UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, DC 20549

FORM 10-K

(Mark One)

[X]  ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the fiscal year ended December 31, 2008

or

[_]  TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from     _______ to _______

Commission File Number 000-28831

CHDT CORPORATION

(Exact name of small business issuer as specified in its charter)

Florida	84-1047159
(State or Other Jurisdiction of Incorporation)	(I.R.S. Employer No.)

350 Jim Moran Boulevard, Suite 120

Deerfield Beach, Florida  33442

(Address of principal executive offices)

(Zip Code)

(954) 252-3440

(Small business issuer’s telephone number, including area code)

Securities registered pursuant to Section 12(b) of the Act: None

Securities registered pursuant to Section 12(g) of the Act:

COMMON STOCK, $0.0001 PAR VALUE

Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act.   Yes _ No x

Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act.   Yes __ No x

Indicate by check mark whether the Registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months, and (2) has been subject to such filing requirements for the past 90 days.   Yes x  No _

Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K (§229.405 of this chapter) is not contained herein, and will not be contained, to the best of registrant’s knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K.  [X]

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See definitions of “large accelerated filer,” “accelerated filer,” and “smaller reporting company” in Rule 12b-2 of the Exchange Act. (Check one):

Large accelerated filer __   Accelerated filer ___   Non-accelerated filer ___

Smaller reporting company  [X]

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

 

The aggregate market value of the voting and non-voting common equity held by non-affiliates computed by reference to the average bid and ask price of such common equity as of March 27, 2009 was approximately $3,630,676.

Number of shares outstanding of the Registrant’s Common Stock, as of March 27, 2009, is 560,041,646

DOCUMENTS INCORPORATED BY REFERENCE

Portions of the Registrant’s Definitive Information Statement under Regulation 14C  to be filed within 120 days after the Registrant’s fiscal year ended December 31, 2008, are incorporated by reference into Part III.

TABLE OF CONTENTS

FORWARD-LOOKING STATEMENTS

 

This Report on Form 10-K contains statements that constitute "forward-looking statements" as defined under the Private Securities Litigation Reform Act 1995, as amended. Those statements appear in a number of places in this Report and include, without limitation, statements regarding the intent, belief and current expectations of the Company, its directors or its officers with respect to the Company's policies regarding investments, dispositions, financings, conflicts of interest and other matters; and trends affecting the Company's financial condition or results of operations. Any such forward-looking statement is not a guarantee of future performance and involves several risks and uncertainties, and actual results may differ materially from those in the forward-looking statement as a result of various factors – some factors being beyond the Company’s control. The accompanying information contained in this Report, including the "Management's Discussion and Analysis of Results of Operations and Financial Condition," identifies important factors that could cause such differences. With respect to any such forward-looking statement that includes a statement of its underlying assumptions or bases, the Company cautions that, while it believes such assumptions or bases to be reasonable and has formed them in good faith, assumed facts or bases almost always vary from actual results, and the differences between assumed facts or bases and actual results can be significant or “material” depending on the circumstances. When, in any forward-looking statement, the Company, or its management, expresses an expectation or belief as to future results, that expectation or belief is expressed in good faith and is believed to have a reasonable basis, but there can be no assurance that the stated expectation or belief will result or be achieved or accomplished. Further, the Company is a "penny stock" and a micro-cap company with no primary market makers. Such a status makes highly risky any investment in the Company securities. The forward-looking statements in this Report on Form 10-K are made as of the date hereof, and we do not assume any obligation to update, amend or clarify them to reflect events, new information or circumstances occurring after the date hereof.

Note of Form 10-KSB:  Form 10KSB is no longer available for use by the Company.  The Company will report on Form 10-K for all fiscal years subsequent to the fiscal year ended December 31, 2007.

DEFINITIONS:

As used in this Report on Form 10-K, the following terms have the stated meaning or meanings:

(1) “Black Box Innovations, L.C.” is a wholly owned subsidiary of CHDT Corporation.

(2) “CHDT Corporation,” a Florida corporation, may also be referred to as “we,” “us” “our,” “Company,” or “CHDT.” Unless the context indicates otherwise, “Company” includes in its meaning all of CHDT’s subsidiaries.

(2) “China” means Peoples’ Republic of China.

(3) “V” means volts.

(4) “W” means watts.

(5) References to "'33 Act" or "Securities Act" means the Securities Act of 1933, as amended.

(6) References to "'34 Act" or "Exchange Act" means the  Securities  Exchange Act of 1934, as amended.

(7) “SEC” or “Commission” means the U.S. Securities and Exchange Commission.

PART I

Item 1. The Company Overview. We are a public holding company organized under the laws of the State of Florida and engaged in the business of producing and selling certain consumer products, which are manufactured in China by contract manufacturers, through our two wholly owned operating subsidiaries; (a) Capstone Industries, Inc., a Florida corporation organized in 1997 and acquired by us in a cash and stock transaction on September 13, 2006 (“Capstone”) and (b) Black Box Innovations, L.L.C., a Florida limited liability company (“BBIL”) formerly known as “Overseas Building Supply, L.C.” and organized by certain members of CHDT management and the Company on February 20, 2004. In April 2008, we changed the name of Overseas Building Supply, L.C., which had no business operations at that time, to “Black Box Innovations, L.L.C.” as part of our launch of new computer memory products to be marketed and sold by BBIL. BBIL is operated as a division of Capstone and Capstone personnel provide the labor and services necessary to operate BBIL This allows BBIL to utilize Capstone’s existing relationships with retailers as well as reducing operational startup costs by sharing expenses such as labor costs, office space rental and Products Liability and General Insurance. Once BBIL products generate sufficient revenues and sales volume can support operations, BBIL will begin running as an independent subsidiary with its own personnel.

We have one dormant wholly owned subsidiary with no personnel or operations: Souvenir Direct, Inc., a Florida corporation, (“SDI”). On December 1, 2007, Capstone and SDI entered into a Purchase and Sale Agreement (the “SDI Purchase Agreement”) with Magnet World, Inc., a Florida corporation (“MWI”).  Under the SDI Purchase Agreement, the operating assets of SDI were sold to MWI for $200,000 cash. We decided to sell SDI’s business in order to: (i) focus on our primary business line, Capstone’s consumer products; (ii) eliminate a secondary business that was not contributing positive cash flow on a consistent basis and constituted a drain on resources needed for the  Capstone consumer product business line;  and (iii) to  obtain cash to fund Capstone’s consumer product business, especially the STP®-branded power tool product line  launch and introduction  in October 2007.  We will either liquidate SDI in 2009 or use it for a possible future line of products not offered by Capstone or BBIL.

Publicly Traded Securities:  Our Common Stock, $0.0001 par value, is quoted on the Over-the-Counter Bulletin Board under the Symbol “CHDO.OB” (“Common Stock”).  No other securities of the Company are publicly traded.

Business and Product Lines:  Capstone produces through contract manufacturers in China: (1) STP®-branded power tools and automotive accessories, and (2) portable booklights, specialty flashlights, and multi-task lights and(3) Eco- i- Lite™ power failure lights.

BBIL produces through contract manufacturers in China: (1) Personal Pocket Safe TM portable computer memory device that provides pre-formatted fields for easy entry of all personal important records, documents and images and (2) Secret Diary TM is a portable computer memory device that works as a personal diary --- providing pre-teens and teens with absolute privacy while allowing for complete creativity.

We distribute those products through national and regional retailers and distributors in the United States and use our in-house sales staff and manufacturers’ representative agents to pitch that distribution network (See: “Current Products” below).

Company History:  The Company history is set forth after “Employees” below in this Part 1, Item 1 of this Form 10-K.

Current Products.   Capstone is engaged in the business of producing the following consumer products, which are, unless indicated otherwise, manufactured for and under the trade name of “Capstone” by contract manufacturers in China, distributed by us and sold through regional and national retailers and distributors in the United States:

(1) STP®-Branded Power Tools and Automotive Accessories : Under an April 2007 licensing agreement with Clorox Company, we have the right to use the trade name STP® on a line of power tools and automotive accessories made for Capstone by Chinese manufacturers and sold by Capstone though its distribution channels in the United States. STP® is a registered trademark of The Armor All/STP Products Company, which is owned by Clorox Company. Our licensing rights to the STP® trademark require periodic licensing payments to Clorox Company and achievement of certain milestones in sales. Clorox Company is a Delaware corporation and an SEC reporting company.

 

A selection of these STP ®-branded products, which are designed for home use and are not contractor-grade tools, are: Screw drivers, power drills, inverters, spot-lights and automotive accessories.

 

Warranties. We provide limited home use warranties, usually two years in duration, for most of our STP® branded power tools and one year for most of the automotive accessories. Our product history has not been long enough to develop any opinion on the impact of warranty claims on our financial results for STP®-branded power tool products. A full customer service hotline and repair center has been contracted out to support these needs as required.

 

(2) Portable Book Lights and Task Lights: We produce and sell the following LED lighting products under the Capstone name: Multi-Task LED Lights, Focus Booklights, Slimline Booklights, the Tri Lite Ultimate Booklight(s), Timely Reader Booklight(s) and Young Reader(s) Booklights, The Flip Neck Booklight, 3 LED Mini Clip Light. These LED booklights are small, light-weight, and portable, attach to reading materials and illuminate the area of the text and are powered by batteries or an AC adapter. Many of the same products are offered under a private label program for several major retailers. The Company will be launching an entire and expanded new line of booklights and multi-task lights, under the name PATHWAY LIGHTS at the International Housewares Show in March 2009

 

(3) The Company also launched The Eco-i-Lite™ and Mini Eco-i-lite Power Failure Lights. Both use induction charge technology and function as a power failure light, hand held flashlight, and night lite. Each product uses an encased lithium ion battery that when fully charged provides 8 + hours of battery life and LED light bulbs that last 100,000 hours.

 

BBIL launched its product line and started operations in the second half of fiscal year 2008. BBIL sells (1) Personal Pocket Safe TM – a portable computer flash memory device that provides pre-formatted fields for easy entry of all personal important records, documents and images and (2) Secret Diary TM is a portable computer memory device that works on PC computer systems using as a personal diary --- providing pre-teens and teens with absolute privacy while allowing for complete creativity.

 

Personal Pocket Safe TM has the following features: click- Icons identify all of your personal vital categories; enter- preformatted fields allow easy entry of all records and also attach documents, photos, and other images; and view- Quickly view your information on any standard Windows based PC computer system (Vista/XP operating systems), any time, any place. No software installation is required for PC computer systems using Vista or XP by MicroSoft; and exit- The encrypted data auto-saves to your Personal Pocket Safe TM . When you’re done, no trace of the software or your data is left behind on the PC computer system.

 

Secret Diary TM has the following features: Secure - Personalized PIN-code and non-removable memory chip foils break-in attempts; Safe - Hack-resistant with encryption software; Invisible --“Traceless” in that data entry leaves nothing on the host PC computer; Helpful - PIN replacement assistance and optional registration for Never-Lost , a backup subscription that retains your diary entries in case of loss or theft.

Distribution of Products:  Capstone distributes its products through existing national and regional distributors and retailers in the United States, including,   office-supply chains,  book store chains, warehouse clubs, supermarket chains, drug chains,  department stores, catalog houses, online retailers and book clubs.   Our largest distribution channels are: Target Stores, Wal-Mart,  Meijer Stores,  Staples, , Barnes & Noble book stores, Fred Meyer/Kroger Stores, Costco Wholesale, Sams Club, BJ’s Wholesale  Club, Cost –U –Less, Northern Tool & Equipment, CSK Auto and  SmartHome Inc.  These distribution channels may sell our products through the Internet as well as through retail storefronts and catalogs/mail order.  When we launch  new products,  our sales team will  introduce the new line to the applicable departments within our existing customer base.

Capstone personnel market and sell BBIL products and do so in the same manner as they market and sell Capstone products.

Marketing and Sales:  We use employee-salesmen, distributors, and a network of manufacturer representatives to direct sell our products to the distribution channels referenced above.   We also display and market our products at industry trade shows to promote our products to retailers and distributors in North America. We rely on our distribution channels to advertise our products to the consumers.   We have redesigned and developed new Websites for CHDT, Capstone and STP®-branded tools and BBIL products. These are user friendly sites and designed to be informational purposes only. We have developed consumer e-commerce capability on the BBIL site, but do not plan at this point to develop e-commerce capabilities on the other sites.

We also try to promote our products through sponsorships. In 2008, we were the primary sponsor for the #72 MacDonald Motorsports Dodge race car, driven by D.J. Kennington, at the NASCAR Nationwide Series, Camping World 300 at Daytona International Speedway on February 16,  2008 and remain a major associate sponsor for the remaining 34 races with one more full sponsorship at Homestead-Miami Speedway in November, 2008. The STP® logo was displayed on racing cars and related promotional displays.  The sponsorship also included a 12-race schedule in the Canadian Tire Series  with D.J. Kennington, which is viewed on the Cable Speed Channel.

On February 2 nd 2009 we announced  that we will be the official tool sponsor for D’Hondt Motorsports, LLC in both the ARCA and Nationwide racing series for the 2009 season.

Strategy:  We intend to become a major producer of certain identified consumer product categories in the United States.    We expect to bring new ideas and concepts to these categories through innovation and new technology, but with certain benchmarks, namely:

-designed for an everyday use or task;

-is affordable within the range of manufacturer’s suggested retail price for such a product (below $100 or $200 dollars, depending on product and market segment);

-represent value when compared to items produced or marketed by major consumer product companies on a national scale; and

-has reasonable profit and profit margin opportunity and acceptable market penetration costs, in our opinion.

We hope to accomplish this goal by:

-           Leveraging Chinese Manufacturing Relationships:  China has become a major manufacturing source for products sold in the U.S. because many of the Chinese manufacturers can quickly produce as well as engineer quality products meeting all design and product specifications, produce such products at an extremely competitive per unit cost (because of low labor rates and relatively modern manufacturing facilities) and timely direct ship those products to any place in the world.  Often, it is more economical and efficient to manufacture products in China and have them shipped to the United States than to have such products produced in North America. While this resource is available to and used by large numbers of U.S. companies, including our competitors, we believe this Chinese manufacturing resource gives us the level of production cost and quality that allows us to be competitive with larger competitors in the United States. We also have very close business partnerships with two Hong Kong-based companies, who work with us to develop and prototype new product concepts and then interface with our Chinese factories to ensure products are Quality Control tested before and during production. These Hong Kong companies also provide extensive Quality Control, factory and security auditing and certification,   product laboratory approvals and logistical support to ensure on time shipments .

-           Experienced in Dealing with Retail and Distributor Networks:  We believe our management has extensive experience in getting consumer products into the retail and distribution channels, which is key to being competitive in our segments of the consumer product industries; and

-           Niche Markets.  We believe our management is experienced in locating and developing niche consumer product opportunities that may be overlooked or underexploited by competitors, especially larger competitors.   Typically, we seek to find consumer products where we believe that we can win a profitable niche of the market share – one where the number or extent of commitment of competitors presents a reasonable opportunity to acceptable market entry costs to obtain a profitable market niche.

-           Leveraging Licensing and Brand Name Services.  We are pursuing and using recognized trademarks or logos of other companies, like STP®,   to assist our products in gaining market recognition and acceptance without extensive marketing and advertising campaigns.  The current STP® branded power tool product line is the first and an instance of such leveraging of existing trademarks.

- Acquisition for Niche Consumer Products. We will also pursue acquiring promising niche consumer products by acquiring other companies with such niche consumer products or the technology to develop such niche consumer products. We will use, in most instances, the Common Stock to acquire such companies. If cash is required for an acquisition, we will have to raise such cash by selling our securities to investors and/or borrowing money from our officers and directors and/or third party sources. The selling of our securities will dilute our existing shareholders and the borrowing of money will divert any cash flow from operations. Despite these negative consequences, we believe that we cannot be competitive or successful without innovation and expansion of consumer products, which may require acquisition by merger or other form of acquisition. The low market price of our Common Stock makes acquisitions difficult to negotiate and consummate. Some of the companies, technology or products acquired by us may be owned by CHDT management or affiliates.

Patents and Proprietary Rights:  Patents currently owned by CHDT include:

- Liqui-Light Flashlights.

·Timely Reader Booklights with Timer and Auto Shut Off.

Trade Marks owned by CHDT include:

·Liqui-Lights

·Timelyreader

·Pagesitters

·Simply Comfort

There can be no assurance that patent applications owned by us, or licensed to us, will issue as patents or that, if issued, our patents will be valid or that they will provide us with meaningful protection against competitors or with a competitive advantage. There can be no assurance that we will not need to acquire licenses under patents belonging to others for technology potentially useful or necessary to us and there can be no assurance that such licenses will be available to us, if at all, on terms acceptable to us. Moreover, there can be no assurance that any patent issued to or licensed by us will not be infringed or circumvented by others. In particular, if we are unable to obtain issuance of a patent with broad claims with respect to our products or if we are unable to prevail in oppositions against our foreign patents with similar claim scope, a competitor may be able to design around our patent rights by employing technologies or innovations that are not covered by our subsisting patents.  Litigating intellectual property rights claims is very expensive and we may not have the available cash flow to engage in litigation in every or any specific instance.

Much of our know-how and technology may not be patentable. To protect our rights, we require employees, consultants, advisors and collaborators to enter into confidentiality agreements. There can be no assurance, however, that these agreements will provide meaningful protection for our trade secrets, know-how or other proprietary information in the event of any unauthorized use or disclosure. In addition, our business may be adversely affected by competitors who independently develop competing technologies, especially if we obtain no, or only narrow, patent protection.

Lastly, there can be no assurance that third-parties will not bring suit against us for patent infringement by a licensee or us , or to have our patents declared invalid

Competition:  Capstone competes against numerous consumer product companies.  Competitors of Capstone include:  Zelco Industries,  Inc. of  Mount Vernon,  New York,  which makes the ITTY BITTY(TM) light and Lightwedge, LLC of Nantucket, Massachusetts.  With trends and technology continually changing, to remain competitive in the industry, Capstone  will have to continue to develop and introduce new products and color options at competitive  pricing.  Many national retailers such as Target, Walmart and Barnes & Noble offer book lights as part of their product line. Where possible, we will endeavor to introduce the latest battery technology identified in the power tool business into our other product categories.

Power Tools Segment:  According to Cleveland State University: 1

- the global market for power tools (home use and construction grade) in 2009 is projected to be $29.2 billion;

-In 2004, 37% of that global market was controlled by Black & Decker (U.S.), Bosch (Germany), TechTronic (Hong Kong), Makita (Japan), and Hitachi (Japan);

-70% of the power tool market is commercial users and 30% is home users; and

-North American makes up 40% of sales in the global power tool market.

We face extensive competition from numerous competitors in the power tool and accessory product line in the United States.  Many of our competitors have significantly greater resources, far more years in selling this market segment and far greater market share than we do.  Companies like Black & Decker, Bosch, Mikita, Hitachi, TechTronic, Porter & Cable, Panasonic, Ryobi and CPO Milwaukee are significantly larger companies than we are and they have well-established and much larger market share than we do in the U.S. home use power tool industry.  Our ability to obtain any market share in the U.S. home use power tool market will depend on the quality and price competitiveness of our Chinese-made power tool line and the name recognition and consumer acceptance of our licensed STP®-brand name for our power tool line for home use.   There are dozens of smaller companies that are competing for the U.S. home use power tool market.   We started to market and sell our STP®-branded power tool line in October  2007. With the downturn in the retail market especially the automotive and hardware segments, we do not have sufficient track record to predict whether we will be able to attain any or a profitable market niche for such product line or will be able to compete in this industry segment.  Success in this market segment is important to the success of our efforts to attain sustained profitability.

FN: 1 See: Gross, Andrew (Cleveland State University), The Global Market  for Power Tools, http://www.springerlink.com/content/917126p01282x670/, August 23, 2006.

Government Regulation: We are subject to regulation by federal and state securities authorities (including FINRA) as well as usual and customary state and county business and tax regulation of a for-profit business. Capstone and BBIL are subject to the usual and customary federal, state and local business and tax regulation of a consumer products company and a for-profit business. We are not subject to any U.S. federal, state or local regulation that poses, in our opinion, any special or unusual burden or obstacle to conducting our business and financial affairs. Our main concern in terms of government regulation is the changing regulatory environment in China and its impact on our ability to access our consumer product manufacturing sources and obtain our consumer products. While the general trend in China has to be conducive to trade and commerce, China is a still a single-party nation-state in which the central government has the power to dramatically and immediately change its trade and commercial policies and laws. China has benefited greatly from a more liberal trade and commercial policies and laws in the 1990’s and this decade to date. However, political or military conflict between the United States and China, who are rivals for power and influence in Asia and to an increasing extent all along the Pacific Rim as well as being diametrically opposed to one another over the status of Taiwan, could provoke a change in Chinese trade or commercial law that makes it more difficult or expensive for us to obtain consumer products. Such a development would have a serious impact on our ability to compete in the United States in the niche consumer product market.

WORLDWIDE RECESSION: It is too early to predict the impact of the current worldwide recession and financial crisis on our business. We have not seen any significant decline in sales as of the date of this Report. We do not conduct business with any financial institution that is currently under federal government control or dependent on federal government financial assistance.

Bank Loan. On May 1, 2008, Capstone entered into a $2 million principal-amount, asset-based loan agreement with Sterling National Bank of New York City whereby Capstone received a credit line to fund working capital needs (“Loan”).   The Loan provides funding for an amount up to 85% of eligible Capstone U.S. accounts receivable and 50% of eligible Capstone inventory. The interest rate of the Loan shall be the Wall Street Journal Prime Rate plus one and one-half percent (1.5%) per annum (adjusted automatically with changes in the Wall Street Journal Prime Rate).  Capstone management believes that this credit line and available cash flow will be adequate to fund most of Capstone’s ongoing working capital needs. CHDT and Howard Ullman, the Chairman of the Board of Directors of CHDT, have personally guaranteed Capstone’s obligations under the Loan. The foregoing summary of the Loan is qualified in its entirety by reference to the documents evidencing the Loan, which are attached as exhibits 10.1 through 10.4 to the Form 8-K, dated May 1, 2008,  and filed with the SEC on May 8, 2008.

Employees:  As of December 31, 2008, we had a total of  9 full-time employees, consisting of 4 officers employed by CHDT and  five  persons employed by Capstone.  Capstone may add 2 to 4 additional salespersons in  2009 to sell its consumer products and an additional logistics coordinator.  Capstone personnel also serve as BBIL personnel in bookkeeping, clerical, administrative, marketing and sales functions.

Company History:  The Company was incorporated under the name “Freedom Funding, Inc." in Delaware on September 18, 1986.  On January 18, 1989, the Company reincorporated from Delaware to Colorado. On November 18, 1989 the name of the Company was changed to "CBQ, Inc." On May 17, 2004, the Company changed its name from  "CBQ, Inc.” to “China Direct Trading Corporation” and also reincorporated from Colorado to Florida by a statutory merger.

From 1986 through 1997, the Company had no business operations and its sole activity was to pursue its business plan to investigate business opportunities in which to engage by merger or acquisition. The Company was a "blank check" shell company  during this initial  development stage.

From 1997 through 2002, the Company became a holding company acquiring a  series  of  small,  private  companies  and  operating subsidiaries.

These operating subsidiaries were engaged in either software systems development operations, resellers of computer hardware and software manufactured by other companies, installers and repair firms of computer networks, or providers of various information technology technical consulting services. Most of these acquisitions were accomplished by stock-for-stock exchanges. By the fourth quarter of 2002, these operating subsidiaries had ceased conducting business due to their inability to compete effectively in their respective geo-graphical markets; loss of key sales, technical, sales and management personnel; unexpected downturns in customer demand in certain industries (especially in the value-added reseller of computer hardware and software); inadequate management and planning (especially the lack of a coherent strategic business plan); failure of CHDT to eliminate duplicative overhead among its operating subsidiaries; inadequate financing of operations; use of financing for non-revenue generating purpose; inability to obtain financing or funding on affordable or commercially reasonable terms or at all; or a combination of the foregoing factors.

By the first quarter of fiscal year 2003,   we  had no business operations  or source of revenue and its  management  was reduced to a caretaker officer and one to two directors.

From  December  1, 2003 to September 2006:  On December 1, 2003, we acquired SDI, which became the Company's sole wholly-owned operating subsidiary at that time.   SDI management also became our management as part of the stock-for-stock acquisition of SDI.  Howard Ullman was the principal shareholder of SDI at the time of  our acquisition and he became the senior executive of CHDT as a result of the acquisition of SDI.

On January 27, 2006, CHDT entered into a Purchase Agreement (the “CPS Purchase Agreement”) with William Dato (“Dato”) and Complete Power Solutions LLC, a Florida limited liability company, (“CPS”) pursuant to which CHDT acquired from Dato 51% of the member interests of CPS for a purchase price consisting of the payment of $637,000 in cash and the delivery of 600,000 unregistered shares of CHDT's Series A Convertible Preferred Stock (the “Series A Preferred Stock”) having a stated value of $1,200,000 which were convertible into 50,739,958 shares of CHDT's Common Stock.

On January 26, 2007, we entered into a Purchase and Settlement Agreement, dated and effective as of December 31, 2007 ("CPS Settlement Agreement") with CPS, Dato and Howard Ullman (our Chairman of the Board and also Chief Executive Officer at the time), whereby: (a) CPS is repurchasing the 51% CPS Membership Interests owned by us in return for the transfer of 600,000 shares of our Series A Preferred Stock"), and which are convertible into 50,739, 958 shares of our Common Stock, $0.0001 par value per share, beneficially owned by Dato, to us, and (b) the issuance of a promissory note by CPS to us in the principal amount of $225,560, bearing annual interest at 7% with interest-only payments commencing on July 1st 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 26, 2010, (the "2007 Promissory Note") and (c) the mutual releases contained in the Agreement. As a result of this transaction, we have no ownership interest in CPS and neither CPS nor Dato will have an ownership interest in us (from the CPS Purchase Agreement). The 2007 Promissory Note provides that if principal and accrued interest thereon is not paid in full by the maturity date, then 2007 Promissory Note's maturity date will be roll over for successive one year periods until paid in full. For any roll over period, the annual interest will be increased to 12%. The 2007 Promissory Note also provides that the principal amount may be automatically increased by an amount up to $7,500 if the amount claimed as the cost of replacement of a garden by the customer for a power generator is abandoned or settled for less than $7,500. The Agreement allows CPS to off set, if CPS so elects, any payments due under the 2007 Promissory Note to us by any amounts owed to CPS under the indemnification provisions of the CPS Settlement Agreement.

The 2007 Promissory Note, CPS Settlement Agreement and CPS Purchase Agreement are attached as exhibits to this Report and all summaries herein of those agreement and instrument are qualified in their entirety by reference to said agreements and note as attached as exhibits hereto.

CPS is also indebted to us under a promissory note in the original principal amount of $250,000, executed by Dato on June 27, 2006 and payable to us, 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 for funds advanced by CPS for portable generators which were never delivered and (ii) $15,000 as an agreed amount paid to compensate CPS for refunds required to be made to clients of CPS for cancelled sales made personally by Howard Ullman (which amounts have been applied first 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 Note to maturity (June 30, 2007), and then to reduce the principal amount of the 2006 Promissory Note to $210,900).

Further,  the CPS Settlement Agreement:  (a) cancels the Voting  Agreement,  dated January 27, 2006,  by and among Dato, CHDT and Howard  Ullman;  (b) removes us as a party to the Employment Agreement, dated January 27, 2006, with Dato and CPS and  (d) requires CPS and Dato to  cooperate  with us and the auditors   in    completing    all   audits    required   by CHDT’s Commission-reporting  obligations in fiscal years 2006 and 2007. Pursuant to the terms of the Agreement,  Dato resigned from all positions at CHDT and Howard Ullman  resigned from all positions at CPS - both  effective  January 26, 2007.

The net result of the CPS Settlement Agreement was to cancel the  transactions  entered into by and among CHDT, CPS and Dato under the CPS Purchase Agreement by and among CHDT, CPS and  Dato, which transaction was reported by the Form 8-K filed by CHDT with the  Commission on January 31, 2007, and end  CHDT’s involvement in the  distribution of commercial and residential standby power generators by CPS.

CHDT and certain note holders were  involved in a lawsuit against CPS and others over payments due under the above referenced notes. CHDT was awarded a judgment  against CPS but after further legal pursuit, it has been determined that any payments awarded under the judgment are uncollectable.

On September 15, 2006, we entered into a Stock Purchase Agreement with Capstone and Stewart Wallach, the sole shareholder, a director and a senior executive officer of Capstone. Under the Stock Purchase Agreement, we acquired 100% of the issued and outstanding shares of Capstone Common Stock in exchange for $750,000 in cash (funded by the previously reported credit line provided by certain directors of CHDT) and $1.25 million in Series B Preferred Stock, $0.01 par value per share, which Series B Stock is convertible into 15.625 million “restricted” shares of our Common Stock, $0.0001 par value (“Common Stock”).  We have agreed to register shares of Common Stock under the Securities Act to cover the conversion of the Series B Stock issued to Mr. Wallach in the acquisition of Capstone.  We anticipate filing such registration statement in mid-2009, if at all.

As of January 1, 2007,  SDI has merged its  operations  and marketing  efforts  under the  Capstone  umbrella in order to streamline operations and consolidate sales and marketing operations under one company.  The executive management of Capstone also became the executive management of CHDT at the time of the acquisition.

Item 1A.  Risk Factors.

RISKS RELATED TO OUR BUSINESS

(A) VARYING, UNPREDICTABLE FINANCIAL RESULTS. Our periodic operating results may significantly fluctuate from time to time due to sales cycles or decreased demand from customers or reliance on and a decrease in demand from those limited number of customers that generate most of the sales revenues, limited funding or cash flow, or changes in business focus. Investors should not rely on financial results for any fiscal period as an accurate basis for predicting or an indication of future financial results. Our future revenues and results of operations may significantly fluctuate due to a combination of factors, many of which are outside of management's control. Our operating results for any particular quarter may not be indicative of future operating results. Prospective investors should not rely on quarter-to-quarter comparisons of results of operations as an indication of future consolidated or segment performance, especially since we have experienced changes from year to year in our business lines or business focus. It is possible that results of operations may be below the expectations of public and investors, which could cause the market price of our Common Stock to fall. The most important of these factors include:

*           market   rejection of Chinese-made   products;

*           drop   in   consumer   demand for our products;

*           increased  competition  from  competitors, especially from competitors  with  substantially

 greater resources than us;

*           political or economic or trade conflicts  between the U.S. and China;

*           ability to obtain products on favorable terms from our Chinese manufacturing sources;

*           general economic conditions;

*           impact of terrorism on the businesses of CHDT;

*           the  timing  and   effectiveness   of  marketing  and product expansion programs;

*           the timing of the introduction of new products;

*           the availability of funding or financing in a timely manner and on affordable terms;

*           timing and effectiveness of capital expenditures; and

*           Strength of foreign and domestic competition.

We have also had a history of operating subsidiaries or business lines failing and several resulting changes in management and business focus. While we are optimistic about the abilities and business plan of current management, we have not yet achieved any record of sustained profitability despite substantially increasing our revenue growth from quarter-to-quarter in 2008. We believe that only such a record of performance will allow any sustained increase in the market price of our Common Stock, which during the past five years has been consistently lower than two cents per share.

(B)  CURRENT ECONOMIC CONDITIONS.  The current worldwide economic recession may adversely impact our business.  Our products are not essential goods in terms of the basic requirements of life and, while our products typically retail below $100, our products may suffer in the future sales if consumers defer non-essential consumer product purchases in the face of an ongoing economic recession.  While we cannot predict the extent of such an impact, we are seeking to obtain advance purchases of products from our customers in order to build a back-log of product orders to provide steady cash flow through fiscal years 2009 and 2010.  We will not know whether these efforts will succeed until mid summer of fiscal year 2009.

(C) RELIANCE ON KEY PERSONNEL. We rely on Stewart Wallach, Gerry McClinton, Laurie Holtz and Howard Ullman for executive management, financial management and strategic planning for the Company. The loss of the services of any one those executives would adversely impact our business and financial prospects. Neither CHDT nor Capstone has a key-man insurance policy or similar policy to fund the cost of replacing any of the aforesaid key personnel. We lack internal cash resources to fund such replacement.

 

We may not be able to attract and retain qualified personnel, which could impact the quality of our content and services and the effectiveness and efficiency of our management, resulting in increased costs and losses in revenue.  Our success also depends on our ability to attract and retain qualified sales and marketing, customer  support,  financial  and accounting,  legal and other managerial personnel.   Our personnel may terminate their employment at any time for any reason.  Loss of personnel may also result in increased costs for replacement hiring and training.  If we fail to attract new personnel or retain and motivate our current  personnel,  we may not be able to operate  our  businesses  effectively  or  efficiently,  serve our  customers properly or maintain the quality of our content and services.

(D) MERGERS AND ACQUISITIONS. We may seek from time to time to consummate mergers and acquisitions of companies in complementary industries to our industries as part of a strategy to grow or acquire new products, which mergers and acquisitions could have an adverse impact on our financial and business condition and prospects as a result of inability to manage growth or integrate or manage acquired operations. We have historically tried to expand or grow our business through mergers and acquisitions with small, private companies with existing operations. Except for Capstone, those prior efforts have failed to establish a business or businesses with steady or growing revenues, or grow the overall revenues or business of the Company for any extensive period. Most of our acquired businesses failed and we closed or sold off. The historically and current low market price of our Common Stock is a significant deterrent or hindrance to consummating mergers and acquisitions or do so on commercially reasonable terms and conditions.

Any such mergers and acquisitions may not, due to the low market  price  of  our common  stock,  and  our lack of  extensive  cash reserves,  be consummated on terms that are favorable to us or without certain  conditions,  such as a provision allowing the acquired or merged entity to spin out of or split  off from us in the  future  or if  certain milestones are not met.

We have throughout its history acquired new businesses, as we expect to continue to make acquisitions in the future. With respect to recent and any future acquisitions, we may fail to successfully integrate our financial and management controls, technology, reporting systems and procedures, or adequately expand, train and manage our work force. The process of integration could take a significant period of time and will require the dedication of management and other resources, which may distract management's attention from our other operations. If we make acquisitions outside of our core businesses, assimilating the acquired technology, services or products into our operations could be difficult and costly. Our inability to successfully integrate any acquired company, or the failure to achieve any expected synergies, could result in increased expenses and a reduction in expected revenues or revenue growth, and as a result our stock price could fluctuate or decline.

Such risks include:

* the  risk  that  our  industry  may  develop  in  a  different direction  than  anticipated  and  that  the  technologies  we acquire do not prove to be those we need to be  successful  in the industry;

* the risk that future  valuations  of acquired  businesses  may decrease from the market price we paid for these acquisitions;

* the generation of insufficient revenues by acquired businesses to offset acquisition costs and increased  operating expenses  associated with these acquisitions;

* the potential  difficulties in completing  in-process research and development  projects and delivering high quality products to our customers;

* the  potential   difficulties  in  integrating  new  products, businesses  and  operations  in  an  efficient  and  effective manner;

* the risk  that our  customers  or  customers  of the  acquired businesses may defer  purchase  decisions as they evaluate the impact of the acquisitions on our future product strategy;

* the   potential   loss  of  key   employees  of  the  acquired businesses;

* the risk that acquired businesses will divert the attention of our senior  management from the operation of our core Capstone business; and

* the risks of  entering  new  markets in which we have  limited experience and where  competitors  may have a stronger  market presence.

Our inability  to  successfully   operate  and  integrate newly-acquired  businesses  appropriately,  effectively  and in a timely  manner  could have a material adverse effect on our ability to take advantage of further  growth in demand for products in our  marketplace,  as well as on our  revenues, gross margins and expenses.

(E)  WE HAVE A SMALL  MANAGEMENT  AND STAFF AND MAY NOT BE ABLE TO ADEQUATELY  HANDLE ANY GROWTH IN OUR BUSINESS AND TO IMPLEMENT AND MAINTAIN INTERNAL  FINANCIAL AND ACCOUNTING  CONTROLS AND SYSTEMS.

If we cannot effectively manage growth, if any, and whether from mergers and acquisitions or internal growth, our business may suffer or fail. We have previously expanded our operations through acquisitions in order to pursue perceived existing and potential market opportunities and in most instances we have failed to do so. If we fail to manage our growth properly, it may incur unnecessary expenses and the efficiency of our operations may decline. To manage any growth effectively, we must, among other things:

* successfully  attract,  train,  motivate  and  manage a larger number of employees for  production  and testing,  engineering and administration activities;

* control higher inventory and working capital requirements; and

* improve the efficiencies within our operating, administrative, financial  and  accounting  systems,  and our  procedures  and controls.

(F) A FEW OFFICERS, DIRECTORS AND PRINCIPAL SHAREHOLDERS HAVE VOTING CONTROL OVER CHDT. A few members of management beneficially own approximately 40% of our outstanding Common Stock on a fully diluted basis. Howard Ullman, the Chairman of the Board, beneficially owns approximately 26% of issued and outstanding shares of Common Stock (excluding conversion of any preferred stock of CHDT or the exercise of options). These members of management control the management and affairs and have voting power sufficient to determine any matters requiring shareholder approval, including:

* election of our board of directors;

* removal of any of our directors;

* amendment of our certificate of incorporation or bylaws;

* adoption of  measures  that could delay or prevent a change in control  or  impede  a  merger,  takeover  or  other  business combination involving us; and

* Significant    corporate    transactions,  like    mergers, acquisitions, dissolution,  recapitalization, stock splits and bankruptcy.

This voting control by insiders over CHDT may hinder the interests of public shareholders from being fully considered in corporate decision making or actions and may result in corporate actions that are not always in furtherance of our public shareholder interests.   Further, the voting control of a few members of management may shield management from pressure from public shareholders for changes or revisions in failing or underachieving business strategies.

(G)  INADEQUATE OR EXPENSIVE  FUNDING OR FINANCING.   We rely on funding from insiders and investors from time to time to fund operations or extraordinary transactions and we may be unable to raise  adequate  funding or  financing to survive  unexpected  revenue shortfalls,  or to reduce  operating  expenses quickly enough to offset any such unexpected revenue shortfall.  The funding and cash flow problems of the Company often hinder or undermine business development efforts, which in turn undermines the market price of our Common Stock.

If we have a shortfall in revenues without a corresponding reduction to its expenses, operating results may suffer. If we do not have sufficient bank financing, we will be forced to seek expensive financing or funding, or forms of financing that require issuance of our securities (such as equity credit lines or PIPE financing). Such financing would dilute the position of existing shareholders and put negative pressure on the market price of the our Common Stock while possibly failing to provide adequate and ongoing working capital for the Company and its operations. While members of our management have provided personal loans to us to fund overhead and acquisitions in fiscal year 2008, we cannot be sure that such financing will be available in the future or in amounts that are adequate to meet our working capital needs. During 2008 Capstone secured a conventional $2,000,00 asset based loan from Sterling National Bank in New York to help fund Capstone’s working capital needs. This facility funds up to 85% of eligible Accounts Receivable and 50% of eligible on hand Inventory. However the continued reliance on private placement of CHDT securities and insider loans or investments to fund CHDT working capital needs and Capstone product development may depress or limit the market price for our Common Stock.

(H)  COMPLIANCE  WITH CHANGING  REGULATION OF CORPORATE  GOVERNANCE AND PUBLIC DISCLOSURE MAY RESULT IN ADDITIONAL EXPENSES.

Changing  laws,   regulations  and  standards   relating  to  corporate governance and public  disclosure,  including the  Sarbanes-Oxley Act of 2002 or "SOX" .and new SEC  regulations  are creating  uncertainty for companies such as ours.  These new or changed  laws,  regulations  and  standards  are  subject to varying interpretations in many cases due to their lack of specificity, and as a result,  their  application  in practice may evolve over time as new guidance is provided by regulatory  and governing  bodies,  which could result in continuing uncertainty  regarding  compliance  matters  and higher  costs  necessitated  by ongoing  revisions to disclosure and governance  practices.  We intend to invest resources to comply with evolving laws,  regulations  and  standards,  and this investment  may result in increased  general and  administrative  expenses and a diversion of management time and attention from revenue-generating activities to compliance  activities.  If our efforts  to comply  with new or  changed  laws, regulations and standards  differ from the activities  intended by regulatory or governing bodies due to ambiguities  related to practice,  our reputation and attraction as an investment may be substantially harmed.

(II)  RISKS RELATED TO OUR COMMON STOCK

(A) RISKS RELATING TO OUR SECURITIES. OUR COMMON STOCK IS A "PENNY STOCK" UNDER SEC RULES AND, AS SUCH, THE MARKET FOR OUR COMMON STOCK IS LIMITED BY CERTAIN SEC RULES APPLICABLE TO PENNY STOCKS. Our Common Stock is subject to certain "penny stock" rules promulgated by the SEC. Those rules impose certain sales practice requirements on brokers who sell "penny stock" ( that is, stock with a market price below $5 per share and more commonly below $1 per share) to persons other than established customers and accredited investors (generally institutions with assets in excess of $5,000,000 or individuals with net worth in excess of $1,000,000). Brokers must make a special suitability determination for the purchaser and receive the purchaser's written consent to the transaction prior to the sale. Furthermore, the penny stock rules generally require, among other things, that brokers engaged in secondary trading of penny stocks provide customers with written disclosure documents, monthly statements of the market value of penny stocks, disclosure of the bid and asked prices and disclosure of the compensation to the brokerage firm and disclosure of the sales person working for the brokerage firm. These rules and regulations adversely affect the ability of brokers to sell or promote our Common Stock shares and limit the liquidity and market price of our securities. Our lack of any sustained history of sustained profitability from operations also depresses our the market value of our Common Stock.

(B) NO DIVIDENDS. We have not paid and we do not intend to pay dividends on our Common Stock in the foreseeable future. We currently intend to retain all future earnings, if any, to finance our current and proposed business activities and do not anticipate paying any cash dividends on our Common Stock in the foreseeable future. We may also incur indebtedness in the future that may prohibit or effectively restrict the payment of cash dividends on our Common Stock.

(C)   OUR COMMON STOCK’S  MARKET PRICE MAY BE VOLATILE AND COULD  FLUCTUATE WIDELY IN PRICE, WHICH COULD RESULT IN SUBSTANTIAL LOSSES FOR INVESTORS.       The market  price of our Common  Stock is likely to be highly  volatile and could  fluctuate  widely in price in  response to various  factors,  many of which are beyond our control, including:

* our lack of primary market makers for our Common Stock – we have market makers but none are primary market makers who maintain an inventory of our Common Stock and actively support the Common Stock;

*  general worldwide economic conditions and the current crisis in the financial markets;

* the lack of research  analysts  or news media  coverage of CHDT or our Common Stock;

* additions or departures of key personnel;

* sales of our Common Stock by the Company or insiders;

* our status as a “Penny Stock” Company;

* our ability to execute our business plan;

* operating results being below expectations;

* loss of any strategic relationships;

* industry or product developments;

* economic and other external factors; and

* period-to-period fluctuations and the uncertainty in our financial results.

(D) SALE OF A SUBSTANTIAL NUMBER OF SHARES OF OUR COMMON STOCK MAY CAUSE THE PRICE OF OUR COMMON STOCK TO DECLINE. The market price of our Common Stock could decline as a result of sales of substantial amounts of our Common Stock in the public market, or the perception that these sales could occur. These factors could make it more difficult for us to raise funds through future offerings of Common Stock. We continue to date to rely on private placement of our securities and insider-management loans to fund operations or business development efforts. We already have over 561 million shares of Common Stock issued and outstanding. This large float also depresses our Common Stock’s market price and discourages investor investment in our Common Stock.

(E) THE LACK OF PRIMARY MARKET MAKERS AND INSTITUTIONAL INVESTOR SUPPORT LIMITS THE ABILITY OF OUR COMMON STOCK TO MAINTAIN ANY INCREASES IN VALUE. We lack primary market makers and institutional support for our Common Stock traded in the public markets. As result, whenever the market price for our Common Stock experiences any significant increase in market price, in terms of percentage increase, it is difficult for our Common Stock to maintain such an increased market price due to the pressure of shareholders selling shares of Common Stock to reap any profits from such increase in market price and the lack of primary market makers and institutional investors to stabilize and support any such increase in market price of our Common Stock (by not selling their positions of such stock in response to market price increases and entering the market to purchase more shares of our Common Stock).

Item 1B:   Unresolved SEC Staff Letters.  None for fiscal year ended December 31, 2008.

Prior Fiscal Years. As previously reported in our SEC filings, we received comments and inquiries from the Division of Corporation Finance (“DFC”) of the Securities and Exchange Commission on or about September 7, 2007, which communication concerned our Form 10-KSB for the fiscal year ended December 31, 2006. The comments and inquiries were part of the DFC’s periodic review of SEC-reporting company Securities and Exchange Act of 1934 periodic filings. As part of the Company’s response to the SEC, the Company filed a Form 8-K, dated and filed with the Commission on October 12, 2007, to report the corrections to the financial statements for the Company’s fiscal year ended December 31, 2005 that were previously filed as Note 14 to the financial statements of the Company’s Form 10-KSB for the fiscal year ended December 31, 2006.

Note 14 states in its entirety: “We have restated our balance sheet at December 31, 2005, and statements of operations, stockholders' equity and cash flows for the year ended December 31, 2005. The restatement impacts the year ended December 31, 2005, but has no effect on the financial statements issued in prior fiscal years. The restatement is the result of a correction of an error. In 2005, the Company did not accrue $175,000 of directors' fees that had been authorized, but not paid at December 31, 2005. The $175,000 was paid in 2006 with the issuance of Common Stock. Also, the Company had accrued $30,600 in payroll tax expense on accrued compensation of $200,000 that had been paid in stock at December 31, 2005, that was subsequently treated as contract services and not employee services. The impact of the restatement on the balance sheet was to increase current liabilities from $573,351 to $717,751. The impact of the restatement on net loss is an increase of $144,400, from $589,171 to $733,571 net of tax for the year ended December 31, 2005. There was no change in the loss per share.”

Date of Conclusion regarding Corrections to Annual Financial Statements for the Fiscal Year Ending December 31, 2005.  The errors in accounting treatment of the two compensation issues referenced above came to light on March 1, 2007 as a result of the audit work for the fiscal year ending December 31, 2006.

Audit Committee Response: Independent director and audit committee member Jeffrey Guzy has discussed the aforementioned corrections with Robison Hill & Co., the Company’s public auditors.  The conclusion of those discussions was that the errors were the result of Company management misunderstanding inquiries from the public auditors and that misunderstanding resulted in a response to the auditors that produced the two errors in the fiscal year 2005 audit. Mr. Guzy and the public auditors also concluded that the Company’s addition of a chief operating officer with financial and accounting experience in early 2007 and the addition of an in-house bookkeeper assisted by a local accountant in early 2007 should help prevent any repeat of the miscommunication between management and the public auditors about such compensation matters and their accounting treatment.

Item 2.  Properties.

Neither the  Company  nor its  operating  subsidiaries  owns  any real properties or facilities.  CHDT and Capstone share principal executive offices and operating  facilities at 350 Jim Moran Blvd., Suite 120, Deerfield Beach, Florida 33442. Rent expense, included in general and administrative expenses, for the years ended December 31, 2008 and 2007 amounted to $51,809 and $36,503, respectively.  The Company has no current plans to expand its facilities and believes that its current facilities will be adequate for fiscal year 2009.

	2008		2007
	high	low	high	low
1 st Quarter	.030	.020	.037	.020
2 nd Quarter	.030	.020	.033	.020
3 rd Quarter	.030	.020	.022	.012
4 th Quarter	.020	.010	.053	.016

First Quarter 2009
(January 1, 2009 to March 25, 2009)
High	Low
.020	.010

CHDT CORPORATION

AND SUBSIDIARIES

-:-

INDEPENDENT REGISTERED PUBLIC ACCOUNTANTS REPORT

DECEMBER 31, 2008 AND 2007

CONTENTS

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTANTS

To the Board of Directors and Shareholders

CHDT Corporation and Subsidiaries

We have audited the accompanying consolidated balance sheets of CHDT Corporation and Subsidiaries as of December 31, 2008 and 2007 and the related consolidated statements of operations, stockholders’ equity and cash flows for the years then ended.  These financial statements are the responsibility of the Company's management.  Our responsibility is to express an opinion on these financial statements based on our audits.

We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States).  Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement.  The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting.  Our audit included consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the company’s internal control over financial reporting.  Accordingly, we express no such opinion.  An audit also includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation.  We believe that our audits provide a reasonable basis for our opinion.

In our opinion, based on our audit and the report of the other auditors, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of CHDT Corporation and Subsidiaries as of December 31, 2008 and 2007 and the results of its operations and its cash flows for the years ended December 31, 2008 and 2007 in conformity with accounting principles generally accepted in the United States of America.

                                                        ROBISON, HILL & CO.
                                                        Certified Public Accountants

Salt Lake City, Utah

March 23, 2009

CHDT CORPORATION AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

CHDT CORPORATION AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

(Continued)

The accompanying notes are an integral part of these financial statements.

CHDT CORPORATION AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF OPERATIONS

The accompanying notes are an integral part of these financial statements.

CHDT CORPORATION AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY

YEARS ENDED DECEMBER 31, 2008 AND 2007

CHDT CORPORATION AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY

YEARS ENDED DECEMBER 31, 2008 AND 2007