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, 2019
[ ]
|
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.
$
0
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 March 13, 2020
|
|
|
|
Common
Stock, par value $0.0001
|
|
13,010,200
|
|
|
|
Documents
incorporated by reference:
|
|
None
|
PART
I
Global
Diversified Marketing Group, Inc. (the “Company”) 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 through snack segments offering Italian Wafers, French Madeleines, Coconut Wafer Praline Bites, Italian Filled Croissants,
and other gourmet snacks. The Company attends global food trade shows to seek out unique products and snacks. Once the Company
identifies products that fit within its distribution channels, they will enter 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 outlets for sale by the outlets. 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 brands regional brands and adding these to the Company’s national distribution can prove beneficial
for the Company.
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 from the Company and pays on a net 10-day term. 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)
|
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.
Product
Activations
The
Company will set up blind taste tests at neutral locations, in stores, malls and snack shops to let consumers sample products
and to determine consumer preferences, and most importantly, find out the basis for those preferences. Is it the taste, the packaging,
or the Company image? This will also serve as an opportunity for the Company to highlight its products directly to the consumer.
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.
Trading
Market
On
January 7, 2020, the Company received its trading symbol “GDMK” from FINRA. Currently, there is no trading
market for the securities of the Company. The Company intends to initially apply for admission to the quotation of its
securities on the OTCQB or QX as soon as possible. There can be no assurance that the Company will qualify for the quotation
of its securities on the OTCQB or QX.
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.
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 Carteret, 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.
PART
II
Item
5.
|
Market for Registrant’s Common Equity, Related
Stockholder Matters and Issuer Purchases of Equity Securities
|
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 2019 and 2018
Revenues
and Cost of Sales
Sales
for the year ended December 31, 2019 were $1,317,092 compared to sales in 2018 of $1,161,996, an increase of $155,097, or approximately
13.3%. For the year ended December 31, 2019, gross profit was $371,002 or 28.2% compared to gross profit of $397,617 or 34.2%.
The increase in revenue is attributable to the addition of new customer and distribution channels. The decrease in gross profit
and gross profit as a percentage of sales (“gross margin”) is partially attributable to two rush orders in 2019 to
accommodate clients where we incurred approximately $27,000 in air shipment excess expense over ocean freight which
were above normal levels. Additionally, the Company’s gross margin from period to period will vary based upon the Company’s
product mix which ranges in margin, from 28% to 40%+. The Company believes that its normalized margin at higher
volumes, if they are achieved, will be between 30-33% of sales, although there can be no assurances that such goals will be achieved.
Historically,
the Company has relied on a small number of customers to generate a large portion of its revenue. In 2019, four customers accounted
for 91% of the Company revenues. In 2018, the same four customers accounted for 99% 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.
Operating
expenses
Operating
expenses for the year ended December 31, 2019, were $492,032 compared to $438,732 for the same period ended December 31, 2018,
or an increase of $53,299, or an increase of approximately 12.1%. This increase in 2019 over 2018 levels is attributable to (1)
an increase in payroll expense of $55,015 in 2019 due to an increase of $18,000 in salary to $198,000(plus associated payroll
tax expense) for the Company’s president who became a payroll employee in 2019 when he whereas he was a consultant in 2018
(2) an increase of $60,755 in general and administrative expenses in 2019 over 2018 levels primarily due to a reclassification
of storage and warehousing expense of approximately $40,000 compared to $-0- in 2018 and an increase in advertising and promotion
of approximately $16,000; partially offset by (3) a decrease of $72,000 in legal and professional fees in 2019 compared to 2018
due to a decrease in legal and accounting fees incurred in 2018 to become a public company.
Other income and (expense)
Other
income and (expense) is comprised of interest expense for the years ended December 31, 2019, and December 31, 2018. Interest
expense increased to $29,955 in 2019 compared to $11,803 in 2018 due to higher levels of borrowings in 2019.
Liquidity
and Capital Resources
As
of December 31, 2019, and 2018, the Company had $22,291 and $21,515 in cash on hand, respectively. Net cash used in operating
activities was $21,663 compared to $12,101 for the same period ended December 31, 2018. The increase in net cash used in operating
activities is primarily attributable to an increase in operating losses of $98,066 in 2019 compared to the 2018 period; offset
by a net increase in operating assets and liabilities of $88,503.
Cash
flows from financing activities decreased to $22,292 for the period ended December 31, 2019, compared to $33,616 during the same
period ended December 31, 2018. The decrease in net cash provided from financing activities is attributable to net issuances of
common stock for $33,000 in the 2018 period compared to zero in the 2019 period, offset by an increase of $21,563 in loans payable.
The
Company had lease payments for its office space of $19,923 in 2019 and $ 19,334 in 2018 and has continuing annual lease obligations
of $20,517 in 2020 and $20,976 in 2021.
The
Company has two short term asset-based credit lines. As of December 31, 2019, and December 31, 2018, respectively, the balances
outstanding were as follows:
|
|
12/31/2019
|
|
|
12/31/2018
|
|
|
|
|
|
|
|
|
|
|
Blue Vine Credit Line
|
|
$
|
12,287
|
|
|
$
|
59,125
|
|
LoanBuilder
|
|
|
86,184
|
|
|
|
17,077
|
|
|
|
$
|
98,471
|
|
|
$
|
76,202
|
|
These
credit facilities for Blue Vine and LoanBuilder bear interest at the rates of 26.4% and 13%, respectively. As of December
31, 2019, the Company had approximately $63,000 in unused availability on these lines.
Seasonality
The Company’s business is subject to seasonality with reduced
sales in the fourth quarter of the year. Typically, sales are lower in the mid to end of the fourth quarter because the Company’s
clients ramp up towards November and then they assess their inventory positions at year-end prior to placing new orders for the
following year.
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. Total current liabilities for the year ended December 31, 2019, were
$466,779 including $332,059 in accounts payable and accrued expenses compared to total current liabilities for year ended December
31, 2018, were $434,111 including $357,909 accounts payable and accrued expenses. Loans payables used to finance the Company’s
business were $98,471 during the period ended December 31, 2019, compared $76,202 during the period ended December 31, 2018
Item
8.
|
Financial Statements and Supplementary Data
|
The
financial statements for the year ended December 31, 2019, and 2018 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, 2018, 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, 2018, 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.
PART
III
Item 10.
|
Directors, Executive Officers, and Corporate Governance
|
Officers
and Directors
The
Directors and Officers of the Company as of December 31, 2019, 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.
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.
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 $198,000 and 180,000, for the years ended December 31, 2019, and December 31,
2018, 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 March 5, 2010, 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)
|
|
|
|
|
|
|
|
Paul Adler
President, CFO, Director
|
|
12,500,200
|
|
|
96.1
|
%
|
|
|
|
|
|
|
|
All Officers and Directors as a Group (1 person)
|
|
12,500,200
|
|
|
96.1
|
%
|
(1)
Based on 13,010,200 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.
The
following table sets forth as of March 5, 2010, 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 12,500,200 common shares and together has an aggregate of 112,500,200 voting share equivalents equaling
more than 99% of the voting power in the Company.
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, 2019
|
|
|
December 31, 2018
|
|
Audit-Related Fees
|
|
$
|
31,340
|
|
|
|
23,100
|
|
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:
GLOBAL
DIVERSIFIED MARKETING GROUP INC.
FINANCIAL
STATEMENTS
DECEMBER 31, 2019
GLOBAL
DIVERSIFIED MARKETING GROUP INC.
TABLE
OF CONTENTS
DECEMBER 31, 2019
Reports
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 balance sheets of Global Diversified Marketing Group, Inc. (the "Company") as of December
31, 2019 and 2018, 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, 2019 and 2018, 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
|
|
March
16, 2020
|
|
Global
Diversified Marketing Group, Inc.
Consolidated
Balance Sheets
|
|
December 31,
|
|
|
December 31,
|
|
|
|
2019
|
|
|
2018
|
|
|
|
|
|
|
|
|
ASSETS
|
|
|
|
|
|
|
|
|
Current assets:
|
|
|
|
|
|
|
|
|
Cash and cash equivalents
|
|
$
|
22,291
|
|
|
$
|
21,515
|
|
Accounts receivable
|
|
|
52,284
|
|
|
|
2,005
|
|
Prepaid expenses
|
|
|
34,176
|
|
|
|
9,054
|
|
Inventory
|
|
|
224,375
|
|
|
|
453,002
|
|
Other assets
|
|
|
4,384
|
|
|
|
-
|
|
Total current assets
|
|
|
337,509
|
|
|
|
485,576
|
|
Property and equipment, net
|
|
|
1,945
|
|
|
|
2,501
|
|
Operating lease right of use assets
|
|
|
30,477
|
|
|
|
-
|
|
Other assets-security deposit
|
|
|
1,600
|
|
|
|
1,600
|
|
Total assets
|
|
$
|
371,531
|
|
|
$
|
489,677
|
|
|
|
|
|
|
|
|
|
|
LIABILITIES AND STOCKHOLDERS’ EQUITY
|
|
|
|
|
|
|
|
|
Current liabilities:
|
|
|
|
|
|
|
|
|
Accounts payable and accrued expense
|
|
$
|
332,059
|
|
|
$
|
357,909
|
|
Current portion of operating lease payable
|
|
|
20,517
|
|
|
|
-
|
|
Loans payable
|
|
|
98,471
|
|
|
|
76,202
|
|
Total current liabilities
|
|
|
451,047
|
|
|
|
434,111
|
|
Long term liability- Operating Lease
|
|
|
15,732
|
|
|
|
-
|
|
Total liabilities
|
|
|
466,779
|
|
|
|
434,111
|
|
|
|
|
|
|
|
|
|
|
Commitments and contingencies
|
|
|
|
|
|
|
-
|
|
|
|
|
|
|
|
|
|
|
Stockholders’ Equity:
|
|
|
|
|
|
|
|
|
Common stock, $0.001 par value, 100,000,000 shares authorized; 13,010,200
and 13,340,200 issued and outstanding as of December 31, 2019 and December 31, 2018, respectively
|
|
|
1,301
|
|
|
|
1,334
|
|
Additional paid-in capital
|
|
|
78,169
|
|
|
|
77,966
|
|
Retained earnings deficit
|
|
|
(174,718
|
)
|
|
|
(23,734
|
)
|
Total stockholders’ equity
|
|
|
(95,248
|
)
|
|
|
55,566
|
|
Total liabilities and equity
|
|
$
|
371,531
|
|
|
$
|
489,677
|
|
The
accompanying notes are an integral part of the consolidated financial statements.
Global
Diversified Marketing Group, Inc.
Consolidated
Statements of Operations
|
|
December 31,
|
|
|
December 31,
|
|
|
|
2019
|
|
|
2018
|
|
|
|
|
|
|
|
|
Sales
|
|
$
|
1,317,092
|
|
|
$
|
1,161,995
|
|
Cost of goods sold
|
|
|
946,090
|
|
|
|
764,378
|
|
Gross margin
|
|
|
371,002
|
|
|
|
397,617
|
|
Operating expenses:
|
|
|
|
|
|
|
|
|
Payroll and taxes
|
|
|
248,084
|
|
|
|
193,069
|
|
Legal and professional fees
|
|
|
55,131
|
|
|
|
127,154
|
|
Rent
|
|
|
28,896
|
|
|
|
19,344
|
|
General and administrative
|
|
|
159,920
|
|
|
|
99,165
|
|
Total operating expenses
|
|
|
492,032
|
|
|
|
438,732
|
|
Income (loss) from operations
|
|
|
(121,030
|
)
|
|
|
(41,116
|
)
|
Other income (expense)
|
|
|
|
|
|
|
|
|
Interest expense
|
|
|
(29,955
|
)
|
|
|
(11,803
|
)
|
Total other income (expense)
|
|
|
(29,955
|
)
|
|
|
(11,803
|
)
|
Income (loss) before income taxes
|
|
|
(150,984
|
)
|
|
|
(52,919
|
)
|
Provision for income taxes (benefit)
|
|
|
-
|
|
|
|
-
|
|
Net loss
|
|
|
(150,984
|
)
|
|
$
|
(52,919
|
)
|
|
|
|
|
|
|
|
|
|
Basic and diluted earnings (loss) per common share
|
|
$
|
(0.01
|
)
|
|
$
|
(0.00
|
)
|
|
|
|
|
|
|
|
|
|
Weighted-average number of common shares outstanding:
|
|
|
|
|
|
|
|
|
Basic and diluted
|
|
|
12,944,088
|
|
|
|
13,085,718
|
|
The
accompanying notes are an integral part of the consolidated financial statements.
Global
Diversified Marketing Group, Inc.
Consolidated
Statements of Changes in Stockholders’ Equity
|
|
|
|
|
|
|
|
Additional
|
|
|
|
|
|
Total
|
|
|
|
Common Stock
|
|
|
Paid-in
|
|
|
Retained
|
|
|
Stockholders’
|
|
|
|
Shares
|
|
|
Value
|
|
|
Capital
|
|
|
Earnings
|
|
|
Equity
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance, January 1, 2018
|
|
|
13,000,000
|
|
|
$
|
1,300
|
|
|
$
|
-
|
|
|
$
|
29,185
|
|
|
$
|
30,485
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Private placement of common shares
|
|
|
340,000
|
|
|
|
34
|
|
|
|
77,966
|
|
|
|
|
|
|
|
78,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Common shares issued in connection with the acquisition of a subsidiary
|
|
|
200
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income (loss)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(52,919
|
)
|
|
|
(52,919
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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
|
)
|
The
accompanying notes are an integral part of the consolidated financial statements.
Global
Diversified Marketing Group, Inc.
Consolidated
Statements of Cash Flows
|
|
December 31,
|
|
|
December 31,
|
|
|
|
2019
|
|
|
2018
|
|
|
|
|
|
|
|
|
Cash flows from operating activities of continuing operations:
|
|
|
|
|
|
|
|
|
Net income (loss)
|
|
$
|
(150,984
|
)
|
|
$
|
(52,919
|
)
|
Adjustments to reconcile net loss to cash used in operating activities:
|
|
|
|
|
|
|
|
|
Depreciation
|
|
|
556
|
|
|
|
556
|
|
Changes in operating assets and liabilities:
|
|
|
|
|
|
|
|
|
Accounts receivable
|
|
|
(50,279
|
)
|
|
|
16,103
|
|
Prepaid expenses
|
|
|
(25,122
|
)
|
|
|
(4,180
|
)
|
Right of use assets
|
|
|
(30,477
|
)
|
|
|
|
|
Inventory
|
|
|
228,627
|
|
|
|
(91,974
|
)
|
Other assets
|
|
|
(4,384
|
)
|
|
|
|
|
Operating lease payable
|
|
|
36,250
|
|
|
|
|
|
Accounts payable
|
|
|
(25,850
|
)
|
|
|
120,313
|
|
Net cash provided by (used in) operating activities
|
|
|
(21,663
|
)
|
|
|
(12,101
|
)
|
|
|
|
|
|
|
|
|
|
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
|
|
|
22,269
|
|
|
|
616
|
|
Issuances of common stock
|
|
|
170
|
|
|
|
78,000
|
|
Proceeds from the sale of convertible notes
|
|
|
-
|
|
|
|
(45,000
|
)
|
Net cash provided by (used in) financing activities
|
|
|
22,439
|
|
|
|
33,616
|
|
|
|
|
|
|
|
|
|
|
Net increase (decrease) in cash and cash equivalents
|
|
|
776
|
|
|
|
21,515
|
|
Cash and cash equivalents at beginning of period
|
|
|
21,515
|
|
|
|
-
|
|
Cash and cash equivalents at end of period
|
|
$
|
22,292
|
|
|
$
|
21,515
|
|
|
|
|
|
|
|
|
|
|
Supplemental disclosure of cash flow information:
|
|
|
|
|
|
|
|
|
Cash paid for interest
|
|
$
|
29,955
|
|
|
$
|
25,247
|
|
Cash paid for income taxes
|
|
$
|
-
|
|
|
$
|
-
|
|
The
accompanying notes are an integral part of the consolidated financial statements.
GLOBAL
DIVERSIFIED MARKETING GROUP INC. NOTES
TO
THE CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER
31, 2019
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
2019 and 2018 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.
Stock-Based
Compensation
As
of December 31, 2019, the Company has not issued any share-based payments to its employees. Under the modified prospective method
the Company uses, stock compensation expense includes compensation expense for all stock-based compensation awards granted, based
on the grant-date estimated fair value.
NOTE
1 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
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, 2019, and 2018, the Company had $22,291 and $21,515 of cash.
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, 2019, and 2018 was $0; the allowance for doubtful accounts at December 31,
2019, and 2018 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.
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 $19,422 and $3,424 during the years ended December 31, 2019, and 2018, 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 wholly-owned subsidiary, with the consent of its stockholder, had elected to be taxed as an S Corporation under
the provisions of the Internal Revenue Code. Instead of paying federal corporate income taxes, the stockholder(s) of an S Corporation
is taxed individually on their proportionate share of the Company’s taxable income. Therefore, prior to the business combination
discussed above, the Company had made no provision for income taxes. Effective with the business combination, the wholly-owned
subsidiary became a C-corporation, and the loss incurred for the period as a C-corporation approximated $409,000. See Note 7.
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. The Company has not had any significant
transactions that are required to be reported in other comprehensive income.
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.
NOTE
2 GOING CONCERN
As
of December 31, 2019, the Company had cash and cash equivalents of $22,291 and an accumulated deficit of $174,718.
Additionally, the Company had accounts payable and accrued liabilities of $357,909. 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 13,010,200 and 13,340,200 shares of
common stock issued and outstanding as of December 31, 2019, and 2018, respectively.
The
Company has 20,000,000 shares of $.0001 par value preferred stock authorized. Preferred shares have not yet been issued.
NOTE
4 – RELATED PARTY TRANSACTIONS
During
the years ended December 31, 2019, and 2018, the Company incurred consulting fees of $198,000 and $180,000 respectively,
related to services provided to it by an officer/ shareholder.
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, 2019, and 2018 was $28,896 and $19,334, 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, 2020
|
|
|
20,517
|
|
Year ended December 31, 2021
|
|
|
20,976
|
|
Total minimum lease payments
|
|
$
|
41,493
|
|
The
Company also pays rental charges for warehouse and storage space under a three-year lease agreement dated May 18, 2017, with
payments due calculated at $1,400 per container.
NOTE
6 – LOANS PAYABLE
The
Company had various loans outstanding at December 31, 2019, and 2018 – all were short-term in nature, with varying rates
of interest and fees, and no set minimum monthly payments, as follows:
|
|
2019
|
|
|
2018
|
|
Credit Line - BlueVine
|
|
|
12,287
|
|
|
|
59,125
|
|
Credit Line – Loan Builder
|
|
|
86,184
|
|
|
|
17,077
|
|
Total loans payable
|
|
$
|
98,471
|
|
|
$
|
76,202
|
|
NOTE
7 – INCOME TAXES
For
the period ended December 31, 2019, 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, 2019.
The
provision for Federal income tax consists of the following at December 31, 2019, and 2018:
|
|
2019
|
|
|
2018
|
|
Federal income tax benefit attributable to:
|
|
|
|
|
|
|
|
|
Current Operations
|
|
$
|
86,000
|
|
|
$
|
56,700
|
|
Less: valuation allowance
|
|
|
(86,000
|
)
|
|
|
(56,700
|
)
|
Net provision for Federal income taxes
|
|
$
|
-
|
|
|
$
|
-
|
|
NOTE
8 – CONCENTRATIONS
The
Company does substantially all of its business with 4 customers. These customers accounted for 91% and 99% of revenues for
the years ended December 31, 2019, and 2018, respectively.
|
|
2019
|
|
|
2018
|
|
Customer A
|
|
|
29
|
%
|
|
|
31
|
%
|
Customer B
|
|
|
25
|
%
|
|
|
25
|
%
|
Customer C
|
|
|
20
|
%
|
|
|
23
|
%
|
Customer D
|
|
|
17
|
%
|
|
|
20
|
%
|
Total
|
|
|
91
|
%
|
|
|
99
|
%
|
These
same customers accounted for approximately 86% of the Company’s accounts receivable balances as of December 31,
2019.
NOTE
9 – SUBSEQUENT EVENTS
In
accordance with ASC 855-10, the Company has analyzed its operations subsequent to December 31, 2019, 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.
Exhibits
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:
|
March
16, 2020
|
By:
|
/s/
Paul Adler
|
|
|
|
President
|
|
|
|
|
Dated:
|
March
16, 2020
|
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
|
|
March
16, 2020
|
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