Global Diversified Industries Inc (GDIV)

[mike306oh]

Positives and Negatives from the last SEC filling.

http://www.pinksheets.com/quote/filings.jsp?symbol=GDVI

(I previously posted it on the RB MB)

Positives:

*Total assets increased from $4.5 MM last Q, to $5.6 MM now

* Financials:

- Total revenues increased to $ 4,326,779 in the six months ended October 31, 2004 from $2,633,337 in the six months ended October 31, 2003. Sales are beginning to increase due to the addition of two experienced salesmen last quarter. Global Modular is becoming accepted by the school districts as a reliable manufacturer of modular school classroom buildings.

- Cost of revenues was $2,957,616 and $$1,669,083, respectively for the six months ended October 31, 2004 and 2003. Gross profit was $1,369,163 and $964,254, respectively for the six months ended October 31, 2004 and 2003. This is due to Global Modular increasing the sales staff and becoming known in the modular school classroom market during the six months ended October 31, 2004.

- Total operating expenses increased to $ 1,108,869 in the six months ended October 31, 2004 from $819,538in the six months ended October 31, 2003. The is mainly attributable to increases in selling, general, and administrative costs in connection with the increased sales and operations of Global Modular and MBS Constructions

- Overall positive: “As of October 31, 2004, the Company had a working capital surplus of $1,911,550 and a gain from operations of $110,496 for the six months ended October 31, 2004. The Company generated a deficit in cash flow from operations of $1,027,112 for the six-month period ended October 31, 2004. The deficit in cash flow from operating activities for the period is primarily attributable to the Company's net adjusted for depreciation and amortization of $115,830, common stock issued to consultants and employees in exchange for compensation of $130,176, an increase in accounts receivable of $490,517, an increase in inventory of $1,057,073, an increase in prepaid expenses and other assets of $158,055, an increase in employee advances of $43,286, a decrease in deferred revenue of $34,877 and an increase in accounts payable of $400,194.”

* “As of October 31, 2004 the Company had seventy-five employees. The Company anticipates that the number of employees will satisfy its production backlog during the next six months.”

* Very positive: “The Company’s current backlog has increased to approximately $4,000,000 as compared to approximately $250,000 the same period one year ago.”

* Very positive: “At some point during the current or successive fiscal year, Global Modular intends to expand its product line to serve the commercial/business sector. This sector consists of retail, industrial and institutional (including educational institutions that reside on private property). This sector adheres to building designs and specifications administered by the Department of Housing (DOH)”


Negatives:

* Weighted average shares (basic and diluted) outstanding have increases since last year from 243 MM to 277 MM. While dilution is not good, the increase is not by much, and the OS is still lower compared to other OTCBB at the same price, most of which hardly can show any income.

* The Langley Deal: “Pursuant to the terms of the Agreement, the Company issued 25,000,000 shares of its restricted common stock (“Consideration Stock”) to be held in escrow, in exchange for Langley Shares (“Langley Consideration Shares”) equal to the same value of the Consideration Stock. The Consideration Stock was released, however the Company did not receive the Langley Consideration Shares. Subsequent to the date of financial statements, the Company filed an action in the United States District Court for the Eastern District of California Fresno Division, against Langley for, among other cause of action, securities fraud, breach of contract and rescission in relation to the Agreement. The Company has demanded the 2,500,000 shares of Consideration Stock wrongfully transferred to Langley being return to the Company and the Consideration Stock has been coded so as not be considered issued. “

(a) since this was not a cash transfer, the deal was not good, IMO, for GDVI
(b) GDVI, has now to tighten it’s belt, or if capital work is needed I think they should be able to obtain a bank loan, under much better conditions. So, this might actually turn to e a positive, IMO.

Mike