UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

_________________________________________

Form 10-Q

x QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended ~~March~~June 3130, 2011

o TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from _____________ ~~_________________~~ to ~~__________________~~_______________

Commission file number 000-53524

DIVERSIFIED GLOBAL HOLDINGS GROUP, INC. ~~(Exact Name of Registrant as Specified in Its Charter)~~

Florida		74-3184267
(State or Other Jurisdiction of Incorporation or Organization)		(I.R.S. Employer Identification No.)

(Exact Name of Registrant as Specified in Its Charter)

Florida	74-3184267
(State or Other Jurisdiction of	(I.R.S. Employer Identification No.)
Incorporation or Organization)

800 North Magnolia Ave., Suite 105, Orlando, FL	32803
(Address of principal executive offices)	(Zip Code)

(407) 843-3344 ~~(Registrant's Telephone Number, Including Area Code)~~

(Registrant's Telephone Number, Including Area Code)

(Former Name, Former Address and Former Fiscal Year, if Changed Since Last Report)

Check whether the issuer (1) filed all reports required to be filed by Section 13 or 15(d) of the Exchange Act during the past 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[X ] Yes o No

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§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). Yes o No o

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, or a smaller reporting company. (Check One):

Large accelerated filer o Accelerated filer o Non-accelerated filer o Smaller reporting company x (Do not check if a smaller reporting company)

Non-accelerated filer o Smaller reporting company x

(Do not check if a smaller reporting company)

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). o Yes x No

The number of shares outstanding of the issuer's common stock, par value $.001 per share, was 9399,~~300~~328,730 as of ~~May~~August 1323, 2011.

Diversified Global Holdings Group, Inc.
Index
		Page	~~Page~~
PART I.	~~PART~~FINANCIAL I.INFORMATION	~~FINANCIAL INFORMATION~~
Item 1.	~~Item~~Financial 1.Statements	~~Financial Statements~~1	1
		Consolidated Balance Sheets as of March 31, 2011
	Consolidated Balance Sheets as of June 30, 2011
	and December 31, 2010 (Unaudited)	~~and December 31, 2010 (Unaudited)~~2	2
	Consolidated Statements of Operations for the	~~Consolidated Statements of Operations for the~~
		Three Months Ended March 31, 2011 and 2010 (Unaudited)	3
	Six and ThreeMonths Ended June 30, 2011 and 2010 (Unaudited)	3
		Consolidated Statement of Stockholders' Equity for the Period Ended March 31, 2011 (Unaudited)	4
	Consolidated Statement of Stockholders' Equity for the Period Ended June 30, 2011 (Unaudited)	4
		Consolidated Statement of Cash Flows for the Three Months Ended March 31, 2011 and 2010 (Unaudited)	5-6
	Consolidated Statement of Cash Flows for the Six Months Ended June 30, 2011 and 2010 (Unaudited)	5
	Notes to Unaudited Financial Statements	~~Notes to Unaudited Financial Statements~~7	7
Item 2.	~~Item~~Management's 2.Discussion and Analysis of Financial	~~Management's Discussion and Analysis of Financial~~	22
	Condition and Results of Operations	~~Condition and Results of Operations~~22
Item 3.	~~Item~~Quantitative 3.and Qualitative Disclosures About Market Risk	~~Quantitative and Qualitative Disclosures About Market Risk~~31	30
Item 4.	~~Item~~Controls 4.and Procedures	~~Controls and Procedures~~31	30
PART II.	~~PART~~OTHER ~~II.~~INFORMATION	~~OTHER INFORMATION~~
Item 6.	~~Item 6~~Exhibits.	~~Exhibits.~~32	32
			32
Signatures		33
	Signatures

PART I—FINANCIAL INFORMATION

Item 1. Financial Statements.

Certain information and footnote disclosures required under accounting principles generally accepted in the United States of America have been condensed or omitted from the following consolidated financial statements pursuant to the rules and regulations of the Securities and Exchange Commission. It is suggested that the following consolidated financial statements be read in conjunction with the year-end consolidated financial statements and notes thereto included in the Company's Form 10-K for the year ending December 31, 2010.

The results of operations for the six and three months ended ~~March~~June 3130, 2011 and 2010 are not necessarily indicative of the results for the entire fiscal year or for any other period.

DIVERSIFIED GLOBAL HOLDINGS GROUP, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(Unaudited)
	March 31,		December 31,
	June 30,		December 31,
	2011		2010
ASSETS
Current Assets:
Cash and cash equivalents	$	2,~~646~~964,~~705~~526	$	2,256,021
Accounts receivable-net of allowance of $14,000 and $39,000, respectively		15,325,475		11,639,051
Accounts receivable-net of allowance of $23,000 and $39,000, respectively		17,535,733		11,639,051
Notes receivable - related parties		1713,~~274~~660		24,333
Inventories		13,~~673~~672,~~462~~868		14,555,927
Other current assets		1,~~165~~404,~~927~~830		1,087,898
Total Current Assets		3235,~~828~~591,~~843~~617		29,563,230
Property and equipment-net		186,~~840~~577,~~003~~695		187,034,900
Goodwill		9,109,253		9,109,253
Other assets		220,314		228,071
Investments		9,542,400		-
Total Assets	$	228,998,413	$	225,935,454
Other assets		176,188		228,071
Total Assets	$	240,997,153	$	225,935,454
LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities:
Current portion of long-term debt	$	13,~~155~~383,~~652~~167	$	12,877,335
Accounts payable and accrued expenses		4,472,970		3,229,971
Convertible notes payable - net of discount		62,167		-
Customer advances		616,485		336,263
Accounts payable and accrued expenses		5,426,765		3,229,971
Advances from related parties		475,753		439,671
Customer advances		601,998		336,263
Deferred revenue		10,055		45,871
Advances from related parties		446,153		439,671
Income taxes payable		1,197,581		1,070,576
Deferred revenue		-		45,871
Total Current Liabilities		19,928,496		17,999,687
Income taxes payable		1,348,520		1,070,576
Total Current Liabilities		21,268,770		17,999,687
Long-term Liabilities:
Long-term debt-less current portion above		5,~~410~~690,~~519~~166		5,029,593
Advances from related parties		~~33,361~~-		36,783
Total Long-term Liabilities		5,~~443~~690,~~880~~166		5,066,376
Total Liabilities		2526,~~372~~958,~~376~~936		23,066,063
Commitments & Contingencies		-		-
Stockholders' Equity:
Common Stock, $.001 par value; authorized 500,000,000 shares:
87,300,730 and 87,294,801 shares issued and outstanding at
99,328,550 and 87,294,801 shares issued and outstanding at
March 31, 2011 and December 31, 2010, respectively		87,300		87,294
June 30, 2011 and December 31, 2010, respectively		99,328		87,294
Additional paid-in capital		~~197~~207,~~693~~423,~~903~~775		197,658,877
Retained earnings		45,~~876~~393,~~991~~018		4,680,761
Accumulated other comprehensive income		967,843		442,459
Deposit on sale of warrant and preferred stock		50,000		-
Total Stockholders' Equity		203,626,037		202,869,391
Accumulated other comprehensive income		1,072,096		442,459
Total Stockholders' Equity		214,038,217		202,869,391
Total Liabilities and
Stockholders' Equity	$	~~228~~240,~~998~~997,~~413~~153	$	225,935,454
See notes to unaudited consolidated financial statements

See notes to unaudited consolidated financial statements

DIVERSIFIED GLOBAL HOLDINGS GROUP, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
	For the Three Months Ended
	For the Six Months Ended						For the Three Months Ended
	March 31,
	June 30,						June 30,
	2011			2010			2011			2010
Net sales:
Revenue (net of return and allowances)	$	59,~~679~~931,~~853~~841		$	12,~~371~~895,~~900~~209		$	4,251,988		$	1,523,309
Cost and expenses:
Cost of sales		46,~~462~~958,~~660~~853			~~942~~1,~~452~~912,254			2,496,193			969,802
General and administrative		~~695~~1,~~025~~501,932			~~341~~735,~~799~~910			806,907			394,111
		5,157,685			1,284,251
		8,460,785			2,648,164			3,303,100			1,363,913
Income from operations		~~522~~1,~~168~~471,056			87247,~~649~~045			948,888			159,396
Other income (expense):
Other income		3240,~~147~~417			~~819~~10,809			8,270			801
Interest expense		(~~264~~488,~~894~~658	)		(611,~~151~~218	)		(223,764	)		(5,067	)
		(232,747	)		(5,332	)
		(448,241	)		(409	)		(215,494	)		(4,266	)
Earnings before provision for income taxes		~~289~~1,~~421~~022,815			82246,~~317~~636			733,394			155,130
Provision for income taxes		93310,~~191~~558			2750,~~191~~269			217,367			23,078
Net earnings	$	~~196~~712,~~230~~257		$	55196,~~126~~367		$	516,027		$	132,052
Earnings per common share - basic	$	0.0001		$	0.00		$	0.01		$	0.00
Weighted average number of common shares
outstanding - basic		8790,~~297~~355,~~370~~899			93,638,511			93,380,818			93,638,511
Earnings per common share - diluted	$	0.0001		$	0.00		$	0.01		$	0.00
Weighted average number of common shares
outstanding - diluted		8790,~~317~~455,~~370~~899			93,638,511			93,480,818			93,638,511
See notes to unaudited consolidated financial statements

See notes to unaudited consolidated financial statements

DIVERSIFIED GLOBAL HOLDINGS GROUP, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF STOCKHOLDERS' EQUITY
(Unaudited)
							Additional		Retained			Accumulated			Deposit on Sale
	Common Stock						Paid-in		Earnings			Other Comprehensive			~~Comprehensive~~of Warrant and		Comprehensive
	Shares			Amount			Capital		(Deficit)			Income (Loss)			~~Income~~Preferred ~~(Loss)~~Stock		~~Total~~Income (Loss)		Total
Balance, January 1, 2010		93,638,511		$	93,638		$	1,716,579	$	(97,668	)	$	(42,182	)	$	-	$	~~1,670,367~~	$	1,670,367
Common shares returned to treasury		(39,000,000	)		(39,000	)		39,000
Issuance of common shares for acquisitions		32,630,159			32,630			195,748,325										~~195,780,955~~		195,780,955
Sale of common stock		26,131			26			131,573										~~131,599~~		131,599
Allocation of warrants in connection with
sale of common stock								23,400										~~23,400~~		23,400
Foreign currency adjustment													484,641		$	~~484,641~~	$	484,641		484,641
Net income										4,778,429						~~4,778,429~~		4,778,429		4,778,429
Comprehensive income															$	~~5,263,070~~	$	5,263,070
Balance, December 31, 2010		87,294,801			87,294			197,658,877		4,680,761			442,459			-		~~202,869,391~~		202,869,391
Common stock issued for services		3103,~~429~~249			3103			25177,~~029~~929										~~25,032~~		178,032
Sale of common stock		2,500			3			3,197										~~3,200~~		3,200
Allocation of warrants in connection with
Acquisition of Banyan Development, LLC		11,928,000			11,928			9,530,472												9,542,400
sale of common stock								6,800										6,800
Allocation of warrants in connection with
Foreign currency adjustment													525,384		$	525,384		525,384
sale of common stock								6,800												6,800
Net income										196,230						196,230		196,230
Beneficial conversion in connection with
Comprehensive income															$	721,614
convertible debt								46,500												46,500
Balance, March 31, 2011		87,300,730		$	87,300		$	197,693,903	$	4,876,991		$	967,843				$	203,626,037
Deposit on common stock sale																50,000				50,000
See notes to unaudited consolidated financial statements
Foreign currency adjustment								-					629,637				$	629,637		629,637
Net income										712,257								712,257		712,257
Comprehensive income																	$	1,341,894
Balance, June 30, 2011		99,328,550		$	99,328		$	207,423,775	$	5,393,018		$	1,072,096		$	50,000			$	214,038,217

See notes to unaudited consolidated financial statements

DIVERSIFIED GLOBAL HOLDINGS GROUP, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
	For the Three Months Ended
	For the Six Months Ended
	March 31,
	June 30,
	2011			2010
Cash flows from operating activities:
Net earnings	$	~~196~~712,~~230~~257		$	55196,~~126~~367
Adjustments to reconcile net earnings to net cash
provided by operating activities:
Depreciation and amortization		~~256~~568,~~451~~068			2847,~~760~~290
Non-cash compensation		25,032			-
Stock-based compensation		39,032			-
Changes in operating assets and liabilities		434,479			(108,443	)
Amortization of discounted note		5,167			-
Net cash provided by (used in) operating activities		912,192			(24,557	)
Changes in operating assets and liabilities		(490,358	)		(220,094	)
Net cash provided by operating activities		834,166			23,563
Cash flows from investing activities:
Repayments on note receivable		1210,~~059~~673			~~179~~(10,947	)
Purchase of property and equipment		(77110,~~296~~683	)		(1385,~~517~~990	)
Net cash used in investing activities		(65100,~~237~~010	)		(1396,~~338~~937	)
Cash flows from financing activities:
Payments on debt		(~~649~~812,~~366~~353	)		(2427,~~139~~392	)
Proceeds from loans		-578,500			1826,~~837~~765
Proceeds from advances from related parties		5136,~~334~~208			1969,~~000~~062
Repayments to related parties		(1666,~~689~~509	)		-(22,304	)
Proceeds from sale of common stock		10,000			-
Net cash provided by (used in) financing activities		(604,721	)		13,698
Deposits on sale of common stock		50,000			-
Effect of exchange rate changes on cash		148,450			(5,287	)
Net cash provided by (used in) financing activities		(204,154	)		46,131
Net increase in cash and cash equivalents		390,684			(29,484	)
Effect of exchange rate changes on cash		178,503			(18,540	)
Net increase (decrease) in cash and cash equivalents		708,505			(45,783	)
Cash and cash equivalents-beginning of period		2,256,021			320,345
Cash and cash equivalents-end of period	$	2,~~646~~964,~~705~~526		$	~~290~~274,~~861~~562
See notes to unaudited consolidated financial statements

See notes to unaudited consolidated financial statements

DIVERSIFIED GLOBAL HOLDINGS GROUP, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
(Continued)
	For the Three Months Ended
	For the Six Months Ended
	March 31,
	June 30,
	2011			2010
Supplementary Information:
Cash paid during the year for:
Interest	$	5208,~~563~~497		$	~~950~~14,292
Income taxes	$	-99,566		$	1325,~~751~~892
Non-cash compensation	$	25,032		$	-
Stock-based compensation	$	178,032		$	-
Changes in operating assets and liabilities consist of:
(Increase) decrease in accounts receivable	$	(21,~~949~~483,~~352~~059	)	$	96(106,~~163~~152	)
(Increase) decrease in inventory		1(5,~~599~~296,~~367~~682	)		412,~~243~~446
(Increase) in other current assets		~~(78~~122,~~029~~068	)		2897,~~856~~597
(Increase) decrease in other assets		251,~~757~~883			(2022,~~859~~192	)
Increase (decrease) in accounts payable and accrued expenses		12,~~487~~651,~~795~~506			(7412,~~565~~320	)
Increase (decrease) in customer advances		~~280~~265,~~222~~735			(~~140~~201,~~054~~183	)
Increase (decrease) in deferred revenue		(3545,~~286~~871	)		(522,667	)
Increase (decrease) in income tax payable		~~127~~277,~~005~~944			1324,~~440~~377
	$	~~434~~(490,~~479~~358	)	$	(~~108~~220,~~443~~094	)
See notes to unaudited consolidated financial statements

See notes to unaudited consolidated financial statements

DIVERSIFIED GLOBAL HOLDINGS GROUP INC. AND SUBSIDIARIES

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

~~MARCH~~AS 31OF AND FOR THE SIX MONTHS ENDED JUNE 30, 2011 AND 2010

1.	DESCRIPTION OF BUSINESS AND SIGNIFICANT ACCOUNTING POLICIES

The consolidated balance sheet as of ~~March~~June 3130, 2011 and the consolidated statements of operations, stockholders' equity and cash flows for the periods presented have been prepared by Diversified Global Holdings, Inc. and Subsidiaries and are unaudited. In the opinion of management, all adjustments (consisting solely of normal recurring adjustments) necessary to present fairly the financial position, results of operations, changes in stockholders' equity and cash flows for all periods presented have been made. The information for the consolidated balance sheet as of December 31, 2010 were derived from audited financial statements.

Organization

Diversified Global Holdings, Inc. and Subsidiaries (formerly Royal Style Design, Inc.) (the “Company” or “DGH Group”) operates primarily in four industries in three geographical areas - the United States, Germany and Russia. The Company is engaged in custom construction activities in Germany and the United States and in the retail sale of high-end contemporary works of art and jewelry in the United States. The Company's U.S. operations also provide business consulting services to companies including temporary skilled-labor employment services to businesses worldwide. The Company is engaged in wholesale distribution of electronic components and in facility, infrastructure and general contracting construction activities in Russia. One of the Company's Russian construction subsidiaries, Kazanneftkhiminvest Ltd. ("KNHI"), owns 8.56 sq. miles of land in Kazan, Russia, which is planned to be used for future development projects for commercial and residential use.

On November 20, 2009, Royal Style Design entered into a Share Exchange Agreement ("Agreement") with the stockholders of Diversified Global Holdings, Inc. a Delaware corporation, ("DGH"), providing for the acquisition by Royal Style Design of 100% of all the outstanding shares of common stock of DGH. In connection with the agreement, as of November 20, 2009, Royal Style Design issued 86,235,800 shares of its common stock to the stockholders of DGH. The issuance of these 86,235,800 shares effectively gave control of Royal Style Design to the stockholders of DGH.

For accounting purposes only, the transaction was treated as a recapitalization of DGH, as of November 20, 2009, with DGH as the acquirer. The financial statements prior to November 20, 2009 are those of DGH and reflect the assets and liabilities of DGH at historical carrying amounts. The financial statements show a retroactive restatement of DGH's historical stockholders' equity to reflect the equivalent number of shares issued to DGH.

Recent Developments

Effective October 7, 2010, the Company reorganized the structure of its holding company, without stockholder approval as permitted under the Florida corporation law for formation of a holding company, by forming a new holding company subsidiary, Diversified Global Holdings Group, Inc., merging the Company into that holding company subsidiary, transferring the construction operating assets of Royal Style Design, Inc. (the original company) into a separate new operating subsidiary (Royal Style Design Developments, Inc.) and, as a result of the merger, changing the company name to Diversified Global Holdings Group, Inc. ("DGH Group"). The change of the corporate name became effective on October 7, 2010, when it was approved for trading purposes by FINRA. As a result of the restructure, DGH Group owns all of its operating subsidiaries. The restructure did not require an exchange of certificates by our stockholders, did not have any tax consequences to, or effects on the respective holding periods for stock held by, or the rights of, the stockholders, and had no effect on the Company's status as reporting company under the SEC's rules. The reorganization did not have an accounting impact on the Company’s consolidated financial statements for the years ended December 31, 2010 and 2009.

DIVERSIFIED GLOBAL HOLDINGS GROUP INC. AND SUBSIDIARIES

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

MARCH 31, 2011

Basis of Presentation

The consolidated financial statements of the Company are prepared in accordance with accounting principles generally accepted in the United States of America (“US GAAP”).

The foreign subsidiaries, which are registered in the Russian Federation and the Republic of Germany, maintain their accounting records in accordance with the Regulations on Accounting and Reporting in the Russian Federation and International Accounting Standards in the Republic of Germany. The accompanying consolidated financial statements have been prepared from these accounting records and adjusted as necessary in order to comply with US GAAP.

Reporting and functional currencies. The Company has determined that the United States dollar (“$”) is the reporting currency for the purposes of financial reporting under US GAAP.

The local currency and the functional currency of the Company’s operating subsidiaries are the Russian Ruble (“RUR”) and European Euro (“Euro”).

Any conversion of RUR and Euro amounts to US dollars should not be construed as a representation that such RUR and Euro amounts have been, could be, or will in the future be converted into US dollars at the exchange rate shown or at any other exchange rate.

Reporting and Functional Currency

The Company has determined that the United States dollar (“USD”) is the reporting currency for the purposes of financial reporting under United States Generally Accepted Accounting Principles.

The local currency and the functional currency of the subsidiaries of the Company is the Russian Rouble (“RUR”) and European Euro ("Euro").

Any conversion of RUR and Euro amounts to USD should not be construed as a representation that such RUR and Euro amounts have been, could be, or will in the future be converted into USD at the current exchange rate or at any other exchange rate.

Recent Accounting Pronouncements

The Company’s significant accounting policies are summarized in Note 1 of the Company’s Annual Report on Form 10-K for the year ended December 31, 2010. There were no significant changes to these accounting policies during the ~~three~~six months ended ~~March~~June 3130, 2011 and the Company does not expect that the adoption of other recent accounting pronouncements will have a material impact on its financial statements.

2. ~~Earnings~~ EARNINGS ~~Per~~PER ~~Share~~SHARE

Basic earnings per share are computed by dividing net earnings by the weighted average number of common shares outstanding during the specified period. Diluted earnings per common share is computed by dividing net income by the weighted average number of common shares and potential common shares during the specified period. Potential common shares include outstanding common stock purchase warrants and convertible notes convertible into common stock. For the ~~three~~six months ended ~~March~~June 3130, 2011 and 2010, there were 20120,000 and -0- potential common shares outstanding, respectively.

DIVERSIFIED GLOBAL HOLDINGS GROUP INC. AND SUBSIDIARIES

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

MARCH 31, 2011

3.	ACQUISITIONS

Effective July 1, 2010, the Company entered into three Exchange and Acquisition Agreements (the "July 2010 Agreements") for the acquisition of three companies: 000 FSO Kazanneftkhiminvest Ltd, a limited company formed under the laws of the Russian Federation ("KNHI"), for the acquisition of which the Company issued 32,260,000 shares of its common stock to the owner of all the outstanding ownership interests in KNHI; Technostroy Ltd, a limited company formed under the laws of the Russian Federation ("Technostroy"), for the acquisition of the Company issued 344,944 shares of its common stock to the owner of all of the outstanding ownership interest in Technostroy; Xerxis Consulting, LLC, a Florida consulting company ("Xerxis"), for the acquisition of which the Company issued 25,215 shares of its common stock to the owner of all the outstanding ownership interest in Xerxis. In connection with the July 2010 Agreements, as of August 5, 2010 the Company issued 32,630,159 shares of its common stock to the owners of the three companies the Company acquired.

Each of the July 2010 Agreements provides for the right of the former owners to require the Company to initiate the regulatory filing process for clearance by the Securities and Exchange Commission, to register the shares received by the former owners, subject to the Company's Board approval, and for the right of each former owner to repurchase ownership of the subsidiary they sold to the Company at any time in the first year following the closing date, by such former owner paying the Company the value of that subsidiary, as such value is determined by the Company's Board of Directors.

The aggregate purchase price was $195,780,955, the fair value of the common stock issued. The results of operations of the three companies acquired will be included in the consolidated financial statements beginning July 1, 2010. The following table presents the preliminary allocation of the purchase price to the assets acquired and liabilities assumed, based on their fair values.

DIVERSIFIED GLOBAL HOLDINGS GROUP INC. AND SUBSIDIARIES

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

MARCH 31, 2011

At July 1, 2010
Purchase price:
Common stock issued	$	195,780,955
Total consideration			$	195,780,955

Allocation of purchase price:
Cash	$	2,617,209
Accounts receivable		2,691,191
Inventories		13,286,620
Property and equipment		185,790,416
Goodwill		9,059,643
Total Assets Acquired		213,445,079

Accounts payable		2,668,466
Accrued expenses		169,636
Customer advances		190,163
Income taxes payable		557,834
Long-term debt		14,078,025
Total Liabilities Assumed		17,664,124

Net Assets Acquired	$	195,780,955

The acquisitions have been accounted for using the purchase method of accounting and, accordingly, the results of operations of KNHI, Technostroy and Xerxis have been included in the Company's consolidated financial statements from the date of their acquisitions.

~~The following unaudited pro forma summary of results of operations assume six acquired entities had been acquired as of January 1, 2010:~~9

	Three Months Ended
	March 31,
	2010
Net revenue	$	5,063,888
Net earnings		134,331
Earnings per share - diluted		0.00

The following unaudited pro forma summary of results of operations assume KNHI, Technostroy and Xerxis had been acquired as of January 1, 2010:

	Six Months Ended
	June 30,
	2010
Net revenue	$	12,978,741
Net earnings		1,362,293
Earnings per share - diluted		0.02

The information above is not necessarily indicative of the results of operations if the acquisition had been consummated as of January 1, 2010. Such information should not be construed as a representation of the future results of operations of the Company.

DIVERSIFIED GLOBAL HOLDINGS GROUP INC. AND SUBSIDIARIES

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

MARCH 31, 2011

4. FAIR VALUE MEASUREMENT

The Company utilizes the accounting guidance for fair value measurements and disclosures for all financial assets and liabilities and nonfinancial assets and liabilities that are recognized or disclosed at fair value in the condensed consolidated financial statements on a recurring basis or on a nonrecurring basis during the reporting period. The fair value is an exit price, representing the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants based upon the best use of the asset or liability at the measurement date. The Company utilizes market data or assumptions that market participants would use in pricing the asset or liability. The accounting guidance establishes a three-tier fair value hierarchy, which prioritizes the inputs used in measuring fair value. These tiers are defined as follows:

Level 1 - Observable inputs such as quoted market prices in active markets

Level 2 - Inputs other than quoted prices in active markets that are either directly or indirectly observable

Level 3 - Unobservable inputs about which little or no market data exists, therefore requiring an entity to develop its own assumptions

As of ~~March~~June 3130, 2011, the Company held certain financial assets that are measured at fair value on a recurring basis. These consisted of cash and cash equivalents. The fair values of the cash and cash equivalents is determined based on quoted market prices in public markets and is categorized as Level 1. The Company does not have any financial assets measured at fair value on a recurring basis as Level 2 or Level 3 and there were no transfers in or out of Level 1, Level 2 or Level 3 during the ~~three~~six months ended ~~March~~June 3130, 2011 and 2010.

The following table sets forth by level, within the fair value hierarchy, the Company’s financial assets accounted for at fair value on a recurring basis as of ~~March~~June 3130, 2011 and December 31, 2010.

			Assets at Fair Value Using
March 31, 2011	Total		Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
Cash and cash equivalents	$	2,646,705	$	2,646,705	$	-	$	-
December 31, 2010	Total		Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
Cash and cash equivalents	$	2,256,021	$	2,256,021	$	-	$	-

			Assets at Fair Value Using

June 30, 2011	Total		Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)

Cash and cash equivalents	$	2,964,526	$	2,964,526	$	-	$	-
Investments		9,542,400		-		-		9,542,400
	$	12,506,926	$	2,964,526	$	-	$	9,542,400
December 31, 2010	Total		Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)

Cash and cash equivalents	$	2,256,021	$	2,256,021	$	-	$	-

~~DIVERSIFIED~~There ~~GLOBAL~~were ~~HOLDINGS~~no ~~GROUP~~financial ~~INC.~~assets ~~AND~~accounted ~~SUBSIDIARIES~~for at fair value on a non-recurring basis as of June 30, 2011 and December 31, 2010.

~~NOTES~~The TOCompany ~~UNAUDITED~~has ~~CONSOLIDATED~~other ~~FINANCIAL~~financial ~~STATEMENTS~~instruments, such as receivables, accounts payable and other liabilities which have been excluded from the tables above. Due to the short-term nature of these instruments, the carrying value of receivables, accounts payable and other liabilities approximate their fair values. The Company did not have any other financial liabilities within the scope of the fair value disclosure requirements as of June 30, 2011.

~~MARCH~~Non-financial 31assets and liabilities, such as goodwill and long-lived assets, are accounted for at fair value on a nonrecurring basis. These items are tested for impairment upon the occurrence of a triggering event or at various dates and in the case of goodwill, on at least an annual basis. As of June 30, 2011, there was no impairment to goodwill. The Company's interim test on its long-lived assets indicated that the carrying value of its long-lived assets was recoverable and that no impairment existed as of the testing date. There were no triggering events that occurred during the six months ended June 30, 2011 that would warrant interim impairment testing.

There were no financial assets accounted for at fair value on a non-recurring basis as of March 31, 2011 and December 31, 2010.

The Company has other financial instruments, such as receivables, accounts payable and other liabilities which have been excluded from the tables above. Due to the short-term nature of these instruments, the carrying value of receivables, accounts payable and other liabilities approximate their fair values. The Company did not have any other financial liabilities within the scope of the fair value disclosure requirements as of March 31, 2011.

Non-financial assets and liabilities, such as goodwill and long-lived assets, are accounted for at fair value on a nonrecurring basis. These items are tested for impairment upon the occurrence of a triggering event or at various dates and in the case of goodwill, on at least an annual basis. As of March 31, 2011, there was no impairment to goodwill. The Company's interim test on its long-lived assets indicated that the carrying value of its long-lived assets was recoverable and that no impairment existed as of the testing date. There were no triggering events that occurred during the three months ended March 31, 2011 that would warrant interim impairment testing.

5.	GOODWILL AND OTHER INTANGIBLE ASSETS

Goodwill represents the excess of the purchase price over the value assigned to the net intangible and other intangible assets with finite lives acquired in a business acquisition. Effective January 1, 2009, acquisition related costs will be recognized separately from the acquisition in accordance with ASC 805, "Business Combinations".

~~The changes in the carrying value of goodwill for the three months ended March 31, 2011 is as follows:~~11

	Total
Balance, December 31, 2010	$	9,109,253
Adjustments		-
Balance, March 31, 2011	$	9,109,253

The changes in the carrying value of goodwill for the six months ended June 30, 2011 is as follows:

	Total

Balance, December 31, 2010	$	9,109,253

Adjustments		-

Balance, June 30, 2011	$	9,109,253

6.	PROPERTY and EQUIPMENT

Property, plant and equipment consist of furniture and equipment used in the ordinary course of business and are recorded at cost less accumulated depreciation.

	March 31,		December 31,
	June 30,		December 31,
	2011		2010
Machinery & equipment	$	1,~~265~~228,~~409~~492	$	1,284,550
Vehicles		1,~~046~~125,~~547~~621		1,014,758
Buildings and building improvements		1,275,657		1,275,657
Land		184,013,337		184,013,337
		187,600,950		187,588,302
		187,643,107		187,588,302
Less: accumulated depreciation		~~760~~1,~~947~~065,412		553,402
	$	186,~~840~~577,~~003~~695	$	187,034,900

12The land was contributed by the previous owner of KNHI in June 2010. The fair value of the property as of the date of the contributions was approximately $184 million. The land is recorded at cost and was determined by management based upon appraisal value at the acquisition date as determined by an independent appraiser and a separate projection of the present value of future cash flows by management. No impairment existed as of June 30, 2011.

DIVERSIFIED GLOBAL HOLDINGS GROUP INC. AND SUBSIDIARIES

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

MARCH 31, 2011

In November 2009, a shareholder of the Company contributed a building to the Company with a fair value of approximately $1 million in accordance with an appraisal performed by an independent third party, and related debt of approximately $271,000.

The land was contributed by the previous owner of KNHI in June 2010. The fair value of the property as of the date of the contributions was approximately $184 million. The land is recorded at cost and was determined by management based upon appraisal value at the acquisition date as determined by an independent appraiser and a separate projection of the present value of future cash flows by management. No impairment existed as of March 31, 2011.

During the year ended December 31, 2010, the Company's Chairman of the Board and its Chief Executive Officer contributed furniture and fixtures to its present headquarters in Orlando, Florida in the amount of approximately $170,000. See Note Related Party Transactions, for further details.

Depreciation expense for the ~~three~~six months ended ~~March~~June 3130, 2011 and 2010 was $~~256~~568,~~451~~068 and $2847,~~760~~290, respectively.

7. NOTES RECEIVABLE - RELATED PARTIES

In connection with the acquisition of Kuhn, the Company has a receivable from a shareholder as of ~~March~~June 3130, 2011 and December 31, 2010 in the amount of $~~137~~133,~~274~~660 and $149,603, respectively. Under the terms of the note, the note bears interest at 5% per annum and the shareholder is required to make monthly payments in the amount of approximately $2,400 per month commencing January 1, 2011. The note is due on December 31, 2017. During the ~~three~~six months ended ~~March~~June 3130, 2011, the Company received payments of $1215,~~329~~943. The long-term balance of approximately $120,000 at ~~March~~June 3130, 2011 and $125,000 at December 31, 2010, respectively, is included in other assets in the Company's consolidated balance sheet. Interest income for the ~~three~~six months ended ~~March~~June 3130, 2011 and 2010 was $12,~~019~~049 and $~~819~~1,620, respectively.

1312

DIVERSIFIED GLOBAL HOLDINGS GROUP INC. AND SUBSIDIARIES

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

MARCH 31, 2011

8.	INVENTORIES

As of ~~March~~June 3130, 2011 and December 31, 2010, inventory consists of the following:

	March 31,		December 31,
	June 30,		December 31,
	2011		2010
Finished goods	$	~~315~~134,~~802~~161	$	281,199
Work in progress		1920,~~215~~865		91,984
Raw materials		5,~~157~~000,~~151~~297		2,863,573
Advance deposits		8,~~181~~322,~~294~~403		11,319,171
	$	13,~~673~~477,~~462~~726	$	14,555,927

The Company prepays various suppliers for inventory. The deposits paid in advance are included as a component of the Company's inventory.

9.	OTHER CURRENT ASSETS

Other current assets in the amount of $1,~~165~~404,~~927~~830 and $1,087,898 at ~~March~~June 3130, 2011 and December 31, 2010, respectively, consists primarily of short-term loans given to third parties. Most of these third parties are subcontractors who are providing services for the Company for their foreign subsidiaries. The loans are all due within 12 months and are interest-free.

In April 2011, the mortgage secured by a building owned by one the Company’s subsidiaries was refinanced and the remaining mortgage agreement in the amount of $195,041 (plus outstanding taxes) was paid off10. ~~The new mortgage amount is $475,000 and bears interest at 12% per annum, payable monthly in the amount of $4,750 until May 1, 2016 when the full principal and any remaining interest shall be due.~~ INVESTMENTS

10On May 16, 2011, the Company acquired 48% of the outstanding limited liability company interests in Banyan Development LLC ("Banyan"). ~~DEBT~~ The purchase price consisted of 11,928,000 shares of the Company's common stock with a fair value of $9,542,400. The shares of common stock the Company issued, and the limited liability company interests the Company received in exchange at the closing are subject to the terms of an escrow agreement providing for the release of such shares and limited liability company interests upon closing of the Department of Housing and Urban Development ("HUD") financing for Banyan's planned assisted living facility. If such financing does not close within one year of May 16, 2011, the agreement will terminate, subject to an extension by mutual agreement of the parties or substitution of replacement assisted living facility with HUD financing in place by Banyan management that is acceptable to the Company's Board of Directors. The balance sheet of Banyan is as follows:

	June 30, 2011
Assets	$	2,742,140

Liabilities	$	3,038,276
Members' deficiency		(296,136	)
Total Liabilities and Members'
Deficiency	$	2,742,140

For the period May 16, 2011 through June 30, 2011, the Company recorded a break-even from operations. Losses are limited to the Company's investment in Banyan as the Company has no obligation to fund additional investments. The balance of the Company's investment in Banyan at June 30, 2011 is as follows:

Balance - May 16, 2011	$	-

Investment in Banyan		9,542,400

Earnings (loss) for the period
May 16, 2011 through June 30, 2011		-

Balance - June 30, 2011	$	9,542,400

11.

DEBT

Long-term debt consists of the following:

	December 31,
	June 30,		December 31,
	2011		2010
Mortgage payable, interest @ 10% per annum, monthly interest only payment	$	-	$	162,217
of $1,138, due December 2012, collaterized
by a building. The mortgage was paid in full April 2011.

Mortgage payable, interest @ 12% per annum payable monthly, due April 2016,		475,000		-
collateralized by a building and parent company corporate guarantee.

Automobile loans, interest @ 0-5.9% per annum, monthly payments		12,214		29,744
of $2,028 due December 2013

Loan payable, interest @ 15% per annum, due November 2011, collateralized		10,359		9,844
by inventory of the Company's Fregat subsidiary

Note payable to Investment and Consulting Ltd, interest free, due May 2020		984,910		918,729

Note payable to Ak Bars Metall, interest free, due December 2011		4,097,132		3,609,291

Note payble to Ak Bars Development, interest @ 10.1% per annum, due October 2012		4,221,042		3,937,408

Notes payable to Ak Bars Development, interest @ Bank of Russia rate plus 1%
(3.2% at June 30, 2011) - 10.1%, due December 31, 2011		9,203,199		9,174,887

Note payable to Belochay combinat, interest @ 12% per annum
due September 30, 2011		69,477		64,808
		19,073,333		17,906,928
Less current portion		13,383,167		12,877,335
	$	5,690,166	$	5,029,593

~~DIVERSIFIED~~The ~~GLOBAL~~following ~~HOLDINGS~~table ~~GROUP~~shows ~~INC.~~the ~~AND~~maturities ~~SUBSIDIARIES~~by year of the total amount of long-term debt as of June 30, 2011:

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

Year Ending December 31,
2011	$	13,383,167
2012		4,227,788
2013		2,468
2014		-
2015		-
thereafter		1,459,910
	$	19,073,333

~~MARCH~~Interest 31expense on long-term debt for the six months ended June 30, 2011 and 2010 was $480,449 and $9,345, respectively.

	December 31,
	March 31,		December 31,
	2011		2010
Mortgage payable, interest @ 10% per annum, monthly interest only payment	$	195,041	$	162,217
of $1,138, due December 2012, collaterized
by a building and the corporate guarantee of DGH
Automobile loans, interest @ 0-5.9% per annum, monthly payments		12,984		29,744
of $2,028 due December 2013
Loan payable, interest @ 15% per annum, due November 2011, collateralized		10,230		9,844
by inventory of the Company's Fregat subsidiary
Note payable to Investment and Consulting Ltd, interest free, due May 2020		984,910		918,729
Note payable to Ak Bars Metall, interest free, due December 2011		3,869,288		3,609,291
Note payble to Ak Bars Development, interest @ 10.1% per annum, due October 2012		4,221,042		3,937,408
Notes payable to Ak Bars Development, interest @ Bank of Russia rate plus 1%
(3.2% at December 31, 2010) - 10.1%, due December 31, 2011		9,203,199		9,174,887
Note payable to Belochay combinat, interest @ 12% per annum
due September 30, 2011		69,477		64,808
		18,566,171		17,906,928
Less current portion		13,155,652		12,877,335
	$	5,410,519	$	5,029,593

12.	CONVERTIBLE NOTE PAYABLE

~~The~~On ~~following~~June ~~table~~17, ~~shows~~2011, the ~~maturities~~Company bysold ~~year~~an of8% convertible promissory note ("Note") in the ~~total~~aggregate principal amount of ~~long-term~~$103,500. The ~~debt~~note asis convertible into shares of ~~December~~the 31Company's common stock at a conversion price representing a 39% discount from the market price of our common stock. The note is convertible after 180 days from the date of issuance of the note through March 16, ~~2010:~~2012 (the "Maturity Date").

Year Ending December 31,
2011	$	13,155,652
2012		4,423,141
2013		2,468
thereafter		984,910
	$	18,566,171

The convertible note was issued in accordance with ASC 470-20-30, "Debt with Conversion and Other Options". The Company calculated the value of the beneficial conversion feature embedded in the convertible note. When debt is issued which is convertible into common stock at a discount from the common market price at the date the debt is issued, a beneficial conversion feature for the difference between the closing price and the conversion price multiplied by the number of shares issuable upon conversion is recognized. The beneficial conversion feature in the amount of $46,500 is presented at a discount to the related debt, with an offsetting amount increasing additional paid-in capital. The beneficial conversion feature is amortized over the life of the debt. For the six months ended June 30, 2011, the Company recorded $5,167 of amortization expense on the discounted note.

Convertible debt as of June 30, 2011:

Note payable	$	103,500
Discount on note payable
net of amortization		(41,333	)
		62,167
Less: Current portion		(62,167	)
	$	-

~~DIVERSIFIED GLOBAL HOLDINGS GROUP INC~~13. ACCOUNTS PAYABLE AND ~~SUBSIDIARIES~~ACCRUED EXPENSES

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

	June 30,		December 31,
	2011		2010
Accounts payable	$	3,278,580	$	2,108,221
Professional fees		7,410		6,891
Salaries		142,139		63,429
Taxes payable		830,978		201,060
Warranty		18,505		17,041
Interest		968,135		687,974
Other		181,018		145,355
	$	5,426,765	$	3,229,971

~~MARCH~~14. STOCKHOLDERS' ~~31, 2011~~EQUITY

~~Interest~~Common ~~expense on long-term debt for the three months ended March 31, 2011 and 2010 was $263,946 and $6,151, respectively.~~Stock

11In September, 2010, the shareholders of the Company voted to increase the authorized shares from 100,000,000 to 500,000,000 shares at $. ~~ACCOUNTS~~001 ~~PAYABLE~~par ~~AND~~value, ~~ACCRUED~~of ~~EXPENSES~~which 87,300,730 shares are outstanding as of June 30, 2011.

	December 31,
	March 31,		December 31,
	2010		2010
Accounts payable	$	2,804,806	$	2,108,221
Professional fees		8,591		6,891
Salaries		63,806		63,429
Taxes payable		492,698		201,060
Warranty		18,130		17,041
Interest		960,294		687,974
Other		124,645		145,355
	$	4,472,970	$	3,229,971

12. COMMON STOCK

In September, 2010, the shareholders of the Company voted to increase the authorized shares from 100,000,000 to 500,000,000 shares at $.001 par value, of which 87,300,730 shares are outstanding as of March 31, 2011.

On August 5, 2010, three major shareholders of the Company each contributed 13,000,000 shares owned by them (for a total of 39,000,000 shares) to the capital of the Company. Following the acceptance of the 39,000,000 shares of common stock so reacquired by the Company as a contribution to capital by these three shareholders, under the Florida Business Corporation Act, such shares constituted authorized but unissued shares of common stock of the Company.

On August 5, 2010, the Company completed three acquisitions (see Note 2, "Acquisitions") and issued 32,630,159 common shares, valued at $195,780,955, of the Company in connection with these acquisitions.

During the ~~three~~six months ended ~~March~~June 3130, 2011, the Company sold 2,500 shares of its common stock and received proceeds of $10,000. In connection with the sale of the common shares, the proceeds included warrants to purchase 10,000 common shares at an exercise price of $7 per share. The Company allocated $6,800 to the fair value of the warrants using a Black Scholes valuation model.

13. WARRANTS

During 2011, the Company issued detachable warrants to purchase shares of the Company's common stock in connection with the sale of its common stock. The warrants are attached to the sale issuance and $6,800 has been allocated to the fair value of the warrants. The warrants are exercisable at $7.00 per share for a period of three years.

~~DIVERSIFIED GLOBAL HOLDINGS GROUP INC~~15. ~~AND SUBSIDIARIES~~ WARRANTS

~~NOTES~~During TO2011, ~~UNAUDITED~~the ~~CONSOLIDATED~~Company ~~FINANCIAL~~issued ~~STATEMENTS~~detachable warrants to purchase shares of the Company's common stock in connection with the sale of its common stock. The warrants are attached to the sale issuance and $6,800 has been allocated to the fair value of the warrants. The warrants are exercisable at $7.00 per share for a period of three years.

~~MARCH~~Information 31regarding the Company's warrants for the six months ended June 30, 2011 is as follows:

Information regarding the Company's warrants for the year ended December 31, 2010 is as follows:

						Agrregate
			Weighted Average		Average Remaining	Intrinsic
Warrants	Shares		Exercise Price		Contractual Term	Value
Outstanding at January 1, 2011		10,000	$	7.00

Exercised		-		-

Granted		10,000		7.00

Cancelled		-		-

Outstanding at June 30, 2011		20,000		7.00	2.7 Years	$	-

Exercisable at June 30, 2011		20,000	$	7.00	2.7 Years	$	-

						Agrregate
			Weighted Average		Average Remaining	Intrinsic
Warrants	Shares		Exercise Price		Contractual Term	Value
Outstanding at January 1, 2011		10,000	$	7.00
Exercised		-		-
Granted		10,000		7.00
Cancelled		-		-
Outstanding at March 31, 2011		20,000		7.00	2.7 Years	$	-
Exercisable at March 31, 2011		20,000	$	7.00	2.7 Years	$	-

16. INCOME TAXES

14. INCOME TAXES

The Company adopted the provisions of FASB ASC 740, "Income Taxes", ("ASC 740") on January 1, 2008. As a result of the implementation of ASC 740, the Company recognized no adjustment in the net liabilities or equity for unrecognized income tax benefits. The Company believes there are no potential uncertain tax positions determinable at this time and all tax returns are correct as filed. Should the Company recognize a liability for uncertain tax positions, the Company will separately recognize the liability for uncertain tax positions on its balance sheet. Included in any liability for uncertain tax positions, the Company will setup a liability for interest and penalties. The Company policy is to recognize interest and penalties related to uncertain tax positions as a component of the current provision for income taxes.

Section 382 of the U.S. Internal Revenue Code imposes an annual limitation on the availability of NOL carryforwards to offset taxable income when an ownership change occurs. The Company's reverse recapitalization meets the definition of an ownership change and some of the NOL's will be limited.

1517. RELATED PARTY TRANSACTIONS

a) The Chairman of the Board and the Chief Executive Officer of the Company advanced the Company $5136,~~334~~208 during the ~~three~~six months ended ~~March~~June 3130, 2011 and $148,167 during the year ended December 31, 2010. During the year ended December 31, 2010, the two executives contributed furniture and fixtures with a fair value of $170,242. The contributed property was recoded as an advance. The advances are interest free and are due on demand. No payments have been made against the advances and contributions and the amount due the related parties are $~~399~~384,~~468~~342 and $348,134 at ~~March~~June 3130, 2011 and December 31, 2010, respectively.

~~DIVERSIFIED~~b) ~~GLOBAL~~In ~~HOLDINGS~~connection ~~GROUP~~with ~~INC~~the contribution of a building to the Company by a shareholder, the Company is obligated to reimburse the shareholder for payments made by the shareholder in connection with the building. ~~AND~~The ~~SUBSIDIARIES~~note to the shareholder bears interest of 5% per annum and is due upon demand. During the six months ended June 30, 2011, the Company repaid $58,246 to the shareholder. As of June 30, 2011 and December 31, 2010, the amount due the shareholder was $14,247 and $72,493, respectively. Interest expense for the six months ended June 30, 2011 and 2010 was $876 and $1,873, respectively.

~~NOTES~~c) TODuring ~~UNAUDITED~~the ~~CONSOLIDATED~~year ~~FINANCIAL~~ended ~~STATEMENTS~~December 31, 2010, a subsidiary of the Company borrowed $33,361 from a shareholder of the Company. The loan bears interest of three percent (3%) per annum and the principal sum and all accrued interest is due January 2012. For the six months ended June 30, 2011 and 2010, interest expense amounted to $2,166 and $-0-, respectively. As of June 30, 2011, the amount due the related party was $27,083.

MARCH 31, 2011

b) In connection with the contribution of a building to the Company by a shareholder, the Company is obligated to reimburse the shareholder for payments made by the shareholder in connection with the building. The note to the shareholder bears interest of 5% per annum and is due upon demand. During the three months ended March 31, 2011, the Company repaid $16,689 to the shareholder. As of March 31, 2011 and December 31, 2010, the amount due the shareholder was $55,804 and $72,493, respectively. Interest expense for the three months ended March 31, 2011 and 2010 was $698 and $801, respectively.

c) During the year ended December 31, 2010, a subsidiary of the Company borrowed $33,361 from a shareholder of the Company. The loan bears interest of three percent (3%) per annum and the principal sum and all accrued interest is due January 2012. For the three months ended March 31, 2011 and 2010, interest expense amounted to $250 and $-0-, respectively. As of March 31, 2011, the amount due the related party was $33,361.

During the year ended December 31, 2010, a subsidiary of the Company borrowed $20,481 from a shareholder of the Company. The advance is interest free and due upon demand.

1618. BUSINESS SEGMENT INFORMATION

FASB ASC 280-10-50-22 "Segment Reporting" ("ASC 280-10-50-22"), established standards for reporting information about operating segments. Operating segments are defined as components of an enterprise about which separate financial information is available that is evaluated regularly by management. The Company is organized by geographical area and industry segment.

The following financial information relating to the Company's business segments:

~~DIVERSIFIED~~The ~~GLOBAL~~following ~~HOLDINGS~~financial ~~GROUP~~information ~~INC.~~relating ~~AND~~to ~~SUBSIDIARIES~~the Company's business segments:

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

	Six Months Ended						Three Months Ended
	June 30,						June 30,
	2011			2010			2011			2010
Net sales by geographic areas:
United States	$	320,759		$	511,701		$	172,122		$	339,538
Germany		2,448,313			1,905,704			1,319,772			969,197
Russia		7,162,769			477,804			2,760,094			214,574
	$	9,931,841		$	2,895,209		$	4,251,988		$	1,523,309
Net sales by industry segment:
Construction	$	9,469,978		$	2,206,259		$	3,999,295		$	1,214,819
Retail		90,616			108,479			37,326			43,916
Consulting		103,087			102,667			56,795			50,000
Electronic components		268,160			477,804			158,572			214,574
	$	9,931,841		$	2,895,209		$	4,251,988		$	1,523,309
Income (loss) from operations:
Construction	$	1,986,070		$	188,063		$	1,274,950		$	155,708
Retail		(34,833	)		15,435			(29,963	)		9,195
Consulting		(461,590	)		(5,476	)		(282,458	)		(15,894	)
Electronic components		(18,591	)		49,023			(13,641	)		10,387
	$	1,471,056		$	247,045		$	948,888		$	159,396

	June 30, 2011			December 31, 2010
Total Assets:
United States	$	13,461,724		$	1,497,455
Germany		1,561,406		$	1,284,810
Russia		225,974,023			223,153,159
	$	240,997,153		$	225,935,424
Total Assets:
Construction	$	238,084,293		$	223,361,298
Retail		1,170,919			1,010,673
Consulting		532,918			397,244
Electronic components		1,209,023			1,166,209
	$	240,997,153		$	225,935,424

MARCH 31, 2011

	Three Months Ended
	March 31,
	2011			2010
Net sales by geographic areas:
United States	$	148,637		$	172,163
Germany		1,128,541			936,507
Russia		4,402,675			263,230
	$	5,679,853		$	1,371,900
Net sales by industry segment:
Construction	$	5,470,683		$	991,440
Retail		53,290			64,563
Consulting		46,292			52,667
Electronic components		109,588			263,230
	$	5,679,853		$	1,371,900
Income (loss) from operations:
Construction	$	711,120		$	32,355
Retail		(4,870	)		6,240
Consulting		(179,132	)		10,418
Electronic components		(4,950	)		38,636
	$	522,168		$	87,649
	March 31, 2011			December 31, 2010
Total Assets:
United States	$	1,655,602		$	1,497,455
Germany		1,521,873		$	1,284,810
Russia		225,820,938			223,153,159
	$	228,998,413		$	225,935,424
Total Assets:
Construction	$	226,319,410		$	223,361,298
Retail		998,529			1,010,673
Consulting		458,120			397,244
Electronic components		1,222,354			1,166,209
	$	228,998,413		$	225,935,424

Construction

The Company’s construction companies serve a diverse range of residential and commercial clients in the United States, Germany and Russia. Acting as a general contractor, infrastructure services, commercial and residential construction remodeling services and construction logistics services.

DIVERSIFIED GLOBAL HOLDINGS GROUP INC. AND SUBSIDIARIES

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

MARCH 31, 2011

Retail

The Company’s retail companies serve a diverse range of residential and commercial clients worldwide in the fine art industry.

Business Consulting Services

The Company’s business consulting companies provide operational consulting and staffing services to a diverse range of commercial clients worldwide.

Electronic Components

The Company’s electronic component distribution companies serve a diverse range of residential and commercial clients in Russia and worldwide.

1719. STOCK-BASED COMPENSATION

The Company accounts for stock-based compensation under ASC 718, "Compensation-Stock Compensation" ("ASC 718"). The compensation cost of the portion of the awards is based on the grant date fair-value of these awards as calculated for either recognition or pro forma disclosure under ASC 718.

For the ~~three~~six months ended ~~March~~June 3130, 2011 and 2010, the Company issued 3103,~~429~~249 and -0- shares and recorded compensation expense of $25178,032 and $-0-, respectively. As of June 30, 2011, approximately $139,000 of the compensation expense is included in other current assets.

1820. COMMITMENTS AND CONTINGENCIES

Taxation

The Russian tax legislation is subject to varying interpretations and changes which can occur frequently. Management's interpretation of such legislation as applied to the transactions and activities of the Company may be challenged by the relevant regional and federal authorities. Recent developments suggest that the authorities are becoming more active in seeking to enforce, through the Russian court system, interpretations of tax legislation which may be selective for particular taxpayers and different to the authorities’ previous interpretations or practices. Different and selective interpretations of tax regulations by various government authorities and inconsistent enforcement create further uncertainties in the taxation environment in the Russian Federation.

Tax declarations, together with related documentation, are subject to review and investigation by a number of authorities, each of which may impose fines, penalties and interest charges. Fiscal periods remain open to review by the authorities for the three calendar years preceding the year of review (one year in the case of customs). Under certain circumstances reviews may cover longer periods. In addition, in some instances new tax regulations have taken retroactive effect. Additional taxes, penalties and interest which may be material to the financial position of the taxpayers may be assessed in the Russian Federation as a result of such reviews.

Capital Commitments

In the normal course of business the Company has entered into a number of construction contracts with its subcontractors. These contracts have various completion dates through 2012. However, management may seek to extend the completion through agreements with the subcontractors.

~~DIVERSIFIED GLOBAL HOLDINGS GROUP INC~~21. ~~AND~~SUBSEQUENT ~~SUBSIDIARIES~~EVENTS

~~NOTES~~On TOJuly ~~UNAUDITED~~1, ~~CONSOLIDATED~~2011, ~~FINANCIAL~~the ~~STATEMENTS~~Company signed an agreement to acquire SibTechService-N ("STS-N"), which was founded in 2006 and is located in Novosibirsk, Russia. STS-N currently performs general construction for commercial energy projects and municipality infrastructure such as roads and airport runways. Pursuant to the acquisition agreement for STS-N, the Company agreed, subject to closing conditions, to issue 1,379,422 shares of common stock to acquire this company.

~~MARCH~~On 31July 6, 2011, the Company signed an agreement to acquire Miralab LLC and, subject to closing conditions in the acquisition agreement, agreed to issue 470,768 shares of common stock to acquire this company. Miralab was founded in 2008 under the name Promium.ru and is a leading search engine optimization (SEO) company headquartered in Moscow.

19. SUBSEQUENT EVENTS

On March 22, 2011, we signed a letter of intent to acquire SibTechService-N, which was founded in 2006 and is located in Novosibirsk, Russia. STS-N currently performs general construction for commercial energy projects and municipality infrastructure such as roads and airport runways. The main customers of STS-N include the government administrations of Novosibirsk and the surrounding cities. Commercial customers include the Tolmachevo Airport.

In April 2011, the mortgage secured by a building owned by one the Company’s subsidiaries was refinanced and the remaining mortgage agreement in the amount of $195,041 (plus outstanding taxes) was paid off. The new mortgage amount is $475,000 and bears interest at 12% per annum, payable monthly in the amount of $4,750 until May 1, 2016 when the full principal and any remaining interest shall be due.

On April 26, 2011, the Company signed a letter of intent to acquire 48% of the outstanding membership interests of Banyan LLC, a Florida limited liability company, for 11, 928,000 shares of our common stock. Banyan LLC is involved in commercial/residential real estate, development and property management in the South Florida market. The closing of this transaction is subject to execution of definitive agreements by the parties; the closing of a Department of Housing and Urban Development financing for a property under development by Banyan LLC is a condition subsequent to the closing of the transaction.

ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

Overview

Diversified Global Holdings Group, Inc. (the “Company”, “DGH Group”, “we” or “us”) was incorporated in the State of Florida on July 7, 2006, under the name Royal Style Design, Inc. We specialized in customized surface installation solutions for floors, walls and other parts of the home using wood, glass, stone and ceramic tile in custom designed homes throughout central Florida. As a result of the acquisitions we have made within the past year, we are now engaged in custom construction activities in Germany, Russia and the United States and in the retail sale of high-end contemporary works of art and jewelry in the United States. Our U.S. operations also provide business consulting services to companies including temporary skilled-labor employment services to businesses worldwide. We are engaged in wholesale distribution of electronic components and in facility, infrastructure and general contracting construction activities in Russia. One of our Russian construction subsidiaries, Kazanneftekhiminvest Ltd., owns 8.56 sq. miles of land in Kazan, Russia, which is planned to be used for future development projects for commercial and residential use. Sales are predominantly in the United States, Russia and Germany.

Acquisitions

Effective November 20, 2009, we entered into a Share Exchange Agreement with the stockholders of Diversified Global Holdings, Inc., a Delaware corporation (“DGH”), providing for the acquisition by the Company of 100% of the outstanding shares of common stock of DGH. In connection with this Agreement, as of November 20, 2009, we issued 86,235,800 shares of our common stock to the stockholders of DGH. The issuance of these 86,235,800 shares effectively gave control of RSD to the DGH shareholders. DGH owned all of the outstanding shares or equity interests in three companies: Forms Gallery, Inc., located in Delray Beach, Florida; Wood Imagination, Inc., located in Orlando, Florida; and Kontakt LLC, a limited company formed under the laws of Russia and its principal offices located at Kazan, Russia.

Effective December 31, 2009, we entered into three Exchange and Acquisition Agreements for the acquisition of three companies: Fregat Ltd., a limited company formed under the laws of Russia (“Fregat”); Bauelemente Kuhn GmbH, a limited liability company formed under the laws of Germany (“Kuhn”); and Kuechen-Schilling GmbH, a limited liability company formed under the laws of Germany (“Schilling”). In connection with these agreements, as of December 31, 2009, we issued an aggregate of 902,711 shares of our common stock to the owners of the three companies we acquired.

For accounting purposes only, the transaction with DGH was treated as a recapitalization of the Company, as of November 20, 2009, with DGH as the acquirer. The financial statements prior to November 20, 2009 are those of DGH and reflect the assets and liabilities of DGH at historical carrying amounts. The financial statements show a retroactive restatement of DGH's historical stockholders' equity to reflect the equivalent number of shares issued to DGH. Our balance sheet at December 31, 2009, includes the assets and liabilities of Fregat, Kuhn and Schilling, which were acquired on December 31, 2009. Our results of operations for the year ended September 30, 2010 include the operations of Fregat, Kuhn and Schilling, as the results of their operations are included in operations from the date of their acquisition.

At closings held on August 5, 2010, we entered into three Exchange and Acquisition Agreements for the acquisition of three companies: in exchange for the issuance of 32,260,000 shares of our common stock, 100% of the outstanding ownership interests in OOO PSO Kazanneftekhiminvest Ltd. (“KNHI”), a construction company located in Kazan, Russia; 100% of the outstanding ownership interests in Technostroy Ltd. (“Technostroy”), a construction and logistics company located in Kazan, Russia, in exchange for 344,944 shares of our common stock; and 100% of the outstanding ownership interests in Xerxis Consulting LLC (“Xerxis”), a temporary employment agency specializing in skilled labor, in exchange for 25,215 shares of our common stock. In order to permit these acquisitions to be accomplished, on August 5, 2010, three major shareholders of the Company contributed 39,000,000 shares owned by them to the capital of the Company. Following the acceptance of the 39,000,000 shares of common stock so reacquired by the Company as a contribution to capital by these stockholders, under the Florida Business Corporation Act, such shares constituted authorized but unissued shares of common stock of the Corporation. By reason of such contribution to capital, the outstanding shares of common stock of the Company were reduced from 93,638,511 shares to 54,638,511 shares. Following issuance of 32,630,459 shares of common stock in the acquisition of Xerxis, Technostroy, and KNHI, the Company had 87,268,670 shares of common stock outstanding.

Recent Developments

Effective October 7, 2010, we reorganized the structure of the Company, without stockholder approval as permitted under the Florida corporation law for formation of a holding company, by forming a new holding company subsidiary, Diversified Global Holdings Group, Inc., merging the Company into that holding company subsidiary, transferring the construction operating assets of Royal Style Design, Inc. (the parent company of our group prior to the holding company merger) into a separate new operating subsidiary (Royal Style Design Developments, Inc.) and, as a result of the merger, changing our company name to Diversified Global Holdings Group, Inc. The change of our corporate name was approved by FINRA and became effective for trading purposes on November 9, 2010. As a result of the restructure, all of the Company’s operations are conducted by its operating subsidiaries.

Critical Accounting Policies and Estimates

The discussion and analysis of our plan of operations is based upon our consolidated financial statements, which have been prepared in accordance with accounting principles generally accepted in the United States of America. The preparation of our consolidated financial statements requires us to make estimates and assumptions that affect our reported results of operations and the amount of reported assets and liabilities.

Some accounting policies involve judgments and uncertainties to such an extent that there is reasonable likelihood that materially different amounts could have been reported under different conditions, or if different assumptions had been used. Actual results may differ from the estimates and assumptions used in the preparation of our consolidated financial statements.

Note 1 to our audited Financial Statements for the year ended December 31, 2010 included in ~~this~~our ~~Report~~report on Form 10-K discusses the most significant policies we apply, or intend to apply, in preparing our consolidated financial statements, some of which are subject to alternative treatments under accounting principles generally accepted in the United States of America.

Allowance for Doubtful Accounts

The principal accounting policy potentially subject to change as a result of our business operations is that relating to the treatment of our receivables and the related allowance for doubtful accounts that would be shown on our balance sheet. Our allowance for doubtful accounts is estimated based on the Company’s historical losses, the existing economic conditions in the construction industry and in the electronic component distribution industry in Europe, and the financial ability of our customers. The Company believes that no allowance for doubtful accounts is necessary at ~~March~~June 3130, 2011 and December 31, 2010 for the U.S. construction subsidiaries. For other subsidiaries, allowances for doubtful accounts have been provided. In the future we will continue to evaluate provisions for allowances for doubtful accounts depending on the financial strength of the customers that owe us payments, as well as our estimate of economic conditions generally in the areas where we operate.

Business Combinations

During 2009, the Company adopted the revised accounting guidance related to business combinations. This guidance requires an acquirer to recognize the assets acquired, the liabilities assumed, and any noncontrolling interest in the acquiree at the acquisition date, measured at their fair values as of that date, with limited exceptions specified in the literature. In accordance with this guidance, acquisition-related costs, including restructuring costs, must be recognized separately from the acquisition and will generally be expensed as incurred. That replaces the cost-allocation process detailed in previous accounting literature, which required the cost of an acquisition to be allocated to the individual assets acquired and liabilities assumed based on their estimated fair values. The Company implemented this new guidance effective January 1, 2009 and as a result, a total of $40,000 and $25,000 in acquisition related costs were charged to selling, general and administrative expenses during 2010 and 2009, respectively.

Goodwill

Goodwill is tested for impairment on an annual basis or whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. The Company tests goodwill for impairment, and has established December 31 as the annual impairment test date, using a fair value approach at the reporting unit level. A reporting unit is an operating segment or one level below an operating segment for which discrete financial information is available and reviewed regularly by management. Assets and liabilities of the Company have been assigned to the reporting units to the extent they are employed in or are considered a liability related to the operations of the reporting unit and are considered in determining the fair value of the reporting unit. The Company has determined that its reportable operating segments are its reporting units.

The goodwill impairment test is a two-step process. If the fair value of a reporting unit exceeds its carrying amount, goodwill of the reporting unit is considered not impaired and the second step of the impairment test is unnecessary. If the carrying amount of a reporting unit exceeds its fair value, the second step of the goodwill impairment test is performed to measure the amount of impairment loss, if any. The second step of the goodwill impairment test compares implied fair value of the reporting unit’s goodwill (i.e., fair value of the reporting unit less the fair value of the unit’s assets and liabilities, including identifiable intangible assets) with the carrying amount of that goodwill. If the carrying value of goodwill exceeds its implied fair value, the excess is required to be recorded as an impairment.

The Company conducts interim as well as annual impairment tests related to its goodwill by operating segment as economic conditions may change. The Company's fair value analysis related to the impairment test is supported by a weighing of two generally accepted valuation approaches, the income approach and the market approach, as further described below. These approaches include numerous assumptions with respect to future circumstances, such as industry and/or local market conditions that might directly impact each of the operating segment's operations in the future, and are therefore uncertain. These approaches are utilized to develop a range of fair values and a weighted average of these approaches is utilized to determine the best fair value estimate within that range.

Income Approach - Discounted Cash Flows. This valuation approach derives a present value of an operating segment's future annual cash flows over the next four years and the present value of the residual value of the operating segment. The Company uses a variety of underlying assumptions to estimate these future cash flows, including assumptions relating to future economic market conditions, product pricing, sales volumes, costs and expenses, and capital expenditures. These assumptions may vary by each reporting unit depending on regional market conditions, including competitive position, supply and demand for raw materials, labor costs and other industry conditions.

Market Approach - Multiples of EBIT, EBITDA, DFNI and DFCF (as defined below). This valuation approach first identifies public companies in industries that are similar to the Company. A grouping of applicable value measures is then selected and the appropriate market multiples are calculated based on the fundamental value measures of the selected guideline companies. The last step involves selecting the multiple to apply to the Company's various value measures, which is used to calculate the indicated value of each operating segment.

Definitions:

EBIT - Earnings before interest and taxes

EBITDA - Earnings before interest, taxes, depreciation and amortization

DFNI - Debt-free net income

DFCF - Debt-free cash flow

The Company has determined the estimated fair value substantially exceeds the carrying value for all of its reporting units.

Evaluation of Long-Lived Assets

Property, plant and equipment represent an important component of the Company’s total assets. The Company depreciates its property, plant and equipment on a straight-line basis over the estimated useful lives of the assets. Management reviews long-lived assets for potential impairment whenever significant events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. An impairment exists when the carrying amount of the long-lived asset is not recoverable and exceeds its fair value. The carrying amount of a long-lived asset is not recoverable if it exceeds the sum of the estimated undiscounted cash flows expected to result from the use and eventual disposition of the asset. If an impairment exists, the resulting write-down would be the difference between fair market value of the long-lived asset and the related net book value.

The Company determined no impairment existed as of March 31, 2011.

The Company determined no impairment existed as of June 30, 2011.

Foreign Currency Translation

The functional currency for foreign operations is the local currency and the United States dollar is the reporting currency.

Assets and liabilities of foreign operations are translated at exchange rates as of the balance sheet date, and income, expense and cash flow items are translated at the average exchange rate for the applicable period. Translation adjustments are recorded in other comprehensive income (loss).

Recent Accounting Pronouncements

The Company’s significant accounting policies are summarized in Note 1 of the Company’s Annual Report on Form 10-K for the year ended December 31, 2010. There were no significant changes to these accounting policies during the ~~three~~six months ended ~~March~~June 3130, 2011, and the Company does not expect that the adoption of other recent accounting pronouncements will have a material impact on the financial statements.

Results of Operations

~~THREE~~SIX MONTHS ENDED ~~MARCH~~JUNE 3130, 2011 AND ~~MARCH~~JUNE 3130, 2010

Revenues

Revenues for the ~~three~~six months ended ~~March~~June 3130, 2011 were $59.79 million as compared to $12.48 million for the ~~three~~six months ended ~~March~~June 3130, 2010 representing an increase of approximately $47.31 million. The Company attributes the increase primarily to the acquisition of several additional companies in July 2010. The Company's Russian construction operations were responsible for most of the increase in revenues.

Cost of Sales

Cost of sales increased approximately $3.5.0 million from $1.09 million for the ~~three~~six months ended ~~March~~June 3130, 2010 to $46.59 million for the ~~three~~six months ended ~~March~~June 3130, 2011. The Company attributes the increase primarily to the acquisition of several additional construction companies in July 2010 and the related revenue increases.

General and Administrative Expenses

General and administrative expenses increased by approximately $~~353~~766,~~226~~022 to $~~695~~1,~~025~~501,932 for the ~~three~~six months ended ~~March~~June 3130, 2011 as compared to $~~341~~735,~~799~~910 for the ~~three~~six months ended ~~March~~June 3130, 2010. The Company attributes the increase primarily to an increase in legal and accounting expenses involved with the filings with the Securities and Exchange Commission and as a result of the acquisition of several additional companies in July 2010 offset, in part, by lower operating expenses.

Other Income

Other income increased to $324,~~147~~417 for the ~~three~~six months ended ~~March~~June 3130, 2011 compared to $~~819~~10,809 for the ~~three~~six months ended ~~March~~June 3130, 2010. The Company attributes the increase primarily to interest earned on excess funds and outside income earned by one of the Company's German subsidiaries.

Interest Expense

Interest expense increased to $~~264~~488,~~894~~658 for the ~~three~~six months ended ~~March~~June 3130, 2011 compared to $611,~~151~~218 for the ~~three~~six months ended ~~March~~June 3130, 2010. The Company attributes the increase primarily to funds borrowed in the Company's Russian construction operations in connection with the 423,000 sq. ft. spa currently being constructed in Kazan, Russia.

Net Earnings

Net Earnings for the ~~three~~six months ended ~~March~~June 3130, 2011, increased approximately $~~141~~515,~~104~~890 to $~~196~~712,~~230~~257 as compared with a net earnings of $55196,~~126~~367 for the ~~three~~six months ended ~~March~~June 3130, 2010. The Company attributes the net earnings in 2011 primarily to the acquisition of several additional companies in July 2010. The Company's Russian construction operations contributed the majority of the net earnings in 2011.

THREE MONTHS ENDED JUNE 30, 2011 AND JUNE 30, 2010

Revenues

Revenues for the three months ended June 30, 2011 were $4.2 million as compared to $1.5 million for the three months ended June 30, 2010 representing an increase of approximately $2.7 million. The Company attributes the increase primarily to the acquisition of several additional companies in July 2010. The Company's Russian construction operations were responsible for most of the increase in revenues.

Cost of Sales

Cost of sales increased approximately $1.4 million from $1.0 million for the three months ended June 30, 2010 to $2.4 million for the three months ended June 30, 2011. The Company attributes the increase primarily to the acquisition of several additional construction companies in July 2010 and the related revenue increases.

General and Administrative Expenses

General and administrative expenses increased approximately $412,796 to $806,907 the three months ended June 30, 2011 as compared to $394,111 for the three months ended June 30, 2010. The Company attributes the increase primarily to an increase in legal and accounting expenses involved with the filings with the Securities and Exchange Commission and as a result of the acquisition of several additional companies in July 2010 offset, in part, by lower operating expenses.

Other Income

Other income increased to $8,270 for the three months ended June 30, 2011 compared to $801 for the three months ended June 30, 2010. The Company attributes the increase primarily to interest earned on excess funds and outside income earned by one of the Company's German subsidiaries.

Interest Expense

Interest expense increased to $223,764 for the three months ended June 30, 2011 compared to $5,067 for the three months ended June 30, 2010. The Company attributes the increase primarily to funds borrowed in the Company's Russian construction operations in connection with the 423,000 sq. ft. spa currently being constructed in Kazan, Russia.

Net Earnings

Net Earnings for the three months ended June 30, 2011, increased approximately $383,975 to $516,027 as compared with a net earnings of $132,052 for the three months ended June 30, 2010. The Company attributes the net earnings in 2011 primarily to the acquisition of several additional companies in July 2010. The Company's Russian construction operations contributed the majority of the net earnings in 2011.

Liquidity and Capital Resources

As of ~~March~~June 3130, 2011, the Company has a working capital surplus of approximately $1214.93 million and stockholders' equity of approximately $~~203.6~~214 million. The Company finances its activities presently through operations, related party loans and loans from third parties.

The Company has no current commitments for capital expenditures; however, in the normal course of business the Company's construction operations have entered a number of construction contracts with its subcontractors for projects in 2011. The Company's subsidiaries are self-sustaining financially, and the Company's current resources are adequate to meet its current commitments. The current and available capital resources are sufficient to fund planned operations for the next 12 months, and current commitments for expenditures will be satisfied out of operating cash flow of our subsidiaries but also be supplemented by related party loans. The Company expects to reduce its short-term debt obligations in its KNHI subsidiary from the cash flow generated from the completion of its spa project during the ~~second~~third quarter of 2011. The Company plans to raise additional capital, however, to expand the infrastructure construction capabilities of recently acquired construction subsidiaries, Technostroy and KNHI and also to develop a portion of the 8.56 sq. miles of land in Kazan, Russia owned by the Company. The Company believes that raising external capital for these construction subsidiaries may be difficult in the current environment in Europe, and that the Company risks not being able to raise additional external capital for these subsidiaries.

The Company has written related party loan agreements with the Company's Chief Executive Officer and Chairman of the Board these advances are interest free and due on demand. As of ~~March~~June 3130, 2011, the amount due related parties is approximately $~~509~~446,000.

In January 2011, a mortgage secured by a building owned by one the Company’s subsidiaries was modified and the principal balance of $162,217 and outstanding accrued interest of $32,825 were converted to a mortgage agreement in the amount of $195,041. In April 2011, the mortgage secured by a building owned by one the Company’s subsidiaries was refinanced and the remaining mortgage agreement in the amount of $195,041 (plus outstanding taxes) was paid off. The new mortgage amount is $475,000 and bears interest at 12% per annum, payable monthly in the amount of $4,750 until May 1, 2016 when the full principal and any remaining interest shall be due.

27Cash and cash equivalents increased approximately $0.7 million during the six months ended June 30, 2011. The increase is primarily attributable to cash provided by operating activities of approximately $0.8 million offset, in part, by cash used in financing activities of approximately $0.2 million, principally the payment of long-term debt.

Cash and cash equivalents increased approximately $0.4 million during the three months ended March 31, 2011. The increase is primarily attributable to cash provided by operating activities of approximately $0.9 million offset, in part, by cash used in financing activities of approximately $0.6 million, principally the payment of long-term debt.28

Accounts receivable increased by approximately $35.79 million to approximately $1517.35 million during the ~~three~~six months ended ~~March~~June 3130, 2011 primarily due to the increase in revenue from the Company's Russian construction operations. Inventories decreased by approximately $0.9 million to approximately $13.7 million during the ~~three~~six months ended ~~March~~June 3130, 2011 primarily due to the construction costs related to the Company's spa construction project. Accounts payable and accrued expenses increased by approximately $12.2 million during the ~~three~~six months ended ~~March~~June 3130, 2011 primarily due to costs incurred at the Company's spa project. Substantially all of these accounts payable will be paid in full upon completion of the spa project during the ~~second~~third quarter of 2011. Customer advances increased by approximately $~~280~~265,000 during the ~~three~~six months ended ~~March~~June 3130, 2011 to approximately $~~616~~602,000 primarily due to an increase in activity during the period. Long-term debt increased approximately $01.61 million to $1819.61 million primarily due to the translation of Rubles to $US that increased the amount of long-term debt, offset by payments during the period of approximately $0.68 million.

Property and equipment decreased by approximately $~~187~~457,000 from December 31, 2010 primarily reflecting acquisitions of equipment of approximately $77110,000 offset by depreciation expense of approximately $~~256~~568,000.

Trend Analysis by Industry Segment

Construction

Sales and capital expenditures increases for the ~~three~~six months ended ~~March~~June 3130, 2011 reflect the acquisitions of Technostroy and KNHI.

Net sales for the ~~three~~six months ended ~~March~~June 3130, 2011 were $59.54 million as compared to $12.02 for the ~~three~~six months ended ~~March~~June 3130, 2010 representing an increase of approximately $47.52 million, principally a result of the acquisitions of Technostroy and KNHI. The Company also attributes the increase to an upturn in the U.S. housing and European markets during 2011 and the operations of the Company's Russian operations. The Company expects revenues of our construction subsidiaries to increase during the second quarter of 2011 as the Company’s spa project is completed.

Net income from operations increased to $~~711~~1,~~000~~986,070, as compared to $32188,~~000~~053 for the ~~three~~six months ended ~~March~~June 3130, 2010. The Company attributes the increase in income from operations primarily to the earnings from the Company's Russian construction operations acquired during July 2010. The Company expects net income from operations to increase during the second quarter of 2011 as the spa project in Russia is finalized. The approximate backlog of our construction subsidiaries as of March 31, 2011, was $56.8 million.

During 2010 and continuing into 2011, the residential real estate and home construction markets worldwide for both new construction and remodeling markets were affected by the global financial crisis, for a period of time most clients could not get bank loans for new home construction. Additionally, due to the significant decrease in existing home values and more restrictive bank lending standards, many clients could not get any bank funding for mortgage refinancing or equity loans to remodel their existing homes.

The residential conditions have improved in some international markets during the latter part of 2010 and into 2011, and the home construction operations in Europe have started to become profitable. The Company expects conditions will continue to improve and be favorable in 2011 and the Company’s construction segment to be more profitable.

Electronic Component Distribution

Net sales for the ~~three~~six months ended ~~March~~June 3130, 2011 were $~~110~~268,~~000~~160 as compared to $~~263~~477,~~000~~804 for the ~~three~~six months ended ~~March~~June 3130, 2010 representing a ~~58%~~ decrease of approximately $~~153~~209,000. The Company attributes the decrease primarily to decreases in demand of electronic components during 2010 and 2011. The Company expects revenues to ~~increase~~remain stable for the remainder of 2011.

Net loss from operations for the ~~three~~six months ended ~~March~~June 3130, 2011 was approximately $518,000 as compared to income from operations of approximately $3949,000 for the ~~three~~six months ended ~~March~~June 3130, 2010 representing a decrease of approximately $4497,000. The decrease in income from operations in 2011 was attributable to a decrease in demand for electronic components in Russia during the first and second quarter of 2011. The Company expects the electronic components subsidiaries in Russia to return to profitability in the latter part of 2011.

Consulting

Net sales for the ~~three~~six months ended ~~March~~June 3130, 2011 were approximately $46103,000 as compared to approximately $53102,000 for the ~~three~~six months ended ~~March~~June 3130, 2010. ~~The Company attributes the decrease primarily to the fact that the economy was slow to rebound in 2010 and 2011.~~ A large contract was signed in 2011 for Xerxis, which increased Xerxis’ overall territory, and the results of which ~~should~~started ~~start~~ to be reflected in the second quarter. Liberalization of EU labor legislation involving removal of restrictions on right to work in other EU countries was also effective April 30, 2011, which will facilitate the movement of labor. These two factors should also generate advertising cost reductions for Xerxis.

Net loss from operations was approximately $~~179~~461,000 for the ~~three~~six months ended ~~March~~June 3130, 2011, as compared to ~~income~~a loss from operations of approximately $105,000 for the ~~three~~six months ended ~~March~~June 3130, 2010. The loss from operations in 2011 is primarily attributable to an increase in overhead expenses. The Company expects 2011 consulting income to increase from prior ~~three~~six months levels but the Company may also experience increases in overhead levels.

Retail

Net sales for the ~~three~~six months ended ~~March~~June 3130, 2011 were approximately $5390,000 as compared to $65108,000 for the ~~three~~six months ended ~~March~~June 3130, 2010 representing aan ~~slight~~approximate $18,000 decrease. The Company attributes the decrease primarily to the lack of new inventory and an overall weak retail market. The Company has selected new vendors and ordered a wider variety of inventory which will arrive in the third quarter of 2011. The Company expects a very strong fourth quarter due to improved holiday sales and a large number of international buyers buying real estate and needing to decorate these newly purchased homes. The Company expects the retail markets to improve by the fourth quarter of 2011.

Net loss from operations was approximately $535,000 for the ~~three~~six months ended ~~March~~June 3130, 2011, as compared with a net income from operations of approximately $615,000 for the ~~three~~six months ended ~~March~~June 3130, 2010. The Company expects the retail market to improve during 2011.

Capital Expenditures

Capital expenditures for the Company during the ~~three~~six months ended ~~March~~June 3130, 2011 were approximately $77110,000. The expenditures primarily consisted of machinery and equipment purchased in our Russian construction operations. Capital expenditures throughout 2011 will be made as needed but the Company does not expect the cash outflow will have a major impact on the Company's cash flow during 2011.

Off−Balance Sheet Arrangements

We have not entered into any off−balance sheet arrangements that have or are reasonably likely to have a current or future effect on our financial condition, changes in financial condition, revenues or expenses, results of operations, liquidity, capital expenditures or capital resources and would be considered material to investors.

Inflation

It is the opinion of the Company that inflation has not had a material effect on its operations.

Commodity Risk – Our raw material costs for our installations, in the normal course of business, could be affected by increased commodity prices for tile, stone, wood and other materials that we use.

Credit Risk - Our accounts receivables are subject, in the normal course of business, to collection risks. We regularly assess these risks and have established policies and business practices to protect against the adverse effects of collection risks. As a result we do not anticipate any material losses in this area.

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.

ITEM 4T. CONTROLS AND PROCEDURES.

The Company's Chief Executive Officer and its Chief Financial Officer are primarily responsible for the accuracy of the financial information that is presented in this quarterly Report. These officers have as of the close of the period covered by this Quarterly Report, evaluated the Company's disclosure controls and procedures (as defined in Rules 13a-4c and 15d-14c promulgated under the Securities Exchange Act of 1934) and determined that such controls and procedures were not effective in ensuring that material information relating to the Company was made known to them during the period covered by this Quarterly Report. In their evaluation, no changes were made to the Company's internal controls in this period that have materially affected, or are reasonably likely materially to affect, the Company’s internal control over financial reporting.

Management concluded in this evaluation that as of June 30, 2011, our disclosure controls and procedures were not effective due to the following material weaknesses. The books and records of the Company’s European subsidiaries are not kept on a GAAP basis, but are translated to statements on a GAAP basis by outside accounting personnel and firms. In addition, management of the Company’s European subsidiaries are not experienced in identifying relevant financial reporting issues and the proper accounting therefor on a GAAP basis. The Company’s international operations have outside accounting personnel in place with substantial knowledge of GAAP and international accounting standards, and these accounting personnel perform the function of the translation of the financial statements of the Company’s European subsidiaries to statements presented on a GAAP basis. Management concluded that the combination of the factors that the European subsidiaries’ financial statements are not kept on a GAAP basis and the lack of experience of their management in identifying relevant GAAP financial reporting issues and the proper accounting therefor constitute a weakness in the Company’s disclosure controls and procedures as of June 30, 2011.

~~Management concluded in this evaluation that as of March~~ 31, 2011, our disclosure controls and procedures were effective due to the following material weaknesses. The books and records of the Company’s European subsidiaries are not kept on a GAAP basis, but are translated to statements on a GAAP basis by outside accounting personnel and firms. In addition, management of the Company’s European subsidiaries are not experienced in identifying relevant financial reporting issues and the proper accounting therefor on a GAAP basis. The Company’s international operations have outside accounting personnel in place with substantial knowledge of GAAP and international accounting standards, and these accounting personnel perform the function of the translation of the financial statements of the Company’s European subsidiaries to statements presented on a GAAP basis. Management concluded that the combination of the factors that the European subsidiaries’ financial statements are not kept on a GAAP basis and the lack of experience of their management in identifying relevant GAAP financial reporting issues and the proper accounting therefor constitute a weakness in the Company’s disclosure controls and procedures as of March 31, 2011.

Given these reportable conditions and material weaknesses, management devoted additional resources to resolving questions that arose during the period covered by this report. As a result we are confident our financial statements as of ~~March~~June 3130, 2011, and for the two years then ended, fairly present in all material respects our financial condition and results of operations.

PART II—OTHER INFORMATION

ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS.

The following table sets forth the sales of unregistered securities since the Company’s last report filed under this item.

Date Title and Amount (1) Purchaser Principal Underwriter Total Offering Price/ Underwriting Discounts

~~February~~May 527, 2011 ~~Company sold 2~~100,~~500~~000 shares of ~~its~~ common stock ~~and received proceeds of $10,000~~. InConsultant ~~connection~~NA ~~with the sale of the common shares, the Company issued warrants to purchase 10,000 common shares at an exercise price of~~ $~~7 per share~~1.78 ~~Private Investor N/A $4.00~~ per share / ~~N/A~~NA

(1) The issuances to consultants and investors are viewed by the Company as exempt from registration under the Securities Act of 1933, as amended (“Securities Act”), alternatively, as transactions either not involving any public offering, or as exempt under the provisions of Regulation D, Regulation S or Rule 701 promulgated by the SEC under the Securities Act.

31.

ITEM 5. OTHER INFORMATION.

SibTechService-N

On July 1, 2011, we signed an agreement to acquire SibTechService-N ("STS-N"), which was founded in 2006 and is located in Novosibirsk, Russia. STS-N currently performs general construction for commercial energy projects and municipality infrastructure such as roads and airport runways. Pursuant to the acquisition agreement for STS-N, we agreed, subject to closing conditions, to issue 1,379,422 shares of our common stock to acquire this company. The main customers of STS-N include the government administrations of Novosibirsk and the surrounding cities. Commercial customers include the Tolmachevo Airport and TZK Aerofuels.

STS-N uses modern building materials and technologies based on proprietary technology. These materials have unique thermal performance, and allow the building process to be efficient and cost-effective for both the customer and contractor. TZK Aerofuels provides fuel supplies to 800 locations worldwide and provides jet fuels to more than 70 air carriers within the Russian Federation, such as Aeroflot, S7 Airlines, Vladivostok Avia, Tesis, Atlant-Soyuz, the Ministry of Emergency Situations, and the Ministry of Defense.

Miralab LLC

On July 6, 2011, we signed an agreement to acquire Miralab LLC, headquartered in Moscow, Russian Federation, and subject to closing conditions in the acquisition agreement, agreed to issue 470,768 shares of our common stock to acquire this company. Miralab was founded in 2008 under the name Promium.ru and is a leading search engine optimization (SEO) company. Miralab provides SEO, contextual advertising and web analytics. Miralab was ranked one of the top 15 SEO companies in Russia by SeoNews.

ITEM 6. EXHIBITS.

31.1	Certification of Chief Executive Officer Pursuant to Section 302 of The Sarbanes Oxley Act of 2002.

31.2	Certification of Chief Financial Officer Pursuant to Section 302 of The Sarbanes Oxley Act of 2002.

32.1	Certification of Chief Executive Officer Pursuant to 18 U.S.C. Section 1350 as adopted pursuant to Section 906 of the Sarbanes-Oxley Oxley Act of 2002.

32.2	Certification of Chief Financial Officer Pursuant to 18 U.S.C. Section 1350 as adopted pursuant to Section 906 of the Sarbanes-Oxley Oxley Act of 2002.

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.

DIVERSIFIED GLOBAL HOLDINGS GROUP, INC. (Registrant) By: /s/ Richard Lloyd Richard Lloyd, Chief Executive Officer

	DIVERSIFIED GLOBAL HOLDINGS GROUP, INC.
	(Registrant)

Date	By:	/s/ Richard Lloyd
		Richard Lloyd,
		Chief Executive Officer
Dated: August 24, 2011

Dated: May 16, 2011

EXHIBIT INDEX

Exhibit Number

Description

31.1	Certification of Chief Executive Officer Pursuant to Section 302 of the Sarbanes Oxley Act of 2002.
31.2	Certification of Chief Financial Officer Pursuant to Section 302 of the Sarbanes Oxley Act of 2002.
32.1	Certification of Chief Executive Officer Pursuant to 18 U.S.C. Section 1350 as adopted pursuant to Section 906 of the Sarbanes-Oxley Oxley Act of 2002.
32.2	Certification of Chief Financial Officer Pursuant to 18 U.S.C. Section 1350 as adopted pursuant to Section 906 of the Sarbanes-Oxley Oxley Act of 2002.

32 33

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