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CHDT -- 08/25/2006 10:04 EDT

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PieSky   Friday, 08/25/06 10:06:58 AM
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CHDT -- 08/25/2006 10:04 EDT
China Direct Reports Revenue Increase of 1,520%, Revenue Increases 58% Sequentially from Q2 2006 over Q1 2006




Q2 2006 Revenue of $3.97 Million and Net Income of $374,885 on delivered orders
COOPER CITY, Fla., Aug. 25 /PRNewswire-FirstCall/ -- China Direct Trading Corp. (OTC Bulletin Board: CHDT.OB) today announced consolidated results for the second quarter of FY2006 ended June 30, 2006, and the filing of its Form 10-Q for that fiscal quarter with the U.S. Securities and Exchange Commission.

FINANCIAL RESULTS: Reported consolidated gross revenues for the quarter ending June 30, 2006, were $3,969,957, an increase of 1,520% from the $261,016 in gross revenues reported for the second quarter of FY2005 and a sequential increase of 58% over first quarter FY2006 gross revenues of $2,511,809. The increase in gross revenues is primarily due to growth in power generator sales by Complete Power Solutions, LLC, a 51%-owned China Direct subsidiary.

Total sales orders reached $6,800,000 Q2 FY2006, of which $3.97 million could be recognized under applicable GAAP as second quarter FY2006 gross revenues.

Profitability continued to accelerate as second quarter FY2006 net income rose to $374,885 over sequential first quarter FY2006 net income of $42,718, versus a loss of $(18,097) for the corresponding second quarter of FY2005.

Cash position increased to $873,211 in Q2 2006 versus $9,090 at the end of the 2005 calendar year.

"Our profitability is increasing and our ability to sell, contract and complete power generator installations is accelerating, as evidenced by the rapid increase in completed orders over the second quarter," said Howard Ullman, CEO/President of China Direct. "The higher investment and associated costs in building out our infrastructure in Q1 FY2006 are now paying off and we will continue to strive to drive cost efficiencies to seek increased profits."

INVESTOR TELECONFERENCE: China Direct will host an investor teleconference to discuss second quarter FY2006 results and update investors on current corporate and subsidiary initiatives on Monday, August 28, 2006 at 10:00 AM Eastern Time. To participate in the call, the dial-in number is (319) 632-1100, then enter access code 260372 and push the pound (#) key. A replay of the call will be available for two weeks and will be accessible at (641) 985-5006, access code 260372#. A replay of the call will also be available from the www.chdt.us web site one day following the call.


Balance Sheet and Consolidated Statement of Operations Financial Tables
follow:



CHINA DIRECT TRADING CORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS

(Unaudited)
June 30, December 31,
2006 2005
Assets:

Current assets:
Cash $873,211 $9,090
Accounts receivable - net 3,856,521 4,000
Advances 1,200 -
Inventory 659,325 11,760
Prepaid expense 49,134 -

Total Current Assets 5,439,391 24,850

Fixed assets:
Communications equipment 12,941 -
Computer equipment 29,898 4,965
Computer software 6,724 -
Transportation equipment 365,303 -
Machinery and equipment 103,296 -
Furniture and fixtures 43,945 -
Leasehold improvements 19,413 -
Less: Accumulated Depreciation (93,506) (2,132)

Total Fixed Assets 488,014 2,833

Other non-current assets:
Deposits 89,610 1,775
Goodwill 1,567,214 -

Total other non-current assets 1,656,824 1,775

Total assets $7,584,229 $29,458



CHINA DIRECT TRADING CORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(Continued)

(Unaudited)
June 30, December 31,
2006 2005
Liabilities and Stockholders' Deficit:

Current Liabilities:
Accounts payable, trade $763,584 $35,666
Accrued expenses 549,161 496,783
Customer deposits 1,970,544 24,891
Notes payable - current maturities 80,535 -
Related party payables 26,011 16,011
Total Current Liabilities 3,389,835 573,351

Long-Term Liabilities:
Notes payable - less current maturities 284,296 -
Stockholder loans payable 747,500 -
Investor loans payable 710,100 -
Total Long-Term Liabilities 1,741,896 -

Total Liabilities 5,131,731 573,351

Minority Interest 741,788 -

Stockholders' Deficit:
Preferred Stock, par value $.001 per share
Authorized 100,000,000 shares,
Issued 1,265,000 shares at
June 30, 2006 and 8,000 shares
at December 31, 2005 1,265 8
Common Stock, par value $.0001 per share
Authorized 600,000,000 shares,
Issued 543,122,028 Shares at
June 30, 2006 and December 31, 2005 54,313 54,313
Additional paid-in capital 2,668,408 832,665
Accumulated deficit (1,013,276) (1,430,879)

Total Stockholders' Deficit 1,710,710 (543,893)

Total Liabilities and
Stockholders' Deficit $7,584,229 $29,458



CHINA DIRECT TRADING CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS

(Unaudited) (Unaudited)
For the Three Months For the Six Months
Ended June 30, Ended June 30,
2006 2005 2006 2005

Revenues $3,969,957 $261,016 $6,481,766 $465,370
Cost of Sales (2,160,684) (155,101) (4,043,229) (327,376)
Gross Profit 1,809,273 105,915 2,438,537 137,994

Operating Expenses:
Sales and marketing 81,773 4,353 173,559 6,126
Compensation 738,923 50,000 896,340 100,000
Professional fees 34,039 36,282 65,907 49,095
Other General and
administrative 203,884 33,388 362,968 85,909
Total Operating
Expenses 1,058,619 124,023 1,498,774 241,130

Net Operating
Income (Loss) 750,654 (18,108) 939,763 (103,136)

Other Income (Expense):
Interest income 2,150 11 2,150 11
Interest expense (26,715) - (41,724) (740)

Net Income (Loss) before
minority interest 726,089 (18,097) 900,189 (103,865)
Minority interest (351,204) - (482,586) -

Net Income (Loss) $374,885 $(18,097) $417,603 $(103,865)

Weighted Average
Shares Outstanding 543,122,028 517,232,972 543,122,028 516,348,305

Income (Loss) per
Common Share $- $- $- $-


About China Direct: China Direct (www.chdt.us) is a holding company engaged through its operating subsidiaries in the following business lines: Overseas Building Supply (OBS) is engaged in manufacturing, distribution and logistics of building materials including but not limited to generators, roof tiles, interior doors, and insulation materials. CPS (www.completepower247.com) is a majority-owned subsidiary engaged in turnkey solutions for standby commercial and residential power generation. Souvenir Direct Inc. (SDI) is engaged in product development, manufacturing, distribution, logistics and product placement into mass retail of souvenir and gift items in 29 countries. None of the web site URLs listed in this press release are incorporated into or are part of this press release

Forward-Looking Statements: This press release, including any financial information and projections, contain "forward-looking statements" as that term is defined in the Private Securities Litigation Reform Act of 1995. These statements are based on China Direct's and its subsidiaries' managements' current expectations and assumptions, and involve risks and uncertainties. Such expectations and assumptions may prove to be faulty or incorrect and actual results may differ significantly, materially from those anticipated results set forth in such statements. No forward-looking statement is or can be guaranteed. Current revenues and revenue growth is not a reliable indicator of future financial results and should not be relied upon by investors as such an indicator. The sale of power generators can be affected by a number of factors that are beyond the control of China Direct or CPS, including seasonal sales cycles, availability of affordable inventory financing, predatory pricing by competitors and weather conditions. China Direct and CPS undertake no obligation to publicly update any forward-looking statement, whether as a result of new information, future events or otherwise. Forward-looking statements in this press release and risks associated with any investment in China Direct, which is a "penny stock" company (and as such is deemed a "highly risky investment") should be evaluated together with the many uncertainties that affect our business, particularly those stated in the cautionary statements and risk factors in current and future China Direct SEC Filings, which statements we hereby incorporate by reference herein. Such risks include, but are not limited to, foreign, national, state and local government regulation, actions or initiatives, Changes in general economic conditions, consumer spending habits, or the sales environment which, in each case, could reduce demand for our products; Risks as a distributor of products produced by other companies; The risk our outstanding litigation could result in settlements or judgments which are material to us; Dilution from any potential issuance of common or convertible preferred stock or convertible debt in connection with financings or acquisition activities; and Risks that we may not realize or anticipate from the expected increased sales and profits and other benefits from CPC.

SOURCE China Direct Trading Corporation




CONTACT: Rich Schineller of China Direct Trading Corporation, +1-941-918-1913, or rich@chdt.us
Web site: http://www.completepower247.com




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