Here are some of the highlights from CDII's 2008 financial results.

• Revenue increased 37% to $223 million
• Net income, excluding non-cash charges, increased 41% to $17.7 million or $0.76 per share
• Net income, excluding non-cash and preferred dividend, increased 32% to $16.5 million or $0.73 per share
• Cash totaled $14.2 million or $0.61 per share
• Book value per share totaled $1.15
• In February the Company bought back a total of 1.6 million shares for $2.1 million
• Shares outstanding now total 21.8 million

Company Overview
China Direct, Inc. (Stock Symbol: CDII) operates through two primary divisions; management services and advisory services. The Management services division acquires controlling interests in Chinese business entities as either wholly or majority owned subsidiaries. By acquiring these controlling interests, China Direct provides management advice as well as investment capital to help these now subsidiaries expand their business. The Advisory services division provides consulting services to Chinese entities seeking access to the U.S. capital markets. Within these two divisions, the Company maintains four business segments.

• Magnesium Segment
• Basic Materials segment
• Consulting segment
• Clean Technology segment

China Direct, similar to an Exchange Traded Fund or ETF, offers investors the opportunity to invest in China through a U.S. publicly traded company with a diversified portfolio of investments, primarily focused on the production of magnesium.

Magnesium Segment
This segment is currently China Direct’s largest in terms of revenue, profit and number of portfolio companies.

China Direct currently has 8 portfolio companies in the Magnesium segment. Below is a snapshot of a couple of these companies.

Taiyuan Changxin Magnesium Co., Ltd. – China Direct acquired 51% interest in this magnesium company. Chang Magnesium is a manufacture of magnesium, operating a magnesium plant in Taiyuan China capable of producing 8,000 metric tons of magnesium annually. The primary products include magnesium ingot, magnesium scraps, magnesium powder and other related products. Chang Magnesium produces magnesium ingot with a magnesium element in excess of 99.95%. Chang Magnesium primarily exports various forms of magnesium including but not limited to magnesium ingot, magnesium powder, magnesium scrap, magnesium alloy and various grades of ordinary magnesium slabs.

Shanxi Gu County Golden Magnesium Co., Ltd. - In April 2007 China Direct acquired a 52% interest in Shanxi Gu County Golden Magnesium Co., Ltd. Golden Magnesium operates a magnesium refinery with an annual production capacity of approximately 12,000 metric tons. Presently, Golden Magnesium is implementing a construction project to increase annual capacity to 20,000 metric tons with an additional 8,000 metric tons of annual capacity.

Pan Asia Magnesium Co., Ltd. - In October 2007 China Direct acquired a 51% interest in Pan Asia Magnesium Co., Ltd. Pan Asia Magnesium, formed in May 2001, is engaged in the production of magnesium ingots. Pan Asia Magnesium produced and sold 4,500 and 5,600 metric tons of Magnesium ingots in 2006 and 2007 respectively. Pan Asia Magnesium operates a magnesium refinery located in Taiyuan, China. The plant has the capacity to produce approximately 6,000 metric tons annually. Presently Pan Asia Magnesium is constructing two additional plants with an estimated annual capacity of 12,000 metric tons annually.

Basic Materials Segment
China Direct’s Basic Materials Segment includes the sale and distribution of industrial grade synthetic chemicals.

China Direct intends to distribute zinc concentrate which is the material utilized in the processing of zinc metal and zinc alloy in the fourth quarter of 2008. The Company is currently constructing a zinc mining facility and upon completion, which is expected in August 2008, the Company plans to manufacture lead and zinc oxide products as well as distribute zinc and lead concentrate.

These steps taken by the Company has shown their willingness and determination to diversify its product base and investment portfolio. Please find below brief overviews on some of the companies in China Direct’s Basic Materials Segment portfolio.

Shanghai Lang Chemical Co., Ltd. - In October 2006 China Direct acquired a 51% interest in Shanghai Lang Chemical Co., Ltd. This segment sells and distributes industrial grade synthetic chemicals through four primary product categories; Glacial acetic acid and acetic acid derivatives, Acrylic acid and acrylic ester, Vinyl acetate-ethylene (“VAE”) and Polyvinyl alcohol (“PVA”) Products sold and distributed by Lang Chemical are used by customers as a raw material in the production of a variety of finished products such as: paint, glue, plastics, textiles, leather goods as well as various medical products. Lang Chemical is a distribution agent in the eastern section of China.

CDI Jingkun Zinc Industry Co., Ltd. - In October 2007 China Direct acquired a 95% interest in CDI Jingkun Zinc Industry Co., Ltd. This segment is located in Huayuan County, of the Hunan Province, is a manufacturer and distributor of zinc concentrate. Zinc concentrate is a product used in the production of pure zinc and zinc alloys, which is the result of a flotation process after the zinc ore has been mined and milled.

CDI Jixiang Metal Industry Co., Ltd. - In November 2007, China Direct acquired a 100% interest in CDI Jixiang Metal Industry Co., Ltd. CDI Jixiang Metal, located in Yongshun County, of the Hunan Province, processes and distributes concentrated zinc and lead. CDI Jixiang Metal owns the mining rights to approximately 51 acres (0.2051 Km2) located in the Yongshun Kaxi Lake Mining area. The land holds both zinc and lead ore. The mining rights allow for the mining of an aggregate of 10,000 metric tons of zinc and lead annually.

Consulting Segment
The Consulting Segment provides services to Chinese entities seeking access to the U.S. capital markets. These services include general business consulting, Chinese regulatory advice, translation services, coordination of professional resources such as legal, audit and investment banking, strategic alliances and partnerships, M&A, and interim CFO support amongst other services.

Clean Technology Segment
This segment engages in the assembly and sale of scrape tire recycling equipment and is constructing a scrap tire recycling center. The planned scrap tire recycling center is expected to commence production in December 2008. In addition, the Company is constructing an aluminum recycling facility. This facility will be capable of recycling aluminum wires that can be used to create aluminum powder used in the manufacture of a variety of applications.

Shandong CDI Wanda New Energy Co., Ltd. - In February 2007 China Direct acquired a 51% interest in Shandong CDI Wanda New Energy Co., Ltd. This segment, which is engaged in the alternative energy and recycling industry, develops environmentally friendly recycling technological applications and provides ancillary services related to the operations of refineries. CDI Wanda has developed a process to recycle waste rubber tires into distillate fuels such as diesel, gasoline and fuel oil.

Shanghai CDI Metal Recycling Co., Ltd. - In February 2008 we acquired an 83% interest in Shanghai CDI Metal Recycling Co., Ltd. CDI Metal Recycling commenced operations in April 2008.

Management Team
James Wang, Ph.D. CEO and Chairman – Dr. Wang is responsible for our Chinese Operations. In 2001 Dr. Wang founded Genesis Technology Group, Inc. serving as President and Chairman of the Board of Directors from 2001-2004. Genesis Technology capitalized on Dr. Wang's knowledge and experience to assist both Chinese and U.S. Companies increase their business by promoting cross border commerce. From 2000 until 2001, Dr. Wang was Vice President and Chief Operating Officer of Tensleep Corporation, an integrated Internet company that acquired and licensed technology focused on the Internet infrastructure market. During that span Dr. Wang served as a Director of China Net & Technologies, Inc., a technology firm. Between 1997 and 2000, Dr. Wang was a research scientist and Assistant Professor, Lab Director at the University Of Minnesota School Of Medicine. Dr. Wang received a Bachelor of Science degree from the University of Science and Technology of China in Hefei, China in 1985, a Master of Science Degree from the Shanghai Second Medical University, Shanghai, China in 1988, and his Ph.D. degree from the University of Arizona in 1994, Tucson, Arizona.

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