UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20549

                                   FORM 10-QSB


(Mark One)
       [X]   QUARTERLY REPORT UNDER SECTION 13 OR 15(D) OF THE
                         SECURITIES EXCHANGE ACT OF 1934

                  For the quarterly period ended: June 30, 2006
                   -------------------------------------------

             [ ] TRANSITION REPORT UNDER SECTION 13 OR 15(D) OF THE
                                  EXCHANGE ACT

                 For the transition period from ______ to ______

                        Commission file number 000-28831
         --------------------------------------------------------------

                        China Direct Trading Corporation
       -------------------------------- ---------------------------------
                     (Exact name of small business issuer as
                            specified in its charter)

                          Florida                 84-1047159
--------------------------------------------------------------------------------
                   (State or other jurisdiction (IRS Employer
              of incorporation or organization) Identification No.)

            10400 Griffin Road, Suite 109, Cooper City, Florida 33328
                    (Address of principal executive offices)

                                 (954) 252-3440
                            Issuer's telephone number


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


                APPLICABLE ONLY TO ISSUERS INVOLVED IN BANKRUPTCY
                   PROCEEDING DURING THE PRECEDING FIVE YEARS

         Check whether the registrant  filed all documents and reports  required
to be  filed  by  Section  12,  13 or  15(d)  of  the  Exchange  Act  after  the
distribution of securities under a plan confirmed by a court. Yes ----- No -----

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

                      APPLICABLE ONLY TO CORPORATE ISSUERS

         State the number of shares  outstanding of each of the issuer's classes
of common equity,  as of the latest practical date: June 30, 2006  Approximately
543,122,028 shares

         Transitional Small Business Disclosure Format (check one).
Yes      ;  No   X
    ----       -----










































<PAGE>



                                     PART I

ITEM 1.  FINANCIAL STATEMENTS

                CHINA DIRECT TRADING CORPORATION AND SUBSIDIARIES
                           CONSOLIDATED BALANCE SHEETS


<TABLE>
<CAPTION>
                                                                                (Unaudited)
                                                                                  June 30,          December 31,
                                                                                    2006                2005
                                                                             ------------------  ------------------
Assets:

Current assets:
<S>                                                                          <C>                 <C>
   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
                                                                             ==================  ==================
</TABLE>








<PAGE>



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

<TABLE>
<CAPTION>
                                                                                (Unaudited)
                                                                                  June 30,          December 31,
                                                                                    2006                2005
                                                                             ------------------  ------------------
Liabilities and Stockholders' Deficit:

Current Liabilities:
<S>                                                                          <C>                 <C>
   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
                                                                             ==================  ==================
</TABLE>




See accompanying notes.


<PAGE>



                CHINA DIRECT TRADING CORPORATION AND SUBSIDIARIES
                      CONSOLIDATED STATEMENTS OF OPERATIONS

<TABLE>
<CAPTION>
                                                         (Unaudited)                            (Unaudited)
                                                    For the Three Months                     For the Six Months
                                                       Ended June 30,                          Ended June 30,
                                            -------------------------------------   -------------------------------------
                                                   2006               2005                2006                2005
                                            ------------------  -----------------   -----------------  ------------------

<S>                                         <C>                 <C>                 <C>                <C>
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              $                -  $               -   $               -  $                -
                                            ==================  =================   =================  ==================
</TABLE>


See accompanying notes.


<PAGE>



                CHINA DIRECT TRADING CORPORATION AND SUBSIDIARIES
                      CONSOLIDATED STATEMENTS OF CASH FLOWS

<TABLE>
<CAPTION>
                                                                                   (Unaudited)
                                                                               For the Six Months
                                                                                 Ended June 30,
                                                                      -------------------------------------
                                                                            2006                2005
                                                                      -----------------  ------------------
CASH FLOWS FROM OPERATING
ACTIVITIES:
Continuing operations:
<S>                                                                   <C>                <C>
   Net Income (Loss)                                                  $         417,603  $         (103,865)
Adjustments necessary to reconcile net loss
   to net cash used in operating activities:
      Stock issued for accrued compensation                                           -             200,000
      Stock issued for expenses                                                       -               9,000
      Depreciation                                                               62,454                 448
     Minority interest in income                                                482,586                   -
     (Increase) decrease in advances                                             (1,200)              3,061
     (Increase) decrease in accounts receivable                              (3,142,771)                  -
     (Increase) decrease in inventory                                          (440,317)                  -
     (Increase) decrease in prepaids                                            (49,134)                  -
     (Increase) decrease in deposits                                            (69,710)                  -
      Increase (decrease) in accounts payable                                   705,138              (1,171)
      Increase (decrease) in accrued expenses                                    36,367            (108,079)
      Increase (decrease) in deposits from customers                          1,618,886                   -
                                                                      -----------------  ------------------
  Net Cash Used in continuing operations                                       (380,098)               (606)
                                                                      -----------------  ------------------

CASH FLOWS FROM INVESTING
ACTIVITIES:
Purchase of fixed assets                                                       (188,098)                  -
                                                                      -----------------  ------------------
Net cash provided by (used) investing activities                               (188,098)                  -
                                                                      -----------------  ------------------

CASH FLOWS FROM FINANCING
ACTIVITIES:
Cash acquired in acquisition                                                     82,373                   -
Loan proceeds                                                                    66,011                   -
Note payments                                                                   (21,151)                  -
Stockholder loan proceeds                                                       750,000                   -
Investor loan proceeds                                                          720,100                   -
Shareholder loan repayments                                                    (165,016)                  -
                                                                      -----------------  ------------------
Net Cash Provided by Financing Activities                                     1,432,317                   -
                                                                      -----------------  ------------------

Net (Decrease) Increase in
  Cash and Cash Equivalents                                                     864,121                (606)
Cash and Cash Equivalents
  at Beginning of Period                                                          9,090              77,503
                                                                      -----------------  ------------------
Cash and Cash Equivalents
  at End of Period                                                    $         873,211  $           76,897
                                                                      =================  ==================
</TABLE>




<PAGE>



CHINA DIRECT TRADING CORPORATION AND SUBSIDIARIES
                      CONSOLIDATED STATEMENTS OF CASH FLOWS
                                   (Continued)



<TABLE>
<CAPTION>
                                                                                (Unaudited)
                                                                             For the Six Months
                                                                              Ended June 30,
                                                                   ---------------------------------------
                                                                          2006                2005
                                                                   ------------------- -------------------

SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:
Cash paid during the period for:
<S>                                                                <C>                  <C>
  Interest                                                         $            41,724  $              740
  Franchise and income taxes                                       $                 -  $                -
</TABLE>

SUPPLEMENTAL DISCLOSURE OF NON-CASH INVESTING AND FINANCING ACTIVITIES:

         On January 27, 2006, the Company entered into a Purchase Agreement (the
"Purchase  Agreement")  with Complete Power Solutions  ("CPS") pursuant to which
the Company  acquired 51% of the member  interests  of CPS for a purchase  price
consisting of the payment of $637,000 in cash and the delivery of 600,000 shares
of  Company's  Series A  Convertible  Preferred  Stock (the  "Series A Preferred
Stock") having a stated value of $1,200,000.






















                             See accompanying notes.




<PAGE>






                CHINA DIRECT TRADING CORPORATION AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE 1 - ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

         This  summary  of   accounting   policies  for  China  Direct   Trading
Corporation  and  Subsidiaries  is  presented  to  assist in  understanding  the
Company's  financial  statements.  The accounting  policies conform to generally
accepted  accounting  principles  and  have  been  consistently  applied  in the
preparation of the financial statements.

Interim Reporting

         The unaudited financial  statements as of June 30, 2006 and for the six
month  periods  ended  June  30,  2006  and  2005  reflect,  in the  opinion  of
management,  all adjustments  (which include only normal recurring  adjustments)
necessary to fairly state the financial  position and results of operations  for
the six  months.  Operating  results for  interim  periods  are not  necessarily
indicative of the results which can be expected for full years.

Organization and Basis of Presentation

         China Direct Trading  Corporation  (formerly  "CBQ,  Inc."),  a Florida
corporation, was initially incorporated September 18, 1986 under the laws of the
State of Delaware under the name "Yorkshire Leveraged Group, Incorporated",  and
then  changed  its  situs  to  Colorado  in  1989  by  merging  into a  Colorado
corporation,  named "Freedom Funding,  Inc.". Freedom Funding, Inc. then changed
its name to  "CBQ,  Inc." by  amendment  of its  Articles  of  Incorporation  on
November 25,  1998.  In May 2004,  the Company  changed its name to China Direct
Trading  Corporation and reincorporated  from the State of Colorado to the State
of Florida.

         Souvenir  Direct,  Inc. was incorporated on September 9, 2002 under the
laws of the State of Florida.

         On December 1, 2003, China Direct Trading Corporation  acquired 100% of
the outstanding common stock of Souvenir Direct, Inc. in a reverse  acquisition.
At this time, a new  reporting  entity was  created.  Souvenir  Direct,  Inc. is
considered the reporting entity for financial reporting purposes.

         On January 27, 2006, the Company entered into a Purchase Agreement with
Complete Power Solutions  ("CPS") to acquire 51% of the member interests of CPS.
CPS was organized by William Dato on September  20, 2004,  as a Florida  limited
liability company to distribute power generators in Florida and adjacent states.
CPS  currently  distributes  Guardian-brand  commercial  and  residential  power
generators.  CPS  sells  to Home  Depot  and  Lowe's  retail  stores  and  local
electrical contractors in Florida.

Nature of Business

         The  Company  is engaged  in the  business  of  marketing  and  selling
novelty,  gift, and promotional items in North America.  The items are typically
manufactured  in the  People's  Republic of China by  third-party  manufacturing
companies.


<PAGE>

                CHINA DIRECT TRADING CORPORATION AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE 1 - ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)

         On January 27, 2006, the Company entered into a Purchase Agreement with
Complete Power Solutions  ("CPS") to acquire 51% of the member interests of CPS.
CPS  currently  distributes  Guardian-brand  commercial  and  residential  power
generators.  CPS  sells  to Home  Depot  and  Lowe's  retail  stores  and  local
electrical contractors in Florida.

Cash and Cash Equivalents

         For purposes of the statement of cash flows, the Company  considers all
highly liquid debt instruments purchased with a maturity of three months or less
to be cash equivalents to the extent the funds are not being held for investment
purposes.

Inventory

         The Company's  inventory  consists of its power generators,  electrical
transfer switches,  propane tanks,  concrete slabs and electrical,  plumbing and
gas hardware and supplies. Inventory is recorded at cost.

Fixed Assets

         Fixed  assets are stated at cost.  Depreciation  and  amortization  are
computed using the straight-line method over the estimated economic useful lives
of the related assets as follows:

         Communications equipment                    3 - 7 years
         Computer equipment                          3 - 7 years
         Computer software                           3 - 7 years
         Transportation equipment                    3 - 7 years
         Machinery and equipment                     3 - 7 years
         Furniture and fixtures                      3 - 7 years
         Leasehold improvements                      Term of lease

         Upon sale or other disposition of property and equipment,  the cost and
related  accumulated  depreciation or amortization are removed from the accounts
and any gain or loss is included in the determination of income or loss.

         Expenditures  for  maintenance  and  repairs  are charged to expense as
incurred.  Major overhauls and betterments are capitalized and depreciated  over
their estimated economic useful lives.

         Depreciation expense was $62,454 and $448 for the six months ended June
30, 2006 and 2005, respectively.





<PAGE>



                CHINA DIRECT TRADING CORPORATION AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE 1 - ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)

Pervasiveness of Estimates

         The  preparation of financial  statements in conformity  with generally
accepted  accounting  principles  required  management  to  make  estimates  and
assumptions  that  affect the  reported  amounts of assets and  liabilities  and
disclosure of  contingent  assets and  liabilities  at the date of the financial
statements  and the  reported  amounts  of  revenues  and  expenses  during  the
reporting period. Actual results could differ from those estimates.

Principles of Consolidation

         The consolidated financial statements for the six months ended June 30,
2006 and 2005  include the  accounts of the parent  entity and its  wholly-owned
subsidiaries Souvenir Direct, Inc. and Overseas Building Supplies, LLC (formerly
China Pathfinder  Fund,  LLC), and its majority owned subsidiary  Complete Power
Solutions.

         The  results  of  subsidiaries  acquired  or sold  during  the year are
consolidated  from their effective dates of acquisition  through their effective
dates of disposition.

         All  significant  intercompany  balances  and  transactions  have  been
eliminated.

Net Income (Loss) Per Common Share

         Basic  earnings per common share were  computed by dividing net loss by
the weighted  average  number of shares of common stock  outstanding  during the
year.  Diluted  loss per common share for the six months ended June 30, 2006 and
2005 are not presented as it would be anti-dilutive.

Concentration of Credit Risk

         The  Company has no  significant  off-balance-sheet  concentrations  of
credit  risk such as foreign  exchange  contracts,  options  contracts  or other
foreign hedging arrangements.

Reclassifications

         Certain   reclassifications  have  been  made  in  the  2005  financial
statements to conform with the 2006 presentation.

Major Suppliers

         The Company's major  suppliers are from the People's  Republic of China
and to a lesser extent a variety of Pacific Rim countries. The Company relies on
30 manufacturing  concerns in China for its products.  The loss of these Chinese
manufacturing sources would adversely impact on the business of the Company.



<PAGE>



                CHINA DIRECT TRADING CORPORATION AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE 1 - ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)

Major Customers

         At June 30, 2006,  Souvenir  Direct receives  approximately  40% of its
gross revenues from its top three  accounts.  The loss of these  customers would
adversely impact the business of the Company.

Revenue Recognition

         Sales of merchandise are recorded when goods are shipped, and profit is
recognized at that time. Allowances for sales returns, rebates and discounts are
recorded  as a  component  on  net  sales  in  the  period  the  allowances  are
recognized.  Revenues  and  related  costs for sales and  installation  of power
generators is recognized as the work progresses.

Advertising

         Advertising costs are expensed as incurred.

Income Taxes

         The Company  accounts for income taxes under the provisions of SFAS No.
109, "Accounting for Income Taxes." SFAS No.109 requires recognition of deferred
income  tax  assets  and   liabilities   for  the  expected  future  income  tax
consequences,  based on enacted tax laws, of temporary  differences  between the
financial reporting and tax bases of assets and liabilities.

NOTE 2 - LEASES

         On September 1, 2005,  the Company  entered into a lease  agreement for
approximately  1,200 square feet of office  space.  The lease  requires  monthly
lease payments of $1,775. The lease expires August 31, 2006. The office space is
used as the corporate  headquarters.  It is located at 10400 Griffin Road, Suite
109, Cooper City, Florida 33328.

         The Company also rents a storage  facility on a  month-to-month  basis.
Monthly rentals for the storage facility are approximately $150.

         Rental expense under these leases was approximately  $11,750 and $7,500
for the six months ended June 30, 2006 and 2005, respectively.







<PAGE>



                CHINA DIRECT TRADING CORPORATION AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE 2 - LEASES (continued)

         The minimum  future lease payments under these leases for the next five
years are:

Year Ended December 31,
--------------------------------------------
         2006                                            $       14,200
         2007                                                         -
         2008                                                         -
         2009                                                         -
         2010                                                         -
                                                         ---------------
         Total minimum future lease payments             $       14,200
                                                         ===============

         The company's majority owned subsidiary, Complete Power Solutions, Inc.
entered into a lease  agreement  April 1, 2006 for its current  office space and
warehouse  facility.  The lease requires monthly  payments of $7,108.  The lease
expires  March 31, 2009 with an option to extend the lease for three  additional
years.  The  facility  is located  at 1288 S. W. 29th  Avenue,  Pompasno  Beach,
Florida 33069.

         Rental  expense under this lease and the previous  lease for office and
warehouse  space which was terminated  when the current lease became  effective,
was approximately $50,558 for the six months ended June 30, 2006.

         The minimum  future lease  payments  under this lease for the next five
years are:

 Year Ended June 30,
 --------------------------------------------
          2007                                            $        80,818
          2008                                                     89,595
          2009                                                     69,192
          2010                                                          -
          2011                                                          -
                                                          ---------------
          Total minimum future lease payments             $       239,605
                                                          ===============

NOTE 3 - COMMITMENTS

         On December 1, 2003, the Company  entered into an employment  agreement
with Howard  Ullman,  the  Company's  President and CEO that provides for annual
compensation of $200,000.

         On January 27, 2006, the Company  entered into an employment  agreement
with William Dato,  the  President of Complete  Power  Solutions,  the Company's
majority-owned subsidiary that provides for annual compensation of $100,000.






<PAGE>



                CHINA DIRECT TRADING CORPORATION AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE 4 - STOCK TRANSACTIONS

Common Stock

         On September 9, 2002, the Company issued 100 shares of common stock for
$2,774 of start-up expenses.

         On December 1, 2003,  the Company  issued  97,000,000  shares of common
stock to acquire Souvenir Direct, Inc. in a reverse acquisition.  The 100 shares
that  were  previously  issued  were  retroactively   adjusted  to  reflect  the
equivalent  number of shares  that were  issued in  connection  with the reverse
acquisition.  The acquisition was recorded by a credit to common stock of $9,600
and a debit to paid-in  capital of $2,674 and a debit to  retained  earnings  of
$6,926.  Also on December 1, 2003,  an additional  414,628,300  shares of common
stock were issued to the previous  owners of CBQ,  Inc. All  references to stock
reflect the retroactive adjustment to the shares.

         In January 2005,  the Company  issued 500,000 shares of common stock to
settle a lawsuit. The value of settlement was $28,000.

         In April 2005, the Company issued  6,940,030 shares of common stock for
services valued at $200,000.

         In May 2005,  the Company  issued  100,000  shares of common  stock for
services valued at $3,000.

         In June 2005, the Company issued  9,523,810  shares of common stock for
accrued compensation of $200,000.

         In June 2005,  6,896,552  shares of common  stock were  returned to the
treasury and cancelled.

         In October 2005,  the Company issued  6,250,000  shares of common stock
for accrued compensation of $100,000.

         In November 2005, the Company issued 588,718 shares of common stock for
legal services valued at $12,500.

         In November 2005, the Company issued  1,140,000  shares of common stock
for legal services valued at $28,500.

         In December 2005, the Company issued  2,300,000  shares of common stock
for services valued at $40,000.

         In December 2005, the Company issued  5,555,555  shares of common stock
for accrued compensation of $100,000.


<PAGE>

                CHINA DIRECT TRADING CORPORATION AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE 4 - STOCK TRANSACTIONS (continued)

         In December 2005, the Company issued  1,666,667  shares of common stock
for cash of $30,000.

Preferred Stock

         In February 2004, the Company sold 1,000 shares of preferred  stock for
cash of $5,000. In June 2004, the Company issued 7,100 shares of preferred stock
for services  valued at $128.  In May 2005,  100 shares of preferred  stock were
returned to the treasury and  cancelled.  The preferred  shares are  convertible
into common shares.

         In January 2006, the Company  issued 657,000 shares of preferred  stock
in exchange for cash of $637,000.

         In January 2006, the Company  issued 600,000 shares of preferred  stock
valued at $2 per share as part of the acquisition of Complete Power Solutions.

Warrants

         The Company has issued stock warrants to its officers and directors for
a total of 5,975,000  shares of the Company's  common stock. The warrants expire
between November 11, 2011 and July 20, 2014. The warrants have an exercise price
of $.03 to $.05.

         The Company  issued a stock  warrant to each of two former  officers of
the  Company  in  December  2003 for a total of 35,000  shares of the  Company's
common stock.  Each of the stock warrants expires on July 20, 2014,and  entitles
each former officer to purchase 10,000 and 25,000 shares,  respectively,  of the
Company's common stock at an exercise price of $0.05.

         The  Company  issued a stock  warrant for  50,000,000  shares of common
stock to Dutchess  Private Equities Fund, II, L.P.  ("Dutchess"),  as part of an
investment agreement between Dutchess and the Company. As part of the agreement,
Dutchess was to invest up to $2,500,000 to purchase the Company's  common stock.
The warrant was to expire August 3, 2014. On February 16, 2005,  the Company and
Dutchess  agreed to  postpone  the  implementation  of the  foregoing  financing
arrangement. As of the date of this Report, the Company and Dutchess have agreed
not to proceed with this financing  arrangement and the  aforementioned  warrant
has been cancelled.

NOTE 5 - RELATED PARTY PAYABLES

         On September  1, 2004,  China  Pathfinder  Fund,  LLC., a  wholly-owned
subsidiary of the Company  received  loans of $15,000 from  shareholders  of the
Company.  The loans  carry an  interest  rate of 5% per annum and are payable in
twelve equal monthly  installments with the first installment due and payable on
January 31,  2006.  At June 30,  2006,  the total  amount due on these loans was
$16,011.


<PAGE>



                CHINA DIRECT TRADING CORPORATION AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE 5 - RELATED PARTY PAYABLES (continued)

         During 2003 and 2004, a former  officer of the Company paid $300,000 to
settle a previously  filed  lawsuit on behalf of the Company.  This $300,000 has
been included in accrued liabilities at June 30, 2006 and December 31, 2005.

         During  the six  months  ended  June  30,  2006,  the  Company  and its
subsidiaries have received loans from  stockholders  totaling $747,500 and other
loans from investors totaling $710,100.

NOTE 6 - INCOME TAXES

         As  of  December  31,  2005,  the  Company  had a  net  operating  loss
carryforward for income tax reporting purposes of approximately  $1,038,000 that
may be offset against future taxable income through 2025. Current tax laws limit
the amount of loss  available to be offset  against future taxable income when a
substantial  change in  ownership  occurs.  Therefore,  the amount  available to
offset future taxable income may be limited. No tax benefit has been reported in
the financial statements, because the Company believes there is a 50% or greater
chance the  carryforwards  will expire  unused.  Accordingly,  the potential tax
benefits of the loss  carryforwards  are offset by a valuation  allowance of the
same amount.

NOTE 7 - LEGAL SETTLEMENTS

         In June 2001,  ITC/INFO Tech  ("Claimant")  obtained a default award of
$79,000  against the Company.  The award was based on  non-payment  for computer
goods shipped by ITC to two subsidiaries of the Company. The Company has offered
to settle the award for shares of restricted stock, but the Claimant has refused
to accept such an offer to date.  The Claimant has made no effort to enforce its
award since June 2001.  As of June 30, 2006 and  December  31,  2005,  the award
amount has been included in the accrued expenses of the Company.

NOTE 8 - CONTINGENCIES

         Celeste Trust Reg.,  Esquire Trade,  et al. v. CBQ, Inc. (Case# 03 Civ.
9650 RMB; US District Court, SDNY,  12/4/2003).  A lawsuit filed against company
by three  plaintiffs on or about December 4, 2003, but which the company did not
receive  notice of until  the week of  February  18,  2004 or  thereabouts.  The
Plaintiffs  purchased  debentures  issued by Socrates  Technologies  Corporation
(STC), a public  Delaware  corporation in 2000.  When the Company  purchased the
assets of two STC  subsidiaries  in March 2001, the  plaintiffs  allege that the
Company  promised to issue to the Plaintiffs and others the  consideration  that
was to be  paid  to STC  for  the  acquired  assets  and  to so do in  order  to
compensate the plaintiffs for their investment in the STC debentures, which were
apparently  in default at that time.  The total  consideration  paid for the STC
subsidiaries'  assets were 7.65  million  shares of company  Common  Stock and a
Promissory Note made by the Company for $700,000  principal amount.  The Company
has defended against the


<PAGE>



                CHINA DIRECT TRADING CORPORATION AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE 8 - CONTINGENCIES (continued)

Plaintiffs'  claims to date. If the  Plaintiffs  win a judgment on their claims,
the judgment, if collected,  would prove potentially ruinous the Company, unless
a settlement  involving no cash was arranged between the parties to the lawsuit.
The  Plaintiff's  claims  include a claim for receipt of the money due under the
Promissory Note with a principal amount of $700,000.  The Company lacks the cash
flow or cash reserves or funding resources to pay such a claim, either in a lump
sum or over time. If the Plaintiffs are awarded the claimed  damages against the
Company in this lawsuit, the Company would be unable to pay such damages, either
in a lump-sum or under a schedule, and would be insolvent.

         The Plaintiff's complaint in Celeste was dismissed by the U.S. District
Court for the  Southern  District  of New York in early 2005 for failure to have
all essential  parties to the dispute as parties to the lawsuit.  The Plaintiffs
filed an amended complaint prior to the March 1, 2005 deadline for doing so. The
Company currently  intends to vigorously defend against the Plaintiff's  amended
complaint, which adds two former, now defunct,  subsidiaries involved in the STC
transaction as defendants. The assets of Networkland,  Inc. and Technet Computer
Services  Corporation  were  acquired  by the Company on March 15, 2001 and that
transaction is at the heart of the dispute in the Celeste case.  Currently,  the
Company's  second  motion to dismiss is scheduled to be heard by the Court on or
about  September  15,  2005.  The Court has also  heard  Plaintiff's  motion for
default judgment against the subsidiaries  involved in the STC transaction.  The
Court's decision may take several months to be issued.  The Company is uncertain
at this time of the final outcome of this litigation.

         Sun Trust  Bank  Dispute.  Sun Trust Bank line of credit and term note:
Prior to being  acquired  by the  company,  Quantum  Technology  Group  had a $4
million line of credit with Crestar Bank, which was subsequently acquired by Sun
Trust.  This  line of credit  was  guaranteed  by  Quantum  and five  individual
guarantors,  including  Ray  Kostkowski,  Anne Sigman,  Skip Lewis,  and Anthony
Saunders.  This line of credit was opened during April, 2000. On August 8, 2000,
the Company acquired all of the shares of Quantum.  Sun Trust asserted that $1.3
million of the line of credit had been used, and was owing to Sun Trust, as well
as line of credit, a $200,000 term loan from Sun Trust to Quantum, approximately
$200,000 in accrued  interest  and  $100,000  in  attorney  fees -- all of which
Suntrust had sought to collect from the individual guarantors. Sun Trust had not
sued the Company and has not raised its prior threat to sue in 2005.

         RAS Investment,  Inc., a company  affiliated with Anne Sigman, a former
employee of the  Company,  has advised the Company that RAS has acquired the Sun
Trust note and has  demanded  payment  in cash or stock.  As of the date of this
Report, the Company's  position remains as before,  that is, that the Company is
not  obligated  to pay the Sun Trust debts and any claims  made to collect  that
debt could be defeated by several potential defenses and counterclaims.

         The Company is a defendant to another  lawsuit  concerning a trade show
contract for approximately  $25,000,  but the Company does not believe that this
lawsuit is  material  in respect of  potential  liability  of the  Company.  The
Company has been and intends to vigorously  defend  itself in this  lawsuit.  In
August 2006, the Company settled this lawsuit for $25,000.

<PAGE>


                CHINA DIRECT TRADING CORPORATION AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE 8 - CONTINGENCIES (continued)

         As  reported  previously,  the  Company  has  received  two claims from
certain  former  shareholders  of  Cyberquest,   Inc.  that  they  hold  or  own
approximately  70,000  shares of a class of the Company's  redeemable  preferred
stock  that  was  issued  in  the  Company's  1998  acquisition  of  Cyberquest.
Cyberquest ceased  operations in 2000-2001 period.  The Company has investigated
these claims and has not been able to date to substantiate  any of the claims to
date  and the  claimants  have  not  pursued  their  claims  beyond  an  initial
communication asserting ownership of these shares of serial preferred stock.

NOTE 9 - SUBSIDIARY

         In February  2004,  the Company  established  a new  subsidiary,  China
Pathfinder Fund, LLC, a Florida limited liability company. During 2005, the name
was changed to Overseas Building Supplies,  LLC to reflect its shift in business
lines from business development to trading Chinese-made building supplies.

NOTE 10 - ACQUISITIONS

         On March 18, 2005,  the Company  entered into an agreement  whereby the
Company  was to  acquire  40% of the  outstanding  shares  of  Beijing  Hua  Wei
Furniture Manufacture Co., Ltd., ("HWFM"), a company organized under the laws of
the People's  Republic of China. The Company was to issue common stock valued at
$1,325,000 at closing to acquire its 40% interest in HWFM. On July 20, 2005, the
Company  announced  the  termination  of this  agreement  because HWFM failed to
satisfy one of the conditions to consummation of the acquisition.

         On January 27, 2006, the Company entered into a Purchase Agreement (the
"Purchase  Agreement")  with William Dato and Complete Power  Solutions  ("CPS")
pursuant to which the Company  acquired 51% of the member interests of CPS owned
by Mr. Dato for a purchase  price  consisting of the payment of $637,000 in cash
and the delivery of 600,000 shares of Company's  Series A Convertible  Preferred
Stock (the  "Series A Preferred  Stock")  having a stated  value of  $1,200,000,
which Series A Preferred  Stock are convertible  into  50,739,958  shares of the
Company's  Common  Stock  at the  demand  of Mr.  Dato.  The  cash  paid  in the
transaction  was  obtained  from  capital  provided  to the  Company  for use in
connection with  acquisitions by Howard Ullman,  our Chief Executive Officer and
President, and certain of our directors and principal shareholders.  The Company
recognized  goodwill of  $1,567,214 as part of the  transaction.  The Company is
currently evaluating the value of the goodwill.










<PAGE>




ITEM 2.  MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION

GENERAL  - This  discussion  should  be read in  conjunction  with  Management's
Discussion and Analysis of Financial  Condition and Results of Operations in the
Company's annual report on Form 10-KSB for the year ended December 31, 2005.

PLAN OF  OPERATIONS.  The Company's  plan of operations is to focus on expanding
OBS' building supplies business and CPS's power generator  distribution business
as the  primary  business  lines of t he Company.  The  Company  will devote its
available  resources  and funding to the  expansion  of OBS and CPS.  Except for
occasional  short-term  loans  from Mr.  Ullman,  SDI will have to  support  its
operations from cash flow from operations.

         The  Company's  current  plan  of  operations  also  includes  actively
reviewing mergers and acquisitions and investment  opportunities like CPS, which
opportunities  are in industries  that  complement the ability of the Company to
trade   Chinese-made   products  in  North  America.   The  Company  is  seeking
opportunities  that  potentially and immediately  enhance our sales revenues and
net worth as well as  possibly  contribute  a  positive  cash  flow and  enhance
shareholder  value beyond the  capability of our current core business  line. As
such,  we are  interested  in  investing in or  acquiring  companies  that could
benefit from  exploiting  the  Company's  financial  and  contacts  with Chinese
manufacturing  firms.  Our  strategic  plan has  traditionally  been to remain a
trading  company with low overhead and focused on  exploiting  its contacts with
Chinese  manufacturers  to meet our  customers'  needs.  We have  concluded that
ownership of or investment in companies that are established distributors in the
U.S. and potential  distribution  channels of Chinese-made  products in the U.S.
should be  considered  as part of the overall  strategy to exploit our  contacts
with over 30 Chinese manufacturing companies.

         We received in early January 2006, a credit line commitment of $500,000
(increased to $647,000) from its chief executive  officer and president,  Howard
Ullman, and three Company directors, Jeffrey Postal, Lorenzo Lamadrid and Laurie
Holtz  (collectively,  the  "lenders").  The credit line is to be used solely to
fund the cash  portion of any  acquisition  or  investment  by the  Company  The
funding was used to acquire the 51% membership interest in CPS. Under the credit
line, the Company has 4 years to repay any advances of credit,  which  repayment
shall be made in  calendar  quarterly  interest-only  payments  for the first 24
months  of  the  term  and  equal  calendar  quarterly  principal  and  interest
installment  payments for the last 24 months of the term.  The interest  rate is
8.5% per annum.  Upon  demand,  any lender may  convert  all or a portion of any
unpaid principal or interest into "restricted" shares (as defined in Rule 144 of
the Securities Act of 1933, as amended) of a new class of the Company  preferred
stock ("Series B Convertible  Preferred  Stock").  The rights,  designations and
privileges  of the Series B  Preferred  Stock  will be  negotiated  between  the
Company  and the  lenders;  provided,  however,  that  the  Preferred  Stock  is
convertible into "restricted" shares of Company Common Stock,  $0.0001 par value
per share,  ("Common  Stock") at a conversion ratio that entitles the lenders to
receive an aggregate of  33,333,333  "restricted"  shares of Common Stock (to be
adjusted for any future stock split or  recapitalization).  The conversion ratio
is based on the principal  amount of the debt  ($647,000)  divided by $0.015 per
share of Common Stock.  Any shares of Common Stock issued in a conversion of the
Series B Preferred Stock have piggyback  registration rights under the agreement
between the Company and the lenders for the credit line.

         The  Company  may  incur   significant   post-merger   or   acquisition
registration costs in the event management wishes to register a portion of their

<PAGE>

shares for subsequent  sale. The Company will also incur  significant  legal and
accounting  costs in  connection  with the  acquisition  including  the costs of
preparing post- effective amendments,  Forms 8-K, agreements and related reports
and documents.

         While the  Company  believes  that SDI and CPS will be able to generate
sufficient  cash  flow to pay for their  respective  direct  overhead  costs and
internal  planned  growth in fiscal  year 2006,  neither  SDI nor our  company's
interest  in CPS  generate  sufficient  cash  flow  at  this  time  to  fund  an
acquisition program, or fund of the proposed enhanced and expanded marketing and
sales efforts for OBS and the overhead of our company. The Company will not have
sufficient  funds  (unless it is able to raise funds in a private  placement  or
debt financing) to undertake any significant business development,  or extensive
marketing,  in terms  of  scope  of  campaign  and  geographical  reach,  of new
products.  Accordingly,  following any future acquisition,  the Company will, in
all likelihood and unless the acquired business  generates  sufficient cash flow
and  profits,  be  required to either  seek debt or equity  financing  or obtain
funding from third parties, in exchange for which the Company may be required to
give up a  substantial  portion of its  interest in the  acquired  product or to
issue large number of shares of its capital  stock.  There is no assurance  that
the Company will be able either to obtain additional financing or interest third
parties  in  providing  funding  for  the  further  development,  marketing  and
manufacturing of any products acquired.

RESULTS OF OPERATIONS - For the six months ended June 30, 2006,  the Company had
net income of  approximately  $418,000.  For the six months ended June 30, 2005,
the Company had a net loss of approximately $104,000.

         Total  Revenues - For the six months ended June 30, 2006 and 2005,  the
Company had total sales of approximately  $6,482,000 and $465,000  respectively,
for an increase of approximately $6,017,000. The increase in revenues was due to
the acquisition of Complete Power Solutions.

         Costs and  Expenses - For the six months  ended June 30, 2006 and 2005,
the  Company  had  cost of  sales  of  approximately  $4,043,000  and  $327,000,
respectively.  The  increase  in the cost of sales  was due the  acquisition  of
Complete Power Solutions. Operating expenses increased approximately $1,258,000,
from $241,000 for the six months ended June 30, 2005 to  $1,499,000  for the six
months  ended June 30,  2006.  This  increase is  attributable  primarily to the
acquisition of Complete Power Solutions.  The cost of rent and other general and
administrative costs also increased in for the six months ended June 30, 2006 as
compared to the same period in 2005.

         Liquidity  and  Capital  Reserves.  Historically,  the  Company has not
generated  enough cash flow from  operations to cover its overhead costs and the
cost of growth.  The inadequacy of cash flow and the inability of the Company to
consistently obtain funding and ongoing funding on commercially reasonable terms
have  undermined  the former  business  operations of the Company and forced the
Company  to obtain  funding  from  management  and  through  the sale of Company
securities.

         As a small  business  and a  penny  stock  company,  the  Company  will
continue to face  difficulty  in obtaining  financing  or funding on  reasonable
commercial  terms. The Company expects future  development and expansion will be
financed  through cash flow from operations and other forms of financing such as
the sale of  additional  equity and debt  securities,  capital  leases and other
credit facilities. There are no assurances that such financing will be available
on terms  acceptable or favorable to the Company.  Further,  the increase in the
number of shares of common stock in the public markets may reduce the ability or
appeal of the Company to future sources of possible financing or funding.


<PAGE>




         Government  Regulations.  The  Company  is  subject  to  all  pertinent
Federal, State, and Local laws governing its business. The Company is subject to
licensing  and   regulation  by  a  number  of   authorities  in  its  State  or
municipality. These may include health, safety, and fire regulations.

         Impact of  Inflation.  To date,  the  Company has not  experienced  any
significant  effect from  inflation.  The Company's major expenses have been the
cost of marketing its product lines to customers in North  America.  That effort
involves mostly Mr. Ullman  traveling to make direct marketing and sales pitches
to  customers  and  potential  customers  as well as showing the SDI products at
industry  trade shows  around North  America and visiting  China to maintain and
expand SDI's  distribution and  manufacturing  relationships  and channels.  The
Company  generally has been able to meet increase in costs by raising  prices of
its products.

         Country  Risks.  Almost  all of the  Company's  contract  manufacturing
operations and sources of products are located in China. As such, the Company is
subject to significant  risks not typically  faced by companies  operating in or
obtaining  products from North America and Western Europe.  Political,  economic
and trade  conflicts  between the United  States and China,  including  possible
conflict over North  Korea's  nuclear  weapons  program or the  independence  of
Taiwan,  could severely hinder the ability of the Company to obtain products and
fill customer orders from the Company's current Chinese  manufacturing  sources.
Further,  Chinese  commercial law is still  evolving to  accommodate  increasing
capitalism in Chinese society,  especially in terms of commercial  relationships
and dealings with foreign companies,  and can be unpredictable in application or
principal.  The same unpredictability exists with respect to the central Chinese
government,  which can  unilaterally and without prior warning impose new legal,
economic  and  commercial  laws,  policies  and  procedures.   This  element  of
unpredictability heightens the risk of doing business in China.

         China is also under  international  pressure to value its currency in a
manner  that would  increase  the value of Chinese  currency in respect of other
world  currencies  and thereby  increase the cost of Chinese  goods in the world
market.  The Company does not believe that such  revaluation of Chinese currency
would  adversely  impact  its  business  because of the  low-cost  nature of the
Company's  products and the fact that U.S. dollars is the currency of use in all
of the Company's commercial transactions.

ITEM 3.  CONTROLS AND PROCEDURES

         The Company's Chief Executive  Officer and Chief Financial  Officer are
responsible for establishing and maintaining  disclosure controls and procedures
for the Company.

         (a) Evaluation of Disclosure Controls and Procedures

         As of the end of the period covered by this report, the Company carried
out an  evaluation,  under the  supervision  and with the  participation  of the
Company's management, including the Company's President, of the effectiveness of
the design and operation of the  Company's  disclosure  controls and  procedures
pursuant to Rule 13a-15 under the  Securities  Exchange Act of 1934,  as amended
(the  "Exchange  Act").  Based  upon the  evaluation,  the  Company's  President
concluded that, as of the end of the period, the Company's  disclosure  controls
and  procedures  were effective in timely  alerting him to material  information
relating to the Company  required to be included in the reports that the Company
files and submits pursuant to the Exchange Act.


<PAGE>




         (b) Changes in Internal Controls

         Based on his evaluation as of June 30, 2006,  there were no significant
changes in the Company's  internal  controls over financial  reporting or in any
other areas that could  significantly  affect the  Company's  internal  controls
subsequent to the date of his most recent  evaluation,  including any corrective
actions with regard to significant deficiencies and material weaknesses.

                           PART II - OTHER INFORMATION

ITEM 1.  LEGAL PROCEEDINGS

         On January 25, 2005, the U.S.  District Court for the Southern District
of New York dismissed without prejudice the lawsuit against China Direct Trading
Corporation  in the  previously-reported  civil case styled  CELESTE TRUST REG.,
ESQUIRE TRADE,  ET AL. V. CBQ, INC.  (Case# 03 Civ. 9650 RMB; US District Court,
Southern  District  for New York,  12/4/2003).  The lawsuit was  dismissed  in a
response to China Direct Trading Corporation's motion to dismiss. The Plaintiffs
can  refile the  lawsuit if they a  complaint  on or before  March 1, 2005.  The
Plaintiffs  filed an amended  complaint  with the Court on or about February 24,
2005.  While the  Company  currently  intends  to  defend  against  the  Amended
Complaint,  and without  admitting any liability in the matter,  the Company may
also explore settlement of the litigation in order to avoid any further drain by
this federal lawsuit on the Company's resources.  The Company has filed a motion
to dismiss the  plaintiff's  amended  complaint,  which  motion has not yet been
heard or ruled upon by the Court.

         As  reported  previously,  the  Company  has  received  two claims from
certain  former  shareholders  of  Cyberquest,   Inc.  that  they  hold  or  own
approximately  70,000  shares of a class of the Company's  redeemable  preferred
stock  that  was  issued  in  the  Company's  1998  acquisition  of  Cyberquest.
Cyberquest ceased  operations in 2000-2001 period.  The Company has investigated
these claims and has not been able to date to substantiate  any of the claims to
date  and the  claimants  have  not  pursued  their  claims  beyond  an  initial
communication asserting ownership of these shares of serial preferred stock.

         The Company is a defendant to another  lawsuit  concerning a trade show
contract,  but the  Company  does not believe  that this  lawsuit is material in
respect of potential liability of the Company. The Company intends to vigorously
defend itself in this lawsuit.  In August 2006, the Company settled this lawsuit
for $25,000.

         No director, officer or affiliate of the Company, or owner of record of
more than five percent (5%) of the  securities of the Company,  or any associate
of any such director, officer or security holder is a party adverse to us or has
a material interest adverse to us in reference to pending litigation.

         We are not  currently  a party to any other legal  proceedings  that we
believe  will have a  material  adverse  effect on our  financial  condition  or
results of operations.

ITEM 2.  CHANGES IN SECURITIES

None.


<PAGE>

ITEM 3.  DEFAULTS UPON SENIOR SECURITIES

None/Not Applicable.

ITEM 4.  SUBMISSION OF MATTERS TO A VOTE OF SECURITIES HOLDERS

None/Not Applicable.

ITEM 5.  OTHER INFORMATION

None

ITEM 6.  EXHIBITS AND REPORTS ON FORM 8-K



<PAGE>



(a) EXHIBITS

2.1      Purchase  Agreement,  dated January 27, 2006, by and among China Direct
         Trading Corporation, William Dato and Complete Power Solutions, LLC. +

3.1      Articles of Incorporation of the Company *

3.1.1    Articles  of  Incorporation   of  China  Direct  Trading   Company,   a
         Wholly-owned subsidiary of the Company **

3.2      By-laws of the Company***

10.1     Voting  Agreement,  dated  January 27, 2006,  by and among China Direct
         Trading Corporation, William Dato and Howard Ullman. *****

10.2     Operating  Agreement,  dated  January  27,  2006,  for  Complete  Power
         Solutions, LLC. *****

10.3     Employment Agreement, dated January 27, 2006, among William Dato, China
         Direct Trading Corporation and Complete Power Solutions, LLC. *****

10.4     Form of July 20,  2005 sales  agency  agreement  between  China  Direct
         Trading Corporation and Sutter's Mill Specialties. *****

14       Code of Ethics, dated November 21, 2003, ++++

31       Certification  Pursuant  to Section  302 of the  Sarbanes-Oxley  Act of
         2002.+

32       Certification  Pursuant  to Section  302 of the  Sarbanes-Oxley  Act of
         2002.+

---------------

* Incorporated by reference to Annex C to the Special  Meeting Proxy  Statement,
dated  April  15,  2004,  filed by China  Direct  Trading  Corporation  with the
Commission  on April 20, 2004.  **  Incorporated  by reference to Annex G to the
Special  Meeting Proxy  Statement,  dated April 15, 2004,  filed by China Direct
Trading Corporation with the Commission on April 20, 2004.


<PAGE>

***  Incorporated by reference to Annex D the Special  Meeting Proxy  Statement,
dated  April  15,  2004,  filed by China  Direct  Trading  Corporation  with the
Commission on April 20, 2004.

****  Incorporated by reference to Annex H the Special Meeting Proxy  Statement,
dated  April  15,  2004,  filed by China  Direct  Trading  Corporation  with the
Commission on April 20, 2004.

***** Incorporated by reference to Form 10KSB, dated April 17, 2006.

+         Filed Herein

++++     Incorporated  by reference to Exhibit 14 to the  Company's  Form 10-KSB
         for the fiscal year ending  December 31, 2003, as filed by China Direct
         Trading Company with the Commission on April 20, 2004.

         (b) Reports on Form 8-K filed.

         The following  reports were filed on Form 8-K during the second quarter
         of the 2006 fiscal year:  May 1, 2006,  May 12, 2006,  May 16, 2006 and
         August 8, 2006.



























<PAGE>

                                   SIGNATURES

         In accordance with the requirements of the Exchange Act, the registrant
caused this report to be signed on its behalf by the undersigned, thereunto duly
authorized, this 24th day of August, 2006.

China Direct Trading Corporation

August 24, 2006

/s/ Howard Ullman
Howard Ullman
CEO, President and Chairman
(Principal Executive Officer)
(Principal Financial and Accounting Officer)