U.S. SECURITIES AND EXCHANGE COMMISSION

                             WASHINGTON, D.C. 20549

                                   FORM 10-KSB

(MARK ONE)

[X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT
OF 1934 FOR THE FISCAL YEAR ENDED APRIL 30, 2006

                                       OR

[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934 FOR THE TRANSITION PERIOD FROM ______________ TO ______________

                        COMMISSION FILE NUMBER: 333-83231

                       GLOBAL DIVERSIFIED INDUSTRIES, INC.
                       -----------------------------------
               (Exact name of Company as specified in its charter)


                  Nevada                             95-4741485
------------------------------------------- ------------------------------
        (State or jurisdiction of                 (I.R.S. Employer
      incorporation or organization)             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 13T 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 [ ]

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 [ ].

The aggregate market value of the voting stock held by non-affiliates of the
Company as of August 10, 2006, Common Stock, par value $0.001 per share was
$8,998,757.00. As of August 14, 2006, the Company had 159,602,478 shares of
common stock issued and outstanding, of which 92,984,564 were held by
non-affiliates



                       GLOBAL DIVERSIFIED INDUSTRIES, INC.

                                   FORM 10-KSB

                                TABLE OF CONTENTS


                                     PART I

                                                                            Page

ITEM 1.          Description of Business ..................................   3
ITEM 2.          Description of Property ..................................   5
ITEM 3.          Legal Proceedings ........................................   5
ITEM 4.          Submission of Matters to a
                   Vote of Security Holders ...............................   5

                                     PART II

ITEM 5.          Market for Common Equity and Other
                   Shareholder Matters ....................................   5
ITEM 6.          Management's Discussion and Analysis of
                   Financial Condition and Results of Operations ..........   7
ITEM 7.          Financial Statements ..................................... F-1
ITEM 8.          Changes in and Disagreements with Accountants on
                   Accounting and Financial Disclosure.....................  18
ITEM 8 (A)       Controls and Procedures ..................................  18

                                    PART III

ITEM 9.          Directors, Executive Officers, Promoters and
                   Control Persons; Compliance with Section 16(a)
                   of the Exchange Act ....................................  18
ITEM 10.         Executive Compensation ...................................  19
ITEM 11.         Security Ownership of Certain Beneficial
                   Owners and Management ..................................  20
ITEM 12.         Certain Relationships and Related Transactions ...........  21
ITEM 13.         Exhibits .................................................  21
ITEM 14.         Principal Accountant's Fees and Services .................  22
                 Signatures ...............................................  23


                                        2

<PAGE>

PART I.

SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS

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

ITEM 1. BUSINESS.

Introduction
------------

The Company is a Nevada company with a limited  operating  history.  On December
11, 2001, Global  Diversified  Industries,  Inc.,  formerly Global Foods Online,
Inc. (the "Company")  acquired two wholly-owned  subsidiaries,  Majestic Modular
Buildings, Ltd. ("Modular"),  and, Lutrex Enterprises,  Inc. "Lutrex", an entity
controlled by the Company's President and Chief Executive Officer.

Modular 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  single  story  classrooms  for two  school
districts in southern California.

The Company is a holding  company for three  wholly owned  subsidiaries,  Lutrex
Enterprises,  Inc.,  an entity,  which holds  equipment  and  inventory  for the
registrant,  MBS Construction Inc., a modular contractor specializing in modular
construction  site work and  renovation,  and  Global  Modular,  Inc.,  a sales,
marketing and manufacturing of modular type structures.

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  recently  secured  rights  to
state-of-the-art  two-story designs recently 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.

                                       3
<PAGE>

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).

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 recent 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 2006, Global Modular will focus its attention on the new
DOH market along with its 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 2006 and
into 2007.

Employees
---------

As of April 30, 2006,  the Company had 145  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.

                                        4
<PAGE>

ITEM 2. PROPERTIES.

The Company's  principal  executive  offices are located at 1200 Airport  Drive,
Chowchilla,  California.  The property  consists of sixteen acres of real estate
including a 100,000 square foot structure of usable space. The structure will be
utilized by the  Company's  executive  management  team,  as well as housing the
operating entities of Lutrex and Global Modular.  The Company has entered into a
three-year lease (including  options for renewals) for the property at a rate of
$16,121  per month  for the  first  year and  moderate  increases  for each year
thereafter.  The Company  believes that the current  facilities are suitable for
its current needs.

ITEM 3. LEGAL PROCEEDINGS.

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

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

There were not any matters that were submitted  during the fourth quarter of the
2005-2006 fiscal year end to a vote of the security holders.

PART II.

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

Market Information
------------------

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

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

Per Share Common Stock Bid Prices by Quarter
For the Fiscal Year Ended on April 30, 2006

                                       HIGH        LOW
                                     ---------- ----------

Quarter Ended April 30, 2006            .08        .07
Quarter Ended January 31, 2006          .07        .07
Quarter Ended October 31, 2005          .09        .8
Quarter Ended July 31, 2005             .11        .11


Per Share Common Stock Bid Prices by Quarter
For the Fiscal Year Ended on April 30, 2005

                                        HIGH       LOW
                                     ---------- ----------

Quarter Ended April 30, 2005            .11        .05
Quarter Ended January 31, 2005          .10        .05
Quarter Ended October 31, 2004          .10        .06
Quarter Ended July 31, 2004             .16        .09



                                        5
<PAGE>

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.

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.


                                        6
<PAGE>

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

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

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

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

General Overview
----------------

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

Critical Accounting Policies
----------------------------

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

          o    revenue recognition
          o    inventories
          o    allowance for doubtful accounts
          o    stock-based compensation


                                        7
<PAGE>

Revenue Recognition
-------------------

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

     (1) Title and risk of ownership have passed to the customer;
     (2) The Company has obtained a written fixed purchase commitment;
     (3) The customer has requested in writing the  transaction be on a bill and
         hold basis;
     (4) The customer has provided a delivery schedule;
     (5) All performance obligations related to the sale have been completed;
     (6) The modular unit has been processed to the  customer's  specifications,
         accepted by the customer and made ready for shipment; and
     (7) The  modular  unit is  segregated  and is not  available  to fill other
         orders.

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

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. A periodic review of inventory quantities on hand is performed in order
to determine if inventory is properly positioned at the lower of cost or market.
Factors related to current inventories such as future consumer demand and trends
in the Company's core business, current aging, current and anticipated wholesale
discounts, and class or type of inventory is analyzed to determine estimated net
realizable  values. A provision is recorded to reduce the cost of inventories to
the estimated net realizable values, if required. Any significant  unanticipated
changes in the factors noted above could have a significant  impact on the value
of our inventories and our reported operating results.

Allowance for Uncollectible Accounts
------------------------------------

We are  required to estimate  the  collectibility  of our trade  receivables.  A
considerable  amount of judgment is required in  assessing  the  realization  of
these receivables  including the current  creditworthiness  of each customer and
related aging of the past due balances. In order to assess the collectibility of
these  receivables,  we perform  ongoing  credit  evaluations  of our customers'
financial  condition.  Through  these  evaluations  we  may  become  aware  of a
situation where a customer may not be able to meet its financial obligations due
to deterioration of its financial viability,  credit ratings or bankruptcy.  The
reserve  requirements  are  based  on the  best  facts  available  to us and are
reevaluated and adjusted as additional information is received. Our reserves are
also based on amounts  determined by using  percentages  applied to certain aged
receivable categories.  These percentages are determined by a variety of factors
including,  but are not limited to, current economic trends,  historical payment
and bad debt  write-off  experience.  We are not able to predict  changes in the

                                       8
<PAGE>

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, 2006, we determined a reserve
was not required against our account receivables.

Stock-Based Compensation
------------------------

Prior to the January 1, 2006  adoption  of the  Financial  Accounting  Standards
Board ("FASB")  Statement No. 123(R),  "Share-Based  Payment" ("SFAS 123R"), the
Company accounted for stock-based  compensation using the intrinsic value method
prescribed in Accounting  Principles  Board ("APB") Opinion No. 25,  "Accounting
for Stock Issued to  Employees,"  and related  interpretations.  As permitted by
SFAS  No.  123,   "Accounting  for  Stock-Based   Compensation"   ("SFAS  123"),
stock-based  compensation was included as a pro forma disclosure in the notes to
the consolidated financial statements.

Effective  January 1,  2006,  the  Company  adopted  the fair value  recognition
provisions of SFAS 123R, using the modified-prospective transition method. Under
this transition method,  stock-based  compensation  expense is recognized in the
consolidated  financial  statements  for  granted,  modified,  or settled  stock
options.  Compensation  expense  recognized  included the estimated  expense for
stock options  granted on and subsequent to January 1, 2006,  based on the grant
date fair value  estimated in accordance  with the  provisions of SFAS 123R, and
the estimated  expense for the portion vesting in the period for options granted
prior to, but not  vested as of  January  1, 2006,  based on the grant date fair
value estimated in accordance with the original  provisions of SFAS 123. Results
for  prior  periods  have  not  been   restated,   as  provided  for  under  the
modified-prospective method.

Comparison of Years Ended April 30, 2006 and 2005 Revenues
----------------------------------------------------------

The Company's total revenues were  $14,921,012 for the year ended April 30, 2006
compared  to  $9,206,445  for the same  time  period  in 2005,  an  increase  of
$5,714,567 or  approximately  62%. The increase is a result of the Company being
awarded larger  projects.  The  acquisition of the Aurora designs have created a
new product line for the company,  which  allowed the Company into the two story
modular  school  market.  The Company  acquired  nine (9) new  modular  building
designs that are approved by the Division of State  Architect.  The  acquisition
also included the trade name of Aurora Modular Industries,  which was the second
largest  modular  manufacturer  in California and was well known for their award
winning designs.

Gross Profit
------------

For the year ended April 30, 2006,  the  Company's  gross profit  margin was 28%
compared to a 34.4% gross margin in 2005.  The gross profit margin has decreased
in the year  ended  April  30, 2006  due to the  Company  being  awarded  larger
projects that are more  competitive than the smaller projects that were produced
in the year ended April 30, 2005. The two story modular  buildings  require more
field  work,  which is less  profitable  than the  manufacturing  portion of the
project.

Costs and Expenses
------------------

The Company's general and  administrative  expenses for the year ended April 30,
2006 was  $2,857,402  compared to  $2,066,555  for the same  period in 2005,  an
increase of $790,847.  This increase is mainly  attributable  to the general and
administrative  costs in connection  with the increased  sales and operations of
Global Modular and MBS Construction.  The Company's  general and  administrative
expenses  for year  ended  April  30,  2006,  increased  approximately  38% with
revenues  increasing  approximately  63% as compared to the year ended April 30,
2005.

The  Company's  interest  cost for the year ended  April 30,  2006 was  $515,577
compared to $264,909 for the same period in 2005,  an increase of $250,668 . The
change is due to the Company's increased borrowings to fund increased production
during the year ended April 30, 2006.

                                        9
<PAGE>

Liquidity and Capital Resources
-------------------------------

As reflected in the accompanying  financial  statements,  the Company incurred a
net profit of $596,683  for the year ended April 30,  2006.  We generated a cash
flow deficit of $803,462 from operating activities. Cash flows used in investing
activities was $436,216  during this period.  We met our cash flow  requirements
during the year  primarily  through the issuance of notes payable of $1,270,357,
net of  repayments,  and $80,339 of proceeds  from  issuance of common stock and
common stock subscription.

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.

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

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

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

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

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.

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,  2006,  the  Company  recognized  approximately
$9,516,531,  or 64% of its  revenues  from  sales  of its  products  to five (5)
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.

                                       10
<PAGE>

NEW ACCOUNTING PRONOUNCEMENTS

In May 2005 the FASB issued Statement of Financial  Accounting  Standards (SFAS)
No. 154, "Accounting Changes and Error Corrections, a replacement of APB Opinion
No. 20 and FASB Statement No. 3." SFAS 154 requires retrospective application to
prior periods' financial statements for changes in accounting principle,  unless
it is  impracticable  to  determine  either the  period-specific  effects or the
cumulative  effect of the  change.  SFAS 154 also  requires  that  retrospective
application of a change in accounting principle be limited to the direct effects
of the change.  Indirect effects of a change in accounting principle,  such as a
change in non-discretionary profit-sharing payments resulting from an accounting
change,  should be recognized in the period of the accounting  change.  SFAS 154
also requires that a change in depreciation,  amortization,  or depletion method
for long-lived,  non-financial assets be accounted for as a change in accounting
estimate effected by a change in accounting principle. SFAS 154 is effective for
accounting  changes and  corrections  of errors made in fiscal  years  beginning
after December 15, 2005. Early adoption is permitted for accounting  changes and
corrections  of  errors  made in  fiscal  years  beginning  after  the date this
Statement  is issued.  The Company  does not expect the adoption of this SFAS to
have a  material  impact on its  consolidated  financial  position,  results  of
operations or cash flows.

On February 16, 2006 the FASB issued SFAS 155,  "Accounting  for Certain  Hybrid
Instruments," which amends SFAS 133, "Accounting for Derivative  Instruments and
Hedging  Activities,"  and SFAS 140,  "Accounting for Transfers and Servicing of
Financial Assets and  Extinguishments of Liabilities." SFAS 155 allows financial
instruments  that  have  embedded  derivatives  to be  accounted  for as a whole
(eliminating  the need to bifurcate the derivative  from its host) if the holder
elects to account for the whole instrument on a fair value basis.  SFAS 155 also
clarifies  and amends  certain  other  provisions of SFAS 133 and SFAS 140. This
statement  is  effective  for all  financial  instruments  acquired or issued in
fiscal years beginning after September 15, 2006. The Company does not expect its
adoption  of this  new  standard  to have a  material  impact  on its  financial
position, results of operations or cash flows.

In March 2006, the FASB issued FASB Statement No. 156,  Accounting for Servicing
of Financial  Assets - an amendment to FASB  Statement  No. 140.  Statement  156
requires that an entity recognize a servicing asset or servicing  liability each
time it undertakes an obligation to service a financial asset by entering into a
service  contract  under certain  situations.  The new standard is effective for
fiscal years beginning after September 15, 2006. The Company does not expect its
adoption  of this  new  standard  to have a  material  impact  on its  financial
position, results of operations or cash flows.

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.

                                       11
<PAGE>

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.

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:

     o    manage our business and our subsidiaries as a cohesive enterprise;
     o    manage expansion through the timely  implementation and maintenance of
          appropriate  administrative,  operational,  financial  and  management
          information systems, controls and procedures;
     o    add   internal   capacity,   facilities   and   third-party   sourcing
          arrangements as and when needed;
     o    maintain service quality controls; and
     o    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.

                                       12
<PAGE>

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.

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:

     o    the volume, timing of, and ability to fulfill customer orders;
     o    the demand for our products;
     o    the number,  timing and  significance of product  enhancements and new
          product introductions by us and our competitors;
     o    changes in pricing policies by us or our competitors;
     o    changes in the level of operating expenses;
     o    expenses  incurred in connection with our plans to fund greater levels
          of sales and  marketing  activities  and  operations,  and broaden our
          customer support capabilities ;
     o    personnel changes;
     o    product defects and other product or service quality problems; and
     o    general  domestic and  international  legal,  economic  and  political
          conditions.

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

WE MAY NOT BE ABLE TO OBTAIN SUFFICIENT CONTRACT BONDING

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

LIMITED OPERATING HISTORY; ANTICIPATED LOSSES; UNCERTAINTY OF FUTURE RESULTS.

The Company has only a limited operating history upon which an evaluation of its
operations  and its prospects  can be based.  The  Company's  prospects  must be
evaluated with a view to the risks encountered by a company in an early stage of
development,  particularly in light of the uncertainties relating to the new and
evolving manufacturing methods with which the Company intends to operate and the
acceptance of the Company's  business model. The Company will be incurring costs
to  develop,   introduce  and  enhance  its  products,  to  establish  marketing
relationships,  to acquire and develop  product lines that will  compliment each
other  and to build an  administrative  organization.  To the  extent  that such
expenses are not subsequently followed by commensurate  revenues,  the Company's
business,  results of  operations  and  financial  condition  will be materially
adversely  affected.  There can be no assurance that the Company will be able to
generate  sufficient  revenues  from  the sale of their  modular  buildings  and

                                       13
<PAGE>

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.

LIMITED PUBLIC MARKET, POSSIBLE VOLATILITY OF SHARE PRICE.

The  Company's  common  stock is  currently  quoted  on the NASD OTC  Electronic
Bulletin  Board under the ticker symbol GDVI. As of August 15, 2006,  there were
approximately   159,602,478  shares  of  common  stock  outstanding,   of  which
approximately  65,368,964 were tradable without restriction under the Securities
Act.  There can be no assurance  that a trading  market will be sustained in the
future.  Factors  such as, but not limited to,  technological  innovations,  new
products, acquisitions or strategic alliances entered into by the Company or its
competitors,  failure  to  meet  security  analysts'  expectations,   government
regulatory  action,  patent  or  proprietary  rights  developments,  and  market
conditions for  manufacturing  stocks in general could have a material effect on
the volatility of the Company's stock price.

MANAGEMENT OF GROWTH

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

The  Company's  future  success  will be highly  dependent  upon its  ability to
successfully  manage the expansion of its operations.  The Company's  ability to
manage and support its growth effectively will be substantially dependent on its
ability to implement adequate improvements to financial and management controls,
reporting and order entry  systems,  and other  procedures  and hire  sufficient
numbers of financial, accounting,  administrative, and management personnel. The
Company's expansion and the resulting growth in the number of its employees have
resulted  in  increased  responsibility  for both  existing  and new  management
personnel.  The  Company is in the process of  establishing  and  upgrading  its
financial accounting and procedures.  There can be no assurance that the Company
will be  able to  identify,  attract,  and  retain  experienced  accounting  and

                                       14
<PAGE>

financial  personnel.  The Company's future operating results will depend on the
ability of its  management  and other key employees to implement and improve its
systems for operations,  financial control, and information  management,  and to
recruit, train, and manage its employee base. There can be no assurance that the
Company  will be able to achieve or manage any such  growth  successfully  or to
implement  and  maintain   adequate   financial  and  management   controls  and
procedures,  and any inability to do so would have a material  adverse effect on
the Company's business, results of operations, and financial condition.

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

RISKS ASSOCIATED WITH ACQUISITIONS.

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

WE PAY NO DIVIDENDS

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

RISK OF PENNY STOCK.

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

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

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

                                       15
<PAGE>

         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:

     o    Variations in anticipated or actual results of operations;

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

     o    Changes in earnings estimates of operational results by analysts;

     o    Results of product demonstrations.

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

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

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

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

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

THE UNCERTAINTY OF CONVERSION  EFFECTS OF THE PREFERRED STOCK MAY CAUSE DILUTION
OF CURRENT COMMON SHAREHOLDERS.

         Within the next 12 months from the date of this report the holders of a
majority of our Preferred Stock and certain warrant and option holders will have
the right to convert their respective  interests into approximately  154,524,309
shares of Common  Stock.  In the event  that such  holders of  Preferred  Stock,
warrants and options exercise their conversion rights, the holders of the Common
Stock then issued and  outstanding  may  experience  immediate  and  substantial
dilution in the net  tangible  book value of their  shares if earnings and other
factors do not  compensate  for the  increased  number of shares of such  Common
Stock.

                                       16
<PAGE>

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.















                                       17
<PAGE>

ITEM  7.  FINANCIAL  STATEMENTS





                       SECURITIES AND EXCHANGE COMMISSION

                             WASHINGTON, D.C. 20549



                       FINANCIAL STATEMENTS AND SCHEDULES

                             APRIL 30, 2006 AND 2005


                         FORMING A PART OF ANNUAL REPORT
                 PURSUANT TO THE SECURITIES EXCHANGE ACT OF 1934


                       GLOBAL DIVERSIFIED INDUSTRIES, INC.




                       GLOBAL DIVERSIFIED INDUSTRIES, INC.

                          Index to Financial Statements

--------------------------------------------------------------------------------



                                                                        Page

Report of Registered Independent Certified Public Accounting Firm        F-3

Consolidated Balance Sheet  at April 30, 2006                         F-4~ F-5

Consolidated Statements of Operations for the years
  ended April 30, 2006 and 2005                                          F-6

Consolidated Statements of  Stockholders' Equity for
  the two years ended April 30, 2006                                 F-7 ~ F-8

Consolidated Statements of Cash Flows for the
  years ended April 30, 2006 and 2005                                F-9 ~ F-10

Notes to Consolidated Financial Statements                          F-11 ~ F-29







                    RUSSELL BEDFORD Stefanou MIRCHANDANI LLP
                          CERTIFIED PUBLIC ACCOUNTANTS


        REPORT OF REGISTERED INDEPENDENT CERTIFIED PUBLIC ACCOUNTING FIRM


To the Board of Directors
Global Diversified Industries, Inc.
Chowchilla, California

We  have  audited  the  accompanying   consolidated   balance  sheet  of  Global
Diversified  Industries,  Inc., and its subsidiaries (the "Company") as of April
30, 2006 and the related  consolidated  statements of operations,  stockholders'
equity,  and cash flows for each of the two years in the period  ended April 30,
2006.  These  financial  statements  are  the  responsibility  of the  Company's
management.  Our  responsibility  is to express  an  opinion on these  financial
statements based upon our audits.


We conducted  our audits in  accordance  with  standards  of the Public  Company
Accounting  Oversight Board (United States of America).  Those standards require
that we plan and perform the audit to obtain reasonable  assurance about whether
the financial statements are free of material  misstatements.  An audit includes
examining,  on a test basis,  evidence supporting the amounts and disclosures in
the  financial  statements.  An audit also  includes  assessing  the  accounting
principles  used  and  significant  estimates  made  by  management,  as well as
evaluating the overall financial statement  presentation.  We believe our audits
provide a reasonable basis for our opinion.

In our opinion, the consolidated  financial statements referred to above present
fairly, in all material  respects,  the financial  position of the Company as of
April 30, 2006, and the results of its operations and its cash flows for each of
the two years in the period ended April 30, 2006 in conformity  with  accounting
principles generally accepted in the United States of America.



                  /S/ RUSSELL BEDFORD STEFANOU MIRCHANDANI LLP
                    Russell Bedford Stefanou Mirchandani LLP
                          Certified Public Accountants
McLean, Virginia
July 28, 2006


                                       F-3
<PAGE>

                       GLOBAL DIVERSIFIED INDUSTRIES, INC.
                           CONSOLIDATED BALANCE SHEET
                                 APRIL 30, 2006


ASSETS:
Current assets:
Cash and cash equivalents                                      $   557,100
Accounts receivable, net of allowance for
  doubtful accounts of $0                                        3,100,040
Inventories (Note C)                                             3,113,804
Advance to employees                                                15,081
Prepaid expenses and deposits                                       84,124
                                                               -----------
Total current assets                                             6,870,149

Property, plant and equipment (Note D):
Property, plant and equipment, at cost                           2,582,142
Less: accumulated depreciation                                    (802,777)
                                                               -----------
Total property, plant and equipment, net                         1,779,365

Other assets:
Deposit and other assets                                            30,279
Non-current deferred tax asset (Note M)                             21,000
Intangible assets, net of accumulated
  amortization of $130,954 (Note B)                              1,015,166
                                                               -----------
Total other assets                                               1,066,445

Total Assets                                                   $ 9,715,959
                                                               ===========



           See accompanying notes to consolidated financial statements



                                       F-4

<PAGE>

                       GLOBAL DIVERSIFIED INDUSTRIES, INC.
                     CONSOLIDATED BALANCE SHEET (Continued)
                                 APRIL 30, 2006


LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable and accrued liabilities (Note F)              $ 1,281,522
Notes payable to related parties, current
portion (Note H)                                                   140,500
Notes payable, current portion (Note H)                          2,199,227
                                                               -----------
Total current liabilities                                        3,621,249

Long-term liabilities:
Notes payable, long term portion, net of debt
discount (Note H)                                                  246,484
Notes payable to related parties, long-term
portion (Note H)                                                   588,815
                                                               -----------
Total long-term liabilities                                        835,299


Commitment and contingencies (Note O)                                 --

Stockholders' equity:
Series A Preferred  stock, par value $.001 per share;
10,000,000 shares authorized; 666,667 shares
issued and outstanding (Note J)                                        667

Common stock, par value $ .001 per share; 400,000,000
shares authorized; 149,447,478 shares issued and
outstanding (Note J)                                               149,446

Additional paid-in capital                                       5,323,334
Preferred stock subscription (Note J)                              733,374
Common stock subscription (Note J)                               1,596,939
Treasury stock (Note J)                                                (50)
Accumulated deficit                                             (2,544,299)
                                                               -----------
Total stockholders' equity                                       5,259,411

Total liabilities and stockholders' equity                     $ 9,715,959
                                                               ===========




           See accompanying notes to consolidated financial statements



                                       F-5






<PAGE>

                       GLOBAL DIVERSIFIED INDUSTRIES, INC.
                      CONSOLIDATED STATEMENTS OF OPERATIONS
                   FOR THE YEARS ENDED APRIL 30, 2006 AND 2005



                                                   2006             2005
                                                ------------    ------------

Revenues                                        $ 14,921,012    $  9,206,445
Cost of goods sold                                10,662,941       6,038,049
                                                ------------    ------------
Gross profit                                       4,258,071       3,168,396

Operating expenses:
Selling, general and administrative expenses       2,857,402       2,066,555
Depreciation and amortization (Notes B and D)        287,609         242,676
                                                ------------    ------------
Total operating expense                            3,145,011       2,309,231

Income from operations                             1,113,060         859,165

Other income (expense):
    Other (expense), net (Note J)                       --          (112,500)
    Interest (expense), net                         (515,577)       (264,909)
                                                ------------    ------------
Total other (expense)                               (515,577)       (377,409)


Income before income tax provision                   597,483         481,756


Income taxes (provision) benefit (Note M)               (800)         20,200
                                                ------------    ------------

Net income                                      $    596,683    $    501,956
                                                ============    ============

Earnings per common share (Note N):
Basic                                           $       0.00    $       0.00
                                                ============    ============
Diluted                                         $       0.00    $       0.00
                                                ============    ============
Weighted average shares outstanding:
Basic                                            145,006,288     135,913,683
Diluted                                          154,524,309     145,630,353



           See accompanying notes to consolidated financial statements





                                       F-6














<PAGE>

                       GLOBAL DIVERSIFIED INDUSTRIES, INC.
                 CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
                     FOR THE TWO YEARS ENDED APRIL 30, 2006


<TABLE>
<CAPTION>
                                                       Preferred
                              Preferred      Stock       Stock         Common        Stock
                                Shares       Amount    Subscription    Shares        Amount
                              -----------   --------   -----------   -----------   -----------
<S>                          <C>            <C>        <C>           <C>           <C>
Balance carry forward             666,667   $    667   $   733,374   131,863,806   $   131,864

Adjustment of
accumulated  fractional
shares from prior years              --         --            --             (54)         --
Common stock issued in
exchange for services
rendered                             --         --            --       4,622,222         4,622
Common stock issued in
connection with employee
stock options exercised              --         --            --         986,840           987
Common stock issued in
exchange for
intellectual property                --         --            --         142,500           142
Shares issued in
exchange for common
stock subscribed                     --         --            --       1,000,000         1,000

Common Stock Subscription            --         --            --            --            --
Beneficial conversion
feature of notes payable
(Note H)                             --         --            --            --            --

Net  income                          --         --            --            --            --

                              ===========   ========   ===========   ============  ============
Balance at April 30, 2005         666,667   $   667    $   733,374    138,615,314  $    138,615
                              ===========   ========   ===========   ============  ============

</TABLE>


<TABLE>
<CAPTION>
                                 Additional                     Common
                                  Paid in       Treasury        Stock        Accumulated
                                  Capital         Stock      Subscription     Deficit          Total
                                -----------   -----------    -----------    -----------    -----------
<S>                             <C>           <C>            <C>           <C>             <C>
Balance carry forward           $ 4,025,104   $       (50)   $ 1,726,600    $(3,642,938)   $ 2,974,621
                                ===========   ===========    ===========    ===========    ===========

Adjustment of
accumulated  fractional
shares from prior years                --            --             --             --             --
Common stock issued in
exchange for services
rendered                            145,778          --             --             --          150,400
Common stock issued in
connection with employee
stock options exercised             124,935          --             --             --          125,922
Common stock issued in
exchange for
intellectual property                22,658          --             --             --           22,800
Shares issued in
exchange for common
stock subscribed                    159,000          --         (160,000)          --             --

Common Stock Subscription              --            --          112,500           --          112,500
Beneficial conversion
feature of notes payable
(Note H)                             50,000          --             --             --           50,000

Net  income                            --            --             --          501,956        501,956
                                -----------   -----------    -----------    -----------    -----------


Balance at April 30, 2005       $ 4,527,475   $       (50)   $ 1,679,100    $(3,140,982)   $ 3,938,199
                                ===========   ===========    ===========    ===========    ===========

</TABLE>

           See accompanying notes to consolidated financial statements

                                       F-7
<PAGE>


                       GLOBAL DIVERSIFIED INDUSTRIES, INC.
           CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY (Continued)
                     FOR THE TWO YEARS ENDED APRIL 30, 2006

<TABLE>
<CAPTION>
                                                       Preferred
                              Preferred      Stock       Stock         Common        Stock
                               Shares       Amount    Subscription    Shares        Amount
                              -----------   --------   -----------   -----------   -----------
<S>                          <C>            <C>        <C>           <C>           <C>
Balance carry forward             666,667   $    667   $   733,374    138,615,314  $    138,615
                              ===========   ========   ===========   ============  ============
Common stock issued in
exchange for cash, net
of costs and fees                    --         --            --          611,112           611
Common stock issued in
exchange for services
rendered                             --         --            --        1,113,909         1,113
Common stock issued in
exchange for conversion
of Note Payable (Note H)             --         --            --        7,857,143         7,857
Shares issued in
exchange for common
stock subscribed                     --         --            --        1,250,000         1,250

Common Stock Subscription            --         --            --            --            --
Beneficial conversion
feature of notes payable
(Note H)                             --         --            --            --            --

Net  income                          --         --            --            --            --


                              ===========   ========   ===========   ============  ============
Balance at April 30, 2006         666,667   $   667    $   733,374    149,447,478  $    149,446
                              ===========   ========   ===========   ============  ============

</TABLE>



<TABLE>
<CAPTION>
                                 Additional                    Common
                                  Paid in       Treasury        Stock        Accumulated
                                  Capital         Stock      Subscription     Deficit          Total
                                -----------   -----------    -----------    -----------    -----------
<S>                             <C>           <C>            <C>           <C>             <C>
Balance carry forward           $ 4,527,475   $       (50)   $ 1,679,100    $(3,140,982)   $ 3,938,199
                                ===========   ===========    ===========    ===========    ===========

Common stock issued in
exchange for cash,
net of costs and fees                49,389          --             --             --           50,000
Common stock issued in
exchange for services
rendered                             76,410          --             --             --           77,523

Common stock issued in
exchange for conversion
of Note Payable                     392,143          --             --             --          400,000
Shares issued in
exchange for common
stock subscribed                    111,250          --         (112,500)          --             --

Common Stock Subscription              --            --           30,339           --           30,339
Beneficial conversion
feature of notes payable
(Note H)                            166,667          --             --             --          166,667

Net  income                            --            --             --          596,683        596,683
                                -----------   -----------    -----------    -----------    -----------

Balance at April 30, 2006       $ 5,323,334   $       (50)   $ 1,596,939    $(2,544,299)   $ 5,259,411
                                ===========   ===========    ===========    ===========    ===========

</TABLE>

                                       F-8











<PAGE>



                       GLOBAL DIVERSIFIED INDUSTRIES, INC.
                      CONSOLIDATED STATEMENTS OF CASH FLOWS
                   FOR THE YEARS ENDED APRIL 30, 2006 AND 2005

<TABLE>
<CAPTION>
                                                                           2006           2005
                                                                       -----------    -----------
<S>                                                                    <C>           <C>
Cash flows from operating activities:

Net income (loss)                                                      $   596,683    $   501,956
Adjustment to reconcile net income (loss) to net cash used in
operating activities:

Depreciation and amortization (Note B and D)                               287,609        242,676
Common stock issued in exchange for services rendered (Note J)              61,053        150,400
Common stock issued to employees for compensation (Note J)                  16,470         60,176
Common stock subscribed in exchange for payment of cancellation of
Stock Purchase Agreement (Note J)                                             --          112,500
Write-off of advances to employees                                          29,000           --
Deferred taxes                                                                --          (21,000)
Amortization and write-off of debt discount (Note H)                        58,984          4,167
Change in assets and liabilities:
(Increase) in accounts receivable                                       (1,467,645)    (1,346,253)

(Increase) in inventory                                                   (590,111)    (1,126,994)

(Increase)/decrease in prepaid expense and others                          (23,276)        18,163

(Increase)/decrease in employee advances                                     5,912        (48,907)

Increase in accounts payable and accrued expenses                          293,087        698,225

(Decrease) in deferred revenue (Note A)                                    (71,228)       (71,839)
                                                                       -----------    -----------
Net cash (used in) operating activities:                                  (803,462)      (826,730)

Cash flows from investing activities:

Capital expenditure, net                                                  (436,216)      (333,003)
                                                                       -----------    -----------
Net cash (used in) investing activities                                   (436,216)      (333,003)

Cash flows from financing activities:
Proceeds from sale of common stock and stock subscription, net of
costs and fees (Note J)                                                     80,339         65,746
Proceeds from notes payable, net of repayments                           1,278,857        934,875
Proceeds from note payable to related parties, net of repayments            (8,500)       (88,000)
                                                                       -----------    -----------
Net cash provided by financing activities                                1,350,696        912,621

Net increase (decrease) in cash and cash equivalents                       111,018       (247,112)
Cash and cash equivalents at beginning of year                             446,082        693,194
                                                                       -----------    -----------
Cash and cash equivalents at end of year                               $   557,100    $   446,082
                                                                       ===========    ===========

</TABLE>


           See accompanying notes to consolidated financial statements

                                       F-9
<PAGE>
                       GLOBAL DIVERSIFIED INDUSTRIES, INC.
                CONSOLIDATED STATEMENTS OF CASH FLOWS (Continued)
                   FOR THE YEARS ENDED APRIL 30, 2006 AND 2005

<TABLE>
<CAPTION>
                                                                          2006           2005
                                                                       -----------    -----------
<S>                                                                    <C>            <C>
Supplemental Disclosures of Cash Flow Information:

Cash paid during the period for interest                               $   364,821    $   101,293
Cash paid during the period for income taxes                                   800           --
Common stock issued for services (Note J)                                   61,053        150,400
Common stock issued to employees for compensation (Note J
and K)                                                                      16,470         60,176
Common stock subscribed in exchange for payment of
cancellation of Stock Purchase Agreement (Note J)                             --          112,500
Common stock issued in exchange for debt (Note J)                          400,000           --
Common stock issued in exchange for engineering plans
(Note J)                                                                      --           22,800
Notes payable issued in exchange for intellectual
property (Note H)                                                             --          500,000
Beneficial conversion feature of notes payable, convertible
portion (Note H)                                                           166,667         50,000
Amortization and write-off of debt discount -
beneficial conversion feature (Note H)                                      58,984          4,167

</TABLE>



           See accompanying notes to consolidated financial statements

                                      F-10

<PAGE>

                       GLOBAL DIVERSIFIED INDUSTRIES, INC.

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

                             APRIL 30, 2006 AND 2005


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"),  Global
Modular,  Inc.  ("Global  Modular"),  and MBS Construction,  Inc.  ("MBS").  All
significant  intercompany  balances and  transactions  have been  eliminated  in
consolidation.


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).


                                      F-11

<PAGE>
                       GLOBAL DIVERSIFIED INDUSTRIES, INC.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                             APRIL 30, 2006 AND 2005

NOTE A - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)

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.

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 as of April 30, 2006. 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:

                                      F-12

<PAGE>
                       GLOBAL DIVERSIFIED INDUSTRIES, INC.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                             APRIL 30, 2006 AND 2005

NOTE A - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)

Revenue Recognition (Continued)
-------------------------------

(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.

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,  2006 and 2005 are  $5,942 and
$7,277 respectively.

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,
2006 and 2005.

                                      F-13

<PAGE>

                       GLOBAL DIVERSIFIED INDUSTRIES, INC.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                             APRIL 30, 2006 AND 2005

NOTE A - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)


Income Taxes
------------

Income taxes are provided based on the liability method for financial  reporting
purposes in accordance with the provisions of Statements of Financial  Standards
No. 109,  "Accounting  for Income Taxes".  Under this method deferred tax assets
and liabilities are recognized for the future tax  consequences  attributable to
differences  between the financial statement carrying amounts of existing assets
and  liabilities  measured  using enacted tax rates expected to apply to taxable
income in the years in which  those  temporary  differences  are  expected to be
removed or  settled.  The effect on  deferred  tax assets and  liabilities  of a
change in tax rates is  recognized  in the statement of operations in the period
that includes the enactment date.

Stock Based Compensation
------------------------

Prior to the January 1, 2006  adoption  of the  Financial  Accounting  Standards
Board ("FASB")  Statement No. 123(R),  "Share-Based  Payment" ("SFAS 123R"), the
Company accounted for stock-based  compensation using the intrinsic value method
prescribed in Accounting  Principles  Board ("APB") Opinion No. 25,  "Accounting
for Stock Issued to  Employees,"  and related  interpretations.  As permitted by
SFAS  No.  123,   "Accounting  for  Stock-Based   Compensation"   ("SFAS  123"),
stock-based  compensation was included as a pro forma disclosure in the notes to
the consolidated financial statements.

Effective  January 1,  2006,  the  Company  adopted  the fair value  recognition
provisions of SFAS 123R, using the modified-prospective transition method. Under
this transition method,  stock-based  compensation  expense is recognized in the
consolidated  financial  statements  for  granted,  modified,  or settled  stock
options.  Compensation  expense  recognized  included the estimated  expense for
stock options  granted on and subsequent to January 1, 2006,  based on the grant
date fair value  estimated in accordance  with the  provisions of SFAS 123R, and
the estimated  expense for the portion vesting in the period for options granted
prior to, but not  vested as of  January  1, 2006,  based on the grant date fair
value estimated in accordance with the original  provisions of SFAS 123. Results
for  prior  periods  have  not  been   restated,   as  provided  for  under  the
modified-prospective method.

The following  table shows the effect on net earnings and earnings per share had
compensation  cost been  recognized  based upon the estimated  fair value on the
grant date of stock options for year ended April 30, 2005,  in  accordance  with
SFAS 123, as amended by SFAS No. 148 "Accounting for Stock-Based  Compensation -
Transition and Disclosure":

<TABLE>
<CAPTION>
                                                                       April 30, 2005
                                                                      --------------
<S>                                                   <C>             <C>
Net income                                            As reported     $      501,956
Less: Total stock-based employee compensation
expense determined under fair value based method
for all awards, net of related tax effects                                         -
                                                                          ----------
Net income attributable to common shareholders        Pro forma       $      501,956
                                                                          ==========

Basic and diluted net income per share:               As reported     $         0.00
                                                      Pro forma       $         0.00
</TABLE>

The  Company  has no awards of  stock-based  employee  compensation  issued  and
outstanding at April 30, 2006.

                                     F-14

<PAGE>

                       GLOBAL DIVERSIFIED INDUSTRIES, INC.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                             APRIL 30, 2006 AND 2005

NOTE A - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)


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 in conformity with accounting principles
generally  accepted in the United States of America requires  management to make
estimates  and  assumptions  that  affect  the  reported  amounts  of assets and
liabilities  and disclosure of contingent  assets and liabilities at the date of
the  financial  statements  and the  reported  amounts of revenues  and expenses
during the reporting periods. Actual results could differ from those estimates.

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, 2006.


                                      F-15

<PAGE>


                       GLOBAL DIVERSIFIED INDUSTRIES, INC.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                             APRIL 30, 2006 AND 2005

NOTE A - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)

Comprehensive Income (Loss)
---------------------------

The  Company  adopted  Statement  of  Financial  Accounting  Standards  No. 130,
"Reporting  Comprehensive  Income".  SFAS No. 130 establishes  standards for the
reporting  and   displaying  of   comprehensive   income  and  its   components.
Comprehensive  income is defined as the change in equity of a business  during a
period from  transactions  and other  events and  circumstances  from  non-owner
sources.  It  includes  all  changes  in  equity  during a period  except  those
resulting from investments by owners and  distributions to owners.  SFAS No. 130
requires  other   comprehensive   income  (loss)  to  include  foreign  currency
translation  adjustments and unrealized  gains and losses on  available-for-sale
securities.


Net Earnings (Losses) Per Common Share
--------------------------------------

The Company computes earnings per share under Statement of Financial  Accounting
Standards No. 128,  "Earnings Per Share" ("SFAS 128"). Net earnings (losses) per
common share is computed by dividing net income  (loss) by the weighted  average
number  of  shares  of  common  stock  and  dilutive  common  stock  equivalents
outstanding during the year. Dilutive common stock equivalents consist of shares
issuable upon conversion of convertible preferred shares and the exercise of the
Company's  stock  options and  warrants  (calculated  using the  treasury  stock
method).

Reclassifications
-----------------

Certain  reclassifications  have been made to conform to prior  periods' data to
the  current  presentation.  These  reclassifications  had no effect on reported
losses.

New Accounting Pronouncements
-----------------------------

In May 2005 the FASB issued Statement of Financial  Accounting  Standards (SFAS)
No. 154, "Accounting Changes and Error Corrections, a replacement of APB Opinion
No. 20 and FASB Statement No. 3." SFAS 154 requires retrospective application to
prior periods' financial statements for changes in accounting principle,  unless
it is  impracticable  to  determine  either the  period-specific  effects or the
cumulative  effect of the  change.  SFAS 154 also  requires  that  retrospective
application of a change in accounting principle be limited to the direct effects
of the change.  Indirect effects of a change in accounting principle,  such as a
change in non-discretionary profit-sharing payments resulting from an accounting
change,  should be recognized in the period of the accounting  change.  SFAS 154
also requires that a change in depreciation,  amortization,  or depletion method
for long-lived,  non-financial assets be accounted for as a change in accounting
estimate effected by a change in accounting principle. SFAS 154 is effective for
accounting  changes and  corrections  of errors made in fiscal  years  beginning
after December 15, 2005. Early adoption is permitted for accounting  changes and
corrections  of  errors  made in  fiscal  years  beginning  after  the date this
Statement  is issued.  The Company  does not expect the adoption of this SFAS to
have a  material  impact on its  consolidated  financial  position,  results  of
operations or cash flows.


                                      F-16
<PAGE>


                       GLOBAL DIVERSIFIED INDUSTRIES, INC.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                             APRIL 30, 2006 AND 2005

New Accounting Pronouncements (Continued)
-----------------------------------------

On February 16, 2006 the FASB issued SFAS 155,  "Accounting  for Certain  Hybrid
Instruments," which amends SFAS 133, "Accounting for Derivative  Instruments and
Hedging  Activities,"  and SFAS 140,  "Accounting for Transfers and Servicing of
Financial Assets and  Extinguishments of Liabilities." SFAS 155 allows financial
instruments  that  have  embedded  derivatives  to be  accounted  for as a whole
(eliminating  the need to bifurcate the derivative  from its host) if the holder
elects to account for the whole instrument on a fair value basis.  SFAS 155 also
clarifies  and amends  certain  other  provisions of SFAS 133 and SFAS 140. This
statement  is  effective  for all  financial  instruments  acquired or issued in
fiscal years beginning after September 15, 2006. The Company does not expect its
adoption  of this  new  standard  to have a  material  impact  on its  financial
position, results of operations or cash flows.

In March 2006, the FASB issued FASB Statement No. 156,  Accounting for Servicing
of Financial  Assets - an amendment to FASB  Statement  No. 140.  Statement  156
requires that an entity recognize a servicing asset or servicing  liability each
time it undertakes an obligation to service a financial asset by entering into a
service  contract  under certain  situations.  The new standard is effective for
fiscal years beginning after September 15, 2006. The Company does not expect its
adoption  of this  new  standard  to have a  material  impact  on its  financial
position, results of operations or cash flows.



                                      F-17
<PAGE>

                       GLOBAL DIVERSIFIED INDUSTRIES, INC.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                             APRIL 30, 2006 AND 2005


NOTE B- ACQUISITION OF INTANGIBLE ASSETS

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 (Note H). The total
purchase price was allocated to the assets acquired as follows:

           Trade name                                         $350,000
           Building engineering and architectural plans        150,000
                                                             ---------
           Total                                             $ 500,000
                                                             =========

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.


                                      F-18
<PAGE>

                       GLOBAL DIVERSIFIED INDUSTRIES, INC.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                             APRIL 30, 2006 AND 2005


NOTE B- ACQUISITION OF INTANGIBLE ASSETS (Continued)

Total identifiable  intangible assets acquired and their carrying value at April
30, 2006 are:

<TABLE>
<CAPTION>
                                                                                                Weighted
                                       Gross                                                    Average
                                      Carrying     Accumulated                  Residual      Amortization
                                       Amount     Amortization       Net         Value       Period (Years)
----------------------------------- ------------- -------------- ------------ ------------- -----------------
<S>                                 <C>            <C>           <C>          <C>           <C>
Amortized Identifiable Intangible
Assets:

Building engineering and
architectural plans
                                       $ 796,120     $(130,954)    $ 665,166        $    -              10.0
                                    ------------- -------------- ------------ ------------- -----------------
Total Amortized Identifiable
Intangible Assets
                                         796,120     $(130,954)    $ 665,166        $    -              10.0

Unamortized Identifiable
Intangible Assets:

Trade Name                               350,000           -         350,000       350,000                 -
                                    ------------- -------------- ------------ ------------- -----------------
Total Unamortized Identifiable
Intangible Assets                        350,000           -         350,000       350,000                 -
                                    ------------- -------------- ------------ ------------- -----------------

Total                                 $1,146,120     $(130,954)    $1,015,166     $ 350,000
                                      ==========     ==========     =========     =========
</TABLE>


Total  amortization  expense  charged to operations for the year ended April 30,
2006 and 2005 were $69,548 and $42,683, respectively.

Estimated amortization expense as of April 30, 2006 is as follows:


              2007                      $ 73,988
              2008                        73,988
              2009                        73,988
              2010                        73,988
              2011 and after             369,214
                                         -------
              Total                     $665,166
                                         =======



NOTE C - INVENTORIES

Inventories  are  stated  at the  lower  of cost  or  market  determined  by the
first-in,  first-out  (FIFO)  method.  Components of inventories as of April 30,
2006:


Finished Goods     $  448,627
Work in Progress      599,455
Raw Materials       2,065,722
                   ----------
                   $3,113,804
                   ==========



                                      F-19
<PAGE>

                       GLOBAL DIVERSIFIED INDUSTRIES, INC.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                             APRIL 30, 2006 AND 2005

NOTE D - PROPERTY, PLANT AND EQUIPMENT

The  Company's  property  and  equipment  at  April  30,  2006  consists  of the
following:


Plant Equipment                      $ 1,903,295
Furniture and Fixture                      2,933
Building and Leasehold Improvement       675,914
                                     -----------
   Total                               2,582,142
Accumulated Depreciation                (802,777)
                                     -----------
                                     $ 1,779,365

Depreciation  expense  included as a charge to income  amounted to $218,061  and
$199,993 for the year ended April 30, 2006 and 2005, respectively.



NOTE E - 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.  The fair value
of the amounts due to and from a related party cannot be  determined  due to the
uncertainty as to the timing of repayment.



NOTE F - ACCOUNTS PAYABLE AND ACCRUED LIABILITIES

Accounts payable and accrued liabilities at April 30, 2006 are as follows:


Accounts payable                    $  807,133
Accrued interest                        58,826
Accrued Sales Tax                       63,478
Accrued Property taxes                  62,474
Accrued payroll and payroll taxes          739
Other accrued expenses                 288,872
                                    ----------
Total                               $1,281,522
                                    ==========

NOTE G - ECONOMIC DEPENDENCY

During the year ended April 30, 2006, approximately $9,516,531, or 64%, of total
revenues were derived from five (5) major customers and $2,727,988  (88%) of the
total  accounts  receivable  at April  30,  2006  were  due  from two (2)  major
customers.


                                      F-20
<PAGE>

                       GLOBAL DIVERSIFIED INDUSTRIES, INC.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                             APRIL 30, 2006 AND 2005


NOTE H - NOTES PAYABLE

A summary of notes payable at April 30, 2006 is as follows:


Note payable to Company shareholder in monthly installments
of interest only at 10.0% per annum; unsecured; maturity
date was in November 30, 2003. The Company re-signed the
note with the shareholder in April 2004; extended maturity
date is on May 1, 2009, and the note has a conversion option
to convert the principal balance of the loan to the
Company's preferred stock. (a)                                    $ 389,465

Note payable to Company shareholders in monthly installments
of interest only at 8.0% per annum; unsecured; maturity date
extended to May 15, 2007. Noteholder has the option to
convert the principal balance of the loan to the Company's
preferred stock. (a)                                                  3,500

Note payable to Company shareholders in monthly installments
of interest only at 6.0% per annum; unsecured; maturity date
is on May 1, 2009 (Note I).                                         199,350

Note payable to Company shareholders in monthly installments
of interest only at 5.0% per annum; unsecured; maturity date
is on August 31, 2005, maturity extended to August 31, 2007
Noteholder has the option to convert the principal balance
of the loan to the Company's preferred stock. (a).                    6,000

Note payable in 24 monthly installments beginning March 15,
2006; unsecured; maturity date is March 2008.                        51,384

Note payable to Company shareholder in monthly installments
of interest only at 8% per annum, unsecured, maturity date
is on January 31, 2006.,maturity date extended to January
31, 2007                                                            131,000




<PAGE>

                                      F-21

                       GLOBAL DIVERSIFIED INDUSTRIES, INC.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                             APRIL 30, 2006 AND 2005

NOTE H - NOTES PAYABLE (Continued)



Note payable in 24 monthly installments beginning December
27, 2004, with interest at 8% per annum beginning January
28, 2005, unsecured; maturity date is December 26, 2006. (b)        25,388

Note payable in 12 installments beginning April 15, 2006
with interest at 9% per annum, unsecured, maturity date is
March 15, 2007                                                      50,875

Note 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)                                                                 346,484

Note 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 October 2006. Maximum borrowing capacity
of $3,000,000.                                                    1,971,580
                                                                  ----------
                                                                  3,175,026

Less: current portion                                            (2,339,727)
                                                                  ----------

Total - notes payable - long term                                 $ 835,299
                                                                  ==========



     (a) The  Company  granted  the  noteholder  an option to convert a total of
     $400,000  of  principal  balance  of the notes to the  Company's  2,666,666
     shares  of  preferred  stock,  and  each  share of the  preferred  stock is
     convertible  to ten shares of the Company's  restricted  common stock.  The
     noteholder has the option to convert the notes to the Company's  securities
     anytime  within  three years from the  issuance  of the notes.  The Company
     accounted  for the notes  payable and stock  purchase  rights in accordance
     with APB No. 14,  "Accounting  for  Convertible  Debt and Debt  Issued with
     Stock Purchase  Warrants"  ("APB 14").  Proceeds from the issuance of notes
     payable  with  equity  securities  are  allocated  between the debt and the
     securities  based on their  relative  fair  values.  The fair  value of the
     company's  restricted  common stock at the time the  conversion  option was
     granted approximated the value of the debt if converted. Accordingly, there
     was no beneficial  conversion  feature in connection  with the  convertible
     notes payable.



                                      F-22
<PAGE>

                       GLOBAL DIVERSIFIED INDUSTRIES, INC.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                             APRIL 30, 2006 AND 2005

NOTE H - NOTES PAYABLE (Continued)

     (b) Original  note  agreement  was entered into in  September  2003,  in 24
     monthly  installments  beginning  October 15, 2003, with interest at 6% per
     annum; unsecured; maturity date is October 2005. The Company was in default
     under the terms of the note  agreement.  On December 28, 2004,  the Company
     and the  noteholder  entered  into an  updated  Promissory  Note  Agreement
     ("Updated  Agreement").  Pursuant to the Updated  Agreement,  the principal
     amount  together  with  interest  accrued at 8% per annum are payable in 24
     monthly   installments   beginning  January  28,  2005.  The  Company  also
     transferred  into an escrow account an aggregate of 3,223,421 shares of its
     restricted  common  stock as  collateral  for this note.  If the note is in
     default  after  one year or any time  thereafter,  the  noteholder  has the
     option to cash in the  restricted  stock to pay off the balance of the note
     plus any unpaid  interest and  penalties.  The  3,223,421  shares of common
     stock were held in escrow so as not be  considered  outstanding  unless the
     Company is in default.  As of April 30, 2006, the Company was in compliance
     with the terms of the Update Agreement.

     (c) The Company  granted  the  noteholder  an option to receive  restricted
     shares of the Company's  common stock in lieu of the annual cash payment of
     $100,000  at the  end of  each  twelve  months  ("anniversary  date").  The
     conversion  price is equal to 75% of the closing  price for the day that is
     twelve months prior to each anniversary date. The minimum  conversion price
     shall be $0.05  per  share.  The  Company  has  sufficient  authorized  and
     unissued  shares  available to settle the debt, and has reserved 10 million
     shares of common stock to settle the debt in the event that the  noteholder
     converts at the minimum  conversion  price of $0.05 per share.  The Company
     accounted for the convertible in accordance with Emerging Issues Task Force
     Issue  98-5,  Accounting  for  Convertible  Securities  with  a  Beneficial
     Conversion  Features or Contingently  Adjustable  Conversion  Ratios ("EITF
     98-5"), and recognized an imbedded beneficial conversion feature present in
     the convertible  note. The Company  recognized and measured an aggregate of
     $166,667 of the proceeds, as 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.  The Company
     amortized the debt discount attributed to the beneficial conversion feature
     and recorded  non-cash interest expense of $13,151 for the year ended April
     30, 2006.

     Additionally,  during the year ended April 30, 2005,  the Company issued an
     unsecured  promissory note in the amount of 500,000. The note is payable in
     3  installments,  the  first on May 2,  2005 for  $100,000,  the  second on
     January 25, 2006 for $200,000, principal only, and the third on January 25,
     2007,  for $200,000  principal plus accrued  interest at 5% per annum.  The
     Company granted the noteholder an option to convert the second  installment
     of  $200,000  of  principal  to  five  million   shares  of  the  company's
     unregistered  common stock at maturity date. The Company  accounted for the
     notes  payable and stock  purchase  rights in  accordance  with APB No. 14,
     "Accounting  for  Convertible  Debt and Debt  Issued  with  Stock  Purchase
     Warrants"  ("APB 14").  Proceeds  from the  issuance of notes  payable with
     equity  securities are allocated  between the debt and the securities based
     on their relative fair values.  The fair value of the company's  restricted
     common  stock at the time the  conversion  option was granted  approximated
     $250,000.  The Company recognized an imbedded beneficial conversion feature
     present in the  convertible  note.  The Company  recognized and measured an
     aggregate of $50,000 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  portion of the note.  The
     debt discount attributed to the beneficial  conversion feature is amortized
     over the  maturity  period  (two years) as  interest  expense.  The Company
     amortized the debt discount attributed to the beneficial conversion feature
     and recorded  non-cash  interest expense of $4,167 for the year ended April
     30, 2005. During the year ended April 30, 2006, the Company repaid $100,000
     of  principal  of the note in cash , and issued an  aggregate  of 7,857,143
     shares of common stock in exchange for conversion of the remaining $400,000
     of the note (Note J). The Company amortized the debt discount attributed to
     the  beneficial  conversion  feature  and  wrote off the  unamortized  debt
     discount upon conversion of the note.  Non-cash interest expense of $45,833
     was charged to operations for the year ended April 30, 2006.


NOTE I - RELATED PARTY TRANSACTIONS

In addition to convertible notes payable to related parties described in Note H,
two of the  Company's  shareholders  repaid an  aggregate  of  $499,350 of notes
payable the Company due to bank (Note H) on behalf of the Company in April 2004.
The Company issued to the shareholders $199,350 of notes payable with a maturity
date on May 1, 2009  (Note  H),  and the  shareholders  agreed  to  receive  the
Company's  preferred  stock in exchange  for the  remaining  $300,000  due.  The
Company has  accounted  $300,000 of preferred  stock  subscription  at April 30,
2004.



                                      F-23
<PAGE>

                       GLOBAL DIVERSIFIED INDUSTRIES, INC.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                             APRIL 30, 2006 AND 2005

NOTE J - CAPITAL STOCK

On November 7, 2001 the Company's Board of Directors approved an increase in the
Company's  authorized  common stock from  50,000,000 to  400,000,000  with a par
value of $.001.  The Company also  created a Series A Preferred  class of stock,
$.001 par value,  and  authorized  10,000,000  shares.  On February 3, 2003, the
Company's  Board of  Directors  approved to change the  conversion  right of the
Series A Preferred  Stock from a ratio of five common for one preferred share to
ten common for one preferred  share.  As of April 30, 2006 and 2005, the Company
has issued and outstanding  666,667 shares of preferred  stock.  The Company has
149,447,478  and  138,615,314  shares of common stock issued and  outstanding at
April 30, 2006 and 2005, respectively. The Company had 50,000 shares of treasury
stock at April 30, 2006 and 2005.

In May 2004, the Company issued  1,000,000 shares of common stock to Grossman in
exchange  for the  $160,000  of  stock  subscription  at  April  30,  2004.  All
obligations pursuant to the agreement have been fulfilled as of April 30, 2005.

During the year ended April 30, 2005, the Company issued an aggregate of 986,840
shares of common stock to officers and employees for stock options  exercised at
50% of the fair market value of the common  stock on the date of exercise  (Note
K).  The  Company  received  $65,745  of  proceeds,  net of costs and fees,  and
compensation  costs of $60,176 were charged to operations  during the year ended
April 30,  2005.  Additionally,  the Company  issued an  aggregate  of 4,622,222
shares of common stock to  consultants in exchange for services in the amount of
$150,400. The Company also issued 142,500 shares of common stock in exchange for
intellectual  property valued at $22,800.  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.

In July 2004, the Company entered into a Stock Purchase  Agreement and an Escrow
Agreement   (collectively   "Agreement")   with  Langley  Park  Investments  PLC
("Langley"),  a  corporation  organized  under the laws of  England  and  Wales.
Pursuant to the terms of the Agreement,  the Company issued 25,000,000 shares of
its restricted  common stock  ("Consideration  Stock") to be held in escrow,  in
exchange for Langley Shares ("Langley  Consideration  Shares") equal to the same
value of the Consideration Stock. The Consideration Stock was released,  however
the Company did not receive the Langley  Consideration Shares. In December 2004,
the Company filed an action in the United States  District Court for the Eastern
District of California  Fresno Division,  against Langley for, among other cause
of action,  securities  fraud,  breach of contract and rescission in relation to
the Agreement.  The Company has demanded the 25,000,000  shares of Consideration
Stock  wrongfully  transferred  to Langley  being  return to the Company and the
Consideration  Stock has been  coded so as not be  considered  issued.  In April
2005,  the Company  entered into an  agreement  with Langley to cancel the Stock
Purchase Agreement.  The Company agreed to issue Langley 1,250,000 shares of its
common stock, valued at $112,500, and Langley agreed to return 23,750,000 of the
Company's common stock to the treasury of the Company. As of April 30, 2005, the
company  accounted for these shares as common stock  subscription  payable.  All
obligations  pursuant to the agreement have been fulfilled during the year ended
April 30, 2006.

During the year ended  April 30,  2006,  the  Company  issued a total of 611,112
shares of common stock in exchange  for $50,000 of cash,  net of costs and fees.
The Company issued an aggregate of 878,614 shares of common stock to consultants
in exchange  for  services in the amount of $61,053.  All  valuations  of common
stock  issued for services  were based upon the value of the services  rendered,
which did not  differ  materially  from the fair value of the  Company's  common
stock  during the period the  services  were  rendered.  The Company also issued
235,295  shares of common  stock  valued at $16,470 to an employee for a signing
bonus after meeting the one year employment requirement

During the year  ended  April 30,  2006,  the  Company  issued an  aggregate  of
7,857,143 shares of common stock to a Lender in exchange for conversion of notes
payable in the amount of $400,000 (Note H). In March 2006,  the Company  entered
into a stock  subscription  agreement  with two  investors  for an  aggregate of
655,000 shares of common stock  subscribed.  The Company received gross proceeds
of $30,339,  however the common  stock has not been issued as of April 30, 2006.
The Company has accounted for the proceeds received as common stock subscription
payable at April 30, 2006.



                                      F-24
<PAGE>

                       GLOBAL DIVERSIFIED INDUSTRIES, INC.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                             APRIL 30, 2006 AND 2005

NOTE K - EMPLOYEE STOCK INCENTIVE PLAN

In September 2001, the Board of Directors of the Company implemented an Employee
Stock  Incentive  Plan ("2001 Stock Option  Plan") for  officers,  employees and
certain  non-employees  (collectively  referred to as  "Employees") in an amount
equal to 15,000,000  shares of common stock. The 2001 Stock Option Plan provides
for the issuance of stock options exercisable at fifty percent (50%) of the fair
market  value  of the  common  stock on the date of  exercise.  For an  employee
holding greater than ten percent (10%) of the total voting power of all stock of
the Company,  the exercise price of an incentive  stock option shall be at least
one hundred and ten percent  (110%) of the fair market value of the common stock
on the date of the grant of the option.  The maximum  life of the options is ten
years from the date the stock options are granted.

In February  2004,  the Board of  Directors of the Company  implemented  another
Employee Stock Incentive Plan ("2004 Stock Option Plan") for officers, employees
and certain non-employees (collectively referred to as "Employees") in an amount
equal to 2,000,000  shares of common stock.  The 2004 Stock Option Plan provides
for the  issuance of stock  options at an exercise  price of $0.05 per share (or
110% of the fair  market  value of the common  stock on the date of the grant of
the option,  for employees  holding  greater than ten percent (10%) of the total
voting  power of all stock of the  Company).  The maximum life of the options is
ten years from the date the stock options are granted.

During the year ended  April 30,  2005,  the  Company  granted an  aggregate  of
986,840 options to Employees pursuant to 2001 Stock Option Plan, and all options
were exercised on the grant date (Note J). There are no stock options issued and
outstanding at April 30, 2006

NOTE L - NON-EMPLOYEE STOCK OPTIONS AND WARRANTS

Non-Compensatory Stock Options
------------------------------

The  following  table   summarizes  the  changes  in   non-compensatory   option
outstanding  and the related  prices for the shares of the  Company's  preferred
stock issued to non-employees of the Company.

<TABLE>
<CAPTION>
                                Options Outstanding                                     Options Exercisable
                                -------------------                                     -------------------
                                            Weighted Average          Weighed                        Weighted
                           Number        Remaining Contractual        Average         Number         Average
    Exercise Prices     Outstanding           Life (Years)        Exercise Price    Exercisable   Exercise Price
    ---------------     -----------           ------------        --------------    -----------   --------------
<S>                     <C>                   <C>                 <C>                <C>          <C>
             $ 0.05       4,000,000                   0.25               $ 0.05      4,000,000         $  0.05
                          4,000,000                   0.25               $ 0.05      4,000,000         $  0.05
                          =========                   ====               ======      =========         =======

</TABLE>

Transactions involving options are summarized as follows:

<TABLE>
<CAPTION>

                                                                         Weighted Average
                                                Number of Shares         Price Per Share
                                                ----------------         ----------------
<S>                                             <C>                      <C>
       Outstanding at April 30, 2004                  5,500,000                   $ 1.40
          Granted                                             -                       -
          Exercised                                           -                       -
          Canceled or expired                                 -                       -
                                                ----------------         ----------------
       Outstanding at April 30, 2005                  5,500,000                   $ 1.40
                                                ================         ================
          Granted                                             -                       -
          Exercised                                           -                       -
          Canceled or expired                        (1,500,000)                    5.00
                                                ----------------         ----------------
       Outstanding at April 30, 2006                  4,000,000                   $ 0.05
                                                ================         ================
</TABLE>

The options granted have an original expiration date on January 25, 2005. During
the year ended April 30, 2006, the Company has extended the  expiration  date to
January 31, 2007.



                                      F-25
<PAGE>

                       GLOBAL DIVERSIFIED INDUSTRIES, INC.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                             APRIL 30, 2006 AND 2005

NOTE L - NON-EMPLOYEE STOCK OPTIONS AND WARRANTS (Continued)

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.

<TABLE>
<CAPTION>
                                Warrants Outstanding                                   Warrants Exercisable
                                --------------------                                   --------------------
                                            Weighted Average          Weighed                        Weighted
                           Number        Remaining Contractual        Average         Number         Average
    Exercise Prices     Outstanding           Life (Years)        Exercise Price    Exercisable   Exercise Price
    ---------------     -----------           ------------        --------------    -----------   --------------
<S>                     <C>                   <C>                 <C>               <C>           <C>
             $ 0.03       1,500,000                   0.25                $ 0.03      1,500,000           $ 0.03
                        -----------                   ----                          -----------           ------
                          1,500,000                   0.25                            1,500,000           $ 0.03
                        ===========                   ====                          ===========           ======
</TABLE>

Transactions involving warrants are summarized as follows:

<TABLE>
<CAPTION>
                                                                         Weighted Average
                                                Number of Shares         Price Per Share
                                                ----------------         ----------------
<S>                                             <C>                      <C>
       Outstanding at April 30, 2004                   1,500,000                 $  0.03
                                                ================         ================
          Granted                                              -                       -
          Exercised                                            -                       -
          Canceled or expired                                  -                       -
                                                ----------------         ----------------
       Outstanding at April 30, 2005                   1,500,000                 $  0.03
                                                ================         ================
          Granted                                              -                       -
          Exercised                                            -                       -
          Canceled or expired                                  -                       -
                                                ----------------         ----------------
       Outstanding at April 30, 2006                   1,500,000                 $  0.03
                                                ================         ================

</TABLE>


The Company  granted  1,500,000 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.  During the year ended
April 30, 2006, the Company has extended the expiration date to July 31, 2006.


                                      F-26
<PAGE>

                       GLOBAL DIVERSIFIED INDUSTRIES, INC.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                             APRIL 30, 2006 AND 2005

NOTE M - INCOME TAXES

Deferred income taxes result from the temporary differences arising from the use
of   accelerated   depreciation   methods  for  income  tax   purposes  and  the
straight-line  method for financial statement purposes,  from differences in the
timing  of  recognition  of the  state  income  tax  provision  for book and tax
reporting purposes,  and an accumulation of Net Operating Loss carryforwards for
income tax  purposes  with a fully  reserved  valuation  allowance  against  the
carryforwards for book purposes.

In assessing  the  realizability  of deferred tax assets,  management  considers
whether it is more likely than not that some  portion or all of the deferred tax
assets  will not be  realized.  Included  in  deferred  tax assets are State net
operating loss  carryforwards  of  $1,416,479,  which will expire in 2024, and a
Federal net operating  loss  carryforward  of  $1,416,479,  which will expire in
2024.  The ultimate  realization  of deferred  tax assets is dependent  upon the
generation of future taxable income during the periods in which those  temporary
differences  become deductible.  Management  considers the scheduled reversal of
deferred tax  liabilities,  projected  future taxable  income,  and tax planning
strategies in making this assessment.  Based upon our cumulative  losses through
April  30,  2006,  we have  provided  a  valuation  allowance  reducing  the net
realizable  benefits of these  deductible  differences to $ 185,143 at April 30,
2006.  The net  change in the  valuation  allowance  from  April 30,  2005 was a
decrease of $814,226. 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 for the years ended April 30, 2006 and 2005 consists of
the following:

                               2006             2005
                           -------------    -------------

Current
Federal                    $          --    $          --
State                                800              800
                           -------------    -------------
                                     800              800
                           -------------    -------------

Deferred
Federal                               --          (16,000)
State                                 --           (5,000)
                           -------------    -------------
                                      --          (21,000)
                           -------------    -------------


                           $         800    $     (20,200)
                           -------------    --------------





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:


                                                       2006         2005
                                                    ---------    ---------

Computed "expected" income tax expense at
approximately 34%                                   $ 203,000    $ 193,200

Change in valuation allowances of deferred income
taxes                                                (202,200)    (213,400)


                                                    $     800    $ (20,200)
                                                    ---------    ---------



                                      F-27
<PAGE>

                       GLOBAL DIVERSIFIED INDUSTRIES, INC.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                             APRIL 30, 2006 AND 2005

NOTE M - INCOME TAXES (Continued)

Deferred  income  taxes  reflect  the net tax effects of  temporary  differences
between the carrying  amounts of assets and liabilities for financial  reporting
purposes and the amounts used for income tax purposes. Significant components of
our deferred tax assets and liabilities as of April 30, 2006 are as follows:



Deferred tax assets:
Federal and state net operating loss                            $ 567,000
Allowance and accruals not recognized for income tax purposes        --
Total gross deferred tax assets                                   567,000
Less : Valuation allowance                                       (480,000)
                                                                ---------
Net deferred tax assets                                         $  87,000

Deferred tax liabilities:

Total gross deferred tax liabilities:
Depreciation and amortization, net                                (65,000)
Deferred state tax liability                                       (1,000)
                                                                ---------
Total net deferred tax liabilities                              $ (66,000)


These amounts have been presented in the consolidated balance sheet at April 30,
2006 as follows:


Current deferred tax asset                                      $    --
Non current deferred tax asset                                     21,000
Non current deferred tax liability                                   --
Total net deferred tax asset                                    $  21,000




                                      F-28
<PAGE>

                       GLOBAL DIVERSIFIED INDUSTRIES, INC.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                             APRIL 30, 2006 AND 2005


NOTE N - EARNINGS PER SHARE

Basic and fully diluted earnings per share are calculated by dividing net income
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 per share:


                                         2006        2005
                                      ---------   ---------
Net income available to
   common stockholders                $ 596,683   $ 501,956
                                      =========   =========
Earnings per share:
Basic                                 $    0.00   $    0.00
                                      =========   =========
Diluted and assuming diluted          $    0.00   $    0.00
                                      =========   =========
Weighted average number of
   common shares outstanding:
Basic                               145,006,288  135,913,683
                                   ============ ============
Diluted and assuming diluted        154,524,309  145,630,353
                                   ============ ============

NOTE O - COMMITMENTS AND CONTINGENCIES

Consulting Agreement
--------------------

The  Company has various  consulting  agreements  with  outside  contractors  to
provide  business  development  and  consultation  services.  The Agreements are
generally for a term of 12 months from  inception  and  renewable  automatically
from year to year  unless  either the  Company  or  Consultant  terminates  such
agreement by written notice.

In October  2003,  the  Company  entered  into a  Financial  Services  Agreement
("Agreement") with Merit Capital Group LLC ("Merit"). Pursuant to the agreement,
the Company agreed to pay Merit an unaccountable  advance of $65,000 and 600,000
shares of the Company's common stock in exchange for financing services rendered
and to be  rendered.  The term of the  Agreement  is two years from the date the
Agreement  was entered  into.  The service  fees will be due only if the Company
obtains  funding  through the  arrangements  and assistance of Merit,  solely at
terms and conditions  acceptable to the Company. As of the date of the financial
statements,  the Company has not obtained any funding through the Agreement with
Merit.

Lease Agreement
---------------

In October 2002, the Company  entered into a three-year  lease for its corporate
offices and facilities in Chowchilla,  California at a rate of $17,016 per month
for the first year and moderate increases for each year thereafter.  Commitments
for  minimum  rentals  under non  cancelable  leases  at April  30,  2006 are as
follows:

                  Fiscal Year       Amount
                 -------------     --------
                      2007         $204,192
                 2008 and after         --
                ---------------    --------

                    Total          $204,192
                                   ========

Rental expenses charged to operations for the year ended April 30, 2006 and 2005
are $204,192 and $196,244, respectively.

Litigation
----------

The  Company is  subject to legal  proceedings  and  claims  which  arise in the
ordinary  course of its  business.  Although  occasional  adverse  decisions  or
settlements may occur, the Company  believes that the final  disposition of such
matters  will not have a  material  adverse  effect on its  financial  position,
results of operations or liquidity.



                                      F-29
<PAGE>


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


None.


ITEM 8A.  CONTROLS AND PROCEDURES

         (a)  EVALUATION OF  DISCLOSURE  CONTROLS AND  PROCEDURES.  Regulation s
         under the Securities  Exchange Act of 1934 require public  companies to
         maintain  "disclosure  controls and  procedures",  which are defined to
         mean a company's  controls  and other  procedures  that are designed to
         ensure that information required to be disclosed in the reports that it
         files or submits under the Securities Exchange Act of 1934 is recorded,
         processed,  summarized and reported,  within the time periods specified
         in the  Commission's  rules  and  forms.  Our Chief  Executive  Officer
         ("CEO"), who is also our President, and our Treasurer/Chief  Accounting
         Officer  carried  out  an  evaluation  of  the   effectiveness  of  our
         disclosure  controls and procedures as of the end of the period covered
         by this report. Based on those evaluations,  as of the Evaluation Date,
         our CEO/President and Treasurer/ Chief Accounting Officer believe:

                  (i) that our  disclosure  controls and procedures are designed
                  to ensure that  information  required to be disclosed by us in
                  the reports we file under the Securities  Exchange Act of 1934
                  is recorded,  processed,  summarized  and reported  within the
                  time  periods  specified in the SEC's rules and forms and that
                  such  information  is  accumulated  and  communicated  to  our
                  management, including the CEO and CFO, as appropriate to allow
                  timely decisions regarding disclosure; and

                  (ii) that our disclosure and procedures are effective.


         (b) CHANGES IN INTERNAL CONTROLS: There were no changes in our internal
         controls   or,  to  our   knowledge,   in  other   factors  that  could
         significantly affect our internal controls subsequent to the evaluation
         date.


PART III.


ITEM 9. DIRECTORS, EXECUTIVE OFFICERS AND COMPLIANCE WITH SECTION 16(A)
        OF THE EXCHANGE ACT.


Officers and Directors.
----------------------

The names, ages, and respective positions of the directors,  executive officers,
and key  employees  of the  Company  are set  forth  below;  there  are no other
promoters or control  persons of the  Company.  The  directors  named below will
serve until the next annual meeting of the Company's stockholders or until their
successors  are duly  elected and have  qualified.  Directors  are elected for a
one-year  term at the annual  stockholders'  meeting.  Officers  will hold their
positions  at  the  will  of the  board  of  directors,  absent  any  employment
agreement.  The directors and executive  officers of the Company are not a party
to any material  pending legal  proceedings and, to the best of their knowledge,
no such action by or against them has been threatened.


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.



                                       18

<PAGE>


PHIL HAMILTON, PRESIDENT/CHAIRMAN

         Phillip  Hamilton,  age 59 has over thirty  years  entrepreneurial  and
senior  management  experience  in the  manufacturing  business.  From  1996  to
current,  Mr. Hamilton has been 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 College taking courses in Business
Administration.

ADAM DEBARD, SECRETARY/TREASURER/DIRECTOR

         Adam N. DeBard,  age 39, has over fifteen  years of  experience  in the
manufacturing and technology business sectors. From January 2001 to current, Mr.
DeBard has been 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


(b) Compliance with Section 16(a) of the Exchange Act.
-----------------------------------------------------

Section  16(a) of the  Securities  Exchange Act of 1934  requires the  Company's
directors,  certain  officers and persons  holding 10% or more of the  Company's
common stock to file reports  regarding  their  ownership  and  regarding  their
acquisitions  and dispositions of the Company's common stock with the Securities
and Exchange Commission. Such persons are required by SEC regulations to furnish
the Company with copies of all Section 16(a) forms they file.

Based  solely on a review of the Forms 5 with  respect to the fiscal  year ended
April 30,  2002 and  subsequently,  the  Company  is unaware  that any  required
reports were not timely filed.  The Company is currently  conducting an internal
audit to ensure that the Company's Officers and/or Directors, as well as persons
holding  more  than  10% of  the  Company's  outstanding  common  stock,  are in
Compliance  with Section 16(a) of the Securities and Exchange Act of 1934. It is
the Company's intention to ensure, where possible,  from the date of this filing
forward, complete compliance according to this Section.

ITEM 10. EXECUTIVE COMPENSATION.

The following table sets forth certain information  relating to the compensation
paid by the  Company  during  the  last  three  fiscal  years  to the  Company's
President.  No other executive  officer of the Company received total salary and
bonus in excess of  $100,000  during the fiscal  year ended  April 30,  2006 and
prior.

                                       19
<PAGE>

 SUMMARY COMPENSATION TABLE

<TABLE>
<CAPTION>
                                  Annual compensation                         Long-term compensation
                            ----------------------------------  ---------------------------------------------------
                                                                         Awards             Payouts
                                                                -----------------------    ---------
                                                                             Securities
                                                     Other     Restricted    underlying
    Name and                                        annual       stock        options/       LTIP       All other
   principal                  Salary     Bonus   compensation   award(s)        SARs        payouts   compensation
    position        Year        ($)       ($)         ($)          ($)           (#)          ($)         ($)
      (a)           (b)         (c)       (d)         (e)          (f)           (g)          (h)         (i)
---------------    ------    --------   -------   ------------  -----------   ----------     -------   ------------
<S>                <C>       <C>        <C>       <C>           <C>           <C>            <C>       <C>
Phil Hamilton,      2006       85,616
President           2005       85,616    37,500
                    2004       42,000
                    2003            0         0            0                           0          0            0

</TABLE>

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.

ITEM 11. 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,  2003  (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:

<TABLE>
<CAPTION>
                                                                                               Amount of
                                                                                              Beneficial        Percent of
 Title of Class                     Name and Address of Beneficial Owner                     Ownership (2)        Class
------------------ ----------------------------------------------------------------------- ------------------ ---------------
<S>                <C>                                                                     <C>                <C>
  Common Stock     Hamilton Trust (1), 1200 Airport Drive, Chowchilla, CA                          5,000,000      3.61%

  Common Stock     Adam Debard(1), 1200 Airport Drive, Chowchilla, CA                              6,200,000      4.47%

  Common Stock     Rebecca Manadic(3), 611 West Main Street, Merced, CA                           35,775,000      25.81%

  Common Stock     Shares of all directors and executive officers as a group (3 persons)          46,975,000      33.89%
------------------ ----------------------------------------------------------------------- ------------------ ---------------
</TABLE>

(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.

                                       20
<PAGE>

ITEM 12. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS.

During  the past two  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 of at total of  $407,465  to a  significant
shareholder. The Company granted the shareholder an option to convert a total of
$400,000 of principal balance of the notes to the Company's  2,666,666 shares of
the preferred stock, and each share of the preferred stock is convertible to ten
shares of the Company's  restricted common stock. The shareholder has the option
to convert the notes to the Company's securities anytime within three years from
the issuance of the notes.


In May 2003, the Company issued to MMI shareholders notes payable of $100,000 in
connection  with the  acquisition  of MMI,  an entity  controlled  by one of the
Company's significant shareholders.


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.


ITEM 13. EXHIBITS

         (a) List of Exhibits attached or incorporated by reference  pursuant to
Item 601 of Regulation S-B.

     Exhibit No.  Description

         3        * Articles of Incorporation  incorporated by reference to Form
                  SB-2, file no. 333-83231, incorporated by reference to Exhibit
                  3 filed on July 6, 2001

         3.2      *  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, 2001

         3.3      * Bylaws  incorporated  by  reference  to Form SB-2,  file no.
                  333-83231,  incorporated  by reference to Exhibit 3.3 filed on
                  July 6, 2001

         3.4      * 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, 2001

         4        *  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, 2001

         4.1      * 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

                                       21
<PAGE>

         10.1     *  Consulting   Agreement  with  Moody's  Financial   Services
                  incorporated by reference to Form SB-2, file no. 333-83231

         10.2     *  Consulting   Agreement  with  Joel  Shine  incorporated  by
                  reference to Form SB-2, file no. 333-83231

         10.3     * 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, 2001

         10.4     * 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, 2001

         10.5     * 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, 2001

         10.6     * 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, 2001

         10.7     *  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,
                  2001

         10.8     * Agreement and Plan of Exchange  between  Global  Diversified
                  Industries and MBS, filed on March 17, 2003

         10.9     * Agreement and Plan of Exchange  between  Global  Diversified
                  Industries and Modular Modernization,  Inc. filed on March 19,
                  2003

         31.1     ** 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.

ITEM 14. PRINCIPAL ACCOUNTANT FEES AND SERVICES

            The  following  table sets forth fees  billed to us by our  auditors
during the fiscal years ended April 30, 2006 and 2005 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, 2006    April 30, 2005
                                   ---------------   ----------------

      (i)      Audit Fees           $    89,370       $    57,995
      (ii)     Audit Related Fees           --                --
      (iii)    Tax Fees                     --              7,050
      (iv)     All Other Fees               --                --
                                    ------------      ------------
                   Total fees       $    89,370       $    65,045
                                    ============      ============


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<PAGE>


         AUDIT FEES. Consists of fees billed for professional  services rendered
for the audit of Global Diversified  Industries,  Inc.'s consolidated  financial
statements and review of the interim consolidated  financial statements included
in quarterly  reports and services that are normally provided by Russell Bedford
Stefanou  Mirchandani LLP in connection with statutory and regulatory filings or
engagements.


         AUDIT-RELATED  FEES.  Consists of fees billed for assurance and related
services that are reasonably  related to the  performance of the audit or review
of Global Diversified  Industries,  Inc.'s consolidated financial statements and
are not  reported  under  "Audit  Fees."  There were no  Audit-Related  services
provided in fiscal 2006 or 2005.

         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.  There were no  management  consulting  services
provided in fiscal 2006 or 2005.


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.

SIGNATURES

Pursuant to the  requirements of Section 13 or 15(d) of the Securities  Exchange
Act of 1934,  the Company has duly caused this report to be signed on its behalf
by the undersigned, thereunto duly authorized.

                       GLOBAL DIVERSIFIED INDUSTRIES, INC.

Dated: August 17, 2006

By: /s/  Phil Hamilton
    ------------------
         Phil Hamilton
         President and CEO

Pursuant to the requirements of the Securities Exchange Act of 1934, this report
has been signed below by the  following  persons on behalf of the Company and in
the capacities and on the date indicated:


          Signature                     Title                       Date
    -----------------      ----------------------------       ---------------

    /s/Phil Hamilton       CEO/Chairman of the Board          August 17, 2006
    ----------------
    Phil Hamilton

    /s/Adam Debard         Secretary/Treasurer/Director       August 17, 2006
    ----------------
    Adam Debard



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