CAPC 10-Q Quarter ended March 31, 2011

---

---

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

x QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 FOR THE QUARTERLY PERIOD ENDED MARCH 31, 2011

o 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 or organization)	(I.R.S. Employer Identification No.)

350 Jim Moran Boulevard, Suite 120, Deerfield Beach, Florida  33442

(Address of principal executive offices)

(954) 252-3440

(Issuer’s Telephone Number)

Indicate by check mark whether the issuer (1) has filed all reports required to be filed by Section 13 or 15(d) of the Exchange Act during the past 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. x Yes o No

Indicate by check mark whether the registrant is a large accelerated file, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of "large accelerated filer," "accelerated filer" and "smaller reporting company" in Rule 12b-2 of the Exchange Act.

Large accelerated filer o	Accelerated filer o
Non-accelerated filer o (Do not check if a smaller reporting company)	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).

o Yes x No

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.  As of March 31, 2011, there were 649, 357,786 shares of the issuer's $.0001 par value common stock issued and outstanding.

PART I - FINANCIAL INFORMATION

Item 1.  Financial Statements

Item 2.  Management’s Discussion and Analysis of Financial Condition and Results of Operations

General – CHDT Corporation, a Florida corporation, (“CHDT,” “Company,” “we,” or “our”) is a public holding company with its Common Stock, $0.0001 par value per share, (“Common Stock”) quoted on the Over-The-Counter QB-OTC Link System under the trading symbol “CHDO.OB.”   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-K for the year ended December 31, 2010.

Forward Looking Statements

Management’s Discussion and Analysis contains “forward-looking” statements within the meaning of Private Securities Litigation Reform Act of 1995, as amended, as well as historical information. The expectations reflected in these forward-looking statements may prove to be incorrect or could change with changing circumstances. Our actual results could differ materially from those anticipated in forward-looking statements as a result of certain factors – many of those factors being beyond our control or ability to predict. Forward-looking statements include those that use forward-looking terminology, such as the words “anticipate,” “believe,” “estimate,” “expect,” “intend,” “may,” “project,” “plan,” “will,” “shall,” “should,” and similar expressions, including when used in the negative. Although we believe that the expectations reflected in these forward-looking statements are reasonable and achievable at the time made, these statements involve risks and uncertainties and no assurance can be given that actual results will be consistent with these forward-looking statements.  Actual results may differ significantly from anticipated business and financial results.

All forward-looking statements attributable to us are expressly qualified in their entirety by the above and all other applicable factors. We undertake no obligation to update or revise these forward-looking statements, except as required by law, whether to reflect events or circumstances after the date initially filed or published, to reflect the occurrence of unanticipated events or otherwise.

Introduction

The following discussion and analysis summarizes the significant factors affecting: (i) our consolidated results of operations for the three months ended March 31, 2011 compared to the three months ended March 31, 2010; and (ii) financial liquidity and capital resources.

Through our operating subsidiaries, we are a developer and manufacturer of niche consumer products selling to distributors and retailers in the United States. Our Capstone subsidiary currently operates in five primary business segments: (1) Portable booklights and multi-task lights. (2) eReader lights. (3) Eco-i-Lite power failure lights and night lights (4) Wireless motion sensor lights (5) Light Ringers® collection of desk lamps and utility lamps.

Our growth strategy has six main elements:

Capstone Lighting products specialize in low cost, innovative portable lighting products that we believe can win a profitable niche and market share without high market penetration costs (especially marketing and advertising costs).  Capstone sells booklights, multi-task lights, power failure lights and nightlights, motion sensor lights, desk lamps, eReader lights  and also offers “Private Label” programs marketed to major retailers.  “Private Label” is the manufacture of products by a company and those products are sold under the name or trade name of the manufacturer or manufacturer’s retailers, distributors or bulk buyers.

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) Portable book lights and Task lights. In March 2009 the Company launched an expanded new line of booklights and multi-task lights, under the name PATHWAY LIGHTS®. This program included the following named products: Mini Taskbright, Multi Taskbright, Poser Taskbright, PawprintTaskbright, Compact 1 Brightbook, Compact 2 Brightbook, Britespot 2 Brightbook, Britespot 3 Brightbook, and Multipose Brightbook.  In March 2010 at the International Housewares Show, the PATHWAY LIGHTS® program was further expanded with the launch of the Retro Taskbright and the Minipose Taskbright   with additional trendy colors offered in our established line. These LED booklights are small, lightweight and portable and attach to reading materials and illuminate the area of text. They are powered by batteries which are typically included in our product offerings. In March 2011, at the International Housewares Show, the PATHWAY LIGHTS® program was further expanded with additional trendy colors and new designs.

(2) In July 2010, we developed the eReader-Lite and the eBook-Lite products and presented to only a few retailers as it was late in the buying season. This new category has been specifically designed to provide lighting for the new trendy eReader products. The eGrip design allows it to adjust to all eReader designs.  In March 2011, at the International Housewares Show, the Company officially launched the line and  introduced  additional trendy colors and a rechargeable eReader-Lite.

(3) In 2009, 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 light. Each product uses an encased lithium ion battery that when fully charged provides 7 + hours of battery life and LED light bulbs that last 100,000 hours. In March 2010, at the International Housewares Show, the Company expanded the line with the launch of the Midi Eco-i-Light and the Pawprint Line in Full size, Midi and Mini, specifically developed for the dog walking consumers. In March 2011, at the International Housewares Show, the Company introduced Mini Eco-i-Lite for children’s rooms and a version marketed to senior citizens. The Company also introduced a new Eco-Headlite.

(4). In March 2010, at the International Housewares Show, the Company also launched its new C-Lite Wireless Motion Sensor light. This is offered in a 12 LED full size and a 6 LED Mini Size and is powered by AA batteries. These lights provide lighting for dark areas without having to install electrical wiring. The bulb housing rotates 360 degrees to allow for light to be directed where needed. Both versions have a Motion Sensor Circuitry that activates the lights when movement is detected within 13 feet of the C-Lite. Both versions have a Hi and Lo light brightness setting to conserve the batteries. The full size also has a period selector (60 seconds, 90 seconds or 120 seconds) which presets the time period that a light should turn off after the last motion has been detected. Both come with a unique slide and snap bracket that allows for the product to be installed on a wall.  In March 2011, the Company launched a 24 LED Outdoor version of the C-Lite motion sensor light.

(5) In March 2010, the Company officially launched its new line of Light Ringers® Lamps. This offer includes the 12 LED Battery Operated Lamp, 12 LED Rechargeable Lamp, 12 LED Solar Lamp and 12 LED AC Lamp also the 20 LED Rechargeable Lamp, 20 LED AC Lamp, 20 LED Metal Lamp and 20 LED Utility Lamp. These products are all offered in trendy colors and unique packaging.

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/Sams Club,  Meijer Stores,  Office Depot, Barnes & Noble book stores, Borders book stores, Brookstone, Fred Meyer-Kroger Stores, Costco Wholesale,  The  Container Store , Starcrest,  True Value  and in Central and South America with our master distributor  Avtek.   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 initially introduce the new line to our existing customer base. Many of our products are multifunctional and as such can be marketed to many other departments within an existing customer. Our goal is to expand our products into other departments where the product features fill a consumer’s need.

As a small reporting company with limited resources, we do not have the resources to compete head-to-head with larger, more established competitors for any of the products.   We face many national or regional brand-named competitors in all of our product lines. However we attempt to compete by leveraging the design, innovation, engineering and manufacturing capabilities of our Chinese contract manufacturers in order to provide quality products with more functions at what we deem to be a value price.  Prior History. Since the start of the 1990’s, the history of CHDT has been a series of failed operating subsidiaries engaged in various business lines.  With each failed business, we usually experienced a change in management and business focus.  We believe that these past failures were due to a combination of one or more of the following: (1) inadequate financing of operations; (2) absence of a readily available sources of affordable funding for operations and product and business exception; (3) absence of any or enough experienced managers or executives; (4) lack of adequate strategic and financial planning and accurate budgeting projections; (5) general economic conditions and downturns in industries that undermined many small businesses, especially in the value-added reseller of computer hardware and software developer and systems developer industries; (6) inability to raise money in the public markets due to poor financial track record of CHDT, resulting low stock market price  and lack of sufficient institutional investor and market maker support for CHDT Common Stock; (7) selection of business lines that CHDT was ill suited to compete in or acquire; (8) operating losses severely limiting the business  and financial options and resources of CHDT;  (9) frequent changes in management and business lines; (10) concurrently operating incompatible business lines that were ill-suited for a small business issuer; and (11) acquisitions that diverted resources from existing operations and ultimately failed and, as such, hindered CHDT’s efforts to attain profitability on a sustained basis.

Starting in 2007, we have sought to avoid the problems of the past by recruiting an experienced management and sales team for the stated purpose to develop and expand a consumer products business and we have endeavored to raise funds for planned business development efforts.  These steps have resulted in continued losses in 2010. but we believe that this investment in corporate infrastructure is necessary to lay the foundation for any hope of future success and effective business and product development.  While we are not certain that our current strategy and business lines will produce sustained future profitability or any growth, we believe that the current strategy and business line is the best approach for our current management team and available resources and, in our opinion, the most likely path to any hope of sustained future profitability or any growth, we believe that the current strategy and business line is the best approach for our current management team and available resources and, in our opinion, the most likely path to any hope of sustained future profitability.

For the years ended December 31, 2010 and 2009, the Company’s revenues were derived from 4 sources: (i) the sale of our PATHWAY LIGHTS® booklight products (Capstone and its booklight product line was acquired by CHDT in September 2006); (ii) sale of Eco-i-Lite Power Failure Lights, (iii) sale of our Wireless motion sensor lights; and (iv) sale of our eReader-Lite program.

Despite the recent efforts to make CHDT and its operations a focused and professionally run organization, we continue to be hampered in our efforts to achieve sustained profitability by problems that stem from the past and our history of failed businesses. Our efforts have also been severely hampered by the current economic recession and tight credit markets.

The failure of CHDT to achieve sustained profitability in its operations continues to hamper our efforts to establish and sustain a profitable, growing business or cause any appreciation in our Common Stock market price.  In fiscal year 2010 and through 2011 to date, we continued our historical reliance on raising working capital for operations, business and product development, by receiving loans or investments from members of management or their affiliates.  During 2010 we   were able to transfer our conventional asset based bank loan to a factor based line that would better  support Capstone operations and working capital needs, however we may have to continue to raise working capital for CHDT and working capital for Capstone business and product development (as well as any possible mergers and acquisitions of other companies or their products) by selling our securities in private placements to investors and/or loans or investments by our management and their affiliates. This reliance on private placements of securities and insider loans or investments adds to the already significant number of outstanding shares of Common Stock, significantly dilutes our shareholders and further weakens our ability to attract primary market makers and institutional investor support for our Common Stock as a publicly traded security and also adversely impacts on our ability to do mergers and acquisitions, attract traditional bank funding or raise working capital by public offerings of our securities

Our lack of primary market makers and institutional investor support of our Common Stock also contributes to our burden in achieving sustained, profitable business lines.   These problems stem from the manner in which CHDT was taken public in the late 1980’s and developed a public market for the Common Stock in 1998.  CHDT did not, and perhaps could not under then current circumstances, do an underwritten initial public offering and produce a national network of broker-dealers and institutional investors interested in long-term investment in CHDT and stability in the market price for the Common Stock. As a result, we have had difficulty in sustaining any increases in the market price of the Common Stock or maintaining stability in the market for our Common Stock.  When the market price of the Common Stock enjoys any significant percentage increase, shareholders tend to sell the Common Stock to reap any gains (no matter how small) from the market price increase and the selling causes the market price of the Common Stock to fall back to prior levels.  Since there are no primary market makers or institutional investors supporting the Common Stock, there are no investors effectively countering the impact of the selling pressure on the market price for the Common Stock. The low market price and lack of support for our Common Stock means that we are hampered in our ability to resort to the public markets to raise working capital because of the low stock market price. As such, we do not readily enjoy one of the principal benefits of being a public company: ready access to the public securities markets for working capital.

We have attempted to address and intend to continue to address the above problems in public and market maker support for our Common Stock by: (1)  establishing  revenue growth  in  our current consumer product business lines in order to demonstrate that current management has a sound business line and business strategy. (2) upon establishing a record of profitability, members of management and agents will solicit support from institutional investors, asset managers, market makers and others to provide long-term investors in the Common Stock and stability in the public market for the Common Stock; (3), seek investment banker assistance in developing a strategic plan, including an acquisition plan, to dramatically grow our core product line or another non retail product line that offers entry into a new distribution channel or niche market..  We can make no assurances that we shall succeed in this effort.

We intend to remain focused on niche products for the time being that we believe can attain a profitable market niche with minimal market penetration costs and is attractive to our existing distribution channel of regional and national retailers and distributors. We also recognize that the retail distribution has been negatively impacted by the ongoing economic recession. We intend to continue to develop exciting new products by internal efforts as well as acquire new products by mergers and acquisitions, but we will also look for opportunities by merger and acquisition that would allow us to diversify into non –retail distribution channels. Nonetheless, our Company is considering a number of options to enhance shareholder value, including without limitation, divesting one or more existing business lines, and mergers and acquisitions.

Results of Operations: For the three months ended March 31, 2011, the Company had net income from continuing operations of approximately $107,100. For the three months ended March 31, 2010 the Company had a net loss from operations of approximately $507,800. That is a net improvement of approximately $614,900 over 2010 results.

Total Net Revenues: For the three months ended March 31, 2011 the Company had Gross Sales of approximately $2,616,000 with sales allowances of approximately $198,600 for net revenues of approximately $2,417,400 compared to net revenues for the same period in 2010 of approximately $ $353,000, for an increase of approximately $2,064,400 which represents a 584% increase from 2010 results. All of the revenue was generated by Capstone.

Cost of Sales: For the three months ended March 31, 2011 and 2010, cost of sales were approximately $1,826,200 and $238,200, respectively. These costs represents 75%% and 67% respectively of Total Net Revenue. Cost of Sales has increased because of the increase is sales volume. As a percentage of total revenue cost of sales has increased primarily because the Company provided promotional funds  of $123,000 for the launch of the new motion sensor light program and other additional allowances  of $75,600 for a total of $198.600 of allowances in the quarter. These higher than usual sales allowances had the effect of reducing Gross Sales and thereby increasing the Cost of Sales percentage to Net sales by approximately 5.7%

Gross Profit: For the three months ended March 31, 2011, gross profit was approximately $591,200 an increase of approximately $476,500 or 415% from $114,700 the three months ended March 31, 2010.  Gross profit as a percentage of sales was 24.4% for the three months ended March 31, 2011 as compared to 33% for the three months ended March 31  2010.   The large Gross profit increase is attributed to significantly increased shipments in the quarter as compared to the same period last year. The lower gross profit percentage compared to the same period in 2010 was mainly the result of additional promotional allowances allowed during the quarter to market the new Wireless motion sensor light

Total Operating Expenses were approximately $408,400 for the three months ended March 31, 2011 as compared to approximately $588,700 for the three months ended March 31, 2010, a net reduction of approximately $180,300 or 30%. This expense decrease can be attributed to various factors. During 2010 an expense reduction program was initiated which has continued into 2011 and the Company eliminated certain expenses.

Sales & Marketing Expenses for the quarter ended March 31 2011 were approximately $52,700 as compared to $102,900 in same period 2010. This is a reduction of $50,200 or 48.7%. The primary reason for this reduction is that the STP license fee has been eliminated in 2011, which cost $62,500 in the same period in 2010.

Compensation Expenses for the quarter ended March 31 2011 were approximately $184,600 as compared to $287,500 in same period 2010. This is a reduction of $102,900 or 35.8%. During 2010 Executive Management voluntarily cut their salaries by 20% which has continued in the first quarter 2011 and a Management position was eliminated. Stock based compensation was also reduced by $18,100 as compared to same period 2010.

Professional Fees for the quarter ended March 31, 2011 were approximately $37,700 as compared to $54,500 in the first quarter 2010. This is a reduction of $16,800 or 30.8%. In the first quarter 2010 we incurred $15,000 of additional legal fees pertaining to the CBQ settlement which was the main reason for the higher expense rate last year.

Product Development Expenses for the quarter ended March 31, 2011 were approximately $52,000 as compared to $35,300 in the first quarter 2010. This is an increase of $16,700 or 47.3% due mainly to the investment in new products and increased quality control inspection costs in our factories associated with the higher volume of orders shipped in the quarter.

General Administrative Expenses for the quarter ended March 31, 2011 were approximately $81,200 as compared to $108,200 in the first quarter 2010. This is a reduction of $27,000 or 24.9%. During first quarter 2011, depreciation and packaging amortization costs have been reduced by $24,700 as we no longer have the added expense of amortizing STP package or  depreciating STP tooling expense.

Net Operating Income (Loss)

For the quarter ended March 31 2011, Net Operating Income was approximately $182,800 as compared to a Net Operating Loss of $473,900 in the same period 2010. This is an improved performance of $656,700 as compared to the same quarter in 2010.

Other Income (Expense): Interest Expenses for the three months ended March 31, 2011 was approximately $75,700, an increase of $41,900 or 123% from approximately $33,800 expensed for the three months ended March 31, 2010.  This expense increase was the result of additional funding required to support the significant order increase   during the quarter and for future orders.

Net Income (Loss): The Income for the three months ended March 31, 2011 was approximately $107,100, against a loss of approximately $507,800 for the three months ended March 31, 2010. As compared to the same period in 2010, the Company improved its net results by approximately $614,900. This substantial net improvement was the result of significantly increased revenue combined with the elimination of some major expenses and the implementation of an expense reduction program.

Directors & Officers Insurance : We currently operate with directors’ and officers’ insurance and we believe our coverage is adequate to cover likely liabilities under such a policy.

Impact of Inflation: Our major expenses have been the cost of selling and marketing 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 seek to expand distribution and manufacturing relationships and channels.  As a result of world economic conditions and the current price of world oil and resulting increased material costs, there are now pressures from Chinese Manufacturers to increase costs. We generally have been able to reduce cost increases by strong negotiating or re-engineering products, but we will have to increase the price of our products in fiscal year 2011 in response to such inflationary pressures.  Since we operate in industries where the consumer tends to be price sensitive, any such increase in the prices of our products may adversely impact our sales and financial results in fiscal year 2011.

Country Risks .  Almost all of our contract manufacturing operations and sources of products are located in Peoples’ Republic of China or “China.”  We are dependent on China for almost all of the design and production of our consumer products.  As such, we are subject to significant risks not typically faced by companies operating in or obtaining products from North America and Western Europe manufacturing sources.  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  CHDT to obtain products and fill customer orders from our 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.  While dramatic anti-trade shift in Chinese policy or laws would seem to be clearly against the best interests of China and its current economic trends, China has a central government with the authority to make such changes and an incentive to take actions designed to reaffirm the control of the central government over the economy and society.

China has been under ongoing international pressure to value its currency in a manner that would increase the value of Chinese currency in respect of otherworld currencies and thereby increase the cost of Chinese goods in the world market.  Such a revaluation of Chinese currency could adversely impact business by increasing costs to consumers, but this cost impact would also affect our competitors with products produced in China.  China adopted a 2% revaluation of its currency in 2005 and the U.S. Dollar declined slightly in response to this revaluation.  While under international pressure to value the Chinese currency in a manner that more realistically reflects the strength and value of the Chinese currency, China may continue to keep Chinese currency at a level that some regard as below its perceived, true value.  The currency issue may produce a conflict between the U.S. and China that affects trade or commerce between those nations and may affect us as well.

Currency .  The U.S. dollar is the currency used in all of our commercial transactions and our property and business is conducted in North America. As a result, the effect of the fluctuations of exchange rates is considered minimal to our business operations.

Interest Rate Risk . We do not have significant interest rate risk during the fiscal quarter ending March 31, 2011.

Credit Risk . We have not experienced significant credit risk, as most of our customers are long-term customers with superior payment records. Our managers monitor our receivables regularly and our Direct Import Programs are typically supported by a customers’ Letter of Credit which is a guaranteed form of payment.

Off-Balance Sheet Arrangements. We have no off-balance sheet arrangements.

Item 3. Quantitative and Qualitative Disclosures about Market Risk

Not applicable.

Item 4. Controls and Procedures

Evaluation of disclosure controls and procedures. We maintain “disclosure controls and procedures,” as defined in Rules13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as amended (the “Exchange Act”), that are designed to ensure that information required to be disclosed by us in reports we file or submit under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms, and that such information is accumulated and communicated to our management, including our principal executive officer and principal financial officer, as appropriate, to allow timely decisions regarding required disclosure. In designing and evaluating our disclosure controls and procedures, management recognized that disclosure controls and procedures, no matter how well conceived and operated, can provide only reasonable assurance of achieving the desired control objectives, and we necessarily are required to apply our judgment in evaluating the cost-benefit relationship of possible disclosure controls and procedures.

Our management, including our principal executive officer and principal financial officer, evaluated the effectiveness of the design and operation of our disclosure controls and procedures as of March 31, 2011 and concluded that the disclosure controls and procedures were effective.

Item 4(T). Controls and Procedures.

Changes in internal controls. There were no changes in our internal control over financial reporting that occurred during the fiscal quarter covered by this report that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

The certifications of our chief executive officer and chief financial officers attached as Exhibits 31.1 and 31.2  to this Report include information concerning our disclosure controls and procedures and internal control over financial reporting. Such certifications should be read in conjunction with the information contained in this Item 4, including the information incorporated by reference to our annual report on Form 10-K for the year ended December 31, 2010, for a more complete understanding of the matters covered by such certifications.

PART II — OTHER INFORMATION

Item 1. Legal Proceedings.

Other than as set forth below,  we are not a party  to any other material  pending  legal  proceedings  and,  to the  best  our  knowledge,  no such action by or against us has been  threatened.  From time to time, we are subject to legal proceedings and claims that arise in the ordinary course of its business. Although occasional adverse decisions or settlements may occur in such routine lawsuits, we believe that the final disposition of such routine lawsuits will not have material adverse effect on its financial position, results of operations or status as a going concern.

ESQUIRE TRADE & FINANCE INC. & INVESTOR, LLC v.  CBQ, Inc. (former name of our company) (Case Number 03 CIV. 9650 (SC), decided November 5, 2009) (formerly styled “ CELESTE TRUST REG., ESQUIRE TRADE, ET AL. V. CBQ, INC ., Case Number 03 CIV. 9650 RMB) (“Celeste case”).   The parties settled this case by mutual agreement on February 18, 2010.  A summary of the settlement is below. A stipulation withdrawing the plaintiffs’ appeal in the Celeste case was filed with and accepted by the court on March 8, 2010, which filing effectively ended the litigation in the Celeste case between the parties.  With the entry of the stipulation, there is no pending litigation in this matter.

The settlement and release provides a mutual, general release of all claims that plaintiffs and the Company may have against each other as the date of the release, including any causes of action or claims under the Celeste case and any related proceedings.  The settlement provides, in part, that: (1) the parties will seek a court order dismissing the Celeste case (which is the above referenced stipulation); (2) the parties will release each other from any and all claims and causes of action in or related to the Celeste case or the pending appeal to the U.S. Circuit Court for the Second Circuit;  (3) the plaintiffs will pay $100,000 towards the Company’s legal fees incurred in the Celeste case, which will go to legal counsel for the Company; (4) the Company will support the release of shares of Company Common Stock, $0.0001 par value per share, (“Common Stock”) owned of record by Networkland, Inc., a Virginia corporation, (“NET”) and Technet Computer Services, Inc., a Virginia corporation, (“TECH”) to the plaintiffs or their designees (each such block of Common Stock was sought by the plaintiffs in the Celeste case as part of their claims against the Company) (collectively, said shares of Common Stock held of record by NET and TECH being referred to as the “N&T Shares”));  (5) the issuance of 350,000 shares of Common Stock owned by Howard Ullman, a director of the Company, to the plaintiffs or their designees; and (6) the granting by Mr. Ullman of a five year option to purchase 20 million shares of Common Stock owned by Mr. Ullman to the plaintiffs or their designees, which option has an exercise price of $0.029 per share.  Under the settlement agreement and release, the Company will grant piggy-back registration rights to the option and underlying shares of Common Stock referenced in (6) above, which rights will be effective after June 1, 2010.  The Company will pay all registration fees and legal costs associated with any such registration, which are currently estimated to be approximately $5,000.

The settlement and release, which consists of a settlement agreement and release and option agreement by Mr. Ullman, was negotiated by Mr. Ullman on behalf of the Company with the plaintiffs. Mr. Ullman has provided case administration of the Celeste case for the Company in his capacity as a Company director (with assistance from a former company officer and director).

The Company believes that the settlement and release is in the best interests of the Company and its public shareholders because (1) it will eliminate the possibility of an adverse ruling by the U.S. Court of Appeals for the Second Circuit on the plaintiffs’ appeal, which adverse ruling could potentially impose a significant liability on the Company; and (2) the continuation of the Celeste case may discourage potential investors and funding sources from assisting the Company in financing operations and business development as well as make it more difficult to pursue any possible future merger and acquisition transactions, and (3) it may have suppressed the market price of the Company Common Stock due to the potentially significant liability presented by the case to the Company.

Potential Litigation

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 fully substantiate any of the ownership claims to date to the preferred stock in question and the claimants have not pursued their claims beyond an initial communication asserting ownership of these shares of serial preferred stock. The Company did not maintain preferred stock ownership records with a stock transfer agent at the time in question and has to rely on available internal records in this matter. The Company has not received any further claims or communications since mid-2006.   Since the Company has no record of the claimants as preferred stock shareholders, the Company is taking the position that they are no shareholders of record and the alleged redeemable preferred stock is not issued and outstanding.

Other Legal Matters . To the best of our knowledge, none of our directors, officers or owners 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 not disclosed above that we believe will have a material adverse effect on our financial condition or results of operations.

Item 1A. Risk Factors.

During the three months ended March 31, 2011, there were no material changes to the risk factors previously disclosed in our Annual Report on Form 10-K for the year ended December 31, 2010.

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds.

There were no unregistered issuances of Company securities in the quarter ending March 31, 2011.

Item 3.  Defaults Upon Senior Securities

None.

Item 4.  Submission of Matters to Vote of Security Holders

None.

Item 5.  Other Information

None.

Item 6.  Exhibits

EXHIBIT #	DESCRIPTION OF EXHIBIT
2.1	Purchase Agreement, dated January 27, 2006, by and among CHDT Corporation, William Dato and Complete Power Solutions, LLC. +
2.1.1	Purchase and Settlement Agreement by and among CHDT 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 between CHDT Corporation, and Capstone Industries, Inc. +++
2.1.1.2	Stock Purchase Agreement, dated 9 July 2009, by and between CHDT Corporation and Involve, LLC †
2.1.1.3	Indemnification Agreement, dated June 6th, 2009, by Howard Ullman and CHDT Corporation ΩΩ
3.1	Articles of Incorporation of CHDT Corp.*
3.1.1	Amendment to the Articles of Incorporation of CHDT Corp. **
3.2	By-laws of the Company***
3.3	Certificate of Designation of the Preferences, Limitations, and Relative Rights of Series B Convertible Preferred Stock of CHDT Corp. ****
10.1	Voting Agreement, dated January 27, 2006, by and among CHDT Corp., 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, by and between William Dato, CHDT Corporation and Complete Power Solutions, LLC. +
10.4	Purchase Agreement, dated December 1, 2007, by Capstone Industries, Inc. and Magnet World, Ltd. For sale of operating assets of Souvenir Direct, Inc. ++++
10.6	2005 Equity Plan of CHDT Corp.++++++
10.7	2008 Employment Agreement by Stewart Wallach and CHDT Corp.++++++
10.8	CHDT Corp. ++++++
10.9	2008 Employment Agreement by Howard Ullman and CHDT Corp.++++++
10.10	Form of Non-Qualified Stock Option+
10.11	Non-Employee Director Compensation++++++
10.12	Memorandum Decision in Esquire Trade & Finance Inc. & Investor, LLC v. CBQ, Inc., Case # 03 CIV. 9650 (SC), S.D.N.Y., 11/05/2009) Ω
10.13	Settlement agreement and release as approved by the CHDT Corporation Board of Directors on February 1, 2010, in the matter of Esquire Trade & Finance, Inc. and Investcor, LLC v. CBQ, Inc ., Case Number 03 CIV. 9650 (SC). ≠
10.14	Option, dated February 1, 2010, granted by Howard Ullman in settlement of Esquire Trade & Finance, Inc. and Investcor, LLC v. CBQ, Inc ., Case Number 03 CIV. 9650 (SC). ≠≠
14	Code of Ethics Policy, dated December 31, 2006+++++
31.1	Certification Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 by Stewart Wallach, Chieff Executive Officer^
31.2	Certification Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 by Gerry McClinton,Chief Financial Officer and Chief Operating Officer^
32.1	Certification Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002, by Stewart Wallach, Chief Executive Officer. ^
32.2	Certification Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 by Gerry McClinton,Chief f Financial Officer and Chief Operating Officer^

------------------------------------------

* Incorporated by reference to Annex G to the Special Meeting Proxy Statement,

Dated April 15, 2004, filed by CHDT Corporation with the Commission on April 20, 2004.

** Incorporated by reference to Exhibit 3(I) to the Form 8-K filed by CHDT Corporation with the Commission on July 10, 2007.

*** Incorporated by reference to Annex H the Special Meeting Proxy Statement,

Dated April 15, 2004, filed by CHDT Corporation with the Commission on April 20, 2004.

**** Incorporated by reference to Exhibit 99.2 to the Form 8-K filed by CHDT Corp. with the Commission on November 6, 2007.

+  Incorporated by reference to Exhibit 2 to the Form 8-K filed by CHDT Corporation with the Commission on January 31, 2006.

++ Incorporated by reference to Exhibit 2 to the Form 8-K filed by CHDT Corporation with the Commission on January 26, 2007.

+++ Incorporated by reference to Exhibit 2.1 to the Form 8-K filed by CHDT Corporation with the Commission on September 18, 2006.

++++ Incorporated by reference to Exhibit 99 to the Form 8-K filed by CHDT Corp. With the Commission on December 3, 2007.

+++++ Incorporated by reference to Exhibit 14 to the Form 10-KSB for the fiscal year ended December 31, 2006 and filed by CHDT

Corp. With the Commission on April 17, 2007.

++++++Incorporated by reference to Form 10-KSB for the fiscal year ended December 31, 2007 and filed by CHDT Corp. with the Commission on March 31, 2008.

†     Incorporated by reference to Exhibit 10.1 to the Form 8-K, dated 9 July 2009, and filed with the Commission on 14 July 2009, File # 000-28831.

Ω   Incorporated by reference to Exhibit 99.1 to the Form 8-K, dated November 6, 2009, as filed with the Commission on 9 November 2009.

ΩΩ  Incorporated by reference to Exhibit 2.1.1.3 to the Form 10-Q for the quarter ending June 30, 2009, as filed with the Commission on 14 August 2009.

≠   Incorporated by reference to Exhibit 99.1 to the Form 8-K, dated  Feb. 19, 2010, and filed by the Company with the Commission on Feb. 22, 2010,

≠≠ Incorporated by reference to Exhibit 99.2 to the Form 8-K, dated  Feb. 19, 2010, and filed by the Company with the Commission on Feb. 22, 2010,

^  Filed herein.

Note: All Exchange Act reports referenced above and filed by the Company has a Commission file number of #000-28813.

SIGNATURES

In accordance with Section13 or 15(d) of the Securities Exchange Act of 1934, CHDT Corporation has caused this report to be signed on its behalf by the undersigned, thereunto duly authorized, in Broward County, Florida on this 5 th day of May, 2011.

CHDT CORPORATION

Dated:   May 5, 2011

/s/Stewart Wallach Stewart Wallach Principal Executive Officer		Chief Executive Officer
/s/Gerry McClinton Gerry McClinton Principal Operations Executive		Chief Financial Officer  and Chief Operating Officer

44

---

---