UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20-549

FORM 10-Q

(Mark One)

x	QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended March 31, 2011

o	TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE EXCHANGE ACT

For the transition period from ______________ to _____________

Commission file number: 0-53566

CHANGDA INTERNATIONAL HOLDINGS, INC.

(Exact name of registrant as specified in its charter)

Nevada (State or other jurisdiction of incorporation or organization)		98-0521484 (I.R.S. Employer Identification No.)
10 th Floor Chenhong Building No. 301 East Dong Feng Street Weifang, Shandong, People’s Republic of China (Address of principal executive offices)		261041 (Zip Code)

86-536 8513228

(Registrant’s telephone number, including area code)

Indicate by check mark whether the registrant (1) has filed reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 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. Yes x No o

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes o No o

Indicate by check mark whether the registrant is a large accelerated filer, 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” ion Rule 12b-2 of the Exchange Act.

Large accelerated filer o	Accelerated filer o
Non-accelerated filer o	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). Yes o No x

As of May 16, 2011, there are 20,509,123 shares of our common stock, par value $0.001 per share common stock issued and outstanding.

FORM 10-Q

CHANGDA INTERNATIONAL HOLDINGS, INC.

INDEX

		Page
	PART I

Item 1.	Financial Statements	3

Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operation	21

Item 3.	Quantitative and Qualitative Disclosures About Market Risk	35

Item 4	Controls and Procedures	35

	PART II

Item 1.	Legal Proceedings	36

Item 1A.	Risk Factors	36

Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	36

Item 3.	Defaults Upon Senior Securities	36

Item 4.	Removed and Reserved	36

Item 5.	Other Information	36

Item 6.	Exhibits	36

SIGNATURES		37

Changda International Holdings, Inc.

Condensed Consolidated Balance Sheets

			As of March 31, 2011		As of December 31, 2010
	Note		US$’000		US$’000
ASSETS			(unaudited)

Current assets
Cash and cash equivalents				10,641		9,364
Restricted cash				3,817		-
Trade and other receivables, net				18,319		19,044
Inventories				8,181		3,143
Prepaid lease payments, net				63		63
Government grant receivables in respect of tax				2,839		2,822

Total current assets				43,860		34,436

Intangible assets				3		3
Property, plant and equipment, net				19,516		17,057
Prepaid lease payments, net				2,917		2,915

Total assets				66,296		54,411

LIABILITIES AND STOCKHOLDERS’ EQUITY

Current liabilities
Trade and other payables				6,548		5,575
Promissory notes		10		17		534
Notes payable				6,107
Shareholders’ loans				1,114		1,107
Short-term interest-bearing borrowings				10,382		7,358
Income tax payables				3,494		3,574

Total current liabilities				27,662		18,148

Deferred government grants				806		805
Long-term portion of shareholders’ loans				-		523

Total liabilities				28,468		19,476

Commitments and contingencies		7

Stockholders’ equity
common stock, par value $0.001 per share, 100,000,000 shares authorized, 20,509,123 shares issued and outstanding as of March 31, 2011 and 19,729,902 shares issued and outstanding as of December 31, 2010		4		21		20
Additional paid-in capital				7,098		6,499
Statutory reserves				2,876		2,822
Accumulated other comprehensive income				2,806		2,572
Accumulated profits				25,027		23,022

Total stockholders’ equity				37,828		34,935

Total liabilities and stockholders’ equity				66,296		54,411

The financial statements should be read in conjunction with the accompanying notes.

Changda International Holdings, Inc.

Condensed Consolidated Statements of Operations and Other Comprehensive Income

			Three months ended March 31, 2011			Three months ended March 31, 2010
	Note		US$’000			US$’000
			(unaudited)			(unaudited)
Operating revenues				26,276			17,202

Cost of sales				(21,871	)		(14,478	)

Gross profit				4,405			2,724

Operating expenses
Depreciation of property, plant and equipment				(126	)		(68	)
Amortization of intangible assets				-			(1	)
Amortization of prepaid lease expenses				(16	)		(9	)
Selling, general and administrative expenses				(1,423	)		(1,431	)

Operating income				2,840			1,215

Other income				4			5
Interest income				7			1
Interest expenses				(186	)		(94	)
Other finance cost				-			(444	)

Income before income taxes				2,665			683

Income taxes		5		(606	)		(309	)

Net income				2,059			374

Other comprehensive income
Foreign currency translation adjustment				234			10

Total comprehensive income				2,293			384


Earnings per common stock ($)		3
Basic				0.10			0.02

Diluted				0.10			0.02

Weighted average number of common stocks		3
Basic				20,006,958			18, 964,025

Diluted				20,026,299			18,964,025

The financial statements should be read in conjunction with the accompanying notes.

Changda International Holdings, Inc.

Condensed Consolidated Statements of Cash Flows

	Three months ended March 31, 2011			Three months ended March 31, 2010
	US$’000			US$’000
	(unaudited)			(unaudited)
CASH FLOWS FROM OPERATING ACTIVITIES
Net Income		2,059			374
Adjustment to reconcile net income to net cash used in operating activities
Depreciation of property, plant and equipment		476			350
Amortization of prepaid lease payments		16			9
Amortization of intangibles assets		-			1
Exchange differences		9			5
Government grants recognized		(4)			(4	)
Cost of warrants issued		-			444
Changes in operating assets and liabilities:
Inventories		(5,019	)		(3,794	)
Trade and other receivable, net		841			1,925
Trade and other payables		994			(800	)
Income tax payables		(102	)		(157	)
Net cash used in operating activities		(730	)		(1,647	)

CASH FLOWS FROM INVESTING ACTIVITIES
Proceeds from disposal of property, plant and equipment		5			-
Purchase of property, plant and equipment		(2,835	)		(47	)
New restricted cash		(3,817)			-
Net cash used in investing activities		(6,647	)		(47	)

CASH FLOWS FROM FINANCING ACTIVITIES
New bank and other loans raised		13,549			5,390
Repayment of bank and other loans		(4,953	)		(3,769	)
Net cash provided by financing activities		8,596			1,621

Net increase (decrease) in cash and cash equivalents		1,219			(73	)

Cash and cash equivalents at beginning of period		9,364			2,275

Effect on exchange rate changes		58			-

Cash and cash equivalents at end of period		10,641			2,202

Changda International Holdings, Inc.

Condensed Consolidated Statements of Cash Flows

	Three months ended March 31, 2011		Three months ended March 31, 2010
	US$’000		US$’000
	(unaudited)		(unaudited)
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION
During the year, cash was paid for the following:
Income taxes		687		156
Interest		186		94

		873		250

The financial statements should be read in conjunction with the accompanying notes.

Changda International Holdings, Inc.

Notes to Unaudited Condensed Consolidated Financial Statements

For the three months ended March 31, 2011 and 2010

1.	ORGANIZATION AND PRINCIPAL ACTIVITIES

	The accompanying unaudited condensed consolidated financial statements present the consolidated financial position of Changda International Holdings, Inc. (“CIHI”) and its subsidiaries (together “the Company”) as of March 31, 2011 and December 31, 2010, and its results of operations for the three-month periods ended March 31, 2011 and 2010 and cash flows for the three months ended March 31, 2011 and 2010.

	Changda International Holdings, Inc. (“CIHI”) was incorporated on January 24, 2007 under the laws of the State of Nevada. On January 15, 2009, Memorandum of Understanding (“Agreement”) was entered by and among CIHI and Changda International Limited (“Changda International”), a company organized under the laws of Marshall Islands. Changda International, being the legal acquiree (accounting acquirer), delivered to CIHI, being the legal acquirer (accounting acquiree), stock certificates representing 100% of the shares in Changda International (the “Share Exchange Transaction”).

	The principal subsidiaries of CIHI after the Share Exchange Transaction are Weifang Changda Chemical Co., Ltd. (“Changda Chemical”), Weifang Changda Fertilizer Co., Ltd. (“Changda Fertilizer”) and Fengtai Changda Fertilizer Co., Ltd. (“Fengtai Changda”). Changda Chemical is a limited liability company incorporated in the People’s Republic of China (the “PRC”). Changda Chemical’s registered office is located at Weifang Ocean Chemical Industry Developing Zone Industry Area, Shandong, PRC. The principal activity of Changda Chemical is manufacturing of snow melting agent and drugs intermediate. Changda Fertilizer and Fengtai Changda are limited liability companies incorporated in the PRC. The registered office of both Changda Fertilizer and Fengtai Changda are located at Weifang Binhai Development Zone, Shandong, PRC. The principal activity of Changda Fertilizer and Fengtai Changda are manufacturing and trading of fertilizers.

	Reverse Stock Split

	On September 30, 2009, it was approved by the Board of Directors and ratified by the majority shareholders to effect one-for-three reverse split of the issued and outstanding shares without changing its par value of $0.001. The actions contemplated herein became effective on October 14, 2009 according to the Company Information Statement while the reverse split completed at the close of business on November 6, 2009. As a result of this reverse stock split, every three shares of the Company's common stock were combined into one share of common stock. All the relevant information relating to number of stock and per stock information contained in these consolidated financial statements has been retrospectively adjusted to reflect the reverse stock split for all periods presented.

	On June 3, 2010, the Board of Directors and a majority of Stockholders approved a proposal to grant discretionary authority to the Board of Directors to effect a reverse stock split of the issued and outstanding shares at any time within one year at a ratio of either (i) one-for-two or (ii) one-for-three, as determined at the discretion of the Board of Directors to be in the best interests of the Company without further approval from the Company’s stockholders and without decreasing the number of the Company’s authorized shares of common stock. As of the date of the financial statements, this prospective reverse stock split is not yet effectuated; accordingly no adjustment is made to the relevant information relating to number of stock and per stock information contained in these financial statements.

	PRINCIPAL ACCOUNTING POLICIES

2.	Basis of presentations

	The accompanying unaudited condensed consolidated financial statements as of March 31, 2011 have been prepared based upon Securities and Exchange Commission rules that permit reduced disclosure for interim periods and include, in the opinion of management, all adjustments (consisting of normal recurring adjustments and reclassifications) necessary to present fairly the financial position, results of operations and cash flows as of March 31, 2011 and for all periods presented.

	Certain information and footnote disclosures normally included in financial statements prepared in accordance with generally accepted accounting principles in the United States of America (“USGAAP”) have been condensed or omitted. These condensed consolidated financial statements should be read in conjunction with the audited financial statements and notes thereto included in the Company’s Form 10-K filed on March 31, 2011 for the year ended December 31, 2010. The results of operations for the three months ended March 31, 2011 and 2010 are not necessarily indicative of the operating results to be expected for the full year.

Changda International Holdings, Inc.

Notes to Unaudited Condensed Consolidated Financial Statements

For the three months ended March 31, 2011 and 2010

2.	PRINCIPAL ACCOUNTING POLICIES (CONTINUED)

	The condensed consolidated financial statements and accompanying notes are presented in United States dollars and prepared in conformity with USGAAP which requires management to make certain estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.

	Basis of consolidation

	The consolidated financial statements include the financial information of CIHI and its subsidiaries. All significant intercompany accounts and transactions have been eliminated upon consolidation.

	Recently issued accounting pronouncements

	In January 2010, the FASB issued Accounting Standards Updates (“ASU”) No. 2010-06, amending ASC Topic 820, “Measuring Liabilities at Fair Value”, to add new requirements for separate disclosures about purchases, sales, issuances, and settlements relating to Level 3 measurements. It amends ASC Topic 820 that a reporting entity should present separately information about purchases, sales, issuances, and settlements in the reconciliation for fair value measurements using significant unobservable inputs. The requirement to provide the Level 3 activity of purchases, sales, insurances and settlements on a gross basis, is effective for fiscal years beginning after December 15, 2010, and for interim periods within those fiscal years. The adoption of this ASU did not have a material impact on the Company’s consolidated financial statements.

	In April 2010, the FASB issued ASU No. 2010-13, Compensation – Stock Compensation (Topic 718) – Effect of Denominating the Exercise Price of a Share-Based Payment Award in the Currency of the Market in Which the Underling Equity Security Trades. This update provides clarification that an employee share-based payment award with an exercise price denominated in the currency of a market in which a substantial portion of the entity’s equity securities trade should not be considered to contain a condition that is not a market, performance or service condition. Therefore, the award would be classified as an equity award if it other wise qualified as equity. ASU No. 2010-13 is effective for fiscal years, and interim periods within those fiscal years, beginning on or after December 15, 2010. The adoption of this ASU did not have a material impact on the Company’s consolidated financial statements.

	In December 2010, the FASB issued ASU No. 2010-29, Business Combinations (Topic 805) “Disclosure of supplementary Pro Forma Information for business combinations”, which specify that if a public entity presents comparative financial statements, the entity should disclosure revenue and earnings of the combined entity as though the business combination(s) that occurred during the current year has occurred as of the beginning of the comparable prior annual reporting period only. The amendments in this update also expand the supplemental pro forma disclosures under Topic 805 to include a description of the nature and amount of material, non-recurring pro forma adjustments directly attributable to the business combination included in the reported pro forma revenue and earnings. These amendments are effective prospectively for business combinations for which the acquisition date is on or after the beginning of the first annual reporting period beginning on or after December 15, 2010. The adoption of this ASU did not have a material impact on the Company’s consolidated financial statements.

3.	EARNINGS PER COMMON STOCK

	Basic earnings per common stock is computed by dividing income available to common stockholders by the weighted-average number of common stocks outstanding during the period. Diluted earnings per common stock is computed similar to basic earnings per common stock except that the denominator is increased to include the number of additional shares of common stock that would have been outstanding if the potential shares of common stock had been issued and if the additional shares of common stock were dilutive.

	Earnings per common stock were computed as follows:

Three months ended March 31, 2011 (unaudited)

Income

Weighted

average

number of

common

stocks

Per

common

stock

amount

US$’000

Basic earnings per common stock

Net income attributable to common stockholders

2,059

20,006,958

0.10

Changda International Holdings, Inc.

Notes to Unaudited Condensed Consolidated Financial Statements

For the three months ended March 31, 2011 and 2010

3.	EARNINGS PER COMMON STOCK (CONTINUED)

	Three months ended March 31, 2011 (unaudited)
	Income		Weighted average number of common stocks		Per common stock amount
	US$’000
Diluted earnings per common stock
Net income attributable to common stockholders		2,059		20,006,958
Effect of potentially dilutive securities
Warrants		-		19,341

		2,059		20,026,299		0.10

For the three months ended March 31, 2011, common stock equivalents which potentially could dilute basic earnings per common stock in the future, and which were excluded from the computation of diluted earnings per common stock, as the effect would be anti-dilutive, totaled approximately 744,934 shares as of March 31, 2011.

Three months ended March 31, 2010 (unaudited)

Income

Weighted

average

number of

common

stocks

Per

common

stock

amount

US$’000

Basic and diluted earnings per common stock

Net income attributable to common stockholders

374

18,964,025

0.02

	For the three months ended March 31, 2010, all potentially dilutive instruments have an anti-dilutive effect. Accordingly, the basic and diluted earnings per common stock are the same.

4.	STOCKHOLDERS’ EQUITY

	Common stock

	As of March 31,2011, the Company has 100,000,000 shares of common stock with a par value of $0.001 per share authorized and 20,509,123 shares issued and outstanding.

	During the three months ended March 31, 2011, 779,221 shares valued at US$0.77 per share were issued to a principal shareholder (see note 10).

Changda International Holdings, Inc.

Notes to Unaudited Condensed Consolidated Financial Statements

For the three months ended March 31, 2011 and 2010

5.	INCOME TAXES

	The Company’s principal subsidiaries in the PRC are subject to income taxes on an entity basis on income arising in or derived from the tax jurisdictions in which each entity domiciles and operates.

	In 2006, the local government of economic development area has granted a special tax exemption to both Changda Fertilizer and Changda Chemical. In this connection, both Changda Fertilizer and Changda Chemical are entitled to receive the whole amount of Enterprise Income Tax (“EIT”) payable for its first two profitable years of operation starting from 2006 and followed by an entitlement to receive 50% of EIT payable for the following three years. The exemption is not applicable upon the successful listing of any holding company vehicle in overseas stock market.

	On December 29, 2008, Changda Chemical was approved as a high-tech enterprise and ceased to enjoy the special tax exemption. Tax rate for an approved high-tech enterprise is 15%. Taxation has been estimated based on the assessable profit for the each of years at a rate of 15%.

	Starting from January 1, 2009, the special tax exemption previously granted to Changda Fertilizer ceased to be effective since it became a subsidiary of CIHI which is listed in the US stock market. Changda Fertilizer is subject to EIT at a rate of 25% thereafter.

	For accounting purpose, taxation for the years has been estimated based on the assessable profit for the period at a rate of 33% in 2007 for both Changda Fertilizer and Changda Chemical and at a rate of 25% according to the EIT Law effective in 2008 of the PRC for Changda Fertilizer. The respective tax liability has been recognized as tax liability and the related receivable from the local government of economic development area has been recognized as government grant receivable in respect of taxation, as reported in the balance sheet.

	Fengtai Changda is subject to EIT at a rate of 25%. However, a special tax exemption has been granted by the local government and Fengtai Changda is entitled to full exemption of EIT payable for its two years of operation starting from 2008 and followed by a 50% exemption of EIT payable for the following three years.

	Dividends payable by a foreign invested enterprise to its foreign investors are subject to a 10% withholding tax, unless any foreign investor’s jurisdiction of incorporation has a tax treaty with the PRC that provides for a different withholding arrangement. Since the Company intends to reinvest its earnings to further expand its businesses in the PRC, its foreign invested enterprises do not intend to declare dividends to their immediate foreign holding companies in the foreseeable future. Accordingly, as of March 31, 2011, the Company has not recorded any withholding tax on the retained earnings of its foreign invested enterprises in the PRC.

Changda International Holdings, Inc.

Notes to Unaudited Condensed Consolidated Financial Statements

For the three months ended March 31, 2011 and 2010

5.	INCOME TAXES (CONTINUED)

(a)	Income tax expenses comprised the following:

	Three months ended March 31,2011		Three months ended March 31, 2010
	US$’000		US$’000
	(unaudited)		(unaudited)
Current taxes arising in the PRC:
For the period		606		309

The Company has adopted the FASB Accounting Standards Codification Topic 740, “Accounting for Uncertainty in Income Taxes – an interpretation of FASB Statement No. 109” (ASC Topic 740”) issued by the FASB which clarifies the accounting and disclosure for uncertainty in tax positions, as defined, and prescribes the measurement process and a minimum recognition threshold for a tax position, taken or expected to be taken in a tax return, that is required to be met before being recognized in the financial statements. Under ASC Topic 740, the Company must recognize the tax benefit from an uncertain position only if it is more-likely-than-not the tax position will be sustained on examination by the taxing authority, based on the technical merits of the position. The tax benefits recognized in the financial statements attributable to such position are measured based on the largest benefit that has a greater than 50% likelihood of being realized upon the ultimate resolution of the position.

Subject to the provision of ASC Topic 740, the Company has analyzed its filing positions in all of the domestic and foreign jurisdictions where it is required to file income tax returns. As of March 31, 2011 and 2010, the Company has identified the jurisdictions at PRC as “major” tax jurisdictions, as defined, in which it is required to file income tax returns. Based on the evaluations noted above, the Company has concluded that there are no significant uncertain tax positions requiring recognition in its consolidated financial statements.

As of March 31, 2011 and 2010, the Company had no unrecognized tax benefits or accruals for the potential payment or interest and penalties. The Company’s policy is to record interest and penalties in this connection as a component of the provision for income tax expense. For the three months ended March 31, 2011 and 2010, no interest or penalties were recorded.

Changda International Holdings, Inc.

Notes to Unaudited Condensed Consolidated Financial Statements

For the three months ended March 31, 2011 and 2010

5.	INCOME TAXES (CONTINUED)

(b)

Reconciliation from the expected income taxes expenses calculated with reference to the statutory tax rates in the PRC:

	Three months ended March 31, 2011			Three months ended March 31, 2010
	US$’000			US$’000
	(unaudited)			(unaudited)
Expected income taxes expenses		666			171
Effect on tax incentives/holiday		(145	)		(58	)
Non-deductible expenses		99			203
Others		(14)			(7	)

Income taxes expenses		606			309

Changda International Holdings, Inc.

Notes to Unaudited Condensed Consolidated Financial Statements

For the three months ended March 31, 2011 and 2010

6.	RELATED PARTY TRANSACTIONS

In addition to the transactions / information disclosed elsewhere in these condensed consolidated financial statements, during the periods and at balance sheet date, the Company had the following transactions and balances with related parties.

(a) Relationship of related parties

Party		Existing relationship with the Company
Mr. Zhu Qing Ran		Chairman and Chief Executive Officer (“CEO”)
Mr. Zhu Xiao Ran		Former director and former stockholder of Changda Fertilizer
Mr. Zhu Xin Ran		Family member of the directors of the Company
Geo Genesis Group Inc.		Stockholder of the Company
Allhomely International Limited		Stockholder of the Company
Mr. Zhu Hua Ran		Director of the Company
Mr. Charles Brock		Director of the Company
Mr. Carsten Aschoff		Director of the Company
Mr. Craji Marshak		Director of the Company
Mr. Jan Panneman		Key management of the Company
Mr. David Cohen		Director of the Company

(b) Summary of related party transactions

	Three months ended March 31, 2011		Three months ended March 31, 2010
	US$’000		US$’000
	(unaudited)		(unaudited)
Key management personnel, including directors:
Short-term employee benefits		125		67

	As of March 31, 2011		As of December 31, 2010
	US$’000 (unaudited)		US$’000 (unaudited)
Loans from Mr. Zhu Qing Ran and his family member		1,114		1,630

Current portion (included in shareholders’ loans)		1,114		1,107
Non-current portion (included in Long-term portion of shareholders’ loans)		-		523

		1,114		1,630

Changda International Holdings, Inc.

Notes to Unaudited Condensed Consolidated Financial Statements

For the three months ended March 31, 2011 and 2010

6.	RELATED PARTY TRANSACTIONS (CONTINUED)

(c)	Summary of related party balances (Continued)

	As of March 31, 2011		As of December 31, 2010
	US$’000		US$’000
	(unaudited)
Due from (included in other receivables):
Mr. Zhu Qing Ran		94		9
Mr. Zhu Xiao Ran		-		-
Mr. Zhu Xin Ran		-		1

		94		10
Due to (included in other payables):
Allhomely International Limited		1		1
Geo Genesis Group Inc.		17		17
Mr. Zhu Qing Ran		300		269
Mr. Zhu Hua Ran		225		200
Mr. Charles Brock		-		7
Mr. Carsten Aschoff		17		17
Mr. Craig Marshak		11		11
Mr. Jan Panneman		45		36
Mr. David Cohen		11		11

The loan from Mr. Zhu Qing Ran of US$523,000 as of December 31, 2010 was unsecured, interest-free and had a fixed repayment term of 2 years, however, the loan was repaid during the period. All other amounts due from/to related parties and directors are unsecured, interest-free and have no fixed repayment term.

(d)

Guarantee

Included in short-term interest-bearing borrowings, there is bank loan of US$763,000 which is guaranteed by the Chairman and CEO of the Company.

Changda International Holdings, Inc.

Notes to Unaudited Condensed Consolidated Financial Statements

For the three months ended March 31, 2011 and 2010

7.	COMMITMENTS AND CONTINGENCIES

As of March 31, 2011, the Company had capital commitments for construction projects amounting to US$57,390.

8.	PLEDGE OF ASSETS

The Company has pledged prepaid lease payments with a net book value of approximately US$1,752,000 and buildings under property, plant and equipment with a net book value of approximately US$4,086,000 and restricted cash of US$3,817,000 to secure general banking facilities granted to Changda Chemical and Changda Fertilizer.

Changda International Holdings, Inc.

Notes to Unaudited Condensed Consolidated Financial Statements

For the three months ended March 31, 2011 and 2010

9.	SEGMENT REPORTING

In accordance with ASC Topic 280, Segment Reporting (“ASC 280”) and based on the nature of revenue, the Company is organized into two business segments, consisting of (i) Fertilizer, and (ii) Chemical, which includes mainly snow melting agent, thiophene, flame retardant, calcium chloride and magnesium chloride.

The following table summarizes financial information for each of the business segments for the three months ended March 31, 2011 and 2010.

	Three months ended March 31, 2011 (unaudited)												Three months ended March 31, 2010 (unaudited)
	Fertilizer			Chemical			All other			Consolidated			Fertilizer			Chemical			All other			Consolidated
	US$’000			US$’000			US$’000			US$’000			US$’000			US$’000			US$’000			US$’000

Operating revenue		21,346			4,930			-			26,276			15,196			2,006			-			17,202
Cost of sales		(18,100	)		(3,771	)		-			(21,871	)		(13,070	)		(1,408	)		-			(14,478	)
Depreciation of property, plant and equipment		(30	)		(96	)		-			(126	)		(30	)		(38	)		-			(68	)
Amortization of intangible assets		-			-			-			-			-			(1	)		-			(1	)
Amortization of prepaid lease expenses		(12	)		(4	)		-			(16	)		(6	)		(3	)		-			(9	)
Interest income		7			-			-			7			1			-			-			1
Interest expense		(99	)		(63	)		(24	)		(186	)		(41	)		(26	)		(27	)		(94	)
Other segment income		3			1			-			4			5			-			-			5
Other segment expenses		(874	)		(334	)		(215	)		(1,423	)		(703	)		(393	)		(779	)		(1,875	)
Income taxes		(497	)		(109	)		-			(606	)		(288	)		(21	)		-			(309	)

Segment profit		1,744			554			(239	)		2,059			1,064			116			(806	)		374

Segment assets		47,140			18,416			740			66,296			31,232			12,191			250			43,673

Capital expenditures		57			-			-			57			1,361			-			-			1,361

Changda International Holdings, Inc.

Notes to Unaudited Condensed Consolidated Financial Statements

For the three months ended March 31, 2011 and 2010

10.	PROMISSORY NOTES

On February 3, 2010, the Company entered into a Securities Purchase Agreement with six purchasers pursuant to which the purchasers purchased promissory notes in the aggregate amount of US$900,000 (“February 2010 Notes”). The February 2010 Notes were due and payable on August 3, 2010 (the “Maturity Date”) together with accrued interest at the rate of 20% per annum. The remaining outstanding balance of the February 2010 Notes together with the corresponding accrued interest of US$9,057, were classified as current liabilities as of December 31, 2010.

In conjunction with the February 2010 Notes, the Company issued warrants to purchasers of the February 2010 Notes to purchase an aggregate of 495,000 shares of the Company’s common stock (“PN Warrants”). The exercise price per share is US$2.25, subject to customary adjustments as set forth in the PN Warrants for stock splits, stock dividends, etc. The PN Warrants expire three years from and fully vested at the date of issuance. The Company assessed the terms in accordance with ASC Topic 815 “Derivatives and Hedging” and determined that the PN Warrants should be accounted for as equity and are valued at fair value at the date of issuance.

The fair value of the PN Warrants was estimated as US$0.9 per warrant at the date of issuance using the Black-Scholes model and graded vesting method together with the following assumptions:

At date of issuance
Expected volatility		29	%
Expected dividends	Nil
Expected life	3 years
Risk-free interest rate		2.57	%

During the three-month period ended March 31, 2011, no PN Warrant has been exercised. There are 495,000 PN Warrants outstanding and exercisable as of March 31, 2011.

Changda International Holdings, Inc.

Notes to Unaudited Condensed Consolidated Financial Statements

For the three months ended March 31, 2011 and 2010

10.	PROMISSORY NOTES (CONTINUED)

In early August 2010, the Company contacted each of the holders of February 2010 Notes in order to request an extension of the Maturity Date. On August 3, 2010, holders of an aggregate of US$200,000 of February 2010 Notes entered into an agreement with the Company pursuant to which the maturity date of the February 2010 Notes held by such persons have been extended until the earlier of (i) December 1, 2010 or (ii) 5 business days after the closing of a public offering of our equity and/or debt securities (the “New Maturity Date”). In consideration for the extension of the maturity date to the New Maturity Date, the Company agreed to provide these holders of February 2010 Notes with the following consideration:

(i)	the payment of an additional 5% interest on the February 2010 Notes commencing from August 3, 2010 until the New Maturity Date;
(ii)	a downward adjustment of the exercise price of the 110,000 PN warrants issued in connection with the February 2010 Notes from US$2.25 to US$0.75, the closing price of our common stock as quoted on the Over-the-Counter Bulletin Board on August 2, 2010, the last trading day prior to the date of the agreement;
(iii)	an amendment to the cashless feature of the warrants issued in connection with the February 2010 Notes to make the warrants exercisable on a cashless basis immediately as of the date of the agreement; and
(iv)	the payment of a pro-rata portion of a US$25,000 payment of interest on the aggregate principal amount of US$900,000 of February 2010 Notes outstanding as of the date of the Agreement.

On August 6, 2010, holders of an aggregate of US$500,000 principal amount of February 2010 Notes informed the Company that they are in default and demanded repayment under the February 2010 Notes. Therefore, the holders of the February 2010 Notes are entitled to, among other things (i) the principal amount of the February 2010 Notes along with any interest accrued but unpaid thereon, (ii) an additional interest at a rate of 5% per annum upon an during the occurrence of an event of default and (iii) costs and expenses in connection with the collection and enforcement under the February 2010 Notes, including reasonable attorneys’ fees.

On October 1, 2010, the Company received notice that on September 27, 2010, holders of an aggregate of US$250,000 principal amount of February 2010 Notes filed a complaint (the "Complaint") in the Supreme Court of the State of New York, County of New York (the "Court"), Index No. 261595/10, against the Company seeking repayment of their respective February 2010 Notes.

On November 16, 2010, holder of an original aggregate of US$200,000 of February 2010 Notes informed the Company that they are in default and demanded repayment under the February 2010 Notes.

As of December 6, 2010, the Company has made payments to the holders of the February 2010 Notes totaling an aggregate of US$500,000 (the “Partial Payment”). This Partial Payment covered all accrued but unpaid interest due and payable under the February 2010 Notes through December 6, 2010 with the remainder as a partial payment of the principal amount due and payable under the February 2010 Notes. Accordingly, as of December 6, 2010, the principal amount remaining under the February 2010 Notes was US$567,252.

The funds for the Partial Payment were provide to the Company by Allhomely International Limited, an entity owned and /or controlled by Jan Pannemann, the Company’s Executive Vice President and QingRan Zhu, the Company’s Chairman and Chief Executive Officer (“Allhomely”). On December 6, 2010, the Company and Allhomely entered into a subscription agreement pursuant to which Allhomely agreed to purchase 714,286 shares of the Company’s common stock for the US$500,000 of funds provided (which is an effective purchase price of US$0.70 per share). The shares were issued pursuant to an exemption under Section 4(2) of the Securities Act of 1933, as amended.

Changda International Holdings, Inc.

Notes to Unaudited Condensed Consolidated Financial Statements

For the three months ended March 31, 2011 and 2010

10.	PROMISSORY NOTES (CONTINUED)

On December 7, 2010, holders of an aggregate of US$200,000 principal amount of February 2010 Notes entered into a subsequent agreement with the Company pursuant to which the December 2010 Maturity Date of the February 2010 Notes held by such persons has been further extended until January 21, 2011 (the “New Maturity Date”), provided , however , that if the Company does not repay all amounts due and payable under the February 2010 Notes on or before December 21, 2010, then beginning on December 21, 2010 and ending on the New Maturity Date, the Holder shall have right to convert their respective principal amount of February 2010 Notes then outstanding, plus accrued but unpaid interest thereon (which is currently equal to a rate of 25% per annum) (the “Owed Amount”), at their sole option, into such number of shares of the Company’s common stock which is equal to the Owed Amount divided by 0.75. No fractional shares of the Company’s common stock will be issued upon such conversion and all fractional shares shall be rounded up to the nearest whole share.

On December 21, 2010, the holder of an original aggregate US$50,000 of February 2010 Notes exercised the right to convert the Owed Amount into 51,591 shares of the Company’s common stock

On January 21, 2011, the holder of an original aggregate of US$150,000 of February 2010 Notes entered into an agreement with the Company pursuant to which the January 2011 Maturity Date of the February 2010 Notes held by such person has been further extended until March 31, 2011 (the “New Maturity Date”), provided , however , the holder shall have right to convert its principal amount of February 2010 Notes then outstanding, plus accrued but unpaid interest thereon (which is currently equal to a rate of 25% per annum) (the “Owed Amount”), at its sole option, into such number of shares of the Company’s common stock which is equal to the Owed Amount divided by 0.75. No fractional shares of the Company’s common stock will be issued upon such conversion and all fractional shares shall be rounded up to the nearest whole share. The additional cost arisen from the conversion feature granted was expensed with corresponding credit to the additional paid-in capital.

As stated above, a portion of the principal (together with accrued but unpaid interest thereon from December 6, 2010) remains due and payable under the February 2010 Notes. As of December 31, 2010, the total amount due on the February 2010 notes is US$533,843. Therefore, the holders of the February 2010 Notes continue to be entitled to, among other things (i) the remaining outstanding portion of the principal amount due and payable under the February 2010 Notes along with any interest accrued but unpaid thereon (ii) an additional interest at a rate of 5% per annum upon and during the occurrence of an event of default and (iii) costs and expenses in connection with the collection and enforcement under the February 2010 Notes, including reasonable attorneys’ fees.

On February 18, 2011 and February 25, 2011, the Company made payments to the holders of the February 2010 Notes totaling an aggregate of US$600,000 (the “Note Repayment”). This Note Repayment covered all remaining principal and accrued but unpaid interest due and payable under the February 2010 Notes, as a result of which the February 2010 Notes have been repaid in full. As of the date hereof, the only obligations of the Company with respect to the Notes relates to a claim by two of the holders of February 2010 Notes for attorneys fees in the amount of approximately US$25,000 relating to collection of the February 2010 Notes, including their prior filing of the Complaint in the court, Index No. 261595/10, against the Company seeking repayment of their respective February 2010 Notes. Up to March 2, 2011, the Company is unaware of any update of change in status with respect to the Complaint.

The funds for the Note Repayment were provided to the Company by Allhomely. On February 28, 2011, the Company and Allhomely entered into a subscription agreement pursuant to which Allhomely agreed to purchase 779,221 shares of the Company’s common stock for US$600,000, which the share purchase price is US$0.77, which was the closing price of the Company’s common stock as quoted on the Over-the-Counter Bulletin Board on February 28, 2011. The shares were issued pursuant to an exemption under Section 4(2) of the Securities Act of 1933, as amended.

Changda International Holdings, Inc.

Notes to Unaudited Condensed Consolidated Financial Statements

For the three months ended March 31, 2011 and 2010

11.	STOCK BASED COMPENSATION

	Number of warrants		Weighted- average exercise price

Warrants outstanding and exercisable as of March 31, 2011 and January 1, 2011		359,934	$	US3.60

There is no movement during the three months ended March 31, 2011.

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

The following is a discussion and analysis of the results of operations of Changda International Holdings Inc. and its subsidiaries (collectively,”we.” “us,” “our,” or the "Company") and should be read in conjunction with our financial statements and related notes contained in this Form 10-Q. This Form 10-Q contains forward looking statements that involve risks and uncertainties. You can identify these statements by the use of forward-looking words such as "may", "will", "expect", "anticipate", "estimate", "believe", "continue", or other similar words. You should read statements that contain these words carefully because they discuss our future expectations, contain projections of our future results of operation or financial condition or state other "forward-looking" information. We believe that it is important to communicate our future expectations to our investors. However, there may be events in the future that we are unable to accurately predict or control. Those events as well as any cautionary language in this Form 10-Q provide examples of risks, uncertainties and events that may cause our actual results to differ materially from the expectations we describe in our forward-looking statements. You should be aware that the occurrence of the events described in this Form 10-Q could have a material adverse effect on our business, operating results and financial condition. Actual results may differ materially from current expectations. Additional information relating to the company can be found on EDGAR at www.sec.gov/edgar.shtml.

Historical Overview

On February 13, 2009, we completed a “reverse acquisition” transaction pursuant to which the stockholders of Changda International Ltd. (“Changda International”) transferred all of the issued and outstanding shares of common stock of Changda International to us in exchange for 15,909,988 newly issued shares and 1,956,667 shares transferred from our stockholders. Upon closing of the reverse acquisition, Changda International became our wholly owned subsidiary, with Changda International’s former stockholders acquiring a majority of the outstanding shares of our common stock. The acquisition of Changda International was accounted for as a “reverse acquisition”, since the stockholders of Changda International acquired a majority of the outstanding shares of our common stock immediately following the closing of the transaction. Changda International was deemed to be the accounting acquirer upon such closing of the transaction and, accordingly, the assets and liabilities and the historical operations that is reflected in the financial statements are those of Changda International.

Overview of the Business

We are engaged in developing, manufacturing and the selling of (i) microbial organic and inorganic compound fertilizers and (ii) chemical products, primarily consisting of snow melting products. We have more than 10 fertilizer product lines which are sold under the “CHANGDA” and “FENGTAI WOSIDA” brands. Our proprietary product lines are marketed and sold to distributors which in turn sell our products to farmers. For the three months ended March 31, 2011, 81% of our revenues ($21 million) were derived from our fertilizer products and 19% of our revenues ($5 million) were derived from our chemical products.

In accordance with ASC Topic 280, Segment Reporting and based on the nature of revenue, we are organized into two business segments, consisting of (i) fertilizer products and (ii) chemical products, which includes mainly snow melting agent, thiophene, flame retardant, calcium chloride and magnesium chloride.

Product Pricing

Our products that account for a substantial amount of our sales are fertilizers and de-icing salt. The establishment of the sales price of these products are influenced primarily by the cost of the raw materials, economic conditions which affect the price and demand for agricultural products, China’s export tariffs which impact the price of products domestically, and weather conditions.

From the end of 2009 through the first quarter of 2010, prices of fertilizer raw materials dropped at a rate lower than what occurred from 2008 to 2009. While prices of raw materials continued to drop during the first quarter of 2010, based upon presentation made at the 78 th Fertilizer Industry Association Annual Conference on Fertilizer Outlook 2010 - 2014 made in Paris, France in June 2010, as management believed, the trend stopped and prices began to increase in 2010 as the demand for fertilizer products increased. Average sales prices of fertilizers increased during the first quarter of 2011 compared to those during the first quarter of 2010.

Seasonality of Sales

We experience seasonal variations in our revenues and our operating costs due to the farming season. The peak selling seasons for our fertilizer products are the first, second and fourth quarters of the year. These periods are the planting and crop-growing months, which boost fertilizer sales. The third quarter of the year is harvest season, hence the low demand for our fertilizer products. The peak selling seasons for our chemical products have been typically the first and fourth quarters of the year, which are the winter season in China when there is strong demand for deicing salt, calcium chloride and salt. The third quarter of the year is typically our slowest due to the low demand for our chemical products.

Fertilizer Products

Our organic and inorganic fertilizer products are classified into the following categories:

·	Complex Fertilizers. These fertilizers contain two or three of the primary nutrients of nitrogen, phosphorus and potassium and are made by a process involving only chemical reactions between raw materials and intermediates.
·	Compound Fertilizers. Such fertilizers are produced by initiating chemical reactions between the three primary nutrients of nitrogen, phosphorous and potassium during the production process. We have expanded our product offerings to include a microbial organic-inorganic compound fertilizer which (i) helps plants secure nitrogen from the air, (ii) facilitates plants’ absorption of useful minerals such as phosphorus and potassium from the soil and (iii) enhances stress resistance by the plants. The combination of the organic and inorganic elements enhances soil fertility and crop yield respectively.
·	Slow-Release Compound Fertilizer. This group of fertilizers allows fertilizer nutrients to be released over a period of time, enabling plants to absorb most of the nutrients and enhance yield rate. We have also developed controlled-release fertilizers.

Our products sold through our distributor, China Post under the “FENGTAI WOSIDA” brand. We have entered into a distribution agreement with China Post whereby China Post has the exclusive right to sell our products under the “FENGTAI WOSIDA” brand in the Shandong Province. In order to distribute our products throughout the Shandong Province, we have to enter into a sales agency agreement with a local branch of China Post that covers a particular region within the Shandong province. Currently we have entered into sales agency agreements with 10 local branches of China Post, all of which are substantially on the same terms and expire on December 31, 2011. While we are not dependent on any one local branch of China Post for the distribution of our products, any inability to renew any sales agency agreement or if such agreements are, they are renewed on terms less favorable to us, with any local branch of China Post will limit our ability to distribute our product within the Shandong Province and could result have an adverse effect on our financial condition. We sell our products throughout China, including the Shandong Province, under two different brand names, including the “CHANGDA” brand, to maximize the sale of our fertilizer products in the same market through a variety of different distribution channels.

For the period ended March 31, 2011, our top ten selling fertilizers were as follows:

Ranking	Products	Type of Fertilizer	Revenues (US$)	Percent in total Revenues of our Fertilizer Products

1	Specialty Fertilizer	S-Compound	4,512,144	21%
2	Silicon calcium and magnesium soil conditioner 8-6-10-5-15	Soil Conditioner	2,679,485	13%
3	S 15-15-15	S-Compound	2,193,044	10%
4	Organic and inorganic fertilizer (bio) 12-5-8	M-O Compound	1,550,165	7%
5	Silicon calcium and magnesium soil conditioner 10-5-20	Soil Conditioner	1,421,842	7%
6	New fertilizer (slow release) 16-8-16	Slow Compound	1,406,419	7%
7	Chlorine 24-8-8	Cl Compound	1,301,173	6%
8	Organic and inorganic fertilizer (bio) 15-7-8	M-O Compound	1,188,996	6%
9	New Compound Chat (release) 24-8-8	Slow Compound	1,174,730	6%
10	New fertilizer (slow release) 18-9-18	Slow Compound	1,046,140	5%

Our fertilizers sold under the “FENGTAI WOSIDA” and “CHANGDA” brands had sales volumes for the three months ended March 31, 2011 of approximately $16,034,000 and $5,312,000, respectively or 75% and 25% of our revenues.

Chemical Products

Our principal chemical products are snow melting agents, flame retardant, and various other industrial chemicals. Snow melting agents are de-icing salts, other salts and calcium chloride. The snow melting agents are a white, odorless and soluble solid compound and are used primarily to de-ice airports, roads and golf courses in the winter seasons, spread by winter service vehicles.

Our industrial chemical products range includes flame retardant, thiophene, calcium chloride and magnesium chloride. Thiophene is a colorless and transparent liquid which is primarily used in the pharmaceutical raw materials industry as a medicine chemical auxiliary, and for the synthesis of anti-bacterial fungus. Calcium chloride and magnesium chloride are used for dust control on roads and also as essential product inputs for a wide range of industrial usage such as in cement production.

Our chemical products, which had the highest sales volumes for the three months ended March 31, 2011, are listed below:

Ranking		Product Names	Revenues (US$)		Percent in total Revenues of our Chemical Products
	1	Deicing Salt		1,986,333		41	%
	2	Flame Retardant		1,133,278		23	%
	3	Calcium Chloride		730,083		15	%
	4	Hydrobromic Acid 40% in water		473,688		10	%
	5	Thiophene		269,070		6	%
	6	Magnesium Chloride		247,830		5	%

Effective the year ended December 31, 2010, our new flame retardant product became one of our highest selling products as a result of the implementation of the "Fire Prevention Law of The People's Republic of China" and the government standards set by “Requirements and Mark on Burning Behavior of Fire Retarding Products and Subassemblies in Public Place” by various industries as well as our increased marketing efforts to promote the product. This sales trend continued during the three months ended March 31, 2011.

February 2010 Notes

On February 3, 2010, the Company entered into a Securities Purchase Agreement with six purchasers pursuant to which the purchasers purchased promissory notes in the aggregate amount of US$900,000 (“February 2010 Notes”). The February 2010 Notes were due and payable on August 3, 2010 (the “Maturity Date”) together with accrued interest at the rate of 20% per annum. The February 2010 Notes were classified as current liabilities with the corresponding accrued interest of US$9,057 as of December 31, 2010.

The Company has repaid all principal and interest due and payable under the February 2010 Notes. As of March 31, 2011, the Company’s only remaining obligation with respect to the February 2010 Notes is a claim by two investors for approximately $25,000 of attorneys fees payable in connection with the prior collection efforts related to the amounts that were previously owed under their respective February 2010 Notes. All remaining amounts owed with respect to the February 2010 Notes were settled in April 2011.

The funds for the repayment of the February 2010 Notes were provided to the Company by Allhomely International Limited, an entity controlled by Jan Pannemann, the Company’s Executive Vice President and QingRan Zhu, the Company’s Chairman and Chief Executive Officer (“Allhomely”). On December 6, 2010, the Company and Allhomely entered into a subscription agreement pursuant to which Allhomely agreed to purchase 714,286 shares of the Company’s common stock for the $500,000 of funds provided (which is an effective purchase price of $0.70 per share). On February 28, 2011, the Company and Allhomely entered into a subscription agreement pursuant to which Allhomely agreed to purchase 779,221 shares of the Company’s common stock for the $600,000 of funds provided, which is per share purchase price of $0.77 per share, which was the closing price of the Company’s common stock as quoted on the Over-the-Counter Bulletin Board on February 28, 2011.

Results of Operations

Three months ended March 31, 2011 as compared to the three months ended March 31, 2010

The following tables set forth our summary statement of operations data for the three months ended March 31, 2011 and 2010, and our summary balance sheet as of March 31, 2011 and 2010.

The consolidated financial statements and accompanying notes are prepared in accordance with generally accepted accounting principles in the United States, or US GAAP.

Selected Balance Sheet Data:		As of March 31,
		2011		2010
Balance Sheet Information:		US$’000

Working capital	$	16,198	$	11,164
Total assets		66,296		43,673
Total liabilities		28,468		16,543
Additional Paid-In Capital		7,098		5,909
Accumulated Profit		25,027		17,219
Stockholders’ equity		37,828		27,130

Selected Statement of Operations Data:	Three months ended March 31,
	US$’000
	2011			2010

INCOME
Operating revenues
Chemical		4,930			2,006
Fertilizer		21,346			15,196
Total	$	26,276		$	17,202

COST OF SALES
Cost of sales
Chemical		3,771			1,408
Fertilizer		18,100			13,070
Total	$	21,871		$	14,478

GROSS PROFIT
Chemical		1,159			598
Fertilizer		3,246			2,126
Total	$	4,405		$	2,724

OPERATING EXPENSES
Administrative expenses		1,565			1,509
Financial costs		186			538
Other expenses (income)		(11	)		(6	)
Taxation		606			309
Total Operating Expenses	$	2,346		$	2,350

NET INCOME	$	2,059		$	374

Operating Revenues

Revenues for the three months ended March 31, 2011 of approximately $26,276,000, increased approximately $9,074,000 or 52.7% from $17,202,000 for the three months ended March 31, 2010. Chemical sales volume for the three months ended March 31, 2011 totaled approximately 30,072 tonnes, representing an increase of approximately 7,846 tonnes from sales volume of approximately 22,226 tonnes for the three months ended March 31, 2010. The sales volume of all chemical products during the three months ended March 31, 2011 increased compared to the same period in 2010. Concurrent with the increase in sales volume, unit selling prices of the major chemical products such as thiophene, de-cing salt, and flame retardant increased, resulting in an increase of chemical operating revenue by approximately $2,924,000 or 145.8%. Our new flame retardant product has become one of our highest selling products as a result of the implementation of the "Fire Prevention Law of The People's Republic of China" and the government standards set by “Requirements and Mark on Burning Behavior of Fire Retarding Products and Subassemblies in Public Place” by various industries as well as our increased marketing efforts to promote the product. Fertilizer sales volume for the three months ended March 31, 2011 of approximately 56,377 tonnes increased approximately 7,089 tonnes compared to the sales volume of approximately 49,288 tonnes for the three months ended March 31, 2010. Sales of fertilizer products increased by approximately $6,150,000 or 40.5% due primarily to the increase in the sales volume resulting from the growth in demand for fertilizer products as well as the increase in average sales price of the best-selling fertilizer products during the three months ended March 31, 2011 by approximately 21.9% compared to the same period in 2010.

Cost of Sales

Total cost of sales for the three months ended March 31, 2011 was approximately $21,871,000 or 83.2% of operating revenues compared to approximately $14,478,000 or 84.2% of operating revenues for the three months ended March 31, 2010. Chemical products cost of sales for the three months ended March 31, 2011 was approximately $3,771,000 or 76.5% of chemical operating revenues. Chemical products cost of sales for the three months ended March 31, 2010 was approximately $1,408,000 or 70.2% of chemical operating revenues. The increase in the cost of sales of chemical products of approximately $2,363,000 resulted from the increase in sales volume as well as the increase in the cost of production related to the Company’s new flame retardant product. Fertilizer products cost of sales for the three months ended March 31, 2011 was approximately $18,100,000 or 84.8% of fertilizer operating revenues. Fertilizer products cost of sales for the three months ended March 31, 2010 was approximately $13,070,000 or 86.0% of fertilizer operating revenues. The increase in cost of sales of fertilizer products of approximately $5,030,000 resulted from the increase in sales volume coupled with the increase in the cost of the major raw materials used in production.

Gross Profit

Total gross profit for the three months ended March 31, 2011 was approximately $4,405,000 or 16.8% of operating revenues compared to approximately $2,724,000 or 15.8% of operating revenues for the three months ended March 31, 2010. Chemical products gross profit for the three months ended March 31, 2011 was approximately $1,159,000 or 23.5% of chemical operating revenues. Chemical products gross profit for the three months ended March 31, 2010 was approximately $598,000 or 29.8% of chemical operating revenues. The increase in the gross profit from the sales of chemical products of approximately $561,000 resulted from the increase in sales volume and sales price of the major chemical products the Company, offset by the increase in the cost of production related to the new flame retardant product. Fertilizer products gross profit for the three months ended March 31, 2011 was approximately $3,246,000 or 15.2% of fertilizer operating revenue. Fertilizer products gross profit for the three months ended March 31, 2010 was approximately $2,126,000 or 14.0% of fertilizer operating revenue. The increase in the gross profit of fertilizer products of approximately $1,120,000 resulted mainly from the increase sales volume and in the average sales price of the best-selling fertilizer products during the three months ended March 31, 2011 by approximately 18.0% compared to the same period in 2010.

Operating Expenses

Operating expenses consist primarily of transportation expenses, commission, promotion and advertising expenses, freight charges and general and administrative expenses. Operating expenses amounted to approximately $1,565,000, or 6.0% of operating revenues for the three months ended March 31, 2011 as compared to approximately $1,509,000 or 8.8 % of operating revenues for the three months ended March 31, 2010.

The increase in operating expenses between the two periods is approximately $56,000, an indication that there were no expenses incurred during the three months ended March 31, 2011 that differed materially from those incurred for the same period in 2010.

Income Taxes

Changda Chemical, Changda Fertilizer, Changda Heze and Shangdong Fengtai as wholly owned foreign subsidiaries, are subject to effective tax rates of 23% and 45% for the three months ended March 31, 2011 and 2010 respectively as a result of tax grants by the PRC local government for economic development. The income tax paid was approximately $606,000 for the three months ended March 31, 2011 and approximately $309,000 for same period in 2010.

Net Income

Our net income of approximately $2,059,000 for the three months ended March 31, 2011 increased from approximately $374,000 for the three months ended March 31, 2010. The increase in net income was largely due to the increase in operating revenues and gross profit. For the three months ended March 31, 2011, income taxes increased consequent to the increase in net income and total finance and interest cost decreased pursuant to the settlement of the promissory note borrowings of February, 2010. The income after the operating expenses covered the increase in income tax and still resulted in a higher net income compared to the same period in 2010. Net income as a percentage of operating revenues approximated 7.8% and 2.2% for the three months ended March 31, 2011 and 2010, respectively.

Liquidity and Capital Resources

Operating Activities

Net cash used by operating activities for the three months ended March 31, 2011 and 2010 amounted to approximately $730,000 and $1,647,000, respectively. The decrease of approximately $917,000 was primarily due to the increase in trade and other payable and net income, which offset the effect of the increase in inventory.

In 2009, the price of the key raw materials necessary for the manufacturing of our fertilizers, namely urea and potassium, had started to recover although the markets had become more volatile. Management decided that in order to limit the risks of exposure to market volatility and sudden price increases, it was beneficial to take advantage of the reduced price offered by raw material suppliers in December 2009 and entered into agreements with said suppliers at contracted prices with prepayment deposit for substantial delivery of the materials during the first quarter of 2010. This option would enable us to maintain our gross profit ratio despite the likelihood of an increase in the price of raw materials. Furthermore, the purchase of the inventory items were made in anticipation of increased sales of fertilizer for the second quarter of 2010, which is considered a planting season. In 2011 and 2010, we continued to make prepayment deposits for raw materials as the return on the investment has been beneficial to the company in terms of hedging against raw material price increases.

Investment Activities

Net cash used for investment activities for the three months ended March 31, 2011 and 2010 amounted to approximately $6,647,000 and $47,000, respectively. This increase of approximately $6,600,000 was mainly due to the increase in acquisition of fixed assets and restricted cash in 2011.

Financing Activities

Net cash provided by financing activities for the three months ended March 31, 2011 and 2010 amounted to approximately $8,596,000 and $1,621,000, respectively. This represents an increase of approximately $6,975,000 which was primarily due to the net increase in new borrowings.

Future cash commitments

In order to improve our performance and competitiveness, we are constructing our Heze fertilizer plant and are preparing to expand our Thiophene product line. We have already invested a total of $5,184,000 into our Heze plant through March 31, 2011. However, an additional $18,516,000 is needed to complete the constructions and an additional $11,500,000 will be needed for the normal operation of the plant and Thiophene product line for the first 12 months after its completion.

To strengthen our financial position, we intend to seek additional funding to be used for general corporate purposes, as well as research and development activities, including advancing our current product development activities and construction of the Heze Plant. We intend to seek funding for our capital needs through the issuance of debt, preferred stock, equity, loan guarantees, or a combination of these types of instruments. We may also seek to obtain financing through private placement or a public offering, a consequence of which could include the sale or issuance of stock to third parties. We expect that we will be able to secure sufficient financing to satisfy our anticipated cash requirements for normal operations and capital expenditures through at least December 31, 2011, although current economic and market conditions will make it challenging for us to do so.

We cannot be certain that we will be able to obtain financing on terms acceptable to us or at all. If we are not able to raise additional capital, we will not have sufficient cash to fund our operations. In such case, we could be required to curtail or cease operations, liquidate or sell assets, modify our current plans for product development, and other research and development activities, or extend the time frame over which these activities will take place, or pursue other actions that would adversely affect future operations.

On February 3, 2010, the Company entered into a Securities Purchase Agreement with six purchasers pursuant to which the purchasers purchased promissory notes in the aggregate amount of US$900,000 (“February 2010 Notes”). The February 2010 Notes were due and payable on August 3, 2010 (the “Maturity Date”) together with accrued interest at the rate of 20% per annum. The February 2010 Notes were classified as current liabilities with the corresponding accrued interest of US$9,057 as of December 31, 2010.

The fair value of the PN Warrants was estimated as US$0.9 per warrant at the date of issuance using the Black-Scholes model and graded vesting method together with the following assumptions:

At date of issuance
Expected volatility	29%
Expected dividends	Nil
Expected life	3 years
Risk-free interest rate	2.57%

During the three months ended March 31, 2011, no PN Warrant has been exercised. There are 495,000 PN Warrants outstanding and exercisable as of March 31, 2011.

The Company has repaid all principal and interest due and payable under the February 2010 Notes. As of March 31, 2011 , the Company’s only remaining obligation with respect to the February 2010 Notes is a claim by two investors for approximately $25,000 of attorneys fees payable in connection with the prior collection efforts related to the amounts that were previously owed under their respective February 2010 Notes. The Company has requested supporting documentation from counsel to such investors regarding such alleged fee amounts in an effort to address this final claimed obligation under the February 2010 Notes.

The funds for the repayment of the February 2010 Notes were provided to the Company by Allhomely. On December 6, 2010, the Company and Allhomely entered into a subscription agreement pursuant to which Allhomely agreed to purchase 714,286 shares of the Company’s common stock for the $500,000 of funds provided (which is an effective purchase price of $0.70 per share). On February 28, 2011, the Company and Allhomely entered into a subscription agreement pursuant to which Allhomely agreed to purchase 779,221 shares of the Company’s common stock for the $600,000 of funds provided, which is per share purchase price of $0.77 per share, which was the closing price of the Company’s common stock as quoted on the Over-the-Counter Bulletin Board on February 28, 2011.

On February 2, 2010, Changda Chemical entered into a loan agreement with Huaran Zhu, our director, for an unsecured interest free loan in the amount of $303,444. The loan is not subject to any interest. The loan is payable on demand.

On March 9, 2010, Weifang Changda Fertilizer Co., Ltd. entered into a loan contract with Bank of Weifang, New Worker Village Branch, for a loan in the amount of $3,053,388. The loan is due and payable on March 8, 2011. The interest rate is 40% more than the Benchmark Lending Rate issued by the China Central Bank and should be adjusted monthly, with the executed interest rate as 7.434% per annum. Interest is payable on a monthly basis. The loan is secured by land use right and factory building of Weifang Changda Fertilizer Co., Ltd., our subsidiary. On March 14, 2011, Changda Fertilizer entered into a loan contract with Bank of Weifang, New Worker Village Branch, to extend the loan until March 3, 2012. The interest rate is 8.484% per annum

On March 25, 2010, Weifang Changda Chemicals Co., Ltd. entered into a loan contract with Bank of Weifang, New worker village Branch, for a loan in the amount of $610,678. The loan is due and payable on March 24, 2011. The interest rate should be 40% more than the Benchmark Lending Rate issued by the China Central Bank and should be adjusted every month, with the executed interest rate as 7.434% per annum. Interest is payable on a monthly basis. The loan is guaranteed by Weifang Sanyou Package Products Co., Ltd., a supplier of Changda Chemical. On March 30, 2011, we entered into an agreement with Bank of Weifang New worker village Branch to extend the loan on the same terms until March 21, 2012, while the executed interest rate is 8.484% per annum.

On June 4, 2010, Weifang Changda Fertilizer Co., Ltd. entered into a loan agreement with Qingran Zhu, our CEO, for an unsecured loan in the amount of $1,044,303. The loan is not subject to any interest. The loan is due and payable on June 3, 2012. The loan is fully paid by February 2011..

On July 26, 2010, Changda Chemicals entered into a loan contract with China Minsheng Banking Corp., Ltd., for a loan in the amount of $2,290,041. The loan is due and payable on July 26, 2011. The interest rate equals 20% more than the Benchmark Lending Rate issued by the China Central Bank and is adjusted every month, with an executed interest rate of 6.372% per annum. Interest is payable on a monthly basis. The loan is secured by land use right and factory building of Weifang Changda Chemicals Co., Ltd., our subsidiary and is guaranteed by Weifang Changda Fertilizer Co., Ltd., our subsidiary.

On January 5, 2011, Changda Chemicals entered into a loan contract with Bank of Weifang, New worker village Branch, for a loan in the amount of $687,012. The loan is due and payable on April 4, 2011. The interest rate is 8.114% per annum. Interest is payable on a monthly basis. The loan is secured by the revenue from our sales agreement with Seiwa Fertilizer Ind. Co., Ltd, one of our customers.

On September 3, 2009, Changda Fertilizer entered into a Credit Facility Agreement with the China Merchants Bank, Weifang Branch, for a credit facility in the amount of $1,517,220. The loan is due and payable on September 2, 2010. The interest rate is to be determined on application of loans under the credit facility agreement. The maximum amount under the credit facility agreement is guaranteed by Changda Chemicals and Qingran Zhu, our chief executive officer, through separate Maximum Irrevocable Guarantee Agreements, effective September 3, 2009. Pursuant to the Maximum Irrevocable Guarantee Agreements, Changda Chemicals and Qingran Zhu are jointly and severally liable for any unpaid loans, interests, or fees arising under the agreement. Pursuant to the Credit Facility Agreement, on September 3, 2009, Changda Fertilizer applied for a loan in the amount of $763,347. The loan was due and payable on the maturity date of September 2, 2010. The loan is subject to a fixed annual interest rate of 6.372% per annum. In the case of unauthorized use of the loan, the annual interest rate is 100% more than the 12-month Benchmark Lending Rate issued by China Central Bank on the date of unauthorized use. On September 2, 2010, Changda Fertilizer entered into a loan contract with China Merchants Bank, Weifang Branch, to extend the loan until March 1, 2011. The interest rate is 5.832% per annum. On March 2, 2011, Changda Fertilizer entered into a loan contract with China Merchants Bank, Weifang Branch, to extend the loan until March 2, 2012. The interest rate is 8.203% per annum.

On August 24, 2010, Changda Fertilizer extended a loan contract with Bank of Weifang, New worker village Branch, for a loan in the amount of $458,008. The loan was due and payable on August 21, 2011. The interest rate equals 40% more than the Benchmark Lending Rate issued by the China Central Bank and should be adjusted every month, with an executed interest rate of 7.434% per annum. Interests should be paid monthly. The loan is guaranteed by Weifang Changda Chemicals Co., Ltd., our subsidiary.

On October 21, 2008, Gang Zhang entered into a personal loan contract with Yingtaoyuan Rural Credit Cooperative, for a loan in the amount of $229,004. The loan is due and payable on October 20, 2010. The interest rate equals 40% more than the Benchmark Lending Rate issued by the China Central Bank and should be adjusted every month, with an executed interest rate of 7.784% per annum. Interest is payable on a monthly basis.The loan is secured by the office premises of Weifang Changda Fertilizer Co., Ltd., our subsidiary. On October 21, 2008, Gang Zhang and Changda Fertilizer entered into an entrusted loan agreement pursuant to which Gang Zhang entrusted his loan with Yingtaoyuan Rural Credit Cooperative to Changda Fertilizer.On October 28, 2010, we entered into an agreement with Weifang Weicheng district Rural Credit Cooperative (previously known as Yingtaoyuan Rural Credit Cooperative) to extend the loan the same terms until October 27, 2011.

On January 31, 2011, Weifang Changda Fertilizer Co., Ltd. entered into a loan contract with China Minsheng Banking Corp., Ltd and Shandong Liwei Touzi Youxian Gangsi, for a loan in the amount of $763,347. China Minsheng Banking Corp., Ltd is an agent, while Shandong Liwei Youxian Gongsi is the capital provider. The loan is due and payable on July 30, 2011. The executed interest rate is 19.2% per annum. Interest is payable on a monthly basis.

On March 23, 2011, Weifang Changda Fertilizer Co., Ltd. entered into a loan contract with Shenzhen Development Bank, Qingdao Branch, for a loan in the amount of $1,526,694. The loan is due and payable on March 22, 2012. The interest rate is 10% more than the Benchmark Lending Rate issued by the China Central Bank and should be adjusted monthly, with the executed interest rate as 6.941% per annum. Interest is payable on a monthly basis. The loan is guaranteed by Weifang Dayeng Shipin Youxian Gongsi.

On March 25, 2011, Weifang Changda Fertilizer Co., Ltd. entered into a Bank’s acceptance bill contract with Shenzhen Development Bank, Qingdao Branch, for the note payable in the amount of $6,106,777. The note payable is due and payable on September 25, 2011. The note payable is secured by the bank deposit placed in Shenzhen Development Bank, Qingdao Branch, with an amount of 3,816,736..

While we have interest bearing loans and notes payable in the aggregate principal amount of $16,489,000 which are due on or before March 31, 2012, we believe that we have sufficient cash on our balance sheet and will have sufficient cash from operations to repay all indebtedness when it becomes due. Furthermore, it is standard practice in China for financial institutions loans to rollover loans on the same terms as opposed to entering into long-term credit arrangements. In the past we have not experienced any problems in rolling over any of our short term loans. However, if the banks we currently dealing should decide not to roll over our loans and we do not have sufficient cash from operations or on our balance sheet to repay such indebtedness, we may need to seek funding for our capital needs through the issuance of debt, preferred stock, equity, loan guarantees, or a combination of these types of instruments. While we do not anticipate the need to raise any additional capital at this time, to the extent we do need to raise capital in the future, we cannot be certain that we will be able to obtain financing on terms acceptable to us or at all. In such case, we may be required to curtail or cease operations, liquidate or sell assets, modify our current plans for product development, and other research and development activities, or extend the time frame over which these activities will take place, or pursue other actions that would adversely affect future operations.

Contractual Obligations and Off-Balance Sheet Arrangements

Contractual Obligations

We have certain fixed contractual obligations and commitments that include future estimated payments. Changes in our business needs, cancellation provisions, changing interest rates, and other factors may result in actual payments differing from the estimates. We cannot provide certainty regarding the timing and amounts of payments. We have presented below a summary of the most significant assumptions used in our determination of amounts presented in the tables, in order to assist in the review of this information within the context of our consolidated financial position, results of operations, and cash flows.

The following tables summarize our contractual obligations as of March 31, 2011 and the effect these obligations is expected to have on our liquidity and cash flows in future periods.

	Payments Due by Period
	Total		Less than 1 year		1-3 Years		3-5 Years		5 Years +
			(in thousands)

Contractual Obligations :
Operating Lease	$	208	$	5	$	15	$	10	$	178
Loans, Notes and Other Borrowings
Notes payable	$	6,107	$	6,107	$	-	$	-	$	-
Shareholders’ loans	$	1,114	$	1,114	$	-	$	-	$	-
Short-term interest-bearing borrowings	$	10,382	$	10,382	$	-	$	-	$	-
Interest payable	$	634	$	634
Promissory notes	$	17	$	17	$	-	$	-	$	-
Total Loans, Notes and Other Borrowings	$	18,254	$	18,254	$	-	$	-	$	-

Total Contractual Obligations:	$	18,462	$	18,259	$	15	$	10	$	178

Off-balance Sheet Arrangements

We have not entered into any other financial guarantees or other commitments to guarantee the payment obligations of any third parties. We have not entered into any derivative contracts that are indexed to our shares and classified as stockholder’s equity or that are not reflected in our consolidated financial statements. Furthermore, we do not have any retained or contingent interest in assets transferred to an unconsolidated entity that serves as credit, liquidity or market risk support to such entity. We do not have any variable interest in any unconsolidated entity that provides financing, liquidity, market risk or credit support to us or engages in leasing, hedging or research and development services with us.

Foreign Currency Exchange Rate Risk

We produce and sell almost all of our products in China. Thus, most of our revenues and operating results may be impacted by exchange rate fluctuations between RMB and US dollars.

Critical Accounting Policies and Estimates

Management's discussion and analysis of its financial condition and results of operations are based upon our consolidated financial statements, which have been prepared in accordance with US GAAP. Our financial statements reflect the selection application of accounting policies which require management to make significant estimates and judgments.

We have disclosed in the notes to our financial statements those accounting policies that we consider to be significant in determining our results of operations and our financial position which we are incorporating by reference herein. We believe that the following reflect the more critical accounting policies that currently affect our financial condition and results of operations.

Critical accounting estimates and judgments

Estimates and judgments are currently evaluated and are based on historical experience and other factors including expectations of future events that are believed to be reasonable under the circumstances. Apart from information disclosed elsewhere in these financial statements, the following summarize the estimates and assumptions that have a significant risk of causing a material adjustment to the carrying amounts of assets and liabilities within the next financial year.

Impairment test of assets

We determine whether an asset is impaired at least on annual basis or where an indication of impairment exists. Determination of recoverability of assets to be held and used is by comparing the carrying amount of an asset to future net undiscounted cash flows to be generated by the assets. This requires an estimation of the expected future cash flows from the assets.

Allowance of bad and doubtful debts.

The provisioning policy for bad and doubtful debts of the Company is based on the evaluation of collectability and aging analysis of the accounts receivables. A considerable amount of judgment is required in assessing the ultimate realization of these receivables, including the current creditworthiness and the past collection history of each debtor. If the financial conditions of these customers were to deteriorate, resulting in an impairment of their ability to make payments, additional allowance will be required.

Allowance for inventories.

Management reviews an aging analysis of inventories at each balance sheet date, and make allowance for obsolete and slow-moving inventory items identified that are no longer recoverable or suitable for use in production. The management estimates the net realizable value for finished goods and work-in-progress based primarily on the latest invoice prices and current market conditions. The Company carries out an inventory review on a product-by-product basis at each balance sheet date and makes allowances for obsolete items.

RECENT ACCOUNTING PRONOUNCEMENTS

In January 2010, the FASB issued Accounting Standards Updates (“ASU”) No. 2010-06, amending ASC Topic 820, “Measuring Liabilities at Fair Value”, to add new requirements for separate disclosures about purchases, sales, issuances, and settlements relating to Level 3 measurements. It amends ASC Topic 820 that a reporting entity should present separately information about purchases, sales, issuances, and settlements in the reconciliation for fair value measurements using significant unobservable inputs. The requirement to provide the Level 3 activity of purchases, sales, insurances and settlements on a gross basis, will be effective for fiscal years beginning after December 15, 2010, and for interim periods within those fiscal years. The adoption of this ASU did not have a material impact on the Company’s consolidated financial statements.

In April 2010, the FASB issued ASU No. 2010-13, Compensation – Stock Compensation (Topic 718) – Effect of Denominating the Exercise Price of a Share-Based Payment Award in the Currency of the Market in Which the Underling Equity Security Trades. This update provides clarification that an employee share-based payment award with an exercise price denominated in the currency of a market in which a substantial portion of the entity’s equity securities trade should not be considered to contain a condition that is not a market, performance or service condition. Therefore, the award would be classified as an equity award if it other wise qualified as equity. ASU No. 2010-13 is effective for fiscal years, and interim periods within those fiscal years, beginning on or after December 15, 2010. The adoption of this ASU did not have a material impact on the Company’s consolidated financial statements.

In December 2010, the FASB issued ASU No. 2010-29, Business Combinations (Topic 805) “Disclosure of supplementary Pro Forma Information for business combinations”, which specify that if a public entity presents comparative financial statements, the entity should disclosure revenue and earnings of the combined entity as though the business combination(s) that occurred during the current year has occurred as of the beginning of the comparable prior annual reporting period only. The amendments in this update also expand the supplemental pro forma disclosures under Topic 805 to include a description of the nature and amount of material, non-recurring pro forma adjustments directly attributable to the business combination included in the reported pro forma revenue and earnings. These amendments are effective prospectively for business combinations for which the acquisition date is on or after the beginning of the first annual reporting period beginning on or after December 15, 2010. The adoption of this ASU did not have a material impact on the Company’s consolidated financial statements.

Item 3. Quantitative and Qualitative Disclosures About Market Risk.

We are a smaller reporting company as defined by Rule 12b-2 of the Securities Exchange Act of 1934 and, as such, are not required to provide the information under this item.

Item 4. Controls and Procedures.

Evaluation of disclosure controls and procedures. We maintain "disclosure controls and procedures," as such term is defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934 (the "Exchange Act"), that are designed to ensure that information required to be disclosed by us in reports that we file or submit under the Exchange Act is recorded, processed, summarized, and reported within the time periods specified in Securities and Exchange Commission rules and forms, and that such information is accumulated and communicated to our management, including our Chief Executive Officer and Chief 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, not absolute, assurance that the objectives of the disclosure controls and procedures are met. Additionally, in designing disclosure controls and procedures, our management necessarily was required to apply its judgment in evaluating the cost-benefit relationship of possible disclosure controls and procedures. The design of any disclosure controls and procedures also is based in part upon certain assumptions about the likelihood of future events, and there can be no assurance that any design will succeed in achieving its stated goals under all potential future conditions.

As of March 31, 2011, we carried out an evaluation, under the supervision and with the participation of our Chief Executive Officer and Chief Financial Officer, of the effectiveness of the design and operation of our disclosure controls and procedures. Based on this evaluation, our Chief Executive Officer and Chief Financial Officer concluded that our disclosure controls and procedures were effective in ensuring that information required to be disclosed by us in our periodic reports is recorded, processed, summarized and reported, within the time periods specified for each report and that such information is accumulated and communicated to our management, including our principal executive and principal financial officers, or persons performing similar functions, as appropriate to allow timely decisions regarding required disclosure.

Changes in Internal Control Over Financial Reporting. There were no changes in our internal control over financial reporting for the quarterly period ended March 31, 2011 identified in connection with the evaluation required by paragraph (d) of Rule 13a-15 or Rule 15d-15 that materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.

Limitations on Controls

Management does not expect that the Company's disclosure controls and procedures or the Company's internal control over financial reporting will prevent or detect all error and fraud. Any control system, no matter how well designed and operated, is based upon certain assumptions and can provide only reasonable, not absolute, assurance that its objectives will be met. Further, no evaluation of controls can provide absolute assurance that misstatements due to error or fraud will not occur or that all control issues and instances of fraud, if any, within the Company have been detected. The Company's disclosure controls and procedures are designed to provide reasonable assurance of achieving their objectives and the Company's chief executive officer and chief financial officer have concluded that the Company's disclosure controls and procedures are effective at that reasonable assurance level.

PART II - OTHER INFORMATION

Item 1. Legal Proceedings.

From time to time, we may become involved in various lawsuits and legal proceedings which arise in the ordinary course of business. However, litigation is subject to inherent uncertainties, and an adverse result in these or other matters may arise from time to time that may harm our business.

We are not currently a party to any material legal proceedings except as described below.

On October 1, 2010, the Company received notice that on September 27, 2010, holders of an aggregate of $250,000 principal amount of promissory notes issued on February 3, 2010 (the “February 2010 Notes”) filed a complaint (the “Complaint”) in the Supreme Court of the State of New York, County of New York (the “Court”), Index No. 651595/10, against the Company seeking repayment of their respective February 2010 Notes. On May 3, 2011, these holders of February 2010 Notes filed a notice of discontinuance in the Court to voluntarily discontinue the action against the Company.

Item 1A. Risk Factors.

We are a smaller reporting company as defined by Rule 12b-2 of the Securities Exchange Act of 1934 and, as such, are not required to provide the information under this item.

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

None.

Item 3. Defaults Upon Senior Securities

None.

Item 4. (Removed and Reserved)

Item 5. Other Information

Not applicable.

Item 6. Exhibits

Exhibit No.		Description
31.1		Certification of Principal Executive Officer pursuant to 13a-14(a) under the Securities Exchange Act of 1934, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

31.2.		Certification of Principal Financial Officer pursuant to 13a-14(a) under the Securities Exchange Act of 1934, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

32.1		Certification of the Principal Executive Officer pursuant to U.S.C. Section 1350 as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

32.2		Certification of the Principal Financial Officer pursuant to U.S.C. Section 1350 as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

SIGNATURES

In accordance with the Exchange Act, the registrant caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

	CHANGDA INTERNATIONAL HOLDINGS, INC.

Date: May16, 2011		/s/ Qingran Zhu
		Qingran Zhu
		Chief Executive Officer (Principal Executive Officer)


Date: May16, 2011		/s/ Leodegario Quinto Camacho
		Leodegario Quinto Camacho
		Chief Financial Officer (Principal Financial and Accounting Officer)

Changda International Holdings, Inc. 10-Q