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Global SEC Response ltr #2 3-31-05

GLOBAL
DIVERSIFIED INDUSTRIES, INC.

1200
AIRPORT DRIVE

CHOWCHILLA,
CA 93610

559-665-5800

March 28,
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 22, 2004 with regard
to the above referenced filings. Our responses, which reference your comment
numbers follow.

Comment
1- Response

The
Registrant has historically capitalized as an intangible asset the costs in
connection with the acquisition of engineering plans and drawings used in
designing and developing its re-locatable modular structures. The assets are an
integral part of the Company’s continuing operations and without appropriately
certified plans, the Company would cease to exist. The intangible assets are
recorded at cost, and the Company does not capitalize any internally generated
costs in connection with the accounting for the assets.

The
amortization of the cost of the intangible assets allocates the cost as an
expense over the useful life of the asset. This process of “matching” is an
important element in the determination of the Registrant’s periodic net
income.

The
Company has based its policy for accounting for the costs of plans and drawings
on FAS 142 . The following are some of the basic principles upon which
accounting for intangible assets in accordance with FAS 142 is
based:

    ·

      Identifiably

    ·

      Manner
      of acquisition

    ·

      Determinate
      or indeterminate life

    ·

      Transferability

    ·

      Cost
      of intangibles

Based
upon the Registrant’s past experience, the intangible assets comprising its
architectural and engineering costs have the following
characteristics:

    ·

      Useful
      life in excess of one year

    ·

      Separately
      identifiable with a reasonably descriptive name

    ·

      The
      assets are purchased

    ·

      The
      assets have a determinate life

    ·

      The
      assets can be transferred

Accordingly,
the Registrant considers the costs incurred to be intangible assets as defined
by generally accepted accounting principles1 .

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. The Registrant typically has incurred the architectural and
engineering costs before the contracts are entered into with its customers. The
Registrant is required to have plans that have been pre-checked by the State of
California in order to provide bids to their customers2 .

The
Registrant acknowledges that intangible assets in general have a high degree of
uncertainty concerning future economic benefits. As a result, the Registrant has
a policy of periodically testing all long-lived assets, including intangible
assets with determinate lives, to determine if their carrying amounts exceeds
their fair values3 .

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

The
Registrant considered the following facts and circumstances in determining
whether the transaction created a
beneficial conversion feature.

    ·

      The
      Registrant noted that the closing price of its common stock was $.02 on
      July 14, 2003 (the commitment date).

    ·

      Average
      daily volume of shares traded during the nine (9) preceding trading days
      was approximately 34,000 shares per day

    ·

      The
      Company’s book value at April 30, 2003 was $.012 per
  share.

    ·

      The
      note holder was given the right to convert it debt is into 26,666,667
      shares of the Company’s restricted common stock

    ·

      The
      note holder had no registration rights in connection with the underlying
      shares of common stock (demand or otherwise)

    ·

      The
      note holder could sell the shares in a private transaction under SEC Rule
      144, however the number of shares transacted would have been over 780
      times the average daily volume at the time of the
    transaction.

    ·

      The
      Registrant’s common stock trades in a Dealer Market (OTC Bulletin Board)
      and not in an exchange or auction market (e.g., NYSE, AMEX)

Based
upon the above facts and circumstances, the
Registrant determined the fair value Company’s common stock could not be
determined solely using the quoted market prices, as required under EITF 98-5,
because in the Company’s judgment, the market for the Company’s registered
shares was not active as contemplated by the pronouncement and as defined in the
normal course of business . The Registrant’s accounting policies define an
active market for a security as a continuously
changing, intense, energetic, and vigorous environment 4 . In
addition market quotations that are obtained from any market other than the
exchange market are generally not as precise or as reliable as the exchange
market quotations5 .

Clearly,
a security which averages a daily volume of .2 % of the Company’s reported
public float and averaged less than 5,000 shares of trading in the five days of
out the previous nine days prior to July 14 2003 ( and on two days did not trade
at all) is not an active market for purposes of pricing the Company’s
securities, as defined and contemplated by the members of the Task Force.

In
summary, as a result of the above facts, and the best information available in
the circumstances, the Registrant utilized what it believes to be commercially
reasonable means in valuing the underlying shares at $.0015 per share (a
discount of 25% from the closing price of $.02 per share).

Based
upon a fair value of $.0015 per share, the Company computed the beneficial
conversion feature as follows:

26,666,667
shares of common stock x $.015 /share = $400,000

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.

The
Registrant believes its policy accounting for beneficial conversion features
imbedded in its equity and debt securities is reasonable and complies with
current accounting principles generally accepted in the US.

Comment
3 Response:

The
Registrant confirms our stock subscription agreements do not have any provisions
whatsoever whereby the investor or counter party may elect to have their
consideration refunded or liability settled in cash.

Initially,
the Registrant delayed issuance of the shares in order to conserve its limited
cash resources (i.e., incurring the costs of legal and stock transfer agent
fees).

Subsequently,
the issue was overlooked and the Registrant will ask its new legal counsel to
ensure the shares are issued prior to the close of the Company’s current fiscal
year.

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.

/s/
Phillip O. Hamilton

__________________________

Phillip
O. Hamilton

Chairman
& CEO

1    Statement
of Financial Accounting Concepts No. 6: Elements of Financial Statements,
Paragraphs 25-28

2 See
typical certification of relocatable building as described in letter dated
November 10, 2003 addressed to Registrant from State of California, Department
of General Services, Division of State Architect enclosed

3 FAS No.
144

4 The
American Heritage® Dictionary of the English Language, Fourth
Edition

5 FASB
Staff Implementation Guidance - Derivatives and Hedging Training Manual

Summary
of Derivative Types Part 1: Valuation Concepts and the Term Structure of
Interest Rates   Determination of Fair
Value