FILED PURSUANT TO RULE 424(b)(3)
REGISTRATION NO. 333-139752
PROSPECTUS SUPPLEMENT NO. 1, DATED MAY __, 2007
(TO PROSPECTUS DATED JANUARY 22, 2007)
CHINA DIRECT, INC.
9,546,875 SHARES OF COMMON STOCK
--------------------------
This prospectus supplement, together with the prospectus described
above, is to be used by certain selling security holders of the securities
referenced above, or by their transferees, pledgees, donees or their successors,
in connection with the offer and sale of the securities. This prospectus
supplement should be read in conjunction with the prospectus and is qualified by
reference to the prospectus, except to the extent that the information contained
in this prospectus supplement supercedes the information contained in the
prospectus.
SELLING SECURITY HOLDERS
The table included in the section entitled "Selling Security Holders"
commencing on page 74 of the prospectus is hereby amended to reflect the
transfer by one of the selling security holders, Mr. Richard J. Church, by gift
to six persons of 30,000 shares of our common stock, together with Class A
common stock purchase warrants to purchase an aggregate of 45,000 shares of our
common stock and Class B common stock purchase warrants to purchase an aggregate
of 45,000 shares of our common stock beneficially owned by him and covered by
the prospectus. As a result of these transfers, the table contained in the
prospectus is supplemented to revise Mr. Church's ownership and to add the six
transferees as selling security holders.
Shares Percentage
Number Percentage to be to be
of owned Shares owned owned
Name of Selling Shares before to be after after
Security Holder Owned offering offered offering offering
---------------------- ------- ---------- ------- -------- ----------
Richard J. Church (15) 430,000 3.3% 430,000 0 0
Alicia B. Church (23) 10,000 * 10,000 0 0
Anna L. LaPerna (24) 20,000 * 20,000 0 0
Dennis Church (25) 50,000 * 50,000 0 0
Harry L. Church (26) 10,000 * 10,000 0 0
Michael E. Tanner (27) 20,000 * 20,000 0 0
George L. Church or
Dorothy R. Church (28) 10,000 * 10,000 0 0
* represents less than 1%
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(15) The number of shares of common stock owned and offered includes 161,250
shares underlying Class A common stock purchase warrants and 161,250 shares
underlying Class B common stock purchase warrants. The common stock purchase
warrants are not convertible or exercisable to the extent that (a) the number of
shares of our common stock beneficially owned by the holder and (b) the number
of shares of our common stock issuable upon the exercise of the warrants would
result in the beneficial ownership by holder of more than 4.99% of our then
outstanding common stock. This ownership limitation can be increased to 9.99% by
the holder upon 61 days notice to us.
(23) The number of shares of common stock owned and offered includes 3,750
shares underlying Class A common stock purchase warrants and 3,750 shares
underlying Class B common stock purchase warrants. The common stock purchase
warrants are not convertible or exercisable to the extent that (a) the number of
shares of our common stock beneficially owned by the holder and (b) the number
of shares of our common stock issuable upon the exercise of the warrants would
result in the beneficial ownership by holder of more than 4.99% of our then
outstanding common stock. This ownership limitation can be increased to 9.99% by
the holder upon 61 days notice to us.
(24) The number of shares of common stock owned and offered includes 7,500
shares underlying Class A common stock purchase warrants and 7,500 shares
underlying Class B common stock purchase warrants. The common stock purchase
warrants are not convertible or exercisable to the extent that (a) the number of
shares of our common stock beneficially owned by the holder and (b) the number
of shares of our common stock issuable upon the exercise of the warrants would
result in the beneficial ownership by holder of more than 4.99% of our then
outstanding common stock. This ownership limitation can be increased to 9.99% by
the holder upon 61 days notice to us.
(25) The number of shares of common stock owned and offered includes 18,750
shares underlying Class A common stock purchase warrants and 18,750 shares
underlying Class B common stock purchase warrants. The common stock purchase
warrants are not convertible or exercisable to the extent that (a) the number of
shares of our common stock beneficially owned by the holder and (b) the number
of shares of our common stock issuable upon the exercise of the warrants would
result in the beneficial ownership by holder of more than 4.99% of our then
outstanding common stock. This ownership limitation can be increased to 9.99% by
the holder upon 61 days notice to us.
(26) The number of shares of common stock owned and offered includes 3,750
shares underlying Class A common stock purchase warrants and 3,750 shares
underlying Class B common stock purchase warrants. The common stock purchase
warrants are not convertible or exercisable to the extent that (a) the number of
shares of our common stock beneficially owned by the holder and (b) the number
of shares of our common stock issuable upon the exercise of the warrants would
result in the beneficial ownership by holder of more than 4.99% of our then
outstanding common stock. This ownership limitation can be increased to 9.99% by
the holder upon 61 days notice to us.
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(27) The number of shares of common stock owned and offered includes 7,500
shares underlying Class A common stock purchase warrants and 7,500 shares
underlying Class B common stock purchase warrants. The common stock purchase
warrants are not convertible or exercisable to the extent that (a) the number of
shares of our common stock beneficially owned by the holder and (b) the number
of shares of our common stock issuable upon the exercise of the warrants would
result in the beneficial ownership by holder of more than 4.99% of our then
outstanding common stock. This ownership limitation can be increased to 9.99% by
the holder upon 61 days notice to us.
(28) The number of shares of common stock owned and offered includes 3,750
shares underlying Class A common stock purchase warrants and 3,750 shares
underlying Class B common stock purchase warrants. The common stock purchase
warrants are not convertible or exercisable to the extent that (a) the number of
shares of our common stock beneficially owned by the holder and (b) the number
of shares of our common stock issuable upon the exercise of the warrants would
result in the beneficial ownership by holder of more than 4.99% of our then
outstanding common stock. This ownership limitation can be increased to 9.99% by
the holder upon 61 days notice to us.
This amended table is based solely upon the information provided to us
by the selling security holders named above. None of the selling security
holders has, or within the past three years has had, any position, office or
other material relationship with us or any of our predecessors or affiliates.
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