U.S.
SECURITIES AND EXCHANGE COMMISSION Washington, D.C.  20549 FORM 10-K Annual
Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
for the fiscal year ended December 31, 2008   Transition
Report Under Section 13 or 15(d) of the Securities Exchange Act of 1934 for the
transition period from _____ to _____ Commission File Number:  000-52238 CELLCYTE GENETICS CORPORATION (Name of
registrant in its charter) Nevada

86-1127046(State or other jurisdiction of incorporation or
organization)

(IRS Employer Identification No.)1725 220th Street SE, Suite 103, Bothell,
Washington

98021(Address of principal executive offices)

(Zip Code) Registrants
telephone number, including area code:(425) 483-6101 Securities registered under Section 12(b) of the Exchange Act:
 None Securities registered under Section 12(g) of the Exchange Act: Common Stock, par value $0.001 per share  Indicate
by check mark if the registrant is a well-known seasoned issuer, as defined in
rule 405 of the Securities Act.       Yes
      No Indicate
by check mark if the registrant is not required to file reports pursuant to
Section 13 or 15(d) of the Exchange Act. Indicate
by check mark whether the registrant (1) 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            
 No Indicate
by check mark if disclosure of delinquent filers pursuant to Item 405 of
Regulation S-K (§229.405 of this chapter) is not contained herein, and will not
be contained, to the best of registrants knowledge, in definitive proxy or
information statements incorporated by reference in Part III of this Form 10-K
or any amendment to this Form 10-K. Indicate by check mark whether the registrant is a large
accelerated filer, an accelerated filer, or a smaller reporting company.
 See the definitions of the large accelerated filer, accelerate filer,
and smaller reporting company in Rule 12b-2 of the Exchange Act.
  (Check one): Large
Accelerated Filer Accelerated
Filer Non-Accelerated
Filer Smaller
reporting company (Do not check if a smaller reporting company)      - 2 -  Indicate
by check mark whether the registrant is a shell company (as defined in
Rule 12b-2 of the Exchange Act).     Yes
    No The
aggregate market value of voting and non-voting common stock held by
non-affiliates of the last day of the registrants most recently completed
fiscal quarter was $4,121,250 based upon the closing price of such common stock
on the OTC Bulletin Board of $0.0655. State
the number of shares outstanding of each of the issuers classes of common
equity, as of the latest practicable date:  62,919,845 shares of common
stock as of May 15, 2009. __________       CELLCYTE GENETICS CORPORATION Form 10-K  __________ PART
I 2 ITEM
1. BUSINESS 2 ITEM
1A.        RISK FACTORS 9 ITEM
2. PROPERTY 14 ITEM
3. LEGAL
PROCEEDINGS 14 ITEM
4. SUBMISSION
OF MATTERS TO A VOTE OF SECURITY HOLDERS 15 PART
II 15 ITEM
5. MARKET
FOR REGISTRANTS COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES
OF EQUITY SECURITIES 15 ITEM
6. SELECTED
FINANCIAL DATA 17 ITEM
7. MANAGEMENTS
DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS 17 ITEM
8. FINANCIAL
STATEMENTS 24 ITEM
9. CHANGES
IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL
DISCLOSURE 24 ITEM
9A. CONTROLS
AND PROCEDURES 24 ITEM
9B. OTHER
INFORMATION 27 PART
III 28 ITEM
10. DIRECTORS,
EXECUTIVE OFFICERS, PROMOTERS AND CORPORATE GOVERNANCE 28 ITEM
11. EXECUTIVE
COMPENSATION 32 ITEM
12. SECURITY
OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER
MATTERS 34 ITEM
13. CERTAIN
RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE 35 ITEM
14. PRINCIPAL
ACCOUNTANT FEES AND SERVICES 35 PART
IV 36 ITEM
15. EXHIBITS 36 SIGNATURES 37               FORWARD-LOOKING STATEMENTS This
Annual Report on Form 10-K for the year ended December 31, 2008 contains
forward-looking statements that involve risks and uncertainties.
 Forward-looking statements in this document include, among others,
statements regarding our capital needs, business plans and expectations.
 Such forward-looking statements involve assumptions, risks and
uncertainties regarding, among others, the success of our business plan,
availability of funds, government regulations, operating costs, our ability to
achieve significant revenues, our business model and other factors.  Any
statements contained herein that are not statements of historical fact may be
deemed to be forward-looking statements.  In some cases, you can identify
forward-looking statements by terminology such as may, will, should,
expect, plan, intend, anticipate, believe, estimate, predict,
potential or continue, the negative of such terms or other comparable
terminology.  In evaluating these statements, you should consider various
factors, including the assumptions, risks and uncertainties set forth in reports
and other documents we have filed with or furnished to the Securities and
Exchange Commission.  These factors or any of them may cause our actual
results to differ materially from any forward-looking statement made in this
document.  While these forward-looking statements, and any assumptions upon
which they are based, are made in good faith and reflect our current judgment
regarding future events, our actual results will likely vary, sometimes
materially, from any estimates, predictions, projections, assumptions or other
future performance suggested herein.  The forward-looking statements in
this document are made as of the date of this document and we do not intend or
undertake to update any of the forward-looking statements to conform these
statements to actual results, except as required by applicable law, including
the securities laws of the United States. REFERENCES As
used in this Annual Report: (i) the terms Company, our company, we, us
and our refer to CellCyte Genetics Corporation, a Nevada corporation, and its
subsidiary, unless the context requires otherwise; (ii) references to CellCyte
mean CellCyte Genetics Corporation, a Washington corporation; and (iii) all
dollar amounts refer to United States dollars unless otherwise indicated. __________    -
1 -     PART
I    ITEM
1. BUSINESS  Overview General We
were incorporated under the laws of the State of Nevada on March 9, 2004 under
the name Shepard Inc.  On February 16, 2007, Shepard Inc. was merged with
a wholly-owned subsidiary, CellCyte Genetics Corporation, a Washington
Corporation, in contemplation of the acquisition of all of the issued and
outstanding shares of CellCyte and the name of our company was changed to
CellCyte Genetics Corporation. In
2008, we substantially changed our business plan and we became involved in
several different lawsuits and a securities investigation. The
CellCyte Acquisition On
March 30, 2007, we completed the acquisition of all of the issued and
outstanding shares (the Purchased Shares) of CellCyte pursuant to a Share
Exchange Agreement among CellCyte, the stockholders of CellCyte (the Vendors)
and our company dated March 14, 2007 (the Share Exchange Agreement). In
accordance with the terms and conditions of the Share Exchange Agreement, the
total purchase price for the Purchased Shares consisted of an aggregate of
16,000,000 shares of our common stock at a deemed price of $1.50 per share.
 In addition, upon completion of the CellCyte acquisition: (i) Robert
Harris, a former director of our company, transferred an aggregate of 18,750,000
restricted shares of our common stock held by him to the Vendors at a deemed
price of $0.001 per share; and (ii) certain other stockholders transferred an
aggregate of 2,500,000 shares of our common stock to the Vendors at a price of
$0.001 per share. In
contemplation of the CellCyte acquisition, in January 2007 we had, on our behalf
and on behalf of certain investors (each a Lender), loaned to CellCyte the
aggregate principal sum of $1,000,000 (the Loan).  Interest on the Loan
accrued at a rate of 5% per annum, compounded semi-annually, and the Loan was to
mature 120 calendar days from the date of the advancement of the principal sum.
 The principal sum and interest on the Loan was secured by all of the
assets of CellCyte.  Under the terms of the Share Exchange Agreement, each
of the Lenders had the right, exercisable until the close of business on the
date of maturity of the Loan, to convert all amounts owing under the Loan to
such Lender into units of our company (each a Loan Unit), at a deemed
conversion price of $1.50 per Loan Unit, with each Loan Unit being comprised of
one share of our common stock and one non-transferable share purchase warrant
(each a Loan Warrant) exercisable until July 11, 2008 at a price of $3.00 per
share. Under
the terms of the Share Exchange Agreement, at the closing of the CellCyte
acquisition, an aggregate of $1,017,088 in principal and interest owing by
CellCyte to certain of its creditors was settled through the issuance of an
aggregate of 678,060 units of our company at a deemed price of $1.50 per unit,
with each such unit having the same terms and conditions as the Loan Units as
described above. In
addition, at the closing of the CellCyte acquisition, all outstanding options to
acquire shares in the capital of CellCyte were exchanged for options to acquire
an aggregate of 2,000,000 shares of our common stock at an exercise price of
$1.50 per share for a period of five years, and all options to acquire shares in
the capital of CellCyte were cancelled.  Further, at closing, all
outstanding warrants to acquire  -
2 -     shares
in the capital of CellCyte were exchanged for 205,000 shares of our common
stock, and all warrants to acquire shares in the capital of CellCyte were also
cancelled. In
accordance with the terms of the Share Exchange Agreement, at closing, we
raised, by way of a private placement of units (the Private Placement), a
total of $5,971,751 at a subscription price of $1.50 per unit (each a Private
Placement Unit), with each Private Placement Unit being comprised of one share
of our common stock and one non-transferable share purchase warrant with each
warrant being exercisable for one additional share of our common stock on the
same terms and conditions as the Loan Warrants.  An aggregate of $4,971,751
from the Private Placement was advanced by our company to CellCyte at closing,
and at closing each of the Lenders, our company and CellCyte agreed that the
original Loan of $1,000,000 would be converted for Loan Units in the manner set
forth above. Accounting
Treatment The
CellCyte acquisition constitutes a recapitalization of our company and has been
accounted for in accordance with principles applicable to accounting for reverse
acquisitions with CellCyte, the legal subsidiary, being treated as the
accounting parent and our company, the legal parent, being treated as the
accounting subsidiary.  Accordingly, the consolidated results of operations
and cash flows of our company set forth in this Annual Report include those of
CellCyte for all periods presented and those of our company subsequent to the
date of the CellCyte acquisition. Our
Business Overview As
a result of the acquisition of CellCyte, we became a biotechnology company
involved in research and development of stem cell enabling therapeutic products
and medical devices for cell production. Through
June 30, 2008, our company was primarily focused on the development of stem cell
targeting technology licensed from the US Department of Veteran Affairs (the
VA) as well as additional development of our patented bioreactor. Based on data and representations from the VA, we had published
that, in preliminary studies conducted by government scientists, administration
of CCG-TH30, the highest known affinity ligand for liver was reported by the
investigator to result in up to 77% of intravenously injected CD34+ cells
targeting the heart of normal Nonobese Diabetes / Severe Combined
Immunodeficiency (NOD/SCID) mice. Similarly, a second product candidate,
CCG-TH35, was reported by the VA to enhance delivery of mesenchymal stem cells
to the heart of normal NOD/SCID mice. In July 2008, we received new data material from the VA. We have
thoroughly reviewed this data and determined that the data was incomplete and
that images of certain mice were not included. Furthermore, we have concluded
from our review that the new data does not demonstrate that the stem cells
injected after CCG-TH30 or CCG-TH35 were, in fact, localized in the desired
target organ, e.g., the heart, as represented by the VA and the inventor,
a VA employee. As a result, unless we receive additional data from the VA that
confirms the VA's claims regarding the technology that we licensed from the VA,
we believe that it will be necessary to perform additional research to determine
if stem cells injected into animals along with CCG-TH30 or CCG-TH35 will
localize in a target organ. We are considering whether to continue internal
research and external collaborations to investigate stem cell targeting. We will
need to raise additional funding in order to conduct such internal testing and
external collaborations. As it relates to other aspects of our current business plan, this
data has no scientific impact on our bioreactor device business segment. Due to
events which occurred or became known in 2008, we intend to focus our efforts
over the next twelve months within the device segment.  -
3 -     Our
Device Division Cell
Expansion and Maintenance We
have purchased a cell expansion technology that was intended as a complementary
addition to our therapeutic portfolio.  The technology has two patents
issued (Cell Production Bioreactor, US Patent Number 5,622,857 and Incubation
device, US Patent Number 5,882,918) and is in the development and prototype
testing stage, with the device slated for research and drug development
applications in 2009. The key of this technology is superior oxygenation of
cells, achieved by the separation of oxygen and nutrient-supply into dedicated
bundles of fibers. Stem cells, islet cells and other cells are significantly
influenced by oxygen. This technology has demonstrated superior oxygenation by
allowing cells to expand and completely fill the bioreactor with viable cells.
 A three-dimensional bioreactor chamber with a volume of 17 ml, for
example, has been shown to grow over 10 billion hybridoma cells. In contrast,
more traditional methods of cell expansion using roller bottles or spinner
flasks produce significantly fewer viable cells, while using more raw materials.
In addition, the cells can grow in a three-dimensional network, thereby
emulating some of the characteristics of cell growth in solid organs.
 Prior to our acquisition of this technology, our bioreactor had already
proven successful in growing, expanding and extending the life of 14 different
cell lines, including embryonic stem cells. One
possible application of our technology is in the expansion of umbilical cord
blood-derived stem cells. There are current therapies that could be augmented by
having access to more positive matched stem cells.  The number of stem
cells that can be collected from one individuals cord blood can only be used to
treat a child or a small adult by a single administration even though the
therapy might require repeated injections.  Once a person reaches a certain
weight, there are not enough stem cells from a single individuals cord blood
for a therapeutic intervention. As an example, leukemia patients would fall in
this category where cord blood transplants could positively impact developing
treatments by having more viable cells available.  Of even greater impact,
our technology may be able to treat multiple patients from a single cord blood
collection.  If we are able to expand matching stem cells from a single
donor, we may have a major breakthrough for multiple therapeutic interventions
from a single source. Another
potential application of our technology is in the treatment of multiple myeloma.
 Widespread use of stem cell treatments for multiple myeloma patients has
not been possible to date, because the stem cells required for these
interventions must be immunologically identical or at least similar enough to
avoid adverse complications.  Therapy with autologous cells is often times
not an option because the patients bone marrow contains tumor cells, and
beneficial stem cells from a donor (allogeneic stem cells) are not available in
significant numbers.  We believe our technology may provide sufficient
quantities of patient-matched stem cells to be generated for therapeutic
interventions. As
stated previously, our cell expansion device is believed to emulate the
three-dimensional growth of cells in human solid organs, and for that reason we
have discussed its use as an artificial pancreas for islet cells to reside in
and produce insulin with physicians in diabetes research institutions. We are
currently in discussions with the Pacific Northwest Diabetes Research Institute
in Seattle to use our cell expansion device in a proof-of-concept study to both
expand the numbers and extend the life of islet cells for use in diabetic
patients.  Either of these applications would be a significant therapeutic
advancement to treat diabetes, one of the worlds most pervasive, debilitating
and growing diseases. Lastly,
an additional application for our technology is seen in the expansion of stem
cells and other cells for minorities, as stem cell banks for these populations
are very limited or do not currently exist. Stem
Cell Purification Our
stem cell purification platform is a second-generation stem cell purification
technology based on a proven immunoaffinity capture system for stem cells that
was previously used with cancer patients.  Our  -
4 -     co-founder,
Dr. Ronald W. Berninger, successfully led the development of the IgM
antibody and capture system for the first generation of this technology.
 This technology was used to generate stems cells for use in clinical
trials involving 3,500 patients in 250 clinics in 28 countries, and in 60 cancer
centers in the United States, saving many lives. The technology had received FDA
approval as well as European regulatory approvals. The
current second generation system is thought to be significantly more robust,
with the potential of supporting our stem cell organ targeting and delivery
technologies.  Additional revenue applications could be in traditional stem
cell bone marrow transplants, where purified stem cells are required for
autologous transplants in order to assure cancer free blood regeneration.
 A high degree of purification of stem cells from bone marrow can also
eliminate the presence of T cells, which reduces GVHD immune response, a serious
complication in bone marrow transplant. This purification platform may have
applications in cancer, genetic blood disorders, and autoimmune disease. Our
Business Model Our
business model focuses on the development of our bioreactor technology in
collaboration with research organizations to develop a wide range of
applications and uses to support external research and to become an integral
part of the process of bringing research to market, and then in the ultimate
production of end-use therapies and products.  We intend to position our
technology as a more efficient and cost effective means of expanding a wide
range of cell types which has the ability to accelerate research into a broad
range of therapies. We
believe this model offers the shortest pathway to begin generating revenues.
 We believe our technologies and the following strategies will make this
possible: Focus
on Synergistic Technologies We
plan on only developing and commercializing breakthrough discoveries with large
market demand that have undergone research with positive outcomes.  Our
current product platform was chosen because it may offer a wide range of
possible commercial and therapeutic applications, either individually or in
combination with our other product candidates or those of other companies.
 We believe this approach may afford us the opportunity to quickly advance
our research and broaden our intellectual property portfolio while mitigating
risks and costs of early stage clinical development. In that regard, the CTLs required for our Adenocarcinoma tumors
detection therapeutic technology will be grown and produced using our cell
expansion technology.  We may also move research forward for expansion of
islet cells and investigate their use in an implantable device.  We believe
these complementary technologies further advance and leverage our plan for early
revenues in addition to those that may also be obtained via collaborative or
development agreements with other companies. Collaboration We
intend to continue to seek collaborations with biotechnology, pharmaceutical and
research organizations that would enhance the development and speed to market of
our product candidates.  We are seeking potential product candidates from
other companies that may not yet have shown to be viable therapeutics, but which
may do so in combination with one or more of our technologies. Patents,
Proprietary Rights and Licenses We
believe that protection and defense of our intellectual property is critical to
our business.  We vigorously seek out additional intellectual property that
we consider useful in connection with our products, and have an aggressive
program of protecting our intellectual property.  Our know-how may  -
5 -     also
provide a significant competitive advantage, and we may continue to develop and
protect our proprietary know-how.  We may also from time to time seek to
acquire licenses to important externally developed technologies. We
have exclusive rights to a portfolio of patents and patent applications related
to our products and methods of deriving and using them.  These patents and
patent applications relate to compositions of matter, methods of obtaining
cells, and methods for preparing, transplanting and utilizing cells.
 Currently, our United States patent portfolio includes three issued United
States patents (Directing Cells to Target Organs, US Patent Number 7,282,222,
Cell Production Bioreactor, US Patent Number 5,622,857 and Incubation device, US
Patent Number 5,882,918). We have two additional patent applications pending. In
addition, we have 11 foreign patents as counterparts to our United States
applications and patents; counterparts to United States patents or applications
have issued in various countries.  We also rely upon trade-secret
protection for our confidential and proprietary information and take active
measures to control access to that information. Our
policy is to require our employees, consultants and significant scientific
collaborators and sponsored researchers to execute confidentiality agreements
upon the commencement of an employment or consulting relationship.  These
agreements generally provide that all confidential information developed or made
known to the individual by us during the course of the individuals relationship
with us is to be kept confidential and not disclosed to third parties except in
specific circumstances.  In the case of employees and consultants, the
agreements generally provide that all inventions conceived by the individual in
the course of rendering services to us shall be our exclusive property. The
patent positions of biotechnology companies, including our company, are
uncertain and involve complex and evolving legal and factual questions.
 The coverage sought in a patent application can be denied or significantly
reduced before or after the patent is issued.  Consequently, we do not know
whether any pending applications will result in the issuance of patents, or if
any existing or future patents will provide significant protection or commercial
advantage or will be circumvented by others.  Since patent applications are
secret until the applications are published (usually eighteen months after the
earliest effective filing date), and since publication of discoveries in the
scientific or patent literature often lags behind actual discoveries, we cannot
be certain that we were the first to make the inventions covered by each pending
patent applications or that we were the first to file patent applications for
such inventions.  There can be no assurance that patents will issue from
pending or future patent applications or, if issued, that such patents will be
of commercial benefit to us, afford us adequate protection from competing
products, or not be challenged or declared invalid. In
the event that a third party has also filed a patent application relating to
inventions claimed in our patent applications, we may have to participate in
interference proceedings declared by the United States Patent and Trademark
Office to determine priority of invention, which could result in substantial
uncertainties and cost, even if the eventual outcome is favorable to us.
 There can be no assurance that our patents, if issued, would be held valid
by a court of competent jurisdiction. A
number of biotechnology and other companies, universities and research
institutions have filed patent applications or have been issued patents relating
to cell therapy, stem cells and other technologies potentially relevant to or
required by our expected products.  We cannot predict which, if any, of
such applications will issue as patents or the claims that might be allowed. If
third party patents or patent applications contain claims infringed by our
technology and such claims or claims in issued patents are ultimately determined
to be valid, there can be no assurance that we would be able to obtain licenses
to these patents at a reasonable cost, if at all, or be able to develop or
obtain alternative non-infringing technology.  If we are unable to obtain
such licenses or develop or obtain alternative non-infringing technology at a
reasonable cost, we may not be able to develop certain products commercially.
 There can be no assurance that we will not be obliged to defend our
company in court  -
6 -     against
allegations of infringement of third party patents.  Patent litigation is
very expensive and could consume substantial resources and create significant
uncertainties.  An adverse outcome in such a suit could subject us to
significant liabilities to third parties, require us to seek licenses from third
parties, or require us to cease using such technology. Research
and Development During
the years ended December 31, 2008 and 2007, we have incurred research and
development costs of $622,111 and $674,598, respectively. At December 31, 2007,
the Company had $70,002 of capitalized patents and $454,534 of capitalized
patents pending. Through December 31, 2008 the Company incurred an additional
$73,594 of capitalized patents pending. Our
research and development has consisted primarily of pre-clinical research work
by our employees and consultants, development of our cell expansion and
maintenance technology through collaboration with research organizations, and
the licensing of patents and expenses relating to pursuing and prosecuting a
range of patent claims related to stem cell delivery and purification.
 Over the next twelve months we intend to focus our efforts in expanding
our proof-of-concept collaborations around the cell expansion and maintenance
technology and allowing us to bring these products to market and generate
revenues for our company. We
regularly evaluate the recoverability of our intangible assets and effective
July 1, 2008, we recorded an impairment of $568,913 on our licenses and patents
pending related to the VA intellectual property. Our initial research and
testing of the VA technology did not yield the anticipated results nor support
the VAs claims regarding the technology and will require further testing to
prove otherwise. We have determined that recovery of these costs through future
net cash flows was uncertain and that it was appropriate for financial statement
purposes to record an impairment loss on our licenses and patents pending. Our
corporate offices and research facility is located in a 26,000 square foot
facility in Bothell, Washington. Once
we have completed products ready for commercialization, we will evaluate our
various sales and marketing alternatives, including the licensing of our
technology to other companies, manufacturing and direct sales or entering into
marketing collaborations. Competition It
is expected that our cell expansion and maintenance products will have to
compete with a variety of existing products and procedures.  In addition,
new products and methods for cell expansion are continuously being developed
and/or refined. There
are a wide range of methods currently being used in cell growth and expansion.
These methods include the standard two-dimensional culture plate or vessel,
roller bottles and T flasks. There are also a wide range of more refined methods
that include spinners, culture bags, plates suspended in culture, and closed
system bioreactors. Traditionally, the culture plate, culture bags, spinner
flasks and T flasks have been used for cell expansion because of their low cost,
ease of use, and visible nature.  The challenge to these current methods
though, is their low aeration, frequent need for cleaning and sterilization, and
large footprint. We
believe that our primary competition will come from other companies that have
developed or are in the process of developing and marketing closed system
bioreactors. Our technology uses our patented dual fiber method which allows the
inner fiber set to carry nutrients and the outer fiber set to supply oxygen.
Other methods include single fiber bioreactors (FiberCell Systems, Inc. and
McGowan Institute  -
7 -     of
Regenerative Medicine), permeable membrane style bioreactors (Synthecon, Inc.),
perfusion bioreactors (AmProtein Corporation) and wave bioreactors (GE
Healthcare). Each of these differing technologies is looking at ways to create
rapid, yet viable, cellular expansion.  We believe that our patented
technology has the opportunity to be one of the standards in this fledgling
market because of its distinctive blend of attributes. Government
Regulation Our
research and development activities and the future manufacturing and marketing
of our therapeutic products are, and will continue to be, subject to regulation
for safety and efficacy by numerous governmental authorities in the United
States and other countries. In
the United States, pharmaceuticals, biologicals and medical devices are subject
to rigorous FDA regulation.  The Federal Food, Drug and Cosmetic Act, as
amended, and the Public Health Service Act, as amended, the regulations
promulgated thereunder, and other Federal and state statutes and regulations
govern, among other things, the testing, manufacture, safety, efficacy,
labeling, storage, export, record keeping, approval, marketing, advertising and
promotion of our potential products.  Product development and approval
within this regulatory framework takes a number of years and involves
significant uncertainty combined with the expenditure of substantial resources.
 In addition, the federal, state, and other jurisdictions have restrictions
on the use of fetal tissue. FDA
Manufacturing Requirements Among
the conditions for product licensure is the requirement that the prospective
manufacturers quality control and manufacturing procedures conform to the FDAs
current good manufacturing practice (cGMP) requirements.  Even after
product licensure approval, the manufacturer must comply with cGMP on a
continuing basis, and what constitutes cGMP may change as the state of the art
of manufacturing changes.  Domestic manufacturing facilities are subject to
regular FDA inspections for cGMP compliance, which are normally held at least
every two years.  Foreign manufacturing facilities are subject to periodic
FDA inspections or inspections by the foreign regulatory authorities with
reciprocal inspection agreements with the FDA.  Domestic manufacturing
facilities may also be subject to inspection by foreign authorities. Other
Regulations In
addition to safety regulations enforced by the FDA, we are also subject to
regulations under the Occupational Safety and Health Act, the Environmental
Protection Act, the Toxic Substances Control Act and other present and potential
future foreign, Federal, state and local regulations.  Employees We
currently have no full time employees and are relying on contractors and unpaid
management to continue development of the companys bio-reactor technology and
to seek financing to enable the continuation of operations.  Where
You Can Find More Information You
may read and copy all or any portion of this Annual Report or any other
information that we file at the SECs public reference room at One Station
Place, 100 F Street, NE, Washington, DC 20549.  You can request copies
of these documents, upon payment of a duplicating fee, by writing to the SEC.
 Please call the SEC at 1-800-SEC-0330 for further information on the
operation of the public reference room.  Our SEC filings, including this
Annual Report, are also available to you on the SECs website at www.sec.gov.   -
8 -     ITEM
1A.        RISK FACTORS An
investment in our common stock involves a number of significant risks.  You
should carefully consider the following risks and uncertainties in addition to
other information in this Annual Report in evaluating our company.  Our
business, operating results and financial condition could be seriously harmed
due to any of these risks.  The risks described below are not all of the
risks facing our company.  Additional risks not presently known to us or
that we currently consider immaterial may also impair our business operations.
 You may lose all or part of your investment due to any of these
risks. Our
financial situation is precarious and, based on currently estimated operating
expenses, our existing capital resources may not be sufficient to fund our
operations beyond the next three months. We
have incurred significant operating losses and negative cash flows from
operations since inception.  We have not achieved profitability and may not
be able to realize sufficient revenues to achieve or sustain profitability in
the future. We have limited liquidity and capital resources and must obtain
significant additional capital resources in order to sustain our product
development efforts and for general and administrative expenses and other
working capital requirements.  We have relied on proceeds from equity
offerings to fund our operations.  If we exhaust our cash reserves and are
unable to realize adequate financing, we may be unable to meet operating
obligations and be required to initiate bankruptcy proceedings.  Our
existing capital resources may not be sufficient to fund our operations beyond
the next three months. We
are not currently able to raise significant amounts of cash from either equity
or debt financings due to the legal issues pertaining to our company. Our
consultants and contractors have agreed to continue work for the company in
exchange for the issuance of unrestricted common stock. If
and when we are able to settle our outstanding legal issues, we intend to pursue
opportunities to obtain additional financing through equity and debt financings,
corporate alliances, grants and collaborative research arrangements.  The
source, timing and availability of any future financing will depend principally
upon market conditions, interest rates and, more specifically, on our progress
in our exploratory, preclinical and future clinical development programs.
 Funding may not be available when needed, at all, or on terms acceptable
to us.  Lack of necessary funds may require us to delay, scale back or
eliminate some or all of our research and product development programs and/or
our capital expenditures or to license our potential products or technologies to
third parties. Our independent registered public accounting firms report
states that there is a substantial doubt that we will be able to continue as a
going concern. Our independent registered public accounting firm, Williams and
Webster, state in their audit report attached to our audited consolidated
financial statements for the years ended December 31, 2008 and 2007 that, since
we have sustained operating losses since inception, have limited cash resources,
have not generated any revenues and are currently defending ourselves in several
legal and securities matters which could severely impact our ability to raise
additional capital to fund operations, these factors raise substantial doubt
about our ability to continue as a going concern. There can be no assurance that
acceptable financing to fund our ongoing operations can be obtained on suitable
terms, if at all. If we are unable to obtain the financing necessary to support
our operations, we may be unable to continue as a going concern. In that event,
we may be forced to cease operations and our stockholders could lose their
entire investment in our company.  -
9 -     We
may need but fail to obtain partners to support our development efforts and to
commercialize our technology. We
are relying on collaboration arrangements with outside research organizations to
help us to develop our cell expansion and maintenance technology. We are
providing our incubators and bioreactors along with our oversight to certain
research organizations to assist with further development. There is no certainty
that these organizations will continue these collaborations or that the results
of these arrangements will prove successful. If any of our collaborators
terminates their relationship with us or we fail to perform our obligations in a
timely manner, the development or commercialization of our technology and
potential products may be adversely affected. If
we are not able to continue these collaborations, or to enter into new
arrangements, we will be required to slow down or discontinue our development
efforts due to a lack of resources. We
have a history of operating losses, and we may fail to obtain revenues or become
profitable. We
expect to continue to incur substantial operating losses in the future in order
to conduct our research and development activities, and, if those activities are
successful, to fund production and other expenses.  These expenses include
the cost of acquiring technology, product testing, acquiring regulatory
approvals, establishing production, marketing, sales and distribution programs
and administrative expenses.  We have not earned any revenues from sales of
any product.  We expect that any revenues we may earn in the foreseeable
future will be derived from the sale of consumable bioreactors, cooperative
agreements, research grants, investments and interest on invested capital.
 We currently have no bioreactor product sales, cooperative agreements, we
have no current research grants for our stem cell technology, and we may not
obtain any such agreements or additional grants in the future or receive any
revenues from product sales. If
we are unable to protect our patents and proprietary rights, our business,
financial condition and results of operations will be harmed. We
own or license a number of patents and pending patent applications related to
our cell expansion and maintenance technology, various stem cells and methods of
deriving and using them, including human neural stem cell cultures.  Patent
protection for products such as those we propose to develop is highly uncertain
and involves complex and continually evolving factual and legal questions. The
governmental authorities that consider patent applications can deny or
significantly reduce the patent coverage requested in an application before or
after issuing the patent.  Consequently, we do not know whether any of our
pending applications will result in the issuance of patents, if any existing or
future patents will provide sufficient protection or significant commercial
advantage or if others will circumvent these patents.  We cannot be certain
that we were the first to discover the inventions covered by each of our pending
patent applications or that we were the first to file patent applications for
such inventions because patent applications are secret until they are published,
and because publication of discoveries in the scientific or patent literature
often lags behind actual discoveries. Patents
may not be issued from our pending or future patent applications or, if issued,
may not be of commercial benefit to us.  In addition, our patents may not
afford us adequate protection from competing products.  Third parties may
challenge our patents or governmental authorities may declare them invalid or
reduce their scope.  In the event that a third party has also filed a
patent application relating to inventions claimed in our patent applications, we
may have to participate in proceedings to determine priority of invention.
 Even if a patent issues, a court could decide that the patent was issued
invalidly.  Because patents issue for a limited term, our patents may
expire before we utilize them profitably.   Procedures of the European
Patent Office, third parties may oppose our issued European patents during the
relevant opposition period.  These proceedings and oppositions could result
in substantial  -
10 -     uncertainties
and cost for us, even if the eventual outcome is favorable to us, and the
outcome might not be favorable to us. If
we learn of third parties who infringe our patent rights, we may need to
initiate legal proceedings to enforce our patent rights.  These proceedings
may entail significant costs, and these third parties may have significantly
greater financial resources than us.  We may not prevail in these
proceedings. Proprietary
trade secrets and unpatented know-how are also important to our research and
development activities.  We cannot be certain that others will not
independently develop the same or similar technologies on their own or gain
access to our trade secrets or disclose such technology or that we will be able
to meaningfully protect our trade secrets and unpatented know-how.  We
require our employees, consultants, and significant scientific collaborators and
sponsored researchers to execute confidentiality agreements upon the
commencement of an employment or consulting relationship with us.  These
agreements may, however, fail to provide meaningful protection or adequate
remedies for us in the event of unauthorized use, transfer or disclosure of such
information or technology. If
we are unable to obtain necessary licenses to third-party patents and other
rights, we may not be able to commercially develop our expected products. A
number of pharmaceutical, biotechnology and other companies, universities and
research institutions have filed patent applications or have received patents
relating to cell therapy, stem cells and other technologies potentially relevant
to or necessary for our expected products.  We cannot predict which, if
any, of the applications will issue as patents, and there may be existing
patents of which we are currently unaware which the commercialization of our
product candidates would infringe.  If third party patents or patent
applications contain valid claims that our technology infringes upon their
technology, we may be prevented from commercializing that technology unless the
third party is willing to grant a license to us.  We may be unable to
obtain licenses to the relevant patents at a reasonable cost, if at all, and may
also be unable to develop or obtain alternative non-infringing technology.
 If we are unable to obtain such licenses or develop non-infringing
technology at a reasonable cost, our business could be significantly harmed.
 Also, any infringement lawsuits commenced against us may result in
significant costs, divert our managements attention and result in an award
against us for substantial damages. We
are aware of intellectual property rights held by third parties that relate to
products or technologies we are developing.    We currently
believe that the commercialization of our products as currently planned will not
infringe these third party rights, or, alternatively, that we will be able to
obtain necessary licenses or otherwise use alternate non-infringing technology.
 However, third parties may nonetheless bring suit against us claiming
infringement.  If we are unable to prove that our technology does not
infringe their patents, or if we are unable to obtain necessary licenses or
otherwise use alternative non-infringing technology, we may not be able to
commercialize any products.  We have obtained rights to technologies,
processes and compounds that we believe may be important to the development of
our products.  These licensors, however, may cancel our licenses or convert
them to non-exclusive licenses if we fail to use the relevant technology or
otherwise breach these agreements.  Loss of these licenses could expose us
to the risk that our technology infringes the rights of third parties.  We
can give no assurance that any of these licenses will provide effective
protection against our competitors. We
compete with companies that have significant advantages over us. It
is expected that our products will have to compete with a variety of similar
products and procedures.  Several larger and or better funded companies
currently offer a number of cell expansion products and methods that are
competitive to ours.    We believe that our products, when and if
successfully developed, will compete with these products principally on the
basis of improved and extended efficacy and safety and their overall economic
benefit to the health care system.  We believe that our most significant
competitors will be fully integrated pharmaceutical companies and more
established biotechnology  -
11 -     companies.
 Smaller companies may also be significant competitors, particularly
through collaborative arrangements with large pharmaceutical or biotechnology
companies.  Many of these competitors have significant products approved or
in development that could be competitive with our products. If
we develop products that receive regulatory approval, we would then have to
compete for market acceptance and market share.  For certain of our
products, an important success factor will be the timing of market introduction
of competitive products.  This is a function of the relative speed with
which we and our competitors can develop products, complete the testing and
approval processes, and supply commercial quantities of a product to market. We
are dependent on the services of key consultants and contractors. We
are highly dependent on former members of our management and scientific staff
that have agreed to continue working as contractors until the company is able to
obtain additional funding.  Although we will enter into contractor
agreements with some of these individuals and will pay them through the issuance
of unrestricted common stock, they may terminate their agreements at any time.
 In addition, our operations are dependent upon our ability to attract and
retain additional qualified scientific and management personnel.  We may
not be able to attract and retain the personnel we need on acceptable terms
given the competition for experienced personnel among pharmaceutical,
biotechnology and health care companies, universities and research institutions,
and our current financial condition. Our
activities involve hazardous materials; improper handling of these materials by
our employees, contractors or agents could expose us to significant legal and
financial penalties. Our
research and development activities involve the controlled use of hazardous
chemicals and potentially hazardous biological materials such as human and
animal tissue.  Their use subjects us to environmental and safety laws and
regulations such as those governing laboratory procedures, exposure to
blood-borne pathogens and the handling of biohazardous materials.
 Compliance with current or future laws and regulations may be expensive
and the cost of compliance could adversely affect us. Although
we believe that our safety procedures for using, handling, storing and disposing
of hazardous and potentially hazardous materials comply with the standards
prescribed by Washington and federal regulations, the risk of accidental
contamination or injury from these materials cannot be eliminated.  In the
event of such an accident or of any violation of these or future laws and
regulations, state or federal authorities could curtail our use of these
materials; we could be liable for any civil damages that result, the cost of
which could be substantial; and we could be subjected to substantial fines or
penalties.  In addition, any failure by us to control the use, disposal,
removal or storage, or to adequately restrict the discharge, or to assist in the
cleanup of hazardous chemicals or hazardous, infectious or toxic substances
could subject us to significant liability.  Any such liability could exceed
our resources and could have a material adverse effect on our business,
financial condition and results of operations.  Moreover, an accident could
damage our research and manufacturing facilities and operations and result in
serious adverse effects on our business. We
are currently subject to legal proceedings. In January 2008, three stockholder lawsuits were filed against us
in the United States federal court for the Western District of Washington:
Armbruster v. Cellcyte Genetics Corporation, et. al,No. C08-0047,
Tolerico v. Cellcyte Genetics Corporation, et. al., No. C08-0163 and
Pruitt v. Cellcyte Genetics Corporation, et. al., No. C08-0178.  An
amended complaint consolidating the 3 lawsuits has been filed and the amended
consolidated complaint alleges, inter alia, that we and our officers and
directors filed misleading statements with the Securities and Exchange
Commission regarding our products, and that we posted misleading information
regarding an officer on our website.  The lawsuits claim that investors
purchased our stock based on the alleged misleading statements and seek monetary
relief. The lawsuit has  -
12 -     not been certified for class action status as of the date of this
report. We are disputing the basis for the lawsuit and intend to vigorously
defend against it.  While we do not believe the lawsuit has merit, an
adverse outcome could have a material adverse effect on our financial position
and results of operations. We are also currently engaged in a dispute with a former employee,
who voluntarily resigned in 2007.  The former employee had signed an
employment agreement with us which contains certain restrictions on their
conduct after termination of employment.  The former employee is claiming
to have been misled into signing the agreement and is seeking monetary damages
for constructive discharge and relief from the terms of the employment contract,
which we are disputing.  We believe we have valid claims against the former
employee for breach of the agreement, among other things, and are seeking
injunctive and other monetary relief.  We do not believe that an adverse
outcome will have a material adverse effect on our financial position. In January 2008, the Securities and Exchange Commission (SEC)
notified us that it was commencing an informal non-public inquiry regarding
certain matters related to our filings. The SEC requested that we voluntarily
produce documents relating to its investigation. On May 12, 2008, we learned
that the informal inquiry commenced by the SEC had become a formal
investigation. We believe that the focus of the formal investigation is
substantially the same as the informal inquiry and intend to continue to fully
cooperate with the SEC regarding this matter. In May 2009, we reached a tentative agreement with the staff of
the SEC whereby we will enter into a consent decree neither admitting nor
denying any wrongdoing.  Finalization of the consent decree is contingent
upon formal SEC approval. We expect the consent decree to be approved by the SEC
during our third fiscal quarter of 2009, at which time we will be able to
announce the settlement terms. We are committed to resolving the issues raised
in connection with the investigation. There can be no assurance that we will be successful in defending
against any of these proceedings or that all of our costs will be covered under
our insurance policies. In addition, it is possible that the SEC will not
formally approve the tentative agreement, and that we will be required to
litigate with the Commission. We
are currently in default of our office lease. We
have not been able to make any of our lease payments since August 2008 and are
in default of the terms of our lease. We are in active discussions with our
landlord to settle the outstanding balance and to renegotiate the lease moving
forward. There is no guarantee that we will be able to agree to terms that are
reasonable for each party, and it is likely that we will be required to vacate
our premises. There is no certainty that we will be able to relocate to new
space without substantial disruption which may have a material adverse effect on
our operations. In addition, we have incurred substantial costs in building out
our facility and equipping it with furniture, office and lab equipment. Although
we have recorded an impairment loss related to our tenant improvements, if we
are required to vacate our premises, we may not be able to recover the value of
our remaining property and equipment costs. We are dependent upon third-party suppliers for raw
materials needed for the manufacture of our products. If any of these third
parties fail or are unable to perform in a timely manner, our ability to
manufacture and deliver will be compromised. In order to produce our bioreactors, we require certain raw of
materials used in our manufacturing process. These items must be manufactured
and supplied to us in sufficient quantities and in compliance with Good
Manufacturing Practices, or GMP. To meet these requirements, we will need to
enter into supply agreements with firms that manufacture these components to GMP
standards. Our requirements for these items are expected to increase if and when
we transition to the manufacture of commercial quantities of our products.  -
13 -     We
have limited liquidity and capital resources and may not obtain the significant
capital resources we will need to sustain our research and development efforts. We
have limited liquidity and capital resources and must obtain substantial
additional capital to support our research and development programs, for
acquisition of technology and intellectual property rights and, to the extent we
decide to undertake these activities ourselves, establishment of production
capabilities, maintaining and enforcing our intellectually property portfolio,
establishment of marketing and sales capabilities and distribution channels, and
general administrative expenses.  If we do not obtain the necessary capital
resources, we may have to delay, reduce or eliminate some or all of our research
and development programs or license our technology or any potential products to
third parties rather than commercialize them ourselves.  We intend to
pursue our needed capital resources through equity and debt financings,
corporate alliances, grants and collaborative research arrangements.  We
may fail to obtain the necessary capital resources from any such sources when
needed or on terms acceptable to us.  Our ability to complete successfully
any such arrangements will depend upon market conditions and, more specifically,
on continued progress in our research and development efforts. Our
stock price will likely be highly volatile, which may negatively affect our
ability to obtain additional financing in the future. The
market price of our stock is likely to be highly volatile due to the risks and
uncertainties described in this risk factors section, as well as other factors,
including: * pending
lawsuits; * our
ability to develop and test our technology; * our
ability to patent or obtain licenses to necessary technology; * competition
in our industry; * price
and volume fluctuations in the stock market at large that are unrelated to our
operating performance; and * comments
by securities analysts, or our failure to meet market expectations. As
a result of this volatility, an investment in our stock is subject to
substantial risk.  Furthermore, the volatility of our stock price could
negatively impact our ability to raise capital in the future.   ITEM
2. PROPERTY We
are located at 1725 220th Street SE, Suite 103, Bothell, WA 98021 in
approximately 26,000 square feet of space. We entered into a 60 month lease for
the facility in Bothell, Washington, commencing on February 1, 2008, that we use
for general office, and research and development activities.  We are
currently in default of the terms of our lease for not making our monthly
payments and are working with our landlord to resolve this issue.  See
Managements Discussion and Analysis  Material Commitments for more
information.        ITEM
3. LEGAL
PROCEEDINGS In January 2008, three stockholder lawsuits were filed against us
in the United States federal court for the Western District of Washington:
Armbruster v. Cellcyte Genetics Corporation, et. al,No. C08-0047,
Tolerico v. Cellcyte Genetics Corporation, et. al., No. C08-0163 and
Pruitt v. Cellcyte Genetics Corporation, et. al., No. C08-0178.  An
amended complaint consolidating the 3 lawsuits has been filed and the amended
consolidated complaint alleges, inter alia, that we and our officers and
directors filed misleading statements with the Securities and Exchange
Commission regarding our products, and that we posted misleading information
regarding an officer on our website.  The lawsuits claim that investors
purchased our stock based on the alleged misleading statements and seek monetary
relief. The lawsuit has not been certified for class action status as of the
date of this report. We are disputing the basis for the  -
14 -     lawsuit and intend to vigorously defend against it.  While we
do not believe the lawsuit has merit, an adverse outcome could have a material
adverse effect on our financial position and results of operations. We are also currently engaged in a dispute with a former employee,
who resigned in 2007.  The employee is asserting claims for
monetary damages based upon a constructive discharge theory and other
claims.  The employee has been ordered to arbitrate her
claims pursuant to the terms of a contract between the employee and
CellCyte.   We do not believe that the employee's claims have merit,
nor do we believe that an adverse outcome will have a material adverse effect on
our financial position.   The employee is on notice
regarding that which CellCyte deems proprietary information.  At this
time, we do not believe that CellCyte's intellectual property is imminently
threatened.   Should we determine that the employee is trying to
operate a new endeavor with intellectual property that belongs to CellCyte, we
will take appropriate action. Although management currently believes that resolving claims
against us, individually or in aggregate, may not have a material adverse impact
on our financial position, our results of operations, or our cash flows due to
the likelihood that our legal fees will be covered under our liability insurance
policy, these matters are subject to inherent uncertainties and managements
view of these matters may change in the future. In January 2008, the Securities and Exchange Commission (SEC)
notified us that it was commencing an informal non-public inquiry regarding
certain matters related to our filings. The SEC requested that we voluntarily
produce documents relating to its investigation. On May 12, 2008, we learned
that the informal inquiry commenced by the SEC had become a formal
investigation. We believe that the focus of the formal investigation is
substantially the same as the informal inquiry and intend to continue to fully
cooperate with the SEC regarding this matter. In May 2009, we reached a tentative agreement with the staff of
the SEC whereby we will enter into a consent decree neither admitting nor
denying any wrongdoing.  Finalization of the consent decree is contingent
upon formal SEC approval. We expect the consent decree to be approved by the SEC
during our third fiscal quarter of 2009, at which time we will be able to
announce the settlement terms. We are committed to resolving the issues raised
in connection with the investigation. While we believe that we have positive defenses against each of
these legal issues, there can be no assurance that we will be successful in
defending against any of these proceedings.   ITEM
4. SUBMISSION
OF MATTERS TO A VOTE OF SECURITY HOLDERS None.   PART
II   ITEM 5. MARKET FOR REGISTRANTS COMMON EQUITY, RELATED STOCKHOLDER
MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES Market
Information Market
for our Common Stock Our
shares of common stock are quoted for trading on the OTC Bulletin Board under
the symbol CCYG.  The following table sets forth the high and low trading
prices of our shares of common stock on the OTCBB for the periods indicated.
 The source of the information is the OTCBB.  The market  -
15 -     quotations
provided reflect inter-dealer prices, without retail mark-up, mark-down or
commissions and may not represent actual transactions. Quarter Ended
High Bid
Low BidMarch
31, 2007
$Nil
$NilJune
30, 2007
10.01
5.00September
30, 2007
6.00
3.25December
31, 2007
7.50
5.55March
31, 2008
7.20
0.20June
30, 2008
0.99
0.32September
30, 2008
0.49
0.20December
31, 2008
0.30
0.10 On
May 14, 2009, the closing sales price of our shares of common stock on the OTCBB
was $0.07 per share. Holders
of Our Common Stock As
of the date of this report, we have 144 stockholders of record. Dividends There
are no restrictions in our Articles of Incorporation or Bylaws that restrict us
from declaring dividends.  The Nevada Revised Statutes, however, do
prohibit us from declaring dividends where, after giving effect to the
distribution of the dividend: (a) we
would not be able to pay our debts as they become due in the usual course of
business; or (b) our
total assets would be less than the sum of our total liabilities, plus the
amount that would be needed to satisfy the rights of stockholders who have
preferential rights superior to those receiving the distribution. We
have not declared any dividends.  We do not plan to declare any dividends
in the foreseeable future. Equity
Compensation Plans The
table set forth below presents information relating to our equity compensation
plans as of the date of this Annual Report: Plan Category
Number of Securities to be Issued Upon Exercise of
Outstanding Options, Warrants and Rights (a)
Weighted-Average Exercise Price of Outstanding Options,
Warrants and Rights(b)
Number of Securities Remaining Available for Future
Issuance Under Equity Compensation Plans (excluding column
(a))Equity
Compensation Plans Approved by Security Holders(1)
3,189,365
$1.08
3,790,000Equity
Compensation Plans Not Approved by Security Holders
Nil
Nil
Nil  -
16 -       (1) On
March 30, 2007, we granted options to acquire up to 2,000,000 shares
of our common stock at an exercise price of $1.50 per share exercisable for
periods of five to ten years pursuant to the 2007 Stock Option / Restricted
Stock Plan. In March 2008, we granted options to our employees to acquire up to
715,000 shares of our common stock at an exercise price of $0.33 per share and
an exercise period of ten years. In June 2008, we granted options to certain
consultants to acquire up to 712,000 shares of our common stock with exercise
prices of $0.32 to $0.52 per share and an exercise period of five years. Due to
the suspension of our operations and the termination of all of our employees on
July 1, 2008, 1,767,000 of these options expired unexercised in October
2008.    ITEM
6. SELECTED
FINANCIAL DATA Not
applicable.  ITEM
7. MANAGEMENTS
DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS The
following discussion of our plan of operations, results of operations and
financial condition should be read in conjunction with our audited financial
statements for the years ended December 31, 2008 and 2007 and the section of
this Annual Report entitled Description of Business. On
March 30, 2007, we acquired all of the issued and outstanding shares of CellCyte
and we are now a biotechnology company focused on research and development See
Description of Business  The CellCyte Acquisition. The
CellCyte acquisition represented a change in control of our company.  For
accounting purposes, this change in control constitutes a re-capitalization of
our company, and the acquisition has been accounted for as a reverse merger
whereby we, as the legal acquirer, are treated as the acquired entity, and
CellCyte, as the legal subsidiary, is treated as the acquiring company with the
continuing operations.  Accordingly, the consolidated results of operations
and cash flows of our company set forth in this Annual Report include those of
CellCyte for all periods presented and those of our company subsequent to the
date of the CellCyte acquisition. The
following discussion contains forward-looking statements that reflect our plans,
estimates and beliefs. Our actual results could differ materially from those
discussed in the forward looking statements. Factors that could cause or
contribute to such differences include, but are not limited to, those discussed
below and elsewhere in this Annual Report, particularly in the section entitled
Description of Business - Risk Factors. Plan
of Operations Our plan of operations for the next 12 months is to: (a) conduct pre-clinical lab research at our biotechnology research
and development facility in Bothell, WA. (b) complete the design and sourcing of components to begin small
scale manufacturing of our cell expansion device technology for use in
collaborative research with academic and institutional research
organizations. (c) initiate collaborative research studies for the expansion of cord
blood stem cells, maintenance of islet cells and production of other cell lines
and proteins. (d) renegotiate the master space lease with our landlord and identify
subtenants to take over a portion of our facilities.  -
17 -     We anticipate that we will incur an aggregate of $1,500,000 in
expenses for the next 12 months as follows: (a) $621,000 for facility and equipment related expenses; (b) $215,000 for pre-clinical work, quality assurance, manufacturing
of biologic material, academic collaborations and further research
collaborations; (c) $128,000 for design and device manufacturing; (d) $1600,000 for legal expenses related to intellectual property
prosecution and accounting expenses related to quarterly reviews and annual
audits; (e) $255,000 for salaries and consulting; and (f) $121,000 for general and administrative purposes, travel,
conferences and public relations. During
the next 12 months we anticipate that we will generate minimal non-recoverable
engineering (NRE) service revenue and revenue from the sale and licensing of our
incubator and bioreactor device technology.  We had cash and cash
equivalents of $6,304 and a working capital deficit of $(1,008,573) at December
31, 2008.  We presently do not have sufficient cash to fund our operations
and we require additional financing to continue operations and enable us to pay
our planned expenses for the next 12 months.  There can be no assurance
that we will obtain any additional financing in the amounts required or on terms
favorable to us. Subsequent
to the 12 month period following the date of this Annual Report, we will be
required to obtain additional financing in order to continue to pursue our
business plan.  We believe that conventional debt financing will not be an
alternative for funding as we do not have tangible assets to secure any debt
financing.  We anticipate that additional funding will be in the form of
convertible debt and equity financing from the sale of our common stock. We
anticipate retaining the services of independent contractors, and expect to pay
such independent contractors by way of the issuance of stock compensation, in
lieu of cash. We
cannot provide investors with any assurance that we will be able to raise
sufficient funding from the issuance of convertible debt or the sale of our
common stock to fund our business plan going forward.  In the absence of
such financing, our business plan will fail.  Even if we are successful in
obtaining financing to fund our business plan, there is no assurance that we
will obtain the funding necessary to pursue our plan over the long-term. Results
of Operations The
following table sets forth selected financial information relating to our
company for the periods indicated: Year Ended December 31, 2008
Year Ended December 31, 2007Revenues
$Nil
$NilOperating
ExpensesConsulting
(746,273)
(499,021)General
and administrative
(1,111,245)
(573,703)Professional
fees
(952,524)
(196,903)  -
18 -      Research,
development and laboratory
(622,111)
(674,508)Salaries
and benefits
(655,907)
(801,617)Stock-based
compensation
(176,286)
(1,780,000)Net loss
(5,306,159)
(4,521,196) We
have been funding our operations primarily by way of private placements of
shares of common stock.  We will require additional capital to meet our
immediate and long term operating requirements. We expect to raise additional
capital through, among other things, the sale of equity or debt securities. Year
Ended December 31, 2008 Compared to Year Ended December 31, 2007 Revenues We
have had no operating revenues since our inception on January 14, 2005, to
December 31, 2008.  We anticipate that we will not generate any significant
revenues for so long as we are a development stage company. Consulting
Expenses We
had consulting expenses of $746,273 in the year ended December 31, 2008,
compared to $499,021 in the year ended December 31, 2007, relating to the growth
in our operations in the first six months of 2008 where we entered into several
collaborative agreements. General
and Administrative Expenses Our
general and administrative expenses in the year ended December 31, 2008
increased to $1,111,245 from $573,703 in 2007, primarily as a result of
increased operations during the first six months of 2008 and the increased rent
for our new research facility. Professional
Fees In
the year ended December 31, 2008, we incurred professional fees of $952,524,
compared to $196,903 in 2007, primarily related to the increase in legal and
accounting costs due to the increase in our operations and defense of various
legal matters. Research,
Development and Laboratory Expenses In
the year ended December 31, 2008, we had research, development and laboratory
expenses of $622,111, compared to $674,508 in 2007, relating to the change in
our plan of operations. Our research and development costs in 2008 were all
incurred in the first six months of the year prior to curtailment of activities
in July 2008. Salaries
and Benefits In
the year ended December 31, 2008, we paid $655,907 in salaries and benefits,
compared to $801,617 in 2007, primarily related to the curtailment of operations
in July 2008.  -
19 -     Stock-Based
Compensation In
the year ended December 31, 2008, we incurred stock-based compensation expenses
of $176,286, compared to $1,780,000 in 2007, directly related to the issuance of
options to acquire up to 2,000,000 of our shares of common stock, in connection
with the acquisition of CellCyte in 2007. Net
Loss As
a result of the above, our net loss for the year ended December 31, 2008 was
$5,306,159, compared to $4,521,196 in 2007. Liquidity
and Capital Resources As
of December 31, 2008, we had cash in the amount of $6,304 and a working capital
deficit of $(1,008,573).  Our planned expenditures over the next twelve
months are expected to amount to approximately $1,500,000 and will exceed our
cash reserves and working capital.  We presently do not have sufficient
cash to fund our operations and have curtailed significantly all activities. We
will require additional financing in order to pursue our plan of operations for
the next twelve months.  There can be no assurance that we will obtain any
additional financing in the amounts required or on terms favorable to us.
 If we are unable to obtain additional financing, we may have to reduce or
abandon our business activities and plan of operations. We
believe that general debt financing will not be an alternative for funding, as
we do not have tangible assets to secure any debt financing.  We anticipate
that additional funding will be in the form of convertible loans and/or equity
financing from the sale of our common stock.  However, we cannot provide
investors with any assurance that we will be able to raise sufficient funding
from the sale of our common stock to fund our plan of operations going forward.
 In the absence of such financing, our business plan will fail.  Even
if we are successful in obtaining equity financing, there is no assurance that
we will obtain the funding necessary to pursue our business plan.  If we do
not continue to obtain additional financing going forward, we will be forced to
abandon our plan of operations. Cash
Used in Operating Activities Cash
used in operating activities in the year ended December 31, 2008, was
$2,663,630, compared to $2,749,108 in the year ended December 31, 2007.
Nearly all of the cash used for operating activities in 2008 was incurred in the
first six months and was related to the commencement of our new plan of
operations.  Cash used for operating activities in the last six months of
2008 was primarily limited to legal fees and accounting services. Cash
Used In Investing Activities In
the year ended December 31, 2008, investing activities used cash of
$321,861, compared to $1,322,886 in the year ended December 31, 2007,
relating primarily to the majority of the acquisition of intellectual property
and the purchase of furniture and lab and office equipment being made in
2007. Cash
Provided By Financing Activities We
have funded our business to date primarily from sales of our common stock.
 In the year ended December 31, 2008, financing activities provided
cash of $700,338, compared to $6,075,701 in the year ended December 31,
2007, primarily from the sale of our common stock.  -
20 -     Going
Concern As
shown in the accompanying financial statements, we have incurred significant
losses since inception and have not generated any revenues to date.  The
future of our company is dependent upon our ability to obtain sufficient
financing and upon achieving future profitable operations.  These factors,
among others, raise substantial doubt about our companys ability to continue as
a going concern.  The accompanying consolidated financial statements do not
include any adjustments that might result from the outcome of this
uncertainty. Future
Financings We
anticipate continuing to rely on sales of our common shares to fund our business
operations.  Issuances of additional shares will result in dilution to our
existing stockholders.  There is no assurance that we will achieve any
additional sales of our equity securities or arrange for debt or other financing
to fund our business plan. Off-Balance
Sheet Arrangements We
have no 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, capital
expenditures or capital resources that are material to investors. Material
Commitments We
have entered into a 60-month lease for our office and research facility in
Bothell, Washington, commencing on February 1, 2008.  Our total commitment
for lease costs for the remaining term of our lease is $1,495,035. Rent expense
relating to our operating leases was $515,789 for the year ended December 31,
2008. As of December 31, 2008 we are in default of our lease agreement
due to the nonpayment of lease fees since August 2008, and owe our landlord
$273,505 for past rent, operating costs, penalties and interest. We are in
discussions with our landlord to work out a solution to this default. It is
uncertain what the outcome of these discussions will be. However, due to the
curtailment of our activities and the default situation under our facility
lease, we have determined that recovery of our tenant improvement costs through
future net cash flows was uncertain and that it was appropriate for financial
statement purposes to record an impairment loss of $383,535 on our tenant
improvements. Critical
Accounting Policies Our
financial statements are impacted by the accounting policies used and the
estimates and assumptions made by management during their preparation.  A
complete summary of these policies is included in Note 2 of the notes to
our financial statements.  We have identified below the accounting policies
that are of particular importance in the presentation of our financial position,
results of operations and cash flows and which require the application of
significant judgment by management. Use
of Estimates Our
financial statements and accompanying notes have been prepared in accordance
with United States generally accepted accounting principles applied on a
consistent basis and include certain estimates and assumptions that affect the
reported amounts of assets and liabilities at the date of the financial
statements and the reported amounts of revenues and expenses during the
reporting period.  Actual results may differ from those estimates.  -
21 -     Income
Taxes We
follow the provisions of Statement of Financial Accounting Standards No. 109,
Accounting for Income Taxes (SFAS No. 109), under which deferred tax
assets and liabilities are determined based on differences between financial
reporting and tax bases of assets and liabilities. Deferred tax assets and
liabilities are measured using the enacted tax rates and laws that are expected
to be in effect when the differences are expected to reverse.  The
provisions of SFAS No. 109 also require the recognition of future tax benefits
such as net operating loss carry-forwards, to the extent that the realization of
such benefits is more likely than not.  To the extent that it is more
likely than not those benefits will not be received, we have recorded a
valuation allowance against the related deferred tax asset. Intangible
Assets Our intangible assets primarily consist of patents and
intellectual property, which are carried at the purchase price and/or the legal
cost to obtain them less accumulated amortization. Patents and licenses are
being amortized over their estimated useful lives, which range from seven to
seventeen years. Annually these assets are reviewed for recoverability to
determine if the carrying amount on the balance sheet is appropriate. Research
and Development Costs Research and development costs are expensed as incurred.  The
cost of intellectual property purchased from others that is immediately
marketable or that has an alternative future use is capitalized and amortized as
intangible assets.  Capitalized costs are amortized using the straight-line
method over the estimated economic life of the related asset.  We
periodically review our capitalized intangible assets to assess recoverability
based on the projected undiscounted cash flows from operations, and impairments
are recognized in operating results when a permanent diminution in value
occurs. Stock-Based
Compensation We account for our stock option plan under the recognition and
measurement principles of the revised Statement of Financial Accounting
Standards No. 123, Share-Based Payments (SFAS No. 123 (R)).
 Accordingly, we have recognized compensation cost using the fair value
method and expected term accrual requirements as prescribed in SFAS No. 123
(R).  We had $176,286 in stock-based compensation expense for the year
ended December 31, 2008 and $1,780,000 in stock-based compensation expense for
the year ended December 31, 2007. Recent
Accounting Pronouncements      Effective January 1, 2008, we adopted Statement of Financial
Accounting Standards No. 157, Fair Value Measurements ("SFAS 157"). In
February 2008, the FASB issued Staff Position No. 157-2, Effective Date of
FASB Statement No. 157 ("FSP 157-2"), which delayed the effective
 date of SFAS 157 for  certain  nonfinancial  assets and
 liabilities, including  fair value  measurements  under
SFAS No. 141 and SFAS 142, to fiscal years  beginning  after
 November 15, 2008. Therefore, we have adopted the provisions of SFAS 157
with respect our financial assets and liabilities only.  SFAS 157
 defines  fair  value, establishes  a  framework
 for  measuring  fair  value  in  generally
  accepted accounting  principles,  and expands
 disclosures about fair value measurements. Fair  value is
 defined  under  SFAS 157 as the  exchange  price
 that  would be received  for an asset or paid to  transfer
a  liability  (an exit price) in the principal or most
 advantageous  market for the asset or liability in an orderly
transaction  between market  participants  on the
 measurement  date.  Valuation techniques used to measure fair
value under SFAS 157 must maximize the use of observable inputs and minimize the
use of unobservable inputs.  The standard describes a fair value hierarchy
based on the following three levels of inputs, of  -
22 -     which
the first two are considered observable and the last unobservable, that may be
used to measure fair value:  o    Level 1 - Quoted
 prices in active  markets  for  identical  assets or
liabilities.  o    Level 2 -
 Inputs  other  than  Level 1 that  are
 observable,  either directly or  indirectly,  such as
quoted prices for similar  assets or liabilities;  quoted  prices
in markets that are not active;  or other inputs that are observable or can
be corroborated by observable market data for substantially the full term of the
assets or liabilities.  o    Level 3 -
 Unobservable  inputs  that are  supported  by
 little or no market  activity  and that are  significant
 to the fair  value of the assets or liabilities.  As of
December 31, 2008, we did not hold any assets or liabilities that are required
to be measured at fair value on a recurring basis, and therefore the adoption of
the respective provisions of SFAS 157 did not have an impact on our consolidated
financial statements. On January 1, 2009, we will implement the previously
deferred provisions of SFAS 157 for nonfinancial assets and liabilities recorded
at fair value, as required. We do not believe that the remaining provisions will
have a material effect on our consolidated financial statements when they become
effective.  Effective January 1, 2008, we adopted Statement of Financial
Accounting Standards No. 159, The Fair Value Option for Financial Assets and
Financial Liabilities, Including an Amendment of SFAS No. 115 ("SFAS 159").
 SFAS 159 permits companies to choose to measure many financial instruments
and certain other items at fair value.  SFAS 159 is effective for financial
statements issued for fiscal years beginning after November 15, 2007.  The
adoption of SFAS 159 did not have a material impact on our consolidated
financial statements. In December 2007, the FASB issued Statement of Financial
Accounting Standards No. 141 (Revised 2007), Business Combinations
(SFAS No. 141R). SFAS No. 141R will change the accounting for business
combinations. Under SFAS No. 141R, an acquiring entity will be required to
recognize all the assets acquired and liabilities assumed in a transaction at
the acquisition-date fair value with limited exceptions. SFAS No. 141R will
change the accounting treatment and disclosure for certain specific items in a
business combination. SFAS No. 141R applies prospectively to business
combinations for which the acquisition date is on or after the beginning of the
entitys first annual reporting period beginning on or after December 15, 2008.
Accordingly, any business combinations we engage in will be recorded and
disclosed following existing GAAP until January 1, 2009. Management has not
determined the effect that adopting this Statement would have on our financial
position or results of operations. In December 2007, the FASB issued Statement of Financial
Accounting Standards No. 160, "Noncontrolling Interest in Consolidated
Financial Statements, an Amendment of ARB No. 51" ("SFAS No. 160"), which
will change the accounting and reporting for minority interests, which will be
recharacterized as noncontrolling interests and classified as a component of
equity within the consolidated balance sheets. SFAS No. 160 is effective as of
the beginning of an entitys first fiscal year beginning on or after December
15, 2008. Earlier adoption is prohibited. Management has not determined the
effect that adopting this Statement would have on our financial position or
results of operations. On
March 19, 2008, the Financial Accounting Standards Board (FASB) announced the
issuance of Statement of Financial Accounting Standards No. 161, Disclosures
about Derivative Instruments and Hedging Activities (SFAS No. 161). SFAS
No. 161 amends Statement of Financial Accounting Standards No. 133,
Accounting for Derivative Instruments and Hedging Activities (SFAS No.
133) and was issued in response to concerns and criticisms about the lack of
adequate disclosure of derivative instruments and hedging activities. SFAS No.
161 is focused on requiring enhanced disclosure on 1) how and why an entity uses
derivative instruments and hedging activities; 2) how derivative instruments and  -
23 -     related
hedging activities are accounted for under SFAS No. 133; and 3) how derivative
instruments and related hedging activities affect an entitys cash flows,
financial position and performance. To
accomplish the three objectives listed above, SFAS No. 161 requires: 1)
qualitative disclosures regarding the objectives and strategies for using
derivative instruments and engaging in hedging activities in the context of an
entitys overall risk exposure; 2) quantitative disclosures in tabular format of
the fair values of derivative instruments and their gains and losses; and 3)
disclosures about credit-risk related contingent features in derivative
instruments. SFAS No. 161 is effective for financial statements issued for
fiscal years and interim periods beginning after November 15, 2008.
 Management has not determined the effect that adopting this Statement
would have on our financial position or results of operations.  In May
2008, the FASB issued Statement of Financial Accounting Standards No. 162,
"The Hierarchy of Generally Accepted Accounting Principles"
("SFAS No. 162").  SFAS No. 162 identifies the sources of
accounting principles and the framework for selecting the principles used in the
preparation of financial statements of nongovernmental entities that are
presented in conformity with generally accepted accounting principles (the
GAAP hierarchy).  SFAS No. 162 will become effective 60 days
following the SEC's approval of the Public Company Accounting Oversight Board
amendments to AU Section 411, "The Meaning of Present Fairly in
Conformity With Generally Accepted Accounting Principles."  We do not
expect the adoption of SFAS No. 162 to have a material effect on our
consolidated financial position, results of operations or cash flows.   ITEM
8. FINANCIAL
STATEMENTS We
have filed as part of this Annual Report our audited financial statements as of
and for the years ended December 31, 2008 and 2007, and the related notes to
these financial statements. These financial statements are set forth in this
Annual Report beginning on page F-1 below, and are incorporated by reference in
this Item 8.   ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE We
engaged Williams & Webster, P.S., Certified Public Accountants, as our
principal independent registered public accounting firm effective April 27,
2007. Concurrent with this appointment, Morgan & Company, Chartered
Accountants, resigned as our principal independent registered public accounting
firm effective April 27, 2007. The decision to change our principal independent
registered public accounting firm was approved by our board of directors. There
were no disagreements with our accountants on accounting and financial
disclosure during the two previous fiscal years. Williams
& Webster, P.S. have not been consulted on any matter relating to the
application of accounting principles to a specific transaction, either completed
or contemplated, or the type of audit opinion that might be rendered on our
company's financial statements.   ITEM
9A. CONTROLS
AND PROCEDURES Evaluation
of Disclosure Controls and Procedures In
connection with the preparation of this annual report on Form 10-K, an
evaluation was carried out by CellCyte Genetic Corporations management, with
the participation of the Principal Executive Officer and Principal Accounting
Officer, of the effectiveness of CellCyte Genetic Corporations disclosure
controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the
Securities Exchange Act  -
24 -     of
1934 (Exchange Act)) as of December 31, 2008.  Disclosure controls and
procedures are designed to ensure that information required to be disclosed in
reports filed or submitted under the Exchange Act is recorded, processed,
summarized, and reported within the time periods specified in the SEC rules and
forms and that such information is accumulated and communicated to management,
including the Principal Executive Officer and the Principal Accounting Officer,
to allow timely decisions regarding required disclosures. During
the evaluation of disclosure controls and procedures as of December 31, 2008,
management identified material weaknesses in internal control over financial
reporting, which management considers an integral component of disclosure
controls and procedures. Material weaknesses identified include ineffective
oversight of financial reporting, lack of appropriate accounting policies,
journal entry documentation procedures and managements assessment of internal
control over financial reporting. As a result of the material weaknesses
identified, management concluded that CellCyte Genetics Corporations disclosure
controls and procedures were ineffective. Notwithstanding the existence of these material weaknesses,
CellCyte Genetics Corporation believes that the consolidated financial
statements in this annual report on Form 10-K fairly present, in all material
respects, CellCyte Genetics Corporations financial condition as of December 31,
2008 and 2007, and results of its operations and cash flows for the years ended
December 31, 2008 and 2007, in conformity with United States generally accepted
accounting principles (GAAP). Managements
Report on Internal Control Over Financial Reporting Management
of our CellCyte Genetic Corporation is responsible for establishing and
maintaining adequate internal control over financial reporting.  CellCyte
Genetic Corporations internal control over financial reporting is a process,
under the supervision of the Principal Executive Officer and the Principal
Accounting Officer, designed to provide reasonable assurance regarding the
reliability of financial reporting and the preparation of the companys
financial statements for external purposes in accordance with United States
generally accepted accounting principles.  Internal control over financial
reporting includes those policies and procedures that:  · Pertain to the maintenance of records that in reasonable detail
accurately and fairly reflect the transactions and dispositions of the companys
assets; · Provide reasonable assurance that transactions are recorded as
necessary to permit preparation of the financial statements in accordance with
generally accepted accounting principles, and that receipts and expenditures are
being made only in accordance with authorizations of management and the Board of
Directors; and · Provide reasonable assurance regarding prevention or timely
detection of unauthorized acquisition, use, or disposition of the companys
assets that could have a material effect on the financial statements. Because
of its inherent limitations, internal control over financial reporting may not
prevent or detect misstatements.  Also, projections of any evaluation of
effectiveness to future periods are subject to the risk that controls may become
inadequate because of changes in conditions or that the degree of compliance
with the policies or procedures may deteriorate. CellCyte
Genetic Corporations management conducted an assessment of the effectiveness of
the companys internal control over financial reporting as of December 31, 2008,
based on criteria established in Internal Control  Integrated Framework
issued by the Committee of Sponsoring Organizations of the Treadway Commission
(COSO). As a result of this assessment, management identified material
weaknesses in internal control over financial reporting.  -
25 -     A
material weakness is a control deficiency, or a combination of deficiencies, in
internal control over financial reporting such that there is a reasonable
possibility that a material misstatement of CellCyte Genetics Corporations
annual or interim financial statements will not be prevented or detected on a
timely basis.  The material
weaknesses identified are disclosed below.  Ineffective Oversight of Financial Reporting.
 CellCyte Genetics Corporation has not provided an appropriate level of
oversight of the financial reporting process and has not appropriately monitored
the Companys system of internal control.  The Companys monitoring of
managements assessment of internal control over financial reporting did not
result in appropriate actions taken by management to remedy the deficiencies in
the process to assess internal control over financial reporting. The Company no
longer has an independent audit committee overseeing the financial reporting
process.  Lack
of Appropriate Accounting Policies, Procedures, and Personnel.
 Management of CellCyte Genetics Corporation has not established with
appropriate rigor the accounting policies, procedures, and documentation of
significant judgments and estimates made by management in the preparation of the
financial statements, including accounting policies related to accounting for
asset impairments. In addition, management has not appropriately assessed the
risk to reliable financial reporting related to the effects of unfilled key
financial reporting position(s).  This led to the identification by the
auditors of material misstatements in the financial statements that were not
identified by management related to the impairment of assets. Journal
Entry Documentation and Procedures.  Journal entries are the principal
means by which CellCyte Genetics Corporations books and records are compiled
for financial reporting purposes, and management has not established a formal
policy for the processing of journal entries, including required supporting
documentation, review, and approval.  Testing of the documentation, review,
and approval of journal entries made in the accounting records of the Company
confirmed that the Company has not maintained records that, in reasonable
detail, accurately and fairly reflect the transactions of the Company.
 Documentation to support journal entries made was missing, inadequate, and
lacked any evidence of approval. As
a result of the material weaknesses in internal control over financial reporting
described above, CellCyte Genetics Corporations management has concluded that,
as of December 31, 2008, the CellCyte Genetics Corporations internal control
over financial reporting was not effective based on the criteria in Internal
Control  Integrated Framework issued by the COSO. This
annual report does not include an attestation report of the Companys
independent registered public accounting firm regarding internal control over
financial reporting.  We were not required to have, nor have we, engaged
the Companys independent registered public accounting firm to perform an audit
of internal control over financial reporting pursuant to the rules of the
Securities and Exchange Commission that permit us to provide only managements
report in this annual report. Changes
in Internal Control over Financial Reporting There
were certain changes in our internal control over financial reporting (as
defined in Rule 13a-15(d) under the Exchange Act) during the year ended December
31, 2008 that may  materially affect, or is reasonably likely to materially
affect, our internal control over financial reporting. These changes included
the resignation of the Companys Principal Accounting Officer and the
appointment of a new Principal Accounting Officer, the suspension of a
significant portion of the Companys operations, and the appointment of the
Audit Committee Chairman, previously an independent director, as the Interim
Principal Executive Officer.    -
26 -     ITEM
9B. OTHER
INFORMATION Not
applicable. __________    -
27 -     PART
III   ITEM 10. DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND CORPORATE
GOVERNANCE Our
directors and executive officers and their respective ages as of the end of the
fiscal year covered by this Annual Report are as follows: Name
andMunicipality of Residence
Age
Current Office withCellCyte Genetics
Corporation
Director or Officer SinceGary A. ReysFreeland,
Washington, U.S.A.
64
Chairman,
President, Chief Executive Officer, and a director
March 30,
2007Dr. Ronald W. Berninger,
Ph.D.Mukilteo, Washington, U.S.A.
63
Secretary,
Executive Vice President, Chief Scientific Officer and a director
March 30,
2007Randy A. Lieber
Issaquah, Washington,
USA
52
Principal
Accounting Officer and a director
November 24,
2008John M. Fluke,
Jr.Bellevue, Washington, U.S.A.
66
Interim Principal Executive
Officer and a Director
June 1,
2007 The
following is a description of the business background of the directors and
executive officers of our company: Gary
A. Reys  Chairman, President, Chief Executive Officer and a
director Mr. Reys brings over 30 years of experience with both
international Fortune 100 and 500 publicly traded companies and emerging-growth
companies in the pharmaceutical, biotechnology and medical device sectors. He
held executive positions with Pfizer and with Rhone Poulenc Rorer (now Aventis),
North America. Mr. Reys was one of the pioneers in the generic pharmaceutical
industry as part of a five member founding executive team of Schein
Pharmaceutical, which Bayer AG acquired a 28% ownership and the company went on
to complete a successful IPO. Mr. Reys served in various capacities for Goldline
Laboratories, positioning the company for the acquisition by IVAX, an
international pharmaceutical holding company (now Teva Pharmaceutical), retiring
from IVAX as Vice President of Business Development in 1993. Mr. Reys served as
Executive Vice President and Chief Financial Officer of IBV Technologies, a
division of the McKesson Corporation from May 1994 to December 1997. Mr. Reys
served as Chief Executive Officer and President of Genespan, a cell expansion
and DNA biotechnology company from January 1998 to February 2000. Mr. Reys
served as Chief Executive Officer, President and Chief Financial Officer for
Clear Medical from February 2000 to March 2001, where he positioned the company
as the first FDA approved high-level disinfectant re-processor of medical
devices. Mr. Reys co-founded and served as the President and Chief Executive
Officer of Cennapharm, a biopharmaceutical company from April 2001 to May 2003.
In June 2003, Mr. Reys co-founded the ideas and concepts which were incorporated
into CellCyte Genetic in January, 2005. Mr. Reys attended the University of
Washington with focus on Finance and Accounting. He also served as a member of
the University of Washington's Graduate School, M.B.A. Mentor Advisory
Board.  -
28 -     Dr.
Ronald W. Berninger, Ph.D.  Secretary, Executive Vice-President, Chief
Scientific Officer and a director Dr.
Berninger has over 20 years experience in building research teams and moving
products from R&D to manufacturing and into the marketplace. In June 2003,
Dr. Berninger co-founded the ideas and concepts which were incorporated into
CellCyte Genetic in January, 2005. Dr. Berninger served as Vice President and
Director of R&D and QA/Regulatory for Genespan Corporation from September
1996 to February 2002 and also for Cennapharm Corporation from May 2002 to May
2003.  In both positions he was responsible for formulation of drugs and
building the infrastructure for R&D, Quality, Regulatory, and
Documentation.  Prior to that, Dr. Berninger served as Senior Scientist and
Head of Biochemistry at CellPro, a stem cell company. As a member of the award
winning Ceprate ̈ SC Concentrator development team, he was instrumental in
establishing the first FDA approved process for purification, biotinylation and
formulation of a CD34 IgM monoclonal antibody for purification of stem
cells.  Dr. Berninger also played a vital role in defining the chemistry
for the affinity gel employed in the Ceprate ̈ product used for cancer and gene
therapy applications. Dr. Berninger served as Senior Scientist for NeoRx
Corporation where he used his expertise in chemistry to play a pivotal role in
purifying and chemically modifying monoclonal antibodies to target tumor cells
in diagnostic and clinical applications. Dr.
Berninger served as Assistant Professor at the Tufts University School of
Medicine from 1980 to 1986. Prior to that appointment, Dr. Berninger was a
Fellow, Instructor and Assistant Professor at the John Hopkins University School
of Medicine from 1975 to 1980. He received his B.S. degree in Chemistry from
Drexel University in 1968 and in 1972 was awarded a Ph.D. in Organic Chemistry
from the University of Pittsburgh. Dr. Berninger has received numerous awards,
patents and honors for his scientific discoveries and has over 70 scientific
publications. John
M. Fluke, Jr.  Interim Principal Executive Officer and a director Mr.
Fluke is the Chairman of Fluke Capital Management, LP; the Fluke family's
investment and trust management company. He founded the company in 1976. Mr.
Fluke graduated from the University of Washington in 1964, with a Bachelor of
Science Degree in Electrical Engineering, and received his Master's Degree in
Electrical Engineering from Stanford University in 1966. Mr.
Fluke joined his father's firm, John Fluke Mfg. Co., in 1966 as a design
engineer and held various engineering and general management positions. He was
elected to the board of that company in 1976, appointed Chief Executive Officer
in 1983 and Chairman from 1984. He served as CEO through 1987, Chairman through
1990 and a director of the Fluke Corp. through July 1998 when the company was
acquired by Danaher Corporation. Mr.
Fluke currently serves on the Boards of two emerging - or re-emerging -
companies: Abacast, Inc. (third generation peer-to-peer streaming software) and
MaestroSoft, Inc. (charitable event management software). Over the last three
decades many of Mr. Fluke's governance positions with smaller companies have
required direct and frequent interaction with management to balance the
achievement (or maintenance) of cash flow positive performance without deviating
from best governance practices. Mr.
Fluke is a director of PACCAR Inc. (since 1984), where he also serves as audit
committee financial expert and chairman of the compensation committee. He also
currently serves as a director of Tully's Coffee Company (since 2005) and chairs
its audit committee. Mr. Fluke is a former director and chairman of the audit
committee for PRIMUS International (2003 to 2006) and American Seafoods Group
(2003 to 2006) where he served on the audit committee. He has also served on the
boards and audit committees of Peoples National Bank (1984 to 1993) and US Bank
of Washington (1993 to 1997). Mr.
Fluke is a past Chairman of the Greater Seattle Chamber of Commerce (1993) and
continues to serve on its board and is a past Chairman of the Washington State
China Relations Council (1985 to 1987). He  -
29 -     concurrently
served as a national board member of the American Electronics Association and
the National Association of Manufacturers as well as the Executive Committees of
both trade organizations (1985 to 1990). Mr.
Fluke continues to serve as a member of the University of Washington's
Engineering Visiting Committee (since 1982), the University of Washington Foster
School of Business Advisory Board (since 1987), the University of Washington
Applied Physics Laboratory Advisory Board (since 1992) and the Pacific Museum of
Flight (since 1988). He also is immediate past Chairman of the board of Junior
Achievement of Washington and is a member of the board of the Washington Policy
Center. Mr. Fluke previously served on the Stanford University Engineering
Advisory Council (1985 to 1989). He is a trustee-emeritus of the University of
Puget Sound (1984-2002), a past trustee of St. Thomas School of Medina, WA (1988
to 1995) and served on the Washington State Higher Education Coordinating Board
(1987 to 2000) and the Washington Business Roundtable and its Education
Committee (1984 to 2001). Mr.
Fluke is a past President of PONCHO (1993), Seattle's oldest fund-raising
auction for the arts, a past President of the Seattle Council of the Boy Scouts
of America (1984 to 1985) and a former member of the boards of the Seattle
Symphony Orchestra (1981 to 1990), the 5th Avenue Theater Association (1985 to
1990) and the Nature Conservancy (1997 to 2001). Randy A. Lieber 
Principal Accounting Officer and a director  Mr.
Lieber is a senior financial professional with more than 28 years of experience
working with both public and private companies. He is the managing partner of
Abacube Accounting Services, which provides a full range of accounting and tax
services to small and medium sized businesses.  Mr.
Lieber started his professional career at Coopers &
Lybrand/PricewaterhouseCoopers (PwC) where he spent 14 years working with a wide
range of companies including Software, semi-conductor, bio-technology and
Internet companies. While at PwC, he was involved in more than 10 initial and
follow-on public offerings, financial reporting to the Securities and Exchange
Commission (SEC), and provided buy-side consulting and due diligence on mergers
and acquisitions.  Subsequent to his tenure at PwC, Mr. Lieber was the Director of
Finance at a $500 Million international public company, Chief Financial Officer
of an internet startup company, and more recently, as the Chief Financial
Officer of Ascentium Corporation, a technology and marketing consulting firm. He
joined Ascentium shortly after it was founded in 2001 and was instrumental in
helping it to grow to annual revenues of $75 Million with offices in seven
cities, including London. He was responsible for all finance, accounting, human
resources, and facilities.  Mr.
Lieber has BS degree in accounting from Central Washington University and became
a CPA in Alaska in 1987 and in California in 1996. He is on the Board of
Directors of Rosetta Solutions and the Greater Seattle USBC Youth Bowling
Association. He is also on the board of advisors for ITM solutions. Term
of Office Our
directors are appointed for a one-year term to hold office until the next annual
general meeting of our stockholders or until removed from office in accordance
with our Bylaws.  Our officers are appointed by our Board of Directors and
hold office until removed by the board. Significant
Employees As
of the date of this Annual Report, we had no paid employees. The management team
has agreed to remain involved with no guarantee of payment for these services.
In addition, certain members of our  -
30 -     scientific
and operations staff have agreed to remain on as contractors. These members will
be compensated through the issuance of the companys unrestricted common
stock. Family
Relationships None
of the directors, officers or the significant employee of our company are
related to one another. Conflicts
of Interest We
do not have any procedures in place to address conflicts of interest that may
arise between our business and our directors other business activities.
 We are not aware of any existing conflicts between us and our directors
other business activities. Audit
Committee The
sole member of our current Audit Committee is Mr. Fluke. Our
Board of Directors has determined that Mr. Fluke qualifies as a financial
expert. None of our executive officers are independent according to the
standards for independence prescribed by the American Stock Exchange. Involvement
in Certain Legal Proceedings None
of our directors, executive officers, significant employees or control persons
has been involved in any of the events prescribed by Item 401(f) of Regulation
S-K during the past five years, including: 1. any
bankruptcy petition filed by or against any business of which such person was a
general partner or executive officer either at the time of the bankruptcy or
within two years prior to that time; 2. any
conviction in a criminal proceeding or being subject to a pending criminal
proceeding (excluding traffic violations and other minor offenses); 3. being
subject to any order, judgment, or decree, not subsequently reversed, suspended
or vacated, of any court of competent jurisdiction, permanently or temporarily
enjoining, barring, suspending or otherwise limiting his involvement in any type
of business, securities or banking activities; or 4. being
found by a court of competent jurisdiction (in a civil action), the Commission
or the Commodity Futures Trading Commission to have violated a federal or state
securities or commodities law, and the judgment has not been reversed,
suspended, or vacated. Compliance
with Section 16(a) of the Securities Exchange Act Section
16(a) of the Securities Exchange Act of 1934, as amended, requires our
executive officers and directors, and persons who beneficially own more than ten
percent of our equity securities, to file reports of ownership and changes in
ownership with the Securities and Exchange Commission.  Officers, directors
and greater than ten percent stockholders are required by SEC regulation to
furnish us with copies of all Section 16(a) forms they file.  Based upon
these forms, our officers, directors and ten percent stockholders were in
compliance during the fiscal year ended December 31, 2008.  -
31 -     Code
of Ethics We
have not as yet adopted a Code of Ethics.  We plan to adopt a Code of
Ethics applicable to our directors, officers and employees in 2009.   ITEM
11. EXECUTIVE
COMPENSATION Summary
Compensation The
following table sets forth the compensation paid to our Chief Executive Officer
and those executive officers that earned more than $100,000 in 2008 (the Named
Executive Officers). Both principal officers have been replaced with interim
officers: Summary Compensation Table  Name
and Principal Position
Year
Salary($)
Bonus($)
Stock Awards($)
Option Awards ($)
Non-Equity Incentive Plan Compensation($)
Non-qualified Deferred Compen-sation Earnings
($)
All Other Compen-sation($)
Total($)Gary
A. Reys,Chief Executive Officer
2008
2007
160,417
337,500(1)
Nil
Nil
Nil
Nil
Nil
Nil
Nil
Nil
Nil
Nil
Nil
Nil
160,417
337,500Dr.
Ronald W. Berninger, Ph.D., Secretary
2008
2007
96,795
178,750(1)
Nil
Nil
Nil
Nil
Nil
Nil
Nil
Nil
Nil
Nil
Nil
Nil
96,795
178,750 (1) Presented
as a combination of consulting fees and salary paid for FY 2007. Stock
Options John
M. Fluke, Jr. became our Interim Principal Executive Officer during 2008. Mr.
Fluke was granted an option in March 2007 for 150,000 shares of our stock with
an exercise price of $1.50 per share. We have not issued options to acquire
shares of our common stock to any other of our executive officers. Stock
Option Plans In
connection with the CellCyte acquisition, on March 30, 2007, our Board of
Directors adopted a 2007 Stock Option/Restricted Stock Plan (the Plan).
 The following summary of the Plan is not complete and is qualified in its
entirety by reference to the Plan, a copy of which has been filed with the
SEC. The
purpose of the Plan is to attract and retain the best available personnel for
positions of substantial responsibility, to provide additional incentive to
employees and consultants and to promote the success of our companys business.
 The number of shares available for issuance under the Plan is 5,450,000
shares.  If an award under the Plan should expire or become unexercisable
for any reason and without having been exercised in full, or surrendered
pursuant to an option exchange program, then the shares that were subject to
such expiry or unexercised award shall again become available for future grant
under the Plan.  The Plan is administered by our companys Board of
Directors or a committee appointed by the Board.  The Plan administrator
has the authority, in its discretion, to determine all matters relating to
awards granted under the Plan, including the selection of individuals to be
granted awards, the type of award to be granted, the number of shares to be
covered by each award and all terms, conditions, restrictions and limitations of
an award granted under the Plan.  The term of the Plan is ten years from
the date of its adoption by the Board.  -
32 -     On
April 2, 2009, our Board of Directors approved the 2009 Stock Incentive Plan for
Employees and Consultants (the 2009 Plan), the purpose of which is to provide
our employees and consultants with an increased incentive to make significant
and extraordinary contributions to the long-term performance and growth of our
company, and to facilitate attracting and retaining exceptional employees and
consultants.  Under
the 2009 Plan, we have initially reserved and registered 30,000,000 shares of
our common stock to be used as compensation to employees and contractors for
services rendered. Director
Compensation We
pay our directors for their services as directors in restricted stock grants.
 We may issue options or shares of our common stock to directors for their
services from time to time. The following table sets forth information about
compensation paid to our directors in 2008: Director Compensation Table Name
Fees Earned or Paid in Cash($)
Stock Awards($)
Option Awards($)
Non-Equity Incentive Plan Compen-sation($)
Non-qualified Deferred Compen-sation Earnings
($)
All OtherCompen-sation($)
Total($)Gary
A. Reys
Nil
Nil
Nil
Nil
Nil
Nil
NilDr.
Ronald W. Berninger
Nil
Nil
Nil
Nil
Nil
Nil
NilJohn
M. Fluke, Jr.
Nil
$107,802
Nil
Nil
Nil
Nil
$107,802Randy
A. Lieber
Nil
Nil
Nil
Nil
Nil
Nil
Nil During
2008, Mr. Fluke was paid director fees as specified by the CellCytes Director
Fee Schedule adopted upon Mr. Flukes appointment to our Board of Directors in
June 2007. Because of our limited cash position, such fees were paid in-kind, in
restricted stock vesting in four equal tranches, starting with the date of grant
and on each of the next three annual anniversaries of the grant date. Mr. Fluke
was granted a total of 145,247 shares of our common stock in 2008. Long-Term
Incentive Plans We
do not have any long-term incentive plans, pension plans, or similar
compensatory plans for our directors or executive officers. Potential
Payments Upon Termination or Change-in-Control Information
with respect to any payouts upon the termination of a Named Executive Officer or
a change-in-control of our company is set forth below under Employment
Agreements. Employment
Agreements We
have entered into employment agreements with Gary A. Reys, our Chairman,
President and Chief Executive Officer and Dr. Ronald W. Berninger, our
Secretary, Executive Vice President and Chief Scientific Officer.  We have
also entered into a CEO Award Agreement with Mr. Reys.  However, the
Company suspended these agreements effective July 1, 2008.  Each of the
agreements will be re-  -
33 -     evaluated
upon the successful completion of the Companys fund raising efforts.  The
agreements have been filed with our Current Report on Form 8-K filed with the
SEC on June 5, 2007 and a summary of each has been included in our Annual Report
on Form 10-KSB for the year ended December 31, 2007.         ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
AND RELATED STOCKHOLDER MATTERS The
following table sets forth certain information with respect to the beneficial
ownership of our common stock by each stockholder known by us to be the
beneficial owner of more than 5% of our common stock and by each of our current
directors and executive officers. Each person has sole voting and investment
power with respect to the shares of common stock held by him, except as
otherwise indicated. As of May 14, 2009, there are 62,919,845 shares of common
stock issued and outstanding. Name
and Address of Beneficial Owner
Shares(1)
PercentNamed Executive
Officers and Directors(2)Gary A. ReysChairman,
President, Chief Executive Officer and a director
18,625,000
29.6%Dr. Ronald W.
Berninger, Ph.D.Secretary, Executive Vice President, Chief Scientific
Officer and a director
18,625,000
29.6%Randy A.
LieberPrincipal Accounting Officer and a director
Nil
*John M. Fluke,
Jr.Interim Principal Executive Officer and a director
295,247(3)
*Directors and
Executive Officers as a Group (4 Persons)
37,545,247
59.7%Beneficial Owners of
in Excess of 5% (other than Executive Officers and
Directors)Not applicable
Nil
Nil * Less
than one percent. (1) Under
Rule 13d-3, a beneficial owner of a security includes any person who, directly
or indirectly, through any contract, arrangement, understanding, relationship,
or otherwise has or shares: (i) voting power, which includes the power to vote,
or to direct the voting of shares; and (ii) investment power, which includes the
power to dispose or direct the disposition of shares. Certain shares may be
deemed to be beneficially owned by more than one person (if, for example,
persons share the power to vote or the power to dispose of the shares). In
addition, shares are deemed to be beneficially owned by a person if the person
has the right to acquire the shares (for example, upon exercise of an option)
within 60 days of the date as of which the information is provided. In computing
the percentage ownership of any person, the amount of shares outstanding is
deemed to include the amount of shares beneficially owned by such person (and
only such person) by reason of these acquisition rights. As a result, the
percentage of outstanding shares of any person as shown in this table does not
necessarily reflect the persons actual ownership or voting power with respect
to the number of shares of common stock actually outstanding on May 14, 2009. As
of May 14 2009, there were 62,919,845 shares issued and outstanding. (2) The
address of the executive officers and directors is 1725 220th Street
SE, Suite 103, Bothell, Washington, U.S.A., 98021. (3) Includes
options to acquire up to 150,000 shares of our common stock at an exercise price
of $1.50 per share for a period of five years. Changes
in Control We
are unaware of any contract, or other arrangement or provision, the operation of
which may at a subsequent date result in a change of control of our
company.    -
34 -     ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR
INDEPENDENCE Related
Party Transactions Except
as disclosed below, there are no transactions, since the beginning of our
companys last fiscal year, or any currently proposed transactions, in which our
company was or is to be a participant where the amount involved exceeds the
lesser of $120,000 or one percent of the average of our companys total assets
at year-end for the last two completed fiscal years and in which any related
person had or will have a direct or indirect material interest.  Related
party includes (a) any
of our directors or officers; (b) any
person proposed as a nominee for election as a director; (c) any
person who beneficially owns, directly or indirectly, shares carrying more than
10% of the voting rights attached to our outstanding shares of common stock;
or (d) any
child, stepchild, parent, stepparent, spouse, sibling, mother-in-law,
father-in-law, son-in-law, daughter-in-law, brother-in-law, or sister-in-law of
any of the foregoing persons who has the same house as any of such person. Gary
A. Reys and Dr. Ronald W. Berninger, current directors and officers, may be
considered promoters of the Company.  Neither Mr. Reys nor Dr. Berninger
has received anything of value from us in their capacities as promoters of our
company. Material
Contracts We
have entered into employment agreements with Gary A. Reys, our Chairman,
President and Chief Executive Officer, and Dr. Ronald W. Berninger, our
Secretary, Executive Vice President and Chief Scientific Officer, which are
described under Executive Compensation  Employment Agreements. Effective as
July 1, 2008, the company suspended these agreements.  Each of the
agreements will be re-evaluated upon the successful completion of our fund
raising efforts.   ITEM
14. PRINCIPAL
ACCOUNTANT FEES AND SERVICES We
engaged Williams & Webster, P.S., Certified Public Accountants, as our
independent auditors effective April 27, 2007.  Morgan & Company,
Chartered Accountants, served as our independent auditors during 2006 and up to
the appointment of Williams & Webster, P.S.  The following table
provides information relating to the fees we paid to our independent auditors
for the periods indicated:  Fiscal Year EndedDecember 31, 2008
Fiscal Year EndedDecember 31, 2007Audit
Fees
$82,063
$50,368Audit-related
Fees
$Nil
$NilTax
Fees
$3,829
$1,700All
other Fees
$Nil
$Nil Audit
fees are the aggregate fees billed by our independent auditors for the audit of
our annual financial statements, reviews of interim financial statements and
attestation services that are provided in connection with statutory and
regulatory filings or engagements.  -
35 -     Audited-related
fees are the aggregate fees billed by our independent auditors for assurance and
related services that are reasonably related to the performance of the audit or
review of our financial statements and are not reported in the preceding
paragraph. Our
policy is to pre-approve all audit and permissible non-audit services performed
by the independent accountants.  These services may include audit services,
audit-related services, tax services and other services.  Under our audit
committees policy, pre-approval is generally provided for particular services
or categories of services, including planned services, project based services
and routine consultations.  In addition, we may also pre-approve particular
services on a case-by-case basis.  We approved all services that our
independent accountants provided to us in the past two fiscal years.  PART
IV  ITEM
15. EXHIBITS  ExhibitNumber
Description
of Exhibit3.1
Articles
of Incorporation, as amended.  Incorporated by reference to our
Registration Statement on Form SB-2 filed on May 4, 2005.3.2
Bylaws.
 Incorporated by reference to our Current Report on Form 8-K
filed May 14, 2004.21.1
Subsidiaries
of the Company:Name
of Subsidiary
Jurisdiction of Incorporation
Percentage OwnershipCellCyte
Genetics Corporation
Washington
100%31.1
Section
302 Certification of Principal Executive Officer.31.2
Section
302 Certification of Principal Accounting Officer.32.1
Section
906 Certification of Principal Executive Officer.32.2
Section
906 Certification of Principal Accounting Officer.    -
36 -     SIGNATURES Pursuant
to the requirements of Section 13 or 15(d) 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. CELLCYTE
GENETICS CORPORATION  /s/
John M. Fluke John
M. Fluke, Jr., Interim Principal Executive Officer  Pursuant
to the requirements of the Securities Exchange Act of 1934, this report has been
signed below by the following persons on behalf of the registrant and in the
capacities and on the dates indicated. /s/
John M. Fluke May
16, 2009John M. Fluke, Jr., Director Date /s/
Randy Lieber May
17, 2099Randy Lieber, Director Date   -
37 -     CELLCYTE GENETICS CORPORATION (a Development Stage Company)  Consolidated
Financial Statements  December 31, 2008   Index Consolidated
Balance Sheets Consolidated
Statements of Operations Consolidated
Statement of Stockholders Equity Consolidated
Statements of Cash Flows Notes
to Consolidated Financial Statements   F-1      To
the Board of Directors and Stockholders of CellCyte Genetics
Corporation  REPORT
OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM  We have
audited the accompanying consolidated balance sheets of CellCyte Genetic
Corporation and subsidiary  (a development stage company) as of December
31, 2008 and 2007, and the related consolidated statements of operations,
stockholders equity and cash flows for the years then ended and for the period
from January 14, 2005 (Inception) to December 31, 2008.  These consolidated
financial statements are the responsibility of the Companys management.
 Our responsibility is to express an opinion on these consolidated
financial statements based on our audits.  We
conducted our audits in accordance with the standards of the Public Company
Accounting Oversight Board (United States).  Those standards require that
we plan and perform the audit to obtain reasonable assurance about whether the
consolidated financial statements are free of material misstatement.  The
Company is not required to have, nor were we engaged to perform, an audit of its
internal control over financial reporting. Our audits included consideration of
internal control over financial reporting as a basis for designing audit
procedures that are appropriate in the circumstances, but not for the purpose of
expressing an opinion on the effectiveness of the Companys internal control
over financial reporting. Accordingly, we express no such opinion. An audit
includes examining, on a test basis, evidence supporting the amounts and
disclosures in the financial statements.  An audit also includes assessing
the accounting principles used and significant estimates made by management, as
well as evaluating the overall financial statement presentation.  We
believe that our audits provide a reasonable basis for our opinion.  In our
opinion, the consolidated financial statements referred to above present fairly,
in all material respects, the financial position of CellCyte Genetics
Corporation and subsidiary as of December 31, 2008 and 2007 and the results of
their operations and their cash flows for the years then ended and for the
period from January 14, 2005 (Inception) to December 31, 2008, in conformity
with accounting principles generally accepted in the United States of
America.  The
accompanying consolidated financial statements have been prepared assuming the
Company will continue as a going concern. As discussed in Note 2, the Company
has sustained operating losses since inception, has limited cash resources and
has not generated any revenues. Additionally, the Company is currently defending
itself in several legal and securities matters which could severely impact its
ability to raise additional capital to fund operations. These factors raise
substantial doubt about the Companys ability to continue as a going concern.
Managements plans regarding those matters also are described in Note 2. The
consolidated financial statements do not include any adjustments that might
result from the outcome of this uncertainty.  /s/
 Williams & Webster, P.S.  Williams & Webster, P.S. Certified Public
Accountants Spokane, Washington May 17,
2009   F-2


CELLCYTE GENETICS CORPORATION(a Development Stage Company)CONSOLIDATED BALANCE SHEETSDecember 31,

December 31,2008

2007ASSETSCURRENT ASSETSCash and cash equivalents
$
6,304

$
2,291,457Prepaid expenses and deposits

78,898


181,140Total Current Assets

85,202


2,472,597OTHER ASSETSFurniture and Equipment, net of depreciation and
impairment

537,945


1,036,456Intellectual property, net of amortization and
impairment

46,236


575,495Total Other Assets

585,181


1,612,350TOTAL ASSETS
$
669,383

$
4,084,947LIABILITIES AND STOCKHOLDERS' EQUITY
(DEFICIT)CURRENT LIABILITIESAccounts payable
$
935,283

$
412,837Accrued expenses

-


51,619Due to related parties

134,239


107,949Deferred rent

7,853


-Convertible note payable to related party

16,400


-Total Current Liabilities

1,093,775


572,405COMMITMENTS AND CONTINGENCIES

-


-STOCKHOLDERS' EQUITY (DEFICIT)Common stock, $0.001 par value; 525,000,000 shares
authorized,62,919,845 and 59,854,225 shares issued and
outstanding, respectively

62,920


59,854Additional paid in capital

9,926,010


7,276,553Common stock purchase warrants

114,702


1,398,000Deficit accumulated during development stage

(10,528,024)


(5,221,865)Total Stockholders' Equity (Deficit)

(424,392)


3,512,542TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY
(DEFICIT)
$
669,383

$
4,084,947The accompanying notes are an integral
part of consolidated financial statements


F-3


CELLCYTE
GENETICS CORPORATION(a Development
Stage Company)CONSOLIDATED
STATEMENTS OF OPERATIONSFrom InceptionYear Ended

(January 4, 2005)December 31,

to
December 31,2008

2007

2008REVENUES

$
-

$
-

$
-OPERATING
EXPENSES:Consulting


746,273


499,021


1,640,098General and
administrative


1,111,245


573,703


1,864,635Professional
fees


952,524


196,903


1,201,526Research,
development and laboratory


622,111


674,508


1,296,619Salaries and
benefits


655,907


801,617


1,457,524Stock-based
compensation


176,286


1,780,000


1,956,286Total Operating
Expenses


4,264,346


4,525,752


9,416,688LOSS FROM
OPERATIONS


(4,264,346)


(4,525,752)


(9,416,688)OTHER INCOME
(EXPENSE)Interest
income


19,890


12,622


32,512Interest and
finance charges


(47,478)


(8,066)


(129,623)Impairment of
intellectual property


(568,913)


-


(568,913)Impairment of
tenant improvements

(383,535)





(383,535)Loss on
disposal of furniture and equipment

(61,777)


-


(61,777)Total Other
Income (Expense)


(1,041,813)


4,556


(1,111,336)LOSS BEFORE
TAXES


(5,306,159)


(4,521,196)


(10,528,024)INCOME
TAXES


-


-


-NET LOSS

$
(5,306,159)

$
(4,521,196)

$
(10,528,024)BASIC AND
DILUTED NET LOSSPER COMMON
SHARE

$
(0.09)

$
(0.08)WEIGHTED
AVERAGE NUMBER OFSHARES
OUTSTANDING FOR BASICAND
DILUTED CALCULATION


61,928,001


55,120,154The accompanying notes are an integral part of these
consolidated financial statements


F-4


CELLCYTE
GENETICS CORPORATION(a Development
Stage Company)CONSOLIDATED
STATEMENTS OF CASH FLOWSFrom Inception(January 4, 2005)Year Ended December 31,
to
December 31,2008

2007

2008CASH FLOWS FROM
OPERATING ACTIVITIES:Net loss

$
(5,306,159)

$
(4,521,196)

$
(10,528,024)Adjustments to
reconcile net loss to net cash used byoperating
activitiesAmortization of
intellectual property


34,339


39,284


100,379Depreciation of
furniture and equipment


301,466


42,347


343,813Stock-based
compensation


176,286


1,780,000


1,956,286Non-cash
services


492,601


-


492,601Non-cash
beneficial conversion right


16,400


-


16,400Non-cash
impairment of tenant improvements


383,535





383,535Non-cash
impairment of intellectual property


568,913


-


568,913Expenses paid by
stockholder


26,290





26,290Loss on disposal
of furniture and equipment


61,777


-


61,777Decrease
(increase) in assetsPrepaid expenses
and deposits


102,242


(179,940)


(78,898)Increase
(decrease) in liabilitiesAccounts
payable


522,446


75,712


903,222Deferred
rent


7,853


-


7,853Accrued
interest


-


8,066


82,088Accrued
expenses


(51,619)


6,619


-Net cash used by
operating activities


(2,663,630)


(2,749,108)


(5,663,765)CASH FLOWS FROM
INVESTING ACTIVITIES:Intellectual
property acquisition


(73,594)


(245,512)


(715,528)Furniture and
equipment acquisition, net


(248,267)


(1,078,803)


(1,327,070)Cash acquired on
reverse acquisition


-


1,429


1,429Net cash used by
investing activities


(321,861)


(1,322,886)


(2,041,169)CASH FLOWS FROM
FINANCING ACTIVITIES:Proceeds from
issuance of convertible notes


16,400


-


951,400Advances from
related party


-


103,950


130,239Proceeds from
sale of common stock


683,938


5,971,751


6,675,889Net cash
provided by financing activities


700,338


6,075,701


7,711,238Net increase in
cash and cash equivalents


(2,285,153)


2,003,707


6,304Cash and cash
equivalents, beginning of period


2,291,457


287,750


-Cash and cash
equivalents, end of period

$
6,304

$
2,291,457

$
6,304SUPPLEMENTAL
CASH FLOW DISCLOSURES:Income taxes
paid

$
-

$
-

$
-Interest
paid

$
315

$
8,066

$
8,381SUPPLEMENTAL
CASH FLOW DISCLOSURES:Income taxes
paid

$
-

$
-

$
-Interest
paid

$
315

$
8,066

$
8,381NON CASH
INVESTING AND FINANCING ACTIVITIESExpenses paid by
shareholders

$
26,290

$
-

$
26,290The
accompanying notes are an integral part of these consolidated financial
statements   F-5





CELLCYTE
GENETICS CORPORATION(a Development
Stage Company)CONSOLIDATED
STATEMENTS OF STOCKHOLDERS' EQUITYCommon

Deficit

TotalAdditional

Stock

Accumulated During

Stockholders'Common Stock

Paid-in

Purchase

Development

EquityShares

Amount

Capital

Warrants

Stage

(Deficit)Initial
contribution by founders

37,250,000

$
200

$
-

$
-

$
-

$
200Net loss for
year ended December 31, 2005

-


-


-


-


(315,030)


(315,030)Balance,
December 31, 2005

37,250,000


200


-


-


(315,030)


(314,830)Net loss for
year ended December 31, 2006

-


-


-


-


(385,639)


(385,639)Balance,
December 31, 2006

37,250,000


200


-


-


(700,669)


(700,469)Issued on
settlement of CGW debts

678,060


678


1,016,410


-


-


1,017,088Issued in
exchange for CGW share purchase warrants

205,000


205


245,795


-


-


246,000Recapitalization
adjustment

17,740,000


54,790


(538,422)


203,000


-


(280,632)Balance post
recapitalization (Note 3)

55,873,060


55,873


723,783


203,000


(700,669)


281,987Issued for
private placement

3,981,165


3,981


4,772,770


1,195,000


-


5,971,751Stock-based
compensation

-


-


1,780,000


-


-


1,780,000Net loss for
year ended December 31, 2007

-


-


-


-


(4,521,196)


(4,521,196)Balance,
December 31, 2007

59,854,225


59,854


7,276,553


1,398,000


(5,221,865)


3,512,542Issued on
exercise of warrants

67,146


67


201,371


-


-


201,438Reclassification
on exercise of warrants

-


-


147,071


(147,071)


-


-Issued for
private placement

840,000


840


146,160


63,000


-


210,000Issued for
services

1,135,247


1,136


491,465


-


-


492,601Issued for
private placement

689,365


689


119,950


51,702


-


172,341Issued on
exercise of warrants

333,862


334


99,825


-


-


100,159Repricing of
warrants

-


-


(367,366)


367,366


-


-Reclassification
on expiration of warrants

-


-


1,618,295


(1,618,295)


-


-Beneficial
conversion right of convertible debt

-


-


16,400


-


-


16,400  F-6





Stock-based
compensation

-


-


176,286


-


-


176,286Net loss for
year ended December 31, 2008

-


-


-


-


(5,306,159)


(5,306,159)Balance,
December 31, 2008

62,919,845

$
62,920

$
9,926,010

$
114,702

$
(10,528,024)

$
(424,392)The
accompanying notes are an integral part of these consolidated financial
statements    F-7


NOTE 1  DESCRIPTION OF BUSINESS AND BASIS OF
PRESENTATION The Company was incorporated as Shepard Inc. March 9, 2004 in the
state of Nevada and changed its name to CellCyte Genetics Corporation (CGN)
effective February 16, 2007. The Company is in the development stage, as defined
by Statement of Financial Accounting Standards No. 7, Accounting and Reporting
by Development Stage Enterprises ("SFAS No. 7") and its efforts have been
principally devoted to discovery and development of stem cell therapeutic
products and the development of its cell expansion technology. To date, the
Company has not generated any sales revenues, has incurred ongoing operating
expenses and has sustained losses.  Consequently, its operations are
subject to all the risks inherent in the establishment of a new business
enterprise.  For the period from inception through December 31, 2008,
the Company has accumulated losses of $10,528,024. As more fully described in Note 3, Effective March 14, 2007, the
Company completed the acquisition of CellCyte Genetics Corporation (CGW), a
private Washington State corporation incorporated January 14, 2005. This
acquisition was in essence a recapitalization of the Company and has been
accounted for in accordance with the principles applicable to accounting for
reverse acquisitions with CGW, the legal subsidiary, being treated as the
accounting parent and CGN, the legal parent, being treated as the accounting
subsidiary.  Accordingly, the consolidated results of operations and cash
flows of the Company include those of CGW for all periods presented and those of
CGN subsequent to the date of the reverse acquisition. NOTE 2  SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES This summary of significant accounting policies is presented to
assist in understanding the Companys financial statements.  The financial
statements and notes are representations of the Companys management, which is
responsible for their integrity and objectivity.  These accounting policies
conform to accounting principles generally accepted in the United States of
America and have been consistently applied in the preparation of the financial
statements. Basis of Consolidation These consolidated financial statements include the accounts of
CGW since its incorporation on January 14, 2005 and CGN since the reverse
acquisition on March 14, 2007 (refer to Note 3).  All inter-company
balances and transactions have been eliminated. Cash and Cash Equivalents The Company considers all highly liquid investments and short-term
debt instruments with maturities of three months or less from date of purchase
to be cash equivalents.  The Company had cash equivalents equal to $6,304
on deposit with Bank of America at December 31, 2008. Concentration of Risks The Company maintains its cash and cash equivalents in commercial
accounts at major financial institutions.  Balances in these accounts may
at times exceed the Federal Deposit Insurance Corporation limit.         Earnings per Share The Company computes net income (loss) per common share in
accordance with Statement of Financial Accounting Standards No. 128, Earnings
per Share (SFAS No. 128).  Net income (loss) per share is based upon the
weighted average number of outstanding common shares and the dilutive effect of
common share equivalents, such as options and warrants to purchase common stock,
convertible preferred stock and convertible notes, if applicable, that are
outstanding each year.  Basic and diluted earnings per share were the same
at the reporting dates of the accompanying financial statements, as including
common stock equivalents in the calculation of diluted earnings per share would
have been anti-dilutive.  As of December 31, 2008, there were outstanding
warrants for 1,529,365 shares of common stock, options for 1,660,000 shares of
common stock, and a convertible promissory note that is convertible into 328,000
shares of common stock. For all periods prior to the reverse acquisition, the number of
shares outstanding is deemed to be the number of shares issued and transferred
to the stockholders of CGW to effect the reverse acquisition, being
37,250,000. Fair Value of Financial Instruments The Company's financial instruments may consist of cash and cash
equivalents, prepaid expenses and other deferred charges, accounts payable,
accrued expenses and other current liabilities.  All instruments are
accounted for on an historical cost basis, which, due to the short maturity of
these financial instruments, approximates the fair value at the reporting dates
of these financial statements. Intangible Assets The Companys intangible assets primarily consist of patents and
intellectual property, which are carried at the purchase price and/or the legal
cost to obtain them less accumulated amortization.  Patents and licenses
are being amortized over their estimated useful lives, which range from seven to
seventeen years. Going Concern The accompanying financial statements have been prepared on a
going concern basis, which contemplates the realization of assets and the
satisfaction of liabilities in the normal course of business. As shown in the
accompanying financial statements, the Company has incurred losses of
$10,528,024 and used $5,786,310 in cash for operating activities from
its inception through December 31, 2008. These factors among others may indicate
that the Company will be unable to continue as a going concern for a reasonable
period of time.  The
Company's existence is dependent upon management's ability to successfully raise
additional capital and to develop profitable operations. Management is devoting
substantially all of its efforts in raising capital and in developing its
products and services and there can be no assurance that the Company's
efforts will be successful. Managements efforts could be further limited by the
effects of certain ongoing investigations and litigation. The inability to raise
new capital prior to the settling of uncertainties may substantially damage any
current plans of continuing operations.The planned principal operations
have not commenced and no assurance can be given that management's actions will
result in profitable operations or the resolution of its liquidity problems. The
accompanying statements do not include any adjustments that might result should
the Company be unable to continue as a going concern.        Income Taxes The Company follows the provisions of Statement of Financial
Accounting Standards No. 109, Accounting for Income Taxes (SFAS No. 109),
under which deferred tax assets and liabilities are determined based on
differences between financial reporting and tax bases of assets and liabilities.
Deferred tax assets and liabilities are measured using the enacted tax rates and
laws that are expected to be in effect when the differences are expected to
reverse.  The provisions of SFAS No. 109 also require the recognition of
future tax benefits such as net operating loss carry-forwards, to the extent
that the realization of such benefits is more likely than not.  To the
extent that it is more likely than not that such benefits will not be received,
the Company records a valuation allowance against the related deferred tax
asset. Long-Lived Assets and Intangibles In accordance with Statement of Financial Accounting Standards No.
144, Accounting for the Impairment or Disposal of Long-Lived Assets (SFAS No.
144), the Company examines on a periodic basis the carrying value of its
tangible and intangible assets to determine whether there are any impairment
losses.  This Standard establishes a single accounting model for long-lived
assets to be disposed of by sale, including discontinued operations, and
requires that these long-lived assets be measured at the lower of carrying
amount or fair value less cost to sell, whether reported in continuing
operations or discontinued operations. The determination of any impairment would
include a comparison of estimated future cash flows anticipated to be generated
during the remaining life of the assets to the net carrying value of the assets.
 Effective July 1, 2008, the Company recorded an impairment of $568,913 on
its intellectual property (Note 4). In addition, on December 31, 2008 the
Company recorded an impairment of $383,535 against its tenant improvements (Note
4). Property and Equipment Property and equipment are stated at cost.  Depreciation is
computed using the straight-line method over the estimated useful lives of the
assets.  Expenditures for repairs and maintenance are expensed as
incurred. Research and Development Costs Research and development costs are expensed as incurred. The cost
of intellectual property purchased from others that is immediately marketable or
that has an alternative future use is capitalized and amortized as intangible
assets. Capitalized costs are amortized using the straight-line method over the
estimated economic life of the related asset. The Company periodically reviews
its capitalized intangible assets to assess recoverability based on the
projected undiscounted cash flows from operations, and impairments are
recognized in operating results when a permanent diminution in value occurs. Recent Accounting Pronouncements  Effective January 1, 2008, the Company adopted Statement of
Financial Accounting Standards No. 157, Fair Value Measurements ("SFAS 157").
In February 2008, the FASB issued Staff Position No. 157-2, Effective Date of
FASB Statement No. 157 ("FSP 157-2"), which delayed the effective  date of
SFAS 157 for  certain  nonfinancial  assets and
 liabilities, including  fair value  measurements  under
SFAS No. 141R and SFAS 142, to fiscal years  beginning  after
 November 15, 2008. Therefore, the Company has adopted the provisions of
SFAS 157 with respect to its financial assets and liabilities only.  SFAS
157  defines  fair  value, establishes  a  framework
 for  measuring  fair  value  in  generally
  accepted       accounting  principles,  and expands  disclosures
about fair value measurements. Fair  value is  defined  under
 SFAS 157 as the  exchange  price  that  would be
received  for an asset or paid to  transfer a  liability
 (an exit price) in the principal or most  advantageous  market
for the asset or liability in an orderly transaction  between market
 participants  on the  measurement  date.  Valuation
techniques used to measure fair value under SFAS 157 must maximize the use of
observable inputs and minimize the use of unobservable inputs.  The
Standard describes a fair value hierarchy based on the following three levels of
inputs, of which the first two are considered observable and the last
unobservable, that may be used to measure fair value:  · Level 1 - Quoted prices in active markets for identical assets or
liabilities. · Level 2 -  Inputs  other  than  Level 1 that
 are  observable,  either directly or  indirectly,
 such as quoted prices for similar  assets or liabilities;
 quoted  prices in markets that are not active;  or other inputs
that are observable or can be corroborated by observable market data for
substantially the full term of the assets or liabilities. · Level 3 -  Unobservable  inputs  that are
 supported  by  little or no market  activity  and that
are  significant  to the fair  value of the assets or
liabilities.  As of
December 31, 2008, the Company did not hold any assets or liabilities that are
required to be measured at fair value on a recurring basis, and therefore the
adoption of the respective provisions of SFAS 157 did not have an impact on the
Company's consolidated financial statements. On January 1, 2009, the Company
will implement the previously deferred provisions of SFAS 157 for nonfinancial
assets and liabilities recorded at fair value, as required.  Management
does not believe that the remaining provisions will have a material effect on
the Company's consolidated financial statements when they become effective.  Effective January 1, 2008, the Company adopted Statement of
Financial Accounting Standards No. 159, The Fair Value Option for Financial
Assets and Financial Liabilities, Including an Amendment of SFAS No. 115 ("SFAS
159").  SFAS 159 permits companies to choose to measure many financial
instruments and certain other items at fair value.  SFAS 159 is effective
for financial statements issued for fiscal years beginning after November 15,
2007.  The adoption of SFAS 159 did not have a material impact on the
Company's consolidated financial statements. In December 2007, the Financial Accounting Standards Board
(FASB) issued Statement of Financial Accounting Standards No. 141 (Revised
2007), Business Combinations (SFAS No. 141R). SFAS No. 141R will change the
accounting for business combinations. Under SFAS No. 141R, an acquiring entity
will be required to recognize all the assets acquired and liabilities assumed in
a transaction at the acquisition-date fair value with limited exceptions. SFAS
No. 141R will also change the accounting treatment and disclosure for certain
specific items in a business combination. SFAS No. 141R applies prospectively to
business combinations for which the acquisition date is on or after the
beginning of the entitys first annual reporting period beginning on or after
December 15, 2008. Management has not determined the effect that adopting this
Statement would have on the Companys financial position or results of
operations. In December 2007, the FASB issued Statement of Financial
Accounting Standards No. 160, "Noncontrolling Interest in Consolidated Financial
Statements, an Amendment of ARB No. 51" ("SFAS No. 160"), which will change the
accounting and reporting for minority interests, which will be recharacterized
as noncontrolling interests and classified as a component of equity within the
consolidated balance sheets. SFAS No. 160 is effective as of the beginning of an
entitys first fiscal year beginning on or after December 15, 2008. Earlier
adoption is prohibited. Management has not determined the effect that adopting
this Statement would have on the Companys financial position or results of
operations.       On
March 19, 2008, the FASB announced the issuance of Statement of Financial
Accounting Standards No. 161, Disclosures about Derivative Instruments and
Hedging Activities (SFAS No. 161). SFAS No. 161 amends Statement of Financial
Accounting Standards No. 133, Accounting for Derivative Instruments and Hedging
Activities (SFAS No. 133) and was issued in response to concerns and
criticisms about the lack of adequate disclosure of derivative instruments and
hedging activities. SFAS No. 161 is focused on requiring enhanced disclosure on
1) how and why an entity uses derivative instruments and hedging activities; 2)
how derivative instruments and related hedging activities are accounted for
under SFAS No. 133; and 3) how derivative instruments and related hedging
activities affect an entitys cash flows, financial position and performance. To
accomplish the three objectives listed above, SFAS No. 161 requires: 1)
qualitative disclosures regarding the objectives and strategies for using
derivative instruments and engaging in hedging activities in the context of an
entitys overall risk exposure; 2) quantitative disclosures in tabular format of
the fair values of derivative instruments and their gains and losses; and 3)
disclosures about credit-risk related contingent features in derivative
instruments. SFAS No. 161 is effective for financial statements issued for
fiscal years and interim periods beginning after November 15, 2008.
 Management has not determined the effect that adopting this Statement
would have on the Companys financial position or results of operations.  In May
2008, the FASB issued Statement of Financial Accounting Standards No. 162,
"The Hierarchy of Generally Accepted Accounting Principles" ("SFAS No.
162").  SFAS No. 162 identifies the sources of accounting
principles and the framework for selecting the principles used in the
preparation of financial statements of nongovernmental entities that are
presented in conformity with generally accepted accounting principles (the
GAAP hierarchy).  SFAS No. 162 will become effective 60 days
following the SEC's approval of the Public Company Accounting Oversight Board
amendments to AU Section 411, "The Meaning of Present Fairly in
Conformity With Generally Accepted Accounting Principles."  The
Company does not expect the adoption of SFAS No. 162 to have a material
effect on its consolidated financial position, results of operations or cash
flows. Stock-Based Compensation The
Company accounts for its stock option plan under the recognition and measurement
principles of the revised statement to Statement of Financial Accounting
Standards No. 123, Share-Based Payments (SFAS No. 123 (R)). Accordingly,
compensation cost has been recognized using the fair value method and expected
term accrual requirements as prescribed in SFAS No. 123 (R). The Company has
recorded stock-based compensation expense of $176,286 during the year ended
December 31, 2008 and $1,780,000 during the year ended December 31, 2007. Use of Estimates The accompanying financial statements are prepared in conformity
with accounting principles generally accepted in the United States of America
and include certain estimates and assumptions which affect the reported amounts
of assets and liabilities at the date of the financial statements, and the
reported amounts of revenues and expenses during the reporting period.
 Accordingly, actual results may differ from those estimates. NOTE
3  ACQUISITION OF CELLCYTE GENETICS CORPORATION Effective January 19, 2007, CGN entered into an Agreement in
Principle to acquire 100% of the issued and outstanding shares of CGW in
exchange for 16,000,000 restricted shares of CGNs common stock, and the
transfer of a further 18,750,000 shares of CGNs restricted common stock and
2,500,000 shares of CGNs non-restricted common stock from certain stockholders
of CGN to the stockholders of CGW.       Effective March 14, 2007, the acquisition of CGW was completed by
the execution of a Share Exchange Agreement (the Agreement), which, in
addition to the share issuances and transfers described above, finalized the
following terms of the acquisition: (i) the completion of a private placement of
3,981,165 units of CGN at a price of $1.50 per unit with each unit consisting of
one common share of CGN and one warrant to acquire an additional common share of
CGN at a price of $3.00 per share; (ii) the settlement of $935,000 of CGWs
convertible promissory notes and accrued interest of $82,088 through the
issuance of 678,060 units of CGN at a price of $1.50 per unit with each unit
being consistent with the private placement units above; (iii) the replacement
of 2,000,000 stock options previously outstanding in CGW with 2,000,000 stock
options in CGN at a price of $1.50 per share; and (iv) the issuance of 205,000
restricted shares of CGNs common stock in exchange for 205,000 share purchase
warrants previously outstanding in CGW. As a result of the completion of this acquisition and the other
related transactions, the former stockholders of CGW owned approximately 62% of
the outstanding shares of common stock of CGN representing 37,250,000 of the
then 59,854,224 total issued and outstanding shares of common stock of CGN. Accordingly, the acquisition has been accounted for as a
recapitalization using accounting principles applicable to reverse acquisitions
whereby the financial statements subsequent to the date of the transaction are
presented as a continuation of CGW.  Under reverse acquisition accounting
CGW (the legal subsidiary) has been treated as the accounting parent (acquirer)
and CGN (the legal parent) has been treated as the accounting subsidiary
(acquiree).  The value assigned to the common stock of consolidated CGN on
acquisition of CGW is equal to the book value of the common stock of CGW plus
the book value of the net assets of CGN as at the date of the acquisition as
adjusted for certain concurrent transactions. In accordance with the provisions for accounting for business
combinations, the fair value of the options issued by CGN to replace options
previously outstanding in CGW and the shares issued by CGN to replace warrants
previously outstanding in CGW are considered part of the business combination
purchase price.  However, as these items are charged to CGNs share capital
and deficit, they have no impact on the net book value of the net assets of
CGN. At the date of the acquisition, the book value of the net assets
of CGN were recorded as follows: Cash
$
1,429Accounts
payable

(32,061)Due
to related party

(4,000)Net
assets (liabilities)

(34,632)Concurrent
share issuance on settlement of debt (see above)

1,017,088Adjusted
CGN net assets
$
982,456
 The consolidated capital stock of the Company immediately
following the acquisition was determined as follows: CGW
- book value of capital stock
$
200CGN
 adjusted book value of net assets

982,456Consolidated
capital stock accounts post reverse acquisition
$
982,656
        Allocated
as follows:Common
Stock  55,873,060 common shares, $0.001 par value
$
55,873Additional
paid in Capital

723,783Common
stock purchase warrants

203,000$
982,656
 . NOTE 4  INTELLECTUAL PROPERTY AND PROPERTY AND
EQUIPMENT Intellectual Property The Company entered into an intellectual property licensing
agreement with the U.S. Department of Veterans Affairs (VA) for which it paid
$115,000.  The license agreement relates to certain patents pending and
contains royalty payment arrangements as well as funding guarantees.  With
the completion of the 2007 financing transaction, the Company met the funding
guarantee requirements included in the VA license. At December 31, 2007, the Company had $70,002 of capitalized
patents and $454,534 of capitalized patents pending. Through December 31, 2008
the Company incurred an additional $73,594 of capitalized patents pending. These
amounts consist of the legal fees expended to pursue and prosecute a range of
patent claims related to stem cell delivery and purification. Effective July 1, 2008, the Company evaluated the recoverability
of its intangible assets and recorded an impairment of $568,913 on its licenses
and patents pending related to the VA intellectual property. The Companys
initial research and testing of the VA technology did not yield the anticipated
results nor support the VAs claims regarding the technology and will require
further testing to prove otherwise. The Company determined that recovery of
these costs through future net cash flows was uncertain and that it was
appropriate for financial statement purposes to record an impairment loss on its
licenses and patents pending. The Company amortizes patents (and licenses for the use of
patents) over the remaining life of the patents, which ranges from 7 to 17
years. Intellectual property was as follows as of December 31, 2008 and
2007:  2008

2007Licenses

$
115,000

$
115,000Patents


70,002


70,002Patents
pending


528,128


454,534Accumulated
amortization


(97,982)


(63,642)Impairment
loss


(568,913)Licenses
and patents, net

$
46,235

$
575,894        Property and Equipment Property and equipment are stated at cost and are being
depreciated using the straight-line basis over the assets estimated useful
lives, which are generally three years for computer equipment, three to five
years for office equipment, five to seven years for furniture, and five years
for laboratory equipment. Tenant improvements are capitalized and amortized over
the shorter of the lease term or their estimated useful life. Depreciation and
amortization expense for the years ended December 31, 2008 and 2007 was $227,087
and $39,284, respectively. At December 31, 2007, the Company had capitalized a total of
$1,078,803 in computer equipment, laboratory equipment and tenant improvements.
During the year ended December 31, 2008 the Company acquired an additional
$102,615 of computer equipment, $90,319 of laboratory equipment and $197,281 of
tenant improvements. In addition, during the same period the Company disposed of
laboratory and office equipment with an original cost of $236,906 for proceeds
of $126,599, resulting in a loss on disposal of $61,777. Effective December 31, 2008, the Company evaluated the
recoverability of the value of its tenant improvements. Due to the curtailment
of the Companys activities and the default situation under the Companys
facility lease, the Company determined that recovery of these costs through
future net cash flows was uncertain and that it was appropriate for financial
statement purposes to record an impairment loss of $383,535 on its tenant
improvements. Property and equipment were as follows as of December 31, 2008 and
2007: 2008

2007Laboratory
equipment

$
379,014

$
505,568Computer
and office equipment


383,198


300,616Tenant
improvements


469,900


272,620Accumulated
depreciation and amortization


(310,632)


(42,347)Impairment
loss


(383,535)Property
and equipment, net

$
537,945

$
1,036,456  NOTE 6  COMMITMENTS AND CONTINGENCIES Operating Leases On April 20, 2007 the Company entered into a 60 month lease for a
new facility in Bothell, Washington. The commencement date of this lease was
February 1, 2008.   Rent and utilities expense relating to the
operating lease was $515,789 for the year ended December 31, 2008 and $169,795
for the year ended December 31, 2007.         Lease commitment cost for the remaining term of the lease is as
follows: Year

Lease Expense2009
$
366,1312010

366,1312011

366,1312012

366,1312013

30,511Total
$
1,495,035 The Company is currently in default on its facility lease and has
an outstanding lease liability, including operating costs, penalties and
interest in the amount of $273,505. The Company is actively working with the
landlord to renegotiate the lease, and to find qualified subtenants to take over
portions of the facility. As a result of this lease situation, the Company has
recorded an impairment loss of $383,535 related to the carrying value of its
tenant improvements. No adjustment has been made to the carrying value of the
Companys other property and equipment related to the potential abandonment of
the facility. Legal Fees The Company is currently involved in a stockholder lawsuit, a
dispute with a former employee, and an investigation by the Securities and
Exchange Commission (Note 10) and believes that its insurance coverage is
sufficient to cover the cost of defense. Executive Employment Contracts During
2007 the Company entered into employment agreements with Gary Reys, its Chief
Executive Officer, and Dr. Ronald Berninger, its Executive Vice President and
Chief Scientific Officer. Effective
as of July 1, 2008, the Company suspended these agreements.  Each of the
agreements will be re-evaluated upon the successful completion of the Companys
fund raising efforts. As of December 31, 2008 there were no executive employment
contracts. NOTE 7  CAPITAL STOCK Common Stock The Company has authorized 525,000,000 shares of its common stock,
$0.001 par value. The Company had issued and outstanding 62,919,845 and
59,854,225 shares of its common stock at December 31, 2008 and December 31,
2007, respectively. During the year ended December 31, 2008, the Company issued common
stock as follows: · 67,146 shares of common stock were issued on the exercise of
common stock purchase warrants at a price of $3.00 per share for total proceeds
of $201,438. · 333,862 shares of common stock were issued on the exercise of
common stock purchase warrants at a price of $0.30 per share for total proceeds
of $100,159. · 1,135,247 shares of common stock were issued in exchange for
services with an estimated fair value of $492,601. · 1,529,365 units were issued at a price of $0.25 per unit for total
proceeds of $382,341.  Each unit consists of one common share of CGN and
one warrant to acquire an additional common share of       CGN at a price of $0.75 per share, exercisable for a period ending
18 months from the date of issuance of the Units. Common Stock Warrants The estimated fair value of the warrants issued in connection with
the sale of the units is $114,702 and has been recorded as a separate component
of stockholders equity and was determined using the Black-Scholes option
pricing model using the following weighted average assumptions: expected option
life of 1.50 years, risk-free interest rate of 1.60%, dividend yield of 0% and
expected volatility of 135%. During the year ended December 31, 2008, the Company repriced a
total of 4,592,079 warrants previously issued at an exercise price of $3.00 per
warrant, to a new exercise price of $0.30 per warrant.  The Company
recorded a charge to additional paid in capital of $367,366 representing the
estimated fair value of the warrant repricing.  Also during the period, a
stockholder of the Company rescinded a portion of their prior investment
totaling $100,159 in gross proceeds to the Company and applied the proceeds to
exercise a total of 333,862 of the repriced warrants. The remaining 4,258,217
repriced warrants expired unexercised. The Companys common stock purchase warrant activity for the years
ended December 31, 2008 and December 31, 2007 is as follows: WarrantsOutstanding

Weighted AverageExercise Price

Weighted AverageRemaining LifeBalance,
December 31, 2006
-
$
-

-Warrants
issued
4,659,225

3.00Warrants
exercised
-

-Warrants
expired
-

-Balance,
December 31, 2007
4,659,225

3.00

0.75 yearsWarrants
issued
1,529,365

0.75Warrants
exercised
(401,008)

0.75Warrants
expired
(4,258,217)

0.30Balance,
December 31, 2008
1,529,365
$
0.75

0.84 years Common Stock Options Effective
March 30, 2007, the Company adopted the 2007 Stock Option/Restricted Stock Plan
(the Plan). The purpose of the Plan is to attract and retain the best
available personnel for positions of substantial responsibility, to provide
additional incentive to employees and consultants and to promote the success the
Companys business.  The number of shares available for issuance under the
Plan is 5,450,000 shares.  If an award under the Plan should expire or
become unexercisable for any reason and without having been exercised in full or
surrendered pursuant to an option exchange program, then the shares that were
subject to such expiry or unexercised award shall again become available for
future grant under the Plan.  The Plan is administered by the Companys
Board of Directors or a committee appointed by the Board.  The Plan
administrator has the authority, in its discretion, to determine all matters
relating to awards granted under the Plan, including the selection of
individuals to be granted awards, the type of award to be granted, the number of
shares to be covered by each award and all terms, conditions,       restrictions
and limitations of an award granted under the Plan.  The term of the Plan
is ten years from the date of its adoption by the Board. During the year ended December 31, 2008, the Company granted a
total of 1,427,000 stock options to certain employees, officers, directors and
consultants of the Company to acquire shares of the Companys common stock at
prices ranging from $0.32 per share to $0.52 per share for periods ranging from
5 to 10 years.  The fair value of the stock options granted during the
period was estimated to be $393,380 and was determined using the Black-Scholes
option pricing model using the following weighted average assumptions: expected
option life of 5.35 years; risk-free interest rate of 3.08%; dividend yield of
0%; and expected volatility of 112%. Certain of these options are subject to vesting conditions and, as
of December 31, 2008, the Company had recorded stock-based compensation of
$176,286 in connection with the vesting of these options.  As a result of
the suspension of operations on July 1, 2008, all employee incentive stock
options expired unexercised on October 1, 2008. In addition, significantly all
non-qualified stock options that had not vested as of July 1, 2008 were
canceled. As of December 31, 2008, all outstanding stock options were fully
vested. The Companys stock option activity for the years ended December
31, 2008 and 2007 is as follows: OptionsOutstanding

Weighted AverageExercise Price

Weighted AverageRemaining LifeBalance,
December 31, 2006
-
$
-

-Options
granted
2,000,000

1.50Options
exercised
-

-Options
cancelled and expired
-

-Balance,
December 31, 2007
2,000,000

1.50

7.31 yearsOptions
granted
1,427,000

0.34Options
exercised
-

-Options
cancelled and expired
(1,767,000)

-Balance,
December 31, 2008
1,660,000
$
1.38

5.59 years  NOTE 8  RELATED PARTY TRANSACTIONS Two officers, Gary Reys and Dr. Ronald Berninger, who are also
members of the Companys board of directors, served as consultants and then
employees to the Company on various business, strategic, and technical issues.
The Company paid and expensed a total of $516,250 during the twelve month period
ended December 31, 2007. In addition to the fees, reimbursable expenses were
paid under this contract. The total amount paid for these expenses was $113,517
during the twelve month period ended December 31, 2007. The use of officers as
consultants was considered an interim arrangement while the Company was in
startup operations until June 1,2007 when they entered into
employment contracts.       During the year ended December 31, 2008, these same two officers
advanced funds in the amount of $26,290 for their legal defense related to the
matters discussed in Note 10. Under the Companys Bylaws, the Company is
required to provide for the legal defense of its officers and directors. Stockholder Advances During the year ended December 31, 2007 a stockholder of the
Company paid various outstanding payables on behalf of the Company. As of
December 31, 2008 the Company owed this stockholder $107,949.  These
advances are unsecured, non-interest bearing with no set terms of repayment. Stockholder Note Payable In September and October of 2008, a stockholder of the Company
advanced a total of $15,000 to help fund ongoing operations. These advances and
accrued interest in the amount of $1,400 were formalized into a convertible note
payable on November 18, 2008. The note bears interest at 1% per month, has no
set term, and can be converted into the Companys common stock at the rate of
$.05 per share upon demand. Since the conversion price of the convertible note
was below the Companys market price at the date of the Note, the Company has
estimated the value of the beneficial conversion right to be $16,400 and has
recorded this as a finance charge with an off-set to additional
paid-in-capital. NOTE 9  INCOME
TAXES  During
 the  year  ended  December  31,  2007,  the
 Company  adopted  Financial Accounting  Standards
 Board  (FASB)  Interpretation  No.  48,
 "Accounting  for Uncertainty  in Income  Taxes"  ("FIN
 48"),  which  supplements  Statement of Financial
Accounting Standards No.  109, "Accounting  for Income  Taxes",
 by defining  the  confidence  level that a tax position
must meet in order to be recognized  in the financial  statements.
 The Interpretation requires that the tax effects of a position be
recognized only it if is "more-likely-than-not" to be sustained based solely on
its technical merits as of the reporting date. The more-likely-than-not
threshold represents a positive assertion by management that a company is
entitled to the economic benefits of a tax position.   If  a
 tax   position   is  not   considered
more-likely-than-not  to be sustained based solely on its technical
 merits,  no benefits   of  the  tax
  position   are  to  be   recognized.
  Moreover,   the more-likely-than-not threshold must
continue to be met in each reporting period to support continued recognition of
a benefit.  With the adoption of FIN 48, companies are required to adjust
their financial statements to reflect only those tax positions that are
more-likely-than-not to be sustained. Any necessary adjustment would be recorded
directly to retained earnings and reported as a change in accounting
principle.  The
Company's deferred income taxes reflect the net tax effects of (a) temporary
differences between the carrying amounts of assets and liabilities for financial
reporting purposes and the amounts used for income tax reporting purposes, and
(b) net operating loss carry forwards.  At
December 31, 2008 and 2007 the Company had gross deferred tax assets calculated
at an expected rate of 34% of approximately $3,571,000 and $1,768,000,
respectively, principally arising from net operating loss carry-forwards and
stock compensation for income tax purposes.  As management of the Company
cannot determine that it is more likely than not that the Company will realize
the benefit of the net deferred tax asset, a valuation allowance of $3,571,000
and $1,768,000 has been established at December 31, 2008 and 2007,
respectively.          The
significant components of the Companys net deferred tax asset at December 31,
2008 and 2007 are as follows:  2008

2007Gross deferred tax asset:Net operating loss carry forwards

$
3,571,000

$ 1,768,000Gross deferred tax liabilities:Valuation allowance

(3,571,000)

(1,768,000)Net deferred tax asset

$
-

$
-  At
December 31, 2008 and 2007 the Company has net operating tax loss carry forwards
of approximately $10,503,000 and $5,201,000, respectively, which will expire in
the years 2025 through 2028.  Although we believe that our estimates are reasonable, no
assurance can be given that the final tax outcome of these matters will not be
different than that which is reflected in our tax provisions. Ultimately, the
actual tax benefits to be realized will be based upon future taxable earnings
levels, which are very difficult to predict.  NOTE 10  LEGAL DISPUTES During the year ended December 31, 2008, three stockholder
lawsuits were filed against the Company and its officers in the United States
federal court for the Western District of Washington: Armbruster v. Cellcyte
Genetics Corporation, et. al,No. C08-0047, Tolerico v. Cellcyte
Genetics Corporation, et. al., No. C08-0163 and Pruitt v. Cellcyte
Genetics Corporation, et. al., No. C08-0178.  An amended complaint
consolidating the 3 lawsuits has been filed, and the amended consolidated
complaint alleges, inter alia, that the Company, and its officers and
directors filed misleading statements with the Securities and Exchange
Commission regarding the Companys products, and that the Company posted
misleading information regarding an officer on its website.  The lawsuits
claim that investors purchased the Companys stock based on the alleged
misleading statements and seek monetary relief. The lawsuit has not been
certified for class action status as of the date of this report. The Company is
disputing the basis for the lawsuit and intends to vigorously defend against
it.  While the Company does not believe the lawsuit has merit, an adverse
outcome could have a material adverse effect on the Companys financial position
and results. The Company is also currently engaged in a dispute with a former
employee, who resigned in 2007.  The employee is asserting claims
for monetary damages based upon a constructive discharge theory and other
claims.  The employee has been ordered to arbitrate her
claims pursuant to the terms of a contract between the employee and
CellCyte. The Company does not believe that the employee's claims have
merit, nor does it believe that an adverse outcome will have a material adverse
effect on the companys financial position.   The
employee is on notice regarding that which CellCyte deems proprietary
information.  At this time, the Company does not believe that its
intellectual property is imminently threatened.   Should the
Company determine that the employee is trying to operate a new endeavor with
intellectual property that belongs to CellCyte, it will take appropriate
action. Although management currently believes that resolving claims
against the Company, individually or in aggregate, may not have a material
adverse impact on its financial position, its results of operations, or its       cash flows, these matters are subject to inherent uncertainties
and managements view of these matters may change in the future. In January 2008, the Securities and Exchange Commission (SEC)
notified the Company that it was commencing an informal non-public inquiry
regarding certain matters related to the Companys filings. The SEC requested
that the Company voluntarily produce documents relating to its investigation. On
May 12, 2008, the Company learned that the informal inquiry commenced by the SEC
had become a formal investigation. The Company believes that the focus of the
formal investigation is substantially the same as the informal inquiry and
intends to continue to fully cooperate with the SEC regarding this matter. The
Company is committed to resolving the issues raised in connection with the
investigation. In April 2009, the Company reached a tentative settlement with the
staff of the SEC, which is contingent upon formal SEC approval. The Company
expects the settlement to be approved by the SEC during the Companys third
fiscal quarter of 2009, at which time it will be able to announce the settlement
terms. However, it is possible that the SEC will not formally approve the
tentative settlement, and that the Company will be required to litigate with the
Commission. NOTE 11  SUBSEQUENT EVENTS  On
April 2, 2009, the Companys Board of Directors approved the 2009 Stock
Incentive Plan for Employees and Consultants (the 2009 Plan), the purpose of
which is to provide employees and consultants with an increased incentive to
make significant and extraordinary contributions to the long-term performance
and growth of the Company, and to facilitate attracting and retaining
exceptional employees and consultants.  Under
the 2009 Plan, the Company has initially reserved and registered 30,000,000
shares of its common stock to be used as compensation to employees and
contractors for services rendered.  For
additional subsequent event narratives, see the appropriate notes.