SHARE-BASED PAYMENTS

9 Months Ended

Jun. 30, 2013

Disclosure Of Compensation Related Costs, Share-Based Payments [Abstract]

Disclosure of Compensation Related Costs, Share-based Payments [Text Block]

Note 8 - SHARE-BASED PAYMENTS

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 nine months ended June 30, 2013 and 2012, the Company amortized share-based payment expenses of $255,966 and $255,966 respectively. For the three months ended June 30, 2013 and 2012, the Company amortized share-based payment expenses of $85,322 and $85,322 respectively. The unrecognized share-based payment expense of $80,488 as of June 30, 2013 (2012: $421,776) 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 (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

On May 31, 2013, Yongqin Ma resigned from her position for personal reasons effective as of the same day. Under the employment agreement dated June 24, 2011 signed between the Company and Yongqin Ma. “On each of June 30, 2011, 2012 and 2013, the Company will issue to Executive 40,000 shares of its restricted common stock. In the event of Executive’s resignation or in the event of a termination by the Company of Executive’s employment, Executive shall not be entitled to receive any of such shares to which she is not already entitled at the time of such event.” 40,000 Stock Options were forfeited as of June 30, 2013.

As of June 30, 2013, 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 following is a summary of the option activity:

	Number of  Options
Outstanding as of September 30, 2012		120,000
Granted		-
Exercised		-
Forfeited		40,000
Outstanding as of June 30, 2013		80,000

For the nine months ended June 30, 2013 and 2012, the Company recognized $0 and $44,766 respectively as share-based payment expense. For the three months ended June 30, 2013 and 2012, the Company recognized $0 and $15,284 respectively as share-based payment expense. The total cost related to non-vested shares not yet recognized as of June 30, 2013 and September 30, 2012 were $0 and $15,371, respectively.

The Company therefore recognized share-based payment expenses to non-employees and employees in the aggregate amounts of $255,966 and $300,732 for the nine months ended June 30, 2013 and 2012, respectively. For the three months ended June 30, 2013 and 2012, the Company recognized share-based payment expenses to non-employees and employees in the aggregate amounts of $85,322 and $100,606, respectively.