UNITED
STATES


SECURITIES
AND EXCHANGE COMMISSION


Washington,
DC 20549





__________________________







FORM
10-KSB/A


Amendment
No. 1




__________________________







(MARK
      ONE)x
            ANNUAL
      REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF
      1934For
      the fiscal year ended April 30, 2008ORo
            TRANSITION
      REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF
      1934For
      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 jurisdiction of  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 5, 2008, Common Stock, par value $0.09 per share was
$1,383,290.  As of August 5, 2008, the Company had 15,369,885 shares
of common stock issued and outstanding, of which 9,963,840 were held by
non-affiliates.




Table of Contents




Table of
Contents




PAGEPART
      I.Item
      1.
            Description of
      Business
            4Item
      2.
            Description of
      Property
            5Item
      3.
            Legal
      Proceedings
            5Item
      4.
            Submission of
      Matters to a Vote of Security Holders
            5PART
      II.Item
      5.
            Market for Common
      Equity and Other Shareholder Matters
            6Item
      6.
            Management’s
      Discussion and Analysis of Financial Condition and Results of
      Operations
            F-1Item
      7.
            Financial
      Statements
            44Item
      8.
            Changes In and
      Disagreements with Accountants on Accounting and Financial
      Disclosure
            44Item
      8. (A)
            Controls and
      Procedures
            44PART
      III.Item
      9.
            Directors, Executive
      Officers, Promoters, Control Persons; Compliance with Section 16(a) of the
      Exchange Act
            46Item
      10.
            Executive
      Compensation
            47Item
      11.
            Security Ownership
      of Certain Beneficial Owners and Management
            47Item
      12.
            Certain
      Relationships and Related Transactions
            47Item
      13.
            Exhibits
            48Item
      14.
            Principal
      Accountant's Fees and Services
            49Signatures
            50







Table of Contents





EXPLANATORY
NOTE





We are
amending our Annual Report on Form 10KSB/A to restate our financial statements
for the year ended April 30, 2008 and applicable related disclosures. We have
identified certain accounting errors related to the recording of our preferred
stock instruments and warrants associated with our preferred stock instruments.
We have performed an analysis of our preferred stock agreements and related
warrants and have concluded that we incorrectly recorded the warrants associated
with this issuance as a derivative due to our incorrect interpretation of EITF
00-19. We had also improperly bifurcated the warrants from our preferred stock.
After further review of EITF’s 98-5 and 00-27 we determined there was a
beneficial conversion feature inherent within our preferred stock. Our analysis
further determined that all the warrants associated with our redeemable
preferred stock qualify for treatment as equity under SFAS No. 133 and EITF
00-19. We also had not appropriately accounted for financing costs incurred as a
direct result of these debt arrangements. . The beneficial conversion feature
and the value of investor and broker-dealer warrants and financing costs reduced
the initial carrying value of the preferred stock to zero.  Such
initial carrying value is being accreted up to the face value of the preferred
over the two-year term thereof.  We have added Note S to disclose the
effect and further information regarding the above changes.




The
effect of the (non-cash) changes related to the above corrections resulted in a
decrease in our net loss as reported in our statement of operations for the year
ended April 30, 2008 of $6,459,362 and a decrease in our net loss attributable
to common shareholders of $6,591,968.  Our basic and diluted loss
attributable to common shareholders per share for the year ended April 30, 2008
decreased by $0.67 per share to a loss of $0.31.   The cumulative
effect on our balance sheet was to decrease total current liabilities by
$7,141,944 as of April 30, 2008, and to reduce shareholders’ deficit by
$9,163,124.




The following sections of this Form 10-KSB/A have
been amended to reflect the restatement:




·
            Part I — Item 1A. “Risk
      Factors;”




·
            Part
      II — Item 6. “Selected Financial
  Data;”




·
            Part
      II — Item 6. “Management’s Discussion and Analysis of Financial Condition
      and Results of
Operations;”




·
            Part
      II — Item 7. “Financial Statements;”
  and




·
            Part
      II — Item 8A. “Controls and
  Procedures;”




For
the convenience of the reader, this amendment includes, in their entirety, those
items in our original filing not being amended and restated. Except to the
extent relating to the restatement of our financial statements and other
financial information described above, this amendment continues to describe
conditions as of our original filing, and does not update disclosures contained
herein to reflect events that occurred at a later date. Accordingly, this
amendment should be read in conjunction with our filings made with the
Securities and Exchange Commission subsequent to the original filing of our Form
10-K for the fiscal year ended December 31, 2007.







3
 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.





ITEM1. 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, 2008 and there is none currently scheduled.








4
 Table 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 2008, 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 2008 and into 2009.





Employees





As of
April 30, 2008 the Company had 30 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.





ITEM2. 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 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.





ITEM4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY
HOLDERS





There
were not any matters that were submitted during the fourth quarter of the
2007-2008 fiscal year end to a vote of the security holders.








5
 Table of Contents




PART
II.





ITEM5. 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
"GDIV". The Company began trading under this symbol on May 8, 2008. The Company
previously traded under the symbol “GDVI" since January 3, 2002 and under the
symbol  "GFDO" which commenced on 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, 2008




HIGH
            
            
            LOWQuarter
      Ended April 30, 2008
            
            
            .12
            
            
            
            .12Quarter
      Ended January 31, 2008
            
            
            .16
            
            
            
            .11Quarter
      Ended October 31, 2007
            
            
            .20
            
            
            
            .16Quarter
      Ended July 31, 2007
            
            
            .30
            
            
            
            .26





Per Share
Common Stock Bid Prices by Quarter


For the
Fiscal Year Ended on April 30, 2007




HIGH
            
            
            LOWQuarter
      Ended April 30, 2007
            
            
            .32
            
            
            
            .30Quarter
      Ended January 31, 2007
            
            
            .60
            
            
            
            .56Quarter
      Ended October 31, 2006
            
            
            1.50
            
            
            
            1.34Quarter
      Ended July 31, 2006
            
            
            1.20
            
            
            
            1.14





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.









6
 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.





ITEM6. 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.




Restatement
of April 30, 2008 Balance Sheet




The
Company has restated their financial statements as of and for their fiscal year
ended April 30, 2008 to correct the classification of and related accounting
fora total of
75,685,880common stock purchase warrants issued in connection with the
Company’s Series B Redeemable Convertible Preferred Stock.  These
warrants had been incorrectly classified as “Liabilities” (rather than
“Equity”).  Classification as a liability required “Derivative”
accounting treatment under Statement of Financial Accounting Standard No. 133,
“Accounting for Derivative Instruments and Hedging Activities” (“SFAS No. 133”)
and Emerging Issues Task Force Consensus 00-19, “Accounting for Derivative
Financial Instruments Indexed to, and Potentially Settled in, a Company's Own
Stock” (“EITF 00-19”), rather than recording the effective beneficial conversion
feature under EITF 98-5, “Accounting for Convertible Securities with Beneficial
Conversion Features or Contingently Adjustable Conversion Ratios” and EITF
00-27, “Application of Issue No. 98-5 to Certain Convertible
Instruments.”




The
accounting treatment previously applied resulted in the reporting of the
preferred stock in the net carrying amount of $2,021,574 and the incorrect
recognition of a $7,141,496 “Warrant” liability, both as of April 30, 2008; and
a related net financing expense of $6,459,362, after the offset a
“Mark-to-Market” gain.  Additional paid in capital had been adjusted
for the difference.  The restatement reversed each of the above
entries on the Company’s books.  After applyingEITF’s98-5and 00-27,
the $3,484,294 face value of the related Series B Preferred Stock was fully
offset by the aggregate discounts for the effective beneficial conversion
feature of the preferred stock and the relative fair value of the
warrants.  At April 30, 2008, $394 of such discount had been
amortized, which amount is the carrying value of the preferred at that
date.  The discount will continue to be amortized until the February
21, 2010 mandatory redemption date of the Series B Preferred Stock.




The
following tables show the principal financial statement line items initially
reported as of and the year ended April 30, 2008, the restatement entries made
and balances of the applicable financial statement items as
restated.  There was no change to any asset accounts.  The
restatement entries have been posted to the accompanying April 30, 3008 balance
sheet as follows:









7
 Table of Contents




As
    Reported
              
              
              Adjustments
              
              
              As
    RestatedWarrant
      Liability
              
              $
              7,141,496
              
              
              $
              (7,141,496
              )
              
              $
              -Total
      liabilities
              
              
              7,979,380
              
              
              
              (7,141,944
              )
              
              
              837,436Series
      B Preferred Stock, net of
      unamortized discount
              
              
              2,021,574
              
              
              
              (2,021,180
              )
              
              
              394Stockholders'
      Equity (Deficiency)Additional
      paid in capital
              
              
              9,282,089
              
              
              
              2,501,076
              
              
              
              11,783,165Accumulated
      deficit
              
              
              (12,537,940
              )
              
              
              6,662,048
              
              
              
              (5,875,892
              )Total
      Stockholders' Equity (Deficiency)
              
              
              (3,240,531
              )
              
              
              9,163,124
              
              
              
              5,922,593Total
      Liabilities and Stockholders' Equity
              
              $
              6,760,423
              
              
              $
              -
              
              
              $
              6,760,423


As
    Reported
            
            
            Adjustments
            
            
            As
    RestatedLoss
      from operations
            
            $
            (1,537,923
            )
            
            
            -
            
            
            $
            (1,537,923
            )Fair
      value of warrants issued in connection with Series B
    Preferred
            
            
            (7,760,305
            )
            
            
            7,760,305
            
            
            
            -Unrealized
      change in fair value of warrants
            
            
            1,300,943
            
            
            
            (1,300,943
            )
            
            
            -Interest
      (expense), net
            
            
            (353,892
            )
            
            
            -
            
            
            
            (353,892
            )Loss
      before provision for income taxes
            
            
            (8,351,177
            )
            
            
            6,459,362
            
            
            
            (1,891,815
            )Net
      loss
            
            
            (8,447,177
            )
            
            
            6,459,362
            
            
            
            (1,987,815
            )Preferred
      stock dividends, actual and imputed
            
            
            202,686
            
            
            
            (132,606
            )
            
            
            70,080Net
      loss attributable to common shareholders
            
            $
            (8,649,863
            )
            
            $
            6,591,968
            
            
            $
            (2,057,895
            )Basic
      and diluted loss per common share
            
            $
            (0.88
            )
            
            $
            (0.67
            )
            
            $
            (0.21
            )




Effect of Related
Prospective Accounting Pronouncement




EITF
07-5, “Determining Whether an Instrument (or Embedded Feature) Is Indexed to an
Entity's Own Stock” will become effective for the Company on May 1,
2009.  The Company’s warrants related to its Series B and C Preferred
Stock both have reset provisions to the exercise price if the Company issues
equity at a price less than the exercise prices.  Upon the effective
date, the provisions of this EITF will require a reclassification to liability
based on the reset feature of the warrant agreements if the Company sells equity
at a price below the exercise price of the warrants.




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






8
 Table of Contents




Revenue
Recognition





The
Company recognizes revenue when persuasive evidence of an arrangement exists,
the price to the customer is fixed, collectability 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
2007 and 2008, 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 regularly reviews the period over which its
inventories will be converted to sales.  Any inventories expected to
convert to sales beyond 12 months from the balance sheet date are classified as
non-current.  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 collectability 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 collectability 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, 2008 we determined a reserve was not required against our
account receivables.






9
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Stock-Based
Compensation




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, 2008 and 2007 Revenues





The
Company's total revenues were $5,701,556 for the year ended April 30, 2008
compared to $6,639,359 for the same time period in 2007, a decrease of $937,803
or approximately 14%.    The Company made a decision to
reduce manufacturing production to a minimum during the fiscal year 2008 until
proper funding was secured, which would enable the Company to have the adequate
capital to meet its goals.  The Company secured $2,000,000 funding
from Vicis Capital Master Fund in February 2008.  Subsequent to the
April 30, 2008, the Company also secured a $2,000,000 accounts receivable line
from another finance company.  The Company now has the adequate
funding to aggressively pursue the school market as well as other markets, such
as the Department of Housing (DOH) market.





Gross
Profit





For the
year ended April 30, 2008, the Company's gross profit margin was $36,279,
approximately 1% as compared to $1,011,246, approximately 15% for the year ended
April 30, 2007.




Operating and Other
Expenses





The
Company's general and administrative expenses for the year ended April 30, 2008
was $ 1,228,362 compared to $1,963,798 for the same period in 2007, a decrease
of $735,436. This decrease is mainly attributable to the general and
administrative costs in connection with the decreased sales and operations of
Global Modular.





The
Company's interest expenses, net, for the year ended April 30, 2008 was $353,892
compared to $446,137 for the same period in 2007, a decrease of $92,245. The
change is due to the Company's decreased need for borrowings with production
reduced during the year ended April 30, 2008.




Liquidity and Capital
Resources





The
Company incurred a loss from operations of $1,537,923 for the year
ended April 30, 2008. We generated a negative cash flow of $2,207,300 from
operating activities. Cash flows used in investing activities was $28,950 during
this period. Cash flow was generated from the $2,000,000 funding from Vicis
Capital and an additional $630,000 from the proceeds for notes payables and sale
of common stock to shareholders. The line of credit was paid off at the end of
fiscal year ended April 30, 2008.




The
Company secured additional funding of $1,750,000 from Vicis Capital in June
2008, which will further strengthen the financial position of the
Company.





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 the 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.







10
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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 from 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.




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, 2008, the Company recognized approximately $4,107,777
or 72% of its revenues from sales of its products to three (3) 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
December 2007, the FASB issued Statement of Financial Accounting Standards No.
141(R), “Business Combinations” (“Statement 141(R)”) and Financial Accounting
Standards No. 160, “Noncontrolling Interests in Consolidated Financial
Statements” (“Statement 160”). Statements 141(R) and 160 require most
identifiable assets, liabilities, noncontrolling interests and goodwill acquired
in a business combination to be recorded at “full fair value” and require
noncontrolling interests (previously referred to as minority interests) to be
reported as a component of equity.  Both statements are effective for
fiscal years beginning after December 15, 2008.  Statement 141(R) will
be applied to business combinations occurring after the effective
date.  Statement 160 will be applied prospectively to all
noncontrolling interests, including any that arose before the effective
date.  The Company does not expect the adoption of Statements 141(R)
and 160 will have a material impact, if any, on the Company’s financial position
or results of operations.




In
February 2008, the FASB issued a FASB Staff Position (FSP) on Accounting for Transfers of
Financial Assets and Repurchase Financing Transactions (FSP FAS 140-3).
This FSP addresses the issue of whether the transfer of financial assets and the
repurchase financing transactions should be viewed as two separate transactions
or as one linked transaction. The FSP includes a rebuttable presumption that the
two transactions are linked unless the presumption can be overcome by meeting
certain criteria. The FSP will be effective for fiscal years beginning after
November 15, 2008 and will apply only to original transfers made after that
date; early adoption will not be allowed. The Company does not expect the
adoption of FSP FAS 140-3 to have a material impact, if any, on its consolidated
financial statements.






11
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In
March 2008, the Financial Accounting Standards Board (FASB) issued
Statement No. 161, Disclosures about Derivative
Instruments and Hedging Activities - an amendment of FASB Statement
No. 133 (SFAS 161).  The SFAS 161 requires companies to provide
enhanced disclosures regarding derivative instruments and hedging activities and
requires companies to better convey the purpose of derivative use in terms of
the risks they intend to manage. Disclosures about (a) how and why an
entity uses derivative instruments, (b) how derivative instruments and
related hedged items are accounted for under SFAS No. 133 and its related
interpretations, and (c) how derivative instruments and related hedged
items affect a company’s financial position, financial performance, and cash
flows are required. This Statement retains the same scope as SFAS No. 133,
Accounting for Derivative
Instruments and Hedging Activities, and is effective for fiscal years and
interim periods beginning after November 15, 2008. The Company does not
expect the adoption of SFAS No. 161 to have a material impact, if any, on
its consolidated financial statements.





In April
2008, the FASB issued FSP No. 142-3, “Determination of the Useful Life of
Intangible Assets” (“FSP 142-3”). FSP 142-3 amends the factors an entity should
consider in developing renewal or extension assumptions used in determining the
useful life of recognized intangible assets under FASB Statement No. 142,
“Goodwill and Other Intangible Assets”. This new guidance applies prospectively
to intangible assets that are acquired individually or with a group of other
assets in business combinations and asset acquisitions. FSP 142-3 is effective
for financial statements issued for fiscal years and interim periods beginning
after December 15, 2008. Early adoption is prohibited. The Company is currently
evaluating the impact, if any, that FSP 142-3 will have on its consolidated
financial statements.





In May
2008, the FASB issued SFAS No. 162, “The Hierarchy of Generally Accepted
Accounting Principles” (“SFAS 162”). SFAS 162 identifies the sources of
accounting principles and the framework for selecting the principles used in the
preparation of financial statements of nongovernmental entities that are
presented in conformity with generally accepted accounting principles (the GAAP
hierarchy). SFAS 162 will become effective 60 days following the SEC’s approval
of the Public Company Accounting Oversight Board amendments to AU Section 411,
“The Meaning of Present Fairly in Conformity With Generally Accepted Accounting
Principles.” The Company does not currently expect the adoption of SFAS 162 to
have a material effect on its consolidated results of operations and financial
condition.





In May
2008, the FASB issued FSP Accounting Principles Board (“APB”) 14-1 “Accounting
for Convertible Debt instruments That May Be Settled in Cash upon Conversion
(Including Partial Cash Settlement)” (“FSP APB 14-1”). FSP APB 14-1 requires the
issuer of certain convertible debt instruments that may be settled in cash (or
other assets) on conversion to separately account for the liability (debt) and
equity (conversion option) components of the instrument in a manner that
reflects the issuer’s non-convertible debt borrowing rate. FSP APB 14-1 is
effective for fiscal years beginning after December 15, 2008 on a retroactive
basis. The Company currently believes the adoption of FSP APB 14-1 will not have
a material effect on its consolidated results of operations and financial
condition.




EITF
07-5, “Determining Whether an Instrument (or Embedded Feature) Is Indexed to an
Entity's Own Stock” will become effective for the Company on May 1,
2009.  The Company’s warrants related to its Series B and C Preferred
Stock both have reset provisions to the exercise price if the Company issues
equity at a price less than the exercise prices.  Upon the effective
date, the provisions of this EITF will require a reclassification to liability
based on the reset feature of the warrant agreements if the Company sells equity
at a price below the exercise price of the warrants.





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.





12
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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.








13
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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 complement 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.






14
 Table of Contents




Limited
Public Market, Possible Volatility Of Share Price





The
Company's common stock is currently quoted on
the  OTC  Bulletin Board under the ticker symbol GDIV. As of
August 9, 2008, there were  15,369,885 shares of common stock
outstanding, . 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.




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.






15
 Table of Contents




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
Conversion of Outstanding Preferred Stock and Exercise of Warrants will Cause
Dilution of the Holders of Common Stock





The
Holders of the Preferred Stock have the right to convert their Preferred Stock
into 34,842,940  shares of Common Stock and the Holders of Warrants
have the right to purchase a total of  75,685,880  shares
of  Common Stock.  In the event that the Holders of the
Preferred Stock and/or the Holders of the Warrants convert their Preferred Stock
or exercise their Warrants, the  Holders of Common Stock will
experience immediate dilution in the net tangible value of their
shares.





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.







16
 Table of Contents




ITEM7.  FINANCIAL STATEMENTS


























CONSOLIDATED
FINANCIAL STATEMENTS


APRIL
30, 2008 AND 2007








FORMING
A PART OF ANNUAL REPORT


PURSUANT
TO THE SECURITIES EXCHANGE ACT OF 1934





GLOBAL
DIVERSIFIED INDUSTRIES, INC.









Table of Contents











GLOBAL
DIVERSIFIED INDUSTRIES, INC.


Index
to Financial Statements




PageReport of
      Registered Independent Certified Public Accounting
      Firm
            F-3Consolidated
      Balance Sheet at April 30, 2008
            F-4Consolidated
      Statements of Operations for the years ended April 30, 2008 and
      2007
            F-5Consolidated
      Statements of Stockholders’ Equity for the two years ended April
      30, 2008
            F-6Consolidated
      Statements of Cash Flows for the years ended April 30, 2008 and
      2007
            F-7Notes to
      Consolidated Financial Statements
            F-8
      to F-27











Table of Contents










RBSM, LLP


Certified
Public Accountants














REPORTOF REGISTERED INDEPENDENT
CERTIFIED PUBLIC ACCOUNTING FIRM








To the
Board of Directors and Stockholders of


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, 2008 and
the related consolidated statements of losses, stockholders’ equity, and cash
flows for each of the two years in the period ended April 30,
2008.  These financial statements are the responsibility of the
Company’s management.  Our responsibility is to express an opinion on
these consolidated 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.  The
Company is not required to have, nor were we engaged to perform, an audit of its
internal control over financial reporting. Our audit included consideration of
internal control over financial reporting as a basis for designing audit
procedures that are appropriate in the circumstances, but not for the purpose of
expressing an opinion on the effectiveness of the Company’s internal control
over financial reporting. Accordingly we express no such opinion. 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,
2008, and the results of its operations and its cash flows for each of the two
years in the period ended April 30, 2008 in conformity with accounting
principles generally accepted in the United States of America.





As
discussed in Note S, the Company has restated the consolidated balance sheet as
of April 30, 2008 and the related consolidated statements of losses,
stockholders’ equity, and cash flows for the year then
ended.













/S/ RBSM
LLP


RBSM
LLP





New York,
New York


August
13, 2008, except for Note A, Note J, and Note S as to which is date is October
23, 2008.







F-3
 Table of Contents








GLOBALDIVERSIFIED INDUSTRIES, INC.


CONSOLIDATED
BALANCE SHEET


APRIL
30, 2008


Restated





ASSETS:Current
      assets:Cash
      and cash equivalents
            
            $
            53,193Accounts
      receivable, net of allowance for doubtful accounts of $0 at April 30,
      2008
            
            
            386,040Inventories
      (Note C)
            
            
            2,357,378Advance
      to employees
            
            
            16,737Prepaid
      expenses
            
            
            246,196Total
      current assets
            
            
            3,059,544Property,
      plant and equipment (Note D):Property,
      plant and equipment, at cost
            
            
            3,081,437Less:
      accumulated depreciation
            
            
            (1,291,771
            )Total
      property, plant and equipment, net
            
            
            1,789,666Other
      assets:Inventories
      (Note C)
            
            
            895,929Deposit
      and other assets
            
            
            113,614Intangible
      assets, net of accumulated amortization of $ 284,170  at April
      30, 2008 (Note B)
            
            
            901,670Total
      other assets
            
            
            1,911,213Total
      Assets
            
            $
            6,760,423




LIABILITIES
      AND STOCKHOLDERS’ EQUITYCurrent
      liabilities:Accounts
      payable and accrued liabilities (Note F)
            
            $
            493,156Notes
      payable to related parties, current portion (Note H)
            
            
            5,500Notes
      payable, current portion (Note H)
            
            
            22,384Dividend
      payable
            
            
            69,686Total
      current liabilities
            
            
            590,726Long-term
      liabilities:Notes
      payable, long term portion, net of debt discount (Note H)
            
            
            246,710Total
      long-term liabilities
            
            
            246,710Commitment
      and contingencies (Note Q)
            
            
            -Convertible
      Redeemable Preferred Stock, Series B, par value $.001 per share; 3,500,000
      share authorized ; 3,484,294 shares issued and outstanding at April 30,
      2008 (Note J)
            
            
            3,484,294Unamortized
      Discount on Preferred Stock
            
            
            (3,483,900
            )Net
      Preferred Stock
            
            
            394Stockholders'
      Equity:Convertible
      Redeemable Preferred Stock, Series A,  par value $.001 per
      share; 10,000,000 share authorized ; no shares issued and outstanding at
      April 30, 2008Common
      stock, par value $.001 per share; 2,750,000,000 shares authorized;
      15,369,885 shares issued and outstanding at April 30,
      2008  (Note K)
            
            
            15,370Additional
      paid-in capital
            
            
            11,783,165Treasury
      stock
            
            
            (50
            )Accumulated
      deficit
            
            
            (5,875,892
            )Total
      stockholders' equity
            
            
            5,922,593Total
      liabilities and stockholders' equity
            
            $
            6,760,423





See
accompanying notes to consolidated financial statements








F-4
 Table of Contents






GLOBALDIVERSIFIED INDUSTRIES, INC.


CONSOLIDATED
STATEMENTS OF LOSSES


FOR
THE YEARS ENDED APRIL 30, 2008 AND 2007




2008
              Restated
            
            
            2007Revenue
            
            $
            5,701,556
            
            
            $
            6,639,359Impairment
      of inventories (Note C)
            
            
            
            
            
            
            850,000Cost
      of goods sold
            
            
            5,665,277
            
            
            
            4,778,114Gross
      profit
            
            
            36,279
            
            
            
            1,011,245Operating
      expenses:Selling,
      general and administrative expenses
            
            
            1,228,362
            
            
            
            1,963,798Depreciation
      and amortization (Notes B and D)
            
            
            345,840
            
            
            
            318,031Total
      operating expense
            
            
            1,574,202
            
            
            
            2,281,829Loss
      from operations
            
            
            (1,537,923
            )
            
            
            (1,270,584)Other
      income (expense):Interest
      (expense), net
            
            
            (353,892
            )
            
            
            (446,137
            )Loss
      before provision for income taxes and discontinued
    operations
            
            
            (1,891,815
            )
            
            
            (1,716,721)Income
      taxes benefit (provision)
            
            
            (96,000
            )
            
            
            74,200Loss
      from continuing operations before discontinued operations
            
            
            (1,987,815
            )
            
            
            (1,642,521)Loss
      from discontinued operations (Note E)
            
            
            -
            
            
            
            (29,543
            )Gain
      from disposal of discontinued operations (Note E)
            
            
            -
            
            
            
            328,286Net
      loss
            
            
            (1,987,815
            )
            
            
            (1,343,778)Preferred
      DividendsContractual
            
            
            (69,686
            )
            
            
            -Amortization
      of preferred stock discount
            
            
            (394
            )
            
            
            -Total
      preferred stock dividends
            
            
            70,080Net
      loss attributable to common shareholders
            
            
            (2,057,895
            )
            
            
            (1,343,778
            )(Losses)
      per common share (Note P):Basic
      and diluted earnings per share
            
            $
            (0.21
            )
            
            $
            (0.17
            )Weighted
      average shares outstanding for computation:Basic
      and diluted
            
            
            9,774,281
            
            
            
            7,970,132




See
accompanying notes to consolidated financial statements




F-5
 Table of Contents






GLOBALDIVERSIFIED INDUSTRIES, INC.


CONSOLIDATED
STATEMENTS OF DEFICIENCY IN STOCKHOLDERS’ EQUITY


FOR
THE TWO YEARS ENDED APRIL 30, 2008


Restated






Preferred
            
            
            
            
            
            
            
            
            Additional
            
            
            CommonSeries
      A preferred stock
            
            
            Stock
            
            
            Common
      stock
            
            
            Paid
      in
            
            
            Stock
            
            
            Treasury
            
            
            AccumulatedShares
            
            
            Amount
            
            
            Subscription
            
            
            Shares
            
            
            Amount
            
            
            Capital
            
            
            Subscription
            
            
            Stock
            
            
            Deficit
            
            
            TotalBalance,
      May 1, 2006
            
            
            666,666
            
            
            $
            667
            
            
            $
            733,374
            
            
            
            7,472,374
            
            
            $
            7,472
            
            
            $
            5,465,308
            
            
            $
            1,596,939
            
            
            $
            (50
            )
            
            $
            (2,544,299
            )
            
            $
            5,259,411Common
      stock issued for services rendered
            
            
            -
            
            
            
            -
            
            
            
            -
            
            
            
            216,448
            
            
            
            217
            
            
            
            173,608
            
            
            
            -
            
            
            
            -
            
            
            
            -
            
            
            
            173,825Common
      stock issued in exchange for stock subscribed
            
            
            -
            
            
            
            -
            
            
            
            -
            
            
            
            504,972
            
            
            
            505
            
            
            
            879,834
            
            
            
            (880,339
            )
            
            
            -
            
            
            
            -
            
            
            
            -Common
      stock subscribed in exchange for notes payable
            
            
            -
            
            
            
            -
            
            
            
            -
            
            
            
            -
            
            
            
            -
            
            
            
            -
            
            
            
            200,000
            
            
            
            -
            
            
            
            -
            
            
            
            200,000Common
      stock issued in exchange for preferred stock
            
            
            (333,333
            )
            
            
            (333
            )
            
            
            -
            
            
            
            166,667
            
            
            
            167
            
            
            
            166
            
            
            
            -
            
            
            
            -
            
            
            
            -
            
            
            
            -Preferred
      stock issued in exchange for in exchange for accrued
      interest
            
            
            79,759
            
            
            
            79
            
            
            
            -
            
            
            
            -
            
            
            
            -
            
            
            
            53,369
            
            
            
            -
            
            
            
            -
            
            
            
            -
            
            
            
            53,448Net
      loss
            
            
            -
            
            
            
            -
            
            
            
            -
            
            
            
            -
            
            
            
            -
            
            
            
            -
            
            
            
            -
            
            
            
            -
            
            
            
            (1,343,778
            )
            
            
            (1,343,778
            )Balance,
      April 30, 2007
            
            
            413,092
            
            
            
            413
            
            
            
            733,374
            
            
            
            8,360,461
            
            
            
            8,361
            
            
            
            6,572,285
            
            
            
            916,600
            
            
            
            (50
            )
            
            
            (3,888,077
            )
            
            
            4,342,906Common
      stock issued in exchange for services rendered
            
            
            -
            
            
            
            -
            
            
            
            -
            
            
            
            100,000
            
            
            
            100
            
            
            
            17,900
            
            
            
            -
            
            
            
            -
            
            
            
            -
            
            
            
            18,000Common
      stock issued in exchange for accrued expenses
            
            
            -
            
            
            
            -
            
            
            
            -
            
            
            
            290,960
            
            
            
            291
            
            
            
            86,997
            
            
            
            -
            
            
            
            -
            
            
            
            -
            
            
            
            87,288Sale
      of common stock
            
            
            -
            
            
            
            -
            
            
            
            -
            
            
            
            791,665
            
            
            
            792
            
            
            
            249,208
            
            
            
            -
            
            
            
            -
            
            
            
            -
            
            
            
            250,000Common
      stock issued in exchange for stock subscribed
            
            
            -
            
            
            
            -
            
            
            
            -
            
            
            
            3,536,919
            
            
            
            3,536
            
            
            
            896,464
            
            
            
            (900,000
            )
            
            
            -
            
            
            
            -
            
            
            
            -Series
      A preferred stock issued in exchange for stock
    subscribed
            
            
            8,333,332
            
            
            
            8,333
            
            
            
            (733,374
            )
            
            
            -
            
            
            
            -
            
            
            
            725,041
            
            
            
            -
            
            
            
            -
            
            
            
            -
            
            
            
            -Conversion
      of Series A to common stock
            
            
            (8,746,424
            )
            
            
            (8,746
            )
            
            
            
            
            
            
            2,289,880
            
            
            
            2,290
            
            
            
            6,456
            
            
            
            -
            
            
            
            
            
            
            
            
            
            
            
            -Cancellation
      of common stock subscription
            
            
            -
            
            
            
            -
            
            
            
            -
            
            
            
            -
            
            
            
            -
            
            
            
            16,600
            
            
            
            (16,600
            )
            
            
            -
            
            
            
            -
            
            
            
            -Beneficial
      conversion feature relating to the issuance of Series B Redeemable
      Preferred Stock
            
            
            -
            
            
            
            -
            
            
            
            -
            
            
            
            
            
            
            
            
            
            
            
            1,009,984
            
            
            
            -
            
            
            
            -
            
            
            
            -
            
            
            
            1,006,984Relative
      fair value of investor warrants issued in connection with Series B
      Redeemable Preferred
      Stock
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            1,590,177
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            1,590,177Fair
      value of broker-dealer warrants issued in connection with Series B
      Redeemable Preferred Stock
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            682,133
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            682,133-
            
            
            
            -
            
            
            
            -
            
            
            
            -
            
            
            
            
            
            
            
            
            
            
            
            -
            
            
            
            -
            
            
            
            -Series
      B preferred stock dividend
            
            
            -
            
            
            
            -
            
            
            
            -
            
            
            
            -
            
            
            
            -
            
            
            
            (70,080
            )
            
            
            -
            
            
            
            -
            
            
            
            
            
            
            
            (70,0080
            )Net
      loss
            
            
            -
            
            
            
            -
            
            
            
            -
            
            
            
            -
            
            
            
            -
            
            
            
            -
            
            
            
            -
            
            
            
            -
            
            
            
            (1,987,815
            )
            
            
            (1,987,815
            )Balance,
      April 30, 2008
            
            
            -
            
            
            $
            -
            
            
            $
            -
            
            
            
            15,369,885
            
            
            $
            15,370
            
            
            $
            11,783,165
            
            
            $
            -
            
            
            $
            (50
            )
            
            $
            (5,875,892
            )
            
            $
            5,922,593
            )






See
accompanying notes to consolidated financial stat










F-6
 Table of Contents







GLOBALDIVERSIFIED INDUSTRIES, INC.


CONSOLIDATED
STATEMENTS OF CASH FLOWS


FOR
THE YEARS ENDED APRIL 30, 2008 AND 2007






2008
              Restated
            
            
            2007Cash
      flows from operating activities:Net
      income (loss)
            
            $
            (1,987,815
            )
            
            $
            (1,343,778
            )Add
      (deduct):Loss
      from discontinued operations
            
            
            
            
            
            
            29,543Gain
      from disposal of discontinued operations
            
            
            
            
            
            
            (328,286
            )Income
      (loss) from continuing operations
            
            
            (1,987,815
            )
            
            
            (1,642,521
            )Adjustment
      to reconcile net income (loss) to net cash used in operating
      activities:Loss
      from impairment of inventory
            
            
            
            
            
            
            850,000Deferred
      taxes
            
            
            96,000
            
            
            
            (75,000
            )Depreciation
      and amortization
            
            
            345,840
            
            
            
            318,031Common
      stock issued in exchange for services rendered
            
            
            18,000
            
            
            
            170,825Common
      stock issued to employees for compensation
            
            
            
            
            
            
            3,000Common
      stock issued in exchange for rent
            
            
            87,282
            
            
            
            -Amortization
      of debt discount
            
            
            19,380
            
            
            
            80,846Change
      in assets and liabilities:(Increase)/decrease
      in accounts receivable
            
            
            296,322
            
            
            
            2,294,079(Increase)
      in inventory
            
            
            (279,767
            )
            
            
            (758,786
            )(Increase)
      in prepaid expense and others
            
            
            (82,310
            )
            
            
            (164,798
            )(Increase)/decrease
      in employee advances
            
            
            (14,992
            )
            
            
            (1,745
            )(Decrease)
      in accounts payable and accrued expenses
            
            
            (705,240
            )
            
            
            417,021(Decrease)
      in deferred revenue
            
            
            -
            
            
            
            -Net
      cash provided by (used in) continued operations
            
            
            (2,207,300
            )
            
            
            1,490,952Net
      cash provided by (used in) discontinued operations
            
            
            -
            
            
            
            78,082Net
      cash provided by (used in) operating activities:
            
            
            (2,207,300
            )
            
            
            1,569,034Cash
      flows from investing activities:Cash
      received in connection with disposition of MBS
            
            
            -
            
            
            
            1,000Capital
      expenditure, net
            
            
            (28,950
            )
            
            
            (628,865
            )Net
      cash (used in) investing activities
            
            
            (28,950
            )
            
            
            (627,865
            )Cash
      flows from financing activities:Proceeds
      from sale of common stock and stock subscription
            
            
            250,000
            
            
            
            -Proceeds
      from sale of series b preferred stock
            
            
            2,000,000
            
            
            
            -Proceeds
      from (repayments of) notes payable, net
            
            
            (702,626
            )
            
            
            (1,252,700
            )Proceeds
      from note payable to related parties, net of repayments
            
            
            435,500
            
            
            
            111,000Net
      cash provided by (used in) financing activities
            
            
            1,932,874
            
            
            
            (1,141,700
            )Net
      increase (decrease) in cash and cash equivalents
            
            
            (303,376
            )
            
            
            (200,531
            )Cash
      and cash equivalents at beginning of year
            
            
            356,569
            
            
            
            557,100Cash
      and cash equivalents at end of year
            
            $
            53,193
            
            
            $
            356,569Supplemental
      Disclosures of Cash Flow Information:Cash
      paid during the period for interest
            
            $
            236,399
            
            
            $
            247,331Cash
      paid during the period for income taxes
            
            
            3,200
            
            
            
            800Common
      stock issued for services
            
            
            18,000
            
            
            
            170,825Common
      stock issued to employees for compensation
            
            
            
            
            
            
            3,000Common
      stock subscribed in exchange for conversion of note
payable
            
            
            700,000
            
            
            
            200,000Common
      stock issued in exchange for factory rent
            
            
            87,288
            
            
            
            -Series
      A Preferred Stock issued in exchange for accrued interest
            
            
            
            
            
            
            53,449Series
      B Preferred Stock issued in exchange for notes payable
            
            
            1,484,294
            
            
            
            -Amortization
      and write off of debt discount – beneficial conversion
    feature
            
            
            19,380
            
            
            
            80,846







See
accompanying notes to consolidated financial statements






F-7
 Table of Contents






GLOBALDIVERSIFIED INDUSTRIES, INC.


NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS


APRIL
30, 2008 AND 2007







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, 2008 AND 2007





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.





In fiscal
2007 and 2008, 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, 2008 and 2007 are $4,614
and $5,270, respectively.







F-9
 Table of Contents





GLOBAL
DIVERSIFIED INDUSTRIES, INC.


NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS


APRIL
30, 2008 AND 2007





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, 2008 and
2007.





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





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 or outstanding
at April 30, 2008.





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, 2008 AND 2007





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,
2008.




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).





Reverse Stock
Split





On May
21, 2008, the Company affected a one-to-twenty reverse stock split of our common
stock.  We did not reduce the number of shares we are authorized to
issue or change the par value of the common stock.  All references to
share value in these consolidated financial statements have been restated to
reflect this split.





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
December 2007, the FASB issued Statement of Financial Accounting Standards No.
141(R), “Business Combinations” (“Statement 141(R)”) and Financial Accounting
Standards No. 160, “Noncontrolling Interests in Consolidated Financial
Statements” (“Statement 160”). Statements 141(R) and 160 require most
identifiable assets, liabilities, noncontrolling interests and goodwill acquired
in a business combination to be recorded at “full fair value” and require
noncontrolling interests (previously referred to as minority interests) to be
reported as a component of equity.  Both statements are effective for
fiscal years beginning after December 15, 2008.  Statement 141(R) will
be applied to business combinations occurring after the effective
date.  Statement 160 will be applied prospectively to all
noncontrolling interests, including any that arose before the effective
date.  The Company does not expect the adoption of Statements 141(R)
and 160 will have a material impact, if any, on the Company’s financial position
or results of operations.







F-11
 Table of Contents




GLOBAL
DIVERSIFIED INDUSTRIES, INC.


NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS


APRIL
30, 2008 AND 2007





NOTE
A – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)





New Accounting
Pronouncements (Continued)





In
February 2008, the FASB issued a FASB Staff Position (FSP) on Accounting for Transfers of
Financial Assets and Repurchase Financing Transactions (FSP FAS 140-3).
This FSP addresses the issue of whether the transfer of financial assets and the
repurchase financing transactions should be viewed as two separate transactions
or as one linked transaction. The FSP includes a rebuttable presumption that the
two transactions are linked unless the presumption can be overcome by meeting
certain criteria. The FSP will be effective for fiscal years beginning after
November 15, 2008 and will apply only to original transfers made after that
date; early adoption will not be allowed. The Company does not expect the
adoption of FSP FAS 140-3 to have a material impact, if any, on its consolidated
financial statements.








In
March 2008, the Financial Accounting Standards Board (FASB) issued
Statement No. 161, Disclosures about Derivative
Instruments and Hedging Activities - an amendment of FASB Statement
No. 133 (SFAS 161).  The SFAS 161 requires companies to provide
enhanced disclosures regarding derivative instruments and hedging activities and
requires companies to better convey the purpose of derivative use in terms of
the risks they intend to manage. Disclosures about (a) how and why an
entity uses derivative instruments, (b) how derivative instruments and
related hedged items are accounted for under SFAS No. 133 and its related
interpretations, and (c) how derivative instruments and related hedged
items affect a company’s financial position, financial performance, and cash
flows are required. This Statement retains the same scope as SFAS No. 133,
Accounting for Derivative
Instruments and Hedging Activities, and is effective for fiscal years and
interim periods beginning after November 15, 2008. The Company does not
expect the adoption of SFAS No. 161 to have a material impact, if any, on
its consolidated financial statements.





In April
2008, the FASB issued FSP No. 142-3, “Determination of the Useful Life of
Intangible Assets” (“FSP 142-3”). FSP 142-3 amends the factors an entity should
consider in developing renewal or extension assumptions used in determining the
useful life of recognized intangible assets under FASB Statement No. 142,
“Goodwill and Other Intangible Assets”. This new guidance applies prospectively
to intangible assets that are acquired individually or with a group of other
assets in business combinations and asset acquisitions. FSP 142-3 is effective
for financial statements issued for fiscal years and interim periods beginning
after December 15, 2008. Early adoption is prohibited. The Company is currently
evaluating the impact, if any, that FSP 142-3 will have on its consolidated
financial statements.





In May
2008, the FASB issued SFAS No. 162, “The Hierarchy of Generally Accepted
Accounting Principles” (“SFAS 162”). SFAS 162 identifies the sources of
accounting principles and the framework for selecting the principles used in the
preparation of financial statements of nongovernmental entities that are
presented in conformity with generally accepted accounting principles (the GAAP
hierarchy). SFAS 162 will become effective 60 days following the SEC’s approval
of the Public Company Accounting Oversight Board amendments to AU Section 411,
“The Meaning of Present Fairly in Conformity With Generally Accepted Accounting
Principles.” The Company does not currently expect the adoption of SFAS 162 to
have a material effect on its consolidated results of operations and financial
condition.





In May
2008, the FASB issued FSP Accounting Principles Board (“APB”) 14-1 “Accounting
for Convertible Debt instruments That May Be Settled in Cash upon Conversion
(Including Partial Cash Settlement)” (“FSP APB 14-1”). FSP APB 14-1 requires the
issuer of certain convertible debt instruments that may be settled in cash (or
other assets) on conversion to separately account for the liability (debt) and
equity (conversion option) components of the instrument in a manner that
reflects the issuer’s non-convertible debt borrowing rate. FSP APB 14-1 is
effective for fiscal years beginning after December 15, 2008 on a retroactive
basis. The Company currently believes the adoption of FSP APB 14-1 will not have
a material effect on its consolidated results of operations and financial
condition.




EITF
07-5, “Determining Whether an Instrument (or Embedded Feature) Is Indexed to an
Entity's Own Stock” will become effective for the Company on May 1,
2009.  The Company’s warrants related to its Series B and C Preferred
Stock both have reset provisions to the exercise price if the Company issues
equity at a price less than the exercise prices.  Upon the effective
date, the provisions of this EITF will require a reclassification to liability
based on the reset feature of the warrant agreements if the Company sells equity
at a price below the exercise price of the warrants.





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, 2008 AND 2007




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, 2008.





Total
identifiable intangible assets acquired and their carrying value at April 30,
2008 are:





Gross
      Carrying Amount
            
            
            Accumulated
      Amortization
            
            
            Net
            
            
            Residual
      Value
            
            Weighted
      Average
              Amortization
              Period
      (Years)Amortized
      Identifiable Intangible Assets:Building
      engineering and architectural plans
            
            $
            835,840
            
            
            $
            (284,170
            )
            
            $
            551,670
            
            
            $
            -
            
            10.0Total
      Amortized Identifiable Intangible Assets
            
            
            835,840
            
            
            
            (284,170
            )
            
            
            551,670
            
            
            
            -
            
            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
            
            $
            1,185,840
            
            
            $
            (284,170
            )
            
            $
            901,670
            
            
            $
            350,000
            
            10.0




Total
amortization expense charged to operations for the year ended April 30, 2008 and
2007 were $87,870 and $81,564, 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, 2008 is as follows:




2009
            
            $
            87,8702010
            
            
            87,8702011
            
            
            87,8702012
            
            
            87,8702013
      and after
            
            
            200,190Total
            
            $
            551,670







F-13
 Table of Contents





GLOBAL
DIVERSIFIED INDUSTRIES, INC.


NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS


APRIL
30, 2008 AND 2007





NOTE C -
INVENTORIES




Inventories
are stated at the lower of cost or market determined by the first-in, first-out
(FIFO) method.   The Company regularly reviews the period over
which its inventories will be converted to sales. Any inventories expected
to convert to sales beyond 12 months from the balance sheet date are
classified as non-current. Components of inventories as of April 30,
2008 are as follows:




Current
Inventories




Finished
      Goods
            
            $
            108,856Work
      in Progress
            
            
            493,994Raw
      Materials
            
            
            1,754,528Total
      current inventories
            
            $
            2,357,378




Long Term
Inventories




Refurbished
      Bldgs
            
            $
            193,000Raw
      Materials
            
            $
            702,929Total
      long term inventories
            
            $
            895,929





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 cannot
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, 2008 consists of the
following:





Plant
      Equipment
            
            $
            2,106,816Furniture
      and Fixture
            
            
            2,933Building
      and Leasehold Improvement
            
            
            971,688Total
            
            
            3,081,437Accumulated
      Depreciation
            
            
            (1,291,771
            )$
            1,789,666





Depreciation
expense included as a charge to income amounted to $257,970 and $236,467 for the
year ended April 30, 2008 and 2007, 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, 2008 AND 2007





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, 2008 and 2007 were:




2008
            
            
            2007Revenues
            
            $
            -
            
            
            $
            -Costs
      and Expenses
            
            
            -
            
            
            
            29,543Net
      loss before tax
            
            
            -
            
            
            
            (29,543
            )Income
      tax provision (benefit)
            
            
            -
            
            
            
            -Net
      loss
            
            
            -
            
            
            
            (29,543
            )Net
      gain on sale of MBS, before tax
            
            
            -
            
            
            
            328,286Income
      tax provision (benefit)
            
            
            -
            
            
            
            -Gain
      on sale, net of tax
            
            
            -
            
            
            
            328,286Gain on discontinued operations,net of tax
            
            $
            -
            
            
            $
            298,743







F-15
 Table of Contents




GLOBAL
DIVERSIFIED INDUSTRIES, INC.


NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS


APRIL
30, 2008 AND 2007







NOTE
F – ACCOUNTS PAYABLE AND ACCRUED LIABILITIES





Accounts
payable and accrued liabilities at April 30, 2008 are as follows:





Accounts
      payable
            
            $
            104,608Accrued
      State Income Tax Payable
            
            
            15,727Accrued
      Expenses related to Hidden Valley Lawsuit
            
            
            207,715Accrued
      Property taxes
            
            
            49,384Accrued
      payroll and payroll taxes
            
            
            21,545Other
      accrued expenses
            
            
            94,625Total
            
            $
            493,604





NOTE
G - ECONOMIC DEPENDENCY





During
the year ended April 30, 2008, approximately $ 4,107,777 or 72%, of total
revenues were derived from three (3) major customers and
$292,746  (76%) of the
total  accounts  receivable  at
April  30,  2008  were  due  from
two (2)  major customers.




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.





NOTE
H – NOTES PAYABLE





A summary
of notes payable at April 30, 2008 is as follows:





Note
      payable to Company shareholders in monthly installments of interest only
      at 8.0% per annum; unsecured; maturity dated August 1,
2008
            
            
            5,500Note
      payable in 24 monthly installments beginning March 15, 2006; unsecured;
      maturity date is March 2008.
            
            
            22,547Note
      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)
            
            
            246,710Note
      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.
            
            
            (163)274,594Less:
      current portion
            
            
            (27,884
            )Total
      - notes payable – long term
            
            $
            246,710








F-16
 Table of Contents




GLOBAL
DIVERSIFIED INDUSTRIES, INC.


NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS


APRIL
30, 2008 AND 2007





NOTE
H – NOTES PAYABLE (Continued)




(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 were issued in
September 2007. 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 $19,380 and $80,846 for the year ended
April 30, 2008 and 2007, respectively.





NOTE
I - RELATED PARTY TRANSACTIONS




Effective
October 16, 2007, Duane Hamilton, the son of the Company’s CEO became a Director
and officer of a leasing company which the Company has borrowed money from and
conducted business with historically.





Effective
February 15, 2008, the Company issued 6,833,340 shares of Convertible Series A
preferred stock related to a past subscription
payable.   Effective March 11, 2008, the 6,833,340 shares of
Convertible Series A were converted into 1,708,333 shares of common
stock.





Effective
February 15, 2008, the Company issued 3,360,417 shares of common stock to two
related parties related to a past subscription payable balance.





NOTE J – CONVERTIBLE
REDEEMABLE PREFERRED STOCK




In
February 2008, the Board of Directors authorized the issuance of up to 3,500,000
shares of Series B 12% convertible voting preferred stock (“Series B”) having a
stated value of $1.00 per share. The Series B shares are convertible at any
time, at the option of the holder, into the Company’s common stock at an
initial conversion rate determined by dividing the stated value of $1.00 by the
initial conversion price of $0.005 (post stock split $0.10) per share. The
conversion price is subject to certain anti-dilution provisions in the event the
Company issues shares of its common stock or common stock equivalents below the
stated conversion price or pays a stock dividend or otherwise makes a
distribution payable in shares of common stock, with the exception of any shares
issued upon conversion or payment of dividend on this issuance, or other similar
events such as stock splits or common stock reclassifications.  The
holders are entitled to receive a cumulative 12% dividend based on the stated
value of $1.00 per share, payable on the calendar quarter in cash.






Upon any
liquidation, dissolution or winding-up of the Company, the Series B shareholders
shall be entitled to receive out of the assets, whether capital or surplus, of
the Company an amount equal to 100% of the stated value, plus any accrued and
unpaid dividends thereon and any other fees or liquidated damages owing thereon,
for each Series B share before any distribution or payment shall be made to the
holders of any other securities, and if the assets of the Company shall be
insufficient to pay in full such amounts, then the entire assets to be
distributed to the Series B shareholders shall be ratably distributed among the
Series B shareholders in accordance with the respective amounts that would be
payable on such shares if all amounts payable thereon were paid in full. The
liquidation value as of April 30, 2008 was $3,484,294 plus accrued dividends of
$77,895.




In
February 2008, the Company issued 2,000,000 Series B shares at $1.00 per share
to accredited investors in a private placement. The Company received $2,000,000
less issuance costs totaling $202,000. Net cash proceeds at April 30, 2008 were
$1,798,000. Additionally, in February 2008, the Company issued 1,484,294 Series
B shares at $1.00 per share in exchange for existing convertible
debentures.




Under the
terms of the Series B Stock Certificate of Designation, the holders have a
right, at any time after the second year anniversary and upon providing written
notice to the Company (a “Put Notice”), to force the Company to redeem all or
part of the shares of Series B Convertible Preferred Stock held by such Holders
at a cash redemption price per share equal to 100% of the then outstanding
Stated Value of the Series B Convertible Preferred Stock, plus all accrued and
unpaid dividend thereon, plus all other amounts, costs, expenses and liquidated
damages due in  respect of the Series B Convertible Preferred Stock
(the “Put Redemption Amount”).




F-17
 Table of Contents




GLOBAL
DIVERSIFIED INDUSTRIES, INC.
 NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS
 APRIL
30, 2008 AND 2007






As a
result of this obligation, the Company has determined the Series B shares
includes redemption features that have the potential to be outside the
control of the Company, and accordingly, the Company has classified the Series
B shares outside of shareholders’ equity in accordance with Emerging
Issues Task Force (“EITF”) Topic D-98, Classification and Measurement of
Redeemable Securities (“EITF Topic D-98”). In accordance with EITF Topic D-98,
the fair value allocated to the Preferred Stock at the date of issuance was
recorded outside of common shareholders’ equity in the accompanying consolidated
balance sheet.




In
connection with the February 22, 2008 issuance of the Series B Preferred Stock,
the Company entered into a registration rights agreement with the purchasers of
the Series B shares, which requires the Company to obtain an effective
registration statement with the SEC covering the sale of the common stock
issuable upon conversion of the Series B shares on or before 150 calendar days.
If the Company is unable to do so, the Company will have to pay liquidated
damages in cash to the holders of the Series B shares.  The amount of
damages that may be due is one and a one-half percent of the stated value of 12%
Preferred Stock per month; provided, however, that in no event shall the
aggregate amount paid exceed nine percent of the stated value. The Company is in
default of this requirement but has obtained a waiver on this provision from the
holders.  In accordance with SFAS 5, “Accounting for
Contingencies,” no penalty accrual has been made as management has concluded
that none will be payable.




The
Company, after the effective date of the registration, and with certain market
conditions, can force redemption of the Series B 12% Convertible Preferred
Stock.




In
connection with the Convertible Redeemable Series B Preferred Stock issuance
dated February 22, 2008, the Company entered into a Security Agreement whereby
the holder or holders of the Company’s Series B Convertible Preferred Stock have
a security interest in substantially all of the Company’s tangible and
intangible assets.




As
additional consideration for the purchase of the Series B shares, the Company
granted to the holders of the Series B shares a) warrants entitling it to
purchase 34,842,940 common shares of the Company’s common stock at the price of
$0.20 per share expiring five years from issuance and b) warrants entitling
it to purchase 34,842,940 common shares of the Company at a price of
$0.40 per share expiring seven years from issuance.  The warrants
are covered under the registration rights agreement. As further discussed in
Note S to these consolidated financial statements, the Company’s original
accounting for the warrants and the related preferred stock classified the
warrants as liabilities and recorded their estimated fair value at date of issue
to be $7,760,305 using the Black-Scholes formula assuming no dividends, a
risk-free interest rate of 2.81% to 3.26 %, expected volatility of 115.06%, and
expected warrant life of five to seven years.




In
addition, the Company issued to broker/dealers a) warrants entitling it to
purchase 2,000,000 common shares of the Company’s common stock at the price of
$0.10 per share expiring five years from issuance; b) warrants entitling it
to purchase 2,000,000 common shares of the Company at a price of $0.20 per
share expiring five years from issuance and c) warrants entitling it to purchase
2,000,000 common shares of the Company’s common stock at the price of $0.40 per
share expiring seven years from issuance.  The warrants are covered
under the registration rights agreement. The Company estimated the fair value at
date of issue of the stock purchase warrants issued in connection with the
issuance of the Series B preferred stock to be $682,133 using the Black-Scholes
formula assuming no dividends, a risk-free interest rate of 2.81% to 3.26 %,
expected volatility of 115.06%, and expected warrant life of five to seven
years.




The
Company has now determined that the warrants issued in connection with the
Series B Preferred Stock meet the applicable exceptions in EITF 00-19 for
treatment as equity instruments and the Company has restated their 2008
financial statements.   The resulting discount is being accreted
over the two-year period until the mandatory redemption of the preferred
stock.  After the accretion of the discount, the Series B Preferred
Stock had a carrying value of $394 at April 30, 2008.




See Note
S to these consolidated financial statements.






F-18
 Table of Contents




GLOBAL
DIVERSIFIED INDUSTRIES, INC.


NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS


APRIL
30, 2008 AND 2007







NOTE K
– 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.  Effective February 21,
2008, the Registrant amended its Articles of Incorporation to (a) increase its
authorized common stock from four hundred million (400,000,000) to two billion
seven hundred thirty six million five hundred thousand (2,736,500,000) shares,
(b) increase its authorized preferred stock from ten million (10,000,000) to
thirteen million five hundred thousand (13,500,000) shares, (c) authorize blank
check preferred stock and delegate the right to designate preferences and
limitations for such preferred stock to the Board of Directors, and
(d)  establish the designations, rights and preferences of the Series
B Preferred Stock.




As of
April 30, 2008 and 2007, the Company has issued and outstanding 0 and 413,092
shares of Series A Preferred Stock, respectively.  The Company has
15,369,887 and 8,360,461 shares of common stock issued and outstanding at April
30, 2008 and 2007, respectively.




On May
21, 2008, the Company affected a one-to-twenty stock split of our common
stock.  We did not reduce the number of shares we are authorized to
issue or change the par value of the common stock.  All references to
share value in these consolidated financial statements have been restated to
reflect this split.





During
the year ended April 30, 2007, the Company issued 211,447 shares of common stock
to consultants in exchange for $170,825 of services fees and 5,000 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 472,222 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 32,750 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 117,667 shares of common stock , 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 166,667 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.





During
the year ended April 30, 2008, the Company issued 100,000 shares of common stock
to consultants for $18,000 of service fees and 290,960 shares of common stock in
exchange for factory rent of $87,288.  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
791,667 shares of stock, valued at $250,000 to a
shareholder.    The Company also issued an aggregate of
3,536,919 shares of common stock in exchange for $900,000 of common stock
subscribed.





During
the year ended April 30, 2008, at the request of a preferred stock shareholder,
the Company converted 8,746,424 shares of Preferred Series A stock to 2,289,880
shares of common stock.  The Company also issued 8,333,332 shares of
Preferred Series A stock in exchange for $733,374 of Preferred Series A stock,
subscribed.




NOTE
L - 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, 2008.






F-19
 Table of Contents







GLOBAL
DIVERSIFIED INDUSTRIES, INC.


NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS


APRIL
30, 2008 AND 2007







NOTE M
– NON-EMPLOYEE STOCK OPTIONS AND WARRANTS





Non-Compensatory Stock
Options





Transactions
involving options are summarized as follows





Number
      of Shares
            
            
            Weighted
      Average Price Per ShareOutstanding
      at April 30, 2006
            
            
            200,000
            
            
            $
            1.00Granted
            
            
            -
            
            
            
            -Exercised
            
            
            -
            
            
            
            -Canceled
      or expired
            
            
            (200,000
            )
            
            
            1.00Outstanding
      at April 30, 2007
            
            
            -
            
            
            
            -Outstanding
      at April 30, 2008
            
            
            -
            
            
            $
            -





During
the year ended April 30, 2008 and 2007, 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, 2008 and 2007. 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
      ExercisableExercise
      Prices
            
            
            Number
      Outstanding
            
            
            Weighted
      Average Remaining Contractual Life (Years)
            
            
            Weighted
      Average Exercise Price
            
            
            Number
      Exercisable
            
            
            Weighted
      Average Exercise Price$
            0.10
            
            
            
            2,000,000
            
            
            
            4.70
            
            
            $
            0.10
            
            
            
            2,000,000
            
            
            $
            0.10$
            0.20
            
            
            
            36,842,940
            
            
            
            4.70
            
            
            $
            0.20
            
            
            
            36,842,940
            
            
            $
            0.20$
            0.40
            
            
            
            36,842,940
            
            
            
            6.30
            
            
            $
            0.40
            
            
            
            36,842,940
            
            
            $
            0.4075,685,880
            
            
            
            
            
            
            $
            0.29
            
            
            
            75,685,880
            
            
            $
            0.29








F-20
 Table of Contents









GLOBAL
DIVERSIFIED INDUSTRIES, INC.


NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS


APRIL
30, 2008 AND 2007





NOTE N
– NON-EMPLOYEE STOCK OPTIONS AND WARRANTS (Continued)




Transactions
involving warrants are summarized as follows:







Number
      of Shares
            
            
            Weighted
      Average Price Per ShareOutstanding
      at May 1, 2006
            
            
            75,000
            
            
            $
            0.60Granted
            
            
            -Exercised
            
            
            -Canceled
      or expired
            
            
            (37,500
            )
            
            
            0.60Outstanding
      at April 30, 2007
            
            
            37,500
            
            
            $
            0.60Granted
            
            
            75,685,880
            
            
            
            0.29Exercised
            
            
            -
            
            
            
            -Canceled
      or expired
            
            
            (37,500
            )
            
            
            0.60Outstanding
      at April 30, 2008
            
            
            75,685,880
            
            
            $
            0.29




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 January 31, 2009.





The
Company granted 75,685,880 warrants during the year ended April 30, 2008 in
connection with a funding by Vicis Capital Master Fund in February
2008.






F-21
 Table of Contents




GLOBAL
DIVERSIFIED INDUSTRIES, INC.


NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS


APRIL
30, 2008 AND 2007





NOTE
O- 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 Federal and State net
operating loss carryforwards of approximately $8,500,000 which will expire
within 2028.. 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, 2008, we have provided a valuation allowance reducing the net
realizable benefits of these deductible differences to $ 0 at April 30, 2008.
 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.





The
income tax provision (benefit) for the years ended April 30, 2008
and  2007 consists of the following:




April
      30, 2008
            
            
            April
      30, 2007Continuing
      OperationsCurrentFederal
            
            $
            --
            
            
            $
            --State
            
            
            --
            
            
            
            800--
            
            
            
            800DeferredFederal
            
            
            75,000
            
            
            
            (69,000
            )State
            
            
            21,000
            
            
            
            (16,000
            )96,000
            
            
            
            (85,000
            )96,000
            
            
            $
            (84,200
            )Discontinued
      OperationsFederal
            
            
            --
            
            
            
            10,000State
            
            
            --
            
            
            
            ----
            
            
            
            10,000Total
            
            $
            96,000
            
            
            $
            (74,200
            )







F-22
 Table of Contents




GLOBAL
DIVERSIFIED INDUSTRIES, INC.


NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS


APRIL
30, 2008 AND 2007




NOTE
O - INCOME TAXES (Continued)




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:




Year
      Ended
              April
      30, 2008
            
            
            Year
      Ended
              April
      30, 2007Computed
      “expected” income tax expense at approximately 34%
            
            $
            (386,000
            )
            
            $
            (470,000
            )Increase
      (decrease) in NOL carryforwards
            
            
            386,000
            
            
            
            444,000Discretionary
      change in valuation allowances of deferred income taxes
            
            
            90,000
            
            
            
            (48,000
            )Various
      other
            
            
            6,000
            
            
            
            (200
            )$
            96,000
            
            
            $
            (74,200
            )




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 are as follows:


April 30,
    2008
            
            
            April 30,
    2007Deferred
      tax assets:Federal
      and state net operating loss
            
            $
            1,586,000
            
            
            $
            1,132,000Allowance
      and accruals not recognized for income tax purposes
            
            
            -
            
            
            
            -Total
      gross deferred tax assets
            
            
            1,586,000
            
            
            
            1,132,000Less
      : Valuation allowance
            
            
            (1,498,000
            )
            
            
            (954,000
            )Net
      deferred tax assets
            
            $
            88,000
            
            
            $
            178,000Deferred
      tax liabilities:Total
      gross deferred tax liabilities:Depreciation
      and amortization, net
            
            
            (88,000
            )
            
            
            (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, 2008
            
            
            April
      30, 2007Current
      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, 2008 AND 2007





NOTE P
- 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:




2008
            
            
            2007Net
      income (loss) available to common stockholders
            
            $
            (2,057,895
            )
            
            $
            (1,343,778
            )Earnings
      (losses) per share:Basic
      and diluted earnings per share
            
            $
            (0.21
            )
            
            $
            (0.17
            )Weighted
      average number of common shares outstanding
      for  computation:Basic
      and diluted
            
            
            9,774,281
            
            
            
            7,970,132




For the
years ended April 30, 2008, 75,685,880 potential shares were excluded from
shares used to calculate diluted losses per share as their inclusion would
reduce net losses per share.





NOTE
Q - 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. Rental expenses charged to operations for
the year ended April 30, 2008 and 2007 are $327,113 and $211,619,
respectively.




Litigation




On
December 13, 2007, the company filed a lawsuit against Financial Pacific
Insurance Company, Inc and Salmeri Insurance Agency, Inc. for terminating the
company’s bonding line of credit during the quarter ended January 31, 2006,
without good cause and in contravention of its past dealings. The lawsuit seeks
reimbursement for damages in excess of $10 million.  As this
litigation is in its initial stages, the Company can make no assurances with
respect to the outcome of this matter.





In
February, 2008, the company filed a lawsuit against Santa Rosa City Schools for
damages in excess of $600,000.





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





GLOBAL
DIVERSIFIED INDUSTRIES, INC.


NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS


APRIL
30, 2008 AND 2007





NOTE
R- SUBSEQUENT EVENTS





Loan and Security
Agreement





Effective
June 10, 2008, the Company entered into a one-year  revolving line of
credit agreement with State Financial Corporation which is secured by receivable
and property.  Borrowings under the revolving line of credit is based
upon 80% of the aggregate outstanding eligible accounts receivable with the
maximum borrowings of $2,000,000





Amendment to Articles of
Incorporation or Bylaws





On June
24, 2008, the board of directors of the Company designated 2,750,000 shares
of  authorized but unissued preferred stock to be designated as
"Series C Convertible Preferred Stock" and filed a Statement of Designations
with the State of Nevada establishing the terms, rights and preferences of the
Series C Preferred Stock





The
Series C Preferred Stock: a) has a stated amount of $1.00 per share; is
convertible at the option of the holder at a price of $.07 per share at any time
(total of 250,000,000 Series C Preferred Stock; c)  is subject to
redemption in one lump sum payment (the “Redemption Amount”) on the date two
years from the date of issuance, unless earlier converted; d) accrues dividends
on any balance outstanding at an annual rate of twelve percent (12%) (dividends
are due and payable quarterly in arrears in cash).  Payment of the
Redemption Amount is guaranteed by the Registrant’s
subsidiaries.  Payment of the Redemption Amount is secured by a
blanket lien encumbering the assets of the Registrant and its subsidiaries
subject only to a lien by State Financial Corporation or other asset-backed
lender in an amount not to exceed $2,000,000





Amended and Restated
Securities Agreement





On June
26, 2008 Global Diversified Industries, Inc. (the  "Company") entered
into a an Amended and Restated Securities Agreement with Babirak Carr, P.C.,
solely as administrative agent for Vicis Capital Master Fund ("Vicis"), and the
holders of the Company's Series B Convertible Preferred Stock, pursuant to which
the Company issued and sold (a) a series of its Series C Convertible Preferred
Stock (the “Series C Preferred Stock”)having an aggregate original stated value
of $1,750,000 (total of 1,750,000 shares of Series C Preferred Stock), (b) its
Series 3 Common Stock Purchase Warrants exercisable, in the aggregate, for
35,000,000 shares of Common Stock (individually, a “Series 3 Warrant” and
collectively, the “Series 3 Warrants”).  The total cash paid for the
Series C Preferred Stock and Series 3 Warrants was $1,750,000.





The
Series C Preferred Stock: a) has a stated amount of $1.00 per share; is
convertible at the option of the holder at a price of $.07 per share at any time
(total of 250,000,000 Series C Preferred Stock; c)  is subject to
redemption in one lump sum payment (the “Redemption Amount”) on the date two
years from the date of issuance, unless earlier converted; d) accrues dividends
on any balance outstanding at an annual rate of twelve percent (12%) (dividends
are due and payable quarterly in arrears in cash).  Payment of the
Redemption Amount is guaranteed by the Registrant’s
subsidiaries.  Payment of the Redemption Amount is secured by a
blanket lien encumbering the assets of the Registrant and its subsidiaries
subject only to a lien by State Financial Corporation or other asset-backed
lender in an amount not to exceed $2,000,000 .





The
Series 3 Warrants have an exercise price of $.10 per share (total of 35,000,000
shares of Common Stock and have a term of 7 years from the date of
issuance.




Under the
terms of the Series C Preferred Stock and the Series 3 Warrants, Vicis may
convert the Series C Preferred Stock and exercise the Series 3
Warrants,  provided that such Conversion and/or exercise do not result
in Vicis beneficially owning more that 4.99% of our outstanding shares of Common
Stock after giving effect to the issuance of shares of Common Stock issuable
upon conversion of the Series C Preferred Stock and/or exercise of the Series 3
Warrants. This limitation may be changed from 4.99% to 9.99% upon not less than
61 days notice to the Company by Vicis.




The
Company paid $75,000 in expenses to Vicis, which included legal fees of
Vicis.





Midtown
Partners & Co. Inc. acted as Placement Agent for the Company and was paid:
a) a 10% commission ($175,000);  a Series BD-4 Warrant to purchase
2,500,000 shares of Common Stock at an exercise price of $.07 per share
exercisable for 5 years from the date of issuance; and c) a Series BD-5 Warrant
to purchase 3,500,000 shares of Common Stock at an exercise price of $.10 per
share exercisable for 7 years from the date of issuance.





The
Series 3 Warrants, the Series BD-4 and Series BD-5 Warrants have "cashless
exercise" provisions and certain anti-dilution rights.





The
Company agreed to register the Common Stock underlying the Series C Preferred
Stock, the Series 3 Warrants, the Series BD-4 Warrants and the Series BD-5
Warrants pursuant to a Registration Rights Agreement.





The
issuance of the Series C Preferred Stock, the Series 3 Warrants, the Series BD-4
Warrants and the issuance of the Series BD-5 Warrants  were exempt
from the registration requirements of the Securities Act of 1933, as amended,
pursuant to Section 4(2) of the Act for transactions not involving a public
offering and Rule 506 promulgated by the United States Securities and Exchange
Commission under the Securities Act of 1933,




Guarantee Fee,
Indemnification, and Security Agreement





On July
29,,2008, the Company entered into a Guarantee Fee, Indemnification, and
Security Agreement with Rebecca Manandic, and Joseph Salmeri, (individually,
a  “Guarantor” and
collectively, the “Guarantors”) pursuant
to which in consideration for the continuing guarantee by the Guarantors of
Surety Bonds issued to the Company, the Company: a) issued a
"Blanket-Lien", in favor of the Guarantors, on all of the Company's and the
Company's subsidiaries' assets, b) issued a Warrant to Rebecca Manandic (the
"Manandic Warrant") to purchase 26,950,000 shares of Common Stock of the Company
at an exercise price of $.10 per share, exercisable for the 7 year period from
the date of issuance, and c)  issued a Warrant to Joseph Salmeri (the
"Salmeri Warrant") to purchase 8,050,000 shares of Common Stock of the Company
at an exercise price of $.10 per share, exercisable for the 7 year period from
the date of issuance.





The
issuance of the Manandic Warrants and the Salmeri Warrants were exempt from the
registration requirements of the Securities Act of 1933, as amended, pursuant to
Section 4(2) of the Act for transactions not involving a public offering and
Rule 506 promulgated by the United States Securities and Exchange Commission
under the Securities Act of 1933.





The
Manandic Warrants and the Salmeri Warrants have certain anti-dilution
rights.






F-25
 Table of Contents





GLOBAL
DIVERSIFIED INDUSTRIES, INC.


NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS


APRIL
30, 2008 AND 2007








NOTE
S - RESTATEMENT





The
Company has restated their financial statements as of and for their fiscal year
ended April 30, 2008 to correct the classification of and related accounting for
a total of 75,685,880 common stock purchase warrants issued in connection with
the Company’s Series B Redeemable Convertible Preferred Stock.  These
warrants had been incorrectly classified as “Liabilities” (rather than
“Equity”).  Classification as a liability required “Derivative”
accounting treatment under Statement of Financial Accounting Standard No. 133,
“Accounting for Derivative Instruments and Hedging Activities” (“SFAS No. 133”)
and Emerging Issues Task Force Consensus 00-19, “Accounting for Derivative
Financial Instruments Indexed to, and Potentially Settled in, a Company's Own
Stock” (“EITF 00-19”), rather than recording the effective beneficial conversion
feature under EITF 98-5, “Accounting for Convertible Securities with Beneficial
Conversion Features or Contingently Adjustable Conversion Ratios” and EITF
00-27, “Application of Issue No. 98-5 to Certain Convertible
Instruments.”





The
accounting treatment previously applied resulted in the reporting of the
preferred stock in the net carrying amount of $2,021,574 and the incorrect
recognition of a $7,141,496 “Warrant” liability, both as of April 30, 2008; and
a related net financing expense of $6,459,362, after the offset a
“Mark-to-Market” gain.  Additional paid in capital had been adjusted
for the difference.  The restatement reversed each of the above
entries on the Company’s books.  After applying EITF’s08-5and 00-27, the $3,484,294
face value of the related Series B Preferred Stock was fully offset by the
aggregate discounts for the effective beneficial conversion feature of the
preferred stock and the relative fair value of the warrants.  At April
30, 2008, $394 of such discount had been accreted, which amount is the carrying
value of the preferred at that date.  The discount will continue to be
accreted until the February 21, 2010 mandatory redemption date of the Series B
Preferred Stock.





The
following tables show the principal financial statement line items initially
reported as of and the year ended April 30, 2008, the restatement entries made
and balances of the applicable financial statement items as
restated.  There was no change to any asset
accounts.




As
      Reported
            
            
            Adjustments
            
            
            As
      RestatedWarrant
      Liability
            
            $
            7,141,496
            
            
            $
            (7,141,496
            )
            
            $
            -Total
      liabilities
            
            
            7,979,380
            
            
            
            (7,141,944
            )
            
            
            837,436Series
      B Preferred Stock, net of unamortized discount
            
            
            2,021,574
            
            
            
            (2,021,180
            )
            
            
            394Stockholders'
      Equity (Deficiency)Additional
      paid in capital
            
            
            9,282,089
            
            
            
            2,501,076
            
            
            
            11,783,165Accumulated
      deficit
            
            
            (12,537,940
            )
            
            
            6,662,048
            
            
            
            (5,875,892
            )Total
      Stockholders' Equity (Deficiency)
            
            
            (3,240,531
            )
            
            
            9,163,124
            
            
            
            5,922,593Total
      Liabilities and Stockholders' Equity
            
            $
            6,760,423
            
            
            $
            -
            
            
            $
            6,760,423













F-26
 Table of Contents




GLOBAL
DIVERSIFIED INDUSTRIES, INC.
 NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS
 APRIL
30, 2008 AND 2007




Effect of Adjustments on the
2008 Statement of Operations





As
      Reported
            
            
            Adjustments
            
            
            As
      RestatedLoss
      from operations
            
            $
            (1,537,923
            )
            
            
            -
            
            
            $
            (1,537,923
            )Fair
      value of warrants issued in connection with Series B
    Preferred
            
            
            (7,760,305
            )
            
            
            7,760,305
            
            
            
            -Unrealized
      change in fair value of warrants
            
            
            1,300,943
            
            
            
            (1,300,943
            )
            
            
            -Interest
      (expense), net
            
            
            (353,892
            )
            
            
            -
            
            
            
            (353,892
            )Loss
      before provision for income taxes
            
            
            (8,351,177
            )
            
            
            6,459,362
            
            
            
            (1,891,815
            )Net
      loss
            
            
            (8,447,177
            )
            
            
            6,459,362
            
            
            
            (1,987,815
            )Preferred
      stock dividends, actual and imputed
            
            
            202,686
            
            
            
            (132,606
            )
            
            
            70,080Net
      loss attributable to common shareholders
            
            $
            (8,649,863
            )
            
            $
            5,574,061
            
            
            $
            (2,057,895
            )Basic
      and diluted loss per common share
            
            $
            (0.88
            )
            
            $
            (0.67
            )
            
            $
            (0.21
            )




Item
3.02   Sale of Unregistered Securities





See Item
1.01 above.





Item
5.03 Amendment to Articles of Incorporation or Bylaws;





On June
24, 2008, the board of directors of the Company designated 2,750,000 shares
of  authorized but unissued preferred stock to be designated as
"Series C Convertible Preferred Stock" and filed a Statement of Designations
with the State of Nevada establishing the terms, rights and preferences of the
Series C Preferred Stock





The
Series C Preferred Stock: a) has a stated amount of $1.00 per share; is
convertible at the option of the holder at a price of $.07 per share at any time
(total of 250,000,000 Series C Preferred Stock; c)  is subject to
redemption in one lump sum payment (the “Redemption Amount”) on the date two
years from the date of issuance, unless earlier converted; d) accrues dividends
on any balance outstanding at an annual rate of twelve percent (12%) (dividends
are due and payable quarterly in arrears in cash).  Payment of the
Redemption Amount is guaranteed by the Registrant’s
subsidiaries.  Payment of the Redemption Amount is secured by a
blanket lien encumbering the assets of the Registrant and its subsidiaries
subject only to a lien by State Financial Corporation or other asset-backed
lender in an amount not to exceed $2,000,000 .









F-27
 Table of Contents




ITEM
8. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE




None.




ITEM8A.  CONTROLS AND PROCEDURES




Evaluation
of Disclosure Controls and Procedures





Disclosure
controls and procedures are controls and other procedures that are designed to
ensure that information required to be disclosed to ensure that information
required to be disclosed by us in the reports that we file or submit under the
Exchange Act is recorded, processed, summarized and reported, within the time
periods specified in the Securities and Exchange Commission’s rules and
forms.  Disclosure controls and procedures include, without
limitation, controls and procedures designed to ensure that information required
to be disclosed by us in the reports that we file under the Exchange Act is
accumulated and communicated to our management, including our principal
executive and financial officers, as appropriately to allow timely decisions
regarding required disclosure.





Subsequent
to that evaluation and in connection with the restatement and filing of this
amendment, we conducted an reevaluation, under the supervision and with
the participation of our Chief Executive Officer and Chief Financial Officer, of
our disclosure controls and procedures (as defined in Rule 13a-15(e) and Rule
15d-15(e) of the Exchange Act.  Based upon this evaluation, our Chief
Executive Officer and Chief Financial Officer concluded that the Company’s
disclosure controls and procedures are not effective to ensure that information
required to be disclosed by the Company in the reports that we file or submit
under the Exchange Act is recorded, processed, summarized and reported within
the time periods specified in the SEC’s rules and forms and which also are
effective in ensuring that it files or submits under the Exchange Act is
accumulated and communicated to the Company’s management, including the
Company’s Chief Executive Officer and Chief Financial Officer, to allow timely
decisions regarding required disclosure.





Our
determination that our disclosure control and procedures were not effective is
due primarily to our limited resources and the discovery of a restatement as
noted in this form 10KSB/A.




Managem ent’s
Report on Internal Control over Financial Reporting





Management
is responsible for establishing and maintaining adequate internal control over
financial reporting of the Company.  Because of its inherent
limitations, internal control over financial reporting may not prevent or detect
misstatements.  Also, projections of any evaluation of effectiveness
to future periods are subject to the risk that controls may become inadequate
because of changes in conditions, or that the degree of compliance with the
policies and procedures may deteriorate.





Management,
with the participation of our principal executive officer and principal
financial officer, has evaluated the effectiveness of our internal control over
financial reporting as of April 30, 2008 based on criteria established in
Internal Control-Integrated Framework issued by the Committee of Sponsoring
Organizations of the Treadway Commission.  Based on this evaluation,
because of the Company’s limited resources and limited number of employees,
management concluded that, as of April 30, 2008, our internal control over
financial reporting is not effective in providing reasonable assurance regarding
the reliability of financial reporting and the preparation of financial
statements for external purposes in accordance with the U.S. generally accepted
accounting principles.





This
annual report does not include an attestation report of the Company’s
independent registered public accounting firm regarding internal control over
financial reporting.  Management’s report was not subject to
attestation by the Company’s independent registered public accounting firm
pursuant to temporary rules of the SEC that permit the Company to provide only
management’s report in this annual report.




Limitations
on Effectiveness of Controls and Procedures





Our
management, including our Chief Executive Officer and Chief Financial Officer,
does not expect that our disclosure controls and  procedures or our
internal controls will prevent all errors and all fraud.  A control
system, no matter how well conceived and operated, can provide only reasonable,
not absolute, assurance that the objectives of the control system are
met.  Further, the design of a control system must reflect the fact
that there are resource constraints and the benefits of controls must be
considered relative to their costs.  Because of the inherent
limitations in all control systems, no evaluation of controls can provide
absolute assurance that all control issues and instances of fraud, if any,
within the Company have been detected.  These inherent limitations
include, but are not limited to, the realities that judgments in decision-making
can be faulty and that breakdowns can occur because of simple error or
mistake.  Additionally, controls can be circumvented by the individual
acts of some persons, by collusion of two or more people, or by management
override of the control.  The design of any system of controls also is
based in part upon certain assumptions about the likelihood of future events and
there can be no assurance that any design will succeed in  achieving
its stated goal under all potential future conditions.  Over time,
controls may become inadequate because of changes in conditions, or the degree
of compliance with the policies or procedures may
deteriorate.  Because of the inherent limitations in a cost-effective
control system, misstatements due to error or fraud may occur and not be
detected.





Changes
in internal controls





There
have been no changes in our internal control over financial reporting identified
in connection with the evaluation required by paragraph (d) of Rule 13a-15d-15
under the Exchange Act that occurred during the quarter ended April 30, 2008
that has materially affected, or is reasonably likely to materially affect, our
internal control over financial reporting.







44
 Table of Contents





PART III.




ITEM9. 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.




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 62 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






45
 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.




ITEM10. 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, 2008 and prior.





Summary Compensation
Table




Annual
      compensation
            
            Long-term
      compensationAwards
            
            
            PayoutsName
      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, President2008
            
            
            100,000
            
            
            
            02007
            
            
            85,616
            
            
            
            10,000
            
            
            
            0
            
            
            
            
            0
            
            
            
            0
            
            02006
            
            
            85,616
            
            
            
            37,5002005
            
            
            85,616
            
            
            
            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.






46
 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, 2008 (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
      ClassCommon
      Stock
            
            Hamilton
      Trust (1), 1200 Airport Drive, Chowchilla, CA
            
            110,000
            
            0.007%Common
      Stock
            
            Adam
      Debard(1), 1200 Airport Drive, Chowchilla, CA
            
            180,000
            
            0.012%Common
      Stock
            
            Rebecca
      Manadic(3), 611 West Main Street, Merced, CA
            
            3,991,448
            
            25.97%Common
      Stock
            
            Phillip
      Hamilton (1) 1200 Airport Drive, Chowchilla, CA
            
            1,708,333
            
            11.11%




(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.  The shareholder converted all of the preferred stock
and  notes to common stock on February 22, 2008




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.  The shareholder converted all of the
preferred stock and notes to common stock on February 22, 2008.






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ITEM13. 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.







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ITEM14. PRINCIPAL ACCOUNTANT FEES AND SERVICES





The
following table sets forth fees billed to us by our auditors during the fiscal
years ended April 30, 2008 and 2007 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, 2008
            
            
            April
      30, 2007(i)
            Audit
      Fees
            
            $
            105,236
            
            
            $
            90,057(ii)
            Audit
      Related Fees
            
            
            --
            
            
            
            --(iii)
            Tax
      Fees
            
            
            7,500
            
            
            
            --(iv)
            All
      Other Fees
            
            
            
            
            
            
            2,800Total
      fees
            
            $
            112,736
            
            
            $
            92,857




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 RBSM 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 2008 or 2007.





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.








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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:October
      23,
      2008
            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
            
            October23,
      2008Phil
      Hamilton/s/Adam
      Debard
            
            Secretary/Treasurer/Director
            
            October23,
      2008Adam
      Debard










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