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Response Letter to 10-KSB Comments 3-16-05

GLOBAL
DIVERSIFIED INDUSTRIES, INC.

1200
AIRPORT DRIVE

CHOWCHILLA,
CA 93610

559-665-5800

March 9, 2005

VIA
FEDERAL EXPRESS AND FAX

Mr. Josh
Forgione

Division
of Corporate Finance

U.S.
Securities & Exchange Commission

Washington,
D.C. 20549

Re:
Global Diversified Industries, Inc.

File No.
333-8321

 Form
10-KSB for Year Ended April 30, 2004

Forms
10-QSB for quarters ended October 31, 2004

Dear Mr.
Forgione:

This will
acknowledge receipt of your letter of comment dated March 7, 2004 with regard to
the above referenced filings. Our responses, which reference your comment
numbers, follow.

Comment
1- Response

In
connection with its primary business activity of designing, manufacturing and
marketing re-locatable modular structures, the Registrant is required by statute
and regulation to have all its plans, drawings, and related specifications
certified by a registered architect and engineer in the states the Registrant
manufactures markets its modular structures. The certification is represented by
a “seal” on the plans. The Registrant is prohibited by state law from
manufacturing a modular structure, whose plans have not been “sealed” by a state
registered architect and engineer. These plans are specific to each structure
and any modifications to the structure require a re-certification.

The plans
have a useful life in excess of one year and, accordingly, the direct costs of
the plans (comprised of consideration paid to third parties, such as architects,
engineers, designers, etc.) have been capitalized. The Registrant does not
capitalize any internal costs associated with the development of the
plans.

Based
upon the Registrant’s experience in the industry and the useful life of past
modular building plans, the Registrant estimates the useful life of a plan is
between 15 and 20 years. While the Registrant believes the useful life of plans
are in excess of 15 years, the Company has adopted a policy of amortizing the
costs ratably over a 10 year period1 .

We have
considered EITF 99-5 Accounting for Pre-Production Costs Related to Long-Term
Supply Arrangements and believe the guidance is not directly applicable to our
accounting for the costs of engineering and architectural plans since the
Registrant generally does enter into long term supply arrangements with its
customers. However EITF 99-5 supports the Registrant’s accounting for
architectural and engineering plans should be capitalized2 .

The
Registrant believes its policy accounting for costs incurred in connection with
developing its architectural and engineering plans is reasonable and complies
with current accounting principles generally accepted in the US.

In future
filings, the Registrant will include a footnote to the financial statements
describing the Company’s policy accounting for the asset.

Comment
2- Response

On July
14, 2003 the note holder was granted an option to convert a total of $400,000 of
principal balance of the notes to the Company’s 2,666,666 shares of preferred
stock. The Registrant considered July 14, 2003 as the commitment
date3 .

Each
share of preferred stock is convertible at the option of the holder into 10
shares of the Company’s common stock ,aggregating 26,666,667 shares of common
stock, representing an amount in excess of 20% of the Company’s issued and
outstanding common stock . The note
holder was not granted registration rights in connection with the
modification.

The
Company consulted the provisions of EITF 98-5 and 00-27 in order to determine if
the transaction created a beneficial conversion feature.

In
accordance with EITF
98-5, Accounting for Convertible Securities with Beneficial Conversion Features
or Contingently Adjustable Conversion Ratios, the
Registrant evaluated whether the embedded conversion option within the debt
instruments issued were beneficial (i.e., had intrinsic value) to the holder the
date the terms of the debt were agreed (“commitment date”).

Paragraph
5 of EITF 98-5, Accounting for Convertible Securities with Beneficial Conversion
Features or Contingently Adjustable Conversion Ratios states in part,
“ that
embedded beneficial conversion features present in convertible securities should
be valued separately at issuance. The embedded beneficial conversion feature
should be recognized and measured by allocating a portion of the proceeds equal
to the intrinsic value of that feature to additional paid-in capital. That
amount should be calculated at the commitment date as the difference between the
conversion price and the fair value of the common stock or other securities into
which the security is convertible, multiplied by the number of shares into which
the security is convertible (“intrinsic value”).

EITF 98-5
defines fair value as “the amount at which the common stock and/or other
securities could be bought or sold in a current transaction between willing
parties, that is, other than in a forced or liquidation sale. Quoted market
prices in active
markets are the
best evidence of fair value and should be used as the basis for the measurement,
if available. That quoted price should not be adjusted to reflect
transferability restrictions, large block factors, avoided underwriter's fees,
or time value discounts. If a quoted market price is not available, the estimate
of fair value should be based on the best information available in the
circumstances”.

The
Registrant’s common stock is quoted on the over the counter Bulletin Board,
which is considered a highly inefficient and inactive market. The Registrant’s
preferred stock has not been registered with the Securities & Exchange
Commission, and accordingly, has no quoted market.

As
reflected below, during the 10 trading days prior to July 14, 2003, the
Company’s registered common shares averaged trading volume of approximately
32,000 shares per day , and did not trade at all during two of the days during
this period.

      Date

      Open

      High

      Low

      Close

      Volume

      14-Jul-03

      $0.04

      $0.04

      $0.01

      $0.02

      342,000

      11-Jul-03

      0.04

      0.04

      0.03

      0.03

      253,700

      10-Jul-03

      0.04

      0.04

      0.04

      0.04

      1,700

      9-Jul-03

      0.04

      0.04

      0.04

      0.04

      10,000

      8-Jul-03

      0.04

      0.04

      0.04

      0.04

      4,000

      7-Jul-03

      0.04

      0.04

      0.04

      0.04

      20900

      3-Jul-03

      0.04

      0.04

      0.04

      0.04

      0

      2-Jul-03

      0.04

      0.04

      0.04

      0.04

      0

      1-Jul-03

      0.04

      0.04

      0.04

      0.04

      14,500

      30-Jun-03

      0.04

      0.04

      0.04

      0.04

      1,900

In
accordance with EITF 98-5, the Registrant determined the fair value of
unregistered preferred stock. Given the significant block of potential common
stock the holder was entitled to upon conversion and the restrictive nature of
the securities, pursuant to SEC Rule 144, the Company believes the fair value of
the preferred shares for purposes of calculating the beneficial conversion
feature was the average price of the Company’s common stock’s market price at
that date , less a discount of 25% for the preferred share’s lack of
registration, restrictions on the underlying common stock and the size of the
potential size of the block of sock.

Accordingly,
the Registrant determined the fair value of the underlying common stock was
$.01125 per share. This estimate was based upon the average price of the
Company’s common stock on July 14, 2003(the mid-point of a low price per share
of $.01 and close of $.02 per share), less the 25% discount.

Utilizing
a fair value of $.01125 per share, the Company computed the beneficial
conversion feature as follows:

26,666,667
shares of common stock x $.01125 /share = $300,000

Accordingly,
the Registrant believes the note holders had no intrinsic value, and therefore
did not record a beneficial conversion feature in connection with the issuance
of the convertible debt during the year ended April 30, 2004.

Comment
3 Response:

As of
April 30, 2004, the Registrant’s $1,726,600 in subscription payables comprised
of the following:

      Receipt
      of cash in exchange for 9,444,444 shares of common stock to be issued

      $
      850,000

      Exchange
      of previously incurred debt for 67,208,333 shares of common stock to be
      issued

      $
      700,000

      Exchange
      of property and equipment for 1,000,000 shares of common stock to be
      issued

      $
      160,000

      Miscellaneous
      stock subscription

      $
      16,600

The terms
of the common stock subscribed to for cash are as follows:

On March
4, 2004, the Registrant entered into a Stock Purchase Agreement with a
shareholder, whereby the shareholder subscribed to 9,444,444 shares of the
Registrant’s restricted common stock at $0.09 per share. The shareholder
deposited an aggregate of $850,000 into the Registrant’s bank account and the
Registrant shall sell, assign, and transfer the common shares subscribed to the
shareholder.

The terms
for common stock issued in exchange for previously incurred debt are as
follows:

In June
2002, the Registrant agreed to pay and the Registrant’s President and Chief
Executive Officer agreed to accept $70,000 per month in the form of the
Company's restricted common stock from June 2002 through March 2003 in exchange
for a note payable due to the Registrant’s President and Chief Executive Officer
in the aggregate amount of $700,000.

Payment
schedule and common shares subscribed pursuant to the agreement are as
follows:

      Date
      of Subscription

      Dollar
      Amount

      Price
      Per Share

      Number
      of Shares

      06/10/02

      $
      70,000

      $0.02

      3,500,000

      07/8/02

      70,000

      0.005

      14,000,000

      08/08/02

      70,000

      0.005

      14,000,000

      09/09/02

      70,000

      0.01

      7,000,000

      10/08/02

      70,000

      0.01

      7,000,000

      11/08/02

      70,000

      0.012

      5,833,333

      12/09/02

      70,000

      0.035

      2,000,000

      01/08/03

      70,000

      0.028

      2,500,000

      02/08/03

      70,000

      0.016

      4,375,000

      03/08/03

      70,000

      0.01

      7,000,000

      Total

    $700,000

    67,208,333

The terms
of the common stock subscribed in exchange for property and equipment are as
follows:

On March
22, 2004, the Registrant entered into an Asset Purchase Agreement with Grossman
Construction Company to acquire equipment and buildings for a total price of
$200,000. The Registrant agreed to pay $40,000 in cash and issue to Grossman
Construction Company an aggregate of 1,000,000 shares of its restricted common
stock, valued at $160,000.

Miscellaneous
stock subscription: Prior to the year ended April 30, 2001, the Registrant
recorded receipt of $16,600 of cash from investors to subscribe for the
Registrant’s common stock. The Registrant did not have a signed subscription
agreement and the investor (unknown) has never demanded the Registrant for the
issuance of shares.

None of
the investors or parties to the subscription agreements have the ability to
cancel, modify, or otherwise change the agreements under which they subscribed
to the shares.

The
Registrant anticipate it will issue the shares subscribed prior to its current
fiscal year end of April 30, 2005

The
Registrant believes its policy accounting for equity-based transactions is
reasonable and complies with current accounting principles generally accepted in
the US.

We thank
you in advance for your assistance in this matter, and should you have any
questions, do not hesitate in calling me.

Sincerely,

GLOBAL
DIVERSIFIED INDUSTRIES, INC.

__________________________

Phillip
Hamilton

President

1
Paragraph 12, FAS No. 142

2
Paragraph 3 , Issue 2, EITF 99-5

3
Commitment date s defined by Paragraph of EITF
98-5