----

----

| [X]             | QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934                   |
|-----------------|-----------------------------------------------------------------------------------------------------|
|            | For the quarterly period ended March 31, 2011                                                       |
|            |                                                                                                |
| [   ] | TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934                  |
|            |          For the transition period from _____ to _____ |

| CHINA DIGITAL ANIMATION DEVELOPMENT INC.(Name of Registrant in its Charter) |
|-----------------------------------------------------------------------------|
|                                                                        |
| New York                                                                    | 84-1275578 |
| (State of Other Jurisdiction ofincorporation or organization)               | (I.R.S.) Employer I.D. No.) |
|                                                                        |
| 15 West 39th Street, Suite 14B, New York, NY  10018                    |
| (Address of Principal Executive Offices)                                    |

----

|      |                                                                                                                                        | Page No |
|-----------|---------------------------------------------------------------------------------------------------------------------------------------------|--------------|
| Part I    | Financial Information                                                                                                                       |         |
| Item 1.   | Financial Statements (unaudited):                                                                                                           |         |
|      | Condensed Consolidated Balance Sheet (unaudited) – March 31, 2011 and December 31, 2010                                               | 2            |
|      | Condensed Consolidated Statements of Income and Other Comprehensive Income (Unaudited) - for the Three Months Ended March 31, 2011 and 2010 | 3            |
|      | Condensed Consolidated Statements of Cash Flows (Unaudited) – for the Three Months Ended March 31, 2011 and 2010                      | 4            |
|      | Notes to Condensed Consolidated Financial Statements (Unaudited)                                                                            | 5            |
| Item 2.   | Management’s Discussion and Analysis of Financial Condition and  Results of Operations                                      | 15           |
| Item 3    | Quantitative and Qualitative Disclosures about Market Risk                                                                                  | 18           |
| Item 4.   | Controls and Procedures                                                                                                                     | 18           |
| Part II   | Other Information                                                                                                                           |         |
| Item 1.   | Legal Proceedings                                                                                                                           | 18           |
| Items 1A. | Risk Factors                                                                                                                                | 18           |
| Item 2.   | Unregistered Sales of Equity Securities and Use of Proceeds                                                                                 | 19           |
| Item 3.   | Defaults upon Senior Securities                                                                                                             | 19           |
| Item 4.   | Reserved                                                                                                                                    | 19           |
| Item 5.   | Other Information                                                                                                                           | 19           |
| Item 6.   | Exhibits                                                                                                                                    | 19           |

----

|                                                                                                                                                                                  |   | March 31,   |       |   | June 30, |   |
|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|-------------|------------|--------|----------|--------|
|                                                                                                                                                                                  |   | 2011        |       |   | 2010     |   |
|                                                                                                                                                                                  |   | (unaudited) |       |   |     |   |
| ASSETS                                                                                                                                                                                |   |        |       |   |
| Current assets:                                                                                                                                                                       |   |        |       |   |     |   |
| Cash and cash equivalents                                                                                                                                                             |   | $           | 10,746,682 |   |     | $      | 6,219,438 |   |
| Accounts receivable                                                                                                                                                                   |   |        | 727,535    |   |     |   | 976,304 |   |
| Other receivables                                                                                                                                                                     |   |        | 12,836     |   |     |   | 3,616 |   |
|                                                                                                                                                                                  |   |      |       |   |   |   |
| Total current assets                                                                                                                                                                  |   |        | 11,487,053 |   |     |   | 7,199,358 |   |
|                                                                                                                                                                                  |   |        |       |   |     |   |   |   |
| Property, plant and equipment, net                                                                                                                                                    |   |        | 5,132,091  |   |     |   | 5,575,026 |   |
| Land use right and other intangible assets, net                                                                                                                                       |   |        | 2,609,198  |   |     |   | 2,756,604 |   |
|                                                                                                                                                                                  |   |      |       |   |   |   |
| Total assets                                                                                                                                                                          |   | $           | 19,228,342 |   |     | $      | 15,530,988 |   |
|                                                                                                                                                                                  |   |        |       |   |     |   |   |   |
| LIABILITIES AND STOCKHOLDERS’ EQUITY                                                                                                                                            |   |        |       |   |     |
| Current liabilities:                                                                                                                                                                  |   |        |       |   |     |   |   |   |
| Accounts payable                                                                                                                                                                      |   | $           | -          |   |     | $      | 34,338 |   |
| Loan payable                                                                                                                                                                          |   |        | 335,975    |   |     |   | 286,000 |   |
| Accrued expenses and other payables                                                                                                                                                   |   |        | 164,074    |   |     |   | 57,040 |   |
| Taxes payable                                                                                                                                                                         |   |        | 397,513    |   |     |   | 410,339 |   |
|                                                                                                                                                                                  |   |      |       |   |   |   |
| Total current liabilities                                                                                                                                                             |   |        | 897,562    |   |     |   | 787,717 |   |
|                                                                                                                                                                                  |   |        |       |   |     |   |   |   |
|                                                                                                                                                                                  |   |        |       |   |     |   |   |   |
| Total liabilities                                                                                                                                                                     |   |        | 897,562    |   |     |   | 787,717 |   |
|                                                                                                                                                                                  |   |        |       |   |     |   |   |   |
| Stockholders' Equity:                                                                                                                                                                 |   |        |       |   |     |   |   |   |
|                                                                                                                                                                                  |   |        |       |   |     |   |   |   |
| Common stock ($0.001 par value, 500,000,000 shares authorized, 20,270,000 shares issued and outstanding at March 31, 2011, 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                                                                                                                                                |   |        | 2,420,047  |   |     |   | 1,873,933 |   |
| Reserved Fund                                                                                                                                                                         |   |        | 1,156,476  |   |     |   | 705,738 |   |
| Retained earnings                                                                                                                                                                     |   |        | 8,010,540  |   |     |   | 5,919,883 |   |
|                                                                                                                                                                                  |   |      |       |   |   |   |
|                                                                                                                                                                                  |   |        |       |   |     |   |   |   |
| Total stockholders’ equity                                                                                                                                                      |   |        | 18,330,780 |   |     |   | 14,743,271 |   |
|                                                                                                                                                                                  |   |        |       |   |     |   |   |   |
| Total liabilities and stockholders' equity                                                                                                                                            |   | $           | 19,228,342 |   |     | $      | 15,530,988 |   |

----

|                                                  |   | Three months ended |       |   | Nine months ended |   |
|-------------------------------------------------------|--------|--------------------|------------|--------|-------------------|--------|
|                                                  |   | March 31,          |       |   | March 31,         |   |
|                                                  |   | 2011               |       |   | 2010              |   |   | 2011 |   |   | 2010 |   |
| Revenue                                               |   | $                  | 2,169,443  |   |              | $      | 1,679,143 |   |   | $ | 5,989,431 |   |   | $ | 4,057,433 |   |
|                                                  |   |               |       |   |              |   |   |   |   |   |   |   |   |   |   |   |
| Cost of goods sold                                    |   |               | 661,193    |   |              |   | 642,352 |   |   |   | 1,587,651 |   |   |   | 1,850,195 |   |
|                                                  |   |               |       |   |              |   |   |   |   |   |   |   |   |   |   |   |
| Gross profit                                          |   |               | 1,508,250  |   |              |   | 1,036,791 |   |   |   | 4,401,780 |   |   |   | 2,207,238 |   |
|                                                  |   |               |       |   |              |   |   |   |   |   |   |   |   |   |   |   |
| Operating expenses                                    |   |               |       |   |              |   |   |   |   |   |   |   |   |   |   |   |
|                                                  |   |               |       |   |              |   |   |   |   |   |   |   |   |   |   |   |
| Selling, General and Administrative expenses          |   |               | 296,877    |   |              |   | 181,329 |   |   |   | 901,438 |   |   |   | 392,602 |   |
|                                                  |   |               |       |   |              |   |   |   |   |   |   |   |   |   |   |   |
| Total operating expenses                              |   |               | 296,877    |   |              |   | 181,329 |   |   |   | 901,438 |   |   |   | 392,602 |   |
|                                                  |   |               |       |   |              |   |   |   |   |   |   |   |   |   |   |   |
| Income from operations                                |   |               | 1,211,373  |   |              |   | 855,462 |   |   |   | 3,500,342 |   |   |   | 1,814,636 |   |
|                                                  |   |               |       |   |              |   |   |   |   |   |   |   |   |   |   |   |
| Other income (expenses)                               |   |               |       |   |              |   |   |   |   |   |   |   |   |   |   |   |
|                                                  |   |               |       |   |              |   |   |   |   |   |   |   |   |   |   |   |
| Interest income                                       |   |               | 8,784      |   |              |   | 82,492 |   |   |   | 17,920 |   |   |   | 251,039 |   |
| Non-operating income                                  |   |               | 1,587      |   |              |   | - |   |   |   | 1,587 |   |   |   | - |   |
| Loss from disposal of property, plant and equipment   |   |               | -          |   |              |   | - |   |   |   | - |   |   |   | (26 | ) |
|                                                  |   |               |       |   |              |   |   |   |   |   |   |   |   |   |   |   |
| Total other income                                    |   |               | 10,371     |   |              |   | 82,492 |   |   |   | 19,507 |   |   |   | 251,013 |   |
|                                                  |   |               |       |   |              |   |   |   |   |   |   |   |   |   |   |   |
| Income before income taxes                            |   |               | 1,221,744  |   |              |   | 937,954 |   |   |   | 3,519,849 |   |   |   | 2,065,649 |   |
| Less: Provision for income taxes                      |   |               | 362,667    |   |              |   | 246,718 |   |   |   | 978,454 |   |   |   | 546,250 |   |
|                                                  |   |               |       |   |              |   |   |   |   |   |   |   |   |   |   |   |
| Net income                                            |   |               | 859,077    |   |              |   | 691,236 |   |   |   | 2,541,395 |   |   |   | 1,519,399 |   |
|                                                  |   |               |       |   |              |   |   |   |   |   |   |   |   |   |   |   |
| Other comprehensive income                            |   |               |       |   |              |   |   |   |   |   |   |   |   |   |   |   |
| Foreign currency translation gain                     |   |               | 66,608     |   |              |   | 253 |   |   |   | 546,114 |   |   |   | 52,717 |   |
|                                                  |   |               |       |   |              |   |   |   |   |   |   |   |   |   |   |   |
| Total comprehensive income                            |   | $                  | 925,685    |   |              | $      | 691,489 |   |   | $ | 3,087,509 |   |   | $ | 1,572,116 |   |
|                                                  |   |               |       |   |              |   |   |   |   |   |   |   |   |   |   |   |
| Basic and diluted earnings per share                  |   | $                  | 0.04       |   |              | $      | 0.03 |   |   | $ | 0.13 |   |   | $ | 0.07 |   |
|                                                  |   |               |       |   |              |   |   |   |   |   |   |   |   |   |   |   |
| Basic and diluted weighted average shares outstanding |   |               | 20,270,000 |   |              |   | 20,510,000 |   |   |   | 20,137,701 |   |   |   | 20,510,000 |   |

----

|                                                                              |   | Nine months ended |       |
|-----------------------------------------------------------------------------------|--------|-------------------|------------|
|                                                                              |   | March 31,         |       |
|                                                                              |   | 2011              |       |   | 2010 |   |
| Cash flow from operating activities:                                              |   |              |       |   |   |   |
| Net income                                                                        |   | $                 | 2,541,395  |   |   | $ | 1,519,399 |   |
| Adjustments to reconcile net income to net cash provided by operating activities: |   |              |       |   |   |   |   |   |
| Depreciation                                                                      |   |              | 618,265    |   |   |   | 452,795 |   |
| Amortization                                                                      |   |              | 235,272    |   |   |   | 153,282 |   |
| Foreign currency exchange gain                                                    |   |              | (1,343     | ) |   |   | - |   |
|                                                                              |   |              |       |   |   |   |   |   |
| Changes in operating assets and liabilities:                                      |   |              |       |   |   |   |   |   |
| Accounts receivable                                                               |   |              | 276,663    |   |   |   | 265,610 |   |
| Prepaid expenses                                                                  |   |              | -          |   |   |   | 67,535 |   |
| Advances to suppliers                                                             |   |              | -          |   |   |   | 1,443,440 |   |
| Interest receivable                                                               |   |              | -          |   |   |   | (82,745 | ) |
| Other receivables                                                                 |   |              | (7,978     | ) |   |   | (1,456 | ) |
| Accounts payable                                                                  |   |              | -          |   |   |   | 28,271 |   |
| Accrued expenses and other payables                                               |   |              | 71,240     |   |   |   | 18,914 |   |
| Taxes payable                                                                     |   |              | (28,008    | ) |   |   | 39,555 |   |
|                                                                              |   |              |       |   |   |   |   |   |
| Net cash provided by operating activities                                         |   |              | 3,705,506  |   |   |   | 3,904,600 |   |
|                                                                              |   |              |       |   |   |   |   |   |
| Cash flows from investing activities                                              |   |              |       |   |   |   |   |   |
| Purchase of property, plant and equipment                                         |   |              | -          |   |   |   | (2,240,436 | ) |
| Acquisition of intangible assets                                                  |   |              | -          |   |   |   | (1,907,100 | ) |
| Additions to long term investment                                                 |   |              | -          |   |   |   | (9,043 | ) |
|                                                                              |   |              |       |   |   |   |   |   |
| Net cash used in investing activities                                             |   |              | -          |   |   |   | (4,156,579 | ) |
|                                                                              |   |              |       |   |   |   |   |   |
| Cash flows from financing activities                                              |   |              |       |   |   |   |   |   |
| Proceeds from borrowing                                                           |   |              | 49,975     |   |   |   | 101,000 |   |
| Proceeds from sale of stock                                                       |   |              | 500,000    |   |   |   | - |   |
|                                                                              |   |              |       |   |   |   |   |   |
| Net cash provided by financing activities                                         |   |              | 549,975    |   |   |   | 101,000 |   |
|                                                                              |   |              |       |   |   |   |   |   |
| Effect of exchange rate changes in cash                                           |   |              | 271,763    |   |   |   | 50,070 |   |
|                                                                              |   |              |       |   |   |   |   |   |
| Net increase (decrease) in cash and cash equivalents                              |   |              | 4,527,244  |   |   |   | (100,909 | ) |
|                                                                              |   |              |       |   |   |   |   |   |
| Cash and cash equivalents, beginning of period                                    |   |              | 6,219,438  |   |   |   | 2,282,786 |   |
|                                                                              |   |              |       |   |   |   |   |   |
| Cash and cash equivalents, end of period                                          |   | $                 | 10,746,682 |   |   | $ | 2,181,877 |   |
|                                                                              |   |              |       |   |   |   |   |   |
| Supplemental Disclosures:                                                         |   |              |       |   |   |   |   |   |
| Cash paid during the period for:                                                  |   |              |       |   |   |   |   |   |
| Income taxes                                                                      |   | $                 | 1,033,306  |   |   | $ | 515,968 |   |
| Interest                                                                          |   | $                 | -          |   |   | $ | - |   |

----

|                        |   | March 31,   |       |   | June 30, |   |
|-----------------------------|--------|-------------|------------|--------|----------|--------|
|                        |   | 2011        |       |   | 2010     |   |
|                        |   | (unaudited) |       |   |     |   |
| Total current assets*       |   | $           | 11,400,184 |   |     | $      | 7,129,061 |   |
| Total assets*               |   |        | 19,141,472 |   |     |   | 15,460,691 |   |
| Total current liabilities** |   |        | 795,538    |   |     |   | 461,096 |   |
| Total liabilities**         |   | $           | 795,538    |   |     | $      | 461,096 |   |

----

----

| Buildings and improvements           | 40 years   |
|--------------------------------------|------------|
| Machinery, equipment and automobiles | 5-10 years |

----

| Balance sheet                                      | RMB 6.5701 to US $1.00 |
|----------------------------------------------------|------------------------|
| Statement of income and other comprehensive income | RMB 6.6796 to US $1.00 |

| Balance sheet                                      | RMB 6.8361 to US $1.00 |
|----------------------------------------------------|------------------------|
| Statement of income and other comprehensive income | RMB 6.8377 to US $1.00 |

| Balance sheet                                      | RMB 6.7889 to US $1.00 |
|----------------------------------------------------|------------------------|
| Statement of income and other comprehensive income | RMB 6.8180 to US $1.00 |

----

----

|                               |   | March 31,  |       |   | June 30, |   |
|------------------------------------|--------|------------|------------|--------|----------|--------|
|                               |   | 2011       |       |   | 2010     |   |
|                               |   | (unaudted) |       |   |     |   |
| Buildings and Improvements         |   | $          | 3,358,728  |   |     | $      | 3,250,495 |   |
| Office Furniture and Equipment     |   |       | 1,471,202  |   |     |   | 1,423,794 |   |
| Vehicles                           |   |       | 361,422    |   |     |   | 349,775 |   |
|                               |   |       | 5,191,352  |   |     |   | 5,024,064 |   |
| Less: Accumulated depreciation     |   |       | (1,447,182 | )      |     |   | (921,034 | ) |
|                               |   |       | 3,744,170  |   |     |   | 4,103,030 |   |
| Construction in progress           |   |       | 1,387,921  |   |     |   | 1,471,996 |   |
| Property, plant and equipment, net |   | $          | 5,132,091  |   |     | $      | 5,575,026 |   |

|                                            |   | March 31,   |      |   | June 30, |   |
|-------------------------------------------------|--------|-------------|-----------|--------|----------|--------|
|                                            |   | 2011        |      |   | 2010     |   |
|                                            |   | (unaudited) |      |   |     |   |
| Cost of land use right                          |   | $           | 353,488   |   |     | $      | 342,098 |   |
| Cost of other intangible assets                 |   |        | 2,776,274 |   |     |   | 2,686,810 |   |
|                                            |   |        | 3,129,762 |   |     |   | 3,028,908 |   |
| Less: Accumulated amortization                  |   |        | (520,564  | )      |     |   | (272,304 | ) |
| Land use right and other intangible assets, net |   | $           | 2,609,198 |   |     | $      | 2,756,604 |   |

----

| Remainder of the year ending June 30, 2011 |   | $      | 71,438  |   |
|--------------------------------------------|--------|--------|---------|--------|
| For the year ending June 30, 2012          |   |   | 285,754 |   |
| For the year ending June 30, 2013          |   |   | 285,754 |   |
| For the year ending June 30, 2014          |   |   | 285,754 |   |
| For the year ending June 30, 2015          |   |   | 285,754 |   |

|                        |   | Three months ended |    |   | Nine months ended |   |
|-----------------------------|--------|--------------------|---------|--------|-------------------|--------|
|                        |   | March 31,          |    |   | March 31,         |   |
|                        |   | 2011               |    |   | 2010              |   |   | 2011 |   |   | 2010 |   |
|                        |   | (unaudited)        |    |   | (unaudited)       |   |   | (unaudited) |   |   | (unaudited) |   |
| Current – PRC and US  |   | $                  | 362,667 |   |              | $      | 246,718 |   |   | $ | 978,454 |   |   | $ | 546,250 |   |
| Deferred – PRC and US |   |               | -       |   |              |   | - |   |   |   | - |   |   |   | - |   |
|   Total           |   | $                  | 362,667 |   |              | $      | 246,718 |   |   | $ | 978,454 |   |   | $ | 546,250 |   |

|                                               |   | Three months ended |    |   | Nine months ended |   |
|----------------------------------------------------|--------|--------------------|---------|--------|-------------------|--------|
|                                               |   | March 31,          |    |   | March 31,         |   |
|                                               |   | 2011               |    |   | 2010              |   |   | 2011 |   |   | 2010 |   |
|                                               |   | (unaudited)        |    |   | (unaudited)       |   |   | (unaudited) |   |   | (unaudited) |   |
| Income tax calculated at statutory rates           |   | $                  | 305,436 |   |              | $      | 234,488 |   |   | $ | 879,962 |   |   | $ | 516,412 |   |
| Tax effect of parent                               |   |               | 59,394  |   |              |   | 12,230 |   |   |   | 100,654 |   |   |   | 29,838 |   |
| Other timing difference                            |   |               | (2,162  | )      |              |   | - |   |   |   | (2,162 | ) |   |   | - |   |
|     Provision for income taxes |   | $                  | 362,667 |   |              | $      | 246,718 |   |   | $ | 978,454 |   |   | $ | 546,250 |   |

|                               |   | March 31,   |     |   | June 30, |   |
|------------------------------------|--------|-------------|----------|--------|----------|--------|
|                               |   | 2011        |     |   | 2010     |   |
|                               |   | (unaudited) |     |   |     |   |
| Net of operating loss carryforward |   | $           | 175,152  |   |     | $      | 87,150 |   |
| Less: Valuation allowance          |   |        | (175,152 | )      |     |   | (87,150 | ) |
| Total deferred income tax assets   |   | $           | -        |   |     | $      | - |   |

----

|                                   |   | Three months ended |      |   | Nine months ended |   |
|----------------------------------------|--------|--------------------|-----------|--------|-------------------|--------|
|                                   |   | March 31,          |      |   | March 31,         |   |
|                                   |   | 2011               |      |   | 2010              |   |   | 2011 |   |   | 2010 |   |
|                                   |   | (unaudited)        |      |   | (unaudited)       |   |   | (unaudited) |   |   | (unaudited) |   |
| Revenue:                               |   |               |      |   |              |   |   |   |   |   |   |   |
| Membership Fees                        |   | $                  | -         |   |              | $      | - |   |   | $ | - |   |   | $ | 244,162 |   |
| Animation Design and Development       |   |               | 2,169,443 |   |              |   | 1,209,863 |   |   |   | 5,989,431 |   |   |   | 3,104,332 |   |
| Other                                  |   |               | -         |   |              |   | 469,280 |   |   |   | - |   |   |   | 708,939 |   |
|    Consolidated revenue |   | $                  | 2,169,443 |   |              | $      | 1,679,143 |   |   | $ | 5,989,431 |   |   | $ | 4,057,433 |   |

|                                                |   | Three months ended |      |   | Nine months ended |   |
|-----------------------------------------------------|--------|--------------------|-----------|--------|-------------------|--------|
|                                                |   | March 31,          |      |   | March 31,         |   |
|                                                |   | 2011               |      |   | 2010              |   |   | 2011 |   |   | 2010 |   |
|                                                |   | (unaudited)        |      |   | (unaudited)       |   |   | (unaudited) |   |   | (unaudited) |   |
| Segment profit:                                     |   |               |      |   |              |   |   |   |   |   |   |   |
| Membership Fees                                     |   | $                  | -         |   |              | $      | (5,008 | ) |   | $ | - |   |   | $ | 183,958 |   |
| Animation Design and Development                    |   |               | 1,315,529 |   |              |   | 444,647 |   |   |   | 3,778,678 |   |   |   | 1,348,759 |   |
| Other                                               |   |               | -         |   |              |   | 250,633 |   |   |   | - |   |   |   | 285,251 |   |
|     Consolidated segment profit |   | $                  | 1,315,529 |   |              | $      | 690,272 |   |   | $ | 3,778,678 |   |   | $ | 1,817,968 |   |

|                                        |   | March 31,   |       |   | June 30, |   |
|---------------------------------------------|--------|-------------|------------|--------|----------|--------|
|                                        |   | 2011        |       |   | 2010     |   |
|                                        |   | (unaudited) |       |   |     |   |
| Assets:                                     |   |        |       |   |     |   |
| Animation Design and Development            |   | $           | 19,141,470 |   |     | $      | 15,460,691 |   |
| Corporate                                   |   |        | 86,872     |   |     |   | 70,297 |   |
|     Consolidated assets |   | $           | 19,228,342 |   |     | $      | 15,530,988 |   |

----

|                                              |   | Three months ended |      |   | Nine months ended |   |
|---------------------------------------------------|--------|--------------------|-----------|--------|-------------------|--------|
|                                              |   | March 31,          |      |   | March 31,         |   |
|                                              |   | 2011               |      |   | 2010              |   |   | 2011 |   |   | 2010 |   |
|                                              |   | (unaudited)        |      |   | (unaudited)       |   |   | (unaudited) |   |   | (unaudited) |   |
| Segment profit                                    |   | $                  | 1,315,529 |   |              | $      | 690,272 |   |   | $ | 3,778,678 |   |   | $ | 1,817,968 |   |
| Other corporate expenses                          |   |               | (93,785   | )      |              |   | 247,682 |   |   |   | (258,829 | ) |   |   | 247,681 |   |
|     Total income before taxes |   | $                  | 1,221,744 |   |              | $      | 937,954 |   |   | $ | 3,519,849 |   |   | $ | 2,065,649 |   |

----

|                                      |   | Three months ended |   | Nine months ended |
|-------------------------------------------|--------|--------------------|--------|-------------------|
|                                      |   | March 31,          |   | March 31,         |
|                                      |   | 2011               |   |              |   | 2010 |   | 2011 |   |   |   | 2010 |
|                                      |   | (unaudited)        |   |              |   | (unaudited) |   | (unaudited) |   |   |   | (unaudited) |
| Beijing Wanfang Xingxing Digital Tech.    |   | *                  |   |              |   | * |   | 11.37% |   |   |   | 10.36% |
| Harbin Sinwen Animation Co., Ltd.         |   | *                  |   |              |   | * |   | 13.61% |   |   |   | * |
| Benxi Yige Amination Design Ltd.          |   | *                  |   |              |   | 21.08% |   | * |   |   |   | 34.31% |
| Jilin Guojia Industry and Trade Co., Ltd. |   | *                  |   |              |   | 27.88% |   | * |   |   |   | 17.46% |
| Shenzhen Global Digital Tech Co., Ltd.    |   | 39.80%             |   |              |   | 24.22% |   | 37.19% |   |   |   | 10.04% |
| Shanghai Amination Making Co., Ltd.       |   | 40.09%             |   |              |   | 26.57% |   | 36.82% |   |   |   | 11.01% |

|                                   |   | Amount              |    |   | Percentage  |   |
|----------------------------------------|--------|---------------------|---------|--------|-------------|--------|
|                                   |   | (unaudited)  |    |   | (unaudited) |   |
| Shenzhen Global Digital Tech Co., Ltd. |   | $                   | 292,232 |   |        |   | 40.16 | % |
| Shanghai Amination Making Co., Ltd.    |   |                | 313,540 |   |        |   | 43.10 | % |
| Beijing Wanfang Xingxing Digital Tech. |   |                | 121,763 |   |        |   | 16.74 | % |
|                                   |   | $                   | 727,535 |   |        |   | 100.00 | % |

----

|   | · | Heilongjiang Province has developed an Animation Development Area, in which participants in the industry are provided subsidized property.  We are currently the beneficiaries of 2,000 square meters in the Animation Development Area, which we occupy rent-free until December 2011. |
|--------|--------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | The local government provides subsidies for animation productions broadcast in China, from RMB300 per minute for broadcasts on provincial television stations up to RMB50 million for productions in prime time on China Central Television or overseas mainstream media. |
|--------|--------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | Animation companies receive reductions in value-added tax, income tax, sales tax, and import duties. |
|--------|--------|------------------------------------------------------------------------------------------------------|

----

----

|                                          |   | For the nine months ended March 31, |       |
|-----------------------------------------------|--------|-------------------------------------|------------|
|                                          |   | 2011                                |       |   | 2010 |   |
| Net cash provided by operating activities     |   | $                                   | 3,705,506  |   |   | $ | 3,904,600 |   |
| Net cash used in investing activities         |   | $                                   | -          |   |   | $ | (4,156,579 | ) |
| Net cash provided by financing activities     |   | $                                   | 549,975    |   |   | $ | 101,000 |   |
|  Effect of exchange rate changes in cash |   | $                                   | 271,763    |   |   | $ | 50,070 |   |
|  Net increase (decrease) in cash         |   | $                                   | 4,527,244  |   |   | $ | (100,909 | ) |
|  Cash, beginning of period               |   | $                                   | 6,219,438  |   |   | $ | 2,282,786 |   |
|  Cash, end of period                     |   | $                                   | 10,746,682 |   |   | $ | 2,181,877 |   |

----

| Item 1. | Legal Proceedings                                                                                                                      |
|---------|----------------------------------------------------------------------------------------------------------------------------------------|
|    |                                                                                                                                   |
| None.   |                                                                                                                                   |
|    |                                                                                                                                   |
| Item 1A | Risk Factors                                                                                                                           |
|    |                                                                                                                                   |
|    | There have been no material changes from the risk factors included in the Annual Report on Form 10-K for the year ended June 30, 2010. |

----

| Item 2. | Unregistered Sale of Securities and Use of Proceeds                                                                                                                     |
|---------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|    |                                                                                                                                                                    |
|    | (a) Unregistered sales of equity securities                                                                                                                             |
|    |                                                                                                                                                                    |
|    | None.                                                                                                                                                                   |
|    |                                                                                                                                                                    |
|    | (c) Purchases of equity securities                                                                                                                                      |
|    |                                                                                                                                                                    |
|    | The Company did not repurchase any of its equity securities that were registered under Section 12 of the Securities Exchange Act during the 3rd quarter of fiscal 2011. |
|    |                                                                                                                                                                    |
| Item 3. | Defaults Upon Senior Securities.                                                                                                                                        |
|    |                                                                                                                                                                    |
|    | None.                                                                                                                                                                   |
|    |                                                                                                                                                                    |
| Item 4. | Reserved.                                                                                                                                                               |
|    |                                                                                                                                                                    |
| Item 5. | Other Information.                                                                                                                                                      |
|    |                                                                                                                                                                    |
|    | None.                                                                                                                                                                   |
|    |                                                                                                                                                                    |
| Item 6. | Exhibits                                                                                                                                                                |
|    |                                                                                                                                                                    |
| 31.1    | Rule 13a-14(a) Certification – CEO                                                                                                                                |
| 31.2    | Rule 13a-14(a) Certification – CFO                                                                                                                                |
| 32      | Rule 13a-14(b) Certification                                                                                                                                            |

|      |
|--------------------------|

|               | CHINA DIGITAL ANIMATION DEVELOPMENT INC.                                      |
|--------------------|-------------------------------------------------------------------------------|
|               |                                                                          |
| Date: May 23, 2011 | By: /s/ Fu Qiang                                                              |
|               |    Fu Qiang, Chief Executive Officer                                |
|               |                                                                          |
|               | By: /s/ Hu Yumei                                                              |
|               |    Hu Yumei, Chief Financial Officer, Chief Accounting Officer |

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