**U.S.
SECURITIES AND EXCHANGE COMMISSION**
 **Washington,
D.C. 20549**
 
 
 **FORM
10-QSB**
 
 
 **QUARTERLY
REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE**
 **SECURITIES
AND EXCHANGE ACT OF 1934**
 
 
 **For
the period ended January 31, 2005**
 
 
 **Commission
file number 333-83231**
 
 
 **GLOBAL
DIVERSIFIED INDUSTRIES, INC**
 **(Exact
Name of Registrant as specified in its charter)**
 
 **NEVADA
95-4741485**
 **(State
of Incorporation) (IRS Employer**
 **Identification
Number)**
 
 **1200
Airport Drive, Chowchilla, CA 93610**
 **(Address
of Principal Executive Offices) (Zip Code)**
 
 **Telephone:
559-665-5800**
 **(Registrant's
telephone number, including area code)**
 
 
 
 ****
 **State
the number of shares outstanding of each of the issuer's**
 **classes
of common equity, as of the latest practicable date:**
 **137,515,368
shares of Common Stock ($.001 par value) as of March 14,
2005.**
 
 **Transitional
small business disclosure format: Yes No X**
   
  ****
 **TABLE
OF CONTENTS**
 
 
 
 **PART
      I: FINANCIAL INFORMATION**
      
      **ITEM
      I: FINANCIAL STATEMENTS (UNAUDITED)****CONDENSED
      CONSOLIDATED BALANCE SHEETS:**
      ******JANUARY
      31, 2005 AND APRIL 30, 2004**
      
      ******CONDENSED
      CONSOLIDATED STATEMENTS OF OPERATIONS:**
      ******FOR
      THE THREE AND NINE MONTHS ENDED JANUARY 31, 2005 AND
      2004**
      
      ******CONDENSED
      CONSOLIDATED STATEMENTS OF CASH FLOWS:**
      ******FOR
      THE NINE MONTHS ENDED JANUARY 31, 2005 AND 2004**
      
      ******NOTES
      TO UNAUDITED CONSOLIDATED FINANCIAL INFORMATION:**
      ******JANUARY
      31, 2005****ITEM
      2: MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL**
      **CONDITION
      AND RESULTS OF OPERATIONS****ITEM
      3. CONTROLS AND PROCEDURES****PART
      II: OTHER INFORMATION****ITEM
      1. LEGAL PROCEEDINGS****ITEM
      2. CHANGES IN SECURITIES****ITEM
      3. DEFAULTS UPON SENIOR SECURITIES****ITEM
      4. SUBMISSION OF MATTERS TO VOTE OF SECURITY
    HOLDERS****ITEM
      5. OTHER INFORMATION****ITEM
      6: EXHIBITS**
 
  
 
 
 **ITEM
I. FINANCIAL STATEMENTS (UNAUDITED)**
 
 **GLOBAL
DIVERSIFIED INDUSTRIES, INC.**
 **CONDENSED
CONSOLIDATED BALANCE SHEETS**
 
 (Unaudited)January
      31, 2005
    April
      30, 2004ASSETS:Current
      assets:Cash
      and cash equivalents
    $
      264,635
    $
      693,194Accounts
      receivable, net of allowance for doubtful accounts of $0 at January 31,
      2005 and April 30, 2004
    1,131,898
    286,142Inventories
    2,421,692
    1,396,699Advance
      to employees
    50,527
    1,086Prepaid
      expenses
    81,999
    93,665Total
      current assets
    3,950,751
    2,470,786Property,
      plant and equipment:Property,
      plant and equipment, at cost
    2,238,684
    2,053,729Less:
      Accumulated depreciation
    (531,827)
    (384,723)Total
      property, plant and equipment, net
    1,706,857
    1,669,006Other
      assets:Deposit
      and others
    17,625
    15,625Engineering
      and architectural plans, net of accumulated amortization of $ 48,935 and
      $18,724 at January 31, 2005 and April 30, 2004 (Note G)
    392,893
    363,790Total
      other assets
    410,518
    379,415Total
      Assets
    $
      6,068,126
    $
      4,519,207
 
 See
accompanying notes to the unaudited condensed consolidated financial
information
 
  
 
 **GLOBAL
DIVERSIFIED INDUSTRIES, INC.**
 **CONDENSED
CONSOLIDATED BALANCE SHEETS (Continued)**
 
 (Unaudited)January
      31, 2005
    April
      30, 2004LIABILITIES
      AND STOCKHOLDERS' EQUITYCurrent
      liabilities:Accounts
      payable and accrued liabilities
    $
      770,505
    $
      290,210Deferred
      revenue
    314,251
    143,067Notes
      payable to related parties, current portion (Note B)
    6,000
    237,000Notes
      payable, current portion (Note B)
    941,659
    285,494Total
      current liabilities
    2,032,415
    955,771Notes
      payable to related parties, long-term portion (Note B)
    643,459
    588,815Commitment
      and contingencies
    -
    -Stockholders'
      equity:Series
      A Preferred stock, par value $.001 per share; 10,000,000 shares
      authorized; 666,667 shares issued and outstanding at January 31, 2005 and
      April 30, 2004, respectively
    667
    667Common
      stock, par value $ .001 per share; 400,000,000 shares authorized;
      137,515,368 and 131,863,806 shares issued and outstanding at January 31,
      2005 and April 30, 2004 respectively
    137,515
    131,864Additional
      paid-in capital
    4,429,574
    4,025,104Preferred
      stock subscription
    733,374
    733,374Common
      stock subscription
    1,566,600
    1,726,600Treasury
      stock
    (50)
    (50)Accumulated
      deficit
    (3,475,428)
    (3,642,938)Total
      stockholders' equity
    3,392,252
    2,974,621Total
      liabilities and stockholders' equity
    $
      6,068,126
    $
      4,519,207
 
 See
accompanying notes to the unaudited condensed consolidated financial
information
 
  
 
 **GLOBAL
DIVERSIFIED INDUSTRIES, INC.**
 **CONDENSED
CONSOLIDATED STATEMENTS OF OPERATIONS**
 **(UNAUDITED)**
 
 For
      The Three Months Ended January 31,
    For
      The Nine Months Ended January 31,2005
    2004
    2005
    2004Revenues
    $
      2,028,714
    $
      547,911
    $
      6,355,493
    $
      3,181,248Cost
      of goods sold
    1,100,133
    378,265
    4,057,749
    2,047,348Gross
      profit
    928,581
    169,646
    2,297,744
    1,133,900Operating
      expenses:Selling,
      general and administrative expenses
    770,448
    243,011
    1,763,487
    972,117Depreciation
      and amortization
    61,485
    47,478
    177,315
    137,910Total
      operating expense
    831,933
    290,489
    1,940,802
    1,110,027Income
      (loss) from operations
    96,648
    (120,843)
    356,942
    23,873Interest
      (expense), net
    (39,634)
    (52,580)
    (189,432)
    (135,033)Income
      (loss) before provision for income taxes
    57,014
    (173,423)
    167,510
    (111,160)Provision
      for income taxes
    -
    -
    -
    -Net
      income (loss)
    $
      57,014
    $
      (173,423)
    $
      167,510
    $
      (111,160)Loss
      per common share:Basic
    $
      0.00
    $
      (0.00)
    $
      0.00
    $
      (0.00)Diluted
    $
      0.00
    $
      (0.00)
    $
      0.00
    $
      (0.00)Weighted
      average shares outstanding:Basic
    137,032,759
    127,174,760
    135,205,893
    121,954,679Diluted
    145,699,429
    127,174,760
    144,310,063
    121,954,679
 
 
 See
accompanying notes to the unaudited condensed consolidated financial
information
 
 
  **GLOBAL
DIVERSIFIED INDUSTRIES, INC.**
 **CONDENSED
CONSOLIDATED STATEMENTS OF CASH FLOWS**
 **(UNAUDITED)**
 
 For
      the Nine months ended January 31,2005
    2004Cash
      flows from operating activities:Net
      income (loss) from operations
    $
      167,510
    $
      (111,160)Adjustment
      to reconcile net (loss) to net cash:Depreciation
      and amortization
    177,315
    137,910Common
      stock issued in exchange for services rendered
    101,400
    36,425Common
      stock issued in exchange for compensation
    60,176
    -Change
      in assets and liabilities:(Increase)/decrease
      in accounts receivable
    (845,756)
    (188,788)(Increase)/decrease
      in inventory
    (1,024,993)
    (507,075)(Increase)/decrease
      in prepaid expense and others
    9,666
    (95,308)(Increase)/decrease
      in employee advances
    (49,441)
    -Increase/(decrease)
      in cash disbursed in excess of available fund
    -
    6,755Increase/(decrease)
      in accounts payable and accrued liabilities
    480,295
    212,996Increase/(decrease)
      in deferred revenue
    171,184
    -Net
      cash (used in) operating activities:
    (752,644)
    (508,245)Cash
      flows from investing activities:Capital
      expenditure
    (221,467)
    (345,902)Net
      cash (used in) investing activities
    (221,467)
    (345,902)Cash
      flows from financing activities:Proceeds
      from sale of common stock and stock subscription, net of costs and
      fees
    65,745
    -Proceeds
      from notes payable, net of repayments
    425,164
    622,808Proceeds
      from note payable to related parties, net of repayments
    54,643
    203,000Advances
      from related parties, net of repayments
    -
    15,000Net
      cash provided by financing activities
    545,552
    840,808Net
      increase in cash and cash equivalents
    (428,559)
    (13,339)Cash
      and cash equivalents at beginning of year
    693,194
    14,097Cash
      and cash equivalents at end of year
    $
      264,635
    $
      758Supplemental
      Disclosures of Cash Flow Information:Cash
      paid during the period for interest
    $ -
    $ -Cash
      paid during the period for income taxes
    $ -
    $ -Common
      stock issued for services
    $
      101,400
    $
      36,425Common
      stock issued for employees for compensation
    $
      60,176
    $ -Common
      stock issued in exchange for debt
    $ -
    $
      15,000Common
      stock issued in exchange for engineering plans
    $
      22,800
    $
      11,750Reclassification
      of notes payable current portion to long-term portion pursuant to modified
      note agreement (Note B)
    $
      29,644
    $ -
 
 
 See
accompanying notes to the unaudited condensed consolidated financial
information
 
 
 
 
 
 **GLOBAL
DIVERSIFIED INDUSTRIES, INC.**
 **NOTES
TO CONDENSED CONSOLIDATED FINANCIAL INFORMATION**
 **JANUARY
31, 2005**
 **(Unaudited)**
 
 **NOTE
A - SUMMARY OF ACCOUNTING POLICIES**
 
 General
 
 The
accompanying unaudited condensed consolidated financial statements have been
prepared in accordance with accounting principles generally accepted in the
United States of America for interim financial information and with the
instructions to Form 10-QSB. Accordingly, they do not include all of the
information and footnotes required by generally accepted accounting principles
for complete financial statements.
 
 In the
opinion of management, all adjustments (consisting of normal recurring accruals)
considered necessary for a fair presentation have been included. Accordingly,
the results from operations for the nine-month period ended January 31, 2005,
are not necessarily indicative of the results that may be expected for the year
ended April 30, 2005. The unaudited condensed consolidated financial statements
should be read in conjunction with the consolidated April 30, 2004 financial
statements and footnotes thereto included in the Company's SEC Form
10-KSB.
 
 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.
 
 Reclassification
 
 Certain
reclassifications have been made to conform to prior periods’ data to the
current presentation. These reclassifications had no effect on reported
losses.
  Stock
Based Compensation
   In
December 2002, the FASB issued SFAS No. 148, "Accounting for
Stock-Based Compensation-Transition and Disclosure-an amendment of
SFAS 123." This statement amends SFAS No. 123, "Accounting for
Stock-Based Compensation," to provide alternative methods of transition for a
voluntary change to the fair value based method of accounting for stock-based
employee compensation. In addition, this statement amends the disclosure
requirements of SFAS No. 123 to require prominent disclosures in both
annual and interim financial statements about the method of accounting for
stock-based employee compensation and the effect of the method used on reported
results. The Company has chosen to continue to account for stock-based
compensation using the intrinsic value method prescribed in APB Opinion
No. 25 and related interpretations. Accordingly, compensation expense for
stock options is measured as the excess, if any, of the fair market value of the
Company's stock at the date of the grant over the exercise price of the related
option. The Company has adopted the annual disclosure provisions of SFAS
No. 148 in its financial reports for the year ended April 30, 2004 and 2003
and has adopted the interim disclosure provisions for its financial reports for
the subsequent periods. The Company has no awards of stock-based employee
compensation outstanding at January 31, 2005.
  
 
 
 **GLOBAL
DIVERSIFIED INDUSTRIES, INC.**
 **NOTES
TO CONDENSED CONSOLIDATED FINANCIAL INFORMATION**
 **JANUARY
31, 2005**
 **(Unaudited)**
 
 **NOTE
B - NOTES PAYABLE**
  A summary
of notes payable at January 31, 2005 and April 30, 2004 is as
follows:
  January
      31, 2005
    April
      30, 2004Note
      payable to Company shareholder in monthly installments of interest only at
      10.0% per annum; unsecured; maturity date was in November 30, 2003. The
      Company amended the note with the shareholder in April 2004, extending the
      maturity date to May 1, 2009; the noteholder has an option to convert the
      unpaid principal balance of the loan, together with any accrued and unpaid
      interest to the Company’s preferred stock. (a)
    $
      414,465
    $
      389,465Note
      payable to Company shareholders in monthly installments of interest only
      at 8.0% per annum; unsecured; maturity date is in May 15, 2004. Noteholder
      has the option to convert the principal balance of the loan to the
      Company’s preferred stock.
    -
    62,000Note
      payable to Company shareholders in monthly installments of interest only
      at 6.0% per annum; unsecured; maturity date is on February 2,
      2009.
    199,350
    199,350Note
      payable to Company shareholders in monthly installments of interest only
      at 5.0% per annum; unsecured; maturity date is on August 31, 2004. The
      Company is currently in default under the terms of the note
      agreement.
    6,000
    100,000Note
      payable to Company shareholder in monthly installments of interest only at
      8.0% per annum; unsecured; maturity date is on May 15, 2004.
    -
    75,000Note
      payable in 24 monthly installments beginning January 28, 2005, with
      interest at 8% per annum; unsecured; maturity date is in December 2006.
      (b)
    61,983
    53,861Note
      payable secured by tangible and intangible property with principal and
      interest payable monthly; interest rate is at 2.75% per annum over and
      above the Prime Rate or Deemed Prime Rate whichever is higher; maturity
      date is on November 1, 2005.
    236,393
    -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 November 1, 2005.maximum
      borrowing capacity of $2,000,000.
    672,927
    -Note
      payable revolving agreement secured by accounts receivable and property
      with interest payable monthly at approximately 6%, maximum borrowing
      capacity of $2,500,000.
    -
    231,6331,591,118
    1,111,309Less:
      current portion
    (947,659)
    (522,494)Total
      - notes payable - long term
    $
      643,459
    $
      588,815
 
 (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, no imbedded
beneficial conversion feature was accounted in connection with the option to
convert notes payable.
 
  
 
 **GLOBAL
DIVERSIFIED INDUSTRIES, INC.**
 **NOTES
TO CONDENSED CONSOLIDATED FINANCIAL INFORMATION**
 **JANUARY
31, 2005**
 **(Unaudited)**
 
 **NOTE
B - 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 January 31, 2005, the
Company was in compliance with the terms of the Update Agreement.
 
 **NOTE
C - 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 January 31, 2005 and April 30, 2004,
the Company has issued and outstanding 666,667 shares of Series A preferred
stock. The Company has 137,515,368 and 131,863,806 shares of common stock issued
and outstanding at January 31, 2005 and April 30, 2004,
respectively.
 
 In March
2004, the Company entered into an agreement with Grossman Construction Company
(“Grossman”) that Grossman contributed to the Company $200,000 of inventory and
equipment in exchange for $40,000 of cash and $160,000 of common stock
subscription. In May 2004, the Company issued 1,000,000 shares of common stock
to Grossman in exchange for the $160,000 of stock subscription. All obligations
pursuant to the agreement have been fulfilled as of January 31,
2005.
 
 During
the period ended January 31, 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 c ommon s tock on
the date of exercise (Note E). The Company received $65,745 of proceeds, net of
costs and fees, and compensation costs of $60,176 were charged to operations
during the period ended January 31, 2005. Additionally, the Company issued an
aggregate of 3,522,222 shares of common stock to consultants in exchange for
$101,400 of services fees. All valuations of common stock issued for services
were based upon the value of the services rendered, which did not differ
materially from the fair value of the Company's common stock during the period
the services are rendered. The Company also issued an aggregate of 142,500
shares of common stock in exchange for $22,800 of intellectual property.
 
 **NOTE
D - STOCK OPTIONS AND WARRANTS**
 
 Non-Compensatory
Stock Options
 
 The
following table summarizes the changes in non-compensatory options outstanding
and the related prices for the shares of the Company’s common stock issued to
non-employees of the Company.
 
 Options
      Outstanding
    Options
      ExercisableExercise
      Prices
    NumberOutstanding
    Weighted
      Average Remaining ContractualLife
      (Years)
    Weighed
      AverageExercise
      Price
    NumberExercisable
    Weighted
      AverageExercise
      Price$
      5.00
    1,500,000
    1.25
    $
      5.00
    1,500,000
    $
      5.00$
      0.05
    4,000,000
    1.00
    $
      0.05
    4,000,000
    $
      0.055,500,000
    1.07
    1.40
    5,500,000
    $
      1.40
 
  
 
 **GLOBAL
DIVERSIFIED INDUSTRIES, INC.**
 **NOTES
TO CONDENSED CONSOLIDATED FINANCIAL INFORMATION**
 **JANUARY
31, 2005**
 **(Unaudited)**
 
 **NOTE
D - STOCK OPTIONS AND WARRANTS (Continued)**
 
 Non-Compensatory
Stock Options (Continued)
 
 Transactions
involving options are summarized as follows:
 
 Number
      of Shares
    Weighted
      AveragePrice
      Per ShareOutstanding
      at April 30, 2002
    -
    $
      -Granted
    1,500,000
    5.00Exercised
    -
    -Canceled
      or expired
    -
    -Outstanding
      at April 30, 2003
    1,500,000
    $
      5.00Granted
    4,000,000
    0.05Exercised
    -
    -Canceled
      or expired
    -
    -Outstanding
      at April 30, 2004
    5,500,000
    $
      1.40Granted
    -
    -Exercised
    -
    -Canceled
      or expired
    -
    -Outstanding
      at January 31, 2005
    5,500,000
    $
      1.40
 
 During
the period ended January 31, 2005 and 2004, the Company did not grant any
compensatory stock options to consultants or shareholders, and all previously
granted stock options were fully vested at the time the stock options were
granted. Accordingly, no compensation costs were charged to operations during
the period ended January 31, 2005 and 2004. The
4,000,000 warrants granted during the year ended April 30, 2004 had an original
expiration date on January 25, 2005. During the period ended Januray 31, 2005,
the Company has extended the expiration date to January 31, 2006.
 
 Non-Compensatory
Warrants
 
 The
following table summarizes the changes in non-compensatory warrants outstanding
and the related prices for the shares of the Company’s common stock issued to
non-employees of the Company.
 
 Warrants
      Outstanding
    Warrants
      ExercisableExercise
      Prices
    NumberOutstanding
    Weighted
      Average Remaining ContractualLife
      (Years)
    Weighed
      AverageExercise
      Price
    NumberExercisable
    Weighted
      AverageExercise
      Price$
      0.03
    1,500,000
    0.50
    $
      0.03
    1,500,000
    $
      0.03
 
 
  
 
 **GLOBAL
DIVERSIFIED INDUSTRIES, INC.**
 **NOTES
TO CONDENSED CONSOLIDATED FINANCIAL INFORMATION**
 **JANUARY
31, 2005**
 **(Unaudited)**
 
 **NOTE
D - STOCK OPTIONS AND WARRANTS (Continued)**
 
 Non-Compensatory
Warrants (Continued)
 
 Transactions
involving warrants are summarized as follows:
 
 Number
      of Shares
    Weighted
      AveragePrice
      Per ShareOutstanding
      at April 30, 2002
    -
    $ -Granted
    1,500,000
    0.03Exercised
    -
    -Canceled
      or expired
    -
    -Outstanding
      at April 30, 2003
    1,500,000
    $
      0.03Granted
    -
    -Exercised
    -
    -Canceled
      or expired
    -
    -Outstanding
      at April 30, 2004
    1,500,000
    $
      0.03Granted
    -
    -Exercised
    -
    -Canceled
      or expired
    -
    -Outstanding
      at January 31, 2005
    1,500,000
    $
      0.03
 
 The
Company granted 1,500,000 of warrants during the year ended April 30, 2003 in
connection with acquisition of MBS Construction, Inc. The warrants granted have
an original expiration date on January 31, 2005. During the period ended January
31, 2005, the Company has extended the expiration date to July 31, 2005.
  **NOTE
E - EMPLOYEE STOCK INCENTIVE PLAN**
  
 In
Septmeber 2001, the Board of Directors of the Company implemented an Employee
Stock Incnetive 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 exerciable 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 optiosn are granted.
 
 In
February 2004, the Board of Directors of the Company implemented another
Employee Stock Incnetive 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 optiosn are granted.
 
 During
the period ended January 31, 2005, the Company granted an agrregate of 986,840
options to Emplyees pursuant to 2001 Stock Option Plan, and all options were
excerised on the grant date (Note C). There are no stock options outstanding at
January 31, 2005.
 
 
 
 
 **GLOBAL
DIVERSIFIED INDUSTRIES, INC.**
 **NOTES
TO CONDENSED CONSOLIDATED FINANCIAL INFORMATION**
 **JANUARY
31, 2005**
 **(Unaudited)**
 
 **NOTE
F - STOCK PURCHASE AGREEMENT**
 
 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 2,500,000 shares of
Consideration Stock wrongfully transferred to Langley being return to the
Company and the Consideration Stock has been coded so as not be considered
issued.
 
 **NOTE
G- ARCHITECTURAL AND ENGINEERING PLANS**
 
 The
Company has adopted SFAS No. 142, Goodwill and Other Intangible Assets, whereby
the Company periodically tests 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 will be tested for impairment, and
write-downs to be included in results from operations may be necessary.
 
 The costs
and accumulated amortization of architectural and engineering plans at January
31, 2005 and April 30, 2004 are summarized as follows:
 
 January
      31, 2005
    April
      30, 2004Costs
      of building engineering and architectural and plans
    $
      441,828
    $
      382,514Less:
      accumulated amortization
    48,935
    18,724Engineering
      Architectural and plans, net
    $
      392,893
    $
      363,790
 
 The
amortization period for engineering and architectural plans is 10 years.
Amortization expense included as a charge to income amounted to $30,211 and
$22,269 for the nine months ended January 31, 2005 and 2004,
respectively.
 
  
  **ITEM
2.**  **MANAGEMENT’S
DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS FOR THE
THREE AND NINE MONTHS ENDED JANUARY 31, 2005**
 
 This
report on Form 10-QSB contains forward-looking statements within the meaning of
Rule 175 of the Securities Act of 1933, as amended, and Rule 3b-6 of the
Securities Act of 1934, as amended, that involve substantial risks and
uncertainties. These forward-looking statements are not historical facts, but
rather are based on current expectations, estimates and projections about our
industry, our beliefs and our assumptions. Words such as “anticipate”,
“expects”, “intends”, “plans”, “believes”, “seeks” and “estimates” and
variations of these words and similar expressions are intended to identify
forward-looking statements. These statements are not guarantees of future
performance and are subject to risks, uncertainties and other factors, some of
which are beyond our control and difficult to predict and could cause actual
results to differ materially from those expressed or forecasted in the
forward-looking statements. You should not place undue reliance on these
forward-looking statements, which apply only as of the date of this Form 10-QSB.
Investors should carefully consider all of such risks before making an
investment decision with respect to the Company’s stock. The following
discussion and analysis should be read in conjunction with our financial
statements and summary of selected financial data for Global Diversified
Industries, Inc. Such discussion represents only the best present assessment
from our Management.
 
 **DESCRIPTION
OF COMPANY:**
 
 The
Company is a holding company that currently operates 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.
 
 Global
Modular also enjoys the benefit of providing educational customers with product
contracted under a “piggyback clause”. The State of California allows school
districts to canvass proposals from modular classroom vendors under a bidding
process where the successful bidder can provide other public school districts
and municipalities portable classrooms under a “piggyback contract” issued by
the originating school district. This process saves school districts valuable
time and resources from the necessity of soliciting bids. A modular vendor who
possesses a “piggybackable contract” containing competitive pricing and a
variety of design options may have access to future business for up to five
years, depending on the term of the piggyback contract. Global Modular has
recently received assignment of a second piggyback contract from a Southern
California school district. This piggyback contract includes all appropriate
pricing parameters pertinent to Global’s “permanent modular construction”
designs. Global Modulars’ two piggyback contracts provides them the flexibility
to offer California public schools and municipalities an expanded variety of
design and pricing alternatives to meet virtually any design request by the
school district and/or architect.
 
 At some
point during the current or successive fiscal year, Global Modular intends to
expand its product line to serve the commercial/business sector. This sector
consists of retail, industrial and institutional (including educational
institutions that reside on private property). This sector adheres to building
designs and specifications administered by the Department of Housing (DOH).
 
 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 2005, the Global Modular will continue to focus its attention
on the sales and marketing of portable classrooms and modular buildings to the
California public and private school sectors including California
municipalities. Since the state of California has been experiencing an influx in
student enrollment over the past several years, and the forecast for the next
ten years is for continual increasing enrollments, the portable classroom
manufacturing industry has become more successful. In an effort to keep up with
demand for additional classroom space, modular manufactures are expecting
increased production backlogs throughout the remainder of 2005 and into
2006.
 
 Currently,
the Company’s backlog has increased to approximately $8,000,000 as compared to
approximately $350,000 the same period one year ago.
 
 The
following Management Discussion and Analysis should be read in conjunction with
the financial statements and accompanying notes included in this Form
10-QSB.
 
 The
following discussion contains forward-looking statements that are subject to
significant risks and uncertainties. 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, “ Cautionary Factors
that May Affect Future Results and Market Price of Stock”.
 
 **COMPARISON
OF THE THREE MONTHS ENDED JANUARY 31, 2005 TO THE THREE MONTHS ENDED JANUARY 31,
2004**
 
 **Results
of Operations**
 
 Total
revenues increased to $2,028,714 in the quarter ended January 31, 2005 from
$547,911 in the quarter ended January 31, 2004. The increase is attributed to a
major contract with a school district in Southern California. The school
district wanted to use the building design, which was acquired through the
Aurora bankruptcy. The intellectual properties acquired from the Aurora
bankruptcy, provides Global Modular with a complete line of new products.
 
 Cost of
revenues was $1,100,133 and $378,265, respectively for the quarters ended
January 31, 2005 and 2004. Gross profit was $928,581 and $169,646, respectively
for the quarters ended January 31, 2005 and 2004. The cost of revenue increased
due to the increased sales generated by the products offered from the purchase
of the Aurora intellectual property.
 
 Total
operating expenses increased to $831,933 in the quarter ended January 31, 2005
from $290,489 in the quarter ended January 31, 2004. This is mainly attributable
to the sales generated from the contract with a school district in Southern
California
 
 
 **COMPARISON
OF THE NINE MONTHS ENDED JANUARY 31, 2005 TO THE NINE MONTHS ENDED JANUARY 31,
2004**
 
 **Results
of Operations**
 
 Total
revenues increased to $6,355,493 in the nine months ended January 31, 2005 from
$ 3,181,248 in the quarter ended January 31, 2004. Sales are increasing due
Modular becoming accepted by the school districts as a reliable manufacturer of
modular, an experienced sales staff is now in place and a new product line is
available through the purchase of intellectual properties from
Aurora.
 
 Cost of
revenues was $4,057,749 and $2,047,348, respectively for the quarters ended
January 31, 2005 and 2004. Gross profit was $2,297,744 and $1,133,900,
respectively for the quarters ended January 31, 2005 and 2004. This is due to
Global Modular becoming a reliable source of modular buildings with wide
selection of attractive designs.
 
 Total
operating expenses increased to $1,940,802 in the quarter ended January 31, 2005
from $1,110,027 in the quarter ended January 31, 2004. This is mainly
attributable to increases in selling, general, and administrative costs in
connection with the increased sales and operations of Global Modular and MBS
Constructions.
 
 **Liquidity
and Capital Resources**
 
 As of
January 31, 2005, the Company had a working capital surplus of $1,918,336 and a
gain from operations of $167,510. The Company generated a deficit in cash flow
from operations of $752,644 for the nine-month period ended January 31, 2005.
The deficit in cash flow from operating activities for the period is primarily
attributable to the Company's net adjusted for depreciation and amortization of
$177,315 an increase in accounts receivable of $845,756, an increase in
inventory of $1,024,993, an increase in employee advances of $49,441, an
increase in deferred revenue of $171,184 and an increase in accounts payable of
$480,295.
 
 Cash
flows used in investing activities for the nine-month period ended January 31,
2005 consisted of the acquisition of $221,467 of equipment and architectural
plans used in operations.
 
 The
Company met its cash requirements during the nine months ended January 31, 2005
through proceeds from the issuance of debt of $425,164 and proceeds from
issuance of debt of $54,643 from related parties, and sale of common stock and
stock subscriptions, net of costs of $65,745.
 
 As a
result of limited capital resources and revenues from operations, the Company
has relied on the issuance of equity securities to non-employees in exchange for
services. The Company's management enters into equity compensation agreements
with non-employees if it is in the best interest of the Company under terms and
conditions consistent with the requirements of Financial Accounting Standards
No. 123, "Accounting for Stock Based Compensation." In order conserve its
limited operating capital resources, the Company anticipates continuing to
compensate non-employees for services during the next twelve months. This policy
may have a material effect on the Company's results of operations during the
next twelve months.
 
 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. The Company currently has
no commitments for financing. 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 belives it has suffucient capital resources to meet projected cash
flow deficits through the next twelve months. However, if thereafter, we are not
successful in generating sufficient liquidity from operations or in raising
sufficient capital resources, on terms acceptable to us, this could have a
material adverse effect on our business, results of operations , liquidity and
financial condition.
 
 The
effect of inflation on the Company's revenue and operating results was not
significant. The Company's operations are located in North America and there are
no seasonal aspects that would have a material effect on the Company's financial
condition or results of operations.
 
 While the
independent auditors report on the Company’s April 30, 2004 financial statements
included in the Form 10-KSB states that we have had difficulty in the past
generating sufficient cash flow to meet our obligations and sustain operations,
which gave rise to substantial doubts about our ability to continue as a going
concern, the Company has begun to generate consistent profits from its operating
activities during the current year. In addition to generating profitable
operations, the Company has recently obtained working capital financing from a
lender on terms more favorable than the prior lender. As a result, the Company’s
management believes it has taken the steps necessary to mitigate the adverse
effects of the conditions and events that gave rise to the auditor’s opinion
there was substantial doubt about the ability of the Company to continue as a
going concern for a reasonable period of time.
 
   **Employees**
  
 As of
January 31, 2005 the Company had seventy-eight employees. The Company
anticipates that the number of employees will satisfy its production backlog
during the next six months. The Company does not expect to have any collective
bargaining agreements covering any of its employees.
 
 **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, MBS Construction and Global Modular. The Company
has entered into a three-year lease (including options for renewals) for the
property at a rate of $16,125 per month for the remaining of the current fiscal
year with moderate increases for each year thereafter. The Company believes that
the current facilities are suitable for its current needs.
 
 **New
Accounting Pronouncements**
  In
November 2004, the Financial Accounting Standards Board (FASB) issued
SFAS 151, *Inventory
Costs— an amendment of ARB No. 43, Chapter 4* . This
Statement amends the guidance in ARB No. 43, Chapter 4, “Inventory
Pricing,” to clarify the accounting for abnormal amounts of idle facility
expense, freight, handling costs, and wasted material (spoilage).
Paragraph 5 of ARB 43, Chapter 4, previously stated that “. . . under
some circumstances, items such as idle facility expense, excessive spoilage,
double freight, and rehandling costs may be so abnormal as to require treatment
as current period charges. . . .” This Statement requires that those items be
recognized as current-period charges regardless of whether they meet the
criterion of “so abnormal.” In addition, this Statement requires that allocation
of fixed production overheads to the costs of conversion be based on the normal
capacity of the production facilities. This Statement is effective for inventory
costs incurred during fiscal years beginning after June 15, 2005.
Management does not believe the adoption of this Statement will have any
immediate material impact on the Company.
   In
December 2004, the FASB issued SFAS No.152, “Accounting for Real Estate
Time-Sharing Transactions—an amendment of FASB Statements No. 66 and 67” (“SFAS
152) The amendments made by Statement 152 This Statement amends FASB Statement
No. 66, Accounting for Sales of Real Estate, to reference the financial
accounting and reporting guidance for real estate time-sharing transactions that
is provided in AICPA Statement of Position (SOP) 04-2, Accounting for Real
Estate Time-Sharing Transactions. This Statement also amends FASB Statement No.
67, Accounting for Costs and Initial Rental Operations of Real Estate Projects,
to state that the guidance for (a) incidental operations and (b) costs incurred
to sell real estate projects does not apply to real estate time-sharing
transactions. The accounting for those operations and costs is subject to the
guidance in SOP 04-2. This Statement is effective for financial statements for
fiscal years beginning after June 15, 2005. with earlier application encouraged.
The Company does not anticipate that the implementation of this standard will
have a material impact on its financial position, results of operations or cash
flows.
   On
December 16, 2004, the Financial Accounting Standards Board (“FASB”)
published Statement of Financial Accounting Standards No. 123 (Revised
2004), *Share-Based
Payment* (“SFAS
123R”). SFAS 123R requires that compensation cost related to share-based payment
transactions be recognized in the financial statements. Share-based payment
transactions within the scope of SFAS 123R include stock options, restricted
stock plans, performance-based awards, stock appreciation rights, and employee
share purchase plans. The provisions of SFAS 123R are effective as of the first
interim period that begins after June 15, 2005. Accordingly, the Company
will implement the revised standard in the third quarter of fiscal year 2005.
Currently, the Company accounts for its share-based payment transactions under
the provisions of APB 25, which does not necessarily require the recognition of
compensation cost in the financial statements. Management is assessing the
implications of this revised standard, which may materially impact the Company’s
results of operations in the third quarter of fiscal year 2005 and thereafter.
  On
December 16, 2004, FASB issued Statement of Financial Accounting Standards
No. 153, *Exchanges
of Nonmonetary Assets, an amendment of APB Opinion No. 29, Accounting for
Nonmonetary Transactions* (“ SFAS
153 ”). This
statement amends APB Opinion 29 to eliminate the exception for nonmonetary
exchanges of similar productive assets and replaces it with a general exception
for exchanges of nonmonetary assets that do not have commercial substance. Under SFAS
153 , if a
nonmonetary exchange of similar productive assets meets a commercial-substance
criterion and fair value is determinable, the transaction must be accounted for
at fair value resulting in recognition of any gain or loss . SFAS
153 is
effective for nonmonetary transactions in fiscal periods that begin after
June 15, 2005. The Company does not anticipate that the implementation of
this standard will have a material impact on its financial position, results of
operations or cash flows.
 **Trends,
Risks and Uncertainties**
 
 We have
sought to identify what we believe to be the most significant risks to our
business, but we cannot predict whether, or to what extent, any of such risks
may be realized nor can we guarantee that we have identified all possible risks
that might arise.  Investors should carefully consider all of such risk
factors before making an investment decision with respect to our Common Stock.
 
 **Cautionary
Factors that May Affect Future Results and Market Price of
Stock**
 
 Our
annual report on April 30, 2004 Form 10-KSB includes a detailed list of
cautionary factors that may affect future results.  Management believes
that there have been no material changes to those factors listed, however other
factors besides those listed could adversely affect us.  That annual report
can be accessed on EDGAR.
 
 **LIMITED
OPERATING HISTORY; ANTICIPATED LOSSES; UNCERTAINTY OF**
 **FUTURE
RESULTS.**
 
 The
Company has only a limited operating history upon which an evaluation of its
operations and its prospects can be based. The Company's prospects must be
evaluated with a view to the risks encountered by a company in an early stage of
development, particularly in light of the uncertainties relating to the new and
evolving manufacturing methods with which the Company intends to operate and the
acceptance of the Company's business model. The Company will be incurring costs
to develop, introduce and enhance its products, to establish marketing
relationships, to acquire and develop product lines that will compliment each
other and to build an administrative organization. To the extent that such
expenses are not subsequently followed by commensurate revenues, the Company's
business, results of operations and financial condition will be materially
adversely affected. There can be no assurance that the Company will be able to
generate sufficient revenues from the sale of their modular buildings and
related products. The Company may have negative cash flow from operations to
continue for the next four (4) quarters as it continues to develop and market
its business. If cash generated by operations is insufficient to satisfy the
Company's liquidity requirements, the Company may be required to sell additional
equity or debt securities. The sale of additional equity or convertible debt
securities would result in additional dilution to the Company's
stockholders.
 
 **POTENTIAL
FLUCTUATIONS IN ANNUAL OPERATING RESULTS.**
 
 The
Company's annual operating results may fluctuate significantly in the future as
a result of a variety of factors, most of which are outside the Company's
control, including: the demand for manufactured modular buildings; seasonal
trends; introduction of new government regulations and building standards;
local, state and federal government procurement delays; general economic
conditions, and economic conditions specific to the modular building industry.
The Company's annual results may also be significantly impacted by the impact of
the accounting treatment of acquisitions, financing transactions or other
matters. Particularly at the Company's early stage of development, such
accounting treatment can have a material impact on the results for any quarter.
Due to the foregoing factors, among others, it is likely that the Company's
operating results will fall below the expectations of the Company or investors
in some future quarter.
 
 **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 March 14, 2005, there were
approximately 137,515,368 shares of common stock outstanding, of which
approximately 49,510,000 were tradable without restriction under the Securities
Act. There can be no assurance that a trading market will be sustained in the
future. Factors such as, but not limited to, technological innovations, new
products, acquisitions or strategic alliances entered into by the Company or its
competitors, failure to meet security analysts' expectations, government
regulatory action, patent or proprietary rights developments, and market
conditions for manufacturing stocks in general could have a material effect on
the volatility of the Company's stock price.
 
 
 **MANAGEMENT
OF GROWTH**
 
 The
Company expects to experience significant growth in the number of employees and
the scope of its operations. In particular, the Company intends to hire
additional engineering, sales, marketing, and administrative personnel.
Additionally, acquisitions could result in an increase in the number of
employees and business activity. Such activities could result in increased
responsibilities for management. The Company believes that its ability to
increase its customer support capability and to attract, train, and retain
qualified engineering, sales, marketing, and management personnel, will be a
critical factor to its future success. In particular, the availability of
qualified sales engineering and management personnel is quite limited, and
competition among companies to attract and retain such personnel is intense.
During strong business cycles, the Company may experience difficulty in filling
its needs for qualified sales, engineering and other personnel.
 
 The
Company's future success will be highly dependent upon its ability to
successfully manage the expansion of its operations. The Company's ability to
manage and support its growth effectively will be substantially dependent on its
ability to implement adequate improvements to financial and management controls,
reporting and order entry systems, and other procedures and hire sufficient
numbers of financial, accounting, administrative, and management personnel. The
Company's expansion and the resulting growth in the number of its employees have
resulted in increased responsibility for both existing and new management
personnel. The Company is in the process of establishing and upgrading its
financial accounting and procedures. There can be no assurance that the Company
will be able to identify, attract, and retain experienced accounting and
financial personnel. The Company's future operating results will depend on the
ability of its management and other key employees to implement and improve its
systems for operations, financial control, and information management, and to
recruit, train, and manage its employee base. There can be no assurance that the
Company will be able to achieve or manage any such growth successfully or to
implement and maintain adequate financial and management controls and
procedures, and any inability to do so would have a material adverse effect on
the Company's business, results of operations, and financial
condition.
 
 The
Company's future success depends upon its ability to address potential market
opportunities while managing its expenses to match its ability to finance its
operations. This need to manage its expenses will place a significant strain on
the Company's management and operational resources. If the Company is unable to
manage its expenses effectively, the Company's business, results of operations,
and financial condition will be materially adversely affected.
 
 **RISKS
ASSOCIATED WITH ACQUISITIONS.**
 
 As part
of its business strategy, the Company expects to acquire assets and businesses
relating to or complementary to its operations. These acquisitions by the
Company will involve risks commonly encountered in acquisitions of companies.
These risks include, among other things, the following: the Company may be
exposed to unknown liabilities of the acquired companies; the Company may incur
acquisition costs and expenses higher than it anticipated; fluctuations in the
Company's quarterly and annual operating results may occur due to the costs and
expenses of acquiring and integrating new businesses or technologies; the
Company may experience difficulties and expenses in assimilating the operations
and personnel of the acquired businesses; the Company's ongoing business may be
disrupted and its management's time and attention diverted; the Company may be
unable to integrate successfully.
 
 **ITEM
3. CONTROLS AND PROCEDURES**
 
 The
Company’s management including the President, Chief Executive Officer and Chief
Financial Officer, have evaluated, within 90 days prior to the filing of this
quarterly report, the effectiveness of the design, maintenance and operation of
the Company’s disclosure controls and procedures. Management determined that the
Company’s disclosure controls and procedures were effective in ensuring that the
information required to be disclosed by the Company in the reports that it files
under the Exchange Act is accurate and is recorded, processed, summarized and
reported within the time periods specified in the Commission’s rules and
regulations.
 
 Disclosure
controls and procedures, no matter how well designed and implemented, can
provide only reasonable assurance of achieving an entity’s disclosure
objectives. The likelihood of achieving such objectives is affected by
limitations inherent in disclosure controls and procedures. These include the
fact that human judgment in decision making can be fully faulty and that
breakdowns in internal control can occur because of human failures such as
errors or mistakes or intentional circumvention of the established
process.
 
 There
have been no significant changes in internal controls or in other factors that
could significantly affect these controls subsequent to the date of the
evaluation thereof, including any corrective actions with regard to significant
deficiencies and material weaknesses.
 
 **PART
II.**  **OTHER
INFORMATION**
 
 **ITEM
1.**  **LEGAL
PROCEEDINGS**
 
 On
December 16, 2004, we filed an action in the United States District Court for
the Eastern District of California, Fresno Division, against Langley Park
Investments, PLC, a United Kingdom corporation (“Langley”), for, among other
causes of action, securities fraud, breach of contract and rescission in
relation to the exchange of 25,000,000 shares of the Company’s common stock for
approximately 4,444,444 shares of common stock in Langley. The complaint also
lists the law firm of Gottbetter & Partners, LLP (“Gottbetter”), for aiding
and abetting in the fraud, breach of fiduciary duty, and conspiracy to commit
fraud in connection with its actions as escrow agent for the share
exchange.
 
 The
Company received a private placement memorandum (the “Memorandum”) from Langley
in April 2004, which proposed to create an investment portfolio consisting of
stock in publicly traded companies based on a quantitative analysis and
fundamental research into, among other factors, current earnings and potential
growth. Langley stated that it would not disclose the identity of other
companies being considered for the portfolio for reasons of confidentiality and
to prevent potential investors in the target companies from “shorting” the
stock.
 
 We now
believe that the information was not disclosed because there were fewer target
companies than had been represented, and some of those companies failed to meet
the criteria. The Company had been assured by Langley that each of the target
companies had net assets, positive book values and were “going concerns.” We
later discovered that these representations were incorrect in several instances.
The majority of the companies that did invest appear to have failed to meet the
established criteria.
 
 In
addition, Langley required that 50% of the Langley shares would be held in
escrow for a period of two years to provide downside protection to the fund,
citing the strength of the target companies and their lack of need for immediate
liquidity in the Langley shares as the reason for the increase. We now believe
that the increase was due to Langley’s knowledge that there were fewer companies
than originally represented and that these were worth less than originally
disclosed.
 
 Unaware
of these issues, the Company entered into a Stock Purchase Agreement with
Langley on or about July 15, 2004, and signed an Escrow Agreement with Langley
and Gottbetter on August 17, 2004, pursuant to which the shares were deposited.
Gottbetter, who also acted as Langley’s attorney on the transaction, was to
receive $7,500 in fees at closing from the Company. The shares were not to be
released until Gottbetter had received notice that the Langley shares were
listed for trading on the London Stock Exchange (“LSE”) and, if such notice had
not been received by September 30, 2004, Gottbetter was to release the shares
back to the Company. Langley’s shares were not listed on the LSE until October
7, 2004. However, although we never waived the September 30, 2004 deadline,
Gottbetter released all of the Company’s shares to Langley on that date. Payment
of the $7,500 was not stated as a condition to release in the Escrow Agreement;
however, Gottbetter refused to release any of the Langley shares to the Company,
preventing us from selling any of the shares and mitigating any loss in value
since the listing date.
 
 In the
litigation, we are seeking rescission of the Stock Purchase Agreement and return
of all of the Company’s shares issued to Langley, in addition to injunctive
relief to prevent the transfer of the shares. We are seeking compensatory
damages representing the loss in value as well as attorneys’ fees and costs
incurred in the litigation against both Langley and Gottbetter.
 
 
 **ITEM
2.**  **CHANGES
IN SECURITIES AND USE OF PROCEEDS**
 On December 8, 2004,
we issued an aggregate of 1,200,000 shares of restricted common stock to two
consultants in exchange for
services
 rendered, valued at $20,400. The shares were issued pursuant to
an exemption provided by Section 4(2) of the Securities Act.
 **ITEM
3.**  **DEFAULTS
UPON SENIOR SECURITIES**
 
 None
during this reporting period.
 
 **ITEM
4.**  **SUBMISSION
OF MATTERS TO A VOTE OF SECURITY HOLDERS**
 
 None
during this reporting period.
 
 **ITEM
5.**  **OTHER
INFORMATION**
 ****
 The
Company entered into a Stock Purchase Agreement with Langley pursuant to which
the Company delivered 25,000,000 shares of its restricted common stock, with a
then market value of approximately $2,000,000, in exchange for $2,000,000 in
shares of stock in Langley if it’s shares became listed on the London Stock
Exchange prior to September 30, 2004. Such listing did not take place by the
date required and we are seeking rescission of the agreement based on our
reliance on certain representations of Langley, which we now believe to have
been false. See “Item 1. Legal Proceedings” above.
 
 **ITEM
6.**  **EXHIBITS
AND REPORTS ON FORM 8-K**
 
 Exhibits
 
 No.  Description
 31.1
    Certification
      of Phillip Hamilton Pursuant to Section 302 of the Sarbanes-Oxley Act of
      2002.
 31.2
    Certification
      of E. Adam DeBard to Section 302 of the Sarbanes-Oxley Act of
      2002.
 32.1  Certification
of Phillip Hamilton Pursuant to Section 906 of the
 Sarbanes-Oxley
Act of 2002.
 32.2  Certification
of E. Adam DeBard Pursuant to Section 906 of the
 Sarbanes-Oxley
Act of 2002.
 
 Reports
on Form 8-K filed during the three months ended January 31, 2005.
 
 None.
 
 **SIGNATURES**
 
 In
accordance with the requirements of the Exchange Act, the registrant caused this
report to be signed on its behalf by the undersigned, there unto duly
authorized.
 
 Global
Diversified Industries, Inc.
 
 Date:
March 15, 2005
  By: /s/
Phillip Hamilton
 ------------------------------------------------------------
 President
and Chief Executive Officer
 (Principal
Executive Officer)
 
 
 Date:
March 15, 2005
 By: /s/
Adam DeBard
 -----------------------------------------------------------
 Chief
Operating Officer
 (Principal  Accounting
and Financial Officer)