updated 2/22/2011 2:46:32 PM ET 2011-02-22T19:46:32

NEW YORK and HARBIN, China, Feb. 22, 2011 (GLOBE NEWSWIRE) -- China Digital Animation Development, Inc. (OTCBB:CHDA) today provided a business update and announced financial results for its fiscal second quarter ended December 31, 2010.

Mr. Fu Qiang, Chairman and Chief Executive Officer, commented, "We are pleased to report another strong quarter and a growing portfolio of notable projects. Revenue for the second quarter of fiscal 2011 grew 63% to $2.0 million compared to the second quarter of fiscal 2010 and we achieved gross margins of 82% for the quarter versus 44% for the same period last year. Streamlining our focus on digital animation is proving to be a winning strategy for the company and our shareholders."

To meet demand for its animation services, China Digital put a significant amount of new equipment into service over the past few months and expects to make additional upgrades to its facilities in the coming year.

Revenue for the second quarter of fiscal 2011 increased 63% to $2.0 million compared to $1.2 million for the same period last year. Gross profit for the second quarter of fiscal 2011 was $1.7 million versus $537 thousand for the same period last year. The company's income from operations for the second quarter of fiscal 2011 was $1.3 million compared to $271 thousand for the second quarter of fiscal 2010. Net income for the second quarter of fiscal 2011 was $919 thousand or $0.05 per share, versus $251 thousand, or $0.01 per share in the same period last year.

As of December 31, 2010, the company had cash and cash equivalents of $9.3 million, working capital of $9.4 million, no long-term debt and shareholders' equity of $17.4 million.

About China Digital Animation Development, Inc.

China Digital Animation Development, Inc. is a premier China-based digital animation development company, operating in Harbin (one of the largest animation development centers in China) as well as Beijing in The People's Republic of China. The Company also has an administrative office in New York City. The Company is engaged in animation post-stage processing, animation outsourcing, and information transmission services. The Company also operates an animation development skills training center located in Harbin, China, which provides its students with different types of animation skill training programs such as motion graphics, product modeling, character animation, and more. The Company's technical team has extensive experience in animation production and outsourcing.

Safe Harbor Statement

In addition to historical information, this press release contains forward-looking statements, which are generally identifiable by use of the words "believes," "expects," "intends," "anticipates," "plans to," "estimates," "projects," or similar expressions. These forward-looking statements represent Management's belief as to the future of China Digital Animation Development, Inc. Whether those beliefs become reality will depend on many factors that are not under Management's control. Many risks and uncertainties exist that could cause actual results to differ materially from those reflected in these forward-looking statements. Factors that might cause such a difference include, but are not limited to, those discussed in Section 1A:  "Risk Factors" In the Company's Annual Report on Form 10-K for the year ended June 30, 2010. Readers are cautioned not to place undue reliance on these forward-looking statements. We undertake no obligation to revise or publicly release the results of any revision to these forward-looking statements.

(tables follow)

CHINA DIGITAL ANIMATION DEVELOPMENT, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME
FOR THE THREE MONTHS AND SIX MONTHS ENDED DECEMBER 31, 2010 AND 2009
         
   Three months ended

December 31,
Six months ended

December 31,
   2010 2009 2010 2009
              
Revenues $2,014,129 $1,234,375 $3,819,988 $2,378,290
              
Cost of goods sold 360,299 697,413 710,904 935,747
              
Gross profit 1,653,830 536,962 3,109,084 1,442,543
              
Operating expenses            
 Selling expenses 113,796 69,742 215,553 134,373
 General and administrative expenses 288,982 196,367 604,561 348,996
Total operating expenses 402,778 266,109 820,114 483,369
              
Income from operations 1,251,052 270,853 2,288,970 959,174
              
Other income (expense)            
 Interest income 7,121 83,952 9,136  168,548 
 Loss from disposal of property, plant and equipment -- -- -- (26)
Total other income (expense) 7,121 83,952 9,136 168,522
              
Income before income taxes 1,258,173 354,805 2,298,106 1,127,696
              
Less: Provision for income taxes 339,616 103,653 615,787 299,532
              
Net income 918,557 251,152 1,682,319 828,164
              
Other comprehensive income            
Foreign currency translation gain 225,030 39,397 479,506 52,464
              
Total comprehensive income $1,143,587 $290,549 $2,161,825 $880,628
              
Basic and diluted earnings per share $0.05 $0.01 $0.08 $0.04
Basic and diluted weighted average shares outstanding   20,125,978 20,020,000   20,072,989 20,020,000
 
CHINA DIGITAL ANIMATION DEVELOPMENT, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
FOR THE PERIOD ENDED DECEMBER 31, 2010 AND YEAR ENDED JUNE 30, 2010
     
   December 31,

2010
June 30,

2010
   (Unaudited)  
ASSETS    
Current assets    
 Cash and cash equivalents $9,299,039 $6,219,438
 Accounts receivable 940,540 976,304
 Other receivables 14,010 3,616
 Total current assets 10,253,589 7,199,358
        
 Property, plant and equipment, net 5,289,156 5,575,026
 Land use right and other intangible assets, net 2,671,747 2,756,604
 Total assets $18,214,492 $15,530,988
        
LIABILITIES AND STOCKHOLDERS' EQUITY    
Current liabilities      
 Loan payable 335,975 286,000
 Accrued expenses and other payables 122,982 91,378
 Taxes payable 350,439 410,339
 Total current liabilities 809,396 787,717
        
Commitments and contingencies      
        
Stockholders' equity      
Common stock ($0.001 par value, 500,000,000 shares authorized,

20,270,000 shares issued and outstanding at December 31, 2010,

20,020,000 shares issued and outstanding at June 30, 2010)
20,270 20,020
Additional paid-in-capital 6,723,447 6,223,697
Accumulated other comprehensive income 2,353,439 1,873,933
Reserved Fund 1,257,468 705,738
Retained earnings 7,050,472 5,919,883
Total stockholders' equity 17,405,096 14,743,271
Total liabilities and stockholders' equity $18,214,492 $15,530,988
CONTACT: Crescendo Communications, LLC
         David Waldman or Klea Theoharis
         Tel: (212) 671-1020
         Email: chda@crescendo-ir.com

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