China Digital Animation Development Provides Secon

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China Digital Animation Development, Inc. (OTCBB:CHDA) has recently provided a business update and announced financial results for its fiscal second quarter ended December 31, 2009.

Mr. Fu Qiang, Chairman and Chief Executive Officer,custom software development, commented, "We are pleased to report the planned acquisition of Chongqing Dinv Ares Filming Production Co., Ltd., an award-winning film production company based in Chongqing, China, is on track and progressing smoothly. This transaction will be highly accretive and launches our company into 2-D animation,Outsourcing Solution For Retail Goods, movie production,Localization Software, and development of our own original content."

By developing its own original content, China Digital plans to leverage its current production capabilities and believes there is significant market potential as well as the opportunity to expand margins. China Digital expects this acquisition to close within the next few months.

Revenue in the digital animation business was relatively flat with the same period last year, as China Digital focused its efforts on the acquisition of Dinv Ares and on developing original content. Results were also tempered by the fact that China Digital is shifting resources away from the Trans World Financial website to focus on its core business of digital animation and movie production.

"With the acquisition of Dinv Ares nearly complete, we resumed growth heading into the third quarter and our pipeline is solid, providing us good visibility into future quarters. Given our strong balance sheet and clean capital structure, we are well positioned for the future," concluded Mr. Fu.

Revenue for the second quarter of fiscal 2010 totaled $1.2 million versus $1.4 million in the second quarter of fiscal 2009. Revenue from animation design and development was $877,outsourcing and globalization,820, compared to $945,000 for the same period last year. Overall gross profit in the second quarter was $537,000 versus $1.2 million in the same period last year, reflecting several lower margin projects and reduced revenue from the Trans World Financial website. Net income was approximately $251,000, or $0.01 per share versus $736,000,Offshore outsourcing, or $0.04 per share in the second quarter of last year.

As of December 31, 2009, the company had cash and cash equivalents of $1.1 million, working capital of $3.4 million, no long-term debt, and shareholders‘ equity of $13.1 million.

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