SOURCE: China Direct Trading Corp.

August 28, 2006 07:30 ET

China Direct Reports Revenue Increases 58% Sequentially From Q2 2006 Over Q1 2006

Q2 2006 Revenue of $3.97 Million and Net Income of $374,885 on Delivered Orders

COOPER CITY, FL -- (MARKET WIRE) -- August 28, 2006 -- China Direct Trading Corp. (OTCBB: CHDT) today announced consolidated results for the second quarter of FY2006 ended June 30, 2006, and the filing of its Form 10-Q for that fiscal quarter with the U.S. Securities and Exchange Commission.

FINANCIAL RESULTS: Reported consolidated gross revenues for the quarter ending June 30, 2006, were $3,969,957, an increase of 1520% from the $261,016 in gross revenues reported for the second quarter of FY2005 and a sequential increase of 58% over first quarter FY2006 gross revenues of $2,511,809. The increase in gross revenues is primarily due to growth in power generator sales by Complete Power Solutions, LLC, a 51%-owned China Direct subsidiary.

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

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

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

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

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

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

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