**UNITED
          STATES**
 **SECURITIES
          AND EXCHANGE COMMISSION**
 **Washington,
          DC 20549**
 
 **FORM
          10-KSB**
  
 (MARK
                      ONE)**x**
                  **ANNUAL
                      REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
                      ACT OF
                      1934****For
                      the fiscal year ended April 30, 2007****OR****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 **: 333-83231**
 **GLOBAL
          DIVERSIFIED INDUSTRIES, INC.**
 (Exact
          name of Company as specified in its charter)
  **Nevada**
                **95-4741485**(State
                    or other jurisdictionof
                  incorporation
                    or organization)
                (IRS
                    Employer
                  Identification
                    No.)
  **1200
            Airport Drive, Chowchilla, California 93610**
 (Address
            of principal executive offices) (Zip Code)
 
 Company's
            telephone number: **(559) 665-5800**
 Securities
            registered pursuant to Section 12(b) of the Act: None
  Securities
            registered pursuant to Section 12(g) of the Act:  Common Stock, $0.001
            Par Value
  Indicate
            by check mark whether the Company (1) has filed all reports required
            to be filed
            by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
            the
            preceding 12 months (or for such shorter period that the Company was
            required to
            file such reports), and (2) been subject to such filing requirements
            for the
            past 90 days. Yes
x 
             No o
 Indicate
              by check mark if disclosure of delinquent filers pursuant to Item 405
              of
              Regulation S-K is not contained herein, and will not be contained,
              to the best
              of Company's knowledge, in definitive proxy or information statements
              incorporated by reference in Part III of this Form 10-KSB or any amendment
              to
              this Form 10-KSB o.
 The
              aggregate market value of the voting stock held by non-affiliates of
              the Company
              as of August 9, 2007, Common Stock, par value $0.001 per share was
              $1,821,332.  As of August 14, 2007, the Company had 167,209,211 shares
              of common stock issued and outstanding, of which 57,820,094 were held
              by
              non-affiliates.
 Table
              of Contents
 **TABLE
          OF CONTENTS**
  **PAGE**PART
                    I.Item
                    1.
                Description
                    of Business
                3Item
                    2.
                Description
                    of Property
                4Item
                    3.
                Legal
                    Proceedings
                4Item
                    4.
                Submission
                    of Matters to a Vote of Security
                    Holders
                4PART
                    II.Item
                    5.
                Market
                    for Common Equity and Other Shareholder
                    Matters
                5Item
                    6.
                Management’s
                      Discussion and Analysis of Financial Condition
                      and Results of Operations
                6Item
                    7.
                Financial
                    Statements
                15Item
                    8.
                Changes
                    In and Disagreements with Accountants on Accounting
                    and Financial Disclosure
                16Item
                    8. (A)
                Controls
                      and Procedures
                16PART
                    III.Item
                    9.
                Directors,
                    Executive Officers, Promoters, Control Persons;
                    Compliance with Section 16(a) of the Exchange Act
                16Item
                    10.
                Executive
                    Compensation
                18Item
                    11.
                Security
                    Ownership of Certain Beneficial Owners and
                    Management
                19Item
                    12.
                Certain
                    Relationships and Related
                    Transactions
                19Item
                    13.
                Exhibits
                20Item
                    14.
                Principal
                    Accountant's Fees and
                    Services
                21Signatures
                22




Table
            of Contents


**PART
      I.**





**SPECIAL
      NOTE REGARDING FORWARD-LOOKING STATEMENTS**





Forward-looking
      statements in this report are made pursuant to the "safe harbor" provisions
      of
      the Private Securities Litigation Reform Act of 1995. The Company wishes to
      advise readers that actual results may differ substantially from such
      forward-looking statements. Forward-looking statements include statements
      concerning underlying assumptions and other statements that are other than
      statements of historical facts. Forward-looking statements involve risks and
      uncertainties that could cause actual results to differ materially from those
      expressed or implied by the statements, including, but not limited to, the
      following: the ability of the Company to provide for its obligations, to provide
      working capital needs from operating revenues, to obtain additional financing
      needed for any future acquisitions, to meet competitive challenges and
      technological changes, and other risks detailed in the Company's periodic report
      filings with the Securities and Exchange Commission.





**ITEM
      1. BUSINESS**





Introduction





The
        Company is a Nevada company with a limited operating history.  In
        October 2006, the Company sold a subsidiary, MBS Construction, Inc. ("MBS")
        to
        Paragon Modular, Inc ("PMI") through a Stock Purchase Agreement ("Purchase
        Agreement"). As a result of the sale of the MBS business segment, the Company
        accounted for the segment as a discontinued operation.
 
 The
        Company currently operates two wholly owned subsidiaries, Lutrex Enterprises,
        Inc., an entity, which holds equipment and inventory for the registrant and
        Global Modular, Inc., a sales, marketing and manufacturing of modular type
        structures.
 
 The
        Company is engaged in the business of designing, manufacturing and marketing
        re-locatable modular structures such as classrooms and office buildings and
        was
        under contract to build multiple classrooms for several school districts
        in
        southern California.
  Overview





The
      Company’s subsidiary, Global Modular, Inc. (“Global Modular”) is in the business
      of designing, manufacturing and marketing pre-fabricated, modular type
      structures.  Global Modular’s 100,000 square foot factory is located
      on sixteen acres adjacent to the municipal airport at Chowchilla,
      California.  The manufacturing facility has the capacity to produce
      approximately $50,000,000 of revenue per year. Its principal customer base
      during the current fiscal year will be educational (public and private schools,
      universities, etc.), child-care and municipality sectors.  Its product
      lines consist of a variety of relocatable (portable) classroom designs, and
      designs used specifically for permanent modular construction, i.e., complete
      schools, wing additions, etc.  Global Modular’s capabilities include
      single-story “slab-on-grade” construction, where a concrete slab is poured on
      site, which also serves as the floor. The structures are built in our factory
      and shipped to the site for installation on the concrete slab. The modular
      division has secured rights to state-of-the-art two-story designs owned by
      Aurora Modular Industries, Inc. All of Global Modulars’ portable/modular
      structures are engineered and constructed in accordance with pre-approved
      building plans, commonly referred to as “P.C.’s” or “pre-checked” plans that
      conform to structural and seismic safety specifications administered by the
      California Department of State Architects (DSA).  The DSA regulates
      all California school construction on public real estate and the DSA’s standards
      are considered to be more rigorous than the standards that typically regulate
      other classes of commercial portable structures.





Global
      Modular was recently awarded a contract with a Southern California School
      District with a “piggyback clause”.  The California allows school
      districts to canvass proposals from modular classroom vendors under a bidding
      process where the successful bidder can provide other public school districts
      and municipalities portable classrooms under a “piggyback contract” issued by
      the originating school district.  This process saves school districts
      valuable time and resources from the necessity of soliciting bids.  A
      modular vendor who possesses a “piggybackable contract” containing competitive
      pricing and a variety of design options may have access to future business
      for
      up to five years, depending on the term of the piggyback contract.





The
      Company was issued a Manufacturer’s License by the California Department of
      Housing (DOH) on July 13, 2006.  This opens up a new market comprising
      of retail, industrial and institutional (including educational institutions
      that
      reside on private property).  This sector adheres to building designs
      and specifications administered by the Department of Housing
      (DOH).  However, there has not been any DOH buildings produced as of
      April 30, 2007 and there is none currently scheduled.




3
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          of Contents




Among
      Global Modular’s asset base is its integrated, state-of-the-art, automated
      manufacturing process which includes equipment, raw material and marketing
      collateral that are specifically designed for the high capacity fabrication
      of
      modular structures.  Future revenue generation and growth partially
      depends on the success of marketing efforts to the educational sector for
      single-story and two-story designs.




The
      Company’s subsidiary Global Modular, Inc. has secured necessary architectural
      and engineering approvals from the State of California (Division of the State
      Architect) for their single story and two-story designs.  The
      two-story design is desirable by school districts since individual two-story
      buildings can be installed side-by-side to form a cluster of buildings,
      occupying hundreds of students.  The two-story design is fully
      equipped with easy access to the second story by stairs and balcony along with
      a
      hydraulic elevator to accommodate handicap students, teachers and
      visitors.  School districts continue to turn to two-story portable
      classrooms to satisfy their space dilemma since they have little real estate
      to
      surrender.  Since the acquisition of Aurora Modular Industries
      intellectual property; the promotion of single-story slab-on-grade and two-story
      designs will be the main focus of our sales team during the next several
      years.  Global Modular now possesses adequate DSA approved designs
      that can meet virtually any type configuration and aesthetic alternatives a
      school district may desire.





During
      the remainder of 2007, Global Modular will focus its attention on the sales
      and
      marketing of portable classrooms and modular buildings to the California public
      and private school sectors including California municipalities.  Since
      the state of California has been experiencing an influx in student enrollment
      over the past several years, and the forecast for the next ten years is for
      continual increasing enrollments, the portable classroom manufacturing industry
      has become more successful.  In an effort to keep up with demand for
      additional classroom space, modular manufactures are expecting increased
      production backlogs throughout the remainder of 2007 and into 2008.





Employees





As
      of
      April 30, 2007 the Company had 100 employees. The Company anticipates that
      the
      number of employees will increase over the next twelve months. The Company
      does
      not expect to have any collective bargaining agreements covering any of its
      employees.





**ITEM
      2. PROPERTIES**





The
      Company's principal executive offices are located at 1200 Airport Drive,
      Chowchilla, California. The property consists of sixteen acres of real estate
      including a 100,000 square foot structure of usable space. The structure will
      be
      utilized by the Company's executive management team, as well as housing the
      operating entities of Lutrex and Global Modular. The Company has entered into
      a
      three-year lease (including options for renewals) for the
      property.  The Company renewed the lease in February 2007 at a rate of
      $24,021 per month with moderate increases for each year thereafter. The Company
      believes that the current facilities are suitable for its current
      needs.





**ITEM
      3. LEGAL PROCEEDINGS**





The
      Company is not a party to any material pending legal proceedings and, to the
      best of its knowledge, no such action by or against the Company has been
      threatened. The Company is subject to legal proceedings and claims that arise
      in
      the ordinary course of its business.  Although occasional adverse
      decisions or settlements may occur, the Company believes that the final
      disposition of such matters will not have material adverse effect on its
      financial position, results of operations or liquidity.





**ITEM
      4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY
      HOLDERS**





There
      were not any matters that were submitted during the fourth quarter of the
      2006-2007 fiscal year end to a vote of the security holders.




4
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          of Contents




**PART
      II.**





**ITEM
      5. MARKET FOR COMMON EQUITY AND RELATED STOCKHOLDER
      MATTERS**





Market
      Information





(a)
      The
      Company's Common Stock has been and is currently traded on the over-the-counter
      market and quotations are published on the OTC Bulletin Board under the symbol
      "GDVI". The Company began trading under this symbol on January 3, 2002. The
      Company previously traded under the symbol "GFDO" and commenced in October
      2000.





The
      following table sets forth the range of high and low bid prices of the Common
      Stock for each fiscal quarterly period. Prices reported represent prices between
      dealers, do not include retail markups, markdowns or commissions and do not
      represent actual transactions.





Per
      Share
      Common Stock Bid Prices by Quarter


For
      the
      Fiscal Year Ended on April 30, 2007




**HIGH**
            ****
            ****
            **LOW**Quarter
                Ended April 30, 2007
            
            
            .02
            
            
            
            .02Quarter
                Ended January 31, 2007
            
            
            .03
            
            
            
            .03Quarter
                Ended October 31, 2006
            
            
            .08
            
            
            
            .07Quarter
                Ended July 31, 2006
            
            
            .06
            
            
            
            .06





Per
      Share
      Common Stock Bid Prices by Quarter


For
      the
      Fiscal Year Ended on April 30, 2006




**HIGH**
            ****
            ****
            **LOW**Quarter
                Ended April 30, 2006
            
            
            .08
            
            
            
            .07Quarter
                Ended January 31, 2006
            
            
            .07
            
            
            
            .07Quarter
                Ended October 31, 2005
            
            
            .09
            
            
            
            .08Quarter
                Ended July 31, 2005
            
            
            .11
            
            
            
            .11





The
      ability of individual stockholders to trade their shares in a particular state
      may be subject to various rules and regulations of that state. A number of
      states require that an issuer's securities be registered in their state or
      appropriately exempted from registration before the securities are permitted
      to
      trade in that state. Presently, the Company has no plans to register its
      securities in any particular state. Further, most likely the Company's shares
      will be subject to the provisions of Section 15(g) and Rule 15g-9 of the
      Securities Exchange Act of 1934, as amended (the "Exchange Act"), commonly
      referred to as the "penny stock" rule. Section 15(g) sets forth certain
      requirements for transactions in penny stocks and Rule 15g-9(d)(1) incorporates
      the definition of penny stock as that used in Rule 3a51-1 of the Exchange
      Act.





The
      Commission generally defines penny stock to be any equity security that has
      a
      market price less than $5.00 per share, subject to certain exceptions. Rule
      3a51-1 provides that any equity security is considered to be a penny stock
      unless that security is: registered and traded on a national securities exchange
      meeting specified criteria set by the Commission; authorized for quotation
      on
      the NASDAQ Stock Market; issued by a registered investment company; excluded
      from the definition on the basis of price (at least $5.00 per share) or the
      issuer's net tangible assets (at least $2 million); or exempted from the
      definition by the Commission. If the Company's shares are deemed to be a penny
      stock, trading in the shares will be subject to additional sales practice
      requirements of broker-dealers who sell penny stocks to persons other than
      established customers and accredited investors, generally persons with assets
      in
      excess of $1,000,000 or annual income exceeding $200,000, or $300,000 together
      with their spouse.





For
      transactions covered by these rules, broker-dealers must make a special
      suitability determination for the purchase of such securities and must have
      received the purchaser's written consent to the transaction prior to the
      purchase. Additionally, for any transaction involving a penny stock, unless
      exempt, the rules require the delivery, prior to the first transaction, of
      a
      risk disclosure document relating to the penny stock market. A broker-dealer
      also must disclose the commissions payable to both the broker-dealer and the
      registered representative, and current quotations for the securities. Finally,
      monthly statements must be sent disclosing recent price information for the
      penny stocks held in the account and information on the limited market in penny
      stocks. Consequently, these rules may restrict the ability of broker-dealers
      to
      trade and/or maintain a market in the Company's Common Stock and may affect
      the
      ability of stockholders to sell their shares.




5
 Table
          of Contents




Dividend
      Information





The
      Company has not declared or paid cash dividends on its Common Stock or made
      distributions in the past, and the Company does not anticipate that it will
      pay
      cash dividends or make cash distributions in the foreseeable future, other
      than
      non cash dividends described below. The Company currently intends to retain
      and
      invest future earnings, if any, to finance its operations.





Transfer
      Agent





The
      transfer agent and registrar for our common stock is Fidelity Transfer Company,
      1800 South West Temple, Suite 301, Salt Lake City, Utah 84115.





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





The
      following discussion contains forward-looking statements that are subject to
      significant risks and uncertainties about us, our current and planned products,
      our current and proposed marketing and sales, and our projected results of
      operations. There are several important factors that could cause actual results
      to differ materially from historical results and percentages and results
      anticipated by the forward-looking statements. The Company has sought to
      identify the most significant risks to its business, but cannot predict whether
      or to what extent any of such risks may be realized nor can there be any
      assurance that the Company has identified all possible risks that might
      arise.





Investors
      should carefully consider all of such risks before making an investment decision
      with respect to the Company's stock. In particular, investors should refer
      to
      the section entitled, Risk Factors that May Affect Future Results and Market
      Price of Stock.





The
      following discussion and analysis should be read in conjunction with our
      financial statements and summary of selected financial data for the Company.
      This discussion should not be construed to imply that the results discussed
      herein will necessarily continue into the future, or that any conclusion reached
      herein will necessarily be indicative of actual operating results in the
      future.  Such discussion represents only the best present assessment
      from our Management.





General
      Overview





The
      Company generates revenue from the sale of pre-fabricated, modular type
      structures to educational institutions, such as public and private schools,
      universities, etc., child-care providers and municipalities. Our product lines
      consist of a variety of re-locatable (portable) classroom designs, including
      both single-story and two-story floor plans.





Critical
      Accounting Policies





The
      preparation of our financial statements in conformity with accounting principles
      generally accepted in the United States requires us to make estimates and
      judgments that affect our reported assets, liabilities, revenues, and expenses,
      and the disclosure of contingent assets and liabilities. We base our estimates
      and judgments on historical experience and on various other assumptions we
      believe to be reasonable under the circumstances. Future events, however, may
      differ markedly from our current expectations and assumptions.  While
      there are a number of significant accounting policies affecting our consolidated
      financial statements; we believe the following critical


accounting
      policies involve the most complex, difficult and subjective estimates and
      judgments:





·
            revenue
                recognition


·
            inventories


·
            allowance
                for doubtful accounts


·
            stock-based
                compensation




6
 Table
            of Contents





Revenue
      Recognition





The
      Company recognizes revenue when persuasive evidence of an arrangement exists,
      the price to the customer is fixed, collectibility is reasonably assured and
      title and risk of ownership is passed to the customer, which is usually upon
      delivery.  However, in limited circumstances, certain customers
      traditionally have requested to take title and risk of ownership prior to
      shipment.  Revenue for these transactions is recognized only
      when:





(1)
      Title and risk of ownership have
      passed to the customer;


(2)
      The Company has obtained a written
      fixed purchase commitment;


(3)
      The customer has requested in
      writing the transaction be on a bill and hold basis;


(4)
      The customer has provided a
      delivery schedule;


(5)
      All performance obligations related
      to the sale have been completed;


(6)
      The modular unit has been processed
      to the customer’s specifications, accepted by the customer and made ready for
      shipment; and


(7)
      The modular unit is segregated and
      is not available to fill other orders.





The
      remittance terms for these “bill and hold” transactions are consistent with all
      other sales by the Company.




In
        fiscal
        2006 and 2007, the Company entered into several fixed-price arrangements
        whereby
        the Company is to construct and install several modular units for customers.
        Revenue from these construction-type fixed-price contracts is recognized
        in
        accordance with SOP No. 81-1, "Accounting for Performance of Construction-Type
        and Certain Production-Type Contracts", on the basis of the estimated percentage
        of completion.
 
 Under
        the
        percentage-of-completion method, progress toward completion is measured by
        the
        ratio of costs incurred to total estimated costs. Revenue and gross profit
        may
        be adjusted prospectively for revisions in estimated total contract costs.
        If
        the current estimates of total contract revenue and contract cost indicate
        a
        loss, a provision for the entire loss on the contract is recorded in the
        period
        in which it becomes evident. The total estimated loss includes all costs
        allocable to the specific contract. Each construction contract is reviewed
        individually to determine the appropriate basis of recognizing revenue.
        Revisions to the estimates at completion are reflected in results of operations
        as a change in accounting estimate in the period in which the facts that
        give
        rise to the revision become known by management.
  Currently,
        there are no warranties provided with the purchase of the Company’s products.
        The cost of replacing defective products and product returns have been
        immaterial and within management’s expectations.  In the future, when
        the company deems warranty reserves are appropriate that such costs will
        be
        accrued to reflect anticipated warranty costs.





Inventories





We
        value
        our inventories, which consists of raw materials, work in progress, finished
        goods, at the lower of cost or market.  Cost is determined on the
        first-in, first-out method (FIFO) and includes the cost of merchandise and
        freight.  The Company periodically reviews the carrying value of
        inventories and non-cancelable purchase commitments by reviewing revenue
        forecasts, material usage requirements, and the engineering design changes.
        These forecasts of changes in design, future sales, and pricing are estimates.
        The Company may record charges to write down inventories based on these reviews
        and forecasts. If there is change in demand, additional write downs of
        inventories may be required which will negatively impact gross margins.
        Inventory impairment charges are considered to permanently establish a new
        cost
        basis for inventory and are not subsequently reversed to income even if
        circumstances later suggest that increased carrying amounts are recoverable,
        except when the associated inventory is disposed of or sold.





Allowance
      for Uncollectible Accounts





We
      are
      required to estimate the collectibility of our trade receivables. A considerable
      amount of judgment is required in assessing the realization of these receivables
      including the current creditworthiness of each customer and related aging of
      the
      past due balances. In order to assess the collectibility of these receivables,
      we perform ongoing credit evaluations of our customers' financial condition.
      Through these evaluations we may become aware of a situation where a customer
      may not be able to meet its financial obligations due to deterioration of its
      financial viability, credit ratings or bankruptcy. The reserve requirements
      are
      based on the best facts available to us and are reevaluated and adjusted as
      additional information is received. Our reserves are also based on amounts
      determined by using percentages applied to certain aged receivable categories.
      These percentages are determined by a variety of factors including, but are
      not
      limited to, current economic trends, historical payment and bad debt write-off experience.
      We are not able to predict changes in the financial condition of our customers
      and if circumstances related to our customers deteriorate, our estimates of
      the
      recoverability of our receivables could be materially affected and we may be
      required to record additional allowances. Alternatively, if we provided more
      allowances than are ultimately required, we may reverse a portion of such
      provisions in future periods based on our actual collection experience. As
      of
      April 30, 2007 we determined a reserve was not required against our account
      receivables.




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Stock-Based
      Compensation





Prior
        to
        the January 1, 2006 adoption of the Financial Accounting Standards Board
        ("FASB") Statement No. 123(R), "Share-Based Payment" ("SFAS 123R"), the Company
        accounted for stock-based compensation using the intrinsic value method
        prescribed in Accounting Principles Board ("APB") Opinion No. 25, "Accounting
        for Stock Issued to Employees," and related interpretations. As permitted
        by
        SFAS No. 123, "Accounting for Stock-Based Compensation" ("SFAS 123"),
        stock-based compensation was included as a pro forma disclosure in the notes
        to
        the consolidated financial statements.
 
 Effective
        January 1, 2006, the Company adopted the fair value recognition provisions
        of
        SFAS 123R, using the modified-prospective transition method. Under this
        transition method, stock-based compensation expense is recognized in the
        consolidated financial statements for granted, modified, or settled stock
        options. Compensation expense recognized included the estimated expense for
        stock options granted on and subsequent to January 1, 2006, based on the
        grant
        date fair value estimated in accordance with the provisions of SFAS 123R,
        and
        the estimated expense for the portion vesting in the period for options granted
        prior to, but not vested as of January 1, 2006, based on the grant date fair
        value estimated in accordance with the original provisions of SFAS 123. Results
        for prior periods have not been restated, as provided for under the
        modified-prospective method.




Comparison
      of Years Ended April 30, 2007 and 2006 Revenues





The
        Company's total revenues were $6,639,359 for the year ended April 30, 2007
        compared to $13,862,494 for the same time period in 2006, a decrease of
        $7,223,135 or approximately 52%.    The Company made a
        decision to reduce manufacturing production to a minimum during the fiscal
        year
        2007 until all of the site construction projects that were managed by MBS
        Construction were 100% complete.  MBS Construction was sold in October
        31, 2006 and Global Modular assumed the responsibility of completing the
        site
        construction projects.  This management task took Global Modular
        approximately five months to complete.





Gross
      Profit





For
        the
        year ended April 30, 2007, the Company's gross profit margin was $1,011,246,
        approximately 15.2% as compared to $4,636,088, approximately 33.4% for the
        year
        ended April 30, 2006.  During the year ended April 30, 2007, the
        Company identified and marked down several groups of raw materials left over
        from special ordered buildings, which can not be used in the Company’s standard
        buildings, together with raw materials that can only be used in MBS construction
        designs, as the utility of the underlying inventories was deemed to be impaired.
        The Company recorded inventory impairment charges in the amount of $850,000
        during the year ended April 30, 2007, which reduced the gross profit by the
        corresponding amount. The Impairment of inventories loss represents
        approximately 12.8% of the reduction in the gross profit margin for the year
        ended April 30, 2007.
 
 Operating
        and Other Expenses
 
 The
        Company's general and administrative expenses for the year ended April 30,
        2007
        was $ 1,963,798 compared to $2,420,434 for the same period in 2006, a decrease
        of $456,636. This decrease is mainly attributable to the general and
        administrative costs in connection with the decreased sales and operations
        of
        Global Modular.  Also the general and administrative costs reduced
        with the sale of MBS Construction in October 2006.
 
 The
        Company's interest expenses, net, for the year ended April 30, 2007 was $446,137
        compared to $472,375 for the same period in 2006, a decrease of $26,238.
        The
        change is due to the Company's decreased need for borrowings with production
        reduced during the year ended April 30, 2007.
  Liquidity
        and Capital Resources
 
 The
        Company incurred a net loss of $1,343,778 for the year ended April 30, 2007.
        We
        generated a positive cash flow of $1,569,034 from operating activities. Cash
        flows used in investing activities was $627,865 during this period. Cash
        flow
        used for financing activities during the year was $1,141,700, primarily paying
        off the line of credit during fiscal year ended April 30, 2007.
  While
        the
        Company has raised capital to meet its working capital and financing needs
        in
        the past, additional financing is required in order to meet the Company's
        current and projected cash flow deficits from operations and development.
        The
        Company is presently seeking financing in the form of debt or equity in order
        to
        provide he necessary working capital. Such financing may be upon terms that
        are
        dilutive or potentially dilutive to our stockholders. There are no assurances
        the Company will be successful in raising the funds required.




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By
      adjusting its operations and development to the level of capitalization,
      management believes it has sufficient capital resources to meet projected cash
      flow needs through the next twelve months. However, if thereafter, we are not
      successful in generating sufficient liquidity form operations or in raising
      sufficient capital resources, on terms acceptable to us, this could have a
      material adverse effect, on our business, results of operations, liquidity
      and
      financial condition.





In
      prior
      periods, the Company has borrowed funds from significant shareholders of the
      Company to satisfy certain obligations. There are no assurances that the Company
      will be able to borrow funds from significant shareholders of the Company in
      the
      future.





As
      the
      Company continues to expand, the Company will incur additional costs for
      personnel. In order for the Company to attract and retain quality personnel,
      management anticipates it will have to offer competitive salaries, issue common
      stock to consultants and employees, and grant Company stock options to current
      and future employees.




The
      company's operations are in the western United States and there are no seasonal
      aspects that would have a material adverse effect on the Company's financial
      condition or results of operations.




As
      of
      April 30, 2007, revenues to be recognized under construction contracts were
      approximately $8,000,000.


Inflation
 
 The
        effect of inflation on the Company's revenue and operating results was not
        significant.




Off-Balance
      Sheet Arrangements





The
      Company does not maintain off-balance sheet arrangements nor does it participate
      in non-exchange traded contracts requiring fair value accounting
      treatment.





Business
      Concentration





During
        the year ended April 30, 2007, the Company recognized approximately $3,126,257
        or 47% of its revenues from sales of its products to four (4) customers.
        While
        the Company's management considers its relationships with the customers to
        be
        satisfactory, given the concentration of its sales to a few key customers,
        its
        continued relationships may be subject to the policies and practices of the
        customers. The Company management continues to concentrate its efforts on
        expanding its customer base in order to reduce its reliance on its current
        customers.





New
        Accounting Pronouncements
 
 In
        July
        2006, the FASB issued Interpretation No. 48 (FIN 48). “*Accounting for
        uncertainty in Income Taxes”.* FIN 48 clarifies the accounting for Income
        Taxes by prescribing the minimum recognition threshold a tax position is
        required to meet before being recognized in the financial statements. It
        also
        provides guidance on derecognition, measurement, classification, interest
        and
        penalties, accounting in interim periods, disclosure and transition and clearly
        scopes income taxes out of SFAS 5, “*Accounting for Contingencies”.*FIN
        48 is effective for fiscal years beginning after December 15, 2006. The Company
        does not expect adoption of this standard will have a material impact on
        its
        financial position, operations or cash flows.
 
 In
        September 2006 the Financial Account Standards Board (the “FASB”) issued its
        Statement of Financial Accounting Standards 157, Fair Value Measurements.
        This
        Statement defines fair value, establishes a framework for measuring fair
        value
        in generally accepted accounting principles (GAAP), and expands disclosures
        about fair value measurements. This Statement applies under other accounting
        pronouncements that require or permit fair value measurements, the Board
        having
        previously concluded in those accounting pronouncements that fair value is
        the
        relevant measurement attribute. Accordingly, this Statement does not require
        any
        new fair value measurements. However, for some entities, the application
        of this
        Statement will change current practice. FAS 157 effective date is for fiscal
        years beginning after November 15, 2007. The Company does not expect adoption
        of
        this standard will have a material impact on its financial position, operations
        or cash flows.
  9
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  In
        September 2006 the FASB issued its Statement of Financial Accounting Standards
        158 “Employers’ Accounting for Defined Benefit Pension and Other Postretirement
        Plans”. This Statement improves financial reporting by requiring an employer to
        recognize the overfunded or underfunded status of a defined benefit
        postretirement plan (other than a multiemployer plan) as an asset or liability
        in its statement of financial position and to recognize changes in that funded
        status in the year in which the changes occur through comprehensive income
        of a
        business entity or changes in unrestricted net assets of a not-for-profit
        organization. This Statement also improves financial reporting by requiring
        an
        employer to measure the funded status of a plan as of the date of its year-end
        statement of financial position, with limited exceptions. The effective date
        for
        an employer with publicly traded equity securities is as of the end of the
        fiscal year ending after December 15, 2006. The Company does not expect adoption
        of this standard will have a material impact on its financial position,
        operations or cash flows
  In
        December 2006, the FASB issued FSP EITF 00-19-2, Accounting for Registration
        Payment Arrangements ("FSP 00-19-2") which addresses accounting for registration
        payment arrangements. FSP 00-19-2 specifies that the contingent obligation to
        make future payments or otherwise transfer consideration under a registration
        payment arrangement, whether issued as a separate agreement or included as
        a
        provision of a financial instrument or other agreement, should be separately
        recognized and measured in accordance with FASB Statement No. 5, Accounting
        for
        Contingencies. FSP 00-19-2 further clarifies that a financial instrument
        subject
        to a registration payment arrangement should be accounted for in accordance
        with
        other applicable generally accepted accounting principles without regard
        to the
        contingent obligation to transfer consideration pursuant to the registration
        payment arrangement. For registration payment arrangements and financial
        instruments subject to those arrangements that were entered into prior to
        the
        issuance of EITF 00-19-2, this guidance is effective for financial statements
        issued for fiscal years beginning after December 15, 2006 and interim periods
        within those fiscal years. The Company has not yet determined the impact
        that
        the adoption of FSP 00-19-2 will have on its financial statements.
 
 In
        February 2007, the FASB issued SFAS No. 159, “The Fair Value Option for
        Financial Assets and Financial Liabilities.” SFAS 159 permits entities to choose
        to measure many financial instruments, and certain other items, at fair value.
        SFAS 159 applies to reporting periods beginning after November 15, 2007.
        The
        adoption of SFAS 159 is not expected to have a material impact on the Company’s
        financial condition or results of operations.





**RISKS
      AND UNCERTAINTIES**





**AN
      INVESTMENT IN OUR COMMON STOCK INVOLVES A HIGH DEGREE OF RISK. IN ADDITION
      TO
      THE OTHER INFORMATION IN THIS REPORT, THE FOLLOWING RISK FACTORS SHOULD BE
      CONSIDERED CAREFULLY IN EVALUATING THE COMPANY AND ITS BUSINESS. THIS REPORT
      CONTAINS FORWARD-LOOKING STATEMENTS WITHIN THE MEANING OF SECTION 27A OF THE
      SECURITIES ACT OF 1933, AS AMENDED, AND SECTION 21E OF THE SECURITIES EXCHANGE
      ACT OF 1934, AS AMENDED. ALL FORWARD-LOOKING STATEMENTS ARE INHERENTLY UNCERTAIN
      AS THEY ARE BASED ON CURRENT EXPECTATIONS AND ASSUMPTIONS CONCERNING FUTURE
      EVENTS OR FUTURE PERFORMANCE OF THE COMPANY. READERS ARE CAUTIONED NOT TO PLACE
      UNDUE RELIANCE ON THESE FORWARD-LOOKING STATEMENTS, WHICH ARE ONLY PREDICTIONS
      AND SPEAK ONLY AS OF THE DATE HEREOF. FORWARD-LOOKING STATEMENTS USUALLY CONTAIN
      THE WORDS "ESTIMATE," "ANTICIPATE," "BELIEVE," "PLAN," "EXPECT," OR SIMILAR
      EXPRESSIONS, AND ARE SUBJECT TO NUMEROUS KNOWN AND UNKNOWN RISKS AND
      UNCERTAINTIES. IN EVALUATING SUCH STATEMENTS, PROSPECTIVE INVESTORS SHOULD
      REVIEW CAREFULLY VARIOUS RISKS AND UNCERTAINTIES IDENTIFIED IN THIS REPORT,
      INCLUDING THE MATTERS SET BELOW AND IN THE COMPANY'S OTHER SEC FILINGS. THESE
      RISKS AND UNCERTAINTIES COULD CAUSE THE COMPANY'S ACTUAL RESULTS TO DIFFER
      MATERIALLY FROM THOSE INDICATED IN THE FORWARD-LOOKING STATEMENTS. THE COMPANY
      UNDERTAKES NO OBLIGATION TO UPDATE OR PUBLICLY ANNOUNCE REVISIONS TO ANY
      FORWARD-LOOKING STATEMENTS TO REFLECT FUTURE EVENTS OR
      DEVELOPMENTS.**







**We
      Will Need Additional Financing To Fully Implement Our Business Plan, And We
      Cannot Assure You That We Will Be Successful In Obtaining Such Financing Or
      In
      Continuing Our Operations.**




We
      have
      focused our efforts on developing our business in the construction and sale
      of
      modular building structures. We will need to raise additional capital to
      continue to implement fully our business plan and continue to establish adequate
      manufacturing, marketing, and sales operations. There can be no assurance that
      additional public or private financing, including debt or equity financing,
      will
      be available as needed, or, if available, on terms favorable to us. Any
      additional equity financing may be dilutive to our stockholders and such
      additional equity securities may have rights, preferences or privileges that
      are
      senior to those of our existing common or preferred stock. Furthermore, debt
      financing, if available, will require payment of interest and may involve
      restrictive covenants that could impose limitations on our operating
      flexibility. Our failure to successfully obtain additional future funding may
      jeopardize our ability to continue our business and operations.




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**If
      We Are Unable To Manage Future Growth, Our Business May Be Negatively
      Affected**





We
      are
      continuing to pursue a strategy of rapid growth, and plan to expand
      significantly our manufacturing capability and devote substantial resources
      to
      our marketing, sales, administrative, operational, financial and other systems
      and resources. Such expansion will place significant demands on our marketing,
      sales, administrative, operational, financial and management information
      systems, controls and procedures. Accordingly, our performance and profitability
      will depend on the ability of our officers and key employees to:





·
            manage
                our business and our subsidiaries as a cohesive
                enterprise;


·
            manage
                expansion through the timely implementation and maintenance of appropriate
                administrative, operational, financial and management information
                systems,
                controls and procedures;


·
            add
                internal capacity, facilities and third-party sourcing arrangements
                as and
                when needed;


·
            maintain
                service quality controls; and


·
            attract,
                train, retain, motivate and manage effectively our
                employees.





There
      can
      be no assurance that we will integrate and manage successfully new systems,
      controls and procedures for our business, or that our systems, controls,
      procedures, facilities and personnel, even if successfully integrated, will
      be
      adequate to support our projected future operations. Any failure to implement
      and maintain such systems, controls and procedures, add internal capacity,
      facilities and third-party sourcing arrangements or attract, train, retain,
      motivate and manage effectively our employees could have a material adverse
      effect on our business, financial condition and results of
      operations.




**We
      May Face Strong Competition From Larger, Established
      Companies**





We
      likely
      will face intense competition from other builders of modular structures ,
      virtually all of which can be expected to have longer operating histories,
      greater name recognition, larger installed customer bases and significantly
      more
      financial resources, facilities and manufacturing and marketing experience
      than
      the Company.




In
      addition, we expect to face additional competition from new entrants into our
      targeted industry segments. As the demand for modular products grows and new
      markets are exploited, we expect that competition will become more intense,
      as
      current and future competitors begin to offer an increasing number of
      diversified products and services.




Increased
      competition could result in price reductions, fewer product orders, and reduced
      operating margins, any of which could materially and adversely affect our
      business, financial condition and results of operations.




**Our
      Success Depends In Large Part On Our Ability To Attract And Retain Key Employees
      And Management**




Our
      success and execution of our business strategy will depend significantly upon
      the continuing contributions of, and on our ability to attract, train and retain
      qualified management, marketing, sales, operational, production, administrative
      and technical personnel. In this regard, we are particularly dependent upon
      the
      services of Phil Hamilton, our President and Chief Executive. The loss of the
      services of Mr. Hamilton and the failure to attract, train and retain additional
      qualified personnel in a timely manner could have a material adverse effect
      on
      our business, financial condition and results of operations.




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**Our
      Results Of Operations May Highly Fluctuate From Quarter To Quarter As We
      Continue To Grow, Therefore You Cannot Use These Results To Predict How We
      May
      Perform In The Future**




As
      a
      result of our limited operating history, we do not have historical financial
      data for a significant number of periods in which to base our planned operating
      expenses. In addition our revenues have not met our expectations.  Our
      expense levels are based in part on our projections as to future revenues that
      are expected to increase. It is anticipated that as we mature, our sales and
      operating results may fluctuate from quarter to quarter and from year to year
      due to a combination of factors, including, among others:





·
            the
                volume, timing of, and ability to fulfill customer
                orders;


·
            the
                demand for our products;


·
            the
                number, timing and significance of product enhancements and new product
                introductions by us and our
                competitors;


·
            changes
                in pricing policies by us or our
                competitors;


·
            changes
                in the level of operating expenses;


·
            expenses
                incurred in connection with our plans to fund greater levels of sales
                and
                marketing activities and operations, and broaden our
                customer  support capabilities
                ;


·
            personnel
                changes;


·
            product
                defects and other product or service quality problems;
                and


·
            general
                domestic and international legal, economic and political
                conditions.





Any
      unfavorable changes in these or other factors could have a material adverse
      effect on our business, financial condition and results of
      operations.




**We
      May Not Be Able To Obtain Sufficient Contract Bonding**




The
      sale
      of our products to certain government and/or private customers may require
      contract performance bonding.  The availability of contract bonding in
      the remediation market has been curtailed since the September 11, 2001 World
      Trade Center disaster. Insurance bonding requirements often require collateral
      of 100% of the contract amount. The collateral and bonding requirements could
      limit the number and size of projects requiring bonds undertaken by the
      Company.  In the event contract bonding cannot be obtained at an
      economical price or collateral requirements are beyond the Company's financial
      capability the failure to obtain contract bonding could have a material adverse
      effect on the Company's business, financial condition and results of
      operations.




**Limited
      Operating History; Anticipated Losses; Uncertainty Of Future
      Results**




The
      Company has only a limited operating history upon which an evaluation of its
      operations and its prospects can be based. The Company's prospects must be
      evaluated with a view to the risks encountered by a company in an early stage
      of
      development, particularly in light of the uncertainties relating to the new
      and
      evolving manufacturing methods with which the Company intends to operate and
      the
      acceptance of the Company's business model. The Company will be incurring costs
      to develop, introduce and enhance its products, to establish marketing
      relationships, to acquire and develop product lines that will compliment each
      other and to build an administrative organization.
      To the extent that such expenses are not subsequently followed by commensurate
      revenues, the Company's business, results of operations and financial condition
      will be materially adversely affected. There can be no assurance that the
      Company will be able to generate sufficient revenues from the sale of their
      modular buildings and related products. The Company may have negative cash
      flow
      from operations to continue for the next four (4) quarters as it continues
      to
      develop and market its business. If cash generated by operations is insufficient
      to satisfy the Company's liquidity requirements, the Company may be required
      to
      sell additional equity or debt securities. The sale of additional equity or
      convertible debt securities would result in additional dilution to the Company's
      stockholders.




**Potential
      Fluctuations In Annual Operating Results**





The
      Company's annual operating results may fluctuate significantly in the future
      as
      a result of a variety of factors, most of which are outside the Company's
      control, including: the demand for manufactured modular buildings; seasonal
      trends; introduction of new government regulations and building standards;
      local, state and federal government procurement delays; general economic
      conditions, and economic conditions specific to the modular building
      industry.  The Company's annual results may also be significantly
      impacted by the impact of the accounting treatment of acquisitions, financing
      transactions or other matters. Particularly at the Company's early stage of
      development, such accounting treatment can have a material impact on the results
      for any quarter.  Due to the foregoing factors, among others, it is
      likely that the Company's operating results will fall below the expectations
      of
      the Company or investors in some future quarter.




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**Limited
      Public Market, Possible Volatility Of Share Price**





The
      Company's common stock is currently quoted on the NASD OTC Electronic Bulletin
      Board under the ticker symbol GDVI. As of August 9, 2007, there were
      approximately 167,209,212 shares of common stock outstanding, of which
      approximately 85,671,086 were tradable without restriction under the Securities
      Act. There can be no assurance that a trading market will be sustained in the
      future. Factors such as, but not limited to, technological innovations, new
      products, acquisitions or strategic alliances entered into by the Company or
      its
      competitors, failure to meet security analysts' expectations, government
      regulatory action, patent or proprietary rights developments, and market
      conditions for manufacturing stocks in general could have a material effect
      on
      the volatility of the Company's stock price.




**Management
      Of Growth**





The
      Company expects to experience significant growth in the number of employees
      and
      the scope of its operations.  In particular, the Company intends to
      hire additional engineering, sales, marketing, and administrative
      personnel.  Additionally, acquisitions could result in an increase in
      the number of employees and business activity. Such activities could result
      in
      increased responsibilities for management. The Company believes that its ability
      to increase its customer support capability and to attract, train, and retain
      qualified engineering, sales, marketing, and management personnel, will be
      a
      critical factor to its future success. In particular, the availability of
      qualified sales engineering and management personnel is quite limited, and
      competition among companies to attract and retain such personnel is
      intense.  During strong business cycles, the Company may experience
      difficulty in filling its needs for qualified sales, engineering and other
      personnel.





The
      Company's future success will be highly dependent upon its ability to
      successfully manage the expansion of its operations. The Company's ability
      to
      manage and support its growth effectively will be substantially dependent on
      its
      ability to implement adequate improvements to financial and management controls,
      reporting and order entry systems, and other procedures and hire sufficient
      numbers of financial, accounting, administrative, and management personnel.
      The
      Company's expansion and the resulting growth in the number of its employees
      have
      resulted in increased responsibility for both existing and new management
      personnel.  The Company is in the process of establishing and
      upgrading its financial accounting and procedures.  There can be no
      assurance that the Company will
      be
      able to identify, attract, and retain experienced accounting and financial
      personnel. The Company's future operating
      results will depend on the ability of its management and other key employees
      to
      implement and improve its systems for operations, financial control, and
      information management, and to recruit, train, and manage its employee base.
      There can be no assurance that the Company will be able to achieve or manage
      any
      such growth successfully or to implement and maintain adequate financial and
      management controls and procedures, and any inability to do so would have a
      material adverse effect on the Company's business, results of operations, and
      financial condition.




The
      Company's future success depends upon its ability to address potential market
      opportunities while managing its expenses to match its ability to finance its
      operations. This need to manage its expenses will place a significant strain
      on
      the Company's management and operational resources. If the Company is unable
      to
      manage its expenses effectively, the Company's business, results of operations,
      and financial condition will be materially adversely affected.




**Risks
      Associated With Acquisitions**





As
      part
      of its business strategy, the Company expects to acquire assets and businesses
      relating to or complementary to its operations. These acquisitions by the
      Company will involve risks commonly encountered in acquisitions of companies.
      These risks include, among other things, the following: the Company may be
      exposed to unknown liabilities of the acquired companies; the Company may incur
      acquisition costs and expenses higher than it anticipated; fluctuations in
      the
      Company's quarterly and annual operating results may occur due to the costs
      and
      expenses of acquiring and integrating new businesses or technologies; the
      Company may experience difficulties and expenses in assimilating the operations
      and personnel of the acquired businesses; the Company's ongoing business may
      be
      disrupted and its management's time and attention diverted; the Company may
      be
      unable to integrate successfully.




**We
      Pay No Dividends**





We
      have
      never declared nor paid cash dividends on our capital stock. We currently intend
      to retain any earnings for funding growth however these plans may change
      depending upon capital raising requirements.




13
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**Risk
      Of Penny Stock**





Our
      common stock is deemed to be a "penny stock" as that term is defined in Rule
      3a51-1 of the Exchange Act of 1934. Penny stocks are stocks (i) with a price
      of
      less than five dollars per share; (ii) that are not traded on a "recognized"
      national exchange; (iii) whose prices are not quoted on the NASDAQ automated
      quotation system (NASDAQ-listed stocks must still meet requirement (i) above);
      or (iv) of an issuer with net tangible assets less than US$2,000,000 (if the
      issuer has been in continuous operation for at least three years) or
      US$5,000,000 (if in continuous operation for less than three years), or with
      average annual revenues of less than US$6,000,000 for the last three
      years.




A
      principal exclusion from the definition of a penny stock is an equity security
      that has a price of $5.00 or more, excluding any broker or dealer commissions,
      markups or markdowns. As of the date of this Annual Report the Company's common
      stock is not listed or traded.





If
      the
      Company's common stock were deemed a penny stock, section 15(g) and Rule 3a51-1
      of the Exchange Act of 1934 would require broker-dealers dealing in the
      Company's common stock to provide potential investors with a document disclosing
      the risks of penny stocks and to obtain a manually signed and dated written
      receipt of the document before effecting any transaction in a penny stock for
      the investor's account. Potential investors in the Company's common stock are
      urged to obtain and read such disclosure carefully before purchasing any shares
      that are deemed to be "penny stock."





Moreover,
      Rule 15g-9 of the Exchange Act of 1934 Commission requires broker-dealers in
      penny stocks to approve the account of any investor for transactions in such
      stocks before selling any penny stock to that investor. This procedure requires
      the broker-dealer to (i) obtain from the investor information concerning his
      or
      her financial situation, investment experience and investment objectives; (ii)
      reasonably determine, based on that information, that transactions in penny
      stocks are suitable for the investor and that the investor has sufficient
      knowledge and experience as to be reasonably capable of evaluating the risks
      of
      penny stock transactions; (iii) provide the investor with a written statement
      setting forth the basis on which the broker-dealer made the determination in
      (ii) above; and (iv) receive a signed and dated copy of such statement from
      the
      investor, confirming that it accurately reflects the investor's financial
      situation, investment experience and investment
      objectives.  Compliance with these requirements may make it more
      difficult for investors in the Company's common stock to resell their shares
      to
      third parties or to otherwise dispose of them.




**The
      Trading Price Of Our Common Stock May Decrease Due To Factors Beyond Our
      Control.**





The
      trading price of the common stock is subject to significant fluctuations in
      response to numerous factors, including:





·
            Variations
                in anticipated or actual results of
                operations;


·
            Announcements
                of new products or technological innovations by us or our
                competitors;


·
            Changes
                in earnings estimates of operational results by
                analysts;


·
            Results
                of product demonstrations.


·
            Inability
                of market makers to combat short positions on the
                stock;


·
            Inability
                of the market to absorb large blocks of stock sold into the
                market;


·
            Developments
                or disputes concerning our licensed patents, trademarks or proprietary
                rights; and


·
            Comments
                about us or our markets posted on the
                Internet.




Moreover,
      the stock market from time to time has experienced extreme price and volume
      fluctuations, which have particularly affected the market prices for emerging
      growth companies and which often have been unrelated to the operating
      performance of the companies. These broad market fluctuations may adversely
      affect the market price of our Common Stock. If our shareholders sell
      substantial amounts of their common stock in the public market, the price of
      our
      common stock could fall. These sales also might make it more difficult for
      us to
      sell equity or equity related securities in the future at a price we deem
      appropriate.




**The
      Uncertainty Of Conversion Effects Of The Preferred Stock May Cause Dilution
      Of
      Current Common Shareholders.**





Within
      the next 12 months from the date of this report the holders of a majority of
      our
      Preferred Stock and certain warrant and option holders will have the right
      to
      convert their respective interests into approximately 157,156,097 shares of
      Common Stock. In the event that such holders of Preferred Stock, warrants and
      options exercise their conversion rights, the holders of the Common Stock then
      issued and outstanding may experience immediate and substantial dilution in
      the
      net tangible book value of their shares if earnings and other factors do not
      compensate for the increased number of shares of such Common Stock.





**The
      Liquidity Of Our Stock Could Become Impaired**





Our
      common stock currently is traded on the OTC Bulletin Board, which is generally
      considered to be a less efficient market than national exchanges such as NASDAQ.
      Consequently, the liquidity of our securities could be impaired, not only in
      the
      number of securities which could be bought and sold, but also through delays
      in
      the timing of transactions, difficulties in obtaining price quotations,
      reduction in security analysts' and the media's coverage of ours, if any, and
      lower prices for our securities than might otherwise be attained. This
      circumstance could have an adverse effect on the ability of an investor to
      sell
      any shares of our Common Stock as well as on the selling price for such
      shares.  In addition, the market price of our Common Stock may be
      significantly affected by various additional factors, including, but not limited
      to, our business performance, industry dynamics or changes in general economic
      conditions.





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**ITEM  7.  FINANCIAL  STATEMENTS**
 
 
 
 
 
 **SECURITIES
        AND EXCHANGE COMMISSION**
 **WASHINGTON,
        D.C. 20549**
 
 
 
 **FINANCIAL
        STATEMENTS AND SCHEDULES**
 **APRIL
        30, 2007 AND 2006**
 
 
 **FORMING
        A PART OF ANNUAL REPORT**
 **PURSUANT
        TO THE SECURITIES EXCHANGE ACT OF 1934**
 
 **GLOBAL
        DIVERSIFIED INDUSTRIES, INC.**
  
 15
 Table
            of Contents
 
 
 **GLOBAL
        DIVERSIFIED INDUSTRIES, INC.**
 **Index
        to Financial Statements**
  **Page**Report
                    of Registered Independent Certified Public
                    Accounting Firm
                F-3Consolidated
                    Balance Sheet at April 30,
                    2007
                F-4Consolidated
                    Statements of Operations for the years ended
                    April 30, 2007 and 2006
                F-5Consolidated
                    Statements of Stockholders’ Equity for
                    the two years ended April 30, 2007
                F-6Consolidated
                    Statements of Cash Flows for the years ended April
                    30, 2007 and 2006
                F-7Notes
                    to Consolidated Financial
                    Statements
                F-8
                    to F-24
 
 Table
              of Contents
 
 **RBSM,
        LLP**
 **Certified
        Public Accountants**
 
 
 **REPORT
        OF REGISTERED INDEPENDENT CERTIFIED PUBLIC ACCOUNTING
        FIRM**
 
 
 To
        the
        Board of Directors
 Global
        Diversified Industries, Inc.
 Chowchilla,
        California
 
 We
        have
        audited the accompanying consolidated balance sheet of Global Diversified
        Industries, Inc., and its subsidiaries (the “Company”) as of April 30, 2007 and
        the related consolidated statements of operations, stockholders’ equity, and
        cash flows for each of the two years in the period ended April 30,
        2007.  These financial statements are the responsibility of the
        Company’s management.  Our responsibility is to express an opinion on
        these financial statements based upon our audits.
  
 We
        conducted our audits in accordance with standards of the Public Company
        Accounting Oversight Board (United States of America). Those standards require
        that we plan and perform the audit to obtain reasonable assurance about whether
        the financial statements are free of material misstatements.  An audit
        includes examining, on a test basis, evidence supporting the amounts and
        disclosures in the financial statements.  An audit also includes
        assessing the accounting principles used and significant estimates made by
        management, as well as evaluating the overall financial statement
        presentation.  We believe our audits provide a reasonable basis for
        our opinion.
 
 In
        our
        opinion, the consolidated financial statements referred to above present
        fairly,
        in all material respects, the financial position of the Company as of April
        30,
        2007, and the results of its operations and its cash flows for each of the
        two
        years in the period ended April 30, 2007 in conformity with accounting
        principles generally accepted in the United States of America.
 
  /S/
        RBSM, LLP
 RBSM,
        LLP
 Certified
        Public Accountants
 McLean,
        Virginia
 August
        14, 2007
 
 
  F-3
 Table
            of Contents
 
 **GLOBAL
        DIVERSIFIED INDUSTRIES, INC.**
 **CONSOLIDATED
        BALANCE SHEET**
 **APRIL
        30, 2007**
 
 **ASSETS:****Current
                  assets:**Cash
                  and cash equivalents
              
              $
              356,569Accounts
                  receivable, net of allowance for doubtful accounts of $0 at April
                  30,
                  2007
              
              
              682,363Inventories
                  (Note C)
              
              
              2,973,540Advance
                  to employees
              
              
              1,745Prepaid
                  expenses
              
              
              87,057Total
                  current assets
              
              
              4,101,274**Property,
                  plant and equipment (Note D):**Property,
                  plant and equipment, at cost
              
              
              3,081,437Less:
                  accumulated depreciation
              
              
              (1,033,801
              )Total
                  property, plant and equipment, net
              
              
              2,047,636**Other
                  assets:**Deposit
                  and other assets
              
              
              190,443Non-current
                  deferred tax asset (Note M)
              
              
              96,000Intangible
                  assets, net of accumulated amortization of $196,299  at April
                  30, 2007 (Note B)
              
              
              1,005,590Total
                  other assets
              
              
              1,292,033**Total
                  Assets**
              
              $
              7,440,943
 **LIABILITIES
                  AND STOCKHOLDERS' EQUITY****Current
                  liabilities:**Accounts
                  payable and accrued liabilities (Note F)
              
              $
              1,183,865Notes
                  payable to related parties, current portion (Note H)
              
              
              251,500Notes
                  payable, current portion (Note H)
              
              
              846,527Total
                  current liabilities
              
              
              2,281,892**Long-term
                  liabilities:**Notes
                  payable, long term portion, net of debt discount (Note H)
              
              
              227,330Notes
                  payable to related parties, long-term portion (Note H)
              
              
              588,815Total
                  long-term liabilities
              
              
              816,145Commitment
                  and contingencies (Note O)
              
              
              -**Stockholders'
                  equity:**Series
                  A Preferred stock, par value $.001 per share; 10,000,000 shares
                  authorized; 413,092 shares issued and outstanding at April 30,
                  2007 (Note
                  J)
              
              
              413Common
                  stock, par value $ .001 per share; 400,000,000 shares
                  authorized;167,209,212 shares issued and outstanding at April 30,
                  2007
                  (Note J)
              
              
              167,208Additional
                  paid-in capital
              
              
              6,413,438Preferred
                  stock subscription (Note J)
              
              
              733,374Common
                  stock subscription (Note J)
              
              
              916,600Treasury
                  stock (Note J)
              
              
              (50
              )Accumulated
                  deficit
              
              
              (3,888,077
              )Total
                  stockholders' equity
              
              
              4,342,906**Total
                  liabilities and stockholders' equity**
              
              $
              7,440,943
 
 See
        accompanying notes to consolidated financial statements
  F-4
 Table
            of Contents
  **GLOBAL
        DIVERSIFIED INDUSTRIES, INC.**
 **CONSOLIDATED
        STATEMENTS OF LOSSES**
 **FOR
        THE YEARS ENDED APRIL 30, 2007 AND 2006**
  **2007**
              ****
              ****
              **2006**Revenues
              
              $
              6,639,359
              
              
              $
              13,862,494Impairment
                  of inventories (Note C)
              
              
              850,000
              
              
              
              -Cost
                  of goods sold
              
              
              4,778,114
              
              
              
              9,226,406Gross
                  profit
              
              
              1,011,246
              
              
              
              4,636,088Operating
                  expenses:Selling,
                  general and administrative expenses
              
              
              1,963,798
              
              
              
              2,420,434Depreciation
                  and amortization (Notes B and D)
              
              
              318,031
              
              
              
              280,722Total
                  operating expense
              
              
              2,281,829
              
              
              
              2,701,156Income
                  (loss) from operations
              
              
              (1,270,584
              )
              
              
              1,934,932Other
                  income (expense):Interest
                  (expense), net
              
              
              (446,137
              )
              
              
              (472,375
              )Income
                  (loss) before provision for income taxes and discontinued
                  operations
              
              
              (1,716,721
              )
              
              
              1,462,557Income
                  taxes benefit (provision)
              
              
              74,200
              
              
              
              (800
              )Income
                  (loss) from continuing operations before discontinued
                  operations
              
              
              (1,642,521
              )
              
              
              1,461,757Loss
                  from discontinued operations (Note E)
              
              
              (29,543
              )
              
              
              (865,074
              )Gain
                  from disposal of discontinued operations (Note E)
              
              
              328,286
              
              
              
              -Net
                  income (loss)
              
              $
              (1,343,778
              )
              
              $
              596,683Earnings
                  (losses) per common share (Note N):Basic
              
              $
              (0.00
              )
              
              $
              0.00Continuing
                  operations
              
              $
              (0.00
              )
              
              $
              0.00Discontinued
                  operations
              
              $
              (0.00
              )
              
              $
              0.00Diluted
                  and assuming diluted
              
              $
              (0.00
              )
              
              $
              0.00Continuing
                  operations
              
              $
              (0.00
              )
              
              $
              0.00Discontinued
                  operations
              
              $
              (0.00
              )
              
              $
              0.00Weighted
                  average shares outstanding for computation:Basic
              
              
              159,402,649
              
              
              
              145,006,288Diluted
                  and assuming diluted
              
              
              159,402,649
              
              
              
              154,722,958
  See
        accompanying notes to consolidated financial statements
   F-5
 Table
            of Contents
   **GLOBAL
        DIVERSIFIED INDUSTRIES, INC.**
 **CONSOLIDATED
        STATEMENTS OF STOCKHOLDERS’ EQUITY**
 **FOR
        THE TWO YEARS ENDED APRIL 30, 2007**
  **Preferred
                  Shares**
              ****
              ****
              **Stock
                  Amount**
              ****
              ****
              **Preferred
                  Stock Subscription**
              ****
              ****
              **Common
                  Shares**
              ****
              ****
              **Stock
                  Amount**
              ****
              ****
              **Additional
                  Paid in Capital**
              ****
              ****
              **Treasury
                  Stock**
              ****
              ****
              **Common
                  Stock Subscription**
              ****
              ****
              **Accumulated
                  Deficit**
              ****
              ****
              **Total**Balance  at
                  May 1, 2006
              
              ****
              **666,667**
              
              
              **$**
              **667**
              
              
              **$**
              **733,374**
              
              
              ****
              **138,615,314**
              
              
              **$**
              **138,615**
              
              
              **$**
              **4,527,475**
              
              
              **$**
              **(50**
              **)**
              
              **$**
              **1,679,100**
              
              
              **$**
              **(3,140,982**
              **)**
              
              **$**
              **3,938,199**Common
                  stock issued in exchange for cash
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              611,112
              
              
              
              611
              
              
              
              49,389
              
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              50,000Common
                  stock issued in exchange for services rendered
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              1,113,909
              
              
              
              1,113
              
              
              
              76,410
              
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              77,523Common
                  stock issued in exchange for conversion of Note Payable
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              7,857,143
              
              
              
              7,857
              
              
              
              392,143
              
              
              
              
              
              
              
              -
              
              
              
              -
              
              
              
              400,000Shares
                  issued in exchange for common stock subscribed
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              1,250,000
              
              
              
              1,250
              
              
              
              111,250
              
              
              
              
              
              
              
              (112,500
              )
              
              
              -
              
              
              
              -Common
                  Stock Subscription
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              30,339
              
              
              
              -
              
              
              
              30,339Beneficial
                  conversion feature of notes payable (Note H)
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              166,667
              
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              166,667Net  income
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              596,683
              
              
              
              596,683**Balance
                  at April 30, 2006**
              
              ****
              **666,666**
              
              
              **$**
              **667**
              
              
              **$**
              **733,374**
              
              
              ****
              **149,447,478**
              
              
              **$**
              **149,446**
              
              
              **$**
              **5,323,334**
              
              
              **$**
              **(50**
              **)**
              
              **$**
              **1,596,939**
              
              
              **$**
              **(2,544,299**
              **)**
              
              **$**
              **5,259,411**Common
                  stock issued in exchange for services rendered
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              4,328,956
              
              
              
              4,330
              
              
              
              169,495
              
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              173,825Common
                  stock issued in exchange for stock subscribed
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              9,444,444
              
              
              
              9,444
              
              
              
              840,556
              
              
              
              -
              
              
              
              (850,000
              )
              
              
              -
              
              
              
              -Common
                  stock issued in exchange for stock subscribed
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              655,000
              
              
              
              655
              
              
              
              29,684
              
              
              
              -
              
              
              
              (30,339
              )
              
              
              -
              
              
              
              -Common
                  stock subscribed in exchange for notes payable
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              200,000
              
              
              
              -
              
              
              
              200,000Common
                  stock issued in exchange for preferred stock
              
              
              (333,333
              )
              
              
              (333
              )
              
              
              -
              
              
              
              3,333,333
              
              
              
              3,333
              
              
              
              (3,000
              )
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              -Preferred
                  stock issued in exchange for accrued interest
              
              
              79,759
              
              
              
              79
              
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              53,369
              
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              53,448Net  loss
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              (1,343,778
              )
              
              
              (1,343,778
              )**Balance
                  at April 30, 2007**
              
              ****
              **413,092**
              
              
              **$**
              **413**
              
              
              **$**
              **733,374**
              
              
              ****
              **167,209,211**
              
              
              **$**
              **167,208**
              
              
              **$**
              **6,413,438**
              
              
              **$**
              **(50**
              **)**
              
              **$**
              **916,600**
              
              
              **$**
              **(3,888,077**
              **)**
              
              **$**
              **4,342,906**
 
 See
        accompanying notes to consolidated financial statements
  F-6
 Table
            of Contents
  **GLOBAL
        DIVERSIFIED INDUSTRIES, INC.**
 **CONSOLIDATED
        STATEMENTS OF CASH FLOWS**
 **FOR
        THE YEARS ENDED APRIL 30, 2007 AND 2006**
 
 **2007**
              ****
              ****
              **2006**Cash
                  flows from operating activities:Net
                  income (loss)
              
              $
              (1,343,778
              )
              
              $
              596,683Add
                  (deduct):Loss
                  from discontinued operations
              
              
              29,543
              
              
              
              865,074Gain
                  from disposal of discontinued operations
              
              
              (328,286
              )
              
              
              -Income
                  (loss) from continuing operations
              
              
              (1,642,521
              )
              
              
              1,461,757Adjustment
                  to reconcile net income (loss) to net cash used in operating
                  activities:Loss
                  from impairment of inventory (Note C)
              
              
              850,000
              
              
              
              -Deferred
                  taxes (Note M)
              
              
              (75,000
              )
              
              
              -Depreciation
                  and amortization (Note B and D)
              
              
              318,031
              
              
              
              280,722Common
                  stock issued in exchange for services rendered (Note J)
              
              
              170,825
              
              
              
              61,053Common
                  stock issued to employees for compensation (Note J)
              
              
              3,000
              
              
              
              16,470Write-off
                  of advances to employees
              
              
              -
              
              
              
              29,000Amortization
                  of debt discount
              
              
              80,846
              
              
              
              58,984Change
                  in assets and liabilities:(Increase)/decrease
                  in accounts receivable
              
              
              2,294,079
              
              
              
              (1,491,758
              )(Increase)
                  in inventory
              
              
              (758,786
              )
              
              
              (644,040
              )(Increase)
                  in prepaid expense and others
              
              
              (164,798
              )
              
              
              (25,276
              )(Increase)/decrease
                  in employee advances
              
              
              (1,745
              )
              
              
              5,912Increase)
                  in accounts payable and accrued expenses
              
              
              417,021
              
              
              
              105,350(Decrease)
                  in deferred revenue
              
              
              -
              
              
              
              (71,228
              )Net
                  cash provided by (used in) continued operations
              
              
              1,490,952
              
              
              
              (213,054
              )Net
                  cash provided by (used in) discontinued operations
              
              
              78,082
              
              
              
              (590,408
              )Net
                  cash provided by (used in) operating activities:
              
              
              1,569,034
              
              
              
              (803,462
              )Cash
                  flows from investing activities:Cash
                  received in connection with disposition of MBS (Note E)
              
              
              1,000
              
              
              
              -Capital
                  expenditure, net
              
              
              (628,865
              )
              
              
              (436,216
              )Net
                  cash (used in) investing activities
              
              
              (627,865
              )
              
              
              (436,216
              )Cash
                  flows from financing activities:Proceeds
                  from sale of common stock and stock subscription, net of costs
                  and fees
                  (Note J)
              
              
              -
              
              
              
              80,339Proceeds
                  from (repayments of) notes payable, net
              
              
              (1,252,700
              )
              
              
              1,278,857Proceeds
                  from note payable to related parties, net of repayments
              
              
              111,000
              
              
              
              (8,500
              )Net
                  cash provided by (used in) financing activities
              
              
              (1,141,700
              )
              
              
              1
                  350,696Net
                  increase (decrease) in cash and cash equivalents
              
              
              (200,531
              )
              
              
              111,018Cash
                  and cash equivalents at beginning of year
              
              
              557,100
              
              
              
              446,082Cash
                  and cash equivalents at end of year
              
              $
              356,569
              
              
              $
              557,100
  Supplemental
                  Disclosures of Cash Flow Information:Cash
                  paid during the period for interest
              
              $
              247,331
              
              
              $
              364,821Cash
                  paid during the period for income taxes
              
              
              800
              
              
              
              800Common
                  stock issued for services
              
              
              170,825
              
              
              
              61,053Common
                  stock issued to employees for compensation
              
              
              3,000
              
              
              
              16,470Common
                  stock subscribed in exchange for conversion of note
                  payable
              
              
              200,000
              
              
              
              -Common
                  stock issued in exchange for debt
              
              
              -
              
              
              
              400,000Preferred
                  Stock issued in exchange for accrued interest
              
              
              53,449
              
              
              
              -Beneficial
                  conversion feature of notes payable, convertible portion
              
              
              -
              
              
              
              166,667Amortization
                  and write off of debt discount – beneficial conversion
                  feature
              
              
              80,846
              
              
              
              58,984
 
 See
          accompanying notes to consolidated financial statements
  F-7
 Table
              of Contents
  **GLOBAL
        DIVERSIFIED INDUSTRIES, INC.**
 **NOTES
        TO CONSOLIDATED FINANCIAL STATEMENTS**
 **APRIL
        30, 2007 AND 2006**
  
 **NOTE
        A - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES**
 
 A
        summary
        of the significant accounting policies applied in the preparation of the
        accompanying consolidated financial statements follows.
 
 Business
        and Basis of Presentation
  Global
        Diversified Industries, Inc. (the “Company”), is incorporated under the laws of
        the State of Nevada, and is in the business of designing, manufacturing and
        marketing re-locatable modular structures such as classrooms and office
        buildings to end users as well as to third party leasing agents for use
        primarily within the state of California and other Western States.
 
 The
        consolidated financial statements include the accounts of the Company and
        its
        wholly-owned subsidiaries, Lutrex Enterprises, Inc. (“Lutrex”) and Global
        Modular, Inc. (“Global Modular”). All significant intercompany balances and
        transactions have been eliminated in consolidation.
  The
        Company sold its MBS subsidiary in October 2006. The MBS business segment
        is
        accounted for as discontinued operations, and accordingly, amounts in the
        financial statements, and related notes for all periods shown have been restated
        to reflect discontinued operations accounting. Summarized results of the
        discontinued business and information relating to the sale of this subsidiary
        are further described in Note E.
  Cash
        Equivalents
 
 For
        purposes of the Statements of Cash Flows, the Company considers all highly
        liquid investments purchased with a maturity date of three months or less
        to be
        cash equivalents.
 
 Inventories
 
 Inventories
        are stated at the lower of cost or market determined by the first-in, first-out
        method. Inventories consist primarily of modular buildings and raw materials
        for
        modular structures (Note C).
 
 Property
        and Equipment
 
 Property
        and equipment are recorded on the basis of cost.  For financial
        statement purposes, property and equipment are depreciated using the
        straight-line method over their estimated useful lives (Note D).
 
 Impairment
        of Long Lived Assets
 
 The
        Company has adopted Statement of Financial Accounting Standards No. 144 (“SFAS
        144”). The Statement requires that long-lived assets and certain identifiable
        intangibles held and used by the Company be reviewed for impairment whenever
        events or changes in circumstances indicate that the carrying amount of an
        asset
        may not be recoverable. Events relating to recoverability may include
        significant unfavorable changes in business conditions, recurring losses,
        or a
        forecasted inability to achieve break-even operating results over an extended
        period.  The Company evaluates the recoverability of long-lived assets
        based upon forecasted undiscounted cash flows. Should an impairment in value
        be
        indicated, the carrying value of intangible assets will be adjusted, based
        on
        estimates of future discounted cash flows resulting from the use and ultimate
        disposition of the asset.  SFAS No. 144 also requires assets to be
        disposed of be reported at the lower of the carrying amount or the fair value
        less costs to sell.
  F-8
 Table
            of Contents
  **GLOBAL
          DIVERSIFIED INDUSTRIES, INC.**
 **NOTES
          TO CONSOLIDATED FINANCIAL STATEMENTS**
 **APRIL
          30, 2007 AND 2006**
 
 **NOTE
          A – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
          (Continued)**
  Revenue
        Recognition
 
 For
        revenue from product/contract sales, the Company recognizes revenue in
        accordance with Staff Accounting Bulletin No. 104, *Revenue
        Recognition* (“SAB104”), which superceded Staff Accounting Bulletin
        No. 101, *Revenue Recognition in Financial Statements*
        (“SAB101”).  SAB 101 requires that four basic criteria must be met
        before revenue can be recognized: (1) persuasive evidence of an arrangement
        exists; (2) delivery has occurred; (3) the selling price is fixed and
        determinable; and (4) collectibility is reasonably assured. Determination
        of
        criteria (3) and (4) are based on management’s judgments regarding the fixed
        nature of the selling prices of the products delivered and the collectibility
        of
        those amounts.  Provisions for discounts and rebates to customers,
        estimated returns and allowances, and other adjustments are provided for
        in the
        same period the related sales are recorded. The Company defers any revenue
        for
        which the product has not been delivered or is subject to refund until such
        time
        that the Company and the customer jointly determine that the product has
        been
        delivered or no refund will be required.  There were no deferred
        revenues at April 30, 2007.  SAB 104 incorporates Emerging Issues Task
        Force 00-21 (“EITF 00-21”), *Multiple-Deliverable Revenue Arrangements.*EITF 00-21 addresses accounting for arrangements that may involve
        the
        delivery or performance of multiple products, services and/or rights to use
        assets. The effect of implementing EITF 00-21 on the Company's consolidated
        financial position and results of operations was not significant.
 
 The
        Company recognizes revenue when persuasive evidence of an arrangement exists,
        the price to the customer is fixed, collectibility is reasonably assured
        and
        title and risk of ownership is passed to the customer, which is usually upon
        shipment.  However, in limited circumstances, certain customers
        traditionally have requested to take title and risk of ownership prior to
        shipment.  Revenue for these transactions is recognized only
        when:
  (1)
        Title
        and risk of ownership have passed to the customer;
 (2)
        The
        Company has obtained a written fixed purchase commitment;
 (3)
        The
        customer has requested in writing the transaction be on a bill and hold
        basis;
 (4)
        The
        customer has provided a delivery schedule;
 (5)
        All
        performance obligations related to the sale have been completed;
 (6)
        The
        modular unit has been processed to the customer’s specifications, accepted by
        the customer and made ready for shipment; and
 (7)
        The
        modular unit is segregated and is not available to fill other
        orders.
 
 The
        remittance terms for these “bill and hold” transactions are consistent with all
        other sales by the Company.
 
 The
        remittance terms for these "bill and hold" transactions are consistent with
        all
        other sales by the Company.
 
 In
        fiscal
        2006 and 2007, the Company entered into several fixed-price arrangements
        whereby
        the Company is to construct and install several modular units for customers.
        Revenue from these construction-type fixed-price contracts is recognized
        in
        accordance with SOP No. 81-1, "Accounting for Performance of Construction-Type
        and Certain Production-Type Contracts", on the basis of the estimated percentage
        of completion.
 
 Under
        the
        percentage-of-completion method, progress toward completion is measured by
        the
        ratio of costs incurred to total estimated costs. Revenue and gross profit
        may
        be adjusted prospectively for revisions in estimated total contract costs.
        If
        the current estimates of total contract revenue and contract cost indicate
        a
        loss, a provision for the entire loss on the contract is recorded in the
        period
        in which it becomes evident. The total estimated loss includes all costs
        allocable to the specific contract. Each construction contract is reviewed
        individually to determine the appropriate basis of recognizing revenue.
        Revisions to the estimates at completion are reflected in results of operations
        as a change in accounting estimate in the period in which the facts that
        give
        rise to the revision become known by management.
 
 Currently,
        there are no warranties provided with the purchase of the Company’s products.
        The cost of replacing defective products and product returns have been
        immaterial and within management’s expectations.  In the future, when
        the company deems warranty reserves are appropriate that such costs will
        be
        accrued to reflect anticipated warranty costs.
 
 Advertising
 
 The
        Company follows the policy of charging the costs of advertising to expenses
        as
        incurred.  Advertising costs as of April 30, 2007 and 2006 are $5,270
        and $5,942 respectively.
   F-9
 Table
            of Contents
 
 **GLOBAL
        DIVERSIFIED INDUSTRIES, INC.**
 **NOTES
        TO CONSOLIDATED FINANCIAL STATEMENTS**
 **APRIL
        30, 2007 AND 2006**
 
 **NOTE
        A – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
        (Continued)**
  Research
        and Development
 
 The
        Company accounts for research and development costs in accordance with the
        Financial Accounting Standards Board’s Statement of Financial Accounting
        Standards No. 2 (“SFAS 2”), “Accounting for Research and Development
        Costs.”  Under SFAS 2, all research and development costs must be
        charged to expense as incurred.  Accordingly, internal research and
        development costs are expensed as incurred.  Third-party research and
        developments costs are expensed when the contracted work has been performed
        or
        as milestone results have been achieved.  Company-sponsored research
        and development costs related to both present and future products are expensed
        in the period incurred.  The Company incurred no expenditures on
        research and product development for the year ended April 30, 2007 and
        2006.
 
 Income
        Taxes
 
 Income
        taxes are provided based on the liability method for financial reporting
        purposes in accordance with the provisions of Statements of Financial Standards
        No. 109, “Accounting for Income Taxes”.  Under this method deferred
        tax assets and liabilities are recognized for the future tax consequences
        attributable to differences between the financial statement carrying amounts
        of
        existing assets and liabilities measured using enacted tax rates expected
        to
        apply to taxable income in the years in which those temporary differences
        are
        expected to be removed or settled.  The effect on deferred tax assets
        and liabilities of a change in tax rates is recognized in the statement of
        operations in the period that includes the enactment date.
 
 Stock
        Based Compensation
 
 Prior
        to
        the January 1, 2006 adoption of the Financial Accounting Standards Board
        ("FASB") Statement No. 123(R), "Share-Based Payment" ("SFAS 123R"), the Company
        accounted for stock-based compensation using the intrinsic value method
        prescribed in Accounting Principles Board ("APB") Opinion No. 25, "Accounting
        for Stock Issued to Employees," and related interpretations. As permitted
        by
        SFAS No. 123, "Accounting for Stock-Based Compensation" ("SFAS 123"),
        stock-based compensation was included as a pro forma disclosure in the notes
        to
        the consolidated financial statements.
 
 Effective
        January 1, 2006, the Company adopted the fair value recognition provisions
        of
        SFAS 123R, using the modified-prospective transition method. Under this
        transition method, stock-based compensation expense is recognized in the
        consolidated financial statements for granted, modified, or settled stock
        options. Compensation expense recognized included the estimated expense for
        stock options granted on and subsequent to January 1, 2006, based on the
        grant
        date fair value estimated in accordance with the provisions of SFAS 123R,
        and
        the estimated expense for the portion vesting in the period for options granted
        prior to, but not vested as of January 1, 2006, based on the grant date fair
        value estimated in accordance with the original provisions of SFAS 123. Results
        for prior periods have not been restated, as provided for under the
        modified-prospective method.
 
 The
        Company has no awards of stock-based employee compensation issued and
        outstanding at April 30, 2007.
 Segment
        Information
 
 Statement
        of Financial Accounting Standards No. 131, “Disclosures about Segments of an
        Enterprise and Related Information” (“SFAS 131”) establishes standards for
        reporting information regarding operating segments in annual financial
        statements and requires selected information for those segments to be presented
        in interim financial reports issued to stockholders.  SFAS 131 also
        establishes standards for related disclosures about products and services
        and
        geographic areas. Operating segments are identified as components of an
        enterprise about which separate discrete financial information is available
        for
        evaluation by the chief operating decision maker, or decision-making group,
        in
        making decisions how to allocate resources and assess
        performance.  The information disclosed herein materially represents
        all of the financial information related to the Company’s principal operating
        segment.
 
 Use
        of
        Estimates
 
 The
        preparation of financial statements and related disclosures in conformity
        with
        accounting principles generally accepted in the United States requires
        management to make estimates and assumptions that affect the reported amounts
        of
        assets, liabilities, revenues and expenses, and related disclosure of contingent
        assets and liabilities. The Company evaluates, on an on-going basis, its
        estimates and judgments, including those related to revenue recognition,
        bad
        debts, excess inventory, impairment of intangible assets, income taxes,
        contingencies and litigation. Its estimates are based on historical experience
        and assumptions that the Company believe to be reasonable under the
        circumstances, the results of which form the basis for making judgments about
        the carrying values of assets and liabilities that are not readily apparent
        from
        other sources. Actual results may differ from these estimates under different
        assumptions or conditions.
 F-10
 Table
              of Contents
 
 **GLOBAL
          DIVERSIFIED INDUSTRIES, INC.**
 **NOTES
          TO CONSOLIDATED FINANCIAL STATEMENTS**
 **APRIL
          30, 2007 AND 2006**
 
 **NOTE
          A – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)**
  Concentration
          of Credit Risk
 
 Financial
        instruments and related items, which potentially subject the Company to
        concentrations of credit risk, consist primarily of cash, cash equivalents
        and
        related party receivables.  The Company places its cash and temporary
        cash investments with credit quality institutions.  At times, such
        investments may be in excess of the FDIC insurance limit. The Company
        periodically reviews its trade receivables in determining its allowance for
        doubtful accounts. The allowance for doubtful accounts was $0 at April 30,
        2007.
  Comprehensive
        Income (Loss)
 
 The
        Company adopted Statement of Financial Accounting Standards No. 130, “Reporting
        Comprehensive Income”. SFAS No. 130 establishes standards for the reporting and
        displaying of comprehensive income and its components. Comprehensive income
        is
        defined as the change in equity of a business during a period from transactions
        and other events and circumstances from non-owner sources. It includes all
        changes in equity during a period except those resulting from investments
        by
        owners and distributions to owners. SFAS No. 130 requires other comprehensive
        income (loss) to include foreign currency translation adjustments and unrealized
        gains and losses on available-for-sale securities.
  Net
        Earnings (Losses) Per Common Share
 
 The
        Company computes earnings per share under Statement of Financial Accounting
        Standards No. 128, "Earnings Per Share" (“SFAS 128”). Net earnings (losses) per
        common share is computed by dividing net income (loss) by the weighted average
        number of shares of common stock and dilutive common stock equivalents
        outstanding during the year. Dilutive common stock equivalents consist of
        shares
        issuable upon conversion of convertible preferred shares and the exercise
        of the
        Company's stock options and warrants (calculated using the treasury stock
        method).
 
 Reclassifications
 
 Certain
        reclassifications have been made to conform to prior periods’ data to the
        current presentation.  These reclassifications had no effect on
        reported losses.
 
 Fair
        Value of Financial Instruments
  Statement
        of Financial Accounting Standards No. 107, "Disclosures about Fair Value
        of
        Financial Instruments" ("SFAS 107"), defines the fair value of a financial
        instrument as the amount at which the instrument could be exchanged in a
        current
        transaction between willing parties. The Company includes fair value information
        in the notes to consolidated financial statements when the fair value of
        its
        financial instruments is materially different from the book value. The carrying
        value of the Company’s cash and cash equivalents, short-term debt securities
        held to maturity, time deposits, receivables, other current assets, accounts
        payable, and accrued liabilities, included in the accompanying balance sheets,
        approximate the estimated fair value of those instruments because of their
        short-term nature. The fair value of the notes payable to banks based on
        the
        interest rates currently available for borrowings with similar terms and
        maturities approximates the carrying amount of those borrowings.
 
 New
        Accounting Pronouncements
 
 In
        July
        2006, the FASB issued Interpretation No. 48 (FIN 48). “*Accounting for
        uncertainty in Income Taxes”.* FIN 48 clarifies the accounting for Income
        Taxes by prescribing the minimum recognition threshold a tax position is
        required to meet before being recognized in the financial statements. It
        also
        provides guidance on derecognition, measurement, classification, interest
        and
        penalties, accounting in interim periods, disclosure and transition and clearly
        scopes income taxes out of SFAS 5, “*Accounting for Contingencies”.*FIN
        48 is effective for fiscal years beginning after December 15, 2006. The Company
        does not expect adoption of this standard will have a material impact on
        its
        financial position, operations or cash flows.
  F-11
 Table
            of Contents
  **GLOBAL
        DIVERSIFIED INDUSTRIES, INC.**
 **NOTES
        TO CONSOLIDATED FINANCIAL STATEMENTS**
 **APRIL
        30, 2007 AND 2006**
 
 **NOTE
        A – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)**
 
 New
        Accounting Pronouncements (Continued)
 
 In
        September 2006 the Financial Account Standards Board (the “FASB”) issued its
        Statement of Financial Accounting Standards 157, Fair Value Measurements.
        This
        Statement defines fair value, establishes a framework for measuring fair
        value
        in generally accepted accounting principles (GAAP), and expands disclosures
        about fair value measurements. This Statement applies under other accounting
        pronouncements that require or permit fair value measurements, the Board
        having
        previously concluded in those accounting pronouncements that fair value is
        the
        relevant measurement attribute. Accordingly, this Statement does not require
        any
        new fair value measurements. However, for some entities, the application
        of this
        Statement will change current practice. FAS 157 effective date is for fiscal
        years beginning after November 15, 2007. The Company does not expect adoption
        of
        this standard will have a material impact on its financial position, operations
        or cash flows.
 
 In
        September 2006 the FASB issued its Statement of Financial Accounting Standards
        158 “Employers’ Accounting for Defined Benefit Pension and Other Postretirement
        Plans”. This Statement improves financial reporting by requiring an employer to
        recognize the overfunded or underfunded status of a defined benefit
        postretirement plan (other than a multiemployer plan) as an asset or liability
        in its statement of financial position and to recognize changes in that funded
        status in the year in which the changes occur through comprehensive income
        of a
        business entity or changes in unrestricted net assets of a not-for-profit
        organization. This Statement also improves financial reporting by requiring
        an
        employer to measure the funded status of a plan as of the date of its year-end
        statement of financial position, with limited exceptions. The effective date
        for
        an employer with publicly traded equity securities is as of the end of the
        fiscal year ending after December 15, 2006. The Company does not expect adoption
        of this standard will have a material impact on its financial position,
        operations or cash flows
 
 In
        December 2006, the FASB issued FSP EITF 00-19-2, Accounting for Registration
        Payment Arrangements ("FSP 00-19-2") which addresses accounting for registration
        payment arrangements. FSP 00-19-2 specifies that the contingent obligation
        to
        make future payments or otherwise transfer consideration under a registration
        payment arrangement, whether issued as a separate agreement or included as
        a
        provision of a financial instrument or other agreement, should be separately
        recognized and measured in accordance with FASB Statement No. 5, Accounting
        for
        Contingencies. FSP 00-19-2 further clarifies that a financial instrument
        subject
        to a registration payment arrangement should be accounted for in accordance
        with
        other applicable generally accepted accounting principles without regard
        to the
        contingent obligation to transfer consideration pursuant to the registration
        payment arrangement. For registration payment arrangements and financial
        instruments subject to those arrangements that were entered into prior to
        the
        issuance of EITF 00-19-2, this guidance is effective for financial statements
        issued for fiscal years beginning after December 15, 2006 and interim periods
        within those fiscal years. The Company has not yet determined the impact
        that
        the adoption of FSP 00-19-2 will have on its financial statements.
 
 In
        February 2007, the FASB issued SFAS No. 159, “The Fair Value Option for
        Financial Assets and Financial Liabilities.” SFAS 159 permits entities to choose
        to measure many financial instruments, and certain other items, at fair value.
        SFAS 159 applies to reporting periods beginning after November 15, 2007.
        The
        adoption of SFAS 159 is not expected to have a material impact on the Company’s
        financial condition or results of operations.
 
 **NOTE
        B- ACQUISITION OF INTANGIBLE ASSETS**
 
 The
        Company has adopted SFAS No. 142, Goodwill and Other Intangible Assets, whereby
        the Company periodically test its intangible assets for
        impairment.  On an annual basis, and when there is reason to suspect
        that their values have been diminished or impaired, these assets are tested
        for
        impairment, and write-downs will be included in results from
        operations.
 On
        March
        11, 2005, the Company acquired certain intellectual properties from Impact
        Modular Leasing (“Impact”) through an Asset Purchase Agreement (“Agreement”).
        Impact had acquired the assets from a bankruptcy auction of Aurora Modular
        Industries, Inc.  As consideration, the Company issued to Impact a
        secured promissory note (the “Note”) for Five Hundred Thousand Dollars
        ($500,000) bearing interest at five (5) percent per annum.  The total
        purchase price was allocated to the assets acquired as follows:
 
 Trade
                  name
              
              $
              350,000Building
                  engineering and architectural plans
              
              
              150,000Total
              
              $
              500,000
 F-12
 Table
              of Contents
  **GLOBAL
          DIVERSIFIED INDUSTRIES, INC.**
 **NOTES
          TO CONSOLIDATED FINANCIAL STATEMENTS**
 **APRIL
          30, 2007 AND 2006**
 NOTE B- ACQUISITION OF INTANGIBLE ASSETS
        (Continued)
  The
        trade
        name acquired is considered to have an undeterminable life, and as such will
        not
        be amortized. Instead, the trade name is tested annually for impairment,
        with
        any impairment charged against earnings in the Company’s consolidated statement
        of earnings. An independent appraiser assessed the value of the trade name
        acquired and determined that the fair value of the trade name exceeded its
        recorded book value at April 30, 2005. The building engineering and
        architectural plans acquired have estimated useful lives of ten
        years.
 
 The
        Company has adopted  SFAS No. 142,  Goodwill  and
        Other  Intangible  Assets, whereby the
        Company  periodically test its intangible assets for
        impairment.  On an annual basis, and when there is reason to suspect
        that their values have been diminished
        or impaired, these assets are tested for impairment,  and write-downs
        will be included in results from operations.  There was no impairment
        of acquired intangibles as of April 30, 2007.
 
 Total
        identifiable intangible assets acquired and their carrying value at April
        30,
        2007 are:
 
 **Gross
                  Carrying Amount**
              ****
              ****
              **Accumulated
                  Amortization**
              ****
              ****
              **Net**
              ****
              ****
              **Residual
                  Value**
              ****
              ****
              **Weighted
                  Average Amortization Period (Years)**Amortized
                  Identifiable Intangible Assets:Building
                  engineering and architectural plans
              
              $
              851,889
              
              
              $
              (196,299
              )
              
              $
              655,590
              
              
              $
              -
              
              
              
              10.0Total
                  Amortized Identifiable Intangible Assets
              
              
              851,889
              
              
              
              (196,299
              )
              
              
              655,590
              
              
              
              -
              
              
              
              10.0Unamortized
                  Identifiable Intangible Assets:Trade
                  Name
              
              
              350,000
              
              
              
              -
              
              
              
              350,000
              
              
              
              350,000
              
              
              
              -Total
                  Amortized Identifiable Intangible Assets
              
              
              350,000
              
              
              
              -
              
              
              
              350,000
              
              
              
              350,000
              
              
              
              -Total
              
              $
              1,201,889
              
              
              $
              (196,299
              )
              
              $
              1,005,590
              
              
              $
              350,000
              
              
              
              10.0
  Total
        amortization expense charged to operations for the year ended April 30, 2007
        and
        2006 were $81,564 and $70,578, respectively.  The Company wrote off
        accumulated amortization in the amount of $16,219 in connection with disposition
        of MBS (Note E) during the year ended April 30, 2007.
 
 Estimated
        amortization expense as of April 30, 2007 is as follows:
 
 2008
              
              $
              85,1852009
              
              
              85,1852010
              
              
              85,1852011
              
              
              85,1852012
                  and after
              
              
              314,850Total
              
              $
              655,590
  F-13
 Table
              of Contents
 
 **GLOBAL
          DIVERSIFIED INDUSTRIES, INC.**
 **NOTES
          TO CONSOLIDATED FINANCIAL STATEMENTS**
 **APRIL
          30, 2007 AND 2006**
 
 **NOTE
          C - INVENTORIES**
  Inventories
        are stated at the lower of cost or market determined by the first-in, first-out
        (FIFO) method.  Components of inventories as of April 30, 2007 are as
        follows:
 
 Finished
                  Goods
              
              $
              273,882Work
                  in Progress
              
              
              651,047Raw
                  Materials
              
              
              2,048,611$
              2,973,540
 
 The
        Company periodically reviews the carrying value of inventories and
        non-cancelable purchase commitments by reviewing revenue forecasts, material
        usage requirements, and the engineering design changes. These forecasts of
        changes in design, future sales, and pricing are estimates. The Company may
        record charges to write down inventories based on these reviews and forecasts.
        If there is change in demand, additional write downs of inventories may be
        required which will negatively impact gross margins. Inventory impairment
        charges are considered to permanently establish a new cost basis for inventory
        and are not subsequently reversed to income even if circumstances later suggest
        that increased carrying amounts are recoverable, except when the associated
        inventory is disposed of or sold.
 
 During
        the year ended April 30, 2007, the Company identified and marked down several
        groups of raw materials left over from special ordered buildings, which can
        not
        be used in the Company’s standard buildings, together with raw materials that
        can only be used in MBS construction designs (Note E), as the utility of
        the
        underlying inventories was deemed to be impaired. The Company recorded inventory
        impairment charges in the amount of $850,000 during the year ended April
        30, 2007, which reduced the gross profit by the corresponding
        amount.
  **NOTE
        D - PROPERTY, PLANT AND EQUIPMENT**
 
 The
        Company’s property and equipment at April 30, 2007 consists of the
        following:
 
 Plant
                  Equipment
              
              $
              2,106,816Furniture
                  and Fixture
              
              
              2,933Building
                  and Leasehold Improvement
              
              
              971,688Total
              
              
              3,081,437Accumulated
                  Depreciation
              
              
              (1,033,801
              )$
              2,047,636
 
 Depreciation
        expense included as a charge to income amounted to $236,467 and $218,061
        for the
        year ended April 30, 2007 and 2006, respectively. The Company wrote off
        accumulated depreciation in the amount of $5,443 in connection with disposition
        of MBS (Note E) during the year ended April 30, 2007.
   F-14
 Table
            of Contents
 **GLOBAL
          DIVERSIFIED INDUSTRIES, INC.**
 **NOTES
          TO CONSOLIDATED FINANCIAL STATEMENTS**
 **APRIL
          30, 2007 AND 2006**
 **NOTE
          E - DIVESTITURES AND DISCONTINUED OPERATIONS**
 
 In
        October 2006, the Company sold one of its subsidiaries, MBS Construction,
        Inc.
        ("MBS") to Paragon Modular, Inc ("PMI") through a Stock Purchase Agreement
        ("Purchase Agreement"). Pursuant to the Purchase Agreement, PMI acquired
        certain
        assets and assumed certain liabilities of MBS and agreed to pay $1,000 in
        cash.
        As a result of the sale of the MBS business segment, the Company accounted
        for
        the segment as a discontinued operation, and accordingly, the amounts in
        the
        financial statements and related notes for all period presented have been
        restated to reflect discontinued operations accounting.
 
 The
        following summarizes the disposition of the MBS business segment:
 
 Cash
                  consideration
              
              $
              1,000Debts
                  assumed by PMI
              
              
              372,819Net
                  assets disposed of
              
              
              (45,533
              )Net
                  gain on disposal of MBS
              
              $
              328,286
 
 The
        financial statements reflect the operating results and balance sheet items
        of
        the discontinued operations separately from continuing operations. Prior
        years
        have been restated. Operating results for the MBS discontinued operations
        for
        the year ended April 30, 2007 and 2006 were:
 **2007**
              
              
              **2006**Revenues
              
              $
              -
              
              
              $
              1,058,518Costs
                  and Expenses
              
              
              29,543
              
              
              
              1,923,592Net
                  loss before tax
              
              
              (29,543
              )
              
              
              (865,074
              )Income
                  tax provision (benefit)
              
              
              -
              
              
              
              -Net
                  loss
              
              
              (29,543
              )
              
              
              (865,074
              )Net
                  gain on sale of MBS, before tax
              
              
              328,286
              
              
              
              -Income
                  tax provision (benefit)
              
              
              -
              
              
              
              -Gain
                  on sale, net of tax
              
              
              328,286
              
              
              
              -Gain
                  (loss) on discontinued operations,net
                  of tax
              
              $
              298,743
              
              
              $
              (865,074
              )
  F-15
 Table
            of Contents
  **GLOBAL
          DIVERSIFIED INDUSTRIES, INC.**
 **NOTES
          TO CONSOLIDATED FINANCIAL STATEMENTS**
 **APRIL
          30, 2007 AND 2006**
 **NOTE
        F – ACCOUNTS PAYABLE AND ACCRUED LIABILITIES**
 
 Accounts
        payable and accrued liabilities at April 30, 2007 are as follows:
 
 Accounts
                  payable
              
              $
              669,722Accrued
                  interest
              
              
              69,203Accrued
                  Sales Tax
              
              
              36,146Accrued
                  Property taxes
              
              
              62,475Accrued
                  payroll and payroll taxes
              
              
              122,303Other
                  accrued expenses
              
              
              224,016Total
              
              $
              1,183,865
 
 **NOTE
        G - ECONOMIC DEPENDENCY**
 
 During
        the year ended April 30, 2007, approximately $3,126,257, or 47%, of total
        revenues were derived from four (4) major customers and $438,288 (64%) of
        the
        total accounts receivable at April 30, 2007 were due from four (4) major
        customers.
 
 During
        the year ended April 30, 2006, approximately $9,516,531, or 68%, of total
        revenues were derived from five (5) major customers and
        $2,727,988  (88%) of the
        total  accounts  receivable  at
        April  30,  2006  were  due  from
        two (2)  major customers.
  **NOTE
        H – NOTES PAYABLE**
 
 A
        summary
        of notes payable at April 30, 2007 is as follows:
  Note
                    payable to Company shareholder in monthly installments of interest
                    only at
                    10.0% per annum; unsecured; maturity date was in November 30,
                    2003. The
                    Company amended the note with the shareholder in April 2004,
                    extending the
                    maturity date to May 1, 2009; the noteholder has an option to
                    convert the
                    unpaid principal balance of the loan, together with any accrued
                    and unpaid
                    interest to the Company's preferred stock. (a)
                
                $
                389,465Note
                    payable to Company shareholders in monthly installments of interest
                    only
                    at 8.0% per annum; unsecured; maturity date extended to May 15,
                    2007.   Noteholder has the option to convert the principal
                    balance of the loan to the Company’s preferred stock. This note was
                    extended to May 15, 2008 subsequent to the date of financial
                    statement.  (a)
                
                
                78,500Note
                    payable to Company shareholders in monthly installments of interest
                    only
                    at 6.0% per annum; unsecured; maturity date is on May 1, 2009
                    (Note
                    I).
                
                
                199,350Note
                    payable to Company shareholders in monthly installments of interest
                    only
                    at 5.0% per annum; unsecured; maturity date is on August 31,
                    2005,
                    maturity extended to August 31, 2007 Noteholder has the option
                    to convert
                    the principal balance of the loan to the Company’s preferred stock.
                    (a).
                
                
                6,000
   F-16
 Table
              of Contents
  **GLOBAL
            DIVERSIFIED INDUSTRIES, INC.**
 **NOTES
            TO CONSOLIDATED FINANCIAL STATEMENTS**
 **APRIL
            30, 2007 AND 2006**
 
 **NOTE
            H – NOTES PAYABLE (Continued)**
 (Continued)Note
                    payable to Company shareholders in monthly installments of interest
                    only
                    at 8.0% per annum; unsecured; maturity dated August 2007. Noteholder
                    has
                    the option to convert the principal balance of the loan to the
                    Company's
                    preferred stock. (a)
                
                
                56,000Note
                    payable in 24 monthly installments beginning March 15, 2006;
                    unsecured;
                    maturity date is March 2008.
                
                
                23,720Note
                    payable in 4 monthly installments beginning April 1, 2007, unsecured;
                    maturity date July 1, 2007. This note was extended to January
                    31, 2008
                    subsequent to the date of financial statement.
                
                
                31,447Note
                    payable to Company shareholder in monthly installments of interest
                    only at
                    8% per annum, unsecured, maturity date is on January 31, 2006;
                    maturity
                    date extended to January 31, 2008 .
                
                
                111,000Note
                    payable in 24 monthly installments beginning December 27, 2004,
                    with
                    interest at 8% per annum beginning January 31, 2005, secured
                    by company
                    stock; maturity date is January 31, 2007. The Company is currently
                    in
                    default of the terms of the Note Agreement (b)
                
                
                15,743Note
                    Payable in monthly installments beginning December 14, 2006 with
                    interest
                    at 8% per annum, unsecured, maturity date is April 30,
                    2008
                
                
                28,000Note
                    payable in 12 installments beginning April 15, 2006 with interest
                    at 9%
                    per annum, unsecured, maturity date is March 15, 2007
                
                
                6,327Note
                    Payable in 24 monthly installments beginning January 28, 2007,
                    interest
                    only first six months at 7.5 % per annum, unsecured, maturity
                    is December
                    27, 2008
                
                
                40,000Note
                    payable in five annual payments beginning December 31, 2006,
                    with interest
                    payable monthly at 10% per annum.  Lender has an option at the
                    end of each twelve months (“anniversary date”) to receive restricted
                    shares of the Company’s common stock in lieu of the annual cash payment of
                    $100,000. The conversion price is equal to 75% of the closing
                    price for
                    the day that is twelve months prior to each anniversary date.
                    The minimum
                    conversion price shall be $0.05 per share. (c)
                
                
                227,330Note
                    payable revolving agreement secured by receivable and property
                    with
                    interest and administrative fees payable monthly; interest rate
                    is at
                    2.75% per annum over and above the Prime Rate or Deemed Prime
                    Rate
                    whichever is higher; maturity date is on November 1, 2007. Maximum
                    borrowing capacity of $3,000,000.
                
                
                701,2901,914,172Less:
                    current portion
                
                
                (1,098,027
                )Total
                    - notes payable – long term
                
                $
                816,145
  (a)
        The
        Company granted the noteholder an option to convert a total of $400,000 of
        principal balance of the notes to the Company’s 2,666,666 shares of preferred
        stock, and each share of the preferred stock is convertible to ten shares
        of the
        Company’s restricted common stock.  The noteholder has the option to
        convert the notes to the Company’s securities anytime within three years from
        the issuance of the notes.  The Company accounted for the notes
        payable and stock purchase rights in accordance with APB No. 14,
        "Accounting for Convertible Debt and Debt Issued with Stock Purchase Warrants"
        ("APB 14").  Proceeds from the issuance of notes payable with equity
        securities are allocated between the debt and the securities based on their
        relative fair values. The fair value of the company’s restricted common stock at
        the time the conversion option was granted approximated the value of the
        debt if
        converted. Accordingly, there was no beneficial conversion feature in connection
        with the convertible notes payable.
 F-17
 Table
              of Contents
  **GLOBAL
          DIVERSIFIED INDUSTRIES, INC.**
 **NOTES
          TO CONSOLIDATED FINANCIAL STATEMENTS**
 **APRIL
          30, 2007 AND 2006**
 
 **NOTE
          H – NOTES PAYABLE (Continued)**
 (b)
        Original note agreement was entered into in September 2003, in 24 monthly
        installments beginning October 15, 2003, with interest at 6% per annum;
        unsecured; maturity date is October 2005.  The Company was in default
        under the terms of the note agreement.  On December 28, 2004, the
        Company and the noteholder entered into an updated Promissory Note Agreement
        (“Updated Agreement”).  Pursuant to the Updated Agreement, the
        principal amount together with interest accrued at 8% per annum are payable
        in
        24 monthly installments beginning January 28, 2005.  The Company also
        transferred into an escrow account an aggregate of 3,223,421 shares of its
        restricted common stock as collateral for this note.  If the note is
        in default after one year or any time thereafter, the noteholder has the
        option
        to cash in the restricted stock to pay off the balance of the note plus any
        unpaid interest and penalties.  The 3,223,421 shares of common stock
        were held in escrow so as not be considered outstanding unless the Company
        is in
        default. In January 2007, the Company entered into a Forbearance Agreement
        with
        the noteholder. Pursuant to the agreement, noteholder agreed to forbear with
        respect to taking foreclosure action against the collateral shares for a
        period
        of 45 calendar days from the date of the agreement. However, such forbearance
        period is not to be constructed as extending the due date of the note which
        the
        Company remains in default during such 45-day period.  The noteholder
        agreed to extend the maturity date of the note to 30 days from March 19,
        2007.
        As of April 30, 2007, the Company was in default with the terms of the Updated
        Note Agreement.
 
 (c)
        The
        Company granted the noteholder an option to receive restricted shares of
        the
        Company’s common stock in lieu of the annual cash payment of $100,000 at the end
        of each twelve months (“anniversary date”).  The conversion price is
        equal to 75% of the closing price for the day that is twelve months prior
        to
        each anniversary date. The minimum conversion price shall be $0.05 per
        share.  The Company has sufficient authorized and unissued shares
        available to settle the debt, and has reserved 10 million shares of common
        stock
        to settle the debt in the event that the noteholder converts at the minimum
        conversion price of $0.05 per share.  The Company accounted for the
        convertible in accordance with Emerging Issues Task Force Issue 98-5, Accounting
        for Convertible Securities with a Beneficial Conversion Features or Contingently
        Adjustable Conversion Ratios ("EITF 98-5"), and recognized an imbedded
        beneficial conversion feature present in the convertible note. The Company
        recognized and measured an aggregate of $166,667 of the proceeds, which is
        equal
        to the intrinsic value of the imbedded beneficial conversion feature, to
        additional paid in capital and a discount against the convertible note. The
        debt
        discount attributed to the beneficial conversion feature is amortized over
        the
        maturity period (five years) as interest expense.  In October 31,
        2006, the noteholder agreed to convert $200,000 of principal into 2,353,356
        shares of the Company's common stock (Note J). These shares have not been
        issued
        as of April 30, 2007 and the Company has accounted for the shares to be issued
        as common stock subscription payable. The Company wrote off the unamortized
        debt
        discount in connection with the converted portion of principal, and non-cash
        interest expense of $54,900 was charged to operations in connection with
        the
        conversion of notes. Total non-cash interest expense the Company charged
        to
        operations in connection with amortization and write-off of debt discount
        attributed to the beneficial conversion feature amounted $80,846 and $13,151
        for
        the year ended April 30, 2007 and 2006, respectively.
 
 
 **NOTE
        I - RELATED PARTY TRANSACTIONS**
 
 In
        addition to convertible notes payable to related parties described in Note
        H,
        two of the Company’s shareholders repaid an aggregate of $499,350 of notes
        payable the Company due to bank on behalf of the Company in April
        2004.  The Company issued to the shareholders $199,350 of notes
        payable with a maturity date on May 1, 2009 (Note H), and the shareholders
        agreed to receive the Company’s preferred stock in exchange for the remaining
        $300,000 due.  The Company has accounted $300,000 of preferred stock
        subscription at April 30, 2004.
 
 
 F-18
 Table
            of Contents
  **GLOBAL
        DIVERSIFIED INDUSTRIES, INC.**
 **NOTES
        TO CONSOLIDATED FINANCIAL STATEMENTS**
 **APRIL
        30, 2007 AND 2006**
 
 **NOTE
        J – CAPITAL STOCK**
 
 On
        November 7, 2001 the Company's Board of Directors approved an increase in
        the
        Company's authorized common stock from 50,000,000 to 400,000,000 with a par
        value of $.001. The Company also created a Series A Preferred class of stock,
        $.001 par value, and authorized 10,000,000 shares.  On February 3,
        2003, the Company’s Board of Directors approved to change the conversion right
        of the Series A Preferred Stock from a ratio of five common for one preferred
        share to ten common for one preferred share.  As of April 30, 2007 and
        2006, the Company has issued and outstanding 413,092 and 666,667 shares of
        preferred stock, respectively.  The Company has 167,209,212 and
        149,447,478 shares of common stock issued and outstanding at April 30, 2007
        and
        2006, respectively.  The Company had 50,000 shares of treasury stock
        at April 30, 2007 and 2006.
 
 During
        the year ended April 30, 2006, the Company issued a total of 611,112 shares
        of
        common stock in exchange  for $50,000 of cash, net of costs and fees.
        The Company issued an aggregate of 878,614 shares of common stock to consultants
        in exchange for services in the amount of
        $61,053.  All  valuations  of common
        stock  issued for services  were based upon the value of the
        services  rendered, which did
        not  differ  materially  from the fair value of
        the  Company's  common stock  during the period
        the  services  were  rendered.  The
        Company also issued 235,295 shares of common stock valued at $16,470 to an
        employee for a signing bonus after meeting the one year employment
        requirement.
 
 During
        the year  ended  April
        30,  2006,  the  Company  issued
        an  aggregate  of 7,857,143 shares of common stock to a
        Lender in exchange for conversion of notes payable in the amount of $400,000.
        In
        March 2006, the Company  entered into a
        stock  subscription  agreement  with
        two  investors  for an  aggregate of 655,000
        shares of common stock  subscribed.  The Company received
        gross proceeds of $30,339, however the common stock has not been issued as
        of
        April 30, 2006. The Company has accounted for the proceeds received as common
        stock subscription payable at April 30, 2006.
 
 During
        the year ended April 30, 2007, the Company issued 4,228,956 shares of common
        stock to consultants in exchange for $170,825 of services fees and 100,000
        shares of common stock valued at $3,000 per the terms of an employment contact.
        All valuations of common stock issued for services were based upon the value
        of
        the services rendered, which did not differ materially from the fair value
        of
        the Company's common stock during the period the services are rendered. The
        Company also issued 9,444,444 shares of its commons stock, valued at $850,000
        to
        a shareholder. These shares were accounted for in the prior year ending April
        30, 2006, as common stock subscription payable. The Company also issued an
        aggregate of 655,000 shares of common stock in exchange for $30,339 of common
        stock subscribed during the year ended April 30, 2006.  Additionally,
        during the year ended April 30, 2007, a lender converted $200,000 of promissory
        note for 2,353,356 shares of common stock (Note H), which have not been issued
        as of April 30, 2007. The Company has accounted for the proceeds received
        as
        common stock subscription payable at April 30, 2007.
 
 During
        the year ended April 30, 2007, at the request of a preferred stock shareholder
        the Company retired 333,333 shares of preferred stock in exchange for the
        Company issuing 3,333,333 shares of common stock. The Company also issued
        79,759
        shares of preferred stock, valued at $53,449 in lieu of payment for accrued
        interest due on promissory notes issued by the Company.
  **NOTE
        K - EMPLOYEE STOCK INCENTIVE PLAN**
 
 In
        September 2001, the Board of Directors of the Company implemented an Employee
        Stock Incentive Plan (“2001 Stock Option Plan”) for officers, employees and
        certain non-employees (collectively referred to as "Employees") in an amount
        equal to 15,000,000 shares of common stock. The 2001 Stock Option Plan provides
        for the issuance of stock options exercisable at fifty percent (50%) of the
        fair
        market value of the common stock on the date of exercise. For an employee
        holding greater than ten percent (10%) of the total voting power of all stock
        of
        the Company, the exercise price of an incentive stock option shall be at
        least
        one hundred and ten percent (110%) of the fair market value of the common
        stock
        on the date of the grant of the option. The maximum life of the options is
        ten
        years from the date the stock options are granted.
 
 In
        February 2004, the Board of Directors of the Company implemented another
        Employee Stock Incentive Plan (“2004 Stock Option Plan”) for officers, employees
        and certain non-employees (collectively referred to as "Employees") in an
        amount
        equal to 2,000,000 shares of common stock. The 2004 Stock Option Plan provides
        for the issuance of stock options at an exercise price of $0.05 per share
        (or
        110% of the fair market value of the common stock on the date of the grant
        of
        the option, for employees holding greater than ten percent (10%) of the total
        voting power of all stock of the Company). The maximum life of the options
        is
        ten years from the date the stock options are granted.
 
 During
        the year ended April 30, 2005, the Company granted an aggregate of 986,840
        options to Employees pursuant to 2001 Stock Option Plan, and all options
        were
        exercised on the grant date (Note J). There are no employee stock options
        outstanding at April 30, 2007.
  F-19
 Table
            of Contents
  **NOTE
        L – NON-EMPLOYEE STOCK OPTIONS AND WARRANTS**
 
 Non-Compensatory
        Stock Options
 
 Transactions
        involving options are summarized as follows
 
 **Number
                  of Shares**
              ****
              ****
              **Weighted
                  Average Price Per Share**Outstanding
                  at May 1, 2005
              
              
              5,500,000
              
              
              $
              1.40Granted
              
              
              -
              
              
              
              -Exercised
              
              
              -
              
              
              
              -Canceled
                  or expired
              
              
              (1,500,000
              )
              
              
              5,00Outstanding
                  at April 30, 2006
              
              
              4,000,000
              
              
              $
              0.05Granted
              
              
              -
              
              
              
              -Exercised
              
              
              -
              
              
              
              -Canceled
                  or expired
              
              
              (4,000,000
              )
              
              
              0.05Outstanding
                  at April 30, 2007
              
              
              -
              
              
              $
              -
 During
        the year ended April 30, 2007 and 2006, the Company did not grant any
        compensatory stock options to consultants or shareholders, and all previously
        granted stock options were fully vested at the time the stock options were
        granted. Accordingly, no compensation costs were charged to operations during
        the year ended April 30, 2007 and 2006. All previously granted stock options
        expired as of April 30, 2007.
 
 Non-Compensatory
        Warrants
 
 The
        following table summarizes the changes in non-compensatory warrants outstanding
        and the related prices for the shares of the Company’s common stock issued to
        non-employees of the Company.
 
 **Warrants
                  Outstanding**
              ****
              ****
              **Warrants
                  Exercisable****Exercise
                  Prices**
              ****
              ****
              **Number
                  Outstanding**
              ****
              ****
              **Weighted
                  Average Remaining Contractual Life (Years)**
              ****
              ****
              **Weighed
                  Average Exercise Price**
              ****
              ****
              **Number
                  Exercisable**
              ****
              ****
              **Weighted
                  Average Exercise Price**$
              0.03
              
              
              
              750,000
              
              
              
              0.83
              
              
              $
              0.03
              
              
              
              750,000
              
              
              $
              0.03750,000
              
              
              
              0.83
              
              
              
              
              
              
              
              750,000
              
              
              $
              0.03
 F-20
 Table
              of Contents
 
 
 **GLOBAL
          DIVERSIFIED INDUSTRIES, INC.**
 **NOTES
          TO CONSOLIDATED FINANCIAL STATEMENTS**
 **APRIL
          30, 2007 AND 2006**
 NOTE L – NON-EMPLOYEE STOCK OPTIONS AND WARRANTS
        (Continued)
  Transactions
        involving warrants are summarized as follows:
 
 **Number
                  of Shares**
              ****
              ****
              **Weighted
                  Average Price Per Share**Outstanding
                  at May 1, 2005
              
              
              1,500,000
              
              
              $
              0.03Granted
              
              
              -Exercised
              
              
              -Canceled
                  or expired
              
              
              -Outstanding
                  at April 30, 2006
              
              
              1,500,000
              
              
              $
              0.03Granted
              
              
              -
              
              
              
              -Exercised
              
              
              -
              
              
              
              -Canceled
                  or expired
              
              
              (750,000
              )
              
              $
              0.03Outstanding
                  at April 30, 2007
              
              
              750,000
              
              
              $
              0.03
 
 The
        Company granted 1,500,000 of warrants during the year ended April 30, 2003
        in
        connection with acquisition of MBS Construction, Inc. The warrants granted
        have
        an original expiration date on January 31, 2005, 750,000 of the warrants
        were
        extended to and expired on July 31, 2006, the remaining 750,000 warrants
        were
        extended to April 30, 2007.
 
 The
        Company granted 750,000 of warrants during the year ended April 30, 2003
        in
        connection with acquisition of MBS in February 2003.  The warrants
        granted have an original expiration date on January 31, 2004, 750,000 of
        the
        warrants were extended to and expired on July 31, 2006, and the remaining
        750,000 warrants were extended to February 28, 2008.
 
 **NOTE
        M - INCOME TAXES**
 
 Deferred
        income taxes result from the temporary differences arising from the use of
        accelerated depreciation methods for income tax purposes and the straight-line
        method for financial statement purposes, from differences in the timing of
        recognition of the state income tax provision for book and tax reporting
        purposes, and an accumulation of Net Operating Loss carryforwards for income
        tax
        purposes with a valuation allowance against the carryforwards for book
        purposes.****
 
 In
        assessing the realizability of deferred tax assets, management considers
        whether
        it is more likely than not that some portion or all of the deferred tax assets
        will not be realized. Included in deferred tax assets are State net operating
        loss carryforwards of $2,830,413, which will expire beginning in 2024, and
        a
        Federal net operating loss carryforward of $2,830,413, which will expire
        beginning in 2024. The ultimate realization of deferred tax assets is dependent
        upon the generation of future taxable income during the periods in which
        those
        temporary differences become deductible. Management considers the scheduled
        reversal of deferred tax liabilities, projected future taxable income, and
        tax
        planning strategies in making this assessment. Based upon our cumulative
        losses
        through April 30, 2007, we have provided a valuation allowance reducing the
        net
        realizable benefits of these deductible differences to $444,401 at April
        30,
        2007. The net change in the valuation allowance from April 30, 2006 was a
        decrease of $120,000. The amount of the deferred tax asset considered realizable
        could change in the near term if projected future taxable income is
        realized. . Due to significant changes in the Company's ownership, the
        Company's future use of its existing net operating losses may be
        limited.
  F-21
 Table
              of Contents
 
 **GLOBAL
          DIVERSIFIED INDUSTRIES, INC.**
 **NOTES
          TO CONSOLIDATED FINANCIAL STATEMENTS**
 **APRIL
          30, 2007 AND 2006**
 **NOTE
        M - INCOME TAXES
        (Continued)**
  The
        income tax provision (benefit) for the years ended April 30, 2007 and 2006
        consists of the following:
 
 **2007**
              ****
              ****
              **2006**Continuing
                  OperationsCurrentFederal
              
              $
              --
              
              
              $
              --State
              
              
              800
              
              
              
              800800
              
              
              
              800DeferredFederal
              
              
              (69,000
              )
              
              
              --State
              
              
              (16,000
              )
              
              
              --(85,000
              )
              
              
              --$
              (84,200
              )
              
              $
              800
 Discontinued
        Operations
 Federal
              
              
              10,000
              
              
              
              --State
              
              
              --
              
              
              
              --10,000
              
              
              
              --
 
 Total
              
              $
              (74,200
              )
              
              $
              800
   A
        reconciliation between the actual income tax expense and income taxes computed
        by applying the statutory Federal and state income tax rates to income from
        continuing operations before income taxes is as follows:
 
 **2007**
              ****
              ****
              **2006**Computed
                  “expected” income tax expense atapproximately
                  34%
              
              $
              (470,000
              )
              
              $
              203,000Increase
                  (decrease) in NOL carryforwards
              
              
              444,000
              
              
              
              (202,200
              )Discretionary
                  change in valuation allowances of deferred income taxes
              
              
              (48,000
              )
              
              
              --Various
                  other
              
              
              (200
              )
              
              
              --$
              (74,200
              )
              
              $
              800
   F-22
 Table
            of Contents
 **GLOBAL
          DIVERSIFIED INDUSTRIES, INC.**
 **NOTES
          TO CONSOLIDATED FINANCIAL STATEMENTS**
 **APRIL
          30, 2007 AND 2006**
  NOTE M - INCOME TAXES
        (Continued)
  Deferred
        income taxes reflect the net tax effects of temporary differences between
        the
        carrying amounts of assets and liabilities for financial reporting purposes
        and
        the amounts used for income tax purposes. Significant components of our deferred
        tax assets and liabilities as of April 30, 2007 are as follows:
 
 Deferred
                  tax assets:Federal
                  and state net operating loss
              
              $
              1,132,000Allowance
                  and accruals not recognized for income tax purposes
              
              
              -Total
                  gross deferred tax assets
              
              
              1,132,000Less
                  : Valuation allowance
              
              
              (954,000
              )Net
                  deferred tax assets
              
              $
              178,000Deferred
                  tax liabilities:Total
                  gross deferred tax liabilities:Depreciation
                  and amortization, net
              
              
              (80,000
              )Deferred
                  state tax liability
              
              
              (2,000
              )Total
                  net deferred tax liabilities
              
              $
              (82,000
              )
 
 These
        amounts have been presented in the consolidated balance sheets as
        follows:
 
 **April
                  30, 2007**Current
                  deferred tax asset
              
              $
              -Non
                  current deferred tax asset
              
              
              96,000Non
                  current deferred tax liability
              
              
              -Total
                  net deferred tax asset
              
              $
              96,000
 
 
 
 F-23
 Table
            of Contents
  **GLOBAL
        DIVERSIFIED INDUSTRIES, INC.**
 **NOTES
        TO CONSOLIDATED FINANCIAL STATEMENTS**
 **APRIL
        30, 2007 AND 2006**
 
 **NOTE
        N - EARNINGS (LOSS) PER SHARE**
 
 Basic
        and
        fully diluted earnings (losses) per share are calculated by dividing net
        income
        (loss) available to common shareholders by the weighted average of common
        shares
        outstanding during the year.  The following table sets forth the
        computation of basic and diluted earnings (losses) per share:
  **2007**
              ****
              ****
              **2006**Net
                  income (loss) available tocommon
                  stockholders
              
              $
              (1,343,778
              )
              
              $
              596,683Earnings
                  (losses) per share:Basic
              
              $
              (0.00
              )
              
              $
              0.00Continuing
                  operations
              
              $
              (0.00
              )
              
              $
              0.00Discontinued
                  operations
              
              $
              (0.00
              )
              
              $
              0.00Diluted
                  and assuming diluted
              
              $
              (0.00
              )
              
              $
              0.00Continuing
                  operations
              
              $
              (0.00
              )
              
              $
              0.00Discontinued
                  operations
              
              $
              (0.00
              )
              
              $
              0.00Weighted
                  average number ofcommon
                  shares outstanding forcomputation:Basic
              
              
              159,402,649
              
              
              
              145,006,288Diluted
                  and assuming diluted
              
              
              159,402,649
              
              
              
              154,722,958
 
 For
        the
        years ended April 30, 2007, 36,863,389 potential shares were excluded from
        shares used to calculate diluted losses per share as their inclusion would
        reduce net losses per share.
 
 **NOTE
        O - COMMITMENTS AND CONTINGENCIES**
 
 Consulting
        Agreement
 
 The
        Company has various consulting agreements with outside contractors to provide
        business development and consultation services. The Agreements are generally
        for
        a term of 12 months from inception and renewable automatically from year
        to year
        unless either the Company or Consultant terminates such agreement by written
        notice.
 
 Lease
        Agreement
 
 In
        October 2002, the Company entered into a three-year lease for its corporate
        offices and facilities in Chowchilla, California.  The Company renewed
        the lease in February 2007, at a rate of $24,021 per month with moderate
        increases for each year thereafter. Commitments for minimum rentals under
        non
        cancelable leases at April 30, 2007 are as follows:
 
 **Fiscal
                  Year**
              ****
              **Amount**2008
              
              $
              288,252Total
              
              $
              288,252
 
 Rental
        expenses charged to operations for the year ended April 30, 2007 and 2006
        are
        $211,619 and $204,192, respectively.
  Litigation
  The
        Company is subject to legal proceedings and claims which arise in the ordinary
        course of its business.  Although occasional adverse decisions or
        settlements may occur, the Company believes that the final disposition of
        such
        matters will not have a material adverse effect on its financial position,
        results of operations or liquidity.
  
 F-24
 Table
            of Contents
  **ITEM
          8. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON
          ACCOUNTING AND FINANCIAL DISCLOSURE**
  None.
  **ITEM
          8A.  CONTROLS AND
          PROCEDURES**
   (a)
                EVALUATION
                    OF DISCLOSURE CONTROLS AND PROCEDURES.  Regulation s under the
                    Securities Exchange Act of 1934 require public companies to maintain
                    “disclosure controls and procedures”, which are defined to mean a
                    company’s controls and other procedures that are designed to ensure that
                    information required to be disclosed in the reports that it files
                    or
                    submits under the Securities Exchange Act of 1934 is recorded,
                    processed,
                    summarized and reported, within the time periods specified in
                    the
                    Commission’s rules and forms.  Our Chief Executive Officer
                    (“CEO”), who is also our President, and our Treasurer/Chief Accounting
                    Officer carried out an evaluation of the effectiveness of our
                    disclosure
                    controls and procedures as of the end of the period covered by
                    this
                    report.  Based on those evaluations, as of the Evaluation Date,
                    our CEO/President and Treasurer/ Chief Accounting Officer
                    believe:
  (i)
                that
                    our disclosure controls and procedures are designed to ensure
                    that
                    information required to be disclosed by us in the reports we
                    file under
                    the Securities Exchange Act of 1934 is recorded, processed, summarized
                    and
                    reported within the time periods specified in the SEC’s rules and forms
                    and that such information is accumulated and communicated to
                    our
                    management, including the CEO and CFO, as appropriate to allow
                    timely
                    decisions regarding disclosure; and
  (ii)
                that
                    our disclosure and procedures are
                    effective.
  (b)
                  CHANGES
                      IN INTERNAL CONTROLS:  There were no changes in our internal
                      controls or, to our knowledge, in other factors that could
                      significantly
                      affect our internal controls subsequent to the evaluation
                      date.
   **PART
          III.**
  **ITEM
          9. DIRECTORS, EXECUTIVE OFFICERS AND COMPLIANCE WITH SECTION
          16(A) OF THE EXCHANGE ACT**
  **Officers
          and Directors**
  The
          names, ages, and respective positions of the directors, executive officers,
          and
          key employees of the Company are set forth below; there are no other promoters
          or control persons of the Company. The directors named below will serve
          until
          the next annual meeting of the Company's stockholders or until their successors
          are duly elected and have qualified. Directors are elected for a one-year
          term
          at the annual stockholders' meeting. Officers will hold their positions
          at the
          will of the board of directors, absent any employment agreement. The directors
          and executive officers of the Company are not a party to any material pending
          legal proceedings and, to the best of their knowledge, no such action by
          or
          against them has been threatened.
  16
 Table
              of Contents
  Compensation
          of Directors
 
 Directors
          currently do not receive a salary for their services and are not paid a
          fee for
          their participation in meetings, although all Directors are reimbursed
          for
          reasonable travel and other out-of-pocket expenses incurred in attending
          meetings of the Board.  The Company anticipates that the Directors
          will be compensated for attending meetings in the future.
  **Phil
          Hamilton, President/Chairman**
  Phillip
          Hamilton, age 60 has over thirty years entrepreneurial and senior management
          experience in the manufacturing business.  From February 2003 to
          current, Mr. Hamilton has been the CEO/ Chairman of the Company.  As
          the CEO, he has directed the marketing, sales and administrative activities
          of
          the Company.
  From
          1996
          to January 2003, Mr. Hamilton was a consultant to Top Line Building
          Products.  Top Line Building Products is a truss manufacturing plants
          with annual revenues of approximately $8,000,000, which provides its products
          to
          major homebuilders in Northern California. As the CEO, Mr. Hamilton has
          directed
          the marketing, sales and production activities of the company, as well
          as
          re-designing the original truss plant into a modern state of the arts
          manufacturing plant with new production stations.
  From
          1996
          to Feb 2000, Mr. Hamilton was the Chairman and CEO of Pacesetter Industries,
          Inc.  Pacesetter Industries was one of the largest modular
          manufacturers of residential and commercial buildings in
          California.  As Chief Executive Officer, Mr. Hamilton was responsible
          for managing the marketing, sales and production activities of the company.
          Pacesetter was built from inception into one of California’s largest modular
          manufacturers producing and installing thousands of residential and commercial
          building.  Pacesetter Industries, Inc. employed a staff of over 650
          employees with annual sales of $50,000,000 in 1999.  Pacesetter
          Industries, Inc. filed a Chapter 11 bankruptcy on February 29, 2000 in
          Fresno
          County that was finally converted to a Chapter 7.
 
 Mr.
          Hamilton attended Pacific Union Colad lege taking courses in Business
          Administration.
  **Adam
          Debard, Secretary/Treasurer/Director**
  Adam
          N.
          DeBard, age 40, has over sixteen years of experience in the manufacturing
          and
          technology business sectors.  From February 2003 to current, Mr.
          DeBard has been the Secretary/Treasurer of the Company and the
          President/Treasurer of Global Modular, Inc.  He is responsible for the
          cash management and accounting functions of both companies.
 
 From
          January 2001 to January 2003, Mr. DeBard was the Chief Information Officer-
          Top
          Line Building Products.  As the CIO, Mr. DeBard was responsible for
          the design, implementation and management of a corporate wide computer
          network,
          as well as preparation of production analysis reports for senior management
          and
          equipment leases and acquisitions.
 
 From
          1997
          to December 2000, Mr. DeBard was the Vice President and Chief Information
          Officer for Pacesetter Industries, Inc.  As such, Mr. DeBard was
          responsible for all computer software and hardware acquisitions, installations
          and maintenance for multiple branch offices, as well as responsible for
          preparing a monthly analysis report of the automated production line for
          senior
          management.  Mr. DeBard was responsible for: computerizing the
          purchasing, estimation, production and engineering systems for the
          company.
 
 Mr.
          DeBard attended Walla Walla College for four years in the Business
          Administration
  17
 Table
              of Contents
  **(b)
          Compliance with Section 16(a) of the Exchange Act**
  Section
          16(a) of the Securities Exchange Act of 1934 requires the Company's directors,
          certain officers and persons holding 10% or more of the Company's common
          stock
          to file reports regarding their ownership and regarding their acquisitions
          and
          dispositions of the Company's common stock with the Securities and Exchange
          Commission. Such persons are required by SEC regulations to furnish the
          Company
          with copies of all Section 16(a) forms they file.
  Based
          solely on a review of the Forms 5 with respect to the fiscal year ended
          April
          30, 2002 and subsequently, the Company is unaware that any required reports
          were
          not timely filed. The Company is currently conducting an internal audit to
          ensure that the Company's Officers and/or Directors, as well as persons
          holding
          more than 10% of the Company's outstanding common stock, are in Compliance
          with
          Section 16(a) of the Securities and Exchange Act of 1934.  It is the
          Company's intention to ensure, where possible, from the date of this filing
          forward, complete compliance according to this Section.
  **ITEM
          10. EXECUTIVE COMPENSATION**
  The
          following table sets forth certain information relating to the compensation
          paid
          by the Company during the last three fiscal years to the Company's President.
          No
          other executive officer of the Company received total salary and bonus
          in excess
          of $100,000 during the fiscal year ended April 30, 2007 and prior.
 
 Summary
          Compensation Table
  **Annual
                      compensation**
                  
                  **Long-term
                      compensation****Awards**
                  
                  
                  **Payouts****Name
                      and principal position**
                  
                  **Year**
                  
                  **Salary
                      ($)**
                  
                  
                  **Bonus
                      ($)**
                  
                  
                  **Other
                      annual compensation ($)**
                  
                  **Restricted
                      stock award(s) ($)**
                  
                  **Securities
                      underlying options/ SARs (#)**
                  
                  
                  **LTIP**
                    **payouts
                      ($)**
                  
                  
                  **All
                      other compensation ($)****(a)**
                  
                  **(b)**
                  
                  **(c)**
                  
                  
                  **(d)**
                  
                  
                  **(e)**
                  
                  **(f)**
                  
                  **(g)**
                  
                  
                  **(h)**
                  
                  
                  **(i)**Phil
                      Hamilton, President
                  
                  2007
                  
                  
                  85,616
                  
                  
                  
                  10,0002006
                  
                  
                  85,616
                  
                  
                  
                  37,5002005
                  
                  
                  85,616
                  
                  
                  
                  0
                  
                  
                  
                  0
                  
                  
                  
                  
                  0
                  
                  
                  
                  0
                  
                  
                  
                  0
  Executive
            Compensation
 
 The
          Company has not paid any compensation to its officers and/or directors
          since its
          inception, and the Company does not expect to pay any compensation in any
          amount
          or of any kind to its executive officers or directors until the funds are
          available to pay them without inhibiting growth of the Company.
  18
 Table
              of Contents
  **ITEM11.
          SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND
          MANAGEMENT**
  The
          following table sets forth information regarding the beneficial ownership
          of
          shares of the Company's common stock as of August 10, 2007 (issued and
          outstanding) by (i) all stockholders known to the Company to be beneficial
          owners of more than ten percent of the outstanding common stock; and (ii)
          all
          directors and executive officers of the Company as a group:
  **Title
                    of Class**
                
                **Name
                    and Address of Beneficial Owner**
                
                **Amount
                    of Beneficial Ownership (2)**
                
                **Percent
                    of Class**Common
                    Stock
                
                Hamilton
                    Trust (1), 1200 Airport Drive, Chowchilla, CA
                
                5,000,000
                
                2.99%Common
                    Stock
                
                Adam
                    Debard(1), 1200 Airport Drive, Chowchilla, CA
                
                6,200,000
                
                3.07%Common
                    Stock
                
                Rebecca
                    Manadic(3), 611 West Main Street, Merced, CA
                
                31,775,000
                
                19.00%Common
                    Stock
                
                Shares
                    of all directors and executive officers as a group (3
                    persons)
                
                46,975,000
                
                28.09%
 
 (1)
          Each
          person has sole voting power and sole dispositive power as to all of the
          shares
          shown as beneficially owned by them.
 
 (2)
          Other
          than as footnoted below, none of these security holders has the right to
          acquire
          any amount of the shares within sixty days from options, warrants, rights,
          conversion privilege, or similar obligations. The amount owned is based
          on
          issued common stock, as well as stock options that are currently
          exercisable.
 
 (3)
          Phil
          Hamilton has sole voting power as to all of the shares owned by Rebecca
          Manandic.
  **ITEM
          12. CERTAIN RELATIONSHIPS AND RELATED
          TRANSACTIONS**
  During
          the past three years, and as not otherwise disclosed of in any other filing,
          there have not been any transaction that have occurred between the Company
          and
          its officers, directors, and five percent or greater shareholders, unless
          listed
          below.
  Certain
          of the officers and directors of the Company are engaged in other businesses,
          either individually or through partnerships and corporations in which they
          have
          an interest, hold an office, or serve on a board of directors. As a result,
          certain conflicts of interest may arise between the Company and its officers
          and
          directors. The Company will attempt to resolve such conflicts of interest
          in
          favor of the Company. The officers and directors of the Company are accountable
          to it and its shareholders as fiduciaries, which requires that such officers
          and
          directors exercise good faith and integrity in handling the Company's affairs.
          A
          shareholder may be able to institute legal action on behalf of the Company
          or on
          behalf of itself and other similarly situated shareholders to recover damages
          or
          for other relief in cases of the resolution of conflicts is in any manner
          prejudicial to the Company.
  The
          Company issued notes payable totaling of $473,965 to a significant
          shareholder.  The Company granted the shareholder an option to convert
          a total of $400,000 of principal balance of the notes to the Company’s 2,666,666
          shares of the preferred stock, and each share of the preferred stock is
          convertible to ten shares of the Company’s restricted common
          stock.  The shareholder has the option to convert the notes to the
          Company’s securities anytime within three years from the issuance of the
          notes.
  In
          April
          2004, two of the Company’s shareholders repaid an aggregate of $499,350 of notes
          payable due to a bank on behalf of the Company.  The Company issued to
          the shareholders $199,350 of notes payable with a maturity date on May
          1, 2009
          and the shareholders agreed to receive the Company’s preferred stock in exchange
          for the remaining $300,000 due.
  19
 Table
              of Contents
  **ITEM
          13. EXHIBITS**
  (a)
          List of Exhibits attached or incorporated by reference pursuant to Item
          601 of
          Regulation S-B.
 Exhibit
                        No.
                    
                    Description3
                    *
                    Articles
                        of Incorporation incorporated by reference to Form SB-2,
                        file no.
                        333-83231, incorporated by reference to Exhibit 3 filed on
                        July 6,
                        20013.2
                    *
                    Amendment
                        to Articles of Incorporation incorporated by reference to
                        Form SB-2, file
                        no. 333-83231, incorporated by reference to Exhibit 3.2 filed
                        on July 6,
                        20013.3
                    *
                    Bylaws
                        incorporated by reference to Form SB-2, file no.
                        333-83231,  incorporated by reference to Exhibit 3.3 filed on
                        July 6, 20013.4
                    *
                    Articles
                        of Merger between Global and IF&G Media Corporation incorporated by
                        reference to Form SB-2, file no. 333-83231, incorporated
                        by reference to
                        Exhibit 3.4 filed on July 6, 20014
                    *
                    Specimen
                        certificate for common stock incorporated by reference to
                        Form SB-2, file
                        no. 333-83231, incorporated by reference to Exhibit 4 filed
                        on July 6,
                        20014.1
                    *
                    Specimen
                        Warrant certificate incorporated by reference to Form SB-2,
                        file no.
                        333-83231, incorporated by reference to Exhibit 4.1 filed
                        on July 6,
                        2001
  10.1
                    *
                    Consulting
                        Agreement with Moody's Financial Services incorporated by
                        reference to
                        Form SB-2, file no. 333-8323110.2
                    *
                    Consulting
                        Agreement with Joel Shine incorporated by reference to Form
                        SB-2, file no.
                        333-8323110.3
                    *
                    Equity
                        Line of Credit Agreement dated May2001 incorporated by reference
                        to Form
                        SB-2, file no. 333-83231 incorporated by reference to Exhibit
                        10.3 filed
                        on July 6, 200110.4
                    *
                    Consulting
                        Agreement with Persia Consulting Group, Inc. dated April
                        12, 2001
                        incorporated by reference to Form SB-2, file no. 333-83231
                        incorporated by
                        reference to Exhibit 10.4 filed on July 6, 200110.5
                    *
                    Escrow
                        Agreement with First Union incorporated by reference to Form
                        SB-2, file
                        no. 333-83231 incorporated by reference to Exhibit 10.5 filed
                        on July 6,
                        200110.6
                    *
                    Registration
                        Rights Agreement incorporated by reference to Form SB-2,
                        file no.
                        333-83231 incorporated by reference to Exhibit 10.6 filed
                        on July 6,
                        200110.7
                    *
                    Agreement
                        with Yorkville Advisors Management, LLC incorporated by reference
                        to Form
                        SB-2, file no. 333-83231, incorporated by reference to Exhibit
                        10.7 filed
                        on July 6, 200110.8
                    *
                    Agreement
                        and Plan of Exchange between Global Diversified Industries
                        and MBS, filed
                        on March 17, 200310.9
                    *
                    Agreement
                        and Plan of Exchange between Global Diversified Industries
                        and Modular
                        Modernization, Inc. filed on March 19, 200331.1
                    **
                    Certification
                        of Chief Executive Officer/President Pursuant to Rule 13a-14(a)
                        and
                        15d-14(a).31.2
                    **
                    Certification
                        of Chief Financial Officer Pursuant to Rule 13a-14(a) and
                        15d-14(a).32.1
                    **
                    Certification
                        Pursuant to 18 U.S.C. Section 1350, as adopted pursuant to
                        Section 906 of
                        the Sarbanes-Oxley Act of 2002.32.2
                    **
                    Certification
                        Pursuant to 18 U.S.C. Section 1350, as adopted pursuant to
                        Section 906 of
                        the Sarbanes-Oxley Act of 2002.
 *
              Previously
              filed.
 **
              Filed
              herewith.
  20
 Table
              of Contents
  **ITEM
          14. PRINCIPAL ACCOUNTANT FEES AND
          SERVICES**
 
 The
          following table sets forth fees billed to us by our auditors during the
          fiscal
          years ended April 30, 2007 and 2006 for: (i) services rendered for the
          audit of
          our annual financial statements and the review of our quarterly financial
          statements, (ii) services by our auditor that are reasonably related to
          the
          performance of the audit or review of our financial statements and that
          are not
          reported as Audit Fees, (iii) services rendered in connection with tax
          compliance, tax advice and tax planning, and (iv) all other fees for services
          rendered.
 
 **April
                    30, 2007**
                
                ****
                **April
                    30, 2006**(i)
                Audit
                    Fees
                
                $
                90,057
                
                
                $
                89,370(ii)
                Audit
                    Related Fees
                
                
                --
                
                
                
                --(iii)
                Tax
                    Fees
                
                
                --
                
                
                
                --(iv)
                All
                    Other Fees
                
                
                2,800
                
                
                
                --Total
                    fees
                
                $
                92,857
                
                
                $
                89,370
  **AUDIT
          FEES.** Consists of fees billed for professional services rendered for
          the audit of Global Diversified Industries, Inc.'s consolidated financial
          statements and review of the interim consolidated financial statements
          included
          in quarterly reports and services that are normally provided by Russell
          Bedford
          Stefanou Mirchandani LLP in connection with statutory and regulatory filings
          or
          engagements.
 
 **AUDIT-RELATED
          FEES.** Consists of fees billed for assurance and related services that
          are reasonably related to the performance of the audit or review of Global
          Diversified Industries, Inc.'s consolidated financial statements and are
          not
          reported under "Audit Fees." There were no Audit-Related services provided
          in
          fiscal 2007 or 2006.
 
 **TAX
          FEES.** Consists of fees billed for professional services for tax
          compliance, tax advice and tax planning.
 
 **ALL
          OTHER FEES.** Consists of fees for products and services other than the
          services reported above.
 
 
 **POLICY
          ON AUDIT COMMITTEE PRE-APPROVAL OF AUDIT AND PERMISSIBLE NON-AUDIT** **SERVICES
          OF INDEPENDENT AUDITORS**
 
 The
          Company currently does not have a designated Audit Committee, and accordingly,
          the Company's Board of Directors' policy is to pre-approve all audit and
          permissible non-audit services provided by the independent
          auditors.  These services may include audit services, audit-related
          services, tax services and other services. Pre- approval is generally provided
          for up to one year and any pre-approval is detailed as to the particular
          service
          or category of services and is generally subject to a specific budget.
          The
          independent auditors and management are required to periodically report
          to the
          Company's Board of Directors regarding the extent of services provided
          by the
          independent auditors in accordance with this pre-approval, and the fees
          for the
          services performed to date. The Board of Directors may also pre-approve
          particular services on a case-by-case basis.
   21
 Table
              of Contents
  **SIGNATURES**
 
 Pursuant
          to the requirements of Section 13 or 15(d) of the Securities Exchange Act
          of
          1934, the Company has duly caused this report to be signed on its behalf
          by the
          undersigned, thereunto duly authorized.
    **GLOBAL
                  DIVERSIFIED
                  INDUSTRIES, INC.**Dated:
                    August 22, 2007
                By:
                /s/
                  Phil
                  HamiltonPhil
                  HamiltonPresident
                  and CEO
 
  Pursuant
          to the requirements of the Securities Exchange Act of 1934, this report
          has been
          signed below by the following persons on behalf of the Company and in the
          capacities and on the date indicated:
 
 Signature
                
                Title
                
                Date/s/Phil
                    Hamilton
                
                CEO/Chairman
                    of the Board
                
                August
                    22, 2007Phil
                    Hamilton/s/Adam
                    Debard
                
                Secretary/Treasurer/Director
                
                August
                    22, 2007Adam
                    Debard
 22