**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 THESECURITIES EXCHANGE ACT OF
      1934**





For
      the quarterly period
      ended:September 30,
      2007





**[  ]   TRANSITION
      REPORT UNDER SECTION 13 OR 15(d) OF THE**


**EXCHANGE
      ACT**





For
      the transition period from __________ to __________





Commission
      file number  000-28831





CHDT
      Corporation


(Formerly
      China Direct Trading Corporation)


(Exact
      name of small business issuer as


specified
      in its charter)





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





350
      Jim Moran Blvd., Suite 120, Deerfield Beach, Florida 33442


(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.)





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













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 o No o







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:   September 30, 2007  Approximately
      587,067,705 shares





Transitional
      Small Business Disclosure
      Format (check one). Yes
o;  No
x












































































**PART
      I**





**Item
      1.  Financial Statements**





CHDT
      CORPORATION AND SUBSIDIARIES


(Formerly
      China Direct Trading Corporation)


CONSOLIDATED
      BALANCE SHEETS








(Unaudited)September
                30,
            
            
            December
                31,2007
            
            
            2006Assets:Current
                assets:Cash
            
            $
            236,504
            
            
            $
            198,084Accounts
                receivable - net
            
            
            690,631
            
            
            
            560,475Inventory
            
            
            433,450
            
            
            
            69,895Deposit
                on inventory
            
            
            -
            
            
            
            19,569Notes
                receivable from former subsidiary
            
            
            225,944
            
            
            
            202,150Prepaid
                expense
            
            
            27,794
            
            
            
            16,162Total
                Current Assets
            
            
            1,614,323
            
            
            
            1,066,335Fixed
                assets:Computer
                equipment/software
            
            
            39,878
            
            
            
            5,422Communications
                equipment
            
            
            2,014
            
            
            
            2,014Tools
                - STP
            
            
            170,809
            
            
            
            -Machinery
                and equipment
            
            
            122,415
            
            
            
            98,514Furniture
                and fixtures
            
            
            5,665
            
            
            
            4,965Less:
                Accumulated Depreciation
            
            
            (101,893
            )
            
            
            (80,571
            )Total
                Fixed Assets
            
            
            238,888
            
            
            
            30,344Other
                non-current assets:Note
                receivable from former subsidiary - long term
            
            
            225,560
            
            
            
            225,560Goodwill
            
            
            1,936,020
            
            
            
            1,936,020Deposits
            
            
            18,013
            
            
            
            16,775Total
                other non-current assets
            
            
            2,179,593
            
            
            
            2,178,355Total
                assets
            
            $
            4,032,804
            
            
            $
            3,275,034








1




CHDT
      CORPORATION AND SUBSIDIARIES


(Formerly
      China Direct Trading Corporation)


CONSOLIDATED
      BALANCE SHEETS


(Continued)





(Unaudited)September
                30,
            
            
            December
                31,2007
            
            
            2006Liabilities
                and Stockholders’ Deficit:Current
                Liabilities:Accounts
                payable and accrued expenses
            
            $
            693,008
            
            
            $
            416,539Customer
                deposits
            
            
            12,530
            
            
            
            -Due
                to related parties
            
            
            300,000
            
            
            
            400,000Notes
                and loans payable to related parties - current maturities
            
            
            519,320
            
            
            
            726,759Total
                Current Liabilities
            
            
            1,524,858
            
            
            
            1,543,298Long-Term
                Liabilities:Notes
                and loans payable to related parties
            
            
            1,325,000
            
            
            
            767,589Investor
                loans payable
            
            
            -
            
            
            
            54,038Total
                Long-Term Liabilities
            
            
            1,325,000
            
            
            
            821,627Total
                Liabilities
            
            
            2,849,858
            
            
            
            2,364,925Stockholders'
                Deficit:Preferred
                Stock, Series A, par value $.001 per shareAuthorized
                100,000,000 shares,Issued
                5,899 shares at September 30, 2007and
                607,000 shares at December 31, 2006
            
            
            6
            
            
            
            607Preferred
                Stock, Series B, par value $.10 per shareAuthorized
                100,000,000 shares,Issued
                942,030 shares at September 30, 2007 and1,193,769
                shares at December 31, 2006
            
            
            94,203
            
            
            
            119,377Common
                Stock, par value $.0001 per shareAuthorized
                600,000,000 shares,Issued
                587,067,705 shares at September 30, 2007and
                536,406,750 shares at December 31, 2006
            
            
            58,708
            
            
            
            53,642Related
                party receivable
            
            
            -
            
            
            
            (1,775,864
            )Additional
                paid-in capital
            
            
            3,476,155
            
            
            
            4,166,747Accumulated
                deficit
            
            
            (2,446,126
            )
            
            
            (1,654,400
            )Total
                Stockholders' Deficit
            
            
            1,182,946
            
            
            
            910,109Total
                Liabilities and Stockholders’ Deficit
            
            $
            4,032,804
            
            
            $
            3,275,034




See
      accompanying notes.






2




CHDT
      CORPORATION AND SUBSIDIARIES


(Formerly
      China Direct Trading Corporation)


CONSOLIDATED
      STATEMENTS OF OPERATIONS





(Unaudited)
            
            
            (Unaudited)For
                the Three Months
            
            
            For
                the Nine MonthsEnded
                September 30,
            
            
            Ended
                September 30,2007
            
            
            2006
            
            
            2007
            
            
            2006Revenues
            
            $
            814,687
            
            
            $
            400,586
            
            
            $
            1,415,165
            
            
            $
            820,407Cost
                of Sales
            
            
            (456,918
            )
            
            
            (268,140
            )
            
            
            (803,777
            )
            
            
            (534,004
            )Gross
                Profit
            
            
            357,769
            
            
            
            132,446
            
            
            
            611,388
            
            
            
            286,403Operating
                Expenses:Sales
                and marketing
            
            
            10,629
            
            
            
            22,523
            
            
            
            33,775
            
            
            
            63,606Compensation
            
            
            409,435
            
            
            
            56,442
            
            
            
            679,994
            
            
            
            178,400Professional
                fees
            
            
            53,426
            
            
            
            112,363
            
            
            
            162,619
            
            
            
            131,872Consulting
            
            
            12,700
            
            
            
            -
            
            
            
            87,700
            
            
            
            -Royalties
            
            
            30,119
            
            
            
            -
            
            
            
            55,119
            
            
            
            -Other
                General and administrative
            
            
            157,314
            
            
            
            80,450
            
            
            
            397,712
            
            
            
            136,467Total
                Operating Expenses
            
            
            673,623
            
            
            
            271,778
            
            
            
            1,416,919
            
            
            
            510,345Net
                Operating Income (Loss)
            
            
            (315,854
            )
            
            
            (139,332
            )
            
            
            (805,531
            )
            
            
            (223,942
            )Other
                Income (Expense):Debt
                forgiveness
            
            
            79,000
            
            
            
            -
            
            
            
            79,000
            
            
            
            -Miscellaneous
                income
            
            
            -
            
            
            
            -
            
            
            
            750
            
            
            
            -Interest
                income
            
            
            10,554
            
            
            
            340
            
            
            
            27,744
            
            
            
            340Interest
                expense
            
            
            (41,464
            )
            
            
            (647
            )
            
            
            (93,689
            )
            
            
            (715
            )Total
                Other Income (Expense)
            
            
            48,090
            
            
            
            (307
            )
            
            
            13,805
            
            
            
            (375
            )Net
                Income (Loss) from continuing operations
            
            
            (267,764
            )
            
            
            (139,639
            )
            
            
            (791,726
            )
            
            
            (224,317
            )Discontinued
                OperationsIncome
                (Loss) from discontinued operations
            
            
            -
            
            
            
            212,227
            
            
            
            -
            
            
            
            714,508Net
                Income (Loss)
            
            $
            (267,764
            )
            
            $
            72,588
            
            
            $
            (791,726
            )
            
            $
            490,191






3




CHDT
      CORPORATION AND SUBSIDIARIES


(Formerly
      China Direct Trading Corporation)


CONSOLIDATED
      STATEMENTS OF OPERATIONS


(continued)








(Unaudited)
            
            
            (Unaudited)For
                the Three Months
            
            
            For
                the Nine MonthsEnded
                September 30,
            
            
            Ended
                September 30,2007
            
            
            2006
            
            
            2007
            
            
            2006Weighted
                AverageShares
                Outstanding
            
            
            569,920,650
            
            
            
            549,878,217
            
            
            
            558,422,786
            
            
            
            545,462,954Income
                (Loss) per Common ShareContinuing
                operations
            
            $
            -
            
            
            $
            -
            
            
            $
            -
            
            
            $
            -Discontinued
                operations
            
            
            -
            
            
            
            -
            
            
            
            -
            
            
            
            -Net
                Income (Loss)
            
            $
            -
            
            
            $
            -
            
            
            $
            -
            
            
            $
            -












































See
      accompanying notes.






4






CHDT
      CORPORATION AND SUBSIDIARIES


(Formerly
      China Direct Trading Corporation)


CONSOLIDATED
      STATEMENTS OF CASH FLOWS





(Unaudited)For
                the Nine MonthsEnded
                September 30,2007
            
            
            2006CASH
                FLOWS FROM OPERATINGACTIVITIES:Continuing
                operations:Net
                Income (Loss)
            
            $
            (791,726
            )
            
            $
            490,191Adjustments
                necessary to reconcile net lossto
                net cash used in operating activities:Income
                from discontinued operations
            
            
            -
            
            
            
            (714,508
            )Stock
                issued for accrued expenses
            
            
            159,255
            
            
            
            -Stock
                issued for expenses
            
            
            101,100
            
            
            
            96,611Compensation
                expense from stock options
            
            
            153,208
            
            
            
            -Depreciation
            
            
            21,323
            
            
            
            2,119(Increase)
                decrease in accounts receivable
            
            
            (130,157
            )
            
            
            (150,218
            )(Increase)
                decrease in inventory
            
            
            (343,987
            )
            
            
            101,509(Increase)
                decrease in prepaids
            
            
            (11,632
            )
            
            
            (10,329
            )(Increase)
                decrease in deposits
            
            
            (1,238
            )
            
            
            -(Increase)
                decrease in interest receivable
            
            
            (23,794
            )
            
            
            -Increase
                (decrease) in accounts payable & accrued expenses
            
            
            276,468
            
            
            
            3,604Increase
                (decrease) in due to/from related parties
            
            
            (100,000
            )
            
            
            -Increase
                (decrease) in accrued interest on notes payable
            
            
            (17,589
            )
            
            
            -Increase
                (decrease) in deposits from customers
            
            
            12,530
            
            
            
            (24,891
            )Net
                Cash Used in continuing operations
            
            
            (696,239
            )
            
            
            (205,912
            )Net
                Cash Used in discontinued operations
            
            
            -
            
            
            
            (452,412
            )Net
                Cash Used in operating activities
            
            
            (696,239
            )
            
            
            (658,324
            )CASH
                FLOWS FROM INVESTINGACTIVITIES:Investment
                in subsidiary
            
            
            -
            
            
            
            (750,000
            )Purchase
                of fixed assets
            
            
            (229,866
            )
            
            
            (1,632
            )Net
                cash provided by (used in) continuing activities
            
            
            (229,866
            )
            
            
            (751,632
            )Net
                cash provided by (used in) discontinued activities
            
            
            -
            
            
            
            (1,012,949
            )Net
                cash provided by (used in) investing activities
            
            
            (229,866
            )
            
            
            (1,764,581
            )











5




CHDT
      CORPORATION AND SUBSIDIARIES


(Formerly
      China Direct Trading Corporation)


CONSOLIDATED
      STATEMENTS OF CASH FLOWS


(Continued)








(Unaudited)For
                the Nine MonthsEnded
                September 30,2007
            
            
            2006CASH
                FLOWS FROM FINANCINGACTIVITIES:Proceeds
                from sale of stock
            
            
            336,000
            
            
            
            710,150Payments
                on notes payable to related parties
            
            
            (288,975
            )
            
            
            (455,000
            )Proceeds
                from shareholder loans
            
            
            -
            
            
            
            1,330,515Cash
                acquired in acquisition
            
            
            -
            
            
            
            33,677Proceeds
                from loans
            
            
            917,500
            
            
            
            50,000Net
                cash provided by (used in) continuing activities
            
            
            964,525
            
            
            
            1,669,342Net
                cash provided by (used in) discontinued activities
            
            
            -
            
            
            
            855,731964,525
            
            
            
            2,525,073Net
                (Decrease) Increase in cash and cash equivalents
            
            
            38,420
            
            
            
            102,168Cash
                and Cash Equivalents at beginning of period
            
            
            198,084
            
            
            
            9,090Cash
                and Cash Equivalents at end of period
            
            $
            236,504
            
            
            $
            111,258





SUPPLEMENTAL
                DISCLOSURE OF CASH FLOW INFORMATION:Cash
                paid during the period for:Interest
            
            $
            52,225
            
            
            $
            715Franchise
                and income taxes
            
            $
            -
            
            
            $
            -SUPPLEMENTAL
                DISCLOSURE OF NON-CASH INVESTING AND FINANCINGACTIVITIES:


On
      February 21, 2007, the Company
      issued 468,750 shares of common stock for notes payable of $15,000 and accrued
      interest of $1,761.





On
      March 16, 2007, the Company issued
      1,835,050 shares of common stock for investor loans payable of $50,000 and
      accrued interest of $5,052.





On
      August 21, 2007, the Company issued
      2,804,947 shares of common stock for notes payable of $250,000 and accrued
      interest of $2,445.














See
      accompanying notes.


6
 CHDT
              CORPORATION AND SUBSIDIARIES
 NOTES
              TO
              CONSOLIDATED FINANCIAL STATEMENTS


**NOTE
        1 - ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING
        POLICIES**
  This
        summary of accounting policies for CHDT Corporation (formerly, 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.  CHDT
        Corporation changed its name by amending its Articles of Incorporation, which
        name change was effective July 16, 2007 in respect of NASD Regulation, Inc.
        and
        OTC Bulletin Board approval of the name change, the trading symbol change
        from
“CHDT.OB” to “CHDO.OB” and change in CUSIP Number for CHDT Corporation’s Common
        Stock and effective May 7, 2007 in terms of approval by the State of Florida
        of
        the charter amendment.
 
 The
        unaudited financial statements as of September 30, 2007 and for the three
        and
        nine month periods ended September 30, 2007 and 2006 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 three and nine 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**
  CHDT
        Corporation (formerly, “China Direct Trading Corporation”), 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 from “CBQ, Inc.” to
        China Direct Trading Corporation as part of a reincorporation from the State
        of
        Colorado to the State of Florida.  Effective May 7, 2007, the Company
        amended its charter to change its name from “China Direct Trading Corporation”
to “CHDT Corporation.”  This name change was effective as of July 16,
        2007 for purposes of the change of its name on the OTC Bulletin
        Board.
  Souvenir
        Direct, Inc. was incorporated on September 9, 2002 under the laws of the
        State
        of Florida.  Souvenir Direct, Inc. operations were transferred to
        Capstone Industries, Inc. in the first quarter of fiscal year 2007 and Souvenir
        Direct, Inc. will be completely dissolved by December 31, 2007.
  On
        December 1, 2003, China Direct Trading Corporation issued 97 million shares
        common stock to acquire 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. Also on December 1, 2003, an additional 414,628,300 shares of common
        stock were issued to the previous owners of the Company.
  In
        February 2004, the Company established a new subsidiary, China Pathfinder
        Fund,
        L.L.C., a Florida limited liability company. During 2005, the name was changed
        to Overseas Building Supply, LLC to reflect its shift in business lines from
        business development to trading Chinese- made building supplies.
  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.  The Company subsequently sold its 51% membership interest in
        CPS, pursuant to a Purchase and Settlement Agreement dated and effective
        as of
        December 31, 2006.
  On
        September 13, 2006 the Company entered into a Stock Purchase Agreement with
        Capstone Industries, Inc., a Florida corporation (Capstone). Capstone was
        incorporated in Florida on May 15, 1996 and is engaged primarily in the business
        of wholesaling low technology consumer products to retailers in the United
        States.
  7
 CHDT
              CORPORATION AND SUBSIDIARIES
 NOTES
              TO
              CONSOLIDATED FINANCIAL STATEMENTS
   **NOTE
        1 - ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
        (continued)**
  **Nature
        of Business**
  From
        the
        beginning of fiscal year 2007, the Company has been primarily engaged in
        the
        business of marketing and selling low technology consumer products through
        national and regional retailers and distributors, primarily portable booklights,
        in North America.  While Capstone continues to sell the promotional,
        gift and novelty items previously sold by Souvenir Direct, inc., that business
        is secondary to the sale of consumer products to national retailers and
        distributors. The Company’s products are typically manufactured in the Peoples’
Republic of China by third-party contract manufacturing companies.
  During
        the period that the Company owned a 51% interest in CPS (January 27, 2006
        through December 31, 2006), the Company, through CPS, engaged in the business
        of
        power generators in South Florida and adjacent states.
  **Cash
        and Cash Equivalents**
  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.
  **Allowance
        for Doubtful Accounts**
  An
        allowance for doubtful accounts is established as losses are estimated to
        have
        occurred through a provision for bad debts charged to earnings.  The
        allowance for bad debt is evaluated on a regular basis by management and
        is
        based on upon management’s periodic review of the collectibility of the
        receivables.  This evaluation in inherently subjective and requires
        estimated that are susceptible to significant revisions as more information
        becomes available.
  As
        of
        September 30, 2007, management has determined that the accounts receivable
        are
        fully collectible.  As such, management has not recorded an allowance
        for doubtful accounts.
  **Inventory**
  The
        Company's inventory, which is recorded at the lower of cost (first-in,
        first-out) or market, consists of finished goods for resale by Capstone,
        totaling $433,450 at September 30, 2007 and $69,895as of
        December 31, 2006.
  In
        addition, Overseas Building Supply had deposits on inventory of $19,569,
        representing payments made for inventory not received by the Company as of
        December 31, 2006.
  **Property
        and Equipment**
  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:
 
 Computer
                  equipment                                3
                  - 7 years
                Computer
                  software                                   3
                  - 7 years
                Machinery
                  and
                  equipment                      3
                  - 7 years
                Furniture
                  and
                  fixtures                               3
                  - 7 years
  The
        Company follows FASB Statement No. 144 (SFAS 144), "Accounting for the
        Impairment of Long-Lived Assets." SFAS 144 requires that long-lived assets
        to be
        held and used are reviewed for impairment whenever events or changes in
        circumstances indicate that the related carrying amount may not be recoverable.
        When required, impairment losses on assets to be held and used are recognized
        based on the fair value of the asset. Long-lived assets to be disposed of,
        if
        any, are reported at the lower of carrying amount or fair value less cost
        to
        sell.  No impairments were recognized by the Company during
        2006.
  8
 CHDT
              CORPORATION AND SUBSIDIARIES
 NOTES
              TO
              CONSOLIDATED FINANCIAL STATEMENTS
   **NOTE
        1 - ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
        (continued)**
  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 $21,323 for the nine months ended September 30, 2007.
  **Goodwill
        and Other Intangible Assets**
  Goodwill
        and other intangible assets are recorded under the
        provisions of the Financial Accounting Standards Board (FASB) Statement No.142
        (SFAS 142), Goodwill and Other Intangible Assets. SFAS 142 requires that
        an
        intangible asset that is acquired either individually or with a group of
        other
        assets (but not those acquired in a business combination) shall be initially
        recognized and measured based on its fair value.  Goodwill acquired in
        business combinations is initially computed as the amount paid by the acquiring
        company in excess of the fair value of the net assets acquired.
  Costs
        of
        internally developing, maintaining and restoring intangible assets (including
        goodwill) that are not specifically identifiable, that have indeterminate
        lives,
        or that are inherent in a continuing business and related to an entity as
        a
        whole, are recognized as an expense when incurred.
  An
        intangible asset (excluding goodwill) with a definite useful life is amortized;
        an intangible asset with an indefinite useful life is not amortized until
        its
        useful life is determined to be no longer indefinite. The remaining useful
        lives
        of intangible assets not being amortized are evaluated at least annually
        to
        determine whether events and circumstance continue to support an indefinite
        useful life. If and when an intangible asset is determined to no longer have
        an
        indefinite useful life, the asset shall then be amortized prospectively over
        its
        estimated remaining useful life and accounted for in the same manner as other
        intangibles that are subject to amortization.
  An
        intangible asset (including goodwill) that is not subject to amortization
        shall
        be tested for impairment annually or more frequently if events or changes
        in
        circumstances indicate that the asset might be impaired. The impairment test
        consists of a comparison of the fair value of the intangible assets with
        its
        carrying amount. If the carrying amount of an intangible asset exceeds its
        fair
        value, an impairment loss shall be recognized in an amount equal to that
        excess.
        In accordance with SFAS 142, goodwill is not amortized.
  It
        is the
        Company's policy to test for impairment no less than annually, or when
        conditions occur that may indicate an impairment. The Company's intangible
        assets, which consist of goodwill of $1,936,020 recorded in connection with
        the
        Capstone acquisition, were tested for impairment and determined that no
        adjustment for impairment was necessary as of September 30, 2007, whereas
        the
        fair value of the intangible asset exceeds its carrying amount,
  The
        Company initially recorded goodwill of $1,567,214 in connection with the
        CPS
        acquisition.  Effective December 31, 2006, the Company disposed of its
        interest in CPS and, accordingly, wrote off this amount, which is included
        in
        the loss from discontinued operations on the consolidated statement of income
        (loss).
  9
 CHDT
              CORPORATION AND SUBSIDIARIES
 NOTES
              TO
              CONSOLIDATED FINANCIAL STATEMENTS
   **NOTE
        1 - ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
        (continued)**
  **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.  In periods where losses are reported, the weighted average
        number of common shares outstanding excludes common stock equivalents because
        their inclusion would be anti-dilutive. Diluted loss per common share for
        the
        nine months ended September 30, 2007 and 2006 are not presented as it would
        be
        anti-dilutive.  At September 30, 2007 and 2006, the total number of
        potentially dilutive common stock equivalents was 85,748,980 and 7,060,000,
        respectively.
  **Principles
        of Consolidation**
  The
        consolidated financial statements for the nine months ended September 30,
        2007
        and 2006 include the accounts of the parent entity and its wholly-owned
        subsidiaries Souvenir Direct, Inc., Overseas Building Supply, LLC (formerly
        “China Pathfinder Fund, LLC”), and Capstone Industries, Inc.
  The
        results of operations attributable to Capstone are included in the consolidated
        results of operating beginning on September 13, 2006, the date on which the
        Company’s interest in Capstone was acquired.
  The
        results of operations attributable to the Company’s interest in its former
        subsidiary, CPS, for the period of time in which majority interest in CPS
        was
        held by the Company (January 27, 2006 through December 31, 2006) are included
        in
        the loss from discontinued operations on the consolidated statement of income
        (loss).  All significant intercompany balances and transactions have
        been eliminated.
 
 **Fair
        Value of Financial Instruments**
 
 The
        carrying value of the Company's financial instruments, including accounts
        payable and accrued liabilities at September 30, 2007 and December 31, 2006
        approximates their fair values due to the short-term nature of these financial
        instruments.
  **Reclassifications**
  Certain
        reclassifications have been made in the 2006 financial statements to conform
        with the 2007 presentation. There were no material changes in classifications
        made to previously issued financial statements.
  **Revenue
        Recognition**
  Product
        Sales are recognized when an agreement of sale exists, product delivery has
        occurred, pricing is final or determinable, and collection is reasonably
        assured.
  Allowances
        for sales returns, rebates and discounts are recorded as a component of net
        sales in the period the allowances are recognized.  In addition,
        accrued liabilities contained in the accompanying balance sheet include accruals
        for estimated amounts of credits to be issued in future years based on
        potentially defective product, other product returns and various
        allowances.  These estimates could change significantly in the near
        term.
  **Advertising
        and Promotion**
  Advertising
        and promotion costs, including advertising, public relations, and trade show
        expenses, are expensed as incurred. Advertising and promotion expense was
        $33,775 and $63,606 for the nine months ended September 30, 2007 and 2006,
        respectively.
  10
 CHDT
              CORPORATION AND SUBSIDIARIES
 NOTES
              TO
              CONSOLIDATED FINANCIAL STATEMENTS
   **NOTE
        1 - ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
        (continued)**
  **Shipping
        and Handling**
  The
        Company’s shipping and handling costs, incurred by Capstone, are included in
        selling expenses and amounted to $5,253 for the nine months ended September
        30,
        2007.
  **Income
        Taxes**
  The
        Company accounts for income taxes under the provisions of Financial Accounting
        Standards Board (FASB) Statement No. 109 (SFAS 109), "Accounting for Income
        Taxes." SFAS 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. The Company and its subsidiaries intend to file
        consolidated income tax returns
 
 **Stock-Based
        Compensation**
 
 On
        January 1, 2006, the Company adopted Statement of Financial Accounting Standards
        No. 123 (Revised 2004), Share-Based Payments, SFAS 123(R), which requires
        the
        measurement and recognition of compensation expense for all share-based payment
        awards made to employees and directors, including employee stock options,
        based
        on estimated fair values. SFAS 123(R) supersedes the Company’s previous
        accounting under Accounting Principles Board Opinion No. 25, Accounting for
        Stock Issued to Employees (APB 25) and related interpretations, applied for
        periods through December 31, 2005. In March 2005, the Securities and Exchange
        Commission issued Staff Accounting Bulletin No. 107 (SAB 107) relating to
        SFAS
        123(R). The Company has applied the provision of SAB 107 in its adoption
        of SFAS
        123(R).
 
 The
        Company adopted SFAS 123(R) using the modified prospective application
        transition method, which requires the application of the accounting standard
        as
        of January 1, 2006, the first date of the Company’s fiscal year. The Company’s
        consolidated financial statements as of and for the year ended December 31,
        2006
        reflect the impact of SFAS 123(R). In accordance with the modified prospective
        method, the Company’s consolidated financial statements for prior periods have
        not been restated to reflect, and do not include, the impact of SFAS
        123(R).
 
 SFAS
        123(R) requires companies to estimate the fair value of share-based payment
        awards on the date of the grant using an option-pricing model. The value
        of the
        portion of the award that is ultimately expected to vest is recognized as
        expenses over the requisite service periods in the Company’s consolidated
        statements of income (loss). Prior to the adoption of SFAS 123(R), the Company
        accounted for stock-based awards to employees and directors using the intrinsic
        value method in accordance with APB 25, as allowed under SFAS No. 123,
        Accounting for Stock-Based Compensation, (SFAS 123). Under the intrinsic
        value
        method, compensation expense under fixed term option plans was recorded at
        the
        date of grant only to the extent that the market value of the underlying
        stock
        at the date of grant exceeded the exercise price. Accordingly, for those
        stock
        options granted for which the exercise price equaled the fair market value
        of
        the underlying stock at the date of grant, no expense was recorded.
 
 Stock-based
        compensation expense recognized during the period is based on the value of
        the
        portion of share-based payment awards that is ultimately expected to vest
        during
        the period.  There was no stock-based compensation expense attributable to
        options for the nine months ended September 30, 2007 and 2006 for compensation
        expense for share-based payment awards granted prior to, but not vested as
        of
        December 31, 2005.  Such stock-based compensation is based on the grant
        date fair value estimated in accordance with the pro forma provisions of
        SFAS
        123.  Compensation expense for share-based payment awards granted
        subsequent to December 31, 2005 are based on the grant date fair value estimated
        in accordance with the provisions of SFAS 123(R).
  11
 CHDT
              CORPORATION AND SUBSIDIARIES
 NOTES
              TO
              CONSOLIDATED FINANCIAL STATEMENTS
   **NOTE
        1 - ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
        (continued)**
 
 In
        conjunction with the adoption of SFAS 123(R), the Company adopted the
        straight-line single option method of attributing the value of stock-based
        compensation expense. As stock-based compensation expense is recognized during
        the period is based on awards ultimately expected to vest, it is subject
        to
        reduction for estimated forfeitures. SFAS 123(R) requires forfeitures to
        be
        estimated at the time of grant and revised, if necessary, in subsequent periods
        if actual forfeitures differ from those estimates. As of and for the three
        months ended March 31, 2007, there were no material amounts subject to
        forfeiture. The Company has not accelerated vesting terms of its
        out-of-the-money stock options, or made any other significant changes, prior
        to
        adopting FASB 123(R), Share-Based Payments.
 
 During
        the nine months ended September 30, 2007, the Company granted 135,500,000
        stock
        options to two officers of the Company.  Twenty percent of these
        options, or 27,100,000 options, vested immediately.  For the three
        months ended September 30, 2007, the Company recognized compensation expense
        of
        $153,208 related to these options.
 
 The
        Company recognizes compensation expense paid with common stock and other
        equity
        instruments issued for assets and services received based upon the fair value
        of
        the assets/services or the equity instruments issued, whichever is more readily
        determined.
 
 As
        of the
        date of this report the Company has not adopted a method to account for the
        tax
        effects of stock-based compensation pursuant to SFAS 123(R) and related
        interpretations. However, whereas the Company has substantial net operating
        losses to offset future taxable income and its current deferred tax asset
        is
        completely reduced by the valuation allowance, no material tax effects are
        anticipated.
 
 During
        the year ended December 31, 2005, the Company valued stock options using
        the
        intrinsic value method prescribed by APB 25.  Since the exercise price
        of stock options previously issued was greater than or equal to the market
        price
        on grant date, no compensation expense was recognized.
 
 
 **Stock-Based
        Compensation Expense**
 
 Stock-based
        compensation expense for the nine months ended September 30, 2007 included
        $101,100, consisting of $25,000 included in employee compensation, $72,500
        for
        consulting fees and $3,600 for legal fees.  Stock-based compensation
        expense for the nine months ended September 30, 2006 was $96,611, consisting
        of
        $37,500 included in employee compensation, $33,861 for consulting fees and
        $25,250 for legal fees.
 
 **Recent
        Accounting Standards**
 
 In
        September 2006, the FASB issued SFAS No. 157, "Accounting for Fair Value
        Measurements." SFAS No. 157 defines fair value, and establishes a framework
        for
        measuring fair value in generally accepted accounting principles and expands
        disclosure about fair value measurements. SFAS No. 157 is effective for the
        Company for financial statements issued subsequent to November 15, 2007.
        The
        Company does not expect the new standard to have any material impact on the
        financial position and results of operations.
 
 In
        September 2006, the staff of the Securities and Exchange Commission issued
        Staff
        Accounting Bulletin No. 108 (“SAB 108”) which provides interpretive guidance on
        how the effects of the carryover or reversal of prior year misstatements
        should
        be considered in quantifying a current year misstatement. SAB 108 becomes
        effective in fiscal 2007. Management is evaluating the financial impact of
        this
        pronouncement.
  12
 CHDT
              CORPORATION AND SUBSIDIARIES
 NOTES
              TO
              CONSOLIDATED FINANCIAL STATEMENTS
  **NOTE
        1 - ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
        (continued)**
 
 In
        December 2006, the FASB approved FASB Staff Position (FSP) No. EITF 00-19-2,
        “Accounting for Registration Payment Arrangements” (“FSP EITF 00-19-2”), which
        specifies that the contingent obligation to make future payments or otherwise
        transfer consideration under a registration payment arrangement, whether
        issued
        as a separate agreement or included as a provision of a financial instrument
        or
        other agreement, should be separately recognized and measured in accordance
        with
        SFAS No. 5, “Accounting for Contingencies”.  FSP EITF 00-19-2 also
        requires additional disclosure regarding the nature of any registration payment
        arrangements, alternative settlement methods, the maximum potential amount
        of
        consideration and the current carrying amount of the liability, if
        any.  The guidance in FSP EITF 00-19-2 amends FASB Statements No. 133,
“Accounting for Derivative Instruments and Hedging Activities”, and No. 150,
“Accounting for Certain Financial Instruments with Characteristics of both
        Liabilities and Equity”, and FASB Interpretation No. 45, “Guarantor’s Accounting
        and Disclosure requirement for Guarantees, Including Indirect Guarantees
        of
        Indebtedness of Others”, to include scope exceptions for registration payment
        arrangements.
 
 FSP
        EITF
        00-19-2 is effective immediately for registration payment arrangements and
        the
        financial instruments subject to those arrangements that are entered into
        or
        modified subsequent to the issuance date of this FSP, or for financial
        statements issued for fiscal years beginning after December 15, 2006, and
        interim periods within those fiscal years, for registration payment arrangements
        entered into prior to the issuance date of this FSP.  The adoption of
        this pronouncement is not expected to have any material impact on the Company’s
        financial position, results of operations or cash flows.
 
 In
        October 2005, the FASB issued FSP FAS 123(R)-2, “Practical Accommodation to the
        Application of Grant Date as Defied in FASB Statement No. 123(R)”, which
        provides clarification of the concept of mutual understanding between employer
        and employee with respect to the grant date of a share-based payment
        award.  This FSP provides that a mutual understanding of the key terms
        and conditions of an award shall be presumed to exist on the date the award
        is
        approved by management if the recipient does not have the ability to negotiate
        the key terms and conditions of the award and those key terms and conditions
        will be communicated to the individual recipient within a relatively short
        time
        period after the date of approval.  This guidance was applicable upon
        the initial adoption of SFAS 123(R).  The adoption of this
        pronouncement did not have an impact on the Company’s financial position,
        results of operations, or cash flows.
 
 In
        February 2007, the FASB issued SFAS no, 159, “The Fair Value Option for
        Financial Assets and Financial Liabilities” (“SFAS 159”).  SFAS 159
        provides companies with an option to report selected financials assets and
        liabilities at fair value.  The objective of SFAS 159 is to reduce
        both complexity in accounting for financial instruments and the volatility
        in
        earnings caused by measuring related assets and liabilities
        differently.  Generally accepted accounting principles have required
        different measurement attributes for different assets and liabilities that
        can
        create artificial volatility in earnings.  The FASB has indicated it
        believes that SFAS 159 helps to mitigate this type of accounting-induced
        volatility by enabling companies to report related assets and liabilities
        at
        fair value, which would likely reduce the need for companies to comply with
        detailed rules for hedge accounting.  SFAS 159 also establishes
        presentation and disclosure requirements designed to facilitate comparisons
        between companies that choose different measurement attributes for similar
        types
        of assets and liabilities.  SFAS 159 does not eliminate disclosure
        requirements included in other accounting standards, including requirements
        for
        disclosures about fair value measurements included in SFAS 157 and SFA No.
        107,
“Disclosures about Fair Value of Financial Instruments.” SFAS 159 is effective
        for the Company as of the beginning of fiscal year 2009.  The adoption of
        this
        pronouncement is not expected to have an impact on the Company’s financial
        position, results of operations or cash flows.
  13
 CHDT
              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 requires 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, and the differences could
        be
        material.
  **NOTE
        2 – CONCENTRATIONS OF CREDIT RISK AND ECONOMIC DEPENDENCE**
  Financial
        instruments that potentially subject the Company to credit risk consist
        principally of cash and cash equivalents and accounts receivable.
  The
        Company has no significant off-balance-sheet concentrations of credit risk
        such
        as foreign exchange contracts, options contracts or other foreign hedging
        arrangements.
  **Cash
        and Cash Equivalents**
  The
        Company at times has cash and cash equivalents with its financial institution
        in
        excess of Federal Deposit Insurance Corporation (FDIC) insurance
        limits.  The Company places in cash and cash equivalents with high
        credit quality financial institution which minimize these risks.  As
        of September 30, 2007, CHDT Corp has cash in excess of FDIC limits of
        approximately $104,704.
  **Accounts
        Receivable**
  The
        Company grants credit to its customers, substantially all of whom are retail
        establishments located throughout the United States.  The Company
        typically does not require collateral from customers. Credit risk is limited
        due
        to the financial strength of the customers comprising the Company’s customer
        base and their dispersion across difference geographical regions.  The
        Company monitors exposure of credit losses and maintains allowances for
        anticipated losses considered necessary under the circumstances.
  **Major
        Customers**
  During
        the years ended December 31, 2006 and 2005, the Company received
        approximately  49% and 40% respectively, of its gross revenues from
        its top three customers. The loss of these customers would adversely impact
        the
        business of the Company.
  During
        the years ended December 31, 2006 Capstone received approximately 71% of
        its
        gross revenues from its top two customers.   As of December 31,
        2006, approximately 68% (or $440,386) of the Company’s accounts receivable were
        from these two customers.  The loss of these customers would adversely
        impact the business of the Company.
  **Major
        Suppliers**
  The
        Company's major suppliers are from the Peoples’ Republic of China. 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.
  In
        addition, Capstone has certain vendors from which it purchased at least ten
        percent of merchandise during 2006.  During the year ended December
        31, 2006, the Capstone purchased approximately 96% of its merchandise for
        two
        suppliers (one at 86% and another at $10%).
  The
        loss
        of these suppliers would adversely impact the business of the
        Company.
  14
 CHDT
              CORPORATION AND SUBSIDIARIES
 NOTES
              TO
              CONSOLIDATED FINANCIAL STATEMENTS
   **NOTE
        3 – DUE TO RELATED PARTIES**
  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 due related parties at September 30, 2007 and December 31,
        2006.  Also included in due to related parties, as of December 31,
        2006, is accrued but unpaid officer’s compensation of $100,000, payable to the
        Company’s CEO. During the three months ended March 31, 2007, the $100,000
        accrued compensation was converted into 3,031,000 shares of common
        stock.
  **NOTE
        4 – NOTES AND LOANS PAYABLE TO RELATED PARTIES**
  **Overseas
        Building Supply - Notes Payable to Shareholders**
  On
        September 1, 2004, Overseas Building Supply, LLC (f/k/a China Pathfinder
        Fund,
        LLC), a wholly-owned subsidiary of the Company, executed notes payable of
        $15,000 to three shareholders of the Company, including $5,000 to CEO. The
        notes
        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.  As of December 31, 2006, the total amounts due on these loans
        was $16,761, including accrued interest.  During the three months
        ended March 31, 2007, these notes were converted into 468,750 shares of common
        stock.
  **CHDT
        Corp - Notes Payable to Director**
  On
        June
        29, 2006, the Company executed a $250,000 note payable to a director of the
        Company.  The note carries an interest rate of 7% per annum and is
        payable if full, with accrued interest, on June 30, 2007.  The
        proceeds from this note were used to advanced funds to CPS. As of December
        31,
        2006, the total amount payable on the note was $258,750, including $8,750
        of
        accrued interest.  During the quarter ended June 30, 2007, the Company
        paid accrued interest of $13,125 and during the quarter ended September 30,
        2007, the Company paid accrued interest of $4,363.  On August 21,
        2007, the Company issued 2,804,947 shares of common stock valued at $252,445
        as
        payment for $250,000 in principal and interest of $2,445 on the
        note.
  On
        September 15, 2006, the Company executed a $750,000 promissory note payable
        a
        director of the Company, secured by the accounts receivable of the note
        holder.  The note carries an interest rate of 8% per
        annum.  Interest is payable each calendar quarter, commencing with the
        quarter ended December 31, 2006.  All principal is payable if full,
        with accrued interest, on December 31, 2008.  At the option of the
        note holder, any quarterly interest or the principal may be paid in cash
        or in
        shares of the Company’s common stock or a combination of cash or
        shares.  Any shares issued shall have a value of $ .08 per share for
        purposes of calculating the amount of principal or interest paid by the issuance
        of each share.  The proceeds from this note were used to funds to
        Capstone acquisition.  As of December 31, 2006, the total amount
        payable on the note was $767,589, including $17,589 of accrued
        interest.  As of September 30, 2007, the total amount payable on the
        note was $765,123, including $15,123 of accrued interest.  During the
        quarter ended June 30, 2007, the Company paid accrued interest of $32,383
        and
        during the quarter ended September 30, 2007, the Company paid accrued interest
        of $14,959.  The carrying amount of the collateral, the Company’s
        accounts receivable at September 30, 2007 and December 31, 2006 was $690,631
        and
        $560,475, respectively.
  On
        May
        30, 2007, the Company executed a $575,000 promissory note payable to a director
        of the Company.  The note carries an interest rate of 10.459% per
        annum.  All principal is payable in full, with accrued interest, on
        May 30, 2009.  As of September 30, 2007, the total amount payable on
        the note was $575,000.
  15
 CHDT
              CORPORATION AND SUBSIDIARIES
 NOTES
              TO
              CONSOLIDATED FINANCIAL STATEMENTS
   **NOTE
        4 – NOTES AND LOANS PAYABLE TO RELATED PARTIES (continued)**
  **Overseas
        Building Supplies - Notes Payable to Director**
  On
        December 14, 2006, Overseas Building Supply received proceeds from a note
        payable of $2,500 to a director. During the quarter ended March 31, 2007,
        Overseas Building Supply received proceeds from additional notes payable
        of
        $24,000.  The notes carry an interest rate of 8% per annum and are due
        on demand.  During the quarter ended June 30, 2007, the Company paid
        accrued interest of $60 and during the quarter ended September 30, 2007,
        the
        Company paid accrued interest of $529.  At September 30, 2007 and
        December 31, 2006, the total amount due on these loans was $27,034 and $2,510,
        respectively.
  **China
        Direct and Souvenir Direct - Loans Payable to Director**
  During
        the period from August 24, 2006 through November 30, 2006, a director made
        loans
        to the Company totaling $490,000, including $10,000 to the Company’s wholly
        owned subsidiary, Souvenir Direct, Inc.  The loans carry interest of
        8% and are payable on demand.  In November 2006, the Company repaid
        $50,000 of this amount.  During the quarter ended March 31, 2007, the
        Company repaid $278,975 of these loans and received an additional $33,000
        in
        proceeds from loans.  During the quarter ended June 30, 2007, the
        Company paid accrued interest of $12,503 and during the quarter ended September
        30, 2007, the Company paid accrued interest of $3,841.  As of December
        31, 2006, the total amount payable on these loans was $448,738, including
        $8,738
        of accrued interest.  At September 30, 2007, the total amount payable
        on these loans was $198,447, including $3,922 of accrued interest.
  **Capstone
        Industries – Loans Payable to Director**
  On
        June
        15, 2007, Capstone Industries executed a $72,000 promissory note payable
        to a
        director of the Company.  The note carries an interest rate
        of  8% per annum and is due on February 15, 2008.  During
        the quarter ended September 30, 2007, the Company paid accrued interest of
        $240.  At September 30, 2007, the total amount payable on this loan
        was $73,452, including interest of $1,452.
  On
        July
        16, 2007, Capstone Industries executed a $103,000 promissory note payable
        to a
        director of the Company.  The note carries an interest rate
        of  8% per annum and is due on December 31, 2007.  At
        September 30, 2007, the total amount payable on this loan was $104,761,
        including interest of $1,761.
  **Capstone
        Industries – Loans Payable to Officer**
  On
        September 7, 2007, Capstone Industries executed a $100,000 promissory note
        payable to an officer of the Company.  The note carries an interest
        rate of  8% per annum and is due on December 31, 2007.  At
        September 30, 2007, the total amount payable on this loan was $100,504,
        including interest of $504.
  Based
        on
        the above, the total amount payable to officers and directors as of September
        30, 2007 and December 31, 2006 was $1,844,320 and $1,494,348, respectively,
        including accrued interest of $23,297 and $36,848, respectively.
  The
        maturities under the notes and loan payable to related parties for the next
        five
        years are:
 
 Year
                  Ended December 31,
                -------------------------------------------
                2007                                  $         519,320
                2008                                          1,325,000
                2009                                                     
                  -
                2010                                                    
                   -
                2011                                                
                       -
                -----------------
                Total
                  future maturities  $    
                   1,844,320
                ==========
  16
 CHDT
              CORPORATION AND SUBSIDIARIES
 NOTES
              TO
              CONSOLIDATED FINANCIAL STATEMENTS
   **NOTE
        5 – INVESTOR LOANS PAYABLE**
  In
        March,
        2006, the Company executed notes payable to an investor of $25,500 and $24,500,
        totaling $50,000.  The notes carry an interest rate of 10% per annum
        and are payable if full, with accrued interest, in March 2008.  The
        notes are secured by shares of the Company’s common stock and convertible into
        the Company’s common stock.  As of December 31, 2006, the total amount
        payable on the notes was $54,038, including $4,038 of accrued
        interest.
  Interest
        shall be payable, at the option of the note holder, in cash or in shares
        of the
        Company’s common stock.  The number of common shares to be issued as
        payment of accrued and unpaid interest shall be determined by dividing the
        total
        amount of accrued and unpaid interest to be converted in common stock by
        the
        Conversion Price. The Note shall be convertible (in whole or in part), at
        the
        option of the note holder, into a number of fully paid and non-assessable
        shares
        of common stock, by dividing that portion of the outstanding principal balance
        plus any accrued but unpaid interest as of the conversion date by the Conversion
        Price.
  The
        Conversion Price shall mean a price no lower than $ .03 and higher than $
        .04
        which will be the average of the closing bid price (adjusted for stock splits,
        combinations, certain dividends and distributions, reclassification, exchange
        or
        substitution, reorganization, merger, consolidation or sales of asses, issuances
        of additional shares of common stock, and issuance of common stock equivalents)
        for ten days trading preceding the conversion date.
  In
        March
        2007, the note holders elected to convert the notes payable and accrued
        interest, totaling $55,052, into a total of 1,835,050 shares of the Company’s
        common stock, at a conversion price of $ .03 per share.
  **NOTE
        6 – LEASES**
  On
        June 29, 2007, the Company  relocated its principal executive offices
        and sole operations facility to 350 Jim Moran Blvd., Suite 120, Deerfield
        Beach,
        Florida 33442, which is located in Broward County.  This space
        consists of 4,000 square rentable feet and is leased under a 1 year lease
        at a
        monthly rental of $4,940.00.
  The
        Company also rents a storage facility on a month-to-month basis. Monthly
        rentals
        for the storage facility are approximately $150.  This facility was
        closed in August, 2007.
  Capstone’s
        operating facility was leased by a company that is 100% owned by the former
        sole
        shareholder.
  Rental
        expense under these leases was approximately $24,072 and $18,018 for the
        nine
        months ended September 30, 2007 and 2006, respectively.
  **NOTE
        7 - COMMITMENTS**
  **Employment
        Agreements**
  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. For 2006 and 2007, Mr. Ullman has agreed to reduce his compensation
        to
        $100,000.
  On
        January 27, 2006, the Company entered into an employment agreement with William
        Dato, the President of CPS, the Company's formerly majority-owned subsidiary,
        which provided for annual compensation of $100,000.  Upon the sale of
        the Company’s interest in CPS, the employment agreement was
        terminated.
  17
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   **NOTE
        7 – COMMITMENTS (continued)**
  On
        April
        23, 2007, Stewart Wallach was appointed as CEO of the Company while retaining
        the position of CEO with Capstone; Howard Ullman resigned as CEO and President
        of the Company while remaining as Chairman of the Board of the Company; and
        Gerry McClinton was appointed as Chief Operating Officer of the
        Company.
  **License
        Agreement**
  Capstone
        entered into a marketing agreement for design and marketing
        services.  These agreements call for royalty payments to be paid
        either at fixed periodic amounts or at varying rates, based on sales volume
        of
        specified products.  Capstone did not renew the royalty agreement in
        2006 and did not incur royalty expense for the year ended December 31,
        2006.
  **Line
        of Credit**
  Capstone
        had a line of credit with a financial institution, with an available limit
        of
        $300,000 during 2005 and a portion of 2006.  As of December 31, 2006
        and 2005, Capstone did not have an outstanding balance related to the line
        of
        credit. Capstone terminated the line effective October 18, 2006
  **NOTE
        8 - STOCK TRANSACTIONS**
  **Common
        Stock**
  In
        June,
        2006, 1,000 shares of the company’s series “A” preferred stock, beneficially
        owned by the Company’s CEO, were exchanged for 1,000,000 shares of the Company’s
        common stock.
  In
        June
        2006, the Company issued 500,000 shares of common stock for compensation
        valued
        at $37,500.
  In
        June
        2006,  the Company issued 834,722 shares of common stock for
        consulting fees and professional services valued at $25,111.
  In
        July
        2006,  the Company issued 250,000 shares of common stock for
        consulting fees valued at $8,750.
  In
        July
        2006,  options were exercised for 4,000,000 shares of the Company’s
        common stock for $72,000.
  In
        August
        2006. the Company issued 250,000 shares of common stock for legal fees valued
        at
        $25,250.
  In
        September 2006,  the Company issued 5,000,000 shares of common stock
        for accrued directors fees valued at $175,000.
  In
        September 2006, 800,000 shares of the Company’s common stock were returned to
        the treasury and cancelled.
  In
        September 2006 options were exercised for 25,000 shares of the Company’s common
        stock for $1,150.
  In
        September 2006, 20,000,000 shares of the Company’s common stock held by the
        Company’s CEO were exchanged for 300,300 shares of the Company’s series “B”
preferred stock.
  In
        October 2006, options were exercised by the Company’s CEO for 1,975,000 shares
        of the company’s common stock for $9,875.
  In
        October 2006, the Company issued 250,000 shares of common stock for consulting
        fees valued at $11,750.
  18
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   **NOTE
        8 - STOCK TRANSACTIONS (continued)**
  In
        February 2007, the Company issued 1,428,571 shares of common
        stock  for consulting fees valued at $50,000.  The shares
        were valued at $.035 per share.
  In
        February 2007, the Company issued 250,000 shares of common stock for cash
        of
        $5,000.
  In
        February 2007, the Company issued 468,750 shares of common stock for notes
        payable totaling $16,761.
  In
        March
        2007, the Company issued 3,031,000 shares of common stock for accrued
        compensation of $100,000.
  In
        March
        2007, the Company issued 757,575 shares of common stock for officers
        compensation valued at $25,000.  The shares were valued at $.033 per
        share.
  In
        March
        2007, the Company issued 1,835,050 shares of common stock for investor loans
        payable totaling $55,051.
  In
        May
        2007, the Company issued 500,000 shares of common stock for expenses totaling
        $15,000.
  In
        August
        2007, the Company issued 105,882 shares of common stock for legal expenses
        of
        $1,800.
  In
        August
        2007, the Company issued 2,804,947 shares of common stock for notes payable
        of
        $252,445.
  In
        August
        2007, the Company issued 2,500,000 shares of common stock for accrued expenses
        of $50,000.
  In
        August
        2007, the Company issued 340,909 shares of common stock for consulting expenses
        of $7,500.
  In
        August
        2007, the Company issued 112,510 shares of common stock for legal expenses
        of
        $1,800.
  In
        September 2007, the Company issued 19,470,588 shares of common stock for
        cash of
        $331,000.
  For
        issuances of shares of common stock during the periods described above, the
        Company issued restricted shares (Rule 144). The shares issued were valued
        by
        the Company based upon the closing price of the shares on the date of issuance.
        The value of these shares issued for services was charged to expense, unless
        they were in consideration for future services, in which case they were recorded
        as deferred consulting fees. Shares retired / cancelled were recorded at
        par
        value.
  **Series
        “A” Preferred Stock**
  A
        total
        of 8,100 shares of series “A” preferred stock were issued in 2004, and, in May
        2005, 100 shares were returned to the treasury and cancelled.
  In
        January 2006 the Company issued 600,000 shares of series “A” preferred stock,
        convertible into 50,738,958 shares of the Company’s common stock, in connection
        with the acquisition of a 51% majority interest in CPS.  The shares
        were valued at $1,200,000.
  In
        January 2007 (effective December 31, 2006), the 600,000 shares of series
“A”
convertible preferred issued to CPS were returned to the treasury and cancelled,
        in connection with the Company’s sale of its interest in CPS.  The
        shares were valued at $1,775,864.  None of the preferred shares were
        converted to common shares.  At December 31, 2006, the shares had not
        been returned, and a related party receivable of $1,775,864 was
        recorded.  During the three months ended March 31, 2007, these shares
        were returned to the treasury and cancelled.
  In
        June,
        2006, 1,000 shares of the company’s series “A” preferred stock, beneficially
        owned by the Company’s CEO, were exchanged for 1,000,000 shares of the Company’s
        common stock.
  19
 CHDT
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   **NOTE
        8 - STOCK TRANSACTIONS (continued)**
  In
        February 2007, 734 shares of the Company’s series “A” preferred stock were
        exchanged for 73,400 shares of the Company’s common stock.
  In
        May
        2007, 367 shares of the Company’s series “A” preferred stock were exchanged for
        367,000 shares of the Company’s common stock.
  As
        of
        September 30, 2007, a total of 5,899 shares of series “A” preferred stock were
        issued and outstanding, and are convertible into common shares, at a rate
        of
        1,000 shares of common stock for each share of series “A” preferred stock and
        are redeemable at the option of the Company.
  **Series
        “B” Preferred Stock**
  In
        January 2006 the Company sold 657,000 shares of its series “B” preferred stock
        for cash of $637,000, including 387,000 shares to the Company’s CEO and the
        remaining shares to other directors of the Company.  During the three
        months ended March 31, 2007, 15,000 shares of the Company’s series “B” preferred
        shares issued to a director were exchanged for 990,000 shares of the Company’s
        common stock.
  In
        September 2006 the Company issued 300,030 shares of its series “B” preferred
        stock to the Company’s CEO in exchange for 20,000,000 shares of its common stock
        held by the CEO.
  In
        September, 2006 the Company issued an additional 236,739 shares of its series
        “B” preferred stock in connection with the acquisition of 100% of the voting
        interest of Capstone Industries, Inc.  The shares were valued at
        $1,250,000.  During the three months ended March 31, 2007, 236,739
        shares of the Company’s series “B” preferred stock was converted into 15,624,774
        shares of the Company’s common stock.
  The
        series “B” preferred shares are convertible into common shares, at a rate of
        66.66 shares of common stock for each share of series “B” preferred
        stock.
  **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.
  **Options**
  In
        2005,
        the Company authorized the 2005 Equity Plan that made available 10,000,000
        shares of common stock for issuance through awards of options, restricted
        stock,
        stock bonuses, stock appreciation rights and restricted stock
        units.  On May 20, 2005 the Company granted non-qualified stock
        options under the company’s 2005 Equity Plan for a maximum of 250,000 shares of
        the Company’s common stock for $0.02 per share. The options expire May 25, 2015
        and may be exercised any time after May 25, 2005 During the years end December
        31, 2006 and 2005, and through the date of this report, none of these options
        were exercised by the option holder.
  On
        April
        23, 2007, the Company granted a ten-year non-qualified, non-statutory stock
        option for 107,400,000 “restricted” shares of the Company’s common stock to
        Stewart Wallach, the Company’s CEO, as incentive compensation.  The
        exercise price of the options is $.029 per share, which was the fair market
        value of the stock on the date of grant.  Twenty percent of the
        options vested on the date of issuance, and twenty percent per year will
        vest on
        the anniversary date through April 23, 2011.
  20
 CHDT
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   **NOTE
        8 - STOCK TRANSACTIONS (continued)**
  On
        April
        23, 2007, the Company granted a ten-year non-qualified, non-statutory stock
        option for 28,100,000 “restricted” shares of the Company’s common stock to Gerry
        McClinton, the Company’s COO and Secretary, as incentive
        compensation.  The exercise price of the options is $.029 per share,
        which was the fair market value of the stock on the date of
        grant.  Twenty percent of the options vested on the date of issuance,
        and twenty percent per year will vest on the anniversary date through April
        23,
        2011.
  **NOTE
        9 – BUSINESS ACQUISITIONS AND DISPOSALS**
  **Complete
        Power Solutions**
  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.
  On
        January 26, 2007, the Company entered into a Purchase and Settlement Agreement
        (the "Settlement Agreement"), dated and effective as of December 31, 2006,
        with
        William Dato and CPS whereby: (a) CPS repurchased the 51% membership interest
        owned by China Direct in return for the transfer of the 600,000 shares of
        the
        Company’s "Series A Preferred Stock”, which are convertible into 50,739,958
        shares of the Company's common stock, and (b) the issuance of a promissory
        note
        by CPS to China Direct for 225,560, bearing annual interest at 7% with
        interest-only payments commencing on July 1, 2007 and thereafter being paid
        quarterly on April 1st, July 1st, October 1st, and January 1st until the
        principal and all unpaid interest thereon shall become due and payable on
        the
        maturity date, being January 6, 2010 (the “2007 Promissory
        Note”).  The 2007 Promissory Note also provides that the principal
        amount may be automatically increased by an amount of up to $7,500 if the
        amount
        of a customer claim is settled for less than $7,500. As of the date of this
        report the principal amount has not been increased by an amount up to $7,500,
        as
        described above.  The shares were valued at $1,775,864 based on the
        market value of the common stock the shares are convertible into.
  As
        of
        December 31, 2006, the balance due on the $225,560 was classified on the
        Company’s balance sheet as an amount due from former subsidiary.  This
        item was classified as long-term as of December 31, 2006, in anticipation
        of its
        conversion to a note receivable, the maturiy of which is more than one year
        from
        the balance sheet date.  Subsequently, upon execution of the 2007
        Promissory Note on January 26, 2007, the Company reclassified the balance
        as a
        long-term note receivable from former subsidiary.  At June 30, 2007,
        the balance due was $225,560.
  CPS
        is
        also indebted to China Direct under a promissory note in the original principal
        amount of $250,000, executed by William Dato on June 27, 2006 and payable
        to
        China Direct, bearing interest at 7% per annum and maturing on June 30, 2007,
        subject to extension (the “2006 Promissory Note”) and subject to offset by (i)
        $41,600 owed by an affiliate of CHDT to the CPS funds advanced by CPS for
        portable generators that were never delivered and (ii) $15,000 as an agreed
        amount paid to compensate CPS for certain refunds required to be made by
        CPS
        (which amounts have been first applied to accrued and unpaid interest due
        September 30, 2006 and December 31, 2006 and then applied to quarterly interest
        payable on the principal of the 2006 Promissory Note to maturity (June 30,
        2007)
        and then to reduce the principal amount of the 2006 Promissory Note to $210,900
        .
  As
        of
        September 30, 2007, the balance due on the 2006 Promissory note was $225,944,
        which reflects the offsets listed above, plus accrued interest of
        $23,794.
  21
 CHDT
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   **NOTE
        9 – BUSINESS ACQUISITIONS AND DISPOSALS (continued)**
  The
        Company disposed of its interest in CPS to further its goal of focusing on
        its
        Capstone Industries consumer product business line in an effort to
        achieve  sustained profitability from low-coast, low inventory
        consumer products that are direct shipped from Chinese and other low cost
        contract manufacturing sources to the Company’s customers.
  In
        connection with the disposal of CPS, the Company recorded a gain from
        discontinued operations of $149,424 at December 31, 2006.  The gain
        from discontinued operations consists of the following unaudited
        amounts:
  
 (Unaudited)For
                  the Years EndedDecember
                  31,2006
              
              
              2005Net
                  loss from discontinued operations
              
              $
              (518,902
              )
              
              $
              -Net
                  gain on disposal of discontinued operations
              
              
              668,326
              
              
              
              -Income
                  (Loss) from discontinued operations
              
              $
              149,424
              
              
              $
              -
  **Capstone
        Industries**
  On
        September 13, 2006 the Company entered into a Stock Purchase Agreement (the
        Purchase Agreement) with Capstone Industries, Inc., a Florida corporation
        (Capstone), engaged in the business of producing and selling portable book
        lights and related consumer goods, and Stewart Wallach, the sole shareholder
        of
        Capstone. Under the Stock Purchase Agreement the Company acquired 100% of
        the
        issued and outstanding shares of Capstone Common Stock in exchange for $750,000
        in cash (funded by a note payable to the Company’s CEO and $1.25 million of the
        Company’s series B Preferred Stock, $0.01 par value per share, which Series “B”
stock is convertible into 15.625 million “restricted” shares of CHDT Common
        Stock, $0.0001 par value (common stock). CHDT has agreed to register shares
        of
        Common Stock under the Securities Act of 1933, as amended, to cover conversion
        of the Series “B” Stock issued to Mr. Wallach in the acquisition of Capstone.
        China Direct will operate Capstone as a wholly-owned subsidiary. As of the
        date
        of this report these share have not been registered.  The Capstone
        acquisition was recorded as follows:
  Cash
              
              $
              33,676Accounts
                  receivable
              
              
              208,851Inventory
              
              
              340,109Prepaid
                  expenses
              
              
              7,500Property
                  and equipment
              
              
              16,127Goodwill
              
              
              1,936,020Accounts
                  payable and accrued expenses
              
              
              (417,283
              )Loan
                  payable to China Direct
              
              
              (125,000
              )Total
                  purchase price
              
              $
              2,000,000
  
  22
 CHDT
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   **NOTE
        9 – BUSINESS ACQUISITIONS AND DISPOSALS (continued)**
  Capstone
        was acquired to expand the Company’s customer base and sources of supply, the
        value of which contributed to the recording of goodwill.
  For
        tax
        purposes, the goodwill is expected to be amortized as an IRC Sec. 197 intangible
        over a period of fifteen years from date of acquisition.
  **NOTE
        10 - INCOME TAXES**
  As
        of
        December 31, 2006, the Company had a net operating loss carryforward for
        income
        tax reporting purposes of approximately $1,206,000 that may be offset against
        future taxable income through 2026. 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.
  
 2006
              
              
              2005Net
                  Operating Losses
              
              $
              247,230
              
              
              $
              214,430Valuation
                  Allowance
              
              
              (247,230
              )
              
              
              (214,430
              )$
              -
              
              
              $
              -
 
 The
        provision for income taxes differ from the amount computed using the federal
        US
        statutory income tax rate as follows:
  2006
              
              
              2005Provision
                  (Benefit) at US Statutory Rate
              
              $
              (59,187
              )
              
              $
              (150,382
              )Accrued
                  but Unpaid Officers Compensation
              
              
              20,500
              
              
              
              -Accrued
                  but Unpaid Interest on Officer Loans
              
              
              8,174
              
              
              
              -Meals
                  and Entertainment
              
              
              47
              
              
              
              533Depreciation
              
              
              (2,334
              )
              
              
              92Increase
                  (Decrease) in Valuation Allowance
              
              
              32,800
              
              
              
              149,757$
              -
              
              
              $
              -
 
 The
        Company evaluates its valuation allowance requirements based on projected
        future
        operations.  When circumstances change and causes a change in
        management’s judgment about the recoverability of deferred tax assets, the
        impact of the change on the valuation is reflected in current
        income.
  **NOTE
        11 - LEGAL SETTLEMENTS**
  **Trade
        Show Contract**
  The
        Company was a defendant to a 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, this lawsuit was settled for $25,000.
  23
 CHDT
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   **NOTE
        12 – CONTINGENCIES**
 
 **Celeste
        Trust Reg., Esquire Trade, et al. v. CBQ, Inc and Deposit on Acquisition
        of
        Treasury Stock**
  *Celeste
        Trust Reg., Esquire Trade, et al. v. CBQ, Inc.* (Case# 03 Civ. 9650 RMB; US
        District Court, SDNY, 12/4/2003). As of the date of this Report, the plaintiffs
        in  this action have not taken any known actions to perfect an appeal
        the dismissal of their amended complaint (*see below*). As such, there
        have been no new developments in this case since the refusal of the Court
        of
        Appeals for the Second Circuit in 2006 to accept an appeal of the dismissal
        of
        plaintiffs’ amended complaint.
 
 This
        case
        concerns a lawsuit that was filed against the 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 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 defended against the Plaintiff's amended complaint, which added 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.The Court also
        dismissed the Plaintiff’s amended complaint on July 20,  2006. The
        Plaintiffs filed an appeal in September 2006 to the adverse order issued
        by the
        Court dismissing the amended complaint.  The appeal, however, was not
        accepted by the Court in October 2006 because
  there
        is
        a pending, unresolved motion for default judgment against the other defendants,
        Networkland, Inc. and Technet Computer Services Corporation, who are two
        former
        subsidiaries of Socrates Technologies Corporation, a defunct Delaware
        corporation, and not owned by or affiliated with China Direct. The staff
        attorney for the 2nd Circuit
        stated
        that said motion must be resolved before the Court will entertain any
        appeal.  The Company is not a party to the pending motion for default
        judgment before the trial court; however,  the Company filed an
        opposition to the motion for default judgment. As of date of this Report,
        the
        Company is not aware of any action by the plaintiffs to date to resolve or
        remove the pending motion for default judgment against the other defendants
        in
        order to clear the way for an appeal of the judgment entered in favor of
        for  Company by the Court.   While the Company is
        confident of prevailing in  this matter, the Company is uncertain at
        this time of the final outcome motion for default against the other defendants
        or whether the plaintiffs intend to pursue this litigation
        further.
  24
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   **NOTE
        12 – CONTINGENCIES (continued)**
  **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.
  **Cyberquest,
        Inc.**
  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
        has not received any further claims or communications since
        mid-2006.
 
 **NOTE
        13 - DISCONTINUED OPERATIONS**
 
 On
        December 31, 2006, Complete Power Solutions, a 51% owned subsidiary of the
        Company, was sold, and is no longer a subsidiary of the Company.
 
 Operating
        results of this discontinued operation for the three months ended September
        30,
        2007 and 2006 are shown separately in the accompanying consolidated statement
        of
        operations.  The operating results of this discontinued operation for
        the three months ended September 30, 2007 and 2006 consist of:
 
 (Unaudited)
              
              
              (Unaudited)For
                  the Three Months Ended
              
              
              For
                  the Three Months EndedSeptember
                  30,
              
              
              September
                  30,2007
              
              
              2006Sales
              
              $
              -
              
              
              $
              1,516,971Cost
                  of sales
              
              
              -
              
              
              
              (1,454,170
              )Sales
                  & marketing
              
              
              -
              
              
              
              (18,840
              )Compensation
              
              
              -
              
              
              
              (659,726
              )Professional
                  fees
              
              
              -
              
              
              
              (45,704
              )General
                  & administrative
              
              
              -
              
              
              
              (223,704
              )Interest
                  income
              
              
              -
              
              
              
              5,949Interest
                  expense
              
              
              -
              
              
              
              (24,099
              )Minority
                  interest
              
              
              -
              
              
              
              (203,902
              )Net
                  Income (Loss)
              
              $
              -
              
              
              $
              212,227
  25
 CHDT
              CORPORATION AND SUBSIDIARIES
 NOTES
              TO
              CONSOLIDATED FINANCIAL STATEMENTS
  **NOTE
        13 - DISCONTINUED OPERATIONS (continued)**
 
 Operating
        results of this discontinued operation for the nine months ended September
        30,
        2007 and 2006  are shown separately in the accompanying consolidated
        statement of operations.  The operating results of this discontinued
        operation for the nine months ended September 30, 2007 and 2006 consist
        of:
 
 (Unaudited)
              
              
              (Unaudited)For
                  the Nine Months Ended
              
              
              For
                  the Nine Months EndedSeptember
                  30,
              
              
              September
                  30,2007
              
              
              2006Sales
              
              $
              -
              
              
              $
              7,578,916Cost
                  of sales
              
              
              -
              
              
              
              (5,231,535
              )Sales
                  & marketing
              
              
              -
              
              
              
              (151,316
              )Compensation
              
              
              -
              
              
              
              (114,656
              )Professional
                  fees
              
              
              -
              
              
              
              (92,102
              )General
                  & administrative
              
              
              -
              
              
              
              (530,655
              )Interest
                  income
              
              
              -
              
              
              
              8,099Interest
                  expense
              
              
              -
              
              
              
              (65,755
              )Minority
                  interest
              
              
              -
              
              
              
              (686,488
              )Net
                  Income (Loss)
              
              $
              -
              
              
              $
              714,508
 
 **NOTE
        14 – UNCERTAIN TAX POSITIONS**
 
 Effective
        January 1, 2007, the Company
        adopted the provisions of FASB Interpretation No. 48, “Accounting for
        Uncertainty in Income Taxes – an interpretation of FASB Statement No. 109” (“FIN
        48”). FIN 48 prescribes a recognition threshold and a measurement attribute
        for
        the financial statement recognition and measurement of tax positions taken
        or
        expected to be taken in a tax return. For those benefits to be recognized,
        a tax
        position must be more-likely-than-not to be sustained upon examination by
        taxing
        authorities. The adoption of the provisions of FIN 48 did not have a material
        impact on the company’s condensed consolidated financial position and results of
        operations. At January 1, 2007, the company had no liability for unrecognized
        tax benefits and no accrual for the payment of related interest.
 
 Interest
        costs related to unrecognized
        tax benefits are classified as “Interest expense, net” in the accompanying
        consolidated statements of operations. Penalties, if any, would be recognized
        as
        a component of “Selling, general and administrative expenses”. The Company
        recognized $0 of interest expense related to unrecognized tax benefits for
        the
        nine months ended September 30, 2007.  In many cases the company’s
        uncertain tax positions are related to tax years that remain subject to
        examination by relevant tax authorities. With few exceptions, the company
        is
        generally no longer subject to U.S. federal, state, local or non-U.S. income
        tax
        examinations by tax authorities for years before 2003. The following describes
        the open tax years, by major tax jurisdiction, as of January 1,
        2007:
 
 United
                  States (a)
              
              2003
                  – Present(a)
                  Includes federal as well as state or similar local jurisdictions,
                  as
                  applicable.
 
  26
  **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, 2006.
 
 Plan
        of
        Operations.  The Company's plan of operations since the fourth quarter
        of Fiscal Year 2006 has been to focus on expanding Capstone’s consumer products,
        including its private branding efforts, and OBS' building supplies business
        development efforts (centered primarily in South Florida).  The
        Company will devote its available resources and funding to the expansion
        of
        Capstone. Except for occasional short-term loans from Mr. Ullman and other
        members of management, the Company’s operating subsidiaries have to rely on
        revenues from operations to cover their overhead and expansion
        efforts.
 
 The
        Company's current plan of operations is to focus on development of Capstone
        as
        its primary business and such an effort may include pursuit of and sale of
        Chinese-made products in North America under the Capstone name or under private
        brand names promoted by the Company.  Capstone assumed the
        promotional, gift and souvenir business of Souvenir Direct, Inc. in the first
        quarter of fiscal year 2007. The Company decided to cease funding OBS sales
        operations in October 2007 due to lack of sales and the continuing national
        downturn in the housing construction industry.  The decision is part
        of the Company’s strategic decision to devote its available manpower and
        resources to the product development initiatives of Capstone.
 
 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 and possibly other foreign
        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 shifted our
        strategic plan in late 2006 to focus on promoting Capstone low-tech consumer
        products – both those under the Capstone name and under the private branding
        efforts.   Originally and secondary in our 2007 strategic plan
        was to promote OBS’ sale of Chinese-made roofing tiles primarily in South
        Florida and secondarily in the Southeast.  By October 2007 the Company
        had concluded that continued funding of OBS sales and marketing efforts would
        be
        futile in light of a national downturn in the housing industry and a lack
        of
        sales orders.  The Company ceased funding of OBS sales and marketing
        efforts and devoting all of the Company resources to promote Capstone and
        its
        consumer products, especially the STP-branded products.
 
 The
        Company may incur significant post-merger or acquisition registration costs
        in
        the event management wishes to register a portion of their 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 Capstone will be able to generate sufficient cash flow
        to
        pay its direct overhead costs and internal planned growth in fiscal year
        2007,
        OBS does not generate sufficient cash flow at this time to fund its operations
        or any business development efforts and marketing and sales efforts in fiscal
        year 2007. With respect to Capstone and OBS, 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 three and nine months ended September 30, 2007, the
        Company had a net loss from continuing operations of approximately $268,000
        and
        $792,000, respectively.  For the three
  27
  and
        nine
        months ended September 30, 2006, the Company had a net loss from continuing
        operations of approximately $140,000 and $224,000, respectively.  The
        increase in the net loss from continuing operations was mainly due to additional
        overhead from the acquisition of Capstone.  For the three and nine
        months ended September 30, 2006, the Company had net income from discontinued
        operations of approximately $212,000 and $715,000, respectively.  The
        net income from discontinued operations for the three and nine months ended
        September 30, 2006 was due to the revenues from Complete Power Solutions
        for the
        quarter.  Complete Power Solutions was disposed of as December 31,
        2006.
 
 Total
        Revenues - For the three and nine months ended September 30, 2007, the Company
        had total sales of approximately $815,000 and $1,415,000
        respectively.  For the three and nine months ended September 30, 2006,
        the Company had total sales of approximately $401,000 and $820,000,
        respectively.  The increase in revenue was due to the acquisition of
        Capstone.
 
 Costs
        and Expenses - For the three and nine months ended September 30, 2007, the
        Company had cost of sales of approximately $457,000 and $804,000,
        respectively.  For the three and nine months ended September 30, 2006,
        the Company had cost of sales of approximately $268,000 and $534,000,
        respectively.  Operating expenses increased approximately $907,000,
        from $510,000 in 2006 to $1,417,000 in 2007.  The cost of rent and
        other general and administrative costs increased in 2007 as compared to 2006
        due
        to additional overhead from the acquisition of Capstone.
 
 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.
 
 The
        Company has no primary market makers and no ongoing institutional support
        in the
        public securities markets for its shares of Common Stock, which results in
        greater volatility in the market prices for the shares of Common
        Stock.  The Company believes that this lack of ongoing institutional
        support in the public securities markets for the Company Common Stock depresses
        the public stock market prices for the Common Stock and increases the
        ability.
 
 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 sales staff  traveling
        to make direct marketing and sales pitches
        to  customers  and  potential  customers.,  trade
        shows  around North  America and visiting  China
        to maintain and expand 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.  While the Company’s strategic decision in 2007 to focus on
        Capstone’s consumer business has shifted the primary business line of the
        Company from a Chinese-oriented trading company to one focused on promoting
        Capstone’s consumer products, China still remains a primary source of products
        for the Company’s Capstone.   Almost all of the Company’s
        contract manufacturing operations and sources of products
  28
  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.  The Company has tasked Jeffrey Guzy, an
        independent director, and its outside legal counsel to conduct a quarterly
        review of disclosure controls and procedures and to report findings to the
        Company Board of Directors, which review will commence with the fourth fiscal
        quarter of fiscal year ending December 31, 2007.  This review is part
        of the Company’s efforts to evaluate and, when needed, improve its disclosure
        controls and procedures.
 
 (b)
        Changes in Internal Controls
 
 Based
        on
        his evaluation as of September 30, 2007, 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. The Company is
        seeking to appoint a chief financial officer or controller in the fourth
        quarter
        of fiscal year ending December 31, 2007, in order to enhance its implementation
        and review of internal controls.  The position of chief financial
        officer is currently handled by the chief operating officer, Gerry
        McClinton.
 
  29
  **PART
        II - OTHER INFORMATION**
 
 **ITEM
        1.  LEGAL PROCEEDINGS**
 
 Other
        than as set forth below, the Company is not a party to any material pending
        legal proceedings and, to the best of its knowledge, no such action by or
        against the Company has been threatened.   The Company is subject
        to legal proceedings and claims that arise in the ordinary course of its
        business.  Although occasional adverse decisions or settlements may
        occur, the Company believes that the final disposition of such matters will
        not
        have material adverse effect on its financial position, results of operations
        or
        liquidity.
 
 *Celeste
        Trust Reg., Esquire Trade, et al. v. CBQ, Inc.* (Case# 03 Civ. 9650 RMB; US
        District Court, SDNY, 12/4/2003). As of the date of this Report, the plaintiffs
        in this action have not taken any known actions to perfect an appeal the
        dismissal of their amended complaint (*see below*). As such, there have
        been no new developments in this case since the refusal of the Court of Appeals
        for the Second Circuit in 2006 to accept an appeal of the dismissal of
        plaintiffs’ amended complaint.
 
 This
        case
        concerns a lawsuit that was filed against the 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 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 defended against the Plaintiff's amended complaint, which added 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.The Court also
        dismissed the Plaintiff’s amended complaint on July 20, 2006. The Plaintiffs
        filed an appeal in September 2006 to the adverse order issued by the Court
        dismissing the amended complaint.  The appeal, however, was not
        accepted by the Court in October 2006 because there is a pending, unresolved
        motion for default judgment against the other defendants, Networkland, Inc.
        and
        Technet Computer Services Corporation, who are two former subsidiaries of
        Socrates Technologies Corporation, a defunct Delaware corporation, and not
        owned
        by or affiliated with China Direct. The staff attorney for the 2nd Circuit
        stated
        that said motion must be resolved before the Court will entertain any
        appeal.  The Company is not a party to the pending motion for default
        judgment before the trial court; however, the Company filed an opposition
        to the
        motion for default judgment. As of date of this Report, the Company is not
        aware
        of any action by the plaintiffs to date to resolve or remove the pending
        motion
        for default judgment against the other defendants in order to clear the way
        for
        an appeal of the judgment entered in favor of for Company by the
        Court.   While the Company is confident of prevailing in this
        matter, the Company is uncertain at this time of the final outcome motion
        for
        default against the other defendants or whether the plaintiffs intend to
        pursue
        this litigation further.
 
  30
  **SunTrust
        Bank Claim. P**rior to being acquired by the company, Quantum Technology
        Group (“QTG”), a now defunct subsidiary, had a $4 million line of credit with
        Crestar Bank (Crestar 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 QTG. 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 QTG, approximately $200,000 in accrued interest
        and
        $100,000 in attorney fees -- all of which SunTrust had sought to collect
        from
        the individual guarantors, not the company.
  RAS
        Investment, Inc., a company apparently affiliated with Anne Sigman, a former
        employee of the Company, advised the Company in 2004 that RAS has acquired
        the
        Sun Trust note and 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 has not received any further claims by RAS
        Investment, Inc. in this matter and the Company is uncertain at this point
        if
        RAS Investment, Inc. intends to pursue the aforementioned claims.
  **Cyberquest,
        Inc.:  T**he Company received two claims from certain former
        shareholders of Cyberquest, Inc. in 2006.  They claimed to hold or own
        approximately 70,000 shares of a class of the Company's redeemable preferred
        stock 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 has not received any further claims or communications since the late
        summer of 2006. The Company is uncertain at this point if the claimants will
        pursue or press the aforementioned claim of preferred stock
        ownership.
 
 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**
  In
        July
        2007, the Company issued 2,058,824 shares of common stock for cash of
        $35,000.
  In
        August
        2007, the Company issued 105,882 shares of common stock for legal expenses
        of
        $1,800.
  In
        August
        2007, the Company issued 4,117,647 shares of common stock for cash of
        $70,000.
  In
        August
        2007, the Company issued 2,804,947 shares of common stock for notes payable
        of
        $252,445.
  In
        August
        2007, the Company issued 2,500,000 shares of common stock for accrued expenses
        of $50,000.
  In
        August
        2007, the Company issued 340,909 shares of common stock for consulting expenses
        of $7,500.
  In
        August
        2007, the Company issued 112,510 shares of common stock for legal expenses
        of
        $1,800.
  In
        September 2007, the Company issued 13,294,117 shares of common stock for
        cash of
        $226,000.
 
 **ITEM
        3.  DEFAULTS UPON SENIOR SECURITIES**
 
 None/Not
        Applicable.
 
  31
  **ITEM
        4.  SUBMISSION OF MATTERS TO A VOTE OF SECURITIES
        HOLDERS**
 
 The
        majority  shareholders of the Company have taken an corporate action
        by written consent and without a meeting of the  holders  of
        the  Common  Stock
        (hereinafter,  "Majority  Shareholder  Action")  pursuant  to  Florida  Statutes
        Section  607.0704  and, by that written consent, holders of
        approximately 70% of the outstanding shares of the Common Stock approved
        the
        following: (1)  an amendment  of the Articles
        of  Incorporation of the Company to change the name of the Company
        from "China Direct Trading  Corporation" to
        "CHDT  Corporation";  and (2) election of
        Stewart  Wallach,  Howard Ullman,  Jeffrey
        Postal,  Laurie Holtz, Larry Sloven and Jeffrey Guzy,  all
        incumbent  directors as of May 7, 2007,  for election to the
        Company  Board of Directors for a term ending in 2008 when their
        successors are elected and assume office.  An Information Statement
        was filed with the Commission for this corporate action on May 15,
        2007.  The Company received no consents in opposition to the foregoing
        proposals.
 
 **ITEM
        5.  OTHER INFORMATION**
 
 None
 
 **ITEM
        6.  EXHIBITS AND REPORTS ON FORM 8-K**
 
 (a)
              EXHIBITS2.1
              Purchase
                  Agreement, dated January 27, 2006, by and among China Direct Trading
                  Corporation, William Dato and Complete Power Solutions, LLC.
                  +2.1.1
              Purchase
                  and  Settlement  Agreement  by and among
                  China Direct  Trading Corporation, Complete
                  Power  Solutions, LLC, William Dato and Howard Ullman, January
                  26, 2007 ++2.1.1.1
              Stock
                  Purchase Agreement, dated September 15, 2006, by and among China
                  Direct
                  Trading Corporation, Capstone Industries, Inc. and Certain Selling
                  Shareholderso3.1
              Articles
                  of Incorporation of the Company *3.1.1
              Amendment
                  to Articles of Incorporation, dated May 7, 2007, changing the name
                  of
                  China Direct Trading Corporation to CHDT
                  Corporation.++++  *****3.2
              By-laws
                  of the Company***4.1
              Form
                  of Warrant issued under Rule 506 Private Placement by CHDT Corporation.
                  ++++4.2
              Form
                  of Subscription Agreement issued under Rule 506 Private Placement
                  by CHDT
                  Corporation. ++++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. +10.5
              Form
                  of Non-Qualified Stock Option+14
              Code
                  of Ethics Policy, dated December 31, 2006+++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.
 ***
        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 Exhibit 3.1.1 to the Information Statement under
        Regulation 14C, dated May 11, 2007, and filed with the Commission on May
        15,
        2007.
 + Incorporated
        by reference to Exhibit 2 to the Form 8-K filed by China Direct Trading
        Corporation with the Commission on January 31, 2006.
 ++ Incorporated
        by reference to Exhibit 2 to the Form 8-K filed by China Direct Trading
        Corporation with the Commission on January 26, 2007.
 o Incorporated
        by reference
        to Exhibit 2.1 to the Form 8-K filed by China Direct Trading Corporation
        with
        the Commission on September 18, 2006.
 +++ Incorporated
        by reference to Exhibit 14 to the Form 10KSB filed by China Direct Trading
        Corporation with the Commission on April 17, 2007.
 ++++ Filed
        Herein
 
 (b)
        Reports on Form 8-K filed.
 
 The
        following reports were filed during
        the last quarter of the 2007 fiscal year:  Form 8-K, August 21, 2007;
        Form 8-K, August 22, 2007; Form 8-K, August 27, 2007; Form 8-K, August 29,
        2007;
        Form 8-K, October 12, 2007.
 
  32
  **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 13th day of November, 2007.
 
 China
        Direct Trading Corporation
 
 November
        13, 2007
 
 /s/
        Stewart Wallach
 Stewart
        Wallach
 CEO
        and
        President
 (Principal
        Executive Officer)
 
 /s/
        Gerry McClinton
 Gerry
        McClinton
 Chief
        Operating Officer & Secretary
 (Principal
        Financial & Accounting Officer)
 33