPA PC., Lakewood, Colorado, the independent registered public accounting firm of the Company, has not issued an attestation report on the effectiveness of the Company’s internal control over financial reporting as no such report is required for a smaller reporting company.
Changes in Internal Control Over Financial Reporting
In the fourth fiscal quarter of 2018, the Company changed control and consequently, the Company’s internal controls over its financial reporting were transferred to new management. However, such control rested with the principal officer prior to the change of control and with the change of control, it continues to rest with the principal officer, the Company’s sole officer. Thus such change has not materially affected or is not reasonably likely to materially affect, the Company’s internal control over financial reporting.
| Item 9B. | Other Information |
Not applicable.
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PART III
| Item 10. | Directors, Executive Officers, and Corporate Governance |
Officers and Directors
The Directors and Officers of the Company as of December 31, 2020, and the date this report is filed, are as follows:
| Name | Positions and Offices Held | |
| Paul Adler | Director, President, Secretary, Chief Financial Officer |
Paul Adler is the sole executive officer and director of the Company and its majority shareholder.
There are no agreements or understandings for the officer or director to resign at the request of another person and the above-named officer and director is not acting on behalf of nor will act at the direction of any other person.
Paul Adler
President, Secretary, Chief Financial Officer, and sole director of the Company.
Mr. Adler has over a decade of experience in food manufacturing and marketing industries having served as a board member in two food manufacturing companies. He developed a strong desire to bring healthy beverages and snacks to the market which began after he saw there were no healthy alternatives. Mr. Adler spent the first decade of his career in the securities industry as a broker/dealer company in the OSJ Supervisory role where he supervised sixteen registered representatives and was involved in all aspects of investment banking including public offerings and private placements. In 2008, Mr. Adler retired from the securities industry and established Beverage Brands, a company offering a line of healthy RTD teas and MATE fusion tea. Beverage Brands’ product placement reached over 2500 supermarkets in the Northeast and South.
In 2012, Mr. Adler established Fruttata Brand, a line of freeze-dried healthy fruit snacks, under the corporate umbrella of Global Diversified Holdings, Inc., the subsidiary of the current parent Global Diversified Marketing Group Inc (OTC: GDMK). Since 2012, Mr. Adler had worked with Global Diversified Holdings to continue its development as a manufacturer, marketer, and supplier of unique products. Under Mr. Adler’s expertise, the company has accelerated its product line development and brand additions to its portfolio in the later part of 2016. The Company has been bootstrapping itself and able to have a significant growth spurt without any outside capital. Mr. Adler has extensive knowledge of day to day business operations ranging from Wall Street companies to running a private company and has been successful at establishing long-lasting business relationships throughout his career.
Directors
The Company is authorized to have at least one director but no more than five.
Director Independence
The Board of Directors has determined that it does not have any independent directors as that term is defined by NASDAQ Marketplace Rule 5605(a)(2). In assessing the independence of the directors, the Board considers any transactions, relationships, and arrangements between our Company and our independent directors or their affiliated companies. This review is based primarily on responses of the directors to questions in a director and officer questionnaire regarding employment, business, familial, compensation and other relationships with our Company or our management.
Director Compensation
Directors do not receive any compensation for serving on the Board of Directors.
Committees and Terms
The Board of Directors has not established any committees.
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Conflicts of Interest
There are no binding guidelines or procedures for resolving potential conflicts of interest. Failure by management to resolve conflicts of interest in favor of the Company could result in liability of management to the Company. However, any attempt by shareholders to enforce the liability of management to the Company would most likely be prohibitively expensive and time-consuming.
Corporate Governance
For reasons similar to those described above, the Company does not have a nominating nor audit committee of the board of directors. At this time, the Company has only one officer and one director. The Company promotes accountability for adherence to honest and ethical conduct; endeavors to provide full, fair, accurate, timely and understandable disclosure in reports and documents that the Company files and will file with the SEC and in other public communications made by the Company; and strives to be compliant with applicable governmental laws, rules, and regulations. The Company has not formally adopted a written code of business conduct and ethics that govern the Company’s employees, officers and Directors as the Company is not required to do so.
Instead of an Audit Committee, the Company’s director is responsible for reviewing and making recommendations concerning the selection of outside auditors, reviewing the scope, results, and effectiveness of the annual audit of the Company’s financial statements and other services provided by the Company’s independent public accountants. The Company’s director reviews the Company’s internal accounting controls, practices, and policies.
Code of Ethics
The Company has not at this time adopted a Code of Ethics pursuant to rules described in Regulation S-K. The Company anticipates that it will adopt a code of ethics when either the number of directors or the number of employees increases development, execution, and enforcement of such a code would be by the same persons and only persons to whom such code applied.
Officers and Directors of Global Diversified Holdings, Inc. (“GDHI”)
The Company’s operating subsidiary, GDHI, has a separate board of directors from the Company which consists of:
| Name | Position | |
| Paul Adler | President, Secretary, CFO, Director |
Advisory Board
The Company has developed an unpaid advisory team that supports the Company and will provide guidance and contacts as needed and requested. The advisory board includes:
Michael Cascione. Michael Cascione, Sr. is the founder and president of Group C, whose various companies provide Pantry, Micro Markets, Coffee and Vending Services.
Anthony Cascione. Anthony Cascione is a lifetime member of the Vending industry and a partner in Group C and the son of Michael Cascione Sr.
Oleg Kaplun. In 2010, Mr. Kaplun started a food distribution company in New York to service specialty and ethnic markets.
James Donegan. Mr. Donegan has a 30 plus-year track record of accomplishment as a sales and marketing executive in the food industry.
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| Item 11. | Executive Compensation |
The Company has not paid compensation to any executive officer or director. The Company’s subsidiary, GDHI, paid its president and director, Paul Adler, annual compensation of $210,000 and 198,000, for the years ended December 31, 2020, and December 31, 2019, respectively. The Company anticipates that it will continue paying such compensation to Mr. Adler with annual increases as approved by the Board.
The Company may choose to pay an additional salary or stock to its executive management in the future.
| Item 12. | Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters (1) |
The following table sets forth, as of December 31, 2020 each person known by the Company to be the officer or director of the Company or a beneficial owner of five percent or more of the Company’s common stock. The Company does not have any compensation plans. Except as noted, the holder thereof has sole voting and investment power with respect to the shares shown.
| Name and Position | Shares Owned | Percent of Class(1)(2) | ||||||
| Paul Adler President, CFO, Director | 12,483,500 | 95.1 | % | |||||
| All Officers and Directors as a Group (1 person) | 12,483,500 | 95.1 | % | |||||
| (1) | Based on 13,132,518 shares outstanding at the date of this Report. Mr. Adler’s address is care of the Company at the address listed on the cover page of this report. | |
| (2) | The amounts of 12,483,500 shares include 650,000 shares held by Mr. Adler’s spouse. |
The following table sets forth as of December 31, 2020 each person known by the Company to be the officer or director of the Company or a beneficial owner of five percent or more of the Company’s Series A Super Voting Preferred Stock.
| Name and Position | Shares Owned | Percent of Class | ||||||
| Paul Adler, President, CEO, and Director | 1,000 | 100 | % | |||||
Each share of Series A Preferred votes with the Common Stock and has 100,000 votes. Accordingly, Mr. Adler has an additional 100,000,000 votes in addition to his 12,483,500 common shares and together has an aggregate of 112,483,500 voting share equivalents equaling more than 99% of the voting power in the Company.
| 9 |
| Item 13. | Certain Relationships and Related Transactions and Director Independence |
The Company issued 200 shares of its common stock in a stock-for-stock acquisition of its wholly-owned subsidiary, GDHI. GDHI was 100% owned by the President of the Company and the transaction cannot be deemed an arm’s length transaction.
| Item 14. | Principal Accounting Fees and Services. Audit Fees |
The aggregate fees incurred for each of the last two years for professional services rendered by the independent registered public accounting firm for the audits of the Company’s annual financial statements and review of financial statements included in the Company’s Form 10-K and Form 10-Q reports and services normally provided in connection with statutory and regulatory filings or engagements were as follows:
| December 31, 2020 | December 31, 2019 | |||||||
| Audit-Related Fees | $ | 30,500 | 31,340 | |||||
The Company does not currently have an audit committee serving and as a result, its board of directors performs the duties of an audit committee. The board of directors will evaluate and approve in advance, the scope and cost of the engagement of an auditor before the auditor renders audit and non-audit services. The Company does not rely on pre-approval policies and procedures.
PART IV
| Item 15. | Exhibits, Financial Statement, Schedules |
EXHIBITS:
| 10 |
GLOBAL DIVERSIFIED MARKETING GROUP INC.
FINANCIAL STATEMENTS
DECEMBER 31, 2020
| 11 |
GLOBAL DIVERSIFIED MARKETING GROUP INC.
TABLE OF CONTENTS
DECEMBER 31, 2020
| 12 |
Report of Independent Registered Public Accounting Firm
To the shareholders and the board of directors of Global Diversified Marketing Group, Inc.
Opinion on the Financial Statements
We have audited the accompanying consolidated balance sheets of Global Diversified Marketing Group, Inc. (the “Company”) as of December 31, 2020 and 2019, the related statements of operations, stockholders’ equity (deficit), and cash flows for the years then ended, and the related notes (collectively referred to as the “financial statements”). In our opinion, the financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2020 and 2019, and the results of its operations and its cash flows for the years then ended, in conformity with accounting principles generally accepted in the United States.
Basis for Opinion
These financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on the Company’s financial statements based on our audit. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (“PCAOB”) and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audit in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. As part of our audits we are required to obtain an understanding of internal control over financial reporting but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting. Accordingly, we express no such opinion.
Our audit included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audit also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audit provides a reasonable basis for our opinion.
Substantial Doubt about the Company’s Ability to Continue as a Going Concern
The accompanying financial statements have been prepared assuming that the Company will continue as a going concern. As discussed in Note 2 to the financial statements, the Company’s significant operating losses raise substantial doubt about its ability to continue as a going concern. The financial statements do not include any adjustments that might result from the outcome of this uncertainty.
| /s/ BF Borgers CPA PC | |
| BF Borgers CPA PC |
We have served as the Company’s auditor since 2017.
Lakewood, CO
February 18, 2021
| F-1 |
Global Diversified Marketing Group, Inc.
Consolidated Balance Sheets
| December 31, | December 31, | |||||||
| 2020 | 2019 | |||||||
| ASSETS | ||||||||
| Current assets: | ||||||||
| Cash and cash equivalents | $ | 62,555 | $ | 22,291 | ||||
| Accounts receivable | 134,570 | 52,284 | ||||||
| Prepaid expenses | 31,444 | 34,176 | ||||||
| Inventory | 350,615 | 224,375 | ||||||
| Other assets | 10,890 | 4,384 | ||||||
| Total current assets | 590,074 | 337,509 | ||||||
| Property and equipment, net | 1,389 | 1,945 | ||||||
| Operating lease right of use assets | 14,257 | 30,477 | ||||||
| Other assets-security deposit | 1,600 | 1,600 | ||||||
| Total assets | $ | 607,320 | $ | 371,531 | ||||
| LIABILITIES AND STOCKHOLDERS’ EQUITY | ||||||||
| Current liabilities: | ||||||||
| Accounts payable and accrued expense | $ | 472,514 | $ | 332,059 | ||||
| Current portion of operating lease payable | 15,732 | 20,517 | ||||||
| Government loans payable | 149,900 | - | ||||||
| Loans payable | 20,540 | 98,471 | ||||||
| Total current liabilities | 658,686 | 451,047 | ||||||
| Government loans payable-long term | ||||||||
| Long term liability- operating lease | - | 15,732 | ||||||
| Total liabilities | 658,686 | 466,779 | ||||||
| Commitments and contingencies | ||||||||
| Stockholders’ Equity(Deficit): | ||||||||
| Preferred stock, Series A $.0001 par value, 1,000,000 shares authorized, 1,000 issued and outstanding | - | - | ||||||
| Common stock, $0.001 par value, 100,000,000 shares authorized; 13,132,518 and 13,010,200 issued and outstanding as of December 31, 2020 and December 31, 2019, respectively | 1,423 | 1,301 | ||||||
| Additional paid-in capital | 26,267,098 | 78,169 | ||||||
| Accumulated deficit | (26,329,779 | ) | (174,718 | ) | ||||
| Accumulated other comprehensive income | 9,892 | - | ||||||
| Total stockholders’ equity(deficit) | (51,366 | ) | (95,248 | ) | ||||
| Total liabilities and equity | $ | 607,320 | $ | 371,531 | ||||
The accompanying notes are an integral part of the consolidated financial statements.
| F-2 |
Global Diversified Marketing Group, Inc.
Consolidated Statements of Operations
| Year Ended | Year Ended | |||||||
| December 31, | December 31, | |||||||
| 2020 | 2019 | |||||||
| Sales, net | $ | 1,660,726 | $ | 1,317,092 | ||||
| Cost of goods sold | 999,911 | 946,090 | ||||||
| Gross margin | 660,815 | 371,002 | ||||||
| Operating expenses: | ||||||||
| General and administrative expense -related party | 26,020,400 | - | ||||||
| Payroll and taxes | 241,018 | 248,084 | ||||||
| Legal and professional fees | 242,892 | 55,131 | ||||||
| Rent | 16,225 | 28,896 | ||||||
| General and administrative | 301,126 | 159,920 | ||||||
| Total operating expenses | 26,821,661 | 492,031 | ||||||
| Income (loss) from operations | (26,160,846 | ) | (121,029 | ) | ||||
| Other (expense) | ||||||||
| Interest expense | (34,299 | ) | (29,955 | ) | ||||
| Miscellaneous income | 40,084 | - | ||||||
| Total other (expense) | 5,785 | (29,955 | ) | |||||
| Income (loss) before income taxes | (26,155,061 | ) | (150,984 | ) | ||||
| Provision for income taxes (benefit) | - | - | ||||||
| Net loss | $ | (26,155,061 | ) | $ | (150,984 | ) | ||
| Basic and diluted earnings (loss) per common share | $ | (2.00 | ) | $ | (0.01 | ) | ||
| Weighted-average number of common shares outstanding: | ||||||||
| Basic and diluted | 13,076,590 | 12,944,088 | ||||||
| Comprehensive income (loss): | ||||||||
| Net income(loss) | (26,155,061 | ) | (150,984 | ) | ||||
| Unrealized gain on foreign exchange | 9,892 | |||||||
| Comprehensive income (loss) | $ | (26,145,169 | ) | $ | (150,984 | ) | ||
The accompanying notes are an integral part of the consolidated financial statements.
| F-3 |
Global Diversified Marketing Group, Inc.
Consolidated Statements of Changes in Stockholders’ Equity
| Accumulated | ||||||||||||||||||||||||||||||||
| Additional | Other | Total | ||||||||||||||||||||||||||||||
| Preferred Stock | Common Stock | Paid-in | Retained | Comprehensive | Stockholders’ | |||||||||||||||||||||||||||
| Shares | Value | Shares | Value | Capital | Earnings(Deficit) | Income(Loss) | Equity | |||||||||||||||||||||||||
| Balance, December 31, 2018 | - | $ | - | 13,340,200 | $ | 1,334 | $ | 77,966 | $ | (23,734 | ) | $ | - | $ | 55,566 | |||||||||||||||||
| Net income (loss) | (150,984 | ) | (150,984 | ) | ||||||||||||||||||||||||||||
| Private placement of common shares | 170,000 | $ | 17 | $ | 153 | 170 | ||||||||||||||||||||||||||
| Common shares returned by founders | (500,000 | ) | (50 | ) | 50 | |||||||||||||||||||||||||||
| Balance December 31, 2019 | - | $ | - | 13,010,200 | 1,301 | 78,169 | (174,718 | ) | $ | - | (95,248 | ) | ||||||||||||||||||||
| Accumulated | ||||||||||||||||||||||||||||||||
| Additional | Other | Total | ||||||||||||||||||||||||||||||
| Preferred Stock | Common Stock | Paid-in | Retained | Comprehensive | Stockholders’ | |||||||||||||||||||||||||||
| Shares | Value | Shares | Value | Capital | Earnings(Deficit) | Income(Loss) | Equity | |||||||||||||||||||||||||
| Balance, December 31, 2019 | - | $ | - | 13,010,200 | $ | 1,301 | $ | 78,169 | $ | (174,718 | ) | $ | - | $ | (95,248 | ) | ||||||||||||||||
| Issuance of super voting preferred stock | 1,000 | 26,020,400 | 26,020,400 | |||||||||||||||||||||||||||||
| Common stock issued for services | 122,318 | 122 | 168,529 | 168,651 | ||||||||||||||||||||||||||||
| Net income(loss) | (26,155,061 | ) | (26,155,061 | ) | ||||||||||||||||||||||||||||
| Change in foreign currency translation | 9,892 | 9,892 | ||||||||||||||||||||||||||||||
| Balance, December 31, 2020 | 1,000 | $ | - | 13,132,518 | $ | 1,423 | $ | 26,267,098 | $ | (26,329,779 | ) | $ | 9,892 | $ | (51,366 | ) | ||||||||||||||||
The accompanying notes are an integral part of the consolidated financial statements.
| F-4 |
Global Diversified Marketing Group, Inc.
Consolidated Statements of Cash Flows
| Year Ended | Year Ended | |||||||
| December 31, | December 31, | |||||||
| 2020 | 2020 | |||||||
| Cash flows from operating activities of continuing operations: | ||||||||
| Net income (loss) | $ | (26,155,061 | ) | $ | (150,984 | ) | ||
| Adjustments to reconcile net loss to cash used in operating activities: | ||||||||
| Depreciation | 556 | 556 | ||||||
| Stock-based compensation -related party | 26,020,400 | |||||||
| Common stock issued for services | 168,529 | |||||||
| Changes in operating assets and liabilities: | ||||||||
| Accounts receivable | (82,286 | ) | (50,279 | ) | ||||
| Prepaid expenses | 2,732 | (25,122 | ) | |||||
| Right of use assets | 16,220 | (30,477 | ) | |||||
| Inventory | (126,240 | ) | 228,627 | |||||
| Other assets | (6,507 | ) | (4,384 | ) | ||||
| Operating lease payable | (20,517 | ) | 36,250 | |||||
| Accounts payable and accrued expenses | 140,577 | (25,850 | ) | |||||
| Net cash provided by (used in) operating activities | (41,597 | ) | (21,663 | ) | ||||
| Cash flows from investing activities: | ||||||||
| Purchase of fixed assets | - | - | ||||||
| Net cash provided by (used in) financing activities | - | - | ||||||
| Cash flows from financing activities: | ||||||||
| Increase (decrease) in loans payable, net | (77,931 | ) | 22,269 | |||||
| Government loans-net | 149,900 | 170 | ||||||
| Net cash provided by (used in) financing activities | 71,969 | 22,439 | ||||||
| Effect of exchange rates on cash and cash and cash equivalents | 9,892 | |||||||
| Net increase (decrease) in cash and cash equivalents | 40,264 | 776 | ||||||
| Cash and cash equivalents at beginning of period | 22,291 | 21,515 | ||||||
| Cash and cash equivalents at end of period | $ | 62,555 | $ | 22,292 | ||||
| Supplemental disclosure of cash flow information: | ||||||||
| Cash paid for interest | $ | 34,299 | $ | 29,955 | ||||
| Cash paid for income taxes | $ | - | $ | - | ||||
The accompanying notes are an integral part of the consolidated financial statements.
| F-5 |
GLOBAL DIVERSIFIED MARKETING GROUP INC. NOTES
TO THE CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2020
NOTE 1 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Nature of Business
Global Diversified Marketing Group Inc. (the “Company”), formerly known as Dense Forest Acquisition Corporation, was incorporated in Delaware on December 1, 2017, and changed its name on June 13, 2018, as part of a change in control. As part of the change in control, its then officers and directors resigned and contributed back to the Company 19,500,000 shares of the 20,000,000 outstanding shares of its common stock, and appointed new officers and directors. On June 14, 2018, the new management of the Company issued 12.500,000 shares of its common stock to Paul Adler, the then president of the Company.
On November 26, 2018, the Company effected the acquisition of Global Diversified Holdings, Inc. (“GDHI”), a private New York company owned by the Company’s president, with the issuance of 200 shares of the Company’s common stock in exchange for all of the outstanding shares of GDHI. GDHI became a wholly-owned subsidiary of the Company, and its activity for the years 2020 and 2019 is reflected in these financial statements along with the expenses of the Company.
Prior to the acquisition of GDHI, the Company had no business and no operations. Pursuant to the acquisition, the Company acquired the operations and business plan of GDHI, which imports and sells snack food products. For accounting purposes, GDHI is considered to be the acquirer, and the equity is presented as if the business combination had occurred on January 1, 2017.
Basis of Presentation
The financial statements of the Company have been prepared in accordance with generally accepted accounting principles in the United States of America and are presented in US dollars. Certain prior year amounts have been reclassified to conform to the presentation in the current year. The Company has adopted a December 31 year-end.
Principles of Consolidation
The accompanying consolidated financial statements include the accounts of the Company and its wholly-owned subsidiary. All intercompany accounts and transactions have been eliminated in consolidation.
Fair Value of Financial Instruments
The Company’s financial instruments consist of cash, accounts receivable from customers, accounts payable, and loans payable. The carrying amounts of these financial instruments approximates fair value due either to length of maturity or interest rates that approximate prevailing market rates unless otherwise disclosed in these financial statements.
Use of Estimates
The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the balance sheet. Actual results could differ from those estimates.
| F-6 |
Stock-Based Compensation
The Company accounts for stock-based compensation using the fair value method following the guidance outlined in Section 718-10 of the FASB Accounting Standards Codification for disclosure about Stock-Based Compensation. This Section requires a public entity to measure the cost of employee services received in exchange for an award of equity instruments based on the grant-date fair value of the award (with limited exceptions). That cost will be recognized over the period during which an employee is required to provide service in exchange for the award- the requisite service period (usually the vesting period). No compensation cost is recognized for equity instruments for which employees do not render the requisite service. During the year ended December 31, 2020 and December 31, 2019 stock-based compensation was $168,651 and $-0-, respectively.
Cash and Cash Equivalents
The Company considers all highly liquid investments with the original maturities of three months or less to be cash equivalents. On December 31, 2020, and 2019, the Company had $62,555 and $22,291 of cash.
Factoring
The Company accounts for the transfer of our accounts receivable to a third party under a factoring agreement in accordance with ASC 860-10-40-5 “Transfers and Servicing”. ASC 860-10 requires that several conditions be met in order to present the transfer of accounts receivable as a sale. Even though we have isolated the transferred (sold) assets and we have the legal right to transfer our assets (accounts receivable) we do not meet the third test of effective control since our accounts receivable sales agreement with the factor requires us to be liable in the event of default by one of our customers. Because we do not meet all three conditions, we do not qualify for sale treatment and our debt incurred with respect to the sale of our accounts receivable is presented as a loan payable in on our consolidated balance sheet. As of December 31, 2020 and 2019, the amounts due to factors were $20,540 and $98,471 respectively.
Accounts Receivable
Accounts receivable are generated from sales of snack food products to retail outlets throughout the United States. The Company performs ongoing credit evaluations of its customers and adjusts credit limits based on customer payment and current creditworthiness, as determined by review of their current credit information. The Company continuously monitors credit limits for its customers and maintains a provision for estimated credit losses based on its historical experience and any specific customer issues that have been identified. An allowance for doubtful; accounts are provided against accounts receivable for amounts management believes may be uncollectible. The Company historically has not had issues collecting on its accounts receivable from its customers. The Company factors certain of its receivables to improve its cash flow.
Bad debt expense for the years ended December 31, 2020, and 2019 was $5,327 and $0, respectively; the allowance for doubtful accounts on December 31, 2020, and 2019 was $0.
Inventory
Inventory consists of snack food products and packaging supplies, and are stated at the lower of cost or market.
Property and Equipment
Property and equipment are stated at cost, net of accumulated depreciation. Depreciation is calculated using the straight-line method over the estimated useful life of the assets. Maintenance, repairs, and renewals that do not materially add to the value of the equipment nor appreciably prolong its useful life are charged to expense as incurred.
Revenue Recognition
Beginning January 1, 2018, the Company implemented ASC 606, Revenue from Contracts with Customers. Although the new revenue standard is expected to have an immaterial impact, if any, on our ongoing net income, we did implement changes to our processes related to revenue recognition and the control activities within them. These included the development of new policies based on the five-step model provided in the new revenue standard, ongoing contract review requirements, and gathering of information provided for disclosures.
| F-7 |
The Company recognizes revenue from product sales or services rendered when control of the promised goods are transferred to our clients in an amount that reflects the consideration to which we expect to be entitled in exchange for those goods and services. To achieve this core principle we apply the following five steps: identify the contract with the client, identify the performance obligations in the contract, determine the transaction price, allocate the transaction price to performance obligations in the contract and recognize revenues when or as the Company satisfies a performance obligation.
Advertising and Marketing Costs
The Company’s policy regarding advertising and marketing is to record the expense when incurred. The Company incurred advertising and marketing expenses of $93,805 and $19,422 during the years ended December 31, 2020, and 2019, respectively.
NOTE 1 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
Impairment of Long-Lived Assets
The Company continually monitors events and changes in circumstances that could indicate carrying amounts of long-lived assets may not be recoverable. When such events or changes in circumstances are present, the Company assesses the recoverability of long-lived assets by determining whether the carrying value of such assets will be recovered through undiscounted expected future cash flows. If the total of the future cash flows is less than the carrying amount of those assets, the Company recognizes an impairment loss based on the excess of the carrying amount over the fair value of the assets. Assets to be disposed of are reported at the lower of the carrying amount or the fair value less costs to sell.
Income Taxes
Income taxes are computed using the asset and liability method. Under the asset and liability method, deferred income tax assets and liabilities are determined based on the differences between the financial reporting and tax bases of assets and liabilities and are measured using the currently enacted tax rates and laws. A valuation allowance is provided for the amount of deferred tax assets that, based on available evidence, are not expected to be realized.
The Company’s income tax returns are open for examination for up to the past three years under the statute of limitations. There are no tax returns currently under examination.
Comprehensive Income
The Company has established standards for reporting and display of comprehensive income, its components, and accumulated balances. When applicable, the Company would disclose this information on its Statement of Stockholders’ Equity. Comprehensive income comprises equity except those resulting from investments by owners and distributions to owners. During the year ended December 31, 2020 the Company had a balance of $9,892 in accumulated other comprehensive income which arose from unrealized gain due to foreign currency fluctuations.
Basic Income (Loss) Per Share
Basic income (loss) per share has been calculated based on the weighted average number of shares of common stock outstanding during the period.
Recent Accounting Pronouncements
The Company does not expect the adoption of recently issued accounting pronouncements to have a significant impact on the Company’s results of operations, financial position, or cash flow.
| F-8 |
NOTE 2 GOING CONCERN
As of December 31, 2020, the Company had cash and cash equivalents of $62,555 and had negative stockholders equity of $51,366. Additionally, the Company had negative working capital of $68,612. These conditions raise substantial doubt about the Company’s ability to continue as a going concern. The consolidated financials have been prepared assuming that the Company will continue as a going concern and, accordingly, do not include any adjustments that might result from the outcome of this uncertainty. If the Company is, in fact, unable to continue as a going concern, the shareholders may lose some or all of their investment in the Company.
NOTE 3 – CAPITAL STOCK
The Company has 100,000,000 shares of $.0001 par value common stock authorized. The Company has 13,132,518 and 13,010,000 shares of common stock issued and outstanding as of December 31, 2020, and December 31, 2019, respectively. During the year ended December 31, 2020, the Company issued the following shares:
On February 26, 2020, the Company issued 60,000 restricted common shares to a consultant and recorded a charge of $120,000.
On July 30, 2020, the Company issued 12,000 restricted common shares to an investment banking firm and recorded a charge of $12,600.
On August 14, 2020, the Company issued 30,000 shares to an investment banking firm and recorded a charge of $22,503.
On August 19, 2020, the Company issued 15,000 restricted common shares to a consultant and recorded a charge of $11,252.
On December 28, 2020 the Company issued 5,318 shares to a consultant and recorded a charge of $2,296.
All of these charges were recorded as “professional fees” on the Company’s Consolidated Statements of Operations during the nine months ended December 31, 2020.
The Company has 20,000,000 shares of $.0001 par value preferred stock authorized. On February 24, 2020, the Company filed a Certificate of Designation for a class of preferred stock designated Class A Super Voting Preferred Stock (“A Stock”). There are 1,000,000 shares of A Stock designated. Each share of such stock shall vote with the common stock and have 100,000 votes. A Stock has no conversion, dividend, or liquidation rights. Accordingly, the holders of A Stock will, by reason of their voting power, be able to control the affairs of the Company. The Company has issued 1,000 shares of A Stock to Paul Adler, the company’s Chief Executive Officer, and majority shareholder giving him effective voting control over the Registrant’s affairs for the foreseeable future.
As a result of the issuance of super-voting rights enabling him to vote 100,000,000 shares, Mr. Adler has effective voting control of approximately 99% of the Company. In conjunction with the issuance of these 1,000 preferred shares, the Company recorded stock compensation expense, related party of $26,020,400 during the year ended December 31, 2020.
NOTE 4 – RELATED PARTY TRANSACTIONS
During the years ended December 31, 2020, and 2019, the Company incurred salary expense of $210,000 and $198,000 respectively, related to services provided to it by its CEO.
| F-9 |
NOTE 5 – COMMITMENTS AND CONTINGENCIES
The Company entered into a 60-month lease agreement on October 1, 2016, to rent office space. The lease requires monthly payments of $1,600 for the first 24 months and after that increases by 3% each year, and contains one five year renewal option. Rental expenses under this lease for the years ended December 31, 2020, and 2019 was $16,225 and $28,896, respectively. The lease also required advance payment of $1,600 for the last month of rent as well as a $1,600 security deposit. Future minimum lease payments due under this operating lease, including renewal periods, are as follows:
| Year ended December 31, 2021 | 15,732 | |||
| Total minimum lease payments | $ | 15,372 |
NOTE 6 – LOANS PAYABLE
The Company had various loans outstanding on December 31, 2020, and 2019 – all were short-term in nature, with varying rates of interest and fees, and no set minimum monthly payments, as follows:
| 2020 | 2019 | |||||||
| Credit Line - BlueVine | 14,072 | 12,287 | ||||||
| Credit Line – Loan Builder | 6,468 | 86,184 | ||||||
| Total loans payable | $ | 20,540 | $ | 98,471 | ||||
NOTE 7 – INCOME TAXES
For the period ended December 31, 2020, the Company has incurred net losses and, therefore, has no tax liability. The net deferred tax asset generated by the loss carry-forward has been fully reserved. The net operating loss carry forward is approximately 409,000 on December 31, 2020.
The provision for Federal income tax consists of the following on December 31, 2020, and 2019:
| 2020 | 2019 | |||||||
| Federal income tax benefit attributable to: | ||||||||
| Current Operations | $ | 33,990 | $ | 86,000 | ||||
| Less: NOL carryforward in 2020, and valuation allowance in 2019 | (33,900 | ) | (86,000 | ) | ||||
| Net provision for Federal income taxes | $ | - | $ | - | ||||
NOTE 8 – CONCENTRATIONS
The Company does substantially all of its business with 4 customers. These customers accounted for % and 91% of revenues for the years ended December 31, 2020, and 2019, respectively.
| 2020 | 2019 | |||||||
| Customer A | 34 | 29 | % | |||||
| Customer B | 24 | 25 | % | |||||
| Customer C | 22 | 20 | % | |||||
| Customer D | 11 | 17 | % | |||||
| Total | 91 | % | 91 | % | ||||
NOTE 9 – SUBSEQUENT EVENTS
In accordance with ASC 855-10, the Company has analyzed its operations subsequent to December 31, 2020, to the date these financial statements were issued, and has determined that it does not have any other material subsequent events to disclose in these financial statements.
| F-10 |
Exhibits
| 13 |
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.
| GLOBAL DIVERSIFIED MARKETING GROUP INC. | |||
| Dated: | February 18, 2021 |
By: | /s/ Paul Adler |
| President | |||
| Dated: | February 18, 2021 |
By: | /s/ Paul Adler |
| Chief Financial Officer | |||
Pursuant to the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated.
| NAME | OFFICE | DATE | ||
| /s/ Paul Adler | Director | February 18, 2021 |
| 14 |