UNITED
STATES


SECURITIES
AND EXCHANGE COMMISSION


Washington,
DC 20549







FORM
10-Q







QUARTERLY
REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE


SECURITIES
EXCHANGE ACT OF 1934




For
the Quarterly period ended January 31,
2009




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 No.)




1200 Airport Drive, Chowchilla,
      CA
              93610(Address
      of principal executive offices)
              (Zip
      Code)




(559)
665-5800


(Registrant's
telephone number, including area code)




None


(Former
name, former address and former fiscal year, if changed since last
report)








Indicate
by check mark, whether the registrant (1) has filed all reports required to be
filed by Section 13 or 15 (d) of the Securities Exchange Act of 1934 during the
preceding 12 months (or for such shorter period that the registrant was required
to file such reports), and (2) has been subject to such filings requirements for
the past 90 days.    Yes x No o




Indicate
by check mark whether the registrant is a large accelerated filer, an
accelerated filer, or a non-accelerated filer.  See definition of
“accelerated filer and larger accelerated filer” in Rule 12b-2 of the Exchange
Act:




Large
      Accelerated Filer o
            Accelerated
      Filer                     
      oNon-Accelerated
      Filer   o
            Smaller
      Reporting Company  x




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




State the
number of shares outstanding of each of the issuer's classes of common equity,:
15,369,885 shares of Common Stock ($.001 par value) as of March 18,
2009.




Table of Contents




TABLEOF CONTENTS


PagePART
      I  Financial InformationItem
      1.
              Financial
      Statements (Unaudited)
              3Condensed
      Consolidated Balance Sheets:  January 31, 2009 (Unaudited) and April
      30, 2008 (Unaudited)
              3Condensed
      Consolidated Statements of Operations: For the Three Months and Nine
      Months Ended January  31, 2009 and 2008
      (Unaudited)
              5Condensed
      Consolidated Statements of Cash Flows: For the Nine Months Ended
      January 31, 2009 and 2008 (Unaudited)
              6Notes to
      Unaudited Consolidated Financial Information
              7Item
      2.
              Management's
      Discussion and Analysis of Financial Condition and Results of
      Operations
              18Item
      3.
              Quantitative and
      Qualitative Disclosures About Market Risk
              25Item
      4.
              Controls and
      Procedures
              25PART
      II  Other InformationItem
      1.
              Legal
      Proceedings
              25Item
      2.
              Changes in
      Securities
              26Item
      3.
              Defaults Upon
      Senior Securities
              26Item
      4.
              Submission of
      Matters to Vote of Security Holders
              26Item
      5.
              Other
      Information
              26Item
      6.
              Exhibits, Including
      Certifications
              26







Table of Contents





ITEM
I.  FINANCIALSTATEMENTS (UNAUDITED)





GLOBAL
DIVERSIFIED INDUSTRIES, INC.


CONDENSED
CONSOLIDATED BALANCE SHEETS


(UNAUDITED)




January
      31, 2009
                              
                              
                              April
      30, 2008ASSETS:Current
      assets:Cash
      and cash equivalents
                              
                              $
                              2,768,617
                              
                              
                              $
                              53,193Accounts
      receivable
                              
                              
                              1,253,591
                              
                              
                              
                              386,040Inventories
                              
                              
                              4,515,650
                              
                              
                              
                              2,357,378Advances
      to employees
                              
                              
                              28,289
                              
                              
                              
                              16,737Prepaid
      expenses
                              
                              
                              397,844
                              
                              
                              
                              246,196Total
      current assets
                              
                              
                              8,963,991
                              
                              
                              
                              3,059,544Property,
      plant and equipment:Property,
      plant and equipment, at cost
                              
                              
                              3,081,437
                              
                              
                              
                              3,081,437Less:
      Accumulated depreciation
                              
                              
                              (1,485,272
                              )
                              
                              
                              (1,291,771
                              )Total
      property, plant and equipment, net
                              
                              
                              1,596,165
                              
                              
                              
                              1,789,666Other
      assets:
                                Inventories-long
      term
                              
                              
                              895,929
                              
                              
                              
                              895,929Deferred
      charges
                              
                              
                              650,406
                              
                              
                              
                              -Deferred
      Financing Cost, net of accumulated amortization of $1,163 (Note
      K)
                              
                              
                              58,375Deposit
                              
                              
                              82,773
                              
                              
                              
                              113,614Intangible
      assets  net of accumulated amortization
      of   $351,740  and $284,170   at
      January  31, 2009 and April 30, 2008, respectively (Note
      F)
                              
                              
                              931,131
                              
                              
                              
                              901,670Total
      other assets
                              
                              
                              2,618,614
                              
                              
                              
                              1,911,213Total
      Assets
                              
                              $
                              13,178,770
                              
                              
                              $
                              6,760,423





See
accompanying notes to the unaudited condensed consolidated financial
information











3
 Table of Contents




GLOBALDIVERSIFIED INDUSTRIES, INC.


CONDENSED
CONSOLIDATED BALANCE SHEETS (Continued)


(UNAUDITED)





January
      31, 2009
                                    
                                    
                                    April
      30, 2008LIABILITIES
      AND STOCKHOLDERS' EQUITYCurrent
      liabilities:Accounts
      payable and accrued liabilities
                                    
                                    $
                                    320,918
                                    
                                    
                                    $
                                    493,156Dividend
      payable
                                    
                                    
                                    58,411
                                    
                                    
                                    
                                    69,686Notes
      payable to related parties, current portion (Note B)
                                    
                                    
                                    -
                                    
                                    
                                    
                                    5,500Notes
      payable, current portion (Note B)
                                    
                                    
                                    100,000
                                    
                                    
                                    
                                    22,384Total
      current liabilities
                                    
                                    
                                    479,329
                                    
                                    
                                    
                                    590,726Long-term
      liabilities:Notes
      payable, long term portion, net of debt discount (Note B)
                                    
                                    
                                    5,572,386
                                    
                                    
                                    
                                    246,710Total
      long-term liabilities
                                    
                                    
                                    5,572,386
                                    
                                    
                                    
                                    246,710Commitment
      and contingencies
                                    
                                    
                                    -
                                    
                                    
                                    
                                    -Convertible
      Redeemable Preferred Stock, Series C, par value $.001 per share, 2,750,000
      shares authorized, 1,750,000 and 0 shares issued and outstanding at
      January 31, 2009 and April 30, 2008, respectively
                                    
                                    
                                    1,750,000
                                    
                                    
                                    
                                    -Discount
      on Preferred Stock Series C
                                    
                                    
                                    (1,749,786
                                    )
                                    
                                    
                                    -Net
      Preferred Stock Series C
                                    
                                    
                                    214
                                    
                                    
                                    
                                    -Convertible
      Redeemable Preferred Stock, Series B, par value $.001 per share; 3,500,000
      shares authorized; 3,484,294 shares issued and outstanding at January 31,
      2009 and April 30, 2008, respectively (Note D )
                                    
                                    
                                    3,484,294
                                    
                                    
                                    
                                    3,484,294Discount
      on Preferred Stock Series B
                                    
                                    
                                    (3,466,525)
                                    
                                    
                                    
                                    (3,483,900
                                    )Net
      Preferred Stock Series B
                                    
                                    
                                    17,769
                                    
                                    
                                    
                                    394Stockholders'
      equity:Common
      stock, par value $ .001 per share; 2,750,000,000 shares authorized;
      15,369,885 and 15,369,885 shares issued and outstanding at
      January  31, 2009 and April 30, 2008, respectively (Note
      C)
                                    
                                    
                                    15,370
                                    
                                    
                                    
                                    15,370Additional
      paid-in capital
                                    
                                    
                                    13,510,123
                                    
                                    
                                    
                                    11,783,165Treasury
      stock (Note C)
                                    
                                    
                                    (50
                                    )
                                    
                                    
                                    (50
                                    )Accumulated
      deficit
                                    
                                    
                                    (6,416,371
                                    )
                                    
                                    
                                    (5,875,892
                                    )Total
      stockholders' equity
                                    
                                    
                                    7,109,072
                                    
                                    
                                    
                                    5,922,593Total
      liabilities and stockholders' equity
                                    
                                    $
                                    13,178,770
                                    
                                    
                                    $
                                    6,760,423





See
accompanying notes to the unaudited condensed consolidated financial
information










4
 Table of Contents




GLOBALDIVERSIFIED INDUSTRIES, INC.


CONDENSED
CONSOLIDATED STATEMENTS OF OPERATIONS


(UNAUDITED)








For
      The Three Months Ended
                                          January
      31,
                                        
                                        
                                        For
      the Nine Months Ended
                                          January
      31,2009
                                        
                                        
                                        2008
                                        
                                        
                                        2009
                                        
                                        
                                        2008Revenues
                                        
                                        $
                                        1,379,736
                                        
                                        
                                        $
                                        547,103
                                        
                                        
                                        $
                                        3,547,091
                                        
                                        
                                        $
                                        5,462,669Cost
      of goods sold
                                        
                                        
                                        699,530
                                        
                                        
                                        
                                        426,344
                                        
                                        
                                        
                                        2,121,592
                                        
                                        
                                        
                                        4,462,038Gross
      profit
                                        
                                        
                                        680,206
                                        
                                        
                                        
                                        120,759
                                        
                                        
                                        
                                        1,425,499
                                        
                                        
                                        
                                        1,000,631Operating
      expenses:Selling,
      general and administrative expenses
                                        
                                        
                                        416,006
                                        
                                        
                                        
                                        240,455
                                        
                                        
                                        
                                        1,420,005
                                        
                                        
                                        
                                        837,919Depreciation
      and amortization
                                        
                                        
                                        87,690
                                        
                                        
                                        
                                        80,383
                                        
                                        
                                        
                                        261,073
                                        
                                        
                                        
                                        241,147Total
      operating expense
                                        
                                        
                                        503,696
                                        
                                        
                                        
                                        320,838
                                        
                                        
                                        
                                        1,681,078
                                        
                                        
                                        
                                        1,079,066Income
      (loss) from operations
                                        
                                        
                                        176,510
                                        
                                        
                                        
                                        (
      200,079
                                        )
                                        
                                        
                                        (255,579
                                        )
                                        
                                        
                                        (78,435
                                        )Interest
      expense, net
                                        
                                        
                                        (174,390
                                        )
                                        
                                        
                                        (96,138
                                        )
                                        
                                        
                                        (257,125
                                        )
                                        
                                        
                                        (305,903
                                        )Guaranty
      Expense
                                        
                                        
                                        42,791
                                        
                                        
                                        
                                        -
                                        
                                        
                                        
                                        (27,775
                                        )
                                        
                                        
                                        -Gain
      (loss) from operations before income taxes
                                        
                                        
                                        44,911
                                        
                                        
                                        
                                        (296,217
                                        )
                                        
                                        
                                        (540,479
                                        )
                                        
                                        
                                        (384,338
                                        )Income
      tax benefit (expense)
                                        
                                        
                                        -
                                        
                                        
                                        
                                        (30,000
                                        )
                                        
                                        
                                        -
                                        
                                        
                                        
                                        (30,000
                                        )Net
      income  (loss)
                                        
                                        
                                        44,911
                                        
                                        
                                        
                                        (326,217
                                        )
                                        
                                        
                                        (540,479
                                        )
                                        
                                        
                                        (414,338
                                        )Preferred
      Dividends, paid or accrued
                                        
                                        
                                        156,975
                                        
                                        
                                        
                                        -
                                        
                                        
                                        
                                        438,148
                                        
                                        
                                        
                                        -Accretion
      of discount on preferred stock
                                        
                                        
                                        8,861
                                        
                                        
                                        
                                        -
                                        
                                        
                                        
                                        17,983
                                        
                                        
                                        
                                        -Net
      loss attributable to common stockholders
                                        
                                        $
                                        (120,925
                                        )
                                        
                                        $
                                        (326,217
                                        )
                                        
                                        $
                                        (966,610
                                        )
                                        
                                        $
                                        (414,338
                                        )Earnings
      per common share:Basic
      and Diluted
                                        
                                        $
                                        (0.01
                                        )
                                        
                                        $
                                        (0.04
                                        )
                                        
                                        $
                                        (0.06
                                        )
                                        
                                        $
                                        (0.05
                                        )Weighted
      average shares outstanding:Basic
      and Diluted
                                        
                                        
                                        15,369,885
                                        
                                        
                                        
                                        8,636,962
                                        
                                        
                                        
                                        15,369,885
                                        
                                        
                                        
                                        8,520,856








See
accompanying notes to the unaudited condensed consolidated financial
information











5
 Table of Contents




GLOBALDIVERSIFIED INDUSTRIES, INC.


CONDENSED
CONSOLIDATED STATEMENTS OF OPERATIONS


(UNAUDITED)





For
      the Nine months ended
                              January
      31,2009
                            
                            
                            2008Cash
      flows from operating activities:Net(loss)
                            
                            $
                            (540,479
                            )
                            
                            $
                            (414,338
                            )Adjustment
      to reconcile net loss to net cash used in continuing
      operationsDepreciation
      and amortization
                            
                            
                            261,073
                            
                            
                            
                            241,147Common
      stock issued in exchange for services rendered
                            
                            
                            -
                            
                            
                            
                            18,000Amortization
      and write-off of debt discount
                            
                            
                            25,649
                            
                            
                            
                            14,535Amortization
      of Deferred Financing Cost
                            
                            
                            1,163Common
      stock issued in exchange for rent
                            
                            
                            -
                            
                            
                            
                            87,282Amortization
      of Guaranty Expense
                            
                            
                            27,775
                            
                            
                            
                            -Change
      in assets and liabilities:(Increase)
      in accounts receivable
                            
                            
                            (867,551
                            )
                            
                            
                            (240,196
                            )(Increase)
      in inventory
                            
                            
                            (2,158,272
                            )
                            
                            
                            (699,002
                            )Decrease
      / (increase) in prepaid expense and others
                            
                            
                            (771,215
                            )
                            
                            
                            102,648(Increase)/decrease
      in employee advances
                            
                            
                            (11,552
                            )
                            
                            
                            745Increase
      in deferred taxes
                            
                            
                            
                            
                            
                            
                            30,000Increase
      in accounts payable and accrued liabilities
                            
                            
                            (172,238
                            )
                            
                            
                            (17,757
                            )Net
      cash (used in) continuing operations
                            
                            
                            (4,205,647
                            )
                            
                            
                            (876,936
                            )Cash
      flows from investing activities:-Capital
      expenditure
                            
                            
                            (97,031
                            )
                            
                            
                            (
      28,950
                            )Net
      cash (used in) investing activities
                            
                            
                            (97,031
                            )
                            
                            
                            (
      28,950
                            )Cash
      flows from financing activities:Proceeds
      from sale of common stock and stock subscription,net
      of costs and fees
                            
                            
                            -
                            
                            
                            
                            630,000Proceeds
      from sale of Series C Preferred Stock, net of cost
                            
                            
                            1,500,000
                            
                            
                            
                            -Preferred
      Dividends paid
                            
                            
                            (449,423
                            )
                            
                            
                            -Proceeds
      from long term promissory note
                            
                            
                            6,000,000Proceeds
      from (repayments of) notes payable, net
                            
                            
                            (26,975
                            )
                            
                            
                            45,000Repayments
      of payable to related parties, net
                            
                            
                            (5,500
                            )
                            
                            
                            (122,624
                            )Net
      cash provided by financing activities
                            
                            
                            7,018,102
                            
                            
                            
                            552,376Net
      decrease in cash and cash equivalents
                            
                            
                            2,715,424
                            
                            
                            
                            (353,510
                            )Cash
      and cash equivalents at beginning of period
                            
                            
                            53,193
                            
                            
                            
                            356,569Cash
      and cash equivalents at end of period
                            
                            $
                            2,768,617
                            
                            
                            $
                            3,059Supplemental
      Disclosures of Cash Flow Information:Cash
      paid during the period for interest
                            
                            $
                            158,009
                            
                            
                            $
                            385,588Common
      stock issued for rent
                            
                            
                            -
                            
                            
                            
                            87,282Common
      stock issued to consultants for services rendered
                            
                            
                            -
                            
                            
                            
                            18,000Common
      stock issue for accrued interest
                            
                            
                            -
                            
                            
                            
                            20,000Accretion
      of preferred stock discounts charged to paid-in-capital
                            
                            
                            17,589
                            
                            
                            
                            -Deferred
      financing costs on DOF Note
                            
                            
                            59,538
                            
                            
                            
                            -Initial
      Discount recorded on DOF Note
                            
                            
                            595,381Amortization
      of deferred financing cost
                            
                            
                            1,163
                            
                            
                            
                            -Amortization
      of beneficial conversion feature of convertible notes & debt
      discount
                            
                            
                            25,649
                            
                            
                            
                            14,535





See
accompanying notes to the unaudited condensed consolidated financial
information




6
 Table of Contents




GLOBALDIVERSIFIED INDUSTRIES, INC.


NOTES
TO CONDENSED CONSOLIDATED FINANCIAL INFORMATION - (Unaudited)


JANUARY
31, 2009




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-Q.  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 of operations for the nine month period ended January 31, 2009, are
not necessarily indicative of the results that may be expected for the year
ending April 30, 2009. The unaudited condensed consolidated financial statements
should be read in conjunction with the consolidated April 30, 2008 financial
statements and footnotes thereto included in the Company's SEC Form
10-K.





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.





Previous
Restatement of April 30, 2008 Balance Sheet (Unaudited)





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





The
accounting treatment previously applied resulted in the reporting of the
preferred stock in the net carrying amount of $2,021,574 and the incorrect
recognition of a $7,141,496 “Warrant” liability, both as of April 30, 2008; and
a related net financing expense of $6,459,362, after the offset a
“Mark-to-Market” gain.  Additional paid in capital had been adjusted
for the difference.  The restatement reversed each of the above
entries on the Company’s books.  After applying EITF’s 08-5 and 00-27,
the $3,484,294 face value of the related Series B Preferred Stock was fully
offset by the aggregate discounts for the effective beneficial conversion
feature of the preferred stock and the relative fair value of the
warrants.  At April 30, 2008, $394 of such discount had been
amortized, which amount is the carrying value of the preferred at that
date.  The discount will continue to be amortized until the February
21, 2010 mandatory redemption date of the Series B Preferred Stock.











7
 Table of Contents




GLOBAL
DIVERSIFIED INDUSTRIES, INC.


NOTES
TO CONDENSED CONSOLIDATED FINANCIAL INFORMATION


JANUARY
31, 2009




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





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




Effect of Adjustments on the
2008 Statement of Operations (Unaudited)




As
      Reported
                  
                  
                  Adjustments
                  
                  
                  As
      RestatedLoss
      from operations
                  
                  $
                  (1,537,923
                  )
                  
                  
                  -
                  
                  
                  $
                  (1,537,923
                  )Fair
      value of warrants issued in connection with Series B
    Preferred
                  
                  
                  (7,760,305
                  )
                  
                  
                  7,760,305
                  
                  
                  
                  -Unrealized
      change in fair value of warrants
                  
                  
                  1,300,943
                  
                  
                  
                  (1,300,943
                  )
                  
                  
                  -Interest
      (expense), net
                  
                  
                  (353,892
                  )
                  
                  
                  -
                  
                  
                  
                  (353,892
                  )Loss
      before provision for income taxes
                  
                  
                  (8,351,177
                  )
                  
                  
                  6,459,362
                  
                  
                  
                  (1,891,815
                  )Net
      loss
                  
                  
                  (8,447,177
                  )
                  
                  
                  6,459,362
                  
                  
                  
                  (1,987,815
                  )Preferred
      stock dividends, actual and imputed
                  
                  
                  202,686
                  
                  
                  
                  (132,606
                  )
                  
                  
                  70,080Net
      loss attributable to common shareholders
                  
                  $
                  (8,649,863
                  )
                  
                  $
                  6,591,968
                  
                  
                  $
                  (2,057,895
                  )Basic
      and diluted loss per common share
                  
                  $
                  (0.88
                  )
                  
                  $
                  (0.57
                  )
                  
                  $
                  (0.21
                  )






8
 Table of Contents




GLOBAL
DIVERSIFIED INDUSTRIES, INC.


NOTES
TO CONDENSED CONSOLIDATED FINANCIAL INFORMATION


JANUARY
31, 2009




Effect of Related
Prospective Accounting Pronouncement





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





Revenue
Recognition





The
Company recognizes revenues, except several construction-type fixed-price
contracts, in accordance with Staff Accounting Bulletin No. 104, Revenue
Recognition ("SAB104"), which modified Staff Accounting Bulletin No. 101,
Revenue Recognition in Financial Statements ("SAB101"). SAB 104 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. In the event that the
Company's arrangements with its customers include more than one product or
service, the Company determines whether the individual revenue elements can be
recognized separately in accordance with Financial Accounting Standards Board
(FASB) Emerging Issues Task Force No. 00-21 (EITF 00-21), Revenue Arrangements
with Multiple Deliverables. EITF 00-21 addresses the determination of whether an
arrangement involving more than one deliverable contains more than one unit of
accounting and how the arrangement consideration should be measured and
allocated to the separate units of accounting.





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




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




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







9
 Table of Contents




GLOBAL
DIVERSIFIED INDUSTRIES, INC.


NOTES
TO CONDENSED CONSOLIDATED FINANCIAL INFORMATION


JANUARY
31, 2009




In fiscal
2007, the Company entered into several fixed-price arrangements whereby the
Company is to construct and install several modular units for a school district.
Revenue from these construction-type fixed-price contracts is recognized in
accordance with SOP No. 81-1, "Accounting for Performance of Construction-Type
and Certain Production-Type Contracts", on the basis of the estimated percentage
of completion.





Under the
percentage-of-completion method, progress toward completion is measured by the
ratio of costs incurred to total estimated costs. Revenue and gross profit may
be adjusted prospectively for revisions in estimated total contract costs. If
the current estimates of total contract revenue and contract cost indicate a
loss, a provision for the entire loss on the contract is recorded in the period
in which it becomes evident. The total estimated loss includes all costs
allocable to the specific contract. Each construction contract is reviewed
individually to determine the appropriate basis of recognizing revenue.
Revisions to the estimates at completion are reflected in results of operations
as a change in accounting estimate in the period in which the facts that give
rise to the revision become known by management.  Costs in excess of
billings are grouped with work-in process inventories.





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.





Reclassifications





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





Use of
Estimates




The
preparation of financial statements and related disclosures in conformity with
accounting principles generally accepted in the United States requires
management to make estimates and assumptions that affect the reported amounts of
assets, liabilities, revenues and expenses, and related disclosure of contingent
assets and liabilities. The Company evaluates, on an on-going basis, its
estimates and judgments, including those related to revenue recognition, bad
debts, excess inventory, impairment of intangible assets, income taxes,
contingencies and litigation. Its estimates are based on historical experience
and assumptions that the Company believes to be reasonable under the
circumstances, the results of which form the basis for making judgments about
the carrying values of assets and liabilities that are not readily apparent from
other sources. Actual results may differ from these estimates under different
assumptions or conditions.




New Accounting
Pronouncements





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





Cash and Cash
Equivalents





The
Company considers all highly liquid investments purchased with an original
maturity of three months or less to be cash equivalents.  There were
no cash equivalents at January 31, 2009 or April 30, 2008,
respectively.





Use of Lattice
Model





Lattice Valuation
Model





Beginning
in the quarter ended October 31, 2008, the Company is now using a lattice
valuation model to determine the fair value of warrants, with the assistance of
a valuation consultant. The lattice model values the warrants based on a
probability weighted discounted cash flow model. This model is based on future
projections that the warrant holder exercises it right to convert the warrants
for settlement of the features included within the instrument. The Company uses
the model to analyze (a) the underlying economic factors that influence which of
these events will occur, (b) when they are likely to occur, and (c) the common
stock price and specific terms of the warrants such as interest rate and
exercise price that will be in effect when they occur. Based on the analysis of
these factors, the Company uses the model to develop a set of potential
scenarios. Probabilities of each scenario occurring during the remaining term of
the warrants are determined based on management's projections. These
probabilities are used to create a cash flow projection over the term of the
warrants and determine the probability that the projected cash flow will be
achieved.







10
 Table of Contents




GLOBAL
DIVERSIFIED INDUSTRIES, INC.


NOTES
TO CONDENSED CONSOLIDATED FINANCIAL INFORMATION


JANUARY
31, 2009




NOTE
B - NOTES PAYABLE





A summary
of notes payable at January 31, 2009 and April 30, 2008 is as
follows:





January
      31, 2009
                      
                      
                      April
      30, 2008Note
      payable to Company shareholders in monthly installments of interest only
      at 8.0% per annum; unsecured; maturity dated August 1,
2008
                      
                      
                      -
                      
                      
                      
                      5,500Note
      payable in 24 monthly installments beginning March 15, 2006; unsecured;
      maturity date is March 2008.
                      
                      
                      -
                      
                      
                      
                      22,547Note
      payable in five annual payments beginning December 31, 2006, with interest
      payable monthly at 10% per annum.  Lender has an option at the
      end of each twelve months (“anniversary date”) to receive restricted
      shares of the Company’s common stock in lieu of the annual cash payment of
      $100,000. The conversion price is equal to 75% of the closing price for
      the day that is twelve months prior to each anniversary date. The minimum
      conversion price shall be $0.05 per share. (c)
                      
                      
                      256,653
                      
                      
                      
                      246,710Note
      payable revolving agreement secured by receivable and property with
      interest and administrative fees payable monthly; interest rate is at
      2.75% per annum over and above the Prime Rate or Deemed Prime Rate
      whichever is higher; maturity date is on November 1, 2007. Maximum
      borrowing capacity of $3,000,000.  Agreement cancelled in April,
      2008.
                      
                      
                      -
                      
                      
                      
                      (163
                      )Note
      payable secured by receivable and property with principal payments in four
      equal lump sum payments being due December 19, 2010, second payment due
      December 19, 2011, third payment due December 19, 2012 and final payment
      due December 19, 2013. Interest rate is at 13% per annum payable monthly,
      however during the first twelve months the accrued interest shall be
      deferred and payable in one lump sum payment on the first anniversary date
      of the Original Issuance Date (d)
                      
                      
                      5,415,733
                      
                      
                      
                      -Note
      payable revolving agreement secured by receivable and property with
      interest and administrative fee payable monthly; interest is at 24% per
      annum, maturity date is on June 9, 2009. Maximum borrowing capacity of
      $2,000,000.
                      
                      
                      -
                      
                      
                      
                      -Total
      Notes Payable
                      
                      
                      5,672,386
                      
                      
                      
                      274,594Less:
      current portion
                      
                      
                      (100,000
                      )
                      
                      
                      (27,884
                      )Total
      - notes payable – long term
                      
                      
                      5,572,386
                      
                      
                      $
                      246,710




(c) The
Company granted the note-holder 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 note-holder converts at the minimum
conversion price of $0.05 per share.  The Company accounted for the
convertible in accordance with Emerging Issues Task Force Issue 98-5, Accounting
for Convertible Securities with a Beneficial Conversion Features or Contingently
Adjustable Conversion Ratios ("EITF 98-5"), and recognized an imbedded
beneficial conversion feature present in the convertible note. The Company
recognized and measured an aggregate of $166,667 of the proceeds, which is equal
to the intrinsic value of the imbedded beneficial conversion feature, to
additional paid in capital and a discount against the convertible note. The debt
discount attributed to the beneficial conversion feature is amortized over the
maturity period (five years) as interest expense.  In October 31,
2006, the note-holder agreed to convert $200,000 of principal into 2,353,356
shares of the Company's common stock (Note J). These shares were issued in
September 2007. The Company wrote off the proportionate unamortized debt
discount applicable to the converted of principal, and non-cash interest expense
of $54,900 was charged to operations in connection with the conversion of notes.
Total non-cash interest expense the Company charged to operations in connection
with amortization and write-off of debt discount attributed to the beneficial
conversion feature amounted to $4,845 and $4,845 for the three month periods
year ended January 31, 2009 and 2008, respectively.





(d) The
Company issued the note-holder 68,168,164 warrants with an exercise price of
$0.05 per share expiring by December 11, 2015.  The Company accounted
for the warrants in accordance with APB 14. The debt discount of $595,391 is
amortized over the maturity period of six years as interest
expense.  Total non-cash interest expense the Company charged to
operations in connection with amortization of debt discount amounted to $11,114
and $0 for the periods ended January 31, 2009 and 2008
respectively.  The aggregate fair value of the warrants was determined
with the assistance of a valuations consultant using the multinomial lattice
formula assuming no dividends, the stock would have no growth with an annual
volatility of 80%, reset events projected to occur 5% of the time at $0.04
generating an adjusted warrant exercise price of $0.0495.





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






11
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GLOBAL
DIVERSIFIED INDUSTRIES, INC.


NOTES
TO CONDENSED CONSOLIDATED FINANCIAL INFORMATION


JANUARY
31, 2009




NOTE
C – CAPITAL STOCK (Continued)





Effective
June 24, 2008, the Registrant amended its Articles of Incorporation to authorize
(a) to increase its authorized preferred stock from thirteen million five
hundred thousand  (13,500,000) shares to sixteen million two hundred
fifty thousand (16,250,000) shares , (b) authorize blank check preferred stock
and delegate the right to designate preferences and limitations for such
preferred stock to the Board of Directors, (c) establish the designations,
rights and preferences of the Series C Preferred Stock.




As of
January 31, 2009 and April 30, 2008, the Company has 15,369,885 and 15,369,885
shares of common stock issued and outstanding, respectively.  The
Company did not issue any shares of common stock during the nine months period
ended January 31, 2009.  The Company has 50,000 shares of treasury
stock at January 31, 2009 and April 30, 2008




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





NOTE
D – CONVERTIBLE REDEEMABLE PREFERRED STOCK – SERIES B





In
February 2008, the Board of Directors authorized the issuance of up to 3,500,000
shares of Series B 12% convertible voting preferred stock (“Series B”) having a
stated value of $1.00 per share. The Series B shares are convertible at any
time, at the option of the holder, into the Company’s common stock at an
initial conversion rate determined by dividing the stated value of $1.00 by the
initial conversion price of $0.005 (post stock split $0.07) per share. The
conversion price is subject to certain anti-dilution provisions in the event the
Company issues shares of its common stock or common stock equivalents below the
stated conversion price or pays a stock dividend or otherwise makes a
distribution payable in shares of common stock, with the exception of any shares
issued upon conversion or payment of dividend on this issuance, or other similar
events such as stock splits or common stock reclassifications.  The
holders are entitled to receive a cumulative 12% dividend based on the stated
value of $1.00 per share, payable on the calendar quarter in cash.





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




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





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





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





In
connection with the February 22, 2008 issuance of the Series B Preferred Stock,
the Company entered into a registration rights agreement with the purchasers of
the Series B shares, which requires the Company to obtain an effective
registration statement with the SEC covering the sale of the common stock
issuable upon conversion of the Series B shares on or before 150 calendar days.
If the Company is unable to do so, the Company will have to pay liquidated
damages in cash to the holders of the Series B shares.  The amount of
damages that may be due is one and a one-half percent of the stated value of 12%
Preferred Stock per month; provided, however, that in no event shall the
aggregate amount paid exceed nine percent of the stated value. The Company is in
default of this requirement but has obtained a waiver on this provision from the
holders.  In accordance with SFAS 5, “Accounting for
Contingencies,” no penalty accrual has been made as management has concluded
that none will be payable.  This treatment is consistent with the
guidance in EITF 00-19-2.








12
 Table of Contents






GLOBAL
DIVERSIFIED INDUSTRIES, INC.


NOTES
TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS


JANUARY
31, 2009





NOTE
D – CONVERTIBLE REDEEMABLE PREFERRED STOCK – SERIES B
(Continued)




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





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





As
additional consideration for the purchase of the Series B shares, the Company
granted to the holders of the Series B shares a) warrants entitling it to
purchase 34,842,940 common shares of the Company’s common stock at the price of
$0.07 per share expiring five years from issuance and b) warrants entitling
it to purchase 34,842,940 common shares of the Company at a price of
$0.07 per share expiring seven years from issuance.  The warrants
are covered under the registration rights agreement. As discussed in Note A to
these condensed consolidated financial statements, the Company’s original
accounting for the warrants and the related preferred stock classified the
warrants as liabilities and recorded their estimated fair value at date of issue
to be $7,760,305 using the Black-Scholes formula assuming no dividends, a
risk-free interest rate of 2.81% to 3.26 %, expected volatility of 115.06%, and
expected warrant life of five to seven years.





In
addition, the Company issued to broker/dealers a) warrants entitling it to
purchase 2,000,000 common shares of the Company’s common stock at the price of
$0.07 per share expiring five years from issuance; b) warrants entitling it
to purchase 2,000,000 common shares of the Company at a price of $0.07 per
share expiring five years from issuance and c) warrants entitling it to purchase
2,000,000 common shares of the Company’s common stock at the price of $0.07 per
share expiring seven years from issuance.  The warrants are covered
under the registration rights agreement. The Company estimated the fair value at
date of issue of the stock purchase warrants issued in connection with the
issuance of the Series B preferred stock to be $682,133 using the Black-Scholes
formula assuming no dividends, a risk-free interest rate of 2.81% to 3.26 %,
expected volatility of 115.06%, and expected warrant life of five to seven
years.   These warrants were initially accounted for in the same
manner as the warrants issued to the purchasers of the Series B Preferred
Stock.





Under the
original accounting, the Company recorded the fair value of the warrants as a
derivative liability. The net value of the warrants at the date of issuance was
recorded as a warrant liability on the balance sheet in the amount of $8,442,438
and a charge to financing expense for the value attributable to financing
activities of $7,760,305 and a charge the additional paid in capital as cost
relating to obtaining financing of $682,133.  Any change in fair value was
recorded as non-operating, non-cash income or expense at each reporting
date.





As
discussed in Note A, the Company has now determined that the warrants issued in
connection with the Series B Preferred Stock meet the applicable exceptions in
EITF 00-19 for treatment as equity instruments and the Company has restated
their 2008 financial statements.  The effect of these restatements is
disclosed in Note A.  After the accretion of the discount, the Series
B Preferred Stock had a carrying value of $17,769 and $394 at January 31, 2009
and April 30, 2008, respectively.





NOTE
E – CONVERTIBLE REDEEMABLE PREFERRED STOCK – SERIES C





On June
26, 2008 the  Company entered into a an Amended and Restated
Securities Agreement with Babirak Carr, P.C., solely as administrative agent for
Vicis Capital Master Fund ("Vicis"), and the holders of the Company's Series B
Convertible Preferred Stock, pursuant to which the Company issued and sold (a) a
series of its Series C Convertible Preferred Stock having an aggregate original
stated value of $1,750,000 (total of 1,750,000 shares of Series C Preferred
Stock), and (b) its Series 3 Common Stock Purchase Warrants exercisable, in the
aggregate, for 35,000,000 shares of Common Stock.  The total cash paid
to the Company for the Series C Preferred Stock and Series 3 Warrants was
$1,750,000.  The Company paid $75,000 in expenses to Vicis, which
included legal fees of Vicis.





The
Series C Preferred Stock: a) has a stated amount of $1.00 per share; (b) is
convertible at the option of the holder at a price of $.07 per share at any time
into a total of 25,000,000 Series C Preferred Stock; c)  is subject to
redemption in one lump sum payment on the date two years from the date of
issuance, unless earlier converted; d) accrues dividends on any balance
outstanding at an annual rate of twelve percent, due and payable quarterly in
arrears in cash.  Redemption of the outstanding principal and any
accrued but unpaid dividends is guaranteed by the Registrant’s
subsidiaries.  Payment thereof is secured by a blanket lien
encumbering the assets of the Registrant and its subsidiaries subject only to a
lien by State Financial Corporation or other asset-backed lender in an amount
not to exceed $2,000,000.





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










13
 Table of Contents




GLOBAL
DIVERSIFIED INDUSTRIES, INC.


NOTES
TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS


JANUARY
31, 2009





NOTE
E – CONVERTIBLE REDEEMABLE PREFERRED STOCK – SERIES C
(Continued)





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





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





The
Series 3 Warrants, the Series BD-4 and Series BD-5 Warrants have "cashless
exercise" provisions and certain anti-dilution rights.  The Company
agreed to register the Common Stock underlying the Series C Preferred Stock, the
Series 3 Warrants, the Series BD-4 Warrants and the Series BD-5 Warrants
pursuant to a Registration Rights Agreement.





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





The
Company used the same basis of accounting to record the Series C Preferred Stock
and each of the warrant series issued therewith as it used when it corrected the
accounting for the Series B Preferred and related warrants as disclosed in Note
A. The relative fair values of the preferred and the warrants were apportioned
and then the effective beneficial conversion feature of the relative fair value
of the preferred was calculated. The initial step of the calculation was the
determination of the Black-Scholes value assuming no dividends, a risk-free
interest rate of 3.50% to 3.74 %, expected volatility of 233.64%, and expected
warrant life of five or seven years.  The relative fair values derived
were as follows: Series C Preferred: $563,939; Series C Warrants: $1,012,835;
Broker Warrants: $173,226.  The effective beneficial conversion
feature was $1,186,061, which was limited to the remaining undiscounted value of
the preferred of $563,939.  Accordingly the initial carrying value of
the preferred was zero. Accretion of the discount amounted to $214 at January
31, 2009 which is the carrying value at that date.





NOTE
F- ACQUISITION OF INTANGIBLE ASSETS





The trade
name acquired is considered to have an undeterminable life, and as such will not
be amortized. Instead, the trade name is tested annually for impairment, with
any impairment charged against earnings in the Company’s consolidated statement
of earnings. An independent appraiser assessed the value of the trade name
acquired and determined that the fair value of the trade name exceeded its
recorded book value at April 30, 2005. The building engineering and
architectural plans acquired have estimated useful lives of ten
years.





The
Company has adopted  SFAS No. 142,  Goodwill  and
Other  Intangible  Assets, whereby the
Company  periodically test its intangible assets for
impairment.  On an annual basis, and when there is reason to suspect
that their values have been diminished or impaired, these assets are tested for
impairment,  and write-downs will be included in results from
operations.  There was no impairment of acquired intangibles as of
January 31, 2009.





Total
identifiable intangible assets acquired and their carrying value at January 31,
2009 are:




Gross
      Carrying Amount
                                  
                                  
                                  Accumulated
      Amortization
                                  
                                  
                                  Net
                                  
                                  
                                  Residual
      Value
                                  
                                  Weighted
      Average
                                    Amortization
                                    Period
      (Years)Amortized
      Identifiable Intangible Assets:Building
      engineering and architectural plans
                                  
                                  $
                                  932,871
                                  
                                  
                                  $
                                  (351,740
                                  )
                                  
                                  $
                                  581,131
                                  
                                  
                                  $
                                  -
                                  
                                  10.0Total
      Amortized Identifiable Intangible Assets
                                  
                                  
                                  932,871
                                  
                                  
                                  
                                  (351,740
                                  )
                                  
                                  
                                  581,131
                                  
                                  
                                  
                                  -
                                  
                                  10.0Unamortized
      Identifiable Intangible Assets:Trade
      Name
                                  
                                  
                                  350,000
                                  
                                  
                                  
                                  -
                                  
                                  
                                  
                                  350,000
                                  
                                  
                                  
                                  350,000
                                  
                                  -Total
      Amortized Identifiable Intangible Assets
                                  
                                  
                                  350,000
                                  
                                  
                                  
                                  -
                                  
                                  
                                  
                                  350,000
                                  
                                  
                                  
                                  350,000
                                  
                                  -Total
                                  
                                  $
                                  1,282,871
                                  
                                  
                                  $
                                  (351,740
                                  )
                                  
                                  $
                                  931,131
                                  
                                  
                                  $
                                  350,000
                                  
                                  10.0








14
 Table of Contents




GLOBAL
DIVERSIFIED INDUSTRIES, INC.


NOTES
TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS


JANUARY
31, 2009





NOTE
F- ACQUISITION OF INTANGIBLE ASSETS – (Continued)





Total
amortization expense charged to operations for the nine months period ended
January 31 2009 and 2008 were $67,571 and $65,903, respectively.  
Estimated amortization expense as of January 31, 2009 is as
follows:




2009
                    
                    $
                    90,7592010
                    
                    
                    90,7592011
                    
                    
                    90,7592012
                    
                    
                    90,7592013
      and after
                    
                    
                    218,095Total
                    
                    $
                    581,131




NOTE
G- 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 carry-forwards for income
tax purposes with a valuation allowance against the carry-forwards for book
purposes.




In
assessing the realizability of deferred tax assets, management considers whether
it is more likely than not that some portion or all of the deferred tax assets
will not be realized. Included in deferred tax assets are Federal and State net
operating loss carry-forwards of approximately $5,000,000, which will expire
beginning in 2028.  The ultimate realization of deferred tax assets is
dependent upon the generation of future taxable income during the periods in
which those temporary differences become deductible. Management considers the
scheduled reversal of deferred tax liabilities, projected future taxable income,
and tax planning strategies in making this assessment. Based upon our cumulative
losses through January 31, 2009, we have provided a valuation allowance reducing
the net realizable benefits of these deductible differences to $0 at January 31,
2009.  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.




There was
no income tax provision or benefit for the nine months ended January 31, 2009
and 2008.




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:




Nine
      Months Ended January 31, 2009
                        
                        
                        Nine
      Months Ended January 31, 2008Computed
      “expected” income tax expense(benefit) at approximately34%
                        
                        $
                        (372,000
                        )
                        
                        $
                        (127,000
                        )Effect
      of available NOL carry-forwards
                        
                        
                        -
                        
                        
                        
                        127,000Losses
      not producing benefits
                        
                        
                        372,000
                        
                        
                        
                        -Discretionary
      change in valuation allowances of deferred income taxes
                        
                        
                        
                        
                        
                        
                        24,000Various
      other
                        
                        
                        
                        
                        
                        
                        6,000$
                        -
                        
                        
                        $
                        30,000


NOTE
H – GUARANTEE FEE AGREEMENT





On July
29, 2008, the Company entered into a Guarantee Fee, Indemnification, and
Security Agreement with two individuals,  collectively, the
“Guarantors” pursuant to which in consideration for the continuing guarantee by
the Guarantors of various surety bonds issued to the Company, the Company: a)
issued a "Blanket-Lien", in favor of the Guarantors, on all of the Company's and
the Company's subsidiaries' assets, b) issued the Guarantors warrants to
purchase 26,950,000 and 8,050,000 shares, respectively,   of the
Company’s common stock, all at an exercise price of $.10 per share, exercisable
for the seven year period from the date of issuance.  The warrants
have certain anti-dilution rights.





The
warrants have an aggregate fair value of $273,288, as determined by the
multinomial lattice formula assuming no dividends, the stock would have no
growth with an annual volatility of 80%, reset events projected to occur 10% of
the time at $0.07 generating an adjusted warrant exercise price of $0.097 and
expected warrant life of seven years.  The agreement has been modified
to specify a minimum term of five years.  Since the warrant holders
have agreed to forfeit the percentage of warrants unearned should they not
fulfill their five year guaranty, the Company is recognizing the related expense
proportionately over five years. For nine months ended January 31, 2009, the
Company recorded expense of $27,775 with an equivalent offset to additional
paid-in capital.





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






15
 Table of Contents




GLOBAL
DIVERSIFIED INDUSTRIES, INC.


NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS


JANUARY
31, 2009





NOTE I
– NON-EMPLOYEE STOCK OPTIONS AND WARRANTS





Non-Compensatory Stock
Options





Transactions
involving options are summarized as follows:




Number
      of Shares
                  
                  
                  Weighted
      Average Price
                    Per
      ShareOutstanding
      at April 30, 2007
                  
                  
                  -
                  
                  
                  $
                  -Outstanding
      at April 30, 2008
                  
                  
                  -
                  
                  
                  
                  -Outstanding
      at January 31, 2009
                  
                  
                  68,168,164
                  
                  
                  $
                  $0.05





During
the quarter ended January 31, 2009, the Company granted a stock option to the
CEO of the Company to purchase all or any part of an aggregate of 68,168,164
shares. The exercise price for each share is $0.05 with a maximum option term of
seven years. The option shall vest and become exercisable upon the satisfaction
in full (inclusive of all principal, interest and penalties) of the six million
loan made to the Company by Debt Opportunity Fund, LLP. The Company accounted
for the options as contingent, since the holder does not earn the right to the
award until the Debt Opp. Fund, LLP is repaid in full.  All other
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 quarters ended January 31, 2009 and 2008. All previously granted
stock options expired as of April 30, 2007.





Non-Compensatory
Warrants





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





Warrants
      Outstanding
                          
                          
                          Warrants
      ExercisableExercise
      Prices
                          
                          
                          Number
      Outstanding
                          
                          
                          Weighted
      Average Remaining Contractual Life (Years)
                          
                          
                          Weighed
      Average Exercise Price
                          
                          
                          Number
      Exercisable
                          
                          
                          Weighted
      Average Exercise Price$
                          0.05
                          
                          
                          74,984,980
                          
                          
                          
                          6.94
                          
                          
                          $
                          0.05
                          
                          
                          74,984,980
                          
                          
                          $
                          0.05$
                          0.07
                          
                          
                          78,185,880
                          
                          
                          
                          5.10
                          
                          
                          $
                          0.07
                          
                          
                          78,185,880
                          
                          
                          $
                          0.07$
                          0.10
                          
                          
                          73,500,000
                          
                          
                          
                          6.50
                          
                          
                          $
                          0.10
                          
                          
                          73,500,000
                          
                          
                          $
                          0.10Total
                          
                          
                          226,670,860
                          
                          
                          
                          
                          
                          
                          $
                          0.08
                          
                          
                          226,670,860
                          
                          
                          $
                          0.08




Transactions
involving warrants are summarized as follows:




Number
      of Shares
                  
                  
                  Weighted
      Average Price
                    Per
      ShareOutstanding
      at April 30, 2008
                  
                  
                  75,685,880
                  
                  
                  $
                  0.07Granted
                  
                  
                  76,000,000
                  
                  
                  
                  0.10Exercised
                  
                  
                  -
                  
                  
                  
                  -Canceled
      or expiredOutstanding
      at July 31, 2008
                  
                  
                  151,685,880
                  
                  
                  $
                  0.08GrantedExercisedCanceled
      or expiredOutstanding
      at October 31, 2008
                  
                  
                  151,685,880
                  
                  
                  $
                  0.08Granted
                  
                  
                  74,984,980
                  
                  
                  $
                  0.05ExercisedCanceled or
      expiredOutstanding
      at January 31, 2009
                  
                  
                  226,670,860
                  
                  
                  $
                  0.07








16
 Table of Contents




GLOBAL
DIVERSIFIED INDUSTRIES, INC.
 NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS
 JANUARY
31, 2009




The
Company granted 750,000 of warrants during the year ended April 30, 2003 in
connection with acquisition of MBS in February 2003.  The warrants
granted have an original expiration date on January 31, 2004, 750,000 of the
warrants were extended to and expired on July 31, 2006, and the remaining
750,000 warrants were extended to January 31, 2008.  These warrants
have expired.
 
 The
Company granted 75,685,880 warrants during the year ended April 30, 2008 and
granted 76,000,000 in June 2008 in with two funding by Vicis Capital Master
Funds.  Of the 75,685,880 warrants granted during the year ended April
30, 2008, 40,842,940 will expire on February 21, 2013 and the remaining
34,842,940 warrants expire on February 21, 2015. The 41,000,000 warrants granted
in June 24, 2008 and the 35,000,000 warrants granted in July 27, 2008 will
expire on June 25, 2015 and July 28, 2015 respectively.
 
 The
Company granted 74,984,980 warrants in December 2008 in connection the issuance
of a promissory note by Debt Opportunity Fund LLP.  The warrants
granted will expire on December 11, 2015.




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




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





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





During
the year ended April 30, 2005, the Company granted an aggregate of 986,840
options to Employees pursuant to 2001 Stock Option Plan, and all options were
exercised on the grant date (Note J). There are no employee stock options
pursuant to the 2001 Stock Option Plan outstanding at January 31,
2009.





Note
K- Deferred Financing Cost





On
December 19, 2008, the Company issued 6,816,816 warrants with an exercise price
of $0.05 per share by December 11, 2015, as part of the fees to secure a
$6,000,000 funding through the issuance of a promissory note.  Using
the effective interest method, the deferred financing cost was $59,538 as of
December 31, 2008 and is being amortized to interest expense.  As of
January 31, 2009, the total non-cash interest charged to operations amount to
$1,163 and $0 for the period year ended January 31, 2009 and 2008
respectively.  The aggregate fair value of the warrants was determined
with the assistance of a valuations consultant using the multinomial lattice
formula assuming no dividends, the stock would have no growth with an annual
volatility of 80%, reset events projected to occur 5% of the time at $0.04
generating an adjusted warrant exercise price of $0.0495.







17
 Table of Contents




ITEM2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS FOR THE NINE MONTHS ENDED JANUARY 31,
2009





This
report on Form 10-Q 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-Q.
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.





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
was 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 two wholly owned subsidiaries, Lutrex
Enterprises, Inc., an entity, which holds equipment and inventory for the
registrant, and Global Modular, Inc., a sales, marketing, manufacturing and
construction site work 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.





In the
quarter ending October 31, 2006, Global Modular was awarded a five year contract
with Victor Valley School District that contained a "piggyback clause.
This allows Global Modular to provide 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. This piggyback contract
includes all appropriate pricing parameters pertinent to Global's "permanent
modular construction" designs. Global Modulars' new piggyback contract 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.




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 2009, 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 2009 and into
2010.




18
 Table of Contents




The
following Management Discussion and Analysis should be read in conjunction with
the financial statements and accompanying notes included in this Form
10-Q.





Previous
Restatement of April 30, 2008 Balance Sheet (Unaudited)





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





The
accounting treatment previously applied resulted in the reporting of the
preferred stock in the net carrying amount of $2,021,574 and the incorrect
recognition of a $7,141,496 “Warrant” liability, both as of April 30, 2008; and
a related net financing expense of $6,459,362, after the offset a
“Mark-to-Market” gain.  Additional paid in capital had been adjusted
for the difference.  The restatement reversed each of the above
entries on the Company’s books.  After applying EITF’s 08-5 and 00-27,
the $3,484,294 face value of the related Series B Preferred Stock was fully
offset by the aggregate discounts for the effective beneficial conversion
feature of the preferred stock and the relative fair value of the
warrants.  After the accretion of the discount, the Series B Preferred
Stock had a carrying value of $394 and $8,963 at April 30, 2008 and October
31,2008 respectively.  The discount will continue to be amortized
until the February 21, 2010 mandatory redemption date of the Series B Preferred
Stock.




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





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




Effect of Adjustments on the
2008 Statement of Operations (Unaudited)





As
      Reported
                  
                  
                  Adjustments
                  
                  
                  As
      RestatedLoss
      from operations
                  
                  $
                  (1,537,923
                  )
                  
                  
                  -
                  
                  
                  $
                  (1,537,923
                  )Fair
      value of warrants issued in connection with Series B
    Preferred
                  
                  
                  (7,760,305
                  )
                  
                  
                  7,760,305
                  
                  
                  
                  -Unrealized
      change in fair value of warrants
                  
                  
                  1,300,943
                  
                  
                  
                  (1,300,943
                  )
                  
                  
                  -Interest
      (expense), net
                  
                  
                  (353,892
                  )
                  
                  
                  -
                  
                  
                  
                  (353,892
                  )Loss
      before provision for income taxes
                  
                  
                  (8,351,177
                  )
                  
                  
                  6,459,362
                  
                  
                  
                  (1,891,815
                  )Net
      loss
                  
                  
                  (8,447,177
                  )
                  
                  
                  6,459,362
                  
                  
                  
                  (1,987,815
                  )Preferred
      stock dividends, actual and imputed
                  
                  
                  202,686
                  
                  
                  
                  (132,606
                  )
                  
                  
                  70,080Net
      loss attributable to common shareholders
                  
                  $
                  (8,649,863
                  )
                  
                  $
                  6,591,968
                  
                  
                  $
                  (2,057,895
                  )Basic
      and diluted loss per common share
                  
                  $
                  (0.88
                  )
                  
                  $
                  (0.57
                  )
                  
                  $
                  (0.21
                  )




19
 Table of Contents




Effect of Related
Prospective Accounting Pronouncement





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





See
Critical Accounting Policies, Notes D and E to the condensed consolidated
financial statements for a further discussion of the Series B Preferred and the
Series C Preferred issued on June 26, 2008 as well as Part II, Item 2 this Form
10-Q





COMPARISON
OF THE THREE MONTHS ENDED JANUARY 31, 2009 TO THE THREE MONTHS ENDED
JANUARY 31, 2008





The
Company’s total revenues were $1,379,736 for the quarter ended January 31, 2009
compared to $547,103 for the same time period in 2008, an increase of
$832,633.  The Company began to ramp up its manufacturing operations
after securing $6,000,000 during the end of the quarter ending January 31,
2009.





The
Company’s cost of goods sold generally vary with revenues.  The gross
profit shown as a percentage of our revenues was 49% and 22% respectively, for
the quarter ended January 31, 2009 and 2008.  The Company had very
high gross profit margins for the quarter ended January 31, 2009 due to the
Company purchasing raw materials for the projects at a 50% discount from
material vendors that had filed for bankruptcy.





Total
operating expenses were $503,696 for the three months ended January 31, 2009
compared to $320,838 for the same time period in 2008.  The Company’s
administrative payroll and related costs increased by $111,551 when comparing
the third quarter of 2009 and 2008. The sixty percent increase in revenue
also caused an overall increase in operating expenses. The Company also
incurred a guaranty expense of $68,322 for amortization of the fair value of
warrants in the nine months ended January 31, 2009.


.


COMPARISON
OF THE NINE MONTHS ENDED JANUARY 31, 2009 TO THE NINE MONTHS ENDED JANUARY 31,
2008





Total
revenues from continuing operations decreased to $3,547,091 for the nine month
ended of January 31, 2009 from $5,462,669 for the nine months ended January 31,
2008. The Company began to increase it manufacturing operations in the last part
of the second quarter and continued the same rate of production during the third
quarter. The Company did not generate any revenue from heavy site construction
for the third quarter ended January 31, 2009, because the Company no longer
provided these services which had become unprofitable.





Cost of
goods sold from continuing operations was $2,121,592 and $4,462,038 respectively
for the nine months ended January 31, 2009 and 2008. The cost of goods sold from
continuing operations decreased because the Company got out of the heavy site
construction business which generated revenue but very low gross profit margins.
The Company also purchased the majority of raw materials used for production in
the third quarter ended January 31, 2009 at a 50% discount from various material
vendors that were in bankruptcy. The gross profit shown as a percentage of
revenues was 40% and 18% respectively, for the nine months ended January 31,
2009 and 2008





Total
operating expenses increased to $1,681,078 in the nine months ended January 31,
2009 from $1,079,066 in the nine months ended January 31, 2008. The operating
expenses increased due to legal fees and professional fees by $203,540 comparing
the nine months ended January 31, 2009 and January 31, 2008, which was
attributed to the professional consulting fees incurred in securing the funding
from Vicis Capital Master Fund.  The Company also had an increase of
$50,067 in insurance costs, and an increase of $234,954 in commissions, wages
and related payroll cost for the nine months ending January 31, 2009 as compared
to the nine months ended January 31, 2008.





Liquidity and Capital
Resources




As of
January 31, 2009, the Company had a working capital surplus of $8,484,662. Net
loss for the nine months ended January 31, 2009 was $540,479. The Company
generated a negative cash flow from operations of $4,205,647 for the nine-month
period ended January 31, 2009. The negative cash flow from operating activities
for the period is primarily attributable to the Company's net loss from
continuing operations adjusted for depreciation and amortization of $261,073,
amortization of debt discount of $25,649, amortization of fair value of warrants
of $27,775, an increase  in accounts receivable of $867,551, an
increase in inventory of $2,158,272, an increase in other assets of $782,767 and
an increase in accounts payable of $172,238.





Cash
flows used in investing activities for the nine-month period ended January 31,
2009 consisted of the acquisition of $97,031 of architectural plans used in
operations.





The
Company funded operations during the nine months ended January 31, 2009 from
proceeds from the sale Series C Preferred Stock of $1,500,000 and $6,000,000,
from the proceeds of a long term promissory note dated December 19, 2008. The
Company paid preferred stock dividends of $449,423 to the preferred
stockholders, reduced notes payable by $26,975 and reduced debt to stockholders
by $5,500.






20
 Table of Contents




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 (R), "Share Based Payment" In order to 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 needs for 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 believes it has sufficient capital resources to meet projected cash
flow needs through the next twelve months. However, if thereafter, we are not
successful in generating sufficient liquidity from operations or in raising
sufficient capital resources, on terms acceptable to us, this could have a
material adverse effect on our business, results of operations, liquidity and
financial condition.





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.




Inflation





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





Off-Balance Sheet
Arrangements





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





Critical Accounting
Policies





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





·
            Revenue
      Recognition·
            Hybrid
      equity instruments·
            Warrants
      issued for certain services·
            Inventories·
            Allowance
      for doubtful accounts·
            Lattice
      Model





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.







21
 Table of Contents




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





In the
event that the Company’s arrangements with its customers include more than one
product or service, the Company determines whether the individual revenue
elements can be recognized separately in accordance with Financial Accounting
Standards Board (FASB) Emerging Issues Task Force No. 00-21 (EITF 00-21), Revenue Arrangements with
Multiple Deliverables, EITF 00-21 addresses the determination of
whether an arrangement involving more than one deliverable contains more than
one unit of accounting and how the arrangement consideration should be measured
and allocated to the separate units of accounting.





In fiscal
years 2007, 2008 and 2009, the Company entered into several fixed-price
arrangements whereby the Company is to construct and install several modular
units for customers. Revenue from these construction-type fixed-price contracts
is recognized in accordance with SOP No. 81-1, "Accounting for Performance of
Construction-Type and Certain Production-Type Contracts", on the basis of the
estimated percentage of completion.





Under the
percentage-of-completion method, progress toward completion is measured by the
ratio of costs incurred to total estimated costs. Revenue and gross profit may
be adjusted prospectively for revisions in estimated total contract costs. If
the current estimates of total contract revenue and contract cost indicate a
loss, a provision for the entire loss on the contract is recorded in the period
in which it becomes evident. The total estimated loss includes all costs
allocable to the specific contract. Each construction contract is reviewed
individually to determine the appropriate basis of recognizing revenue.
Revisions to the estimates at completion are reflected in results of operations
as a change in accounting estimate in the period in which the facts that give
rise to the revision become known by management.




Hybrid Equity
Instruments





Redeemable
convertible preferred stock issued with common stock purchase warrants present
one of the most difficult areas in today’s accounting
environment.  Restatements such as the one described above and in
Notes A and D to the condensed consolidated financial statements have not been
uncommon in recent years.  The correct treatment of these instruments
requires careful analysis and the choice and application of the proper rules
encompassed by several accounting pronouncements as discussed in the
above-referenced notes.  Moreover these accounting rules continue to
evolve.  As an example, as indicated above when effective, EITF 07-5
will result in a reclassification to liability and related mark-to-market
accounting for the warrants issued with the Series B and C Preferred
Stock.





As
discussed in the restatement note, the Company initially miss-interpreted
certain clauses in the applicable February 2008 warrant agreements and also did
not correctly interpret the requirements of EITF 00-19.  Shortly after
filing its Form 10-KSB for the year ended April 30, 2008 the Company revised its
analysis of the Warrant Agreements and the applicability of EITF
00-19.  The Company retained a financial reporting consultant,
revisited the issue with its independent auditors and also consulted with the
Office of the Chief Accountant of the SEC.  Eventually the Company’s
auditors agreed with the Company’s  position that restatement was
required and Chief Accountant’s Staff advised they would not object to a
restatement on the basis of the facts presented to them.




Warrants issued for certain
services





The
Company has issued certain warrants in exchange for a continuing guarantee of
its surety bonds.  As the period of service is prospective for the
one-year term of the agreement the Company is charging the fair value of these
warrants proportionately over such one-year term.





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 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 January 31, 2009, we determined a reserve was not required against our
account receivables.







22
 Table of Contents




Employees




As of
January 31, 2009, the company had 75 employees. The Company anticipates the
number of employees will increase over the next six months. The Company does not
expect to have any collective bargaining agreements covering 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 and Global Modular. The Company has entered
into a three-year lease (including options for renewals) for the property at a
rate of $24,021 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.





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.





Lattice Valuation
Model





Beginning
in the quarter ended October 31, 2008, the Company is now using a lattice
valuation model to determine the fair value of warrants, with the assistance of
a valuation consultant. The lattice model values the warrants based on a
probability weighted discounted cash flow model. This model is based on future
projections that the warrant holder exercises it right to convert the warrants
for settlement of the features included within the instrument.. The Company uses
the model to analyze (a) the underlying economic factors that influence which of
these events will occur, (b) when they are likely to occur, and (c) the common
stock price and specific terms of the warrants such as interest rate and
exercise price that will be in effect when they occur. Based on the analysis of
these factors, the Company uses the model to develop a set of potential
scenarios. Probabilities of each scenario occurring during the remaining term of
the warrants are determined based on management's projections. These
probabilities are used to create a cash flow projection over the term of the
warrants and determine the probability that the projected cash flow will be
achieved.




Cautionary Factors that May
Affect Future Results and Market Price of Stock





Our
annual report on April 30, 2008 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.




Subsequent
Events





There
were no subsequent events that occurred since January 31, 2009




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.. 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.




23
 Table of Contents




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 GDIV. As of March 15, 2009, there were
approximately 15,369,885 shares of common stock outstanding, of which
approximately 9,380,104 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.





IMPLEMENTATION
OF SECTION 404 OF THE SARBANES-OXLEY ACT





We may
not be able to implement Section 404 of the Sarbanes-Oxley Act on a timely
basis. The SEC, as directed by Section 404 of the Sarbanes-Oxley Act,
adopted rules generally requiring each public company to include a report of
management on the company’s internal controls over financial reporting in its
annual report on Form 10-K that contains an assessment by management of the
effectiveness of the company’s internal controls over financial reporting. This
requirement first applied to our annual report on Form 10-K for the fiscal
year ended April 30, 2008. In addition, commencing with our annual report
for the fiscal year ending April 30, 2010 our independent registered accounting
firm must attest to and report on management’s assessment of the effectiveness
of our internal controls over financial reporting.





We have
in the past discovered, and may in the future discover, areas of our internal
controls that need improvement. How companies should be implementing these new
requirements including internal control reforms to comply with Section 404’s
requirements and how independent auditors will apply these requirements and test
companies’ internal controls, is still reasonably uncertain.





Upon
completion of a Section 404 plan, we may not be able to conclude that our
internal controls are effective.  Any failure to implement required
new or improved controls, or difficulties encountered in their implementation,
could negatively affect our operating results or cause us to fail to meet our
reporting obligations.






24
 Table of Contents




ITEM3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET
RISK





Not
applicable





ITEM 4. CONTROLS AND PROCEDURES





The
Company's management including the President, Chief Executive Officer and Chief
Financial Officer, have evaluated as of and within 45 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 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





ITEM1. LEGAL PROCEEDINGS





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





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





The
Company is subject to other 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.






25
 Table of Contents




ITEM2. UNREGISTERED SALE OF EQUITY SECURITIES AND USE OF
PROCEEDS





On August
12, 2008, the company filed a Form 8-K report to the SEC, which stated that the
company completed a private placement on June 26, 2008, and issued (a) its
Series C Preferred Stock having an aggregate original principal balance of
$1,750,000, (b) its Series 3 Warrants exercisable, in aggregate, for 35,000,000
shares of Common Stock, (c) Series BD-4 Warrants exercisable, in the
aggregate for 2,500,000 shares of Common Stock and (d) Series BD-5 Warrants
exercisable, in the aggregate for 3,500,000 shares of Common Stock (the “Series
C Offering”). The stated value of the Series C Preferred Stock converts into
Common Stock at a conversion price of ten cent ($.10) per share.  The
total cash paid for the Securities was $1,750,000 in cash.





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




The Form
8-K  report filed  to the SEC on August 12,
2008,  also stated that on July 29, 2008, the Company entered into a
Guarantee Fee, Indemnification, and Security Agreement with Guarantors pursuant
to which in consideration for the continuing guarantee by the Guarantors of
Surety Bonds issued to the Company, the Company issued  Warrants
exercisable, in aggregate, for 35,000,000 shares of Common Stock of the Company
at an exercise price of $.10 per share, exercisable for the 7 year period from
the date of issuance.




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




On
February 5, 2009, the Company filed a Form 8-K report to the SEC, which stated
that on December 19, 2008, the Company entered into a Loan and Securities
Purchase Agreement and received $6,000,000 in cash and issued (a) its series 4
warrants, in aggregate for 68,198,164 shares of Common Stock and (b) Series BD-6
Warrants exercisable, in aggregate for 6,816,816 shares of Common
Stock.




The
issuance of the Series 4 Warrants and the issuance of the Series BD-6
Warrants were exempt from the registration requirements of the Securities
Act of 1933, as amended, pursuant to Section 4(2) of the Act for transactions
not involving a public offering and Rule 506 promulgated by the United States
Securities and Exchange Commission under the Securities Act of 1933




The Form
8-K report filed to the SEC on February 5, 2009, also stated that on December
17, 2008, the Company entered into a Stock Option Agreement with one of its
executives, which allows the executive to purchase 68,164,164 shares of Common
Stock at an exercise price of $0.05 per share for a period of seven years
provided that the Company completely satisfies in full all principal and
interest on a certain promissory note dated on February 5, 2009 for
$6,000,000.




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




ITEM3. DEFAULTS UPON SENIOR SECURITIES





None
during this reporting period.





ITEM4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY
HOLDERS




None
during this reporting period.




ITEM5. OTHER INFORMATION





None
during this reporting period.




ITEM6. EXHIBITS




Exhibit No.
            
            Description31.1
            
            Certification of Phillip Hamilton Pursuant to Section
      302 of the Sarbanes-Oxley Act of 2002.31.2
            
            Certification of 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 Adam DeBard Pursuant to Section 906 of
      the Sarbanes-Oxley Act of
2002.







26
 Table of Contents




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 18, 2009
              By:
              /s/ Phillip
      HamiltonChairman
      and Chief Executive Officer
                (Pal
      B  (Principal Executive
Officer





Date:  March
      18, 2009
              By:
              /s/ Adam
      DeBardChief   Operating
      Officer (Principal
                ccou   Accounting
      and Financial Officer)









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