PART
I
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,
|
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Mini
Wafers, Filled
|
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Croissants,
Macarons
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Dolcibono
|
250g
Wafers
|
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BonBons
de Paris
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Plain
French Madeleines
|
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Marble
French
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Madeleines
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Coco
Bliss
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Coconut
Wafer Bites
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Fruttata
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Jams
(R&D stage), Fruit Snacks
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(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.
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.
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 $19,680 per year. The lease contains one five year renewal option with escalator
clauses. The Company utilizes a 3PL warehouse in Port Reading , New Jersey. The Company’s website is www.360worldsnacks.com.
Management believes that its present facilities are adequate for its needs and that if it was required to do so, it could obtain
similar facilities at a similar cost.
Item
3.
|
Legal
Proceedings
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There
are no pending, threatened or actual legal proceedings in which the Company is a party.
Item
4.
|
Mine
Safety Disclosures.
|
Not
applicable.
PART
II
Item
5.
|
Market
for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities
|
Our
Common Stock is quoted on the over the counter “pink sheets” under the trading symbol “GDMK.” Trading
volume in our Common Stock is very limited. As a result, the trading price of our Common Stock is subject to significant fluctuations.
There
can be no assurance that a liquid market will develop in the foreseeable future.
Transfer
of our common stock may also be restricted under the securities or blue sky laws of certain states and foreign jurisdictions.
Consequently, investors may not be able to liquidate their investments and should be prepared to hold the common stock for an
indefinite period of time.
The
following table sets forth the high and low bid quotations for our Common Stock as reported on the pink sheets for the periods
indicated.
Fiscal 2019
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$
High
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$
Low
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First Quarter
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N/A
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N/A
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Second Quarter
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N/A
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N/A
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Third Quarter
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N/A
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N/A
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Fourth Quarter
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N/A
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N/A
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Fiscal 2020
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$ High
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$ Low
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First Quarter
|
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N/A
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N/A
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Second Quarter
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$
|
2.15
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$
|
2.05
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Third Quarter
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$
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2.80
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$
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0.12
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Fourth Quarter
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$
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0.90
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$
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0.40
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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.
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.
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.
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 $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.
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.
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.
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.
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.
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.
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.
Exhibits