UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10-Q

x¨ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES

EXCHANGE ACT OF 1934

For the quarterly period ended ~~June 30,~~December 31, 2012

¨ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES

EXCHANGE ACT OF 1934

For the transition period from _______ to _______

Commission File No. 000-51824

COMPUTER GRAPHICS INTERNATIONAL INC.

(Exact name of Registrant as Specified in its Charter)

Nevada

98-0400189

(State or other Jurisdiction of

Incorporation or Organization)

(I.R.S. Employer Identification No.)

Room 01B, 02/F, Podium Building,

Guodu Golf Garden, North of Xinsha Road

Futian District, Shenzhen, 518048 People’s Republic of China

(Address of Principal Executive Offices) (Zip Code)

+ (86)-755-22211114

(Registrant’s Telephone Number, Including Area Code)

Indicate by check mark whether the registrant: (1) has filed all 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 xS No ¨£

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 x S No ¨£

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” in Rule 12b-2 of the Exchange Act.

Large Accelerated Filer ¨		Accelerated Filer ¨
Non-Accelerated Filer ¨		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 ¨ No x

As of ~~August~~February 414, ~~2012~~2013, there were outstanding [16,331,854 ~~shares~~] shares of the Registrant’s Common Stock.

PART I - FINANCIAL INFORMATION

Item 1. Financial Statements.

COMPUTER GRAPHICS INTERNATIONAL INC.

~~INDEX~~CONSOLIDATED BALANCE SHEETS

		Page
PART I – FINANCIAL INFORMATION
Item 1.	Financial Statements.	F-1
	Consolidated Balance Sheets	F-2
	Consolidated Statements of Income and Comprehensive Income	F-3
	Consolidated Statements of Cash Flows	F-4
	Consolidated Statement of Stockholders’ Equity	F-5
	Notes to Consolidated Financial Statements	F-6-F-20
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations.	2
Item 3.	Quantitative And Qualitative Disclosures About Market Risk.	9
Item 4.	Controls and Procedures.	9
PART II – OTHER INFORMATION
Item 1.	Legal Proceedings.	9
Item 1A.	Risk Factors.	10
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds.	10
Item 3.	Defaults Upon Senior Securities.	10
Item 4.	Mine Safe Disclosures.	10
Item 5.	Other Information.	10
Item 6.	Exhibits.	10
SIGNATURES		11

(Amounts in USD)

	Notes	December 31,			September 30,
		2012			2012
		(Unaudited)
ASSETS
Current Assets
Cash and cash equivalents		$	333,386		$	263,228
Accounts receivable, net of provision of $90,894 (September 30, 2012 : $91,577)			272,009			361,575
Value-added tax recoverable			54,880			35,402
Other receivables			163,175			220,572
Total Current Assets			823,450			880,777

Property and equipment, net of accumulated depreciation of $414,494 (September 30, 2012 : $350,484)	3		640,644			777,189
Rental deposits	14		40,572			40,361
Monies held by a legal firm/Deposit for acquisition of a subsidiary	13		218,216			268,393

Total non-current assets			899,432			1,085,943

Total Assets		$	1,722,882		$	1,966,720

LIABILITIES AND STOCKHOLDERS’ EQUITY

Current Liabilities
Accounts payable		$	155,909		$	13,640
Accrued expenses and other payable			397,426			497,702
Total Current Liabilities			553,335			511,342

Non-current liabilities
Amount due to a shareholder	4		1,006,551			754,582
Total Liabilities			1,559,886			1,265,924

Stockholders' Equity
Common stock, US$0.0001 par value, 900,000,000 shares authorized, 16,331,854 and 16,291,854 shares issued and outstanding at December 31, 2012 and September 30, 2012 respectively (#)	7		1,633			1,633
Additional paid-in capital (#)			1,134,291			1,129,351
Common stock issued for prepaid service	8		(251,132	)		(336,454	)
Statutory reserves	9		500,088			500,088
Accumulated other comprehensive income			256,484			247,866
Accumulated losses			(1,478,368	)		(841,688	)
Total Stockholders' Equity			162,996			700,796

Total Liabilities and Stockholders' Equity		$	1,722,882		$	1,966,720

~~PART~~(#) IReflects the 1-for-2.18 ~~FINANCIAL~~reverse ~~INFORMATION~~split of the Company's outstanding common stock effected on June 7, 2011.

~~Item~~The 1.accompanying notes ~~Financial~~are ~~Statements~~an integral part of these consolidated financial statements.

~~TABLE OF CONTENTS~~F-2

Consolidated Balance Sheets (unaudited and audited)	F-2
Consolidated Statements of Income and Comprehensive Income (unaudited)	F-3
Consolidated Statements of Cash Flows (unaudited)	F-4
Consolidated Statements of Stockholders’ Equity (unaudited)	F-5
Notes to Consolidated Financial Statements (unaudited)	F-6 - F-22

COMPUTER GRAPHICS INTERNATIONAL INC.

~~F-1~~CONSOLIDATED STATEMENTS OF OPERATION AND COMPREHENSIVE LOSS

~~COMPUTER~~FOR ~~GRAPHICS~~THE ~~INTERNATIONAL~~THREE ~~INC.~~MONTHS ENDED DECEMBER 31, 2012 AND 2011 (UNAUDITED)

~~CONSOLIDATED~~(Amounts ~~BALANCE~~in ~~SHEETS~~USD, except shares)

				June 30,			September 30,
	2012			2011
	Notes			2012			2011
Sales	$	1,085,904		$	1,952,720
				(Unaudited)			(Audited)
Cost of sales		(1,032,437	)		(842,276	)
ASSETS
Gross profit		53,467			1,110,444
Current Assets
Selling, general and administrative expenses		(688,264	)		(1,407,679	)
Cash and cash equivalents				$	30,862		$	779,132
Loss from operations		(634,797	)		(297,235	)
Accounts receivable, net of provision of $159,542 (September 30, 2011 : $Nil)					885,113			307,109
Other Income (Expense)
Value-added tax recoverable					828			5,865
Interest income		127			643
Income tax recoverable		6			188,824			-
Sundry income		8,242			-
Other receivables and deposits					137,603			45,274
Bank charges		(710	)		(1,168	)
Inventory		3			-			2,080
Exchange loss		-			(914	)
Total Current Assets					1,243,230			1,139,460
Non operation expense		(9,542	)		-
Property and equipment, net of accumulated depreciation of $313,242 (September 30, 2011 : $149,509)		3			903,672			871,051
Total other expenses		(1,883	)		(1,439	)
Rental deposits		14(2)			56,325			53,093
Loss before income taxes		(636,680	)		(298,674	)
Monies held by a legal firm		13			475,521			937,236
Income tax expense		-			(28,765	)
Deposit for acquisition of a leasehold property		14(1)			-			781,030
Net loss		(636,680	)		(327,439	)
Total non-current assets					1,435,518			2,642,410
Other comprehensive income - foreign currency translation adjustment		8,618			14,017
Total Assets				$	2,678,748		$	3,781,870
Comprehensive loss	$	(628,062	)	$	(313,422	)
LIABILITIES AND STOCKHOLDERS’ EQUITY
Weighted average common shares outstanding (*)
Current Liabilities
Basic		16,301,717			16,291,854
Accounts payable				$	6,501		$	29,291
Net loss per common share (*)
Accrued expenses and other payable					289,668			225,235
Basic	$	(0.04	)	$	(0.02	)
Provision for employee benefits		13			154,094			-
Income tax payable		6			-			263,417
Total Current Liabilities					450,263			517,943
Amount due to a shareholder		4			872,306			1,845,380
Total Liabilities					1,322,569			2,363,323
Stockholders’ Equity
Common stock, US$0.0001 par value, 900,000,000 shares authorized, 16,291,854 shares issued and outstanding at June 30, 2012 and September 30, 2011 respectively		7			1,629			1,629
Additional paid-in capital					1,124,415			1,079,649
Common stock issued for prepaid service		8			(421,776	)		(677,742	)
Statutory reserves		9			656,900			500,088
Accumulated other comprehensive income		10			258,882			219,798
(Accumulated losses)/Retained earnings					(263,871	)		295,125
Total Stockholders’ Equity					1,356,179			1,418,547
Total Liabilities and Stockholders’ Equity				$	2,678,748		$	3,781,870

~~The~~(*) ~~accompanying~~Reflects ~~notes~~the ~~are~~1-for-2.18 ~~an integral part~~reverse split of ~~these~~the ~~consolidated~~Company’s ~~financial~~outstanding ~~statements~~common stock effected on June 7, 2011.

~~F-2~~The accompanying notes are an integral part of these consolidated financial statements.

~~COMPUTER GRAPHICS INTERNATIONAL INC.~~F-3

~~CONSOLIDATED~~COMPUTER ~~STATEMENTS~~GRAPHICS OFINTERNATIONAL ~~INCOME AND COMPREHENSIVE INCOME~~INC.

~~(UNAUDITED)~~CONSOLIDATED STATEMENTS OF CASH FLOWS

	Three Months Ended						Nine Months Ended
	June 30,						June 30,
	2012			2011			2012			2011
Sales	$	1,752,329		$	2,234,219		$	4,706,083		$	8,033,040
Cost of sales		(515,276	)		(971,231	)		(2,021,575	)		(3,284,062	)
Gross profit		1,237,053			1,262,988			2,684,508			4,748,978
Selling, general and administrative expenses		(1,122,630	)		(560,189	)		(3,511,055	)		(1,180,644	)
Income/(loss) from operations		114,423			702,799			(826,547	)		3,568,334
Other income/(expenses)
Interest income		98			2,093			958			7,430
Exchange loss		-			(1,945	)		(914	)		(1,945	)
Bank charges		(1,522	)		(364	)		(3,859	)		(922	)
Total other (expenses)/income		(1,424	)		(216	)		(3,815	)		4,563
Income/(loss) before income taxes		112,999			702,583			(830,362	)		3,572,897
Income tax (expenses)/credit		(3,610	)		(132,387	)		428,178			(865,894	)
Net income/(loss)	$	109,389		$	570,196		$	(402,184	)	$	2,707,003
Weighted average common shares outstanding
Basic		16,291,854			15,983,447			16,291,854			14,971,261
Diluted		16,343,331			15,983,477			16,328,289			14,971,261
Net income/(loss) per common share
Basic	$	0.01		$	0.04		$	(0.02	)	$	0.18
Diluted	$	0.01		$	0.04		$	(0.02	)	$	0.18
Net income/(loss)	$	109,389		$	570,196		$	(402,184	)	$	2,707,003
Other comprehensive income - foreign currency translation adjustment		(207	)		59,723			39,084			99,978
Comprehensive income/(loss)	$	109,182		$	629,919		$	(363,100	)	$	2,806,981

FOR THE THREE MONTHS ENDED DECEMBER 31, 2012 AND 2011(UNAUDITED)

~~The~~(Amounts ~~accompanying~~in ~~notes are an integral part of these consolidated financial statements.~~USD)

F-3

	2012			2011

CASH FLOWS FROM OPERATING ACTIVITIES
Net loss	$	(636,680	)	$	(327,439	)
Adjustments to reconcile net loss to net cash provided by operating activities:
Amortization of prepaid post combination employee benefit		51,686			50,964
Depreciation		102,151			50,137
Share-based payment expense		90,262			100,063
Changes in operating assets and liabilities:
Monies held by legal firm		-			470,436
Notes receivable		-			(24,698	)
Accounts receivable		91,644			135,179
Value-added tax recoverable/payable		(19,334	)		(6,761	)
Amount due to a shareholder		252,014			78,667
Other receivables		58,251			17,033
Inventory		-			2,088
Accounts payable		142,494			(29,404	)
Accrued expense and other payable		(101,768	)		61,424
Income tax payable		-			28,765

Net cash provided by operating activities		30,720			606,454

CASH FLOWS FROM INVESTING ACTIVITIES
Acquisition of property and equipment		(1,546	)		(142,925	)
Disposal of property and equipment		40,291			-

Net cash provided by /(used in) investing activities		38,745			(142,925	)

Effect of exchange rate changes on cash and cash equivalents		693			6,354

Net increase in cash and cash equivalents		70,158			469,883

Cash and cash equivalents, beginning balance		263,228			779,132

Cash and cash equivalents, ending balance	$	333,386		$	1,249,015

~~COMPUTER~~The ~~GRAPHICS~~accompanying ~~INTERNATIONAL~~notes ~~INC~~are an integral part of these consolidated financial statements.

~~CONSOLIDATED STATEMENTS OF CASH FLOWS~~F-4

~~FOR~~COMPUTER ~~THE~~GRAPHICS ~~NINE~~INTERNATIONAL ~~MONTHS ENDED JUNE 30, 2012 AND 2011~~INC.

~~(UNAUDITED)~~NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

	2012			2011
CASH FLOWS FROM OPERATING ACTIVITIES
Net (loss)/income	$	(402,184	)	$	2,707,003
Adjustments to reconcile net income to net cash (used in)/ provided by operating activities :
Provision for employee benefits		154,094			-
Depreciation		161,097			52,603
Share-based payment expense		300,732			302,183
Impairment loss for accounts receivable		159,542			-
Changes in operating assets and liabilities
Monies held by a legal firm		470,436			-
Accounts receivable		(733,120	)		(30,451	)
Other receivables and deposits		(91,678	)		(13,946	)
Rental deposits		(2,450	)		-
Inventory		2,111			(2,051	)
Amount due to a shareholder		159,556			247,726
Accounts payable		(23,225	)		-
Accrued expenses and other payable		31,491			72,122
Value-added tax liability - net		34,912			(80,296	)
Income tax payable		(456,199	)		(306,550	)
Net cash (used in)/provided by operating activities		(234,885	)		2,948,343
CASH FLOWS FROM INVESTING ACTIVITIES
Refund of deposit for acquisition of a leasehold property		792,669			-
Purchase of property and equipment		(181,352	)		(572,204	)
Repayment of promissory notes		-			(2,363,401	)
Net cash provided by/(used in) investing activities		611,317			(2,935,605	)
CASH FLOWS FROM FINANCING ACTIVITIES
(Repayment to)/advance from a shareholder		(1,141,444	)		1,237,815
Net cash (used in)/provided by financing activities		(1,141,444	)		1,237,815
Effect of exchange rate changes on cash and cash equivalents		16,742			79,455
Net (decrease)/increase in cash and cash equivalents		(748,270	)		1,330,008
Cash and cash equivalents, beginning balance		779,132			956,402
Cash and cash equivalents, ending balance	$	30,862		$	2,286,410

DECEMBER 31, 2012

~~The~~(Amounts ~~accompanying~~in ~~notes are an integral part of these consolidated financial statements.~~USD)

~~F-4~~(Unaudited)

~~COMPUTER~~Note ~~GRAPHICS~~1 ~~INTERNATIONAL~~- ~~INC.~~ORGANIZATION

~~CONSOLIDATED~~Computer ~~STATEMENTS~~Graphics OFInternational ~~STOCKHOLDERS'~~Inc. (“CGII” ~~EQUITY~~or “the Company”) (formerly known as AMP Productions, Ltd.), was incorporated under the laws of the State of Nevada on February 27, 2003. China Digital Image Organization Co., Limited (“China Digital”) was incorporated in Hong Kong on August 5, 2009. China Digital holds 100% of Shenzhen Digital Image Technologies Co., Ltd. (“SDIT”), a company incorporated in Shenzhen, Peoples’ Republic of China (“PRC”), and ultimately holds 100% of Shenzhen Digital Image 3D Design and Development Co., Ltd. (“SHENZHEN 3D DESIGN”) and Guangzhou Digital Image Technologies Co., Ltd, the companies incorporated in Shenzhen and Guangzhou, PRC.

Pursuant to a series of transactions completed in October, 2010, China Digital became the holding company of SDIT and SHENZHEN 3D DESIGN (~~UNAUDITED~~the "Group Reorganization"). In October, 2010, China Digital acquired a 100% interest in SDIT (which directly holds a 100% interest in SHENZHEN 3D DESIGN) at a consideration of Chinese Renminbi Yuan ("CNY") 2,000,000 (equivalent to $283,265). Prior to and after this acquisition, both China Digital and SDIT were controlled by the same party, Hua Zeng. Hua Zeng already controlled and held a 100% interest in SHENZHEN 3D DESIGN in January, 2007. In August, 2010, SDIT acquired a 100% interest of SHENZHEN 3D DESIGN. Prior to and after this acquisition, both SDIT and SHENZHEN 3D DESIGN were controlled by Hua Zeng.

								Common							Retained
	Common		Common		Additional			Stock Issued					Other		Earnings/			Total
	Stock		Stock		Paid-in			For Prepaid			Statutory		Comprehensive		(Accumulated			Stockholders
	Outstanding		Amount *		Capital *			Service			Reserves		Income		Losses)			Equity
Balance September 30, 2010		14,462,684	$	1,446	$	283,109		$	-		$	146,429	$	127,355	$	215,423		$	773,762
Foreign currency translation adjustments		-		-		-			-			-		92,443		-			92,443
Distribution upon Group reorganization		-		-		(283,265	)		-			-		-		-			(283,265	)
Acquisition of CGII		447,276		45		(45	)		-			-		-		-			-
Issuance of promissory notes recorded as deemed distribution to stockholders		-		-		-			-			-		-		(2,368,471	)		(2,368,471	)
Issuance of common stock for prepaid service - note 8		1,341,894		134		1,023,731			(1,023,865	)		-		-		-			-
Issuance of common stock to employee - note 8		40,000		4		56,119			-			-		-		-			56,123
Record of amortization of prepaid services - note 8		-		-		-			346,123			-		-		-			346,123
Income for the year ended September 30, 2011		-		-		-			-			-		-		2,801,832			2,801,832
Transferred to statutory reserve		-		-		-			-			353,659		-		(353,659	)		-
Balance September 30, 2011		16,291,854		1,629		1,079,649		$	(677,742	)		500,088		219,798		295,125			1,418,547
Foreign currency translation adjustments		-		-		-			-			-		39,084		-			39,084
Record of amortization of prepaid services - note 8		-		-		-			255,966			-		-		-			255,966
Net loss for the nine months ended June 30, 2012		-		-		-			-			-		-		(402,184	)		(402,184	)
Recognition of share-based payments - note 8		-		-		44,766			-			-		-		-			44,766
Transferred to statutory reserve		-		-		-			-			156,812		-		(156,812	)		-
Balance June 30, 2012		16,291,854	$	1,629	$	1,124,415		$	(421,776	)	$	656,900	$	258,882	$	(263,871	)	$	1,356,179

Since China Digital, SDIT and SHENZHEN 3D DESIGN were under common control of the ultimate controlling party, Hua Zeng both before and after the completion of the Group Reorganization, the Group Reorganization has been accounted for using merger accounting. The Consolidated Financial Statements have been prepared on the basis as if China Digital had always been the holding company of SDIT and SHENZHEN 3D DESIGN and the group structure had been in existence throughout the periods ended December 31, 2012 and December 31, 2011 as defined by Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) 810, “Consolidation”.

*On ~~The~~March ~~above~~31, ~~information~~2011, ~~has~~CGII ~~been~~entered ~~restated~~into toand closed ~~reflect~~a share purchase and exchange agreement (the ~~1-for-2.18~~“Share Exchange Agreement”) with China Digital, the shareholders ~~reverse~~of ~~split~~China Digital, and Thomas E. Mills, pursuant to which CGII acquired 100% of the ~~Company'~~issued and outstanding capital stock of China Digital (the “Share Exchange”) in exchange for (i) 14,462,684 shares of CGII’s common stock, ~~effected~~representing on97% of ~~June~~the 7increased issued and outstanding stock of CGII, ~~2011~~and (ii) payment (“the Cash Component”) of $2,368,471. The Cash Component was payable in full within 12 months after the Closing.

~~The~~In ~~accompanying~~connection ~~notes~~with ~~are~~the anShare ~~integral~~Exchange, Thomas ~~part~~E. Mills sold 260,124 shares of CGII’s common stock to Truth Giver Group Limited, a company incorporated under the laws of ~~these~~the ~~consolidated~~British ~~financial~~Virgin ~~statements~~Islands and owned by Hua Zeng and Jing Wang, in exchange for an aggregate payment of $300,000.

~~F-5~~On completion of the Share Exchange, CGII acquired all of the outstanding issued capital of China Digital. For accounting and financial reporting purposes, the acquisition has been treated as a reverse acquisition of CGII by China Digital. On completion of the reverse acquisition, the prior business of CGII was abandoned and all liabilities of CGII were paid off or assumed by Thomas E. Mills, the former director of CGII. For China Digital, the reverse acquisition is accounted for as a recapitalization. Consequently, the assets and liabilities of China Digital have been brought forward at their book value and no goodwill has been recognized on the reverse acquisition of CGII. The historical financial statements prior to March 31, 2011 are those of China Digital.

~~COMPUTER~~On ~~GRAPHICS~~August ~~INTERNATIONAL~~22, ~~INC~~2012, the Company filed dissolution for Shenzhen Digital Image 3D Design and Development Co., Ltd. (“SHENZHEN 3D DESIGN”) and discontinued its operation.

~~NOTES TO CONSOLIDATED FINANCIAL STATEMENTS~~F-5

~~JUNE~~COMPUTER ~~30,~~GRAPHICS ~~2012~~INTERNATIONAL INC.

(~~UNAUDITED~~FORMERLY KNOWN AS AMP PRODUCTIONS, LTD.)

~~Note~~NOTES 1TO -CONSOLIDATED ~~ORGANIZATION~~FINANCIAL STATEMENTS

~~Computer~~DECEMBER ~~Graphics International Inc. (“CGII” or “the Company”) was incorporated under the laws of the State of Nevada on February 27~~31, 2003. China Digital Image Organization Co., Limited (“China Digital”) was incorporated in Hong Kong on August 5, 2009. China Digital holds 100% of Shenzhen Digital Image Technologies Co., Ltd. (“SDIT”), a company incorporated in Shenzhen, Peoples’ Republic of China (“PRC”), and ultimately holds 100% of Shenzhen Digital Image 3D Design & Development Co., Ltd. (“Shenzhen 3D Design”), a company also incorporated in Shenzhen, PRC.2012

~~Pursuant to a series of transactions completed in October, 2010, China Digital became the holding company of SDIT and Shenzhen 3D Design~~ (~~the~~Amounts ~~"Group Reorganization"). In October, 2010, China Digital acquired a 100% interest~~ in ~~SDIT (which directly holds a 100% interest in Shenzhen 3D Design at a consideration of CNY2,000,000 (equivalent to $283,265~~USD)). Prior to and after this acquisition, both China Digital and SDIT were controlled by the same party, Hua Zeng. Hua Zeng already controlled and held a 100% interest in Shenzhen 3D Design in January, 2007. In August, 2010, SDIT acquired a 100% interest of Shenzhen 3D Design. Prior to and after this acquisition, both SDIT and Shenzhen 3D Design were controlled by Hua Zeng.

Since China Digital, SDIT and Shenzhen 3D Design were under common control of the ultimate controlling party, Hua Zeng, both before and after the completion of the Group Reorganization, the Group Reorganization has been accounted for using merger accounting. The Consolidated Financial Statements have been prepared on the basis as if China Digital had always been the holding company of SDIT and Shenzhen 3D Design and the group structure had been in existence throughout the nine months ended June 30, 2012 and the year ended September 30, 2011 as defined by Financial Accounting Standards Board (~~“FASB”~~Unaudited) ~~Accounting Standards Codification (“ASC”) 810, “Consolidation”.~~

OnNote ~~March~~1 ~~31,~~- ~~2011,~~ORGANIZATION ~~CGII entered into and closed a share purchase and exchange agreement~~ (~~the “Share Exchange Agreement”~~CONTINUED) with China Digital, the shareholders of China Digital, and Thomas E. Mills, pursuant to which CGII acquired 100% of the issued and outstanding capital stock of China Digital (the “Share Exchange”) in exchange for (i) 14,462,684 shares of CGII’s common stock, representing 97% of the increased issued and outstanding stock of CGII, and (ii) payment (“the Cash Component”) of $2,368,471. The Cash Component was payable in full within 12 months after the closing of the Share Exchange.

InOn ~~connection~~September ~~with~~26, 2011, the ~~Share~~Company’s wholly ~~Exchange~~owned subsidiary, SDIT entered into a Letter of Intent for Share Purchase (the “Acquisition Agreement”) with ~~Thomas~~Li E.Dongxiang ~~Mills~~and ~~sold~~Zeng ~~260~~Xianguang (together,~~124~~ the “Sellers”) with respect to the shares of ~~CGII’s~~Guangzhou ~~common~~Fanyutuo ~~stock~~3D toTechnology Co., ~~Truth~~Ltd, ~~Giver~~at ~~Group~~that ~~Limited,~~time arecently formed start-up company ~~incorporated~~involved ~~under~~in ~~the~~three dimensional technology (“Guangzhou”). Pursuant ~~laws~~to the terms of the ~~British~~Acquisition ~~Virgin~~Agreement, ~~Islands~~the ~~and~~Sellers ~~owned~~agreed byto ~~Hua~~sell ~~Zeng~~all ~~and~~of ~~Jing~~the ~~Wang,~~capital stock of Guangzhou to SDIT in exchange for anCNY6,000,000 ~~aggregate~~(equivalent ~~payment~~to of $~~300~~952,~~000~~215). There is no prior relationship between the Company and its affiliates and Guangzhou and its affiliates.

OnA ~~completion~~Supplemental Letter of ~~the~~Intent ~~Share~~for ~~Exchange, CGII~~Share ~~acquired~~Purchase ~~all~~Agreement of(“Supplemental ~~the~~Agreement”) ~~outstanding~~was ~~issued~~entered ~~capital~~into ofbetween ~~China~~Li ~~Digital.~~Dongxiang ~~For accounting~~ and ~~financial~~Zeng ~~reporting~~Xianguang ~~purposes~~(together, the ~~acquisition~~ ~~has~~“Sellers”) ~~been treated as a reverse acquisition of CGII by China Digital. On completion of the reverse acquisition, the prior business of CGII was abandoned~~ and ~~all~~three ~~liabilities~~non-shareholder ofemployees ~~CGII were paid off or assumed by Thomas E. Mills, the former director~~ of ~~CGII.~~Guangzhou ~~For China~~Fanyutuo ~~Digital,~~3D ~~the~~Technology ~~reverse acquisition is accounted for as a recapitalization. Consequently, the assets~~ and ~~liabilities~~SDIT ~~of China Digital have been brought forward at their book value and no goodwill has been recognized~~ on ~~the~~September ~~reverse acquisition of CGII. The historical financial statements prior to March 31~~26, 2011 ~~are those of China Digital~~.

OnExtracts September 26, 2011, the Company’s wholly owned subsidiary, SDIT entered into a Letter of Intent for Share Purchase (the “Acquisition Agreement”) with Li Dongxiang and Zeng Xianguang (together, the “Sellers”) with respect to the ~~shares~~Supplemental ~~of Guangzhou Fanyutuo 3D Technology Co., Ltd, the then recently formed start-up company involved in three dimensional technology (“Guangzhou”). Pursuant to the terms of the Acquisition~~ Agreement~~, the Sellers agreed to sell all of the capital stock of Guangzhou to SDIT in exchange~~ ~~for CNY6,000,000 (equivalent to $937,236). There is no prior relationship between the Company and its affiliates and Guangzhou and its affiliates.~~are:

~~A Supplemental Letter of Intent for Share Purchase Agreement (“Supplemental Agreement”~~i) ~~was~~The ~~entered into between Li Dongxiang and Zeng Xianguang (together, the “~~Sellers”) and three non-shareholder employees of Guangzhou ~~Fanyutuo~~guarantee 3Dthemselves ~~Technology~~to ~~and~~work ~~SDIT~~for ~~on September 26, 2011.~~SDIT;

~~F-6~~ii) 5 working days after execution of the Supplemental Agreement, 50% of the amount of $952,215 (CNY6,000,000) shall be paid to the Sellers through the legal firm witnessing the transaction;

~~COMPUTER~~iii) ~~GRAPHICS~~5 ~~INTERNATIONAL~~working ~~INC.~~days after completion of two years employment by the Sellers and the three non-shareholder employees with SDIT, 30% of the amount of $952,215 (CNY6,000,000) shall be paid to the Sellers through the legal firm witnessing the transaction;

~~NOTES~~iv) TO5 ~~CONSOLIDATED~~working ~~FINANCIAL~~days ~~STATEMENTS~~after completion of three years employment by the Sellers and the three non-shareholder employees with SDIT, 20% of the amount $952,215 (CNY6,000,000) shall be paid to the Sellers through the legal firm witnessing the transaction;

~~JUNE~~v) 30As the Supplemental Agreement forms part and parcel of the Acquisition Agreement, ~~2012~~in accordance with the terms of the Acquisition Agreement, any dispute arising from the Agreement, both parties shall resolve by mutual negotiations or in the event of such negotiations fail, the dispute should be resolved by arbitrations or by Court Action in PRC;

~~(UNAUDITED~~vi) In the event that any one of the Sellers and the three non-shareholder employees left employment with SDIT during the three years Agreement period, the acquisition price shall not establish.

~~Note~~The 1acquisition of Guangzhou was in essence to secure the long term employment of the Sellers and the three non-shareholder ~~ORGANIZATION~~employees ~~(CONTINUED)~~to work for SDIT.

~~Extracts~~Guangzhou towas a start-up company with minimal assets and liabilities that were considered of no real value. Following the ~~Supplemental~~acquisition, ~~Agreement~~Guangzhou was placed in dormancy with no business activities undergoing. In light of the aforesaid, the management considers that the acquisition is not a business combination, as defined under ASC Topic 805, in substance and therefore the purchase consideration is accounted for as employee benefits. The employee benefits so expensed are: reported under Selling, general and administrative expenses in the Consolidated Statements of Operations and Comprehensive Loss.

~~i) The Sellers and three non~~F-~~shareholder employees of Guangzhou guarantee themselves to work for SDIT;~~6

~~ii)~~COMPUTER 5GRAPHICS ~~working~~INTERNATIONAL ~~days after execution of the Supplemental Agreement 50% of the amount of $937,236 (CNY6,000,000) shall be paid to the Sellers through the legal firm witnessing the transaction;~~INC.

~~iii)~~NOTES 5TO ~~working~~CONSOLIDATED ~~days~~FINANCIAL after completion of two years employment by the Sellers and the three non-shareholder employees with SDIT, 30% of the amount of $937,236 (CNY6,000,000) shall be paid to the Sellers through the legal firm witnessing the transaction;STATEMENTS

~~iv)~~DECEMBER ~~5 working days after completion of three years employment by the Sellers and the three non-shareholder employees with SDIT~~31, ~~20% of the amount $937,236 (CNY6,000,000) shall be paid to the Sellers through the legal firm witnessing the transaction;~~2012

v)(Amounts ~~As the Supplemental Agreement forms part and parcel of the Acquisition Agreement,~~ in accordance with the terms of the Acquisition Agreement, any dispute arising from the Agreement, both parties shall resolve by mutual negotiations or in the event of such negotiations fail, the dispute should be resolved by arbitrations or by Court Action in PRC;USD)

vi(Unaudited) ~~In the event that any one of the Sellers and the three non-shareholder employees left employment with SDIT during the three years Agreement period, the acquisition price shall not establish.~~

~~The~~Note ~~acquisition~~1 ~~of Guangzhou was in essence to secure the long term employment of the Sellers and the three non~~-~~shareholder~~ ~~employees~~ORGANIZATION to(CONTINUED) ~~work for SDIT.~~

~~Guangzhou~~The ~~was~~Company aoperates ~~start-up~~in ~~company~~a ~~with~~single ~~minimal~~reportable ~~assets~~segment. ~~and~~The ~~liabilities~~principal ~~that~~activities ~~were considered~~ of ~~no real value. Following~~ the ~~acquisition,~~Company ~~Guangzhou~~are ~~was~~engaged ~~placed~~ in ~~dormancy~~sales ~~with no~~in ~~business~~majority ~~activities undergoing. In light~~ of ~~the~~software ~~aforesaid,~~promotion ~~the~~related ~~management~~products ~~considers~~to ~~that the acquisition is not a business combination,~~customers ~~as defined under ASC Topic 805,~~ in ~~substance and therefore~~ the ~~purchase~~nature ~~consideration~~of isdemonstration ~~accounted~~video ~~for as employee benefits. The employee benefits so expensed are reported under Selling, general~~ and ~~administrative~~motion ~~expenses~~pictures inusing the ~~Consolidated~~application ~~Statement~~ of ~~Income~~ ~~and~~three-dimension ~~Comprehensive~~vision ~~Income as detailed in note 3~~technology.

~~The~~These ~~Company~~consolidated ~~operates~~financial ~~in a single reportable~~statements ~~segment.~~present ~~The principal activities of~~ the Company ~~are engaged in sales in majority of software promotion related products to customers in the nature of demonstration videos~~ and ~~motion~~its ~~pictures~~subsidiaries ~~using~~on ~~the~~a ~~application~~historical ~~of three-dimension vision technology~~basis.

Note 2 - GOING CONCERN

The accompanying unaudited Consolidated Financial Statements have been prepared assuming the Company will continue as a going concern. As shown in the accompanying Consolidated Financial Statements, the Company incurred a net loss of $~~402~~636,~~184~~680 for ~~the~~three ~~nine~~ months ended ~~June~~December 3031, 2012 and had accumulated ~~losses~~ losses of $~~263~~1,~~871~~478,368 at ~~June~~December 3031, 2012. These create an uncertainty about the Company’s ability to continue as a going concern. In this regard, the management decided to close some less profitable branches and laid off excessive staff. Furthermore, the Company’s Chairman has issued a letter of undertaking that he will provide financial support to the Company (Note 15). The Consolidated Financial Statements do not include any adjustments that might be necessary if the Company is unable to continue as a going concern.

Note 3 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

These Unaudited Consolidated Financial Statements were prepared by the Company pursuant to the rules and regulations of the SEC. The information furnished herein reflects all adjustments (consisting of normal recurring accruals and adjustments) that are, in the opinion of management, necessary to present fairly the operating results for the respective periods. Certain information and footnote disclosures normally present in Annual Consolidated Financial Statements prepared in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”) were omitted pursuant to such rules and regulations. These Unaudited Consolidated Financial Statements should be read in conjunction with the Audited Consolidated Financial Statements and footnotes for the year ended September 30, ~~2011~~2012. The results for the ~~nine~~three months ended ~~June~~December 3031, 2012, are not necessary indicative of the results to be expected for the full year ending September 30, ~~2012~~2013.

~~F-7~~Basis of Presentation

~~COMPUTER~~The ~~GRAPHICS~~accompanying ~~INTERNATIONAL~~Consolidated ~~INC~~Financial Statements have been prepared in conformity with accounting principles generally accepted in the United States of America and represent the historical results of the consolidated group. The Company adopted the new accounting guidance (“Codification”) on July 1, 2009. For three months ended December 31, 2012, all reference for periods subsequent to July 1, 2009 are based on the codification. The Company's functional currency is the Chinese Renminbi; however the accompanying Consolidated Financial Statements have been translated and presented in United States Dollars.

~~NOTES~~Principles TOof ~~CONSOLIDATED FINANCIAL STATEMENTS~~Consolidation

~~JUNE~~For ~~30,~~Group ~~2012~~Reorganization under Common Control

~~(UNAUDITED)~~The Consolidated Financial Statements incorporate the financial statement items of the combining entities or businesses in which the common control combination occurs as if they had been combined from the date when the combining entities or businesses first came under the control of the controlling party.

~~Note~~The 3net -assets ~~SUMMARY~~of OFthe ~~SIGNIFICANT~~combining ~~ACCOUNTING~~entities or ~~POLICIES~~businesses ~~(CONTINUED)~~are combined using the existing book values from the controlling party’s perspective. No amount is recognized in respect of goodwill or excess of acquirer’s interest in the net fair value of acquiree’s identifiable assets, liabilities and contingent liabilities over cost at the time of common control combination, to the extent of the continuation of the controlling party’s interest.

~~These Consolidated Financial Statements present the Company and its subsidiaries on a historical basis.~~F-7

~~Basis~~COMPUTER ofGRAPHICS ~~Presentation~~INTERNATIONAL INC.

~~The~~NOTES ~~accompanying~~TO ~~Consolidated~~CONSOLIDATED ~~Financial Statements~~FINANCIAL have been prepared in conformity with accounting principles generally accepted in the United States of America. The Company adopted the new accounting guidance (“Codification”) on July 1, 2009. For the nine months ended June 30, 2012, all reference for periods subsequent to July 1, 2009 are based on the Codification. The Company's functional currency is the Chinese Renminbi; however the accompanying Consolidated Financial Statements have been translated and presented in United States Dollars.STATEMENTS

~~Principles~~DECEMBER of31, ~~Consolidation~~2012

~~For~~(Amounts ~~Group~~in ~~Reorganization under Common Control~~USD)

The Consolidated Financial Statements incorporate the financial statement items of the combining entities or businesses in which the common control combination occurs as if they had been combined from the date when the combining entities or businesses first came under the control of the controlling party.(Unaudited)

The ~~net~~Consolidated ~~assets~~Statements of ~~the combining entities~~Operations orand ~~businesses~~Comprehensive ~~are~~Loss ~~combined~~include ~~using~~ the ~~existing~~results ~~book~~of ~~values~~each ~~from~~of the ~~controlling~~combining ~~party’s~~entities ~~perspective.~~or Nobusinesses ~~amount~~from isthe ~~recognized in~~earliest ~~respect~~date ofpresented ~~goodwill~~ or since ~~excess of~~ the ~~acquirer’s~~date ~~interest~~when in the ~~net~~combining ~~fair~~entities ~~value~~or ofbusinesses ~~the~~first ~~acquiree’s~~came ~~identifiable~~under ~~assets, liabilities and contingent liabilities over cost at the time of~~ common control ~~combination~~, towhere ~~the~~this ~~extent~~is ofa ~~the~~shorter ~~continuation of the controlling party’s interest~~period.

~~The~~A ~~Consolidated~~business ~~Statements~~combination ofinvolving ~~Income and~~entities ~~Comprehensive~~or ~~Income~~businesses ~~include~~under ~~the~~common ~~results~~control ofis ~~each~~a business combination in which all of the combining entities or businesses ~~from~~are ~~the~~ultimately controlled ~~earliest~~by ~~date~~the ~~presented~~same party or ~~since the~~parties ~~date~~both ~~when~~before and after the ~~combining~~business ~~entities~~combination, orand ~~businesses~~that ~~first~~control ~~came~~is ~~under~~not transitory. Such business combinations are referred to as common control, ~~where~~combinations ~~this~~which is ain ~~shorter~~line ~~period~~with U.S. GAAP.

AFor ~~business~~Reverse combination involving entities or businesses under common control is a business combination in which all of the combining entities or businesses are ultimately controlled by the same party or parties both before and after the business combination, and that control is not transitory. Such business combinations are referred to as common control combinations, which is in line with U.S. GAAP.Acquisition

~~For~~The ~~Reverse~~Consolidated ~~Acquisition~~Financial Statements include the accounts of the Company and its subsidiaries. All inter-company accounts, transactions and profits have been eliminated in consolidation.

~~The~~Employee ~~Consolidated Financial Statements include the amounts of the Company and its subsidiaries. All inter-company accounts, transactions and profits have been eliminated in consolidation.~~Benefits

~~Employee~~In ~~Benefits~~respect of the Company’s acquisition of a subsidiary, Guangzhou as referred to in note 1, management considers that the amount of acquisition price of $952,215 (CNY6,000,000), should be accounted for as employee benefits under Selling, general and administrative expenses in the Consolidated Statement of Income and Comprehensive Income on the following basis :-

Ini) ~~respect~~50% of the ~~Company’s~~amount ~~acquisition of~~$952,215 ai.e. ~~subsidiary~~$476,107 ~~Guangzhou~~(CNY3,000,000) aspaid ~~referred~~ to inthe ~~note~~Sellers 1,5 ~~management~~working ~~considers~~days ~~that~~after execution of the ~~amount~~Supplemental Agreement was in the nature of ~~acquisition~~inducement ~~price~~fee for securing the employment of ~~$937,236~~the ~~(CNY6,000,000),~~ Sellers and the three non-shareholder employees. The payment should be accounted for as employee benefits ~~under Selling, general~~ and ~~administrative~~charged ~~expenses~~to in the Consolidated Statement of Income and Comprehensive Income onupon ~~the following basis:~~payment.

iii) 50% of the amount $~~937~~952,~~236~~215 i.e. $~~471~~476,~~350~~107 (CNY3,000,000) ~~paid~~will continue to ~~the~~be ~~Sellers~~held 5under ~~working~~escrow ~~days~~as ~~after~~monies ~~execution~~held ofby ~~the~~a ~~Supplemental~~legal ~~Agreement~~firm ~~was~~for inmeeting ~~the~~future ~~nature~~contingent ofpayment ~~inducement~~under ~~fee for securing~~ the ~~employment~~terms of ~~the Sellers and the three non-shareholder employees. The~~ payment ~~should be accounted for~~ as ~~employee~~set ~~benefits~~out ~~and~~in ~~charged~~note to1 ~~the Consolidated Statement of Income and Comprehensive Income upon payment.~~:

ii$285,664 (CNY1,800,000) ~~50%~~[September 30, of2011 ~~the~~: ~~amount~~ $~~937~~281,~~236~~171 ~~i.e. $471,350~~ (~~CNY3~~CNY1,~~000~~800,000)] ~~will~~is ~~continue~~payable to bethe ~~held~~Sellers ~~under~~on ~~escrow~~completion asof ~~monies~~the ~~held~~two years employment by athe ~~legal~~Sellers ~~firm~~and ~~for~~the three ~~meeting~~non-shareholder ~~future~~employees with SDIT. This contingent payment ~~under~~will ~~the~~therefore ~~terms~~be ofexpensed ~~payment~~in asa ~~set~~systematic ~~out~~basis inover ~~note~~the 1period of :-two years commencing from September 26, 2011.

FThe remaining amount of $190,443 (CNY1,200,000) [September 30, 2011: $187,447 (CNY1,200,000)] is payable to the Sellers on completion of the three years employment by the Sellers and the three non-8shareholder employees with SDIT. This contingent payment will therefore be expensed in a systematic basis over the period of three years commencing from September 26, 2011.

~~COMPUTER~~Pursuant ~~GRAPHICS~~to ~~INTERNATIONAL~~a ~~INC~~letter of confirmation dated February 10, 2012 executed by the two Selling shareholders, should any of the Sellers and the three non-shareholder employees cease employment with SDIT before the expiry of the three-years period, the balance consideration of CNY3,000,000 will be reduced by CNY600,000 for any one of the Sellers and the three non-shareholder employees each.

~~NOTES TO CONSOLIDATED FINANCIAL STATEMENTS~~F-8

~~JUNE~~COMPUTER ~~30,~~GRAPHICS ~~2012~~INTERNATIONAL INC.

~~(UNAUDITED)~~NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

~~Note~~DECEMBER 331, ~~- SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)~~2012

~~$282,810~~ (~~CNY1,800,000)~~Amounts (September 30, 2011 : $281,171 (CNY1,800,000) is payable to the Sellers on completion of the two years employment by the Sellers and the three non-shareholder employees with SDIT. This contingent payment will therefore be expensed in ~~a systematic basis over the period of two years commencing from September 26, 2011.~~USD)

~~The remaining amount of $188,540~~ (~~CNY1,200,000~~Unaudited) (September 30, 2011 : $187,447 (CNY1,200,000) is payable to the Sellers on completion of the three years employment by the Sellers and the three non-shareholder employees with SDIT. This contingent payment will therefore be expensed in a systematic basis over the period of three years commencing from September 26, 2011.

~~Pursuant~~Note to3 ~~a letter of confirmation dated 10 February, 2012 executed by the two Selling shareholders, should any of the Sellers and the three non~~-~~shareholder~~ ~~employees~~SUMMARY ~~cease employment~~OF ~~with~~SIGNIFICANT ~~SDIT~~ACCOUNTING ~~before~~POLICIES ~~the expiry of the three-years period, the balance consideration of CNY3,000,000 will be reduced by CNY600,000 for any one of the Sellers and the three non-shareholder employees each.~~(CONTINUED)

~~Translation~~Use ~~Adjustment~~of Estimates

AsThe ofpreparation ~~June 30, 2012 and September 30, 2011, the accounts~~ of ~~the Company were maintained, and its~~ financial statements ~~were expressed, in Chinese Yuan Renminbi (“CNY”).~~ ~~Such financial statements were translated into U.S. Dollars (“USD”)~~ in ~~accordance~~conformity with ~~Statement~~generally ofaccepted ~~Financial~~accounting ~~Accounting Standards~~principles ~~(SFAS)~~requires ~~No.~~management ~~52,~~to ~~“Foreign~~make ~~Currency~~estimates ~~Translation”,~~and ~~included~~assumptions inthat ~~the~~affect ~~Codification as ASC830, Foreign Currency Matters,~~the ~~with~~reported ~~the~~amounts ~~CNY~~of asassets ~~the~~and ~~functional~~liabilities ~~currency.~~and ~~According~~disclosure toof ~~the~~contingent ~~Codification, all~~ assets and liabilities ~~were translated~~ at the ~~current exchange~~date ~~rate,~~of ~~stockholders’ equity is translated at~~ the ~~historical~~financial ~~rates~~ statements and ~~income statement items are translated at~~ the ~~average~~ ~~exchange rate for the period. The resulting translation adjustments are~~ reported ~~under~~amounts ~~other~~of ~~comprehensive~~revenues ~~income~~and inexpenses ~~accordance with~~during the ~~Comprehensive~~reporting ~~Income Topic of the Codification, as a component of stockholders’ equity~~period. ~~Transaction~~Actual ~~gains~~results ~~and~~could ~~losses are~~differ ~~reflected~~from inthose ~~the income statement~~estimates.

~~Use~~Comprehensive ofLoss ~~Estimates~~

The ~~preparation~~Company ofuses ~~financial~~SFAS ~~statements~~130 “Reporting Comprehensive Income” (codified in ~~conformity~~FASB ~~with~~ASC ~~generally~~Topic ~~accepted~~220). ~~accounting~~Comprehensive ~~principles~~loss ~~requires~~is ~~management~~comprised toof ~~make~~net ~~estimates~~loss and ~~assumptions~~all ~~that~~changes ~~affect~~to the ~~reported~~statements ~~amounts~~ of ~~assets~~stockholders’ ~~and~~equity, ~~liabilities~~except ~~and~~those ~~disclosure~~due ofto ~~contingent~~investments ~~assets~~by ~~and~~stockholders, ~~liabilities~~changes atin ~~the~~paid-in ~~date~~capital ofand ~~the~~distributions to ~~financial~~stockholders. ~~statements and~~Comprehensive loss for the ~~reported~~three ~~amounts~~months ofperiods ~~revenues~~ended ~~and~~December ~~expenses~~31, ~~during~~2012 and ~~the~~2011 ~~reporting~~included ~~period.~~net ~~Actual~~loss ~~results~~and ~~could~~foreign ~~differ~~currency ~~from~~translation ~~those estimates~~adjustments.

~~Comprehensive~~Risks ~~Income~~and Uncertainties

The Company’s ~~uses~~operations ~~SFAS~~are ~~130 “Reporting~~carried ~~Comprehensive~~out ~~Income”~~in ~~(codified~~the inPeople's ~~FASB~~Republic ~~ASC~~of ~~Topic~~China ~~220~~("PRC"). ~~Comprehensive~~Accordingly, ~~income~~the isCompany’s ~~comprised~~business, offinancial ~~net~~condition ~~income~~ and ~~all~~results of ~~changes~~operations ~~to the~~may ~~statements~~be ofinfluenced ~~stockholders’~~by ~~equity~~the political, ~~except~~economic ~~those~~and ~~due~~legal toenvironments ~~investments~~in bythe ~~stockholders~~PRC, ~~changes~~and inby ~~paid-in~~the ~~capital~~general ~~and~~state ~~distributions to~~of ~~stockholders~~the PRC’s economy. ~~Comprehensive~~The ~~income~~Company’s ~~for~~business ~~the~~may ~~nine~~be ~~months~~influenced ~~and~~by ~~three~~changes ~~months~~in ~~ended~~governmental ~~June~~policies 30with respect to laws and regulations, anti-inflationary ~~2012~~measures, currency conversion and ~~2011~~remittance ~~included~~abroad, ~~net~~and ~~income~~rates and ~~foreign~~ ~~currency~~methods ~~translation~~of ~~adjustments~~taxation, among other things.

~~F-9~~The Company is subject to substantial risks from, among other things, intense competition associated with the industry in general, other risks associated with financing, liquidity requirements, rapidly changing customer requirements, limited operating history, foreign currency exchange rates and the volatility of public markets.

~~COMPUTER GRAPHICS INTERNATIONAL INC.~~Contingencies

~~NOTES~~Certain TOconditions ~~CONSOLIDATED~~may ~~FINANCIAL~~exist ~~STATEMENTS~~as of the date the financial statements are issued, which may result in a loss to the Company but which will only be resolved when one or more future events occur or fail to occur. The Company’s management and legal counsel assess such contingent liabilities, and such assessment inherently involves an exercise of judgment. In assessing loss contingencies related to legal proceedings that are pending against the Company or unasserted claims that may result in such proceedings, the Company’s legal counsel evaluates the perceived merits of any legal proceedings or unasserted claims as well as the perceived merits of the amount of relief sought or expected to be sought. There were no contingencies of this type December 31, 2012 and September 30, 2012.

~~JUNE~~If the assessment of a contingency indicates that it is probable that a material loss has been incurred and the amount of the liability can be estimated, then the estimated liability would be accrued in the Company’s financial statements. If the assessment indicates that a potential material loss contingency is not probable but is reasonably possible, or is probable but cannot be estimated, then the nature of the contingent liability, together with an estimate of the range of possible loss if determinable and material would be disclosed. There were no contingencies of this type as of December 31, 2012 and September 30, 2012.

~~(UNAUDITED)~~Loss contingencies considered to be remote by management are generally not disclosed unless they involve guarantees, in which case the guarantee would be disclosed.

~~Note 3~~ F- ~~SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)~~9

~~Risks~~COMPUTER ~~and~~GRAPHICS ~~Uncertainties~~INTERNATIONAL INC.

~~The~~NOTES ~~Company’s~~TO ~~operations~~CONSOLIDATED ~~are~~FINANCIAL carried out in the PRC. Accordingly, the Company’s business, financial condition and results of operations may be influenced by the political, economic and legal environments in the PRC, and by the general state of the PRC’s economy. The Company’s business may be influenced by changes in governmental policies with respect to laws and regulations, anti-inflationary measures, currency conversion and remittance abroad, and rates and methods of taxation, among other things.STATEMENTS

~~The~~DECEMBER ~~Company is subject to substantial risks from~~31, among other things, intense competition associated with the industry in general, other risks associated with financing, liquidity requirements, rapidly changing customer requirements, limited operating history, foreign currency exchange rates and the volatility of public markets.2012

~~Contingencies~~(Amounts in USD)

Certain conditions may exist as of the date the financial statements are issued, which may result in a loss to the Company but which will only be resolved when one or more future events occur or fail to occur. The Company’s management and legal counsel assess such contingent liabilities, and such assessment inherently involves an exercise of judgment. In assessing loss contingencies related to legal proceedings that are pending against the Company or unasserted claims that may result in such proceedings, the Company’s legal counsel evaluates the perceived merits of any legal proceedings or unasserted claims as well as the perceived merits of the amount of relief sought or expected to be sought. There were no contingencies of this type as of June 30, 2012 and September 30, 2011.(Unaudited)

IfNote ~~the~~3 ~~assessment~~- ofSUMMARY aOF ~~contingency~~SIGNIFICANT ~~indicates that~~ACCOUNTING itPOLICIES is probable that a material loss has been incurred and the amount of the liability can be estimated, then the estimated liability would be accrued in the Company’s financial statements. If the assessment indicates that a potential material loss contingency is not probable but is reasonably possible, or is probable but cannot be estimated, then the nature of the contingent liability, together with an estimate of the range of possible loss if determinable and material would be disclosed. There were no contingencies of this type as of June 30, 2012 and September 30, 2011.(CONTINUED)

~~Loss~~Cash ~~contingencies~~and ~~considered~~Cash toEquivalents ~~be remote by management are generally not disclosed unless they involve guarantees, in which case the guarantee would be disclosed.~~

Cash and ~~Cash~~cash ~~Equivalents~~equivalents include cash in hand and cash in time deposits, certificates of deposit and all highly liquid debt instruments with original maturities of three months or less.

~~Cash~~Accounts ~~and cash equivalents include cash in hand and cash in time deposits, certificates of deposit and all highly liquid debt instruments with original maturities of three months or less.~~Receivable

~~Accounts~~The ~~Receivable~~Company maintains reserves for potential credit losses on accounts receivable. Management reviews the composition of accounts receivable and analyzes historical bad debts, customer concentrations, customer credit worthiness, current economic trends and changes in customer payment patterns to evaluate the adequacy of these reserves. Reserves are recorded based on the Company’s historical collection history. There was $90,894 and $91,577 allowance for doubtful accounts as of December 31, 2012 and September 30, 2012.

The Company maintains reserves for potential credit losses on accounts receivable. Management reviews the composition of accounts receivable and analyzes historical bad debts, customer concentrations, customer credit worthiness, current economic trends and changes in customer payment patterns to evaluate the adequacy of these reserves. Reserves are recorded based on the Company’s historical collection history. Allowances for doubtful accounts as of June 30, 2012 and September 30, 2011 were $159,542 and $Nil, respectively.Inventories

~~Inventories~~The Company engages in sales in majority of software promotion related products to customers in the nature of demonstration video and motion pictures using the application of three dimension vision technology and in addition the Company also sourced hardware as part of the production project, procured for customers. The Company normally does not hold inventory as production are made when customized orders are placed by customers.

~~The~~Property ~~Company engages in sales in majority of software promotion related products to customers in the nature of demonstration video~~ and motion pictures using the application of three dimension vision technology and in addition the Company also sourced hardware as part of the production project, procured for customers. The Company normally does not hold inventory, as productions are made when customized orders are placed by customers.Equipment

FProperty and equipment are stated at cost. Expenditures for maintenance and repairs are charged to earnings as incurred; additions, renewals and betterments are capitalized. When property and equipment are retired or otherwise disposed of, the related cost and accumulated depreciation are removed from the respective accounts, and any gain or loss is included in operations. Depreciation of property and equipment is provided using the straight-10line method for substantially all assets with estimated lives of:

COMPUTER GRAPHICS INTERNATIONAL INC.

Furniture and fixture	5 years
Leasehold improvement	5 years
Motor vehicles	10 years
Office equipment	5 years

~~NOTES TO CONSOLIDATED FINANCIAL STATEMENTS~~F-10

~~JUNE~~COMPUTER ~~30,~~GRAPHICS ~~2012~~INTERNATIONAL INC.

~~(UNAUDITED)~~NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

~~Note~~DECEMBER 331, ~~- SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)~~2012

~~At June 30, 2012, the Company did not have inventory of hardware acquired for customers that had not yet been delivered to the customers~~ (~~September~~Amounts ~~30, 2011 : hardware were acquired for a customer that had not yet been delivered to that customer~~ in ~~the amount of $2,080 that was valued at the lower of cost or market. Costs related to the cost of procurement of hardware for customer were capitalized as incurred~~USD).

~~Property and Equipment~~(Unaudited)

~~Property~~Note ~~and~~3 equipment are stated at cost. Expenditures for maintenance and repairs are charged to earnings as incurred; additions, renewals and betterments are capitalized. When property and equipment are retired or otherwise disposed of, the related cost and accumulated depreciation are removed from the respective accounts, and any gain or loss is included in operations. Depreciation of property and equipment is provided using the straight-~~line~~ ~~method~~SUMMARY ~~for~~OF ~~substantially~~SIGNIFICANT ~~all~~ACCOUNTING ~~assets~~POLICIES ~~with estimated lives of:~~(CONTINUED)

Furniture and fixtures	5 years
Leasehold improvement	5 years
Motor vehicles	10 years
Office equipment	5 years

Property and Equipment (continued)

As of ~~June~~December 3031, 2012 and September 30, ~~2011~~2012, Property and ~~Equipment~~ Equipment consist of the following:

	06/30/2012			09/30/2011
	December 31, 2012			September 30, 2012
Furniture and fixtures	$	161,184		$	113,422
Furniture and fixture	$	132,458		$	148,845
Leasehold improvement		~~475~~476,~~521~~107			~~468~~473,~~619~~634
Motor vehicles		4044,~~058~~956			3944,~~476~~722
Office equipment		~~540~~401,~~151~~617			~~399~~460,~~043~~472
Total	$	1,~~216~~055,~~914~~138		$	1,~~020~~127,~~560~~673
Accumulated depreciation		(~~313~~414,~~242~~494	)		(~~149~~350,~~509~~484	)
	$	~~903~~640,~~672~~644		$	~~871~~777,~~051~~189

Depreciation expense for the ~~nine~~three months ended ~~June~~December 3031, 2012 and ~~2011~~December ~~was~~31, 2011were $~~161~~102,~~097~~151 and $5250,~~603~~137, respectively.

~~Depreciation~~For ~~expense for~~ the three months ended ~~June~~December 3031, 2012 and 2011, ~~was~~total fixed assets of $55202,~~581~~954 and $~~33,475,~~Nil ~~respectively~~were disposed.

Share-Based ~~Payment~~payment

Share-based payment is accounted for based on the FASB Statement No. 123R, “Share-Based Payment, an Amendment of FASB Statement No. 123” (“FAS No. 123R”) and Emerging Issue Task Force 96-18, “Accounting for Equity Instruments that are Issued to Other than Employees for Acquiring, or in Conjunction with Selling, Goods or Services” (“EITF 96-18”) and Emerging Issue Task Force 00-18 “Accounting Recognition for Certain Transactions involving Equity Instruments Granted to Other Than Employees” (“EITF 00-18”) (codified in FASB ASC Topic 505-50). The Company recognized in the ~~Consolidated~~consolidated ~~Statement~~statement of ~~Income~~income and ~~Comprehensive~~comprehensive ~~Income~~income the fair value of shares, stock options and other equity-based compensation issued to non-employees when the service provided by non-employees is completed, or the date when the shares were issued (provided that the shares issued are fully vested and not subject to forfeiture) with the prepaid services presented as contra equity. This is in accordance with the consensus reached in EITF 00-18 that in the event that a note or receivable is acquired in exchange for the fully vested, nonforfeitable equity instruments, the note or receivable should be displayed as contra-equity by the grantor. The Company as grantor interprets that the term “receivable” also embraces prepaid service fees. For employees, the Company recognized in the ~~Consolidated~~consolidated ~~Statement~~statement of ~~Income~~income and ~~Comprehensive~~comprehensive ~~Income~~income the grant date fair value of the shares, stock options and other equity-based compensation over the requisite service period.

FIn the case of stock-11based compensation expense on stocks, options and other equity based compensation to employees awarded by different tranches over the requisition service period, the expense is accounted for using the “graded vesting method”. Under the “graded vesting method”, each of the shares in different tranches would be accounted for as a separate award and the grant date fair value of each tranche would be recognized over the requisite service period for that tranche. The requisite service period for each of the tranches would begin on the grant date and ends on the date that the tranche is earned.

~~COMPUTER GRAPHICS INTERNATIONAL INC.~~F-11

~~NOTES~~COMPUTER TOGRAPHICS ~~CONSOLIDATED~~INTERNATIONAL ~~FINANCIAL STATEMENTS~~INC.

~~JUNE~~NOTES ~~30,~~TO ~~2012~~CONSOLIDATED FINANCIAL STATEMENTS

~~(UNAUDITED)~~DECEMBER 31, 2012

~~Note~~(Amounts 3in ~~- SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED~~USD)

In the case of stock-based compensation expense on stocks, options and other equity based compensation to employees awarded by different tranches over the requisition service period, the expense is accounted for using the “graded vesting method”. Under the “graded vesting method”, each of the shares in different tranches would be accounted for as a separate award and the grant date fair value of each tranche would be recognized over the requisite service period for that tranche. The requisite service period for each of the tranches would begin on the grant date and ends on the date that the tranche is earned.(Unaudited)

~~Long~~Note 3 -~~Lived~~ ~~Assets~~SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

The Company adopted the Property, Plant and Equipment Topic of the Codification, which addresses financial accounting and reporting for the impairment or disposal of long-lived assets and supersedes previous accounting guidance, “Accounting for the Impairment of Long-Lived Assets and for Long-Lived Assets to be Disposed Of,” and “Reporting the Results of Operations for a Disposal of a Segment of a Business.” The Company periodically evaluates the carrying value of long-lived assets to be held and used, which requires impairment losses to be recorded on long-lived assets used in operations when indicators of impairment are present and the undiscounted cash flows estimated to be generated by those assets are less than the assets carrying amounts. In that event, a loss is recognized based on the amount by which the carrying amount exceeds the fair market value of the long-lived assets. Loss on long-lived assets to be disposed of is determined in a similar manner, except that fair market values are reduced for the cost of disposal. Based on its review, the Company believes that, as of June 30, 2012, there were no impairments of its long-lived assets.

~~Fair~~The ~~Value~~Company adopted the Property, Plant and Equipment Topic of ~~Financial~~the ~~Instruments~~Codification, which addresses financial accounting and reporting for the impairment or disposal of long-lived assets and supersedes previous accounting guidance, “Accounting for the Impairment of Long-Lived Assets and for Long-Lived Assets to be Disposed Of,” and “Reporting the Results of Operations for a Disposal of a Segment of a Business.” The Company periodically evaluates the carrying value of long-lived assets to be held and used, which requires impairment losses to be recorded on long-lived assets used in operations when indicators of impairment are present and the undiscounted cash flows estimated to be generated by those assets are less than the assets carrying amounts. In that event, a loss is recognized based on the amount by which the carrying amount exceeds the fair market value of the long-lived assets. Loss on long-lived assets to be disposed of is determined in a similar manner, except that fair market values are reduced for the cost of disposal. Based on its review, the Company believes that, as of December 31, 2012 and September 30, 2012, there were no impairments of its long-lived assets.

~~The~~Fair ~~Financial~~Value ~~Instrument Topic~~ of ~~the~~Financial ~~Codification requires~~Instruments that the Company disclose estimated fair values of financial instruments. The carrying amounts reported in the Consolidated Balance Sheet for current assets and current liabilities qualifying as financial instruments are a reasonable estimate of fair value.

~~Revenue~~The ~~Recognition~~Financial Instrument Topic of the Codification requires that the Company disclose estimated fair values of financial instruments. The carrying amounts reported in the Balance Sheet for current assets and current liabilities qualifying as financial instruments are a reasonable estimate of fair value.

~~The~~Revenue Company’s revenue recognition policies are in compliance with SEC Staff Accounting Bulletin (“SAB”) 104 (codified in FASB ASC Topic 605). Sales revenue is recognized at the completion of delivery to customers when a formal arrangement exists, the price is fixed or determinable, no other significant obligations of the Company exist and collectability is reasonably assured at the date of completion of delivery. Payments received before all of the relevant criteria for revenue recognition are satisfied are recorded as unearned revenue.Recognition

~~Advertising~~The Company’s revenue recognition policies are in compliance with SEC Staff Accounting bulletin (“SAB”) 104 (codified in FASB ASC Topic 605). Sales revenue is recognized at the completion of delivery to customers when a formal arrangement exists, the price is fixed or determinable, no other significant obligations of the Company exist and collectability is reasonably assured at the date of completion of delivery. Payments received before all of the relevant criteria for revenue recognition are satisfied are recorded as unearned revenue.

Advertising expenses consist primarily of costs of promotion for corporate image and product marketing and costs of direct advertising. The Company expenses all advertising costs as incurred. For the nine months ended June 30, 2012 and 2011, the Company incurred advertising expenses of $39,472 and $585, respectively.

Advertising expenses consist primarily of costs of promotion for corporate image and product marketing and costs of direct advertising. The Company expenses all advertising costs as incurred. For the three months ended ~~June~~December 3031, 2012 and 2011, the Company incurred advertising expenses of $~~25,981~~Nil and $~~585~~ 10,387 respectively.

Shipping and Handling Fees

The Company follows FASB ASC Topic 605-45, “Handling Costs, Shipping Costs”. The Company does not charge its customers for shipping and handling. The Company classifies shipping and handling fees as part of selling, general and administrative expenses. ~~For~~During the ~~nine~~three months ended ~~June 30,~~December 31, 2012 and 2011, the Company incurred shipping and handling fees and costs of $122,~~466~~247 and $3,~~642,~~702 respectively.

F-12

COMPUTER GRAPHICS INTERNATIONAL INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

~~JUNE~~DECEMBER 3031, 2012

(~~UNAUDITED~~Amounts in USD)

~~Note 3 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES~~ (~~CONTINUED~~Unaudited)

~~For~~Note ~~the~~3 ~~three~~- ~~months~~SUMMARY ~~ended~~OF ~~June~~SIGNIFICANT ~~30,~~ACCOUNTING ~~2012 and~~POLICIES ~~2011, the Company incurred shipping and handling fees of $3,932 and $1,920, respectively.~~(CONTINUED)

Income Taxes

The Company utilizes the accounting standards (“SFAS”) No. 109, “Accounting for Income Taxes,” codified in Financial Accounting Standard Board Accounting Standards Codification (“ASC”) Topic 740 which requires the recognition of deferred tax assets and liabilities for the expected future tax consequences of events that have been included in the financial statements or tax returns. Under this method, deferred income taxes are recognized for the tax consequences in future years of differences between the tax bases of assets and liabilities and their financial reporting amounts at each period end based on enacted tax laws and statutory tax rates applicable to the periods in which the differences are expected to affect taxable income. Valuation allowances are established, when necessary, to reduce deferred tax assets to the amount expected to be realized.

The Company adopted the provisions of FASB Interpretation No. 48, Accounting for Uncertainty in Income Taxes, (“FIN 48”), codified in FASB ASC Topic 740. When tax returns are filed, it is likely that some positions taken would be sustained upon examination by the taxing authorities, while others are subject to uncertainty about the merits of the position taken or the amount of the position that would be ultimately sustained. The benefit of a tax position is recognized in the financial statements in the period during which, based on all available evidence, management believes it is more likely than not that the position will be sustained upon examination, including the resolution of appeals or litigation processes, if any. Tax positions taken are not offset or aggregated with other positions. Tax positions that meet the more-likely-than-not recognition threshold are measured as the largest amount of tax benefit that is more than 50 percent likely of being realized upon settlement with the applicable taxing authority. The portion of the benefits associated with tax positions taken that exceeds the amount measured as described above is reflected as a liability for unrecognized tax benefits along with any associated interest and penalties that would be payable to the taxing authorities upon examination. Interest associated with unrecognized tax benefits are classified as interest expense and penalties are classified in selling, general and administrative expenses in the statements of income. The adoption of FIN 48 did not have a material impact on the Company’s ~~consolidated~~ financial statements. At ~~June~~December 3031, 2012 and September 30, ~~2011~~2012, the Company did not take any uncertain positions that would necessitate ~~recording~~ recording a tax related liability.

Statement of Cash Flows

In accordance with SFAS 95 “Statement of Cash Flows”, codified in FASB ASC Topic 230, cash flows from the Company’s operations are based upon the local currencies. As a result, amounts related to assets and liabilities reported on the statement of cash flows will not necessarily agree with changes in the corresponding balances on the balance sheet.

Basic and Diluted Earnings per Share

Earnings per share are calculated in accordance with FASB ASC Topic 260, “Earnings per Share”. Basic earnings per share is based upon the weighted average number of common shares outstanding. Diluted earnings per share is based on the assumption that all dilutive convertible shares and stock options were converted or exercised. Dilution is computed by applying the treasury stock method. Under this method, options and warrants are assumed to be exercised at the beginning of the period (or at the time of issuance, if later), and as if funds obtained thereby were used to purchase common stock at the average market price during the period.

F-13

COMPUTER GRAPHICS INTERNATIONAL INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

~~JUNE~~DECEMBER 3031, 2012

(~~UNAUDITED~~Amounts in USD)

~~Note 3 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES~~ (~~CONTINUED~~Unaudited)

~~Concentration~~Note of3 ~~Credit~~- ~~Risk~~SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

~~Financial~~Concentration ~~instruments that potentially subject the Company to concentrations~~ of ~~credit~~Credit risk are cash, accounts receivable and other receivables arising from its normal business activities. The Company places its cash in what it believes to be credit-worthy financial institutions. The Company has a diversified customer base. The majority of sales are either cash receipt in advance or cash receipt upon delivery. During the nine months ended June 30, 2012 and 2011, one and no customer accounted for more than 10% of net sales revenue. As of June 30, 2012 and September 30, 2011, five and six customers accounted for more than 5% of net accounts receivable respectively (Note 12). For those credit sales, the Company routinely assesses the financial strength of its customers and, based upon factors surrounding the credit risk, establishes an allowance, if required, for uncollectible accounts and, as a consequence, believes that its accounts receivable credit risk exposure beyond such allowance is limited.Risk

~~Recent~~Financial ~~Accounting~~instruments ~~Pronouncements~~that potentially subject the Company to concentrations of credit risk are cash, accounts receivable and other receivables arising from its normal business activities. The Company places its cash in what it believes to be credit-worthy financial institutions. The Company has diversified customer base. The majority of sales are either cash receipt in advance or cash receipt upon delivery. During the three months ended December 31, 2012, two customers accounted for 33% and 13% of net revenue, respectively. During the three months ended December 31, 2011, one customer accounted over 10% of net revenue. As of December 31, 2012 and September 30, 2012, 3 and 4 customers accounted for more than 5% of net accounts receivable, respectively (note 12). For those credit sales, the Company routinely assesses the financial strength of its customers and, based upon factors surrounding the credit risk, establishes an allowance, if required, for uncollectible accounts and, as a consequence, believes that its accounts receivable credit risk exposure beyond such allowance is limited.

~~In December, 2011, the FASB issued Accounting Standards Update No. 2011~~F-11 “Balance Sheet (Topic 210): Disclosures about Offsetting Assets and Liabilities,” (“ASU 2011-11”). ASU 2011-11 enhances disclosures regarding financial instruments and derivative instruments. Entities are required to provide both net information and gross information for these assets and liabilities in order to enhance comparability between those entities that prepare their financial statements on the basis of U.S. GAAP and those entities that prepare their financial statements on the basis of IFRS. This new guidance is to be applied retrospectively. The adoption of these provisions does not have a material impact on the Company’s consolidated statements.14

OnCOMPUTER ~~July~~GRAPHICS ~~27,~~INTERNATIONAL ~~2012, the FASB issued ASU 2012-02, Intangibles-Goodwill and Other (Topic 350) - Testing Indefinite-Lived Intangible Assets for Impairment~~INC. The ASU provides entities with an option to first assess qualitative factors to determine whether events or circumstances indicate that it is more likely than not that the indefinite-lived intangible asset is impaired. If an entity concludes that it is more than 50% likely that an indefinite-lived intangible asset is not impaired, no further analysis is required. However, if an entity concludes otherwise, it would be required to determine the fair value of the indefinite-lived intangible asset to measure the amount of actual impairment, if any, as currently required under US GAAP. The ASU is effective for annual and interim impairment tests performed for fiscal years beginning after September 15, 2012. Early adoption is permitted. The adoption of this pronouncement will not have a material impact on its financial statements.

~~Recently~~NOTES ~~Issued~~TO ~~Accounting~~CONSOLIDATED ~~Pronouncements~~FINANCIAL ~~Not Yet Adopted~~STATEMENTS

AsDECEMBER ~~of June 30~~31, 2012~~, there are no recently issued accounting standards not yet adopted that would have a material effect on the Company’s financial statements.~~

~~Note~~(Amounts 4in ~~- DUE TO A SHAREHOLDER~~USD)

As of June 30, 2012 and September 30, 2011, the Company has amount due to a shareholder of $872,306 and $1,845,380, respectively. The amount due to a shareholder is unsecured, interest-free and will not be required to repay to the shareholder until such time that the Company has the necessary financial resources to repay the amount due.(Unaudited)

Note 54 - ~~COMPENSATED~~DUE ~~ABSENCES~~TO A SHAREHOLDER

~~Regulation~~As 45 of ~~the~~December ~~local~~31, ~~labor~~2012 ~~law~~and of 2011, the ~~People’s~~Company has ~~Republic~~amount ofdue ~~China~~to ~~(“PRC”)~~a ~~entitles~~shareholder ~~employees~~of to$1,006,551 ~~annual~~and ~~vacation~~$754,582, ~~leave~~respectively. ~~after~~The ~~one~~amount ~~year~~due ofto ~~service. In~~a ~~general~~shareholder is unsecured, ~~all~~interest-free and ~~leave~~will ~~must~~not be ~~utilized~~required ~~annually,~~to ~~with~~repay ~~proper~~to ~~notification.~~the ~~Any~~shareholder ~~unutilized~~until ~~leave~~such istime ~~cancelled~~that the Company has the necessary financial resources to repay the amount due.

FNote 5 -14 COMPENSATED ABSENCES

~~COMPUTER~~Regulation ~~GRAPHICS~~45 ~~INTERNATIONAL~~of ~~INC~~the local labor law of the People’s Republic of China (“PRC”) entitles employees to annual vacation leave after 1 year of service. In general, all leave must be utilized annually, with proper notification. Any unutilized leave is cancelled.

~~NOTES~~Note TO6 ~~CONSOLIDATED~~- ~~FINANCIAL~~INCOME ~~STATEMENTS~~TAXES

~~JUNE~~The 30Company operates in more than one jurisdiction with its main operations conducted in PRC and virtually no activities in USA, ~~2012~~with complex regulatory environments subject to different interpretations by the taxpayer and the respective governmental taxing authorities. The Company evaluates its tax positions and establishes liabilities, if required.

~~(UNAUDITED)~~The reconciliation of the U.S. statutory income tax rate to the Company’s effective income tax rate is as follows:

Note 6 - INCOME TAXES

	Three Months Ended December 31,
	2012			2011

Income tax at U.S. statutory rate (34%)	$	(216,471	)	$	-
State tax, net of federal effect		-			-
Foreign rate differential (2012 :12.5 %, 2011 : 25%)		117,416			-
Expenses not deductible for tax (share-based payment)		30,689			34,021
Others		68,366			(5,256	)

Income tax (credit)/expense	$	-		$	28,765

~~The~~Pursuant ~~Company~~to ~~operates~~the inPRC ~~more~~Income ~~than~~Tax ~~one~~Laws, ~~jurisdiction~~the ~~with~~Enterprise ~~its~~Income ~~main~~Tax ~~operations~~(“EIT”) ~~conducted~~through inDecember ~~PRC~~31, ~~and~~2007 ~~virtually~~is noat ~~activities~~a instatutory ~~USA,~~rate ~~with~~of ~~complex~~33%, ~~regulatory~~which ~~environments~~is ~~subject~~comprised toof ~~different~~30% national ~~interpretations~~income bytax ~~the~~and ~~taxpayer~~3% ~~and~~local ~~the~~income ~~respective~~tax. ~~governmental~~As ~~taxing~~from ~~authorities.~~January ~~The~~1, ~~Company~~2008 ~~evaluates~~onwards, ~~its~~the ~~tax~~EIT ~~positions~~is ~~and establishes~~at ~~liabilities,~~a ifstatutory ~~required~~rate of 25%.

~~The~~On ~~reconciliation~~April 6, 2012, the Company obtains the approval from the tax authority of PRC that it fulfills certain tax requirements of a company engaging in the ~~U.S.~~design ~~statutory~~of software ~~income~~and integrated circuit and thereby it is entitled to preferential tax ~~rate~~relief for EIT. The Company is exempted from EIT in the first two profitable financial years of operation and is further granted a 50% relief from the EIT for the following three financial years. As the approval is officially given to the Company’s ~~effective~~in ~~income~~April, 2012, no refund of tax ~~rate~~would isbe asmade ~~follows~~in :respect of the EIT paid by the Company for the fiscal years ended December 31, 2009 and 2010, with the 50% relief from EIT becomes effective from the financial year commencing on January 1, 2011.

	Three Months Ended June 30,						Nine Months Ended June 30,
	2012			2011			2012			2011
Income tax at USA statutory rate (34%)	$	38,420		$	238,878		$	(282,323	)	$	1,214,785
State tax, net of federal effect		-			-			-			-
Foreign rate differential		(24,295	)		(63,232	)		178,528			(321,561	)
Expenses not deductible for tax		19,770			31,676			57,874			75,546
Tax effect of tax losses utilized		(56,519	)		-			-			-
Tax effect of unrecognised temporary difference		32,501			-			3,936			-
Over-provision in respect of prior year		-			-			(460,554	)		-
Others		(6,267	)		(74,935	)		74,361			(102,876	)
Income tax (credit)/expenses	$	3,610		$	132,387		$	(428,178	)	$	865,894

F-15

~~Pursuant~~COMPUTER toGRAPHICS ~~the~~INTERNATIONAL ~~PRC Income Tax Laws, the Enterprise Income Tax (“EIT”) through December 31, 2007 is at a statutory rate of 33%, which is comprised of 30% national income tax and 3% local income tax~~INC. ~~As from January 1, 2008 onwards, the EIT is at a statutory rate of 25%.~~

OnNOTES ~~April~~TO 6,CONSOLIDATED ~~2012,~~FINANCIAL the Company obtains the approval from the tax authority of PRC that it fulfills certain tax requirements of a company engaging in the design of software and integrated circuit and thereby it is entitled to preferential tax relief for EIT. The Company is exempted from EIT in the first two profitable financial years of operation and is further granted a 50% relief from the EIT for the following three financial years. As the approval is officially given to the Company in April, 2012, no refund of tax would be made in respect of the EIT paid by the Company for the fiscal years ended December 31, 2010 and 2011, with the 50% relief from EIT becomes effective from the financial year commencing on January 1, 2011.STATEMENTS

~~Provision~~DECEMBER ~~for income taxes for each of the nine months and three months ended June 30~~31, 2012 ~~and 2011 consists entirely of current taxes for the operations in PRC. There were no significant deferred tax differences in both periods.~~

~~Deferred~~(Amounts ~~U.S.~~in income taxes have not been provided on the undistributed income of the Company’s foreign subsidiaries because the Company does not plan to initiate any action that would require the payment of U.S. income taxes.USD)

~~Uncertain Tax Positions~~(Unaudited)

~~Interest~~Provision ~~associated~~for ~~with~~income ~~unrecognized~~taxes ~~tax benefits~~for iseach ~~classified~~of for asthe ~~interest~~three ~~expense~~months ~~and~~ended ~~penalties~~December ~~in selling~~31, ~~general~~2012 and ~~administrative~~2011 ~~expenses~~consists inentirely of current taxes for the ~~statements~~operations ofin ~~income~~PRC. There were ~~and~~no ~~comprehensive~~significant ~~income~~deferred tax differences in both periods.

~~For~~Deferred ~~the~~Income ~~nine~~Tax months and three months ended June 30, 2012 and 2011, the Company had no unrecognized tax benefits and related interest and penalties expenses. Currently, the Company has not received any notice of examination by any tax authority in major tax jurisdictions, but the tax authority in PRC has the right to examine the Company’s tax positions in all past years.Asset

~~Income~~The ~~tax~~primary ~~recoverable/(payable)~~components inof ~~the~~temporary differences ~~Consolidated~~which ~~Balance~~might ~~Sheets~~give isrise ~~comprised~~to the Company’s deferred tax assets as at December 31, 2012 and September 30, 2012 were as follows:

F-15

	As of
	December 31,			September 30,
	2012			2012

Balance	$	157,063		$	54,865

USA		-			-
Hong Kong		-			37,002
PRC		68,265			65,196
		225,328			157,063
Less: valuation allowance		(225,328	)		(157,063	)
Deferred income tax benefit, net of valuation allowance	$	-		$	-

~~COMPUTER~~Increase ~~GRAPHICS~~in ~~INTERNATIONAL~~valuation ~~INC~~allowance for the three months ended December 31, 2012 and 2011 was $68,265.

~~NOTES~~Deferred TOtax ~~CONSOLIDATED~~asset ~~FINANCIAL~~which ~~STATEMENTS~~may arise as a result of these losses have been offset in these consolidated financial statements by a valuation allowance due to the uncertainty surrounding their realization.

~~JUNE~~Deferred ~~30,~~U.S. ~~2012~~income taxes have not been provided on the undistributed income of the Company’s foreign subsidiaries because the Company does not plan to initiate any action that would require the payment of U.S. income taxes.

~~(UNAUDITED)~~Uncertain Tax Positions

	06/30/2012			09/30/2011
Balance brought forward	$	(263,417	)	$	(425,458	)
Current tax provision for the period/year		(3,610	)		(1,132,175	)
Over-provision of current tax for the period/year		460,554			-
Tax paid during the period/year		-			1,294,216
Others		(4,703	)		-
Balance carried forward	$	188,824		$	(263,417	)

Interest associated with unrecognized tax benefits is classified as interest expense and penalties in selling, general and administrative expenses in the statements of income and comprehensive income.

~~Note~~For 7the -three ~~COMMON~~months ~~STOCK~~ended ~~AND~~December ~~PREFERRED~~31, 2012 ~~STOCK~~and 2011, the Company had no unrecognized tax benefits and related interest and penalties expenses. Currently, the Company has not received any notice of examination by any tax authority in major tax jurisdictions, but the tax authority in PRC has the right to examine the Company’s tax positions in all past years.

~~The~~Income ~~Company~~tax ispayable ~~authorized~~in tothe ~~issue up to 900,000,000 shares~~Consolidated ofBalance ~~common~~Sheets ~~stock~~is ofcomprised ~~par~~as ~~value of $0.0001 per share.~~follows:

As detailed in Note 1 above, on March 31, 2011, China Digital became a wholly-owned subsidiary of CGII through issuance of 14,462,684 shares of common stock of par value of $0.0001 per share pursuant to the Share Exchange Agreement.

	December 31, 2012		September 30, 2012

Balance brought forward	$	-	$	(263,417	)
Current tax provision for the year		-		237,055
Tax paid during the year		-		26,362

Balance carried forward	$	-	$	-

For accounting purposes, this transaction was treated as reverse acquisition and the CGII’s equity accounts at September 30, 2010 prior to the acquisition are restated based on the ratio of the exchange of 14,462,684 of CGII’s shares for 10,000 of China Digital’s shares. As the par value of each share of CGII and China Digital are $0.0001 and $0.129, respectively, the difference in capital of $1,863 arising from this reverse acquisition is reallocated from additional paidF-~~in capital to common stock.~~16

OnCOMPUTER ~~April~~GRAPHICS ~~19,~~INTERNATIONAL ~~2011, the Company issued 1,341,894 shares of common stock to Well Trend Consultant Limited (“Well Trend”) - Note 8~~INC.

OnNOTES ~~June~~TO 7,CONSOLIDATED ~~2011,~~FINANCIAL ~~the Company effected a 1-for-2.18 reverse stock split of its outstanding common stock. The information contained herein gives retroactive effect to the reverse stock split for all periods presented.~~STATEMENTS

OnDECEMBER ~~July 26~~31, ~~2011 and July 25,~~ 2012~~, the Company issued 40,000 shares of common stock each to the Company’s Chief Financial Officer, Yongqing Ma - Note 8.~~

~~The~~(Amounts ~~Company~~in ~~is authorized to issue up to 100,000,000 shares of preferred stock, par value $0.0001 per share. As of June 30, 2012, no preferred stock was issued.~~USD)

~~Note 8 - SHARE BASED PAYMENTS~~(Unaudited)

OnNote ~~April~~7 19, 2011, the Company issued 1,341,894 shares of the Company’s common stock to Well Trend, an independent party, in exchange for certain consulting services pursuant to the terms of a consultancy agreement dated September 25, 2010 between Well Trend and China Digital (“Consultancy Agreement”). The consultancy services are to be performed for three years after signing the Consultancy Agreement. The shares were fully vested and not subject to forfeiture when issued. The fair value of the shares issued was $0.763 per share (adjusted for the effect on 1-~~for-2.18~~ ~~reverse~~COMMON ~~stock~~STOCK ~~split)~~AND ~~and~~PREFERRED the total fair value of the shares issued was $1,023,865. The fair value of the shares issued per share was based on the quoted market price of CGII’s shares. The total fair value of the shares issued would be recognized as share-based payment expense over the period that the consultancy services are performed. For the nine months ended June 30, 2012 and 2011, the Company amortized share-based payment expenses of $255,966 and $Nil respectively. For the three months ended June 30, 2012 and 2011, the Company amortized share-based payment expenses of $85,322 and $Nil respectively. The unrecognized share-based payment expense of $421,776 as of June 30, 2012 (2011: $Nil) will be amortized up to September 2013. There is no tax benefit related to the share-based payment expense recognized.STOCK

~~F-16~~The Company is authorized to issue up to 900,000,000 shares of common stock of par value of $0.0001 per share.

~~COMPUTER~~The ~~GRAPHICS~~Company ~~INTERNATIONAL~~is ~~INC~~authorized to issue up to 100,000,000 shares of preferred stock, par value $0.0001 per share. As of December 31, 2012, no preferred stock was issued.

~~NOTES~~Note TO8 ~~CONSOLIDATED~~- ~~FINANCIAL~~SHARE ~~STATEMENTS~~BASED PAYMENTS

~~JUNE~~On April 19, 2011, the Company issued 1,341,894 shares of the Company’s common stock to Well Trend, an independent party, in exchange for certain consulting services pursuant to the terms of a consultancy agreement dated September 25, 2010 between Well Trend and China Digital (“Consultancy Agreement”). The consultancy services are to be performed for three years after signing the Consultancy Agreement. The shares were fully vested and not subject to forfeiture when issued. The fair value of the shares issued was $0.763 per share (adjusted for the effect on 1-for-2.18 reverse stock split) and the total fair value of the shares issued was $1,023,865. The fair value of the shares issued per share was based on the quoted market price of CGII’s shares. The total fair value of the shares issued would be recognized as share-based payment expense over the period that the consultancy services are performed. For the three months ended December 31, 2012 and 2011, the Company amortized share-based payment expenses of $85,322 and $85,322 respectively. The unrecognized share-based payment expense of $251,132 as of December 31, 2012 (September 30, 2012: $336,454) will be amortized up to September 2013. There is no tax benefit related to the share-based payment expense recognized.

On June 24, 2011, the Company signed an employment agreement with Yongqing Ma pursuant to which the Company agreed to issue to Yongqing Ma 40,000 shares of its restricted common stock on each of June 30, 2011, 2012 and 2013 (~~UNAUDITED~~totaling 120,000 shares), as partial remuneration to Yongqing Ma for acting as the chief financial officer of the Company. The fair value of the shares issued was $1.01 per share at the grant date and the total fair value based on grant date fair value of the 120,000 shares issued is $121,200. The fair value of the shares issued per share is based on the quoted market price of CGII’s shares. As of September 30, 2012, 80,000 shares with a grant date fair value of $80,800 were vested. 40,000 shares were issued on July 26, 2011, with the other 40,000 shares issued on July 25, 2012. The remaining 40,000 shares are unvested. For the three months ended December 31, 2012 and 2011, the Company recognized $4,940 and $14,741 respectively as share-based payment expense. The total cost related to non-vested shares not yet recognized as of December 31, 2012 and September 30, 2012 were $10,431 and $15,371, respectively and will be recognized and accounted for as separate awards based on the grant date value of the shares to be issued in each tranche over the requisite service period up to June 2013.

~~Note 8~~ F- ~~SHARE BASED PAYMENTS (CONTINUED)~~17

OnCOMPUTER ~~June~~GRAPHICS ~~24,~~INTERNATIONAL 2011, the Company signed an employment agreement with Yongqing Ma pursuant to which the Company agreed to issue to Yongqing Ma 40,000 shares of its restricted common stock on each of June 30, 2011, 2012 and 2013 (totalling 120,000 shares), as partial remuneration to Yongqing Ma for acting as the chief financial officer of the CompanyINC. The fair value of the shares issued was $1.01 per share at the grant date and the total fair value based on grant date fair value of the 120,000 shares issued is $121,200. The fair value of the shares issued per share is based on the quoted market price of CGII’s shares. As of June 30, 2012, 80,000 shares with a grant date fair value of $80,800 were vested. 40,000 shares were issued on July 26, 2011, with the other 40,000 shares issued on July 25, 2012. The remaining 40,000 shares are unvested. For the nine months ended June 30, 2012 and 2011, the Company recognized $44,766 and $41,382 respectively as share-based payment expense. For the three months ended June 30, 2012 and 2011, the Company recognized $15,284 and $41,382 respectively as share-based payment expense. The total cost related to non-vested shares not yet recognized as of June 30, 2012 and September 30, 2011 was $20,311 and $65,077, respectively and will be recognized and accounted for as separate awards based on the grant date value of the shares to be issued in each tranche over the requisite service period up to June 2013.

~~The~~NOTES ~~Company~~TO ~~therefore~~CONSOLIDATED ~~recognized~~FINANCIAL share-based payment expenses to non-employees and employees in the aggregate amounts of $300,732 and $126,704 for the nine months ended June 30, 2012 and 2011, respectively. For the three months ended June 30, 2012 and 2011, the Company recognized share-based payment expenses to non-employees and employees in the aggregate amounts of $100,606 and $126,704.STATEMENTS

~~Note~~DECEMBER 931, ~~- STATUTORY RESERVES~~2012

In(Amounts accordance with the laws and regulations of the PRC, a wholly-owned Foreign Invested Enterprise’s income, after the payment of the PRC income taxes, shall be allocated to the statutory reserves. The allocation is 10 percent of income after tax and the cumulative allocations are not to exceed 50 percent of registered capital. However, voluntary allocations to statutory reserves are not prohibited. These reserves are not transferable to the Company in the form of cash dividends, loans or advances. These reserves are therefore not available for distribution except in liquidation. As of June 30, 2012 and September 30, 2011, the Company had allocated $656,900 and $500,088 in aggregate to these non-distributable reserve funds, respectively.USD)

~~Note 10 - OTHER COMPREHENSIVE INCOME~~(Unaudited)

~~Balance~~Note of8 ~~related after~~-~~tax~~ ~~components comprising~~SHARE ~~accumulated~~BASED ~~other~~PAYMENTS ~~comprehensive income, included in stockholders’ equity, at June 30, 2012 and September 30, 2011, are as follows:~~(CONTINUED)

	Foreign Currency Translation Adjustment			Accumulated Other Comprehensive Income
Balance at September 30, 2010	$	127,355		$	127,355
Change for the year		92,443			92,443
Balance at September 30, 2011		219,798			219,798
Change for 2012 Q1		14,017			14,017
Balance at December 31, 2011		233,815			233,815
Change for 2012 Q2		25,274			25,274
Balance at March 31, 2012		259,089		$	259,089
Change for 2012 Q3		(207	)		(207	)
Balance at June 30, 2012	$	258,882			258,882

The Company therefore recognized share-based payment expenses to non-employees and employees in the aggregate amounts of $90,262 and $100,063 for the three months ended December 31, 2012 and 2011, respectively.

FNote 9 -17 STATUTORY RESERVES

~~COMPUTER~~In ~~GRAPHICS~~accordance ~~INTERNATIONAL~~with ~~INC~~the laws and regulations of the PRC, a wholly-owned Foreign Invested Enterprises income, after the payment of the PRC income taxes, shall be allocated to the statutory reserves. The allocation is 10 percent of income after tax and the cumulative allocations are not to exceed 50 percent of registered capital. However, voluntary allocations to statutory reserves are not prohibited. These reserves are not transferable to the Company in the form of cash dividends, loans or advances. These reserves are therefore not available for distribution except in liquidation. As of December 31, 2012 and September 30, 2012, the Company had allocated $500,088 and $500,088 in aggregate to these non-distributable reserve funds, respectively.

~~NOTES~~Note TO10 ~~CONSOLIDATED~~- ~~FINANCIAL~~OTHER ~~STATEMENTS~~COMPREHENSIVE INCOME

~~JUNE~~Balance 30of after-tax components comprising accumulated other comprehensive income, included in stockholders’ equity, at December 31, 2012, are as follows:

(UNAUDITED)

	Foreign		Accumulated
	Currency		Other
	Translation		Comprehensive
	Adjustment		Income

Balance at September 30, 2010	$	127,355	$	127,355
Change for 2011		92,443		92,443

Balance at September 30, 2011		219,798		219,798
Change for 2012		28,068		28,068

Balance at September 30, 2012	$	247,866	$	247,866
Change for three months period ended December 31, 2012		8,618		8,618

Balance at December 31, 2012	$	256,484	$	256,484

Note 11 - CURRENT VULNERABILITY DUE TO CERTAIN RISK FACTORS

The Company’s operations are carried out in the PRC. Accordingly, the Company’s business, financial condition and results of operations may be influenced by the political, economic and legal environments in the PRC, ~~and~~ by the general state of the PRC's economy. The Company’s business may be influenced by changes in governmental policies with respect to laws and regulations, anti-inflationary measures, currency conversion and remittance abroad, and rates and methods of taxation, among other things.

Note 12 - MAJOR CUSTOMERS AND CREDIT RISK

~~Five~~3 and ~~six~~4 customers accounted for more ~~than~~ than 5% of accounts receivable at ~~June~~December 3031, 2012 and September 30, ~~2011~~2012, totaling 3971% and 6454%, respectively. For the ~~nine~~three months ended ~~June~~December 3031, 2012 and 2011, ~~one~~2 and no1 customer accounted for ~~more~~greater than 10% of total sales, ~~amounting to 17% and nil~~amounts, ~~respectively. For~~totaling ~~the three months ended June 30, 2012 and 2011, one and one customer accounted for more than 10~~46% ~~of total sales, amounting to 17%~~ and 1040%, respectively.

~~Note 13~~ F- ~~MONIES HELD BY A LEGAL FIRM AND PROVISION FOR EMPLOYEE BENEFITS~~18

OnCOMPUTER ~~September~~GRAPHICS ~~26,~~INTERNATIONAL ~~2011, the Company’s wholly-owned subsidiary Shenzhen Digital Image Technologies Co~~INC., Ltd. (“SDIT”) entered into a Letter of Intent for Share Purchase (the “Acquisition Agreement”) with Li Dongxiang and Zeng Xianguang (together, the “Sellers”) with respect to the shares of Guangzhou Fanyutuo 3D Technology Co., Ltd. (“Guangzhou”), a recently formed start-up company involved in three dimensional technology. Pursuant to the terms of the Acquisition Agreement, the Sellers agreed to sell all of the capital stock of Guangzhou to SDIT in exchange for $937,236 (CNY6,000,000).

ANOTES ~~Supplemental~~TO ~~Letter~~CONSOLIDATED ofFINANCIAL ~~Intent for Share Purchase Agreement (“Supplemental Agreement”) was entered into on September 26, 2011. Extracts to the Supplemental Agreement are:~~STATEMENTS

i)DECEMBER ~~The~~31, ~~Sellers and three non-shareholder employees of Guangzhou guarantee themselves to work for SDIT;~~2012

~~ii) 5 working days after execution of the Supplemental Agreement 50% of the amount of $937,236~~ (~~CNY6,000,000)~~Amounts ~~shall~~in ~~be paid to the Sellers through the legal firm witnessing the transaction;~~USD)

~~iii) 5 working days after completion of two years employment by the Sellers and the three non-shareholder employees with SDIT, 30% of the amount of $937,236~~ (~~CNY6,000,000~~Unaudited) ~~shall be paid to the Sellers through the legal firm witnessing the transaction;~~

~~iv)~~Note 513 ~~working days after completion of three years employment by the Sellers and the three non~~-~~shareholder~~ ~~employees~~MONIES ~~with~~HELD ~~SDIT,~~BY ~~20%~~A ofLEGAL FIRM ~~the~~AND ~~amount~~PROVISION ~~$937,236~~FOR ~~(CNY6,000,000)~~EMPLOYEE ~~shall be paid to the Sellers through the legal firm witnessing the transaction;~~BENEFITS

v)On AsSeptember 26, 2011, the ~~Supplemental~~Company’s wholly-owned ~~Agreement~~subsidiary ~~forms~~Shenzhen ~~part~~Digital ~~and~~Image ~~parcel~~Technologies Co., Ltd. (“SDIT”) entered into a Letter of Intent for Share Purchase (the “Acquisition Agreement,”) inwith ~~accordance~~Li ~~with~~Dongxiang and Zeng Xianguang (together, the ~~terms~~“Sellers”) with ofrespect to the ~~Acquisition~~shares ~~Agreement,~~of ~~any~~Guangzhou ~~dispute~~Fanyutuo ~~arising~~3D ~~from~~Technology ~~the~~Co., ~~Agreement~~Ltd. (“Guangzhou”), ~~both~~a ~~parties~~recently ~~shall~~formed ~~resolve~~start-up company byinvolved ~~mutual~~in ~~negotiations~~three ordimensional intechnology. Pursuant to the ~~event~~terms of ~~such~~the ~~negotiations~~Acquisition ~~fail~~Agreement, the ~~dispute~~Sellers ~~should~~agreed beto ~~resolved~~sell all byof ~~arbitrations~~the orcapital bystock ~~Court~~of ~~Action~~Guangzhou to SDIT in ~~PRC;~~exchange for $952,215 (CNY6,000,000).

~~vi)~~A InSupplemental ~~the~~Letter ~~event~~of ~~that~~Intent ~~any~~for ~~one~~Share Purchase ofAgreement ~~the~~(“Supplemental ~~Sellers~~Agreement”) ~~and~~was ~~the~~entered ~~three~~into ~~non-shareholder~~on ~~employees~~September ~~left~~26, ~~employment~~2011. ~~with~~Extracts ~~SDIT~~to ~~during~~ the ~~three years~~ Supplemental Agreement ~~period, the acquisition price shall not establish.~~are:

~~Management considers~~i) ~~that~~The ~~in the event that any one of the~~ Sellers orand ~~the~~ three non-shareholder employees ~~terminates employment with SDIT before completion~~ of ~~the~~Guangzhou ~~three~~guarantee ~~years~~themselves ~~Agreement period, any payment that had paid~~ to ~~the~~work ~~Sellers~~for under the terms of the Supplemental Agreement will not be repaid back to the Company. The unpaid balance in respect of the remaining Agreement period, shall cease to be payable to the Sellers and that the Acquisition price shall then be reduced in proportion to the number of Sellers and the three non-shareholder employees left employment before completion of the three years Agreement period.SDIT;

~~F-18~~ii) 5 working days after execution of the Supplemental Agreement, 50% of the amount of $952,215 (CNY6,000,000) shall be paid to the Sellers through the legal firm witnessing the transaction;

~~Note~~Management considers 13that in the event that any one of the Sellers or the three non-shareholder ~~MONIES~~employees ~~HELD~~terminates BYemployment Awith ~~LEGAL~~SDIT before ~~FIRM~~completion of the three years Agreement period, any payment that had paid to the Sellers under the terms of the Supplemental ~~AND~~Agreement ~~PROVISION~~will ~~FOR~~not ~~EMPLOYEE~~be ~~BENEFITS~~repaid ~~(CONTINUED)~~back to the Company. The unpaid balance in respect of the remaining Agreement period, shall cease to be payable to the Sellers and that the Acquisition price shall then be reduced in proportion to the number of Sellers and the three non-shareholder employees left employment before completion of the three years Agreement period.

Management also considers that the acquisition is in fact to secure three years continuing employment of the Sellers and three non-shareholder employees of Guangzhou by SDIT.

On September 28, 2011, SDIT paid the full amount of $~~937~~952,~~236~~215 (CNY6,000,000) to the legal firm witnessing the transaction under Escrow.

50% of the amount $937,236 i.e. $471,350 (CNY3,000,000) was then paid to the Sellers following execution of the Supplemental Agreement and that the remaining balance $471,350 (CNY3,000,000) remains under the custody of the legal firm witnessing the transaction under Escrow for future payments to the Sellers in accordance with the terms of the Supplemental Agreement.F-19

~~The~~COMPUTER ~~Company~~GRAPHICS ~~therefore~~INTERNATIONAL ~~accounts for:~~INC.

~~(a)~~NOTES ~~50%~~TO ofCONSOLIDATED ~~the~~FINANCIAL amount, $471,350 (CNY3,000,000) that was paid to the Sellers following execution of the Supplemental Agreement as employee benefits and expensed to consolidated statement of income and comprehensive income;STATEMENTS

~~(b)~~DECEMBER ~~30% of the amount~~31, ~~$282,810 (CNY1,800,000) is expensed over the two years Agreement period with the corresponding entry credited to provision for employee benefits in the balance sheet.~~2012

(c)Amounts ~~20% of the amount, $188,540 (CNY1,200,000) is expensed over the three years Agreement period with the corresponding entry credited to provision for employee benefits~~ in ~~the balance sheet.~~USD)

~~In total, the Company incurred employee benefits of US$624,531 and $Nil for the nine months ended June 30, 2012 and 2011 respectively under the Acquisition Agreement and the Supplemental Agreement.~~(Unaudited)

InNote ~~total,~~13 ~~the~~- ~~Company~~MONIES ~~incurred~~HELD ~~employee benefits~~BY ofA ~~US$51,524~~LEGAL ~~and~~FIRM ~~$Nil~~AND ~~for~~PROVISION ~~the three months ended June 30, 2012 and 2011 respectively under the Acquisition Agreement and~~FOR ~~the~~EMPLOYEE ~~Supplemental Agreement.~~BENEFITS(CONTINUED)

~~Note~~50% 14of -the ~~NON-FINANCIAL~~amount ~~IMPACT~~$952,215 OFi.e. $476,107 ~~THE~~(CNY3,000,000) ~~COMPANY~~was then paid to the Sellers following execution of the Supplemental Agreement and that the remaining balance $476,107 (CNY3,000,000) remains under the custody of the legal firm witnessing the transaction under Escrow for future payments to the Sellers in accordance with the terms of the Supplemental Agreement.

1)The ~~Capital~~Company ~~commitment~~therefore accounts for:

As(a) at50% ~~June~~of 30the amount, ~~2012~~$476,107 ~~and~~(CNY3,000,000) ~~September~~that ~~30,~~was ~~2011,~~ paid to the ~~Company~~Sellers ~~had~~following ~~total~~execution ~~capital~~of ~~commitment~~the Supplemental Agreement as ~~follows:~~employee benefits and expensed to consolidated statement of income and comprehensive income;

	06/30/2012		09/30/2011
Total consideration for the leasehold property	$	-	$	10,403,324
Less: Deposit paid		-		(781,030	)
Total capital commitment	$	-	$	9,622,294

(b)

30% of the amount, $285,664 (CNY1,800,000) is expensed over the two years Agreement period with the corresponding entry credited to provision for employee benefits in the balance sheet.

On(c) ~~September~~20% ~~22,~~of ~~2011,~~ the ~~Company~~amount, ~~entered into~~$190,443 ~~an agreement to purchase a leasehold property situated in Shenzhen~~(CNY1,200,000) ~~PRC~~is asexpensed ~~its~~over ~~office premise. The acquisition of~~ the ~~leasehold property~~three ~~was~~years ~~expected~~Agreement toperiod bewith ~~completed by early 2012. However,~~ the ~~acquisition~~corresponding ~~did~~entry ~~not~~credited ~~materialize~~to ~~and~~provision ~~that~~for ~~the~~employee ~~purchase~~benefits ~~arrangement was~~in ~~cancelled. The whole amount of deposit paid of US$793,953 was refunded by~~ the ~~vendor~~balance ~~on February 13, 2012~~sheet.

~~F-19~~In total, the Company incurred employee benefits of US$51,686 and $521,400 for three months ended December 31, 2012 and 2011 respectively under the Acquisition Agreement and the Supplemental Agreement. As of December 31, 2012 and September 30, 2012, the unamortized balance of employee benefits were $218,216 and $268,393, respectively.

~~COMPUTER GRAPHICS INTERNATIONAL INC.~~F-20

~~NOTES~~COMPUTER TOGRAPHICS ~~CONSOLIDATED~~INTERNATIONAL ~~FINANCIAL STATEMENTS~~INC.

~~JUNE~~NOTES ~~30,~~TO ~~2012~~CONSOLIDATED FINANCIAL STATEMENTS

~~(UNAUDITED)~~DECEMBER 31, 2012

2)(Amounts ~~Leases~~in ~~commitment and rental deposits~~USD)

As at June 30, 2012 and September 30, 2011, the Company had total future aggregate minimum lease payments under non-cancellable operating leases for the Company’s office premises located in PRC as follows:(Unaudited)

	06/30/2012		09/30/2011
Within 1 year	$	489,397	$	122,946
1 - 2 years		453,670		36,656
2 - 3 years		456,340		-
3 - 4 years		430,148		-
4 - 5 years		161,416		-
	$	1,990,971	$	159,602

Note 14 - NON-FINANCIAL IMPACT OF THE COMPANY

~~Note~~Leases 14commitment -and ~~NON-FINANCIAL~~rental ~~IMPACT OF THE COMPANY (CONTINUED)~~deposits

~~Rental~~As ~~deposits~~at ~~paid~~December ~~for leasing of the office premises in the sum of $56~~31,~~325~~ ~~(September 30~~2012, ~~2011~~the :Company ~~$53,093)~~had ~~are~~total ~~recorded~~future asaggregate ~~non-current asset~~minimum ~~(September~~lease ~~30,~~payments ~~2011:~~under as non-~~current~~cancellable ~~asset)~~operating asleases for the ~~lease~~Company’s ~~expires~~office ~~over~~premises 1located ~~year~~in ~~(September~~PRC ~~30,~~as ~~2011~~follows: ~~over 1 year).~~

Note 15 - CHAIRMAN FINANCIAL UNDERTAKING

	December 31, 2012

Within 1 year	$	184,340
1 - 2 year		193,557
2 - 3 year		203,235
3 - 4 year		68,838

	$	649,970

OnRental ~~August~~deposits ~~14,~~paid ~~2012,~~for ~~the~~leasing ~~Chairman~~of ~~issued an undertaking that~~ the ~~Chairman~~office ~~will~~premises ~~give~~in ~~his~~the ~~every~~sum ~~endeavor~~of ~~and~~$40,572 ~~effort~~(September to30, ~~obtain~~2012 ~~necessary~~: ~~and~~$40,631) ~~adequate~~are ~~fundings~~recorded toas ~~meet~~non-current ~~the Company’s~~asset ~~financial obligations~~ as ~~when they are required thereby warranting that~~ the ~~operations~~lease ofexpires ~~the~~over ~~Company~~1 ~~will not be affected~~year.

Note 1615 - ~~SUBSEQUENT~~CHAIRMAN ~~EVENTS~~FINANCIAL UNDERTAKING

~~For~~On ~~the~~December ~~nine months ended June 30~~28, 2012, the ~~Company~~Chairman ~~has~~issued an ~~evaluated~~undertaking ~~subsequent~~that ~~events~~the ~~for~~Chairman ~~potential~~will ~~recognition~~give ~~disclosure.~~his ~~There~~every ~~were~~endeavor noand ~~significant~~effort ~~events occurred subsequent~~ to ~~the~~obtain ~~balance~~necessary ~~sheet~~and ~~date~~adequate ~~but~~fundings ~~prior~~ to meet the Company’s ~~filing~~financial ofobligations ~~this~~as ~~report~~when ~~that~~they ~~would~~are ~~have~~required. aThere ~~material~~can ~~impact~~be onno ~~our~~assurance ~~consolidated~~that ~~financial~~the Chairman will be successful ~~statements~~in this endeavor.

FNote 16 -20 SUBSEQUENT EVENTS

~~Item~~The 2Company has evaluated subsequent events for potential recognition disclosure. ~~Management's~~There ~~Discussion~~were ~~and~~no ~~Analysis~~significant ofevents ~~Financial~~occurred ~~Condition~~subsequent ~~and~~to ~~Results~~the balance sheet date but prior to the filing of ~~Operations~~this report that would have a material impact on our consolidated financial statements.

~~The following discussion and analysis should be read in conjunction with our unaudited condensed consolidated financial statements and notes thereto included in this Quarterly Report on Form 10~~F-~~Q and our audited consolidated financial statements and notes thereto included in our Annual Report on Form 10-K filed with the SEC on December 29, 2011.~~21

~~Note~~Item ~~Regarding~~2. ~~Forward-Looking~~Management’s ~~Statements~~Discussion and Analysis of Financial Condition and Results of Operations.

~~This~~Forward ~~quarterly~~Looking report on Form 10-Q contains forward-looking statements within the meaning of the U.S. federal securities laws. These statements relate to future events or our future financial performance and involve known and unknown risks, uncertainties and other factors that may cause our actual results, levels of activity, performance or achievements to be materially different from those expressed or implied by the forward-looking statements. In some cases, you can identify forward-looking statements by terminology such as “may,” “likely,” “will,” “should,” “expect,” “plan,” “anticipate,” “believe,” “estimate,” “predict,” “potential,” “continue” or the negative of these terms or other comparable terminology. These forward-looking statements are subject to a number of risks that could cause them to differ from our expectations. These include, but are not limited to, risks relating to:Statements

·The ~~our~~following ~~ability~~discussion toand ~~expand~~analysis of ~~domestically~~the byresults ~~2011~~of operations and ~~internationally~~financial condition of Computer Graphics International Inc. should be read in conjunction with the Company’s financial statements, and the notes to those financial statements that are included in this quarterly report and the company’s annual report for the year ended September 30, 2012;. Our discussion includes forward-looking statements based upon current expectations that involve risks and uncertainties, such as our plans, objectives, expectations and intentions. Actual results and the timing of events could differ materially from those anticipated in these forward-looking statements as a result of a number of factors, including those set forth under the Risk Factors and Business sections in our annual report. We use words such as “anticipate,” “estimate,” “plan,” “project,” “continuing,” “ongoing,” “expect,” “believe,” “intend,” “may,” “will,” “should,” “could,” and similar expressions to identify forward-looking statements.

·Our ~~our ability to create standardized and centralized production procedures and standards;~~Company

·Business ~~our ability to attract key technology and management personnel;~~Overview

·We ~~our~~are ~~ability~~a to3D ~~strengthen~~digital ~~our~~visual ~~existing~~service ~~technology~~provider founded in ~~efficiency~~2006 based in China, specialized in providing one-stop-shop service and systems based on 3D image technology ~~integration~~to domestic governments, real estate developers, game developers, the automotive industry and ~~create~~other acommercial ~~high~~customers. We operate through our wholly-~~standard~~owned ~~internal~~subsidiaries ~~procedure~~Shenzhen Digital Image Technology Co., Limited and ~~quality~~Guangzhou ~~monitoring~~Digital ~~system;~~Image Technologies Co., Ltd.

·Our headquarters are located in Shenzhen, China. We operate domestically with four branches in the ~~market~~PRC, ~~for~~including our Xi’an office, Guangzhou office, Yun’nan office and Xiamen office. Through our 3D imaging technology, we participate in the visual expression of construction-related industries and help our ~~ability~~customers complete visual technological changes from hand painting to ~~achieve~~computer-aided ~~market~~visual ~~share~~displays. We endeavor to provide our customers with the most cost-effective 3D digital visual communication products and ~~develop~~services ~~new~~through ~~sales~~the ~~channels~~combination of orthe ~~other~~latest ~~industry~~visual ~~sales~~technology ~~opportunities;~~and terminal display equipment.

·Our ~~our~~Corporate ~~ability~~History toand ~~obtain additional capital in future years to fund our planned expansion;~~Background

·Computer ~~economic~~Graphics International Inc., or ~~political~~the “Company”, ~~regulatory~~was incorporated under the laws of the State of Nevada on February 27, ~~legal~~2003 ~~and~~under ~~foreign~~the ~~exchange~~name ~~risks~~AMP ~~associated~~Productions, Ltd. (“AMP”), with ~~our~~the ~~operations;~~business orpurpose of developing, producing, marketing, and distributing low-budget feature-length films to movie theaters and ancillary markets. From inception until the reverse acquisition transaction described below, AMP earned no revenue and suffered recurring losses and net cash outflows from operations.

·On July 30, 2010, the ~~loss~~controlling shareholders of ~~key~~AMP ~~members~~consented to a proposed 1-for-10 reverse split of ~~our~~AMP's ~~senior~~issued ~~management~~and outstanding common stock, an increase in AMP's authorized common stock to 900,000,000 shares, and ~~our~~the ~~qualified~~authorization ~~sales~~of ~~personnel~~100,000,000 shares of preferred stock. The corporate action was approved by FINRA on September 17, 2010 and effective in the State of Nevada on September 23, 2010.

~~You~~Acquisition should not place undue reliance on these forward-looking statements, which are based on our current views and assumptions. In evaluating these statements, you should specifically consider various factors, including the foregoing risks and those outlined under “Risk Factors” in our Annual Report on Form 10-K as filed with the SEC on December 29, 2011. Many of ~~these~~China factors are beyond our control. Our forward-looking statements represent estimates and assumptions only as of the date of this quarterly report on Form 10-Q. Except as required by law, we undertake no obligation to update any forward-looking statement to reflect events or circumstances occurring after the date of this quarterly report on Form 10-Q.Digital

~~Company~~On March ~~Overview~~31, 2011, we completed a reverse acquisition transaction through a share exchange (the “Share Exchange”) with China Digital and its shareholders, whereby we acquired 100% of the issued and outstanding capital stock of China Digital in exchange for (i) 14,462,684 shares of our Common Stock (after giving effect to the Reverse Stock Split described below), which collectively constituted approximately 97% of our issued and outstanding capital stock as of and immediately after the consummation of the transactions contemplated by the Share Exchange Agreement and (ii) payment (the “Cash Component”) of $2,368,471. The Cash Component was payable in full within 12 months after the Closing.

~~Business~~As ~~Overview~~a result of the reverse acquisition, China Digital became our wholly-owned subsidiary and the former shareholders of China Digital became our controlling stockholders. The share exchange transaction with China Digital and the Shareholders was treated as a reverse acquisition, with China Digital as the acquirer and AMP as the acquired party. Unless the context suggests otherwise, when we refer in this report to business and financial information for periods prior to the consummation of the reverse acquisition, we are referring to the business and financial information of China Digital and its consolidated subsidiaries.

WeAs ~~are~~ a 3Dresult ~~digital~~of ~~visual~~our ~~service~~acquisition ~~provider~~of China ~~founded~~Digital, inwe ~~2006~~now ~~based~~own inall of the issued and outstanding capital stock of China Digital, ~~specialized~~which in ~~providing~~turn ~~one-stop-shop~~owns ~~service~~all of the issued and outstanding ~~systems~~capital ~~based~~stock onof 3DShenzhen ~~image~~Digital ~~technology~~Image toTechnologies ~~domestic governments~~Co., ~~real~~Ltd. ~~estate~~(“Shenzhen ~~developers,~~Holding ~~game~~Company”). Shenzhen Holding ~~developers~~Company in turn owns our two additional Operating Subs, ~~the~~Shenzhen ~~automotive~~Digital ~~industry~~Image 3D Design and ~~other~~Development ~~commercial~~Co., ~~customers~~Ltd. We ~~operate~~(“Shenzhen ~~through~~3D ~~our~~Design”) ~~wholly-owned~~and ~~subsidiary~~Guangzhou ~~Shenzhen~~ Digital Image ~~Technology~~Technologies Co., ~~Limited~~Ltd.

On May 31, 2011, AMP filed a certificate of amendment with the Secretary of State of Nevada changing its name to “Computer Graphics International Inc.” and effecting a 1-for-2.18 reverse stock split of its common stock (the “Reverse Stock Split”). The Reverse Stock Split took effect when approved by FINRA on June 7, 2011. As a result of the Reverse Stock Split, the number of our shares outstanding was reduced from 35,428,981 shares immediately before the Reverse Stock Split to 16,251,846 shares immediately after the Reverse Stock Split.

~~Our~~On ~~headquarters~~September ~~are~~26, ~~located~~2011, inthe ~~Shenzhen,~~Company’s ~~China.~~wholly Weowned ~~operate~~subsidiary ~~both~~Shenzhen ~~domestically~~Holding ~~and~~Company ~~overseas,~~entered ~~with~~into ~~eleven~~a ~~branches~~Letter inof ~~the~~Intent ~~PRC,~~for ~~including~~Share ~~our~~Purchase ~~Xi’an~~(the ~~office,~~“Acquisition ~~Wuhan office,~~Agreement”) ~~Hunan~~with ~~office,~~Li ~~Chengdu~~Dongxiang ~~office,~~and ~~Chongqing~~Zeng ~~office~~Xianguang (together, ~~Hefei~~the ~~office,~~“Sellers”) ~~Guangzhou~~with ~~office,~~respect ~~Yun’nan~~to ~~office,~~the ~~Xiamen~~shares ~~office,~~of ~~Hainan~~Guangzhou ~~office~~Fanyutuo 3D ~~and~~Technology ~~Beijing~~Co., ~~office~~Ltd. ~~Our~~(“Guangzhou ~~international~~”). Pursuant ~~branch~~to isthe ~~located~~terms inof ~~Hong~~the ~~Kong.~~Acquisition ~~Through~~Agreement, ~~our~~the 3DSellers ~~imaging~~agreed to ~~technology,~~sell weall ~~participate~~of in the ~~visual~~ ~~expression~~capital stock of ~~construction-related~~Guangzhou ~~industries~~to ~~and~~Shenzhen ~~help~~Holding ~~our~~Company ~~customers~~in ~~complete~~exchange ~~visual~~for ~~technological~~RMB ~~changes~~six ~~from~~million ~~hand~~(approximately ~~painting~~US$952,215). Guangzhou tois ~~computer~~a recently formed start-~~aided~~up ~~visual~~company ~~displays~~involved in three dimensional technology. WeOn ~~endeavor~~December to27, ~~provide~~2011, ~~our~~the ~~customers~~parties ~~with~~closed the ~~most~~purchase and ~~cost-effective~~sale 3Dof ~~digital~~shares ~~visual~~of ~~communication products~~Guangzhou ~~and~~pursuant ~~services~~to ~~through~~terms of the ~~combination~~Acquisition ofAgreement. In connection with the ~~latest~~closing, ~~visual~~Guangzhou's name ~~technology~~was ~~and~~changed ~~terminal~~to ~~display~~"Guangzhou ~~equipment~~Digital Image Technologies Co., Ltd."

~~Our~~Principal ~~Corporate~~Factors ~~History~~Affecting ~~and~~Our ~~Background~~Financial Performance

~~Computer~~We ~~Graphics~~believe ~~International~~our ~~Inc.,~~operating ~~or the~~results ~~“Company”,~~will ~~was~~be ~~incorporated~~primarily ~~under the laws of the State of Nevada on February 27, 2003 under the name AMP Productions,~~affected ~~Ltd.~~by ~~(“AMP”), with~~ the ~~business~~following purpose of developing, producing, marketing, and distributing low-budget feature-length films to movie theaters and ancillary markets. From inception until the reverse acquisition transaction described below, we earned no revenue and suffered recurring losses and net cash outflows from operations.factors:

On· ~~July~~Our ~~30,~~ability ~~2010, our controlling shareholders consented~~ to aexpand ~~proposed 1-for-10 reverse split of~~ our ~~issued~~presence ~~and outstanding common stock, an increase~~ in ~~our~~the ~~authorized~~PRC ~~common stock~~market toas ~~900,000,000~~we ~~shares~~plan, ~~and~~including the ~~authorization~~client ~~of 100~~base,~~000,000~~ ~~shares of preferred stock. The corporate action was approved by FINRA on September 17, 2010~~ and ~~effective~~our inindustry ~~the State of Nevada on September 23, 2010~~presence.

~~Acquisition~~· Our ability to maintain a good relationship with our suppliers for continued supply of ~~China~~hardware ~~Digital~~equipment at a competitive price and quality in order to continue carrying out our current pricing strategy.

On· ~~March~~Our ~~31,~~ability ~~2011,~~to weattract ~~completed a reverse acquisition transaction through a share exchange (the “Share Exchange”) with China Digital Image Organization Co., Limited, a Hong Kong company (“China Digital”),~~ and ~~its~~retain ~~shareholders,~~key ~~whereby~~management wepersonnel ~~acquired~~as ~~100%~~well ofas ~~the~~technical ~~issued~~staff ~~and outstanding capital stock of China Digital in exchange~~ for ~~(i)~~technology ~~31,528,651shares~~integration ~~of our Common Stock, which collectively constituted approximately 97% of our issued~~ and ~~outstanding~~new ~~capital~~product ~~stock~~development ~~as of and immediately after the consummation of the Share Exchange, and (ii) payment (the “Cash Component”) of $2,368,471.35. The Cash Component was payable~~ in ~~full~~this ~~within~~competitive ~~12 months after the Closing~~market.

As a result of the reverse acquisition, China Digital became our wholly-owned subsidiary and the former shareholders of China Digital became our controlling stockholders. The share exchange transaction with China Digital and the Shareholders was treated as a reverse acquisition, with China Digital as the acquirer and AMP as the acquired party. Unless the context suggests otherwise, when we refer in this report to business and financial information for periods prior to the consummation of the reverse acquisition, we are referring to the business and financial information of China Digital and its consolidated subsidiaries.Taxation

AsUnited aStates ~~result of our acquisition of China Digital, we now own all of the issued~~ and ~~outstanding~~Hong capital stock of China Digital, which in turn owns all of the issued and outstanding capital stock of Shenzhen Digital Image Technologies Co., Ltd, which in turn owns all of Shenzhen Digital Image 3D Design and Development Co., Ltd. and Guangzhou Digital Image Technologies Co., Ltd.Kong

OnWe ~~May~~are ~~31,~~subject ~~2011,~~to weUnited ~~filed~~States ~~a certificate~~federal ofincome ~~amendment~~tax ~~with~~at ~~the~~a ~~Secretary~~tax ofrate ~~State~~ of ~~Nevada changing our name to “Computer Graphics International Inc~~34%.” ~~and effected~~No aprovision 1-for~~-2.18~~ ~~reverse~~income ~~stock~~taxes ~~split~~in ~~of our common stock (~~the ~~“Reverse~~United ~~Stock~~States ~~Split”). The~~has ~~Reverse~~been ~~Stock Split~~made ~~took~~as ~~effect~~we ~~when~~have ~~approved~~no bytaxable ~~FINRA on June 7, 2011. As a result of the Reverse Stock Split, the number of our~~income ~~shares~~derived ~~outstanding was reduced~~ from ~~35,428,981~~business ~~shares~~effectively ~~immediately~~connected ~~before the Reverse Stock Split~~ to ~~16,251,846 shares immediately after~~ the ~~Reverse~~United ~~Stock Split~~States.

~~Recent~~China ~~Developments~~Digital is incorporated in Hong Kong and is subject to Hong Kong profits tax. In accordance with the relevant tax laws and regulations of Hong Kong, a company, irrespective of its residential status, is subject to tax on all profits (excluding profits arising from the sale of capital assets) arising in or derived from Hong Kong. No tax is levied on profits arising abroad, even if they are remitted to Hong Kong. Therefore, China Digital is exempt from Hong Kong income tax since all the profits were derived from subsidiaries in the PRC and there were no assessable profits generated in Hong Kong. The income tax rate in Hong Kong is 16.5%.

OnPeople’s ~~September~~Republic ~~22, 2011, the Company entered into an agreement to purchase a leasehold property situated in Shenzhen, PRC as its office premise. The acquisition~~ of the leasehold property was expected to be completed by early 2012. However, subsequent to December 31, 2011, the acquisition did not materialize and that the purchase arrangement was cancelled. The whole amount of deposit paid of US$793,953 was refunded by the vendor on February 13, 2012.China

3Because all of our operations are conducted in the PRC, we are governed by the Enterprise Income Tax Law of the PRC (the "EIT Law"). This law and its implementing rules impose a unified EIT rate of 25% on all enterprises, unless they qualify for certain limited exceptions.

OnUnder ~~September~~the ~~26,~~EIT ~~2011~~Law, ~~the~~an ~~Company’s~~enterprise established ~~wholly~~outside ~~owned subsidiary Shenzhen Holding Company entered into a Letter~~ of ~~Intent~~China ~~for~~with ~~Share~~“de ~~Purchase~~facto ~~(the~~management ~~“Acquisition Agreement~~bodies”~~) with~~ Liwithin ~~Dongxiang~~China ~~and~~is ~~Zeng~~considered ~~Xianguang~~a ~~(together,~~resident ~~the~~enterprise ~~“Sellers”)~~and ~~with~~will ~~respect~~normally be subject to ~~the~~an ~~shares~~EIT of ~~Guangzhou~~25% ~~Fanyutuo~~on ~~3D Technology~~its ~~Co.,~~global ~~Ltd~~income. ~~(“Guangzhou”). Pursuant~~The toimplementing ~~the~~rules ~~terms~~define of the ~~Acquisition~~term ~~Agreement,~~“de ~~the~~facto ~~Sellers~~management ~~agreed~~bodies” toas ~~sell~~“an ~~all~~establishment ofthat ~~the~~exercises, ~~capital~~in ~~stock~~substance, ofoverall ~~Guangzhou~~management toand ~~Shenzhen~~control ~~Holding~~over ~~Company~~the inproduction, ~~exchange~~business, ~~for~~personnel, accounting, ~~RMB~~etc., ~~six~~of ~~million~~a ~~(approximately~~Chinese ~~$937,236)~~enterprise. ~~Guangzhou is~~” aIf ~~recently~~the ~~formed~~PRC ~~start-up~~tax ~~company~~authorities ~~involved~~subsequently indetermine ~~three-dimensional~~that ~~technology. On~~we ~~December~~should ~~27,~~be ~~2011,~~classified as ~~the~~a ~~parties~~resident ~~closed the~~enterprise, ~~purchase~~then ~~and~~our ~~sale~~organization’s ofglobal ~~shares~~income ofwill ~~Guangzhou~~be ~~pursuant~~subject to ~~terms~~PRC ofincome tax at the ~~Acquisition~~rate ~~Agreement~~of 25%. In ~~connection~~Such classification ~~with~~would ~~the~~likely ~~closing, Guangzhou's~~result ~~name~~in ~~was~~unfavorable ~~changed~~tax consequences to ~~"Guangzhou~~us ~~Digital~~and ~~Image~~our ~~Technologies~~non-PRC Coshareholders.~~, Ltd."~~

~~Principal~~Since ~~Factors~~2008, ~~Affecting~~we have been subject to tax at a statutory rate of 25% on income reported in our statutory financial statements filed after appropriate tax adjustments in the relevant periods. Our ~~Financial~~future effective income tax rate depends on various factors, such as tax legislation, the geographic ~~Performance~~composition of our pre-tax income and non-tax deductible expenses incurred.

WeOn ~~believe~~April ~~our~~6, ~~operating~~2012, ~~results~~the ~~will~~Company beobtained ~~primarily~~the ~~affected~~approval byfrom the tax authority of PRC that it fulfills certain tax requirements of a company engaging in the design of software and integrated circuit and thereby it is entitled to preferential tax relief for EIT. The Company is exempted from EIT in the first two profitable financial years of operation and is further granted a 50% relief from the EIT for the following ~~factors:~~three financial years. As the approval is officially given to the Company in April, 2012, no refund of tax would be made in respect of the EIT paid by the Company for the fiscal years ended December 31, 2009 and 2010, with the 50% relief from EIT becomes effective from the financial year commencing on January 1, 2011.

¨Value ~~Our~~Added ~~ability~~Taxes – We are also subject to ~~expand~~value added tax, or VAT, on the sale of our ~~presence~~products. The applicable VAT rate is 17% for products sold in the PRC. ~~market~~The asamount weof ~~plan,~~VAT ~~including~~liability is determined by applying the ~~client~~applicable ~~base~~tax rate to the invoiced amount of goods sold (output VAT) less VAT paid on purchases made with the relevant supporting invoices (input VAT). Under the commercial practice in the PRC, we ~~and~~pay ~~our~~VAT ~~industry~~based ~~presence~~on tax invoices issued. ¨The ~~Our~~tax ~~ability~~invoices may be issued subsequent to ~~maintain~~the date on which revenue is recognized, and there may be a ~~good~~considerable ~~relationship~~delay ~~with~~between ~~our~~the ~~suppliers~~date on which the revenue is recognized and the date on which the tax invoice is issued. In the event that the PRC tax authorities dispute the date on which revenue is recognized for ~~continued~~tax ~~supply~~purposes, ofthe ~~hardware~~PRC tax ~~equipment~~office athas the right to assess a ~~competitive~~penalty, ~~price~~which ~~and~~can ~~quality~~range infrom ~~order~~zero to ~~continue~~five ~~carrying~~times ~~out~~the ~~our~~amount ~~current~~of ~~pricing~~the ~~strategy.~~taxes ¨which ~~Our~~are ~~ability~~ determined to ~~attract~~be ~~and~~late ~~retain~~or ~~key~~deficient. ~~management~~Any ~~personnel~~tax aspenalty ~~well~~assessed asis ~~technical~~expensed ~~staff~~as ~~for~~a ~~technology~~period ~~integration~~expense if and ~~new~~when ~~product~~a ~~development~~determination inhas ~~this~~been ~~competitive~~made ~~market~~by the taxing authorities that a penalty is due.

~~Taxation~~Results of Operations

~~United~~The ~~States~~following tables set forth key components of our results of operations for the three months ended December 31, 2012 and ~~Hong~~December ~~Kong~~31, 2011, both in dollars and as a percentage of our net sales.

We are subject to United States federal income tax at a tax rate ranging from 15% to 35%. No provision for income taxes in the United States has been made as we have no taxable income derived from business effectively connected to the United States.

	Three months ended						Three months ended
	December 31, 2012						December 31, 2011
				% of Net						% of Net
	Amount			Sales			Amount			Sales
Net Sales	$	1,085,904			100	%	$	1,952,720			100	%
Cost of sales		1,032,437			95	%		842,276			43	%
Gross profit		53,467			5	%		1,110,444			57	%
Selling, General and Administrative Expenses		688,264			63	%		1,407,679			72	%
Loss from operation		(634,797	)		(58	)%		(297,235	)		(15	)%
Other expenses		(1,883	)		0	%		(1,439	)		0	%
Loss Before Income Taxes		(636,680	)		(58	)%		(298,674	)		(15	)%
Income tax expense		-			-			28,765			2	%
Net loss	$	(636,680	)		(58	)%	$	(327,439	)		(17	)%

~~China~~Net ~~Digital~~Sales. isOur ~~incorporated~~net ~~in Hong Kong~~sales ~~and~~decreased ~~is subject~~ to ~~Hong~~$1,085,904 ~~Kong~~for ~~profits tax. In accordance with~~ the ~~relevant~~three ~~tax~~months ~~laws~~ended ~~and~~December ~~regulations~~31, of2012 ~~Hong~~from ~~Kong~~$1, ~~a company~~952, ~~irrespective~~720 offor ~~its residential status, is subject to tax on all profits (excluding profits arising from~~ the ~~sale of capital assets)~~ ~~arising~~three inmonths orended ~~derived~~December ~~from~~31, ~~Hong Kong. No tax is levied on profits arising abroad~~2011, ~~even~~representing ifa ~~they~~44% ~~are remitted to Hong Kong~~decrease. ~~Therefore,~~ ~~China~~The ~~Digital~~decrease is ~~exempt~~primarily ~~from~~due ~~Hong~~to ~~Kong income tax since all~~ the ~~profits~~overall ~~were~~market ~~derived from subsidiaries~~decline in the ~~PRC~~current ~~and~~Chinese ~~there~~real ~~were~~estate ~~no assessable profits generated in Hong Kong. The income tax rate in Hong Kong is 16.5%.~~industry

~~People’s~~Cost ~~Republic~~of Sales. Our cost of ~~China~~sales increased to $1,032,437 for the three months ended December 31, 2012 from $842,276 for the three months ended December 31, 2011, representing a 23% increase. The cost of goods sold per sales ratio increased to 95% for the three months ended December 31, 2012 from 43% for the three months ended December 31, 2011, mainly due to increased cost related to developed sales on low margin products.

~~Because~~Gross ~~all~~Profit. ofOur gross ~~our~~profit ~~operations~~decreased ~~are~~to ~~conducted in the PRC~~$53,467 wefor ~~are~~the ~~governed~~three bymonths ~~the~~ended ~~Enterprise~~December ~~Income~~31, ~~Tax~~2012 ~~Law~~from of$1,110,444 for the ~~PRC~~three ~~(the~~months ~~"EIT~~ended ~~Law").~~December ~~This~~31, ~~law~~2011, ~~and~~representing ~~its implementing rules impose~~ a ~~unified~~95% ~~EIT~~decrease. ~~rate~~This ofdecrease ~~25%~~was onprimarily ~~all~~due ~~enterprises,~~to ~~unless~~the ~~they~~decreased ~~qualify~~sales and ~~for~~the ~~certain~~increased ~~limited~~cost ~~exceptions~~of sales.

~~On April 6~~Selling, ~~2012,~~General ~~the~~and ~~Company obtains the~~Administrative ~~approval~~Expenses. ~~from~~Our ~~the~~selling, ~~tax~~general ~~authority~~and ofadministrative ~~PRC~~expenses ~~that~~decreased itto ~~fulfills~~$688,264 ~~certain~~for ~~tax~~the ~~requirements~~three ofmonths aended ~~company~~December ~~engaging in the design of software~~31, ~~and~~2012 ~~integrated~~from ~~circuit~~$1,407,679 ~~and~~for ~~thereby~~the itthree ismonths ~~entitled~~ended toDecember ~~preferential~~31, ~~tax~~2011, ~~relief~~representing ofa ~~EIT.~~51% decrease. The ~~Company~~Selling, isGeneral ~~exempted~~and ~~from~~Administrative ~~EIT~~Expense inper ~~the~~sales ~~first two~~ratio ~~profitable~~decreased ~~financial~~to ~~years of operation and is further granted a 50~~63% ~~relief from the EIT~~ for the ~~following~~ three ~~financial years.~~months Asended ~~the~~December ~~approval is officially given to the Company in April~~31, 2012~~, no refund of tax would be made in respect of the EIT~~ ~~paid~~from by72% ~~the Company~~ for the ~~fiscal~~three ~~years~~months ended December 31, ~~2010 and~~ 2011, ~~with~~mainly ~~the~~due ~~50%~~to ~~relief~~decreased ~~from~~cost ~~EIT~~related ~~becomes~~to ~~effective~~fewer ~~from the~~employees ~~financial~~than ~~year~~last ~~commencing on January 1, 2011~~period.

4Other Expenses. Other expenses increased to $1,883 for the three months ended December 31, 2012 from $1,439 for the three months ended December 31, 2011. This increase was mainly due to one time non-operation expense.

~~Under~~Loss ~~the~~Before ~~EIT~~Income ~~Law, an enterprise established~~Taxes. ~~outside~~Our ofloss ~~China~~before ~~with~~income ~~“de~~taxes ~~facto~~increased ~~management bodies” within China is considered a resident enterprise and will normally be subject~~ to an$636,680 ~~EIT~~for ofthe ~~25%~~three onmonths ~~its~~ended ~~global~~December ~~income.~~31, ~~The~~2012 ~~implementing~~from ~~rules~~$298,674 ~~define~~for the ~~term~~three ~~“de facto management bodies”~~months asended ~~“an~~December ~~establishment that exercises~~31, ~~in substance~~2011, ~~overall~~representing ~~management and control over the production, business, personnel, accounting, etc., of~~ a ~~Chinese~~113% ~~enterprise~~increase.” The Ifincrease ~~the~~was ~~PRC~~mainly ~~tax~~due ~~authorities subsequently determine that we should be classified as a resident enterprise, then our organization’s global income will be subject~~ to ~~PRC income tax at~~ the ~~rate~~decrease ~~of 25%. Such classification would likely result~~ in ~~unfavorable~~sales ~~tax consequences to us~~ and ~~our~~increase in ~~non-PRC~~cost ~~shareholders~~of sales.

~~Since~~Income ~~2008,~~tax weexpenses. ~~have~~Our income ~~been subject to~~ tax at aexpense ~~statutory~~was ~~rate~~nil offor ~~25%~~the onthree ~~income~~months ~~reported~~ended inDecember ~~our~~31, ~~statutory~~2012, ~~financial~~compared ~~statements~~to ~~filed~~income ~~after~~tax ~~appropriate~~expense ~~tax~~$28,765 ~~adjustments~~for in the ~~relevant~~three months ~~periods.~~ended ~~Our~~December ~~future~~31, ~~effective~~2011. ~~income~~This ~~tax~~change ~~rate~~was ~~depends~~mainly ondue ~~various~~to ~~factors, such as tax legislation,~~ the ~~geographic composition~~loss ofbefore ~~our~~income ~~pre-tax~~taxed ~~income~~for ~~and~~the ~~non-tax~~three ~~deductible~~months ~~expenses~~ended ~~incurred~~December 31, 2012.

~~Value~~Liquidity Added Taxes – We are also subject to value added tax, or VAT, on the sale of our products. The applicable VAT rate is 17% for products sold in the PRC. The amount of VAT liability is determined by applying the applicable tax rate to the invoiced amount of goods sold (output VAT) less VAT paid on purchases made with the relevant supporting invoices (input VAT). Under the commercial practice in the PRC, we pay VAT based on tax invoices issued. The tax invoices may be issued subsequent to the date on which revenue is recognized, and ~~there~~ ~~may~~Capital be a considerable delay between the date on which the revenue is recognized and the date on which the tax invoice is issued. In the event that the PRC tax authorities dispute the date on which revenue is recognized for tax purposes, the PRC tax office has the right to assess a penalty, which can range from zero to five times the amount of the taxes which are determined to be late or deficient. Any tax penalty assessed is expensed as a period expense if and when a determination has been made by the taxing authorities that a penalty is due. As of June 30, 2012 and 2011, we prepaid VAT $828 and accrued $4,504, respectively.Resources

~~Results~~As of ~~Operations~~December 31, 2012 and September 30, 2012, we had cash and cash equivalents of $333,386 and $263,228, respectively, primarily consisting of cash on hand and demand deposits. The following table provides detailed information about our net cash flow for all financial statement periods presented in this report. To date, we have financed our operations primarily through cash flows from operations and equity contributions by our shareholders.

The following table sets forth ~~the~~a ~~key~~summary ~~components~~ of our ~~results of~~cash ~~operations~~ flows for the ~~three~~periods ~~months and nine months ended June 30, 2012 and 2011, both in dollars and as a percentage of our net sales.~~indicated:

	Nine Months Ended						Nine Months Ended
	June 30, 2012						June 30, 2011
				% of Net					% of Net
	Amount			Sales			Amount		Sales
Net Sales	$	4,706,083			100	%	$	8,033,040		100	%
Cost of sales		2,021,575			43	%		3,284,062		41	%
Gross profit		2,684,508			57	%		4,748,978		59	%
Selling, General and Administrative Expenses		3,511,055			75	%		1,180,644		15	%
Operating Income		(826,547	)		(18	%)		3,568,334		44	%
Other income & interest expense		(3,815	)		0	%		4,563		0	%
(Loss)/Income Before Income Taxes		(830,362	)		(18	%)		3,572,897		44	%
Provision for income taxes		(428,178	)		(9	%		865,894		11	%
Net (loss)/income		(402,184	)		(9	%)		2,707,003		33	%

Cash Flow
(all amounts in U.S. dollars)

	Three Months Ended						Three Months Ended
	The three months Ended
	June 30, 2012						June 30, 2011
	December 31,
				% of Net						% of Net
	2012			2011
	Amount			Sales			Amount			Sales
Net cash provided by operating activities	$	30,720		$	606,454
Net Sales	$	1,752,329			100	%	$	2,234,219			100	%
Net cash provided by (used in) investing activities		38,745			(142,925	)
Cost of sales		515,276			29	%		971,231			43	%
Effects of Exchange Rate Change in Cash		693			6,354
Gross profit		1,237,053			71	%		1,262,988			57	%
Net Increase in Cash and Cash Equivalents		70,158			469,883
Selling, General and Administrative Expenses		1,122,630			64	%		560,189			25	%
Cash and Cash Equivalent at Beginning of the Period		263,228			779,132
Operating Income		114,423			6	%		702,799			32	%
Cash and Cash Equivalent at End of the Period	$	333,386		$	1,249,015
Other income & interest expense		(1,424	)		0	%		(216	)		0	%
Income Before Income Taxes		112,999			6	%		702,583			32	%
Provision for income taxes		3,610			0	%		132,387			6	%
Net income		109,389			6	%		570,196			26	%

5Operating activities

Net ~~Sales.~~cash ~~Our~~provided ~~net~~by ~~sales~~operating activities ~~decreased~~was to $130,~~752,329~~720 for the three months ended ~~June~~December 3031, 2012, ~~from~~as compared to net cash provided by operating activities of $2606,~~234,219~~ 454 for the three months ended ~~June~~December 3031, 2011~~, representing a 22% decrease~~. ~~Our~~The ~~net~~change ~~sales~~is ~~decreased~~attributable to ~~$4,706,083 for~~ the ~~nine~~increase ~~months~~in ~~ended~~net ~~June~~loss ~~30,~~of ~~2012 from~~ $8309,~~033~~241,~~040~~ ~~for~~ the ~~nine months~~decrease ~~ended~~of ~~June 30~~$91,644 ~~2011,~~in ~~representing~~accounts areceivable, ~~41%~~the decrease. ~~The~~of ~~decrease~~$58,251 isin ~~primarily~~other ~~due~~receivables, to the ~~overall~~increase ~~market~~of ~~decline~~$252,014 in ~~current~~amount ~~Chinese real~~due ~~estate~~to ~~industry.~~a ~~The~~shareholder, the ~~company’s~~increase ~~business~~of is$142,494 in ~~transition~~accounts ~~from~~payable, athe ~~majority~~decrease of ~~the~~$101,768 ~~real~~in ~~estate~~accrued ~~market~~expenses toand aother ~~full commercial CG industry~~payable, ~~but~~the itdecrease ~~takes~~of $19,334 ~~time~~in tovalue-added ~~get~~tax ~~new industry customers~~liability.

~~Cost~~Investing of Sales. Our cost of sales decreased to $515,276 for the three months ended June 30, 2012 from $971,231 for the three months ended June 30, 2011. Our cost of sales decreased to $2,021,575 for the nine months ended June 30, 2012 from $3,284,062 for the nine months ended June 30, 2011, mainly due to the decreased sales. The cost of goods sold per sales ratio increased to 43% for the nine months ended June 30, 2012 from 41% for the nine months ended June 30, 2011. The cost of goods sold per sales ratio decreased to 29% for the three months ended June 30, 2012 from 43% for the three months ended June 30, 2011, mainly due to the decreased outsourcing cost and hardware purchase cost. activities

~~Gross~~Net ~~Profit.~~cash ~~Our gross~~provided ~~profit~~by ~~decreased~~investing ~~to $1,237,053~~ activities for the three months ended ~~June~~December 3031, 2012 ~~from~~was $138,~~262~~745,~~988~~ ~~for~~as ~~the~~compared ~~three months ended June 30, 2011, representing a 2% decrease. Our gross profit decreased~~ to $2142,~~684,508~~925 ~~for~~net ~~the~~cash ~~nine~~used ~~months~~in ~~ended~~investing ~~June~~activities ~~30, 2012 from $4,748,978~~ for the three ~~nine~~ months ended ~~June~~December 3031, 2011~~, representing a 43% decrease~~. ~~This~~The ~~decrease~~change was ~~primarily~~mainly ~~due~~attributable to ~~the~~disposal ~~decreased sales~~of property and ~~the increased cost of production~~equipment.

~~Selling,~~Financing General and Administrative Expenses. Our selling, general and administrative expenses increased to $1,122,630 for the three months ended June 30, 2012 from $560,189 for the three months ended June 30, 2011. Our selling, general and administrative expenses increased to $3,511,055 for the nine months ended June 30, 2012 from $1,180,644 for the nine months ended June 30, 2011. The Selling, General and Administrative Expense per sales ratio changed to 64% for the three months ended June 30, 2012 from 25% for the three months ended June 30, 2011, mainly due to employee benefits related to the Company’s acquisition of Guangzhou Subsidiary, increased share-based payment expense for consulting services, increased salary due to rapid growth of sales staff and additional depreciation charge on leasehold improvements to office premises that were rented in April 2011.activities

~~Other~~No ~~Income.~~cash ~~Other~~provided ~~income decreased~~or toused ~~$(1,424)~~in ~~for~~financing ~~the~~activities ~~three months ended June 30, 2012 from ($216)~~ for the three ~~months ended June 30, 2011. Other~~ ~~income decreased to $(3,815) for the nine~~ months ended ~~June~~December 3031, 2012 ~~from~~and ~~$4,563 for~~ the ~~nine~~three months ended ~~June~~December 3031, 2011. ~~This decrease was mainly due to the increased bank charges and decreased interest income.~~

~~(Loss)/Income~~PART ~~Before~~II ~~Income~~- ~~Taxes. Our~~OTHER income before income taxes decreased to $112,999 for the three months ended June 30, 2012 from $702,583 for the three months ended June 30, 2011, representing a 84% decrease. Our income before income taxes decreased to $(830,362) for the nine months ended June 30, 2012 from $3,572,897 for the nine months ended June 30, 2011, representing a 123% decrease. The decrease was mainly due to the decrease in sales and increase in cost of sales and selling, general and administrative expenses.INFORMATION

Provision for income taxes. Our income tax expense was $3,610 for the three months ended June 30, 2012, compared to income tax expense $132,387 for the three months ended June 30, 2011. Our income tax credit was $(428,178) for the nine months ended June 30, 2012, compared to income tax expense $865,894 for the nine months ended June 30, 2011. This change was mainly due to the loss before income taxed for the nine months ended June 30, 2012.

Liquidity and Capital Resources

As of June 30, 2012 and June 30, 2011, we had cash and cash equivalents of $30,862 and $2,286,410 respectively, primarily consisting of cash on hand and demand deposits. The following table provides detailed information about our net cash flow for all financial statement periods presented in this report. To date, we have financed our operations primarily through cash flows from operations and equity contributions by our shareholders.

The following table sets forth a summary of our cash flows for the periods indicated:

Cash Flow

(all amounts in U.S. dollars)

	Nine Months Ended
	June 30,
	2012			2011
Net cash (used in)/provided by operating activities	$	(234,885	)	$	2,948,343
Net cash provided by/ (used in) investing activities		611,317			(2,935,605	)
Net cash (used in)/provided by financing activities		(1,141,444	)		1,237,815
Effects of Exchange Rate Change in Cash and Cash Equivalents		16,742			79,455
Net (Decrease)/ Increase in Cash and Cash Equivalents		(748,270	)		1,330,008
Cash and Cash Equivalents at Beginning of the Period		779,132			956,402
Cash and Cash Equivalent at End of the Period		30,862			2,286,410

Operating activities

Net cash used in operating activities was $234,885 for the nine months ended June 30, 2012, as compared to net cash provided by operating activities of $2,948,343 for the nine months ended June 30, 2011. The change is attributable to the decrease in net income of $3,109,187, the decrease of $470,436 in monies held by a legal firm, the increase of $733,120 in accounts receivable, the increase of $91,678 in other receivables and deposits, the increase of $2,450 in rental deposits, the decrease of $2,111 in inventory, the increase of $159,556 in amount due to a shareholder, the decrease of $23,225 in accounts payable, the increase of $31,491 in accrued expenses and other payable, the increase of $34,912 in value-added tax liability, and the decrease of $456,199 in income tax payable.

To cater with any short term liquidity issue, the chairman, on Aug 14, 2012, issued an undertaking that the chairman will give his every endeavor and effort to obtain necessary and adequate funds to meet the Company’s financial obligations as when they are required thereby warranting that the operations of the Company will not be affected.

Investing activities

Net cash provided by investing activities for the nine months ended June 30, 2012 was $611,317 compared to $2,935,605 net cash used in investing activities for the nine months ended June 30, 2011. The change was mainly attributable to the refund of deposit for acquisition of a leasehold property.

Financing activities

Net cash used in financing activities for the nine months ended June 30, 2012 was due to a repayment of $1,141,444 made to a shareholder.

Inflation

Inflation and changing prices have not had a material effect on our business and we do not expect that inflation or changing prices will materially affect our business in the foreseeable future. However, our management will closely monitor price changes in the digital video service industry and strives to continually maintain effective cost control in operations.

Off Balance Sheet Arrangements

We do not have any off balance sheet arrangements that have or are reasonably likely to have a current or future effect on our financial condition, changes in financial condition, revenues or expenses, results of operations, liquidity or capital expenditures or capital resources that is material to an investor in our securities.

Critical Accounting Policies

The Company’s revenue recognition policies are in compliance with SEC Staff Accounting bulletin (“SAB”) 104 (codified in FASB ASC Topic 605). Sales revenue is recognized at the completion of delivery to customers when a formal arrangement exists, the price is fixed or determinable, no other significant obligations of the Company exist and collectability is reasonably assured at the date of completion of delivery. Payments received before all of the relevant criteria for revenue recognition are satisfied are recorded as unearned revenue.

Use of Estimates

The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.

Accounts Receivable

The Company maintains reserves for potential credit losses on accounts receivable. Management reviews the composition of accounts receivable and analyzes historical bad debts, customer concentrations, customer credit worthiness, current economic trends and changes in customer payment patterns to evaluate the adequacy of these reserves. Reserves are recorded based on the Company’s historical collection history. Allowance for doubtful accounts as of June 30, 2012 and 2011 were $159,542 and $nil, respectively.

Impairment of Long-Lived Assets

The Company adopted the Property, Plant and Equipment Topic of the Codification, which addresses financial accounting and reporting for the impairment or disposal of long-lived assets and supersedes previous accounting guidance, “Accounting for the Impairment of Long-Lived Assets and for Long-Lived Assets to be Disposed Of,” and “Reporting the Results of Operations for a Disposal of a Segment of a Business.” The Company periodically evaluates the carrying value of long-lived assets to be held and used, which requires impairment losses to be recorded on long-lived assets used in operations when indicators of impairment are present and the undiscounted cash flows estimated to be generated by those assets are less than the assets’ carrying amounts. In that event, a loss is recognized based on the amount by which the carrying amount exceeds the fair market value of the long-lived assets. Loss on long-lived assets to be disposed of is determined in a similar manner, except that fair market values are reduced for the cost of disposal. Based on its review, the Company believes that, as of June 30, 2012, there were no impairments of its long-lived assets.

Comprehensive Income

The Company uses SFAS 130 “Reporting Comprehensive Income” (codified in FASB ASC Topic 220). Comprehensive income is comprised of net income and all changes to the statements of stockholders’ equity, except those due to investments by stockholders, changes in paid-in capital and distributions to stockholders. Comprehensive income for the three- and nine-month periods ended June 30, 2012 and 2011 included net income and foreign currency translation adjustments.

Foreign Currency Translation

As of June 30, 2012 and 2011, the accounts of the Company were maintained, and its financial statements were expressed, in Chinese Yuan Renminbi (“CNY”). Such financial statements were translated into U.S. Dollars (“USD”) in accordance with Statement of Financial Accounting Standards (SFAS) No. 52, “Foreign Currency translation”, included in the Codification as ASC830, Foreign Currency Matters, with the CNY as the functional currency. According to the Codification, all assets and liabilities were translated at the current exchange rate, stockholders’ equity are translated at the historical rates and income statement items are translated at the average exchange rate for the period. The resulting translation adjustments are reported under other comprehensive income in accordance with the Comprehensive Income Topic of the Codification, as a component of stockholders’ equity. Transaction gains and losses are reflected in the income statement.

Recent Accounting Pronouncements

In December 2011, the FASB issued ASU 2011-11, Balance Sheet (Topic 210): Disclosures about Offsetting Assets and Liabilities. ASU 2011-11 enhances disclosures regarding financial instruments and derivative instruments. Entities are required to provide both net information and gross information for these assets and liabilities in order to enhance comparability between those entities that prepare their financial statements on the basis of U.S. GAAP and those entities that prepare their financial statements on the basis of IFRS. This new guidance is to be applied retrospectively. The Company anticipates that the adoption of this standard will expand its consolidated financial statement footnote disclosures.

On July 27, 2012, the FASB issued ASU 2012-02, Intangibles-Goodwill and Other (Topic 350) - Testing Indefinite-Lived Intangible Assets for Impairment. The ASU provides entities with an option to first assess qualitative factors to determine whether events or circumstances indicate that it is more likely than not that the indefinite-lived intangible asset is impaired. If an entity concludes that it is more than 50% likely that an indefinite-lived intangible asset is not impaired, no further analysis is required. However, if an entity concludes otherwise, it would be required to determine the fair value of the indefinite-lived intangible asset to measure the amount of actual impairment, if any, as currently required under US GAAP. The ASU is effective for annual and interim impairment tests performed for fiscal years beginning after September 15, 2012. Early adoption is permitted. The adoption of this pronouncement will not have a material impact on its financial statements.

Item 3. Quantitative and Qualitative Disclosures About Market Risk.

Not applicable.

Item 4. Controls and Procedures.

(a) Evaluation of Disclosure Controls and Procedures.

As required by paragraph (b) of Rules 13a-15 or 15d-15 under the Securities Exchange Act of 1934, the Company's principal executive officer and principal financial officer have evaluated the Company's disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) of the Exchange Act) as of the end of the period covered by this Quarterly Report on Form 10-Q. Based on this evaluation these officers have concluded that as of the end of the period covered by this Quarterly Report on Form 10-Q, our disclosure controls and procedures were effective and were adequate to insure that the information required to be disclosed by the Company in reports it files or submits under the Exchange Act were recorded, processed, summarized and reported within the time period specified in the Commission's rules and forms.

(b) Changes in Internal Control Over Financial Reporting.

During the quarter ended June 30, 2012, there were no changes in our internal control over financial reporting identified in connection with the evaluation performed during the fiscal period covered by this report that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.

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 currently not aware of any such legal proceedings or claims that we believe will have a material adverse effect on our business, financial condition or operating results.

Item 1A. Risk Factors.

There have been no material changes to the risk factors previously disclosed under Item 1A of the Company’s Annual Report on Form 10-K, as filed with the United States Securities and Exchange Commission on ~~December~~January 2914, ~~2011~~2013.

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

None.

Item 3. Defaults Upon Senior Securities.

None.

Item 4. Mine Safety Disclosures.

Not applicable.

Item 5. Other Information.

None.

Item 6. Exhibits.

Exhibits:
31.1		Certification of Principal Executive Officer pursuant to Section 302 of Sarbanes Oxley Act of 2002.
31.1*		Certification of Principal Executive Officer pursuant to Section 302 of Sarbanes Oxley Act of 2002.
31.2		Certification of Principal Financial Officer pursuant to Section 302 of Sarbanes Oxley Act of 2002.
31.2*		Certification of Principal Financial Officer pursuant to Section 302 of Sarbanes Oxley Act of 2002.
32.1		Certification of Principal Executive Officer pursuant to Section 906 of Sarbanes Oxley Act of 2002.
32.1*		Certification of Principal Executive Officer pursuant to Section 906 of Sarbanes Oxley Act of 2002.
32.2		Certification of Principal Financial Officer pursuant to Section 906 of Sarbanes Oxley Act of 2002.
32.2*		Certification of Principal Financial Officer pursuant to Section 906 of Sarbanes Oxley Act of 2002.
101.INS*		XBRL Instance Document

101.SCH*	XBRL Taxonomy Extension Schema Document
101.CAL*	XBRL Taxonomy Extension Calculation Linkbase Document
101.DEF*	XBRL Taxonomy Extension Definition Linkbase Document
101.LAB*	XBRL Taxonomy Extension Label Linkbase Document
101.PRE*	XBRL Taxonomy Extension Presentation Linkbase Document

*Filed herewith.

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

	COMPUTER GRAPHICS
	COMPUTER GRAPHICS INTERNATIONAL INC.
	INTERNATIONAL INC.
Date: February 19, 2013	By:	/s/ Jing Wang
Date: August 20, 2012	By:	/s/ Jing Wang
		Jing Wang Chief Executive Officer
		Jing Wang
		Chief Executive Officer
		(Principal Executive Officer)

Date: August 20, 2012	By:	/s/ Yongqing Ma
Date: February 19, 2013	By:	/s/ Yongqing Ma
		Yongqing Ma
		Yongqing Ma Chief Financial Officer
		Chief Financial Officer
		(Principal Financial Officer and Principal Accounting Officer)
		(Principal Financial Officer and Principal
		Accounting Officer)

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