UNITED STATES


SECURITIES AND EXCHANGE COMMISSION


WASHINGTON, D.C. 20549








FORM 10-K





x ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE


SECURITIES EXCHANGE ACT OF 1934





FOR THE YEAR ENDED DECEMBER 31, 2010





OR





o TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE


SECURITIES EXCHANGE ACT OF 1934


FOR THE TRANSITION PERIOD FROM _____ TO __________





COMMISSION FILE NO. 09081





CYBRDI INC.


(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)





CALIFORNIA

95-2461404(STATE OR OTHER JURISDICTION OF

(I.R.S. EMPLOYERINCORPORATION OR ORGANIZATION)

IDENTIFICATION NO.)No 29 Chang’An South Road Xi’an Shaanxi P.R. China

710061(ADDRESS OF PRINCIPAL EXECUTIVE OFFICE)

(ZIP CODE)





REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE:       (011) 86-29-8237-3068





Former name, former address and former fiscal year,


(if changed since last report)





Indicate by a check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15 (d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes x No o





Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act Yes o No x





Indicate by check mark if the Registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act Yes o No x





Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities and Exchange Act 0f 1934 during the preceding 12 months (of for such shorter period that the registrant was required to file such reports) and (2) has been subject to such filing requirements for the past 90 days. Yes x No o





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





Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, or a non-accelerated filer. See definition of “accelerated filer and large accelerated filer” in Rule 12b-2 of the Exchange Act.


Large accelerated filer  ̈           Accelerated filer  ̈            Non-accelerated filer  ̈Smaller Reporting Company x





Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K 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 amendments to this Form 10-K. Indicate by a check mark whether the registrant is a large accelerated filer (as defined in Rule 12b-2 of the Exchange Act). Yes o No x


Indicate by a check mark whether the registrant is a shell Company (as defined by Rule 12b-2 of the Act). Yes o No x





APPLICABLE ONLY TO CORPORATE ISSUERS:





As of March 31, 2011, the Company had 65,756,567 shares of Common Stock, without par value, outstanding .





The aggregate market value of the voting and non-voting common equity held by non-affiliates computed by reference to, as of  June 30, 2010 was approximately $1,051,962 based on a closing bid price of $0.03 and a total of  35,065,404  shares held by non-affiliates.


(APPLICALBE ONLY TO REGISTRANTS INVOLVED IN BANKRUPTCY PROCEEDINGS DURING THE PRECEDING FIVE YEARS)





Indicate by check mark whether the registrant has filed all documents and reports required to be filed by Section 12, 13 or 15(d) of the Securities Exchange Act of 1934 subsequent to the distribution of securities under a plan confirmed by a court.             Yes o     No o     Not Applicable x





DOCUMENTS INCORPORATED BY REFERENCE: None











TABLE OF CONTENTS
PAGEPART IItem 1.
Business
4Item 1A.
Risk Factors
8Item 1B.
Unresolved Staff Comments
12Item 2.
Properties
12Item 3.
Legal Proceedings
12Item 4.
RESERVEDPART II

12Item 5.
Market For Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities.
12Item 6.
Selected Consolidated Financial Information
13Item 7.
Management’s Discussion And Analysis Of Financial Condition And Results Of Operations
13Item 7A.
Quantitative And Qualitative Disclosures About Market Risk
17Item 8.
Financial Statements And Supplementary Data
17Item 9.
Changes In And Disagreements With Accountants Or Accounting And Financial Disclosure
17Item 9A.
Control And Procedures
17Item 9B.
Other Information
18PART III

18Item 10.
Directors And Executive Officers Of The Registrant
18Item 11.
Executive Compensation
20Item 12.
Security Ownership Of Certain Beneficial Owners And Management And Related Stockholder Matters
21Item 13.
Certain Relationships And Related Transactions, And Director Independence
21Item 14.
Principal Accountant Fees And Services
22PART IV.

23Item 15.
Exhibits, Financial Statement Schedules
23




2





This annual report contains certain forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. These include statements about our expectations, beliefs, intentions or strategies for the future, which we indicate by words or phrases such as "anticipate," "expect," "intend," "plan," "will," "we believe," "our company believes," "management believes" and similar language. These forward-looking statements are based on our current expectations and are subject to certain risks, uncertainties and assumptions, including those set forth in the discussion under Item 1. "Business" and Item 7. "Management's Discussion and Analysis", including under the heading "- Risk Factors" under Item 1A. Our actual results may differ materially from results anticipated in these forward-looking statements. We base our forward-looking statements on information currently available to us, and we assume no obligation to update them. In addition, our historical financial performance is not necessarily indicative of the results that may be expected in the future and we believe such comparisons cannot be relied upon as indicators of future performance.





Certain financial information included in this annual report has been derived from data originally prepared in Renminbi (RMB), the currency of the People's Republic of China ("China" or "PRC"). For purposes of this annual report, conversion at year-end exchange rates of US$1.00 to RMB 6.6023 for assets and liabilities, and average rate of US$1.00 to RMB 6.7682 for revenue and  expenses in year 2010.  There is no assurance that RMB amounts could be converted into US dollars at that rate.  Please see Note 3 “Summary of Significant Accounting Policy Item (l) for Foreign Currency Translation ” of the accompanying financial statements.




3




PART I





ITEM 1.    BUSINESS





HISTORY





Cybrdi, Inc. (f/k/a Certron Corporation) was incorporated on August 1, 1966, under the laws of the State of California. From then to approximately June 2004, we conducted business in the distribution of magnetic media products, primarily blank audio and video cassettes. Due to continuing intense price competition and technological changes in the marketplace for our products, we lost our remaining significant customers and disposed of, or wrote off our remaining inventory.





In November 2004, we acquired all of the ownership interests in Cybrdi, Inc., a privately held company incorporated in the State of Maryland ("Cybrdi Maryland"). As a result of the ownership interests of the former shareholders of Cybrdi Maryland, for financial statement reporting purposes, the transaction was treated as a reverse acquisition, with Cybrdi Maryland deemed the accounting acquirer and Certron Corporation deemed the accounting acquiree. Historical information of the surviving company is that of Cybrdi Maryland.





Cybrdi Maryland was established in 2001 to acquire an interest in biogenetic products commercialization and related services entities in Asia. On March 5, 2003, Cybrdi Maryland acquired an 80% interest in Shaanxi Chao Ying Biotechnology Co., Ltd. (“Chaoying Biotech”), a sino-foreign equity joint venture established in July 2000 in the People's Republic of China (“PRC”), through the exchange of 99% of our shares to the existing shareholders of Chaoying Biotech. For financial statement reporting purposes, the merger was treated as a reverse acquisition, with Chaoying Biotech deemed the accounting acquirer and Cybrdi Maryland deemed the accounting acquiree.





Chaoying Biotech is a sino-foreign equity joint venture between Shaanxi Chaoying Beauty & Comestics Group Co., Ltd. (the “Chinese Partner”, a PRC corporation) and Immuno-OncoGenomics Inc. (the “Foreign Partner”, a U.S. corporation).  The joint venture agreement has a 15 year operating period starting from its formation in July 2000 and it may be extended upon mutual consent. The principal activities of Chaoying Biotech are research, manufacture and sale of various high-quality tissue arrays and the related services in the PRC.





Most of our activities are conducted through Chaoying Biotech. Chaoying Biotech, with its principal operations located in China, aims to take advantage of China's abundant scientific talent, low wage rates, less stringent biogenetic regulation, and the huge genetic population as it introduces its growing list of tissue micro array products.





On February 10, 2005, we completed the merger with Cybrdi Maryland and changed its name to Cybrdi, Inc.





On July 26, 2007, Chaoying Biotech entered into an acquisition agreement with the Chinese Partner.  On July 28, 2007, Chaoying Biotech invested RMB15 millions to acquire an 83.33% equity ownership of Shandong Chaoying Culture and Entertainment Co., Ltd (“SD Chaoying”) from the Chinese Partner. SD Chaoying is a corporation organized in the Shandong province of P.R.China. On September 5, 2007, Shandong Commercial government approved this acquisition and ownership of SD Chaoying was transferred to Chaoying Biotech from the Chinese Partner. The business of SD Chaoying will primarily focus on culture and entertainment, including make-up, personal care, human body building and slimming, gambling, saunas for massage and bath, karaoke, catering, and lodging, etc. SD Chaoying will have a specific emphasis on casino gambling, which has been approved by Shandong Administration for Civil Affairs. As of December 31, 2010, SD Chaoying had substantially completed the construction of two residential buildings and had recognized revenue from sales of housing units from these buildings for the year then ended.  The main structure of the commercial entertainment center has also been completed, with the exterior, rooftop, the surrounding supporting projects and the community landscaping yet to be completed, but which are expected to be completed in the year 2011 prior to the commencement of operations by merchant tenants.





4




BUSINESS OVERVIEW





Cybrdi is a holding company incorporated with 80% equity in Chaoying Biotech, which is engaged in biotechnology manufacturing, and research and development.. Through Chaoying Biotech, Cybrdi also controls SD Chaoying, a cultural and entertainment company, which is also developing a casino .





Biotechnology Manufacturing, R&D Business





Chaoying Biotech is actively seeking to expand its biotechnology manufacturing business. Tissue chips, also called micro-tissue arrays, represent a newly developed technology which is intended to provide high-throughput molecular profiling and parallel analysis of biological and molecular characteristics for hundreds of pathologically controlled tissue specimens. Tissue arrays can, at times, provide rapid and cost-effective localization and evaluation of proteins, RNA, or DNA molecules, which is particularly useful for functioning genomic studies. Cybrdi manufactures both human and animal tissue micro-array for a wide variety of scientific uses, including drug discovery and development.





We supply Biomax Ltd., a United States research and development subcontractor for Pfizer, and, through Biomax we provide our products and services to other major biotechnology companies in the U.S.and Europe such as America Nanoarray. We are also a supplier for the China’s National Biomedical Center, Shanghai Biochip Center, a research partner with Peking University Academy of Military Medical Sciences, and perform dermatological research and development for Lancome and Estee Lauder.  Starting in 2010, our sole domestic sales representative in China was Xi’an AiLiNa Biotechnology Co., Ltd,, and the only overseas sales representative was Biomax.  We mainly distribute our products through these two sales representatives.





We are the patent holder and producer of Tissue Microarrays (TMAs) which are a powerful tool to examine disease pathology across a variety of patients and disease conditions. We also hold three patents in antibody detection.





Our manufacturing facility and a pathology and molecule laboratory is located at an approximately18,000 square foot facility that we own in Shaanxi province.  At this facility, we have established the standard tissue chip production, processing procedure and a quality control system. We have also established an electronic management system to effectively manage biologic information databank.





Specifically, our products and services include:





TISSUE MICROARRAYS (“TMA”): TMA technology can survey hundreds or even thousands of clinical specimens in a single experiment utilizing common probes, including DNA, RNA, peptide, protein and antibody probes. This is an efficient, in vivo approach for the validation of gene discoveries and identification of potential molecules for diagnosis and therapy. TMA chips can be broadly applied in both basic and clinical research conducted by the academic, medical, pharmaceutical and biogenetic research communities. We currently offer a wide variety of tissue array products and services on the commercial market, including approximately (at present) 234 different disease and 98 different organ types.of both human and animal varieties. These tissues are prepared in a variety of array panels of differing formats and tissue densities to service the full range of scientific research interests. New products are being added on a monthly basis per customer demands.





TECHNICAL SERVICES: Complimenting the production and marketing of tissue chips, we have launched an in-house technical services platform to perform customized research according to customer specifications. By outsourcing experimentation to us, international research labs, (particularly those in high labor and material cost markets) can incur substantial cost savings. Frequently requested services include the standard immunohisto chemistry (IHC) and in-situ-hybridization (ISH) services needed to locate proteins or genes of interest using customer-supplied probes. These probes are applied to select normal, diseased and marginal tissue from our tissue array bank. The results are presented as publishable, detailed pathology reports including high resolution digital photographs. Through virtual cybernetic bio-services (vCBS), these results can be sent via the Internet to the customer the day after the probe is received by our labs. Our technical services currently serves our Chinese customers.





Our business strategies and focus in the near future include: enhancing R&D in TMAs and technical service; expanding our product  portfolio  and  virtual tissue  array data bank (vTMAB); and Launch the health diagnosis kit for obesity and skin disease.





Culture, Entertainment, and Real Estate Business





Chaoying Biotech owns 83.33% of SD Chaoying, a culture and entertainment company with a special license for casino gambling. SD Chaoying is developing a Culture and Entertainment Square in Changle City of Shangdong Province on the 33,333 square meter land it owns the right to use. The usage areas of the Square will be approximately 19,145 square meters. With the entertainment facilities of restaurants spas, hotel rooms, movie theaters, cosmetic and personal care salons, body buildup gyms, the Square will become local cultural and entertainment center. A portion of the  cultural and entertainment part of the facility opened in January 2011 and the balance  remains under construction. The project includes four multi-family residential buildings (about 14,188 square meters), and two of them had been completed.  Of 74 total units,  nine units were sold in 2010 and 37 were sold in 2009.




5




The total cost for the construction is estimated to be $8.2 million.  At present, SD Chaoying has invested approximately $5.4 million in the construction.  The casino has not yet been completed and we intend to engage another party to operate the casino.  We have not yet reached agreement with any operator.  Operation of the casino has been approved by the Shandong Administration for Civil Affairs . We believe that the casino will attract patrons  from surrounding areas and  that the potential for a cultural and entertainment business is enhanced as living standards rise in the region.  We anticipate financing the balance of the construction in part from the sale of the residential units. ..However, there is no assurance regarding the proceeds that will be generated from the sale of the residential units.  We believe that the balance of any funding will need to be obtained from affiliated companies or from banks and affiliates.





We will also explore other business development opportunities that can leverage our sales platform and relationship with affiliated companies. Until such time as we can identify attractive marketing opportunities, we will loan available cash on a short term unsecured basis to non-affiliated third parties in order to generate interest income.





The accompanying consolidated financial statements have been prepared assuming the Company will continue as a going concern, which contemplates the realization of assets and the satisfaction of liabilities in the normal course of business.  The Company has incurred significant losses and has not demonstrated the ability to generate sufficient cash flows from operations to satisfy its liabilities and sustain operations.  The Company had an accumulated deficit of $1,847,882 and $1,097,141 as of December 31, 2010 and 2009 respectively, including net losses of $750,740 and $596,946 for the years ended December 31, 2010 and 2009, respectively.  In addition, current liabilities exceeded current assets by $3,123,937 and $2,163,830 at December 31, 2010 and 2009, respectively.  These matters raise substantial doubt about the Company’s ability to continue as a going concern.





The Company finances its operations primarily through short-term bank borrowings and advances from related parties and/or officers/shareholders.  In order to complete the construction of SD Chaoying cultural and entertainment center, approximately $2.8 million (equivalent to RMB 19 million) of capital is expected to be needed.  The Company, taking into account the available banking facilities, internal financial resource, and supports from related companies, believes it has sufficient working capital to meet its present obligation for at least the next twelve months.  Management is taking actions to address the company's financial condition and deteriorating liquidity position.  The following sets forth management’s plans for dealing with the adverse effects of the conditions:





(a)           Sale of housing inventories:  Proceeds to be received from the sale of the remaining housing of the two completed residential buildings are expected to amount to approximately $1.1 million.





(b)          Rental and management fee revenue from the cultural and entertainment center:  Annual rental revenue is estimated to be approximately $650,000 per year.  Management fee revenue will be charged to commercial tenants at 3% of annual gross revenue.





(c)           Additional advances from related companies and affiliates:  Mr. Bai, our Chief Executive Officer, advanced $97,317 to the Company in 2010 to finance operations and the costs to maintain the Company’s public status in the U.S.  In addition, Shaanxi Chaoying Beauty & Cosmetics Group, which is also an affiliate, is anticipated to provide up to $730,000 of capital to support operational use.  During the year 2010, Shaanxi Chaoying Beauty & Cosmetics Group advanced $88,632 to the Company to finance its operations.





The Company may require additional funds and may seek to raise such funds though public and private financings or from other sources.  There is no assurance that the above management’s plans will be realized or the additional financing will be available at all or that, if available, such financing will be obtainable on terms favorable to the Company or that any additional financing will not be dilutive.  The consolidated financial statements do not include any adjustments that might result from the outcome of those uncertainties.





MARKETING





Marketing strategy in,ShaanXi,Chaoyina: By leveraging existing hospital relationships and Shaanxi Chaoying's marketing channels, we have marketed TMA products, medical care products and other services within the Chinese market. There are two primary regions in China where we focus our marketing: the northern provinces which include the cities of Beijing, Tian Jing and Hebei Province, and the eastern provinces which include the cities of Shanghai, Jiangsu , Guangdong, Fujian, Shanxi, Hunan, Hubei ,Zhejiang Province and Shangdong Province. Our domestic sales accounted for approximately18% of our total sales of ChaoYing Biotech in the fiscal year of 2010   Starting in 2010, our sole domestic sales representative in China has been Xi’an AiLiNa Biotechnology Co., Ltd,, and the only overseas sales representative has been Biomax.  We mainly distribute our products through these two sales representatives.





Marketing strategy in ShanDong,Chaoyina:with the progress of the project construction, we have sold more than half of residential housing units, and the merchants for the culture and entertainment center are also under way, Our residential housing sales accounted for approximately 36% of our total sales revenue in the fiscal year of 2010.  Shandong’s main focus in 2011 will be to occupy the culture and entertainment center with merchant tenants and commence the operation.




6




International Marking Strategy: By leveraging our know-how and current infrastructure of our operations in China, we attempt to expand our international distribution network. With the comparatively low cost for our products and services and our patented technology, we have a competitive advantage in the international market. In 2001, we set up Cybrdi Maryland to develop our business in the United States. The expansion of our business in the international arena came on March 10, 2007, when we entered into a Sales Agent Agreement with BioMax, a re-seller located in the United States. Under the Sales Agent Agreement, BioMax acts as our exclusive agent dealing with the distribution of our products and services in all countries and regions except theP.R.C mainland.   We expect our business in the international market will continue to grow through the efforts of BioMax.  BioMax has played an important role in introducing us to the leading pharmaceutical companies and institutes outside of China. Through BioMax, we have gradually built up our sales channels in the United States, Canada, Germany, Italy, Belgium, Japan and Taiwan.  In the fiscal year of 2010, BioMax accounted for about 82% of our sales revenue, which also represents our export sales.





MARKET OPPORTUNITIES AND COMPETITION





China Biotech Trends





Biotechnology research has been supported by the Chinese government, having been designated a “key industry” in China's scientific development plan since 1986. However, most biotech investments have been made in the areas of basic research in government funded laboratories or government linked companies which are focused on major scientific discoveries in gene functions. Cybrdi received government grants of $4,300 (equivalent to RMB 29,103) and $8,421(equivalent to RMB 57,523) during the years ended December 31, 2010 and 2009, respectively.





Competition





Our TMA products are facing increased competition. While in the past, the high costs and strict patient information protocol associated with tissue collection in most developed economies made it difficult for companies with competing products of similar quality to compete, cost differences are now narrowing. Furthermore, established genomics firms such as Ambion and Clinomics customarily outsourced most TMA production, yet now are beginning to offer the wide product series variety demanded by the global research community. This results in increased price and service competition for us under either in-house and/or through OEM programs.





At the other end of the price spectrum, low-priced tissue chips are providing better quality and adequate density. The production of qualified TMAs requires expertise in several scientific areas including pathology, immunology, molecular and biology. Producers of TMA must also meet in hygienic standards, quality controls, and special materials processing and shipping procedures not only in the country of manufacture but for usage in the country of ultimate destination. In addition, because of the high cost of reliable commercial TMAs, and, conversely, the low quality of low cost TMAs, many research institutions had previously established their own production teams for in-house research needs prior to the introduction of our TMAs.





INTELLECTUAL PROPERTY





We regard our service marks, trademarks, trade secrets, patents and similar intellectual property as critical to our success. We rely on patent, trademark and trade secret law, as well as confidentiality and license agreements with certain of our employees, customers and others to protect our proprietary rights. Currently we own four invention patents:





Name of Patent


Number of Patent


AwardedTissue Microarrays (TMAs)


ZL01128783.7


June 1st 2005A way to test content of special antibody in body fluid in a certain part


ZL01131756.6


December 15th 2004Diabetes autoimmune antibody test kit multiplex Chip, equipment and method


ZL02145561.9


November 17th 2004Diabetes immunization antibody testing protein chips and its own preparation, detection methods


ZL02145535.X


October 27th 2004




7




RESEARCH AND DEVELOPMENT





Our strategy is to incrementally advance from our current technological base into complementary, rapidly commercialized products and services. New product development can represent an expansion of existing TMA technical knowledge or a new commercial application of current knowledge.





We currently perform all of our own research and development activities. We have our own research development and laboratory facilities located at our Shaanxi facility and retain our own professional research and development team. We may also enter into agreements for research and development activities with third parties in the future.





We plan to continue to attempt to enhance research and development in TMAs and technical services by expanding our virtual tissue array data bank (vTMAB) to meet expected growing demand from various research institutions and medical universities and colleges. Offering our products and services on a price competitive basis will be a key to meeting this growing market demand.





Our strategic focuses in the near future also include the biotechnology cosmetics and healthcare products, and health diagnosis for obesity and skin disease.





We spent $56,930 and $24,393 in research and development in the 2010 and 2009 fiscal years, respectively.





ENVIRONMENTAL LAW COMPLIANCE





Our operation currently complies with all the environmental law and regulations in China. Moreover, since China does not have additional environmental regulations dealing with climate change that apply to our operations, we have not planned material capital expenditures for environmental control facilities or changes in our business practices specific to climate change





EMPLOYEES





As of December 31, 2010, we had 43 full-time employees, with 38 employees at Chaoying Biotech and 5 at SD Chaoying. All of the Company’s employees are engaged full-time.  The Company believes that its relations with its employees are good.





AVAILABLE INFORMATION





Information regarding the Company's annual reports on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K, and any amendments to these reports, are available to the public from the SEC's website at http://www.sec.gov as soon as reasonably practicable after the Company electronically files such reports with the Securities and Exchange Commission. Any document that the Company files with the SEC may also be read and copied at the SEC's public reference room. Please call the SEC at 1-800-SEC-0330 for further information on the public reference room. We will also supply this information to any shareholder requesting copies of any of the foregoing free of charge. Shareholders should contact our office at (301)644-3901 if they desire copies of any of our filings with the Securities and Exchange Commission.





ITEM 1A.   RISK FACTORS





You should consider each of the following risk factors and any other information set forth in this Form 10-K and our other reports that we have filed with the Securities and Exchange Commission), including the Company's financial statements and related notes, in evaluating the Company's business and prospects. The risks and uncertainties described below are not the only ones that impact on the Company's operations and business. Additional risks and uncertainties not presently known to the Company, or that the Company currently considers immaterial, may also impair its business or operations. If any of the following risks actually occur, our business and financial condition, results or prospects could be harmed.





RISKS ASSOCIATED WITH THE COMPANY'S BUSINESS AND OPERATIONS IN THE MEDICAL TECHNOLOGY FIELD





The Company has a limited history with respect to the manufacture, sale and distribution of TMAs. Medical technology is constantly evolving and there can be no assurance that our TMAa will keep pace with medical breakthroughs. The Company's ability to achieve and maintain profitability and positive cash flow over time will be dependent upon, among other things, its ability to (i) continue to develop new TMA products and market these products both in China and other developing companies and (ii) its ability to evaluate the merits of pursuing the beauty supply business and its success in developing franchise opportunities despite no prior experience.





OUR BUSINESS IS HEAVILY DEPENDENT ON THE ECONOMIC GROWTH OF CHINA





At the current time, our business is heavily dependent on the economy and developing middle and upper class in China. Should the country suffer an economic downturn or should the government imposed restrictions on the growth of private companies and the ability of a large consumer class to earn money in the private sector our business will suffer. To the extent that any of the foregoing should occur, our revenues will decline significantly.




8




WE HAVE LOANED APPROXIMATELY $0.09 MILLION TO NON-AFFILIATED THIRD PARTIESS





In order to maximize returns on available cash, the Company has outstanding unsecured loans totaling approximately $0.09 million, representing 0.9% of the Company's assets.  The loans were placed to earn interest income.  However, in the event of a default, the Company risks substantial loss of their ability to continue to finance ongoing operations.  Litigation could be costly to enforce the loan obligations and may deprive us of the use of the cash for a significant period of time.  Included in the balance was $173,452 of interest receivable, which was net of $173,452 of allowance for doubtful amount.





RELIANCE ON SINGLE CUSTOMER





We generated 82% of our revenue of tissue array from sales to a single customer. Should this customer face financial difficulty, refuse to pay our invoices as they become due or direct their business to a competitor, our business operations will suffer a material adverse effect.





WE MAY NOT BE ABLE TO SUPPORT OUR OPERATIONS THROUGH INTERNAL GROWTH





In order to fully implement our business plan, we may require additional financing. Financing may be in the form of traditional bank financing or through the sale of our common stock. There can be no assurance that we will be able to secure adequate bank financing or if available, will be on terms acceptable to the Company. If we attempt to sell shares of our common stock, existing shareholders will face dilution and likely a reduction in the price of our common stock. There are currently no financing arrangements in place.





OUR BUSINESS MAY BE AFFECTED BY UNEXPECTED CHANGES IN REGULATORY REQUIREMENTS IN


THE JURISDICTIONS IN WHICH WE OPERATE.





Development and distribution of our TMA's is subject to regulation both where we manufacture and sell the products. We believe that we are currently in compliance with applicable governmental rules and procedures. However, there can be no assurance that changes in the regulatory environment will not make it difficult for us to comply or result in a substantial increase in our operating costs and a resulting decline in our margins.





THERE IS UNCERTAINTY AS TO OUR ABILITY TO CONTROL COSTS AND EXPENSES.





If our business grows, costs will increase. Management cannot accurately project or give any assurance, with respect to its ability to control development and operating costs and/or expenses in the future. Consequently, even if the Company is successful in expanding its operations (of which there can be no assurance), our management still may not be able to control costs and expenses adequately, and therefore such expansion may result in operating losses.





COMPETITION





Our market is highly competitive and some of our competitors may have greater resources than us. These competitors may be able to respond more quickly to new or emerging technologies and changes in customer requirements and devote greater resources to develop, promote and sell their services. If this should occur, revenues may decline and we will likely lose market share.





IF WE DO NOT MANAGE OUR GROWTH, WE MAY NOT BE ABLE TO OPERATE OUR BUSINESS EFFECTIVELY.





We expect significant expansion will be required to address potential growth in our customer base, the breadth of our service offerings, and other opportunities. This expansion could strain our management, operations, systems and financial resources. To manage any future growth of our operations and personnel, we must improve and effectively utilize operational, management, marketing and financial systems and successfully recruit, hire, train and manage personnel and maintain close coordination among our technical, finance, marketing, sales and recruitment staffs. We also will need to manage an increasing number of complex relationships with customers, strategic partners, advertisers and other third parties. Our failure to manage growth could disrupt our operations and ultimately prevent us from generating the revenue we expect.





UNANTICPATED OBSTACLES TO EXECUTION OF OUR BUSINESS PLAN.





The Company's business plans may change significantly. Many of our potential business endeavors are capital intensive and may be subject to statutory or regulatory requirements. Management believes that our  activities and strategies are achievable in light of current economic and legal conditions with the skills, background, and knowledge of the Company's principals and advisors. Management reserves the right to make significant modifications to the Company's stated strategies depending on future events.




9




CERTAIN POLITICAL AND ECONOMIC CONSIDERATIONS RELATING TO THE PRC COULD ADVERSELY AFFECT OUR COMPANY.





The government of the People's Republic of China has welcomed foreign investment and the expansion of business opportunities in the private sector. There can be no assurance that this policy will continue or alternatively, that this policy will not be modified to make it more restrictive to transfer funds from China to the United States or any other country. Moreover, political instability could adversely impact our ability to fully implement our business plan as political instability would likely lead to a downturn in the Chinese economy.





CURRENCY EXCHANGE





Changes in the exchange rate of the Chinese yuan renminbi (“CYN” or “RMB”) may adversely impact our profitability. If the CYN declines with respect to the U. S. dollar, our profitability will be adversely affected.





RESEARCH AND DEVELOPMENT CAN BE COSTLY





Medical advances are taking place at a rapid pace. In order to stay competitive, and bring state of the art TMAs to the market at competitive prices will require us to continue to devote significant resources to research and development. There can be no assurance that we will have sufficient cash flow to make this commitment on a going forward basis.





RELIANCE ON CURRENT MANAGEMENT





We are reliant on our current management team, particularly Mr. Bai and Ms. Bu, to help us fully implement our business plan. The loss of any of their services could have a material adverse impact on the implementation of our business plan and our future growth. We do not carry any type of key man insurance.





Our business may experience periods of rapid growth that will place significant demands on its managerial, operational and financial resources. In order to manage this possible growth, the Company must continue to improve and expand its management, operational and financial systems and controls. The Company will need to expand, train and manage its employee base. No assurances can be given that the Company will be able to timely and effectively meet such demands.





WE MAY HAVE DIFFICULTY ATTRACTING TALENT IN FOREIGN COUNTRIES.





Our research and development program requires us to recruit highly skilled personnel. There can be no assurance that we will be able to attract these personnel for work either in the United States or China. If we cannot attract skilled personnel, our operations will likely suffer and any competitive edge that we have in the marketplace will quickly erode.





RISKS RELATED TO THE COMPANY’S RESIDENTIAL, CASINO & ENTERTAINMENT BUSINESS





THE ENTERTAINMENT AND LEISURE BUSINESS IS PARTICULARLY SENSITIVE TO REDUCTIONS IN DISCRETIONARY CONSUMER SPENDING AS A RESULT OF DOWNTURNS IN THE ECONOMY AND SALES OF RESIDENTIAL HOUSING ARE ALSO SENSITIVE TO DOWNTURNS IN THE REAL ESTATE INDUSTRY.





Consumer demand for hotel/casino resorts and for the type of luxury amenities we offer may be particularly sensitive to downturns in the economy. Demand for residential housing is also sensitive to downturns in the real estate market. Changes in consumer preferences or discretionary consumer spending brought about by factors such as fears of war, future acts of terrorism, general economic conditions, disposable consumer income, fears of recession and changes in consumer confidence in the economy could reduce customer demand for the luxury products and leisure services we offer, thus imposing practical limits on pricing and harming our operations.





THERE ARE SIGNIFICANT RISKS ASSOCIATED WITH OUR PLANNED CONSTRUCTION PROJECTS, WHICH COULD ADVERSELY AFFECT OUR FINANCIAL CONDITION, RESULTS OF OPERATIONS OR CASH FLOWS FROM THESE PLANNED FACILITIES.





Our ongoing and future construction projects entail significant risks. Construction activity requires us to obtain qualified contractors and subcontractors, the availability of which may be uncertain. In addition, the failure to sell our residential units as expected could adversely affect development of the casino and entertainment project as we are anticipating using the proceeds of such sales to help finance completion of the project.  While we anticipate being able to obtain alternate financing, possibly from affiliated companies, there is no assurance such financing will be available. Construction projects are subject to cost overruns and delays caused by events outside of our control or, in certain cases, our contractors’ control, such as shortages of materials or skilled labor, unforeseen engineering,  environmental and/or geological problems, work stoppages, weather interference, unanticipated cost increases and unavailability of construction materials or equipment. Construction, equipment or staffing problems or difficulties in obtaining any of the requisite materials, licenses, permits, allocations and authorizations from governmental or regulatory authorities could increase the total cost, delay, jeopardize, prevent the construction or opening of our projects, or otherwise affect the design and features. In addition, the number of ongoing projects and their locations throughout the world present unique challenges and risks to our management structure. If our management is unable to successfully manage our worldwide construction projects, it could have an adverse effect on our financial condition, results of operations or cash flows.




10




THE LOSS OF OUR GAMING LICENSE OR OUR FAILURE TO COMPLY WITH THE EXTENSIVE REGULATIONS THAT GOVERN OUR OPERATIONS COULD HAVE AN ADVERSE EFFECT ON OUR FINANCIAL CONDITION, RESULTS OF OPERATIONS OR CASH FLOWS.





Our gaming operations and the ownership of our securities are subject to extensive regulation by the Shandong Administration for Civil Affairs. They have broad authority with respect to licensing and registration of our business entities and individuals investing in or otherwise involved with us.  These authorities may, among other things, revoke the gaming license of any corporate entity or the registration of a registered corporation or any entity registered as a holding company of a corporate licensee for violations of gaming regulations. This would have a material adverse affect on our business. Furthermore, any change in the laws, regulations or licenses applicable to our business or gaming licenses could require us to make substantial expenditures or could otherwise have a material adverse effect on our financial condition, results of operations or cash flows.





WE MAY BE EXPOSED TO POTENTIAL RISKS RELATING TO OUR INTERNAL CONTROLS OVER FINANCIAL REPORTING AND OUR ABILITY TO HAVE THOSE CONTROLS ATTESTED TO BY OUR INDEPENDENT AUDITORS.




As directed by Section 404 of the Sarbanes-Oxley Act of 2002 or SOX 404, the SEC adopted rules requiring public companies to include a report of management on the company’s internal controls over financial reporting in their annual reports, including Form 10-K. We have established disclosure controls and procedures effective for the purposes set forth in the definition thereof in Exchange Act Rule 13a-15(e) as of December 31, 2010.  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 or compliance with the policies or procedures may deteriorate.





WE MAY BE AFFECTED BY GLOBAL CLIMATE CHANGE OR BY LEGAL, REGULATORY, OR MARKET RESPONSES TO SUCH CHANGE.





The growing political and scientific sentiment is that increased concentrations of carbon dioxide and other greenhouse gases in the atmosphere are influencing global weather patterns. Changing weather patterns, along with the increased frequency or duration of extreme weather conditions, could impact the availability or increase the cost of key raw materials that we use to produce our products. Additionally, the sale of our products can be impacted by weather conditions.





Concern over climate change, including global warming, has led to legislative and regulatory initiatives directed at limiting greenhouse gas (GHG) emissions. For example, proposals that would impose mandatory requirements on GHG emissions continue to be considered by policy makers in the territories that we operate. Laws enacted that directly or indirectly affect our production, distribution, packaging, cost of raw materials, fuel, ingredients, and water could all impact our business and financial results.





RISKS RELATED TO OUR COMMON STOCK





THE COMPANY DOES NOT EXPECT TO PAY CASH DIVIDENDS IN THE FORESEEABLE FUTURE.





We have never paid cash dividends on its common stock and have no plans to do so in the foreseeable future. The Company intends to retain earnings, if any, to develop and expand its business.





"PENNY STOCK" RULES MAY MAKE BUYING OR SELLING THE COMMON STOCK DIFFICULT A SEVERELY LIMIT THEIR MARKET AND LIQUIDITY.





Trading in the Company's common stock is subject to certain regulations adopted by the SEC commonly known as the "Penny Stock Rules". Our common stock qualifies as penny stock and is covered by Section 15(g) of the Securities and Exchange Act of 1934, as amended (the "1934 Act"), which imposes additional sales practice requirements on broker/dealers who sell our common stock in the market. The "Penny Stock" rules govern how broker/dealers can deal with their clients and "penny stock". For sales of our common stock, the broker/dealer must make a special suitability determination and receive from clients a written agreement prior to making a sale. The additional burdens imposed upon broker/dealers by the "penny stock" rules may discourage broker/dealers from effecting transactions in our common stock, which could severely limit its market price and liquidity. This could prevent investors from reselling our common stock and may cause the price of the common stock to decline.




11




Although publicly traded, our common stock has substantially less liquidity than the average trading market for a stock quoted on other national exchanges, and our price may fluctuate dramatically in the future.





Our Common Stock is currently quoted on the Pink Sheets. Our Common Stock was previously listed for trading on the Over-the-Counter Electronic Bulletin Board. The trading market in the common stock has substantially less liquidity than the average trading market for companies quoted on other national stock exchanges. A public trading market having the desired characteristics of depth, liquidity and orderliness depends on the presence in the marketplace of willing buyers and sellers of our common stock at any given time. This presence depends on the individual decisions of investors and general economic and market conditions over which we have no control. Due to limited trading volume, the market price of the Company's common stock may fluctuate significantly in the future, and these fluctuations may be unrelated to the Company's performance. General market price declines or overall market volatility in the future could adversely affect the price of the Company's common stock, and the current market price may not be indicative of future market prices.





ITEM 1B.    UNRESOLVED STAFF COMMENTS





Not Applicable.





ITEM 2.    DESCRIPTION OF PROPERTY





Our operations in the People's Republic of China are located at the Chaoying Workshop, Third Floor, Changyanbu, Private-owned industrial zone where we use approximately 18,000 square feet (2,000 square meters) of space. We lease office space from a related party, Shaanxi Chaoying Personal Care Group Co., Inc. We pay $5,855 per month in rent (equivalent to RMB 40,000 per month). This lease will expire on December 31, 2012.We believe that this arrangement is comparable to what we would pay had we leased similar space from a non-affiliated entity. The facility is sufficient for our current operations. Should our operations expand and we find the need to locate additional rental properties, we do not anticipate any problem in securing additional leased space.





In connection with our entertainment facility, as discussed previously, we purchased 33,333 square meters land, in Changle County, Weifang, Shandong Province. SD Chaoying is building a 19,145 square meters entertainment, culture, casino and lodging facilitites, and another 14,188 square meters residential buildings.





ITEM 3.    LEGAL PROCEEDINGS





There are no material pending legal proceedings to which we are a party. We received a notice on June 6, 2000 to inform us that we may have a potential liability from waste disposal in the Casmalia Disposal Site at Santa Barbara County, California.  We were given a choice of either signing an agreement that would toll the statute of limitations for eighteen (18) months in order to allow us to resolve any liability with the government without incurring costs associated with being named a defendant in a lawsuit, or becoming an immediate defendant in a lawsuit. We signed the tolling agreement. On November 20, 2001, the tolling agreement was extended for an additional 18 months. On May 20, 2003 the tolling agreement was again extended for an additional 18 months and on November 24, 2004 the tolling agreement was again extended for additional 18 months. On June 29, 2004, we received a proposed settlement from the EPA in the amount of $21,131, which had been accrued as other payable. We are waiting for communication from the government concerning payment of the final settlement.  As of and subsequent to December 31, 2010, the Company had not received further correspondences from the EPA regarding this matter.




ITEM 4.    RESERVED





PART II





ITEM 5.    MARKET FOR COMMON EQUITY AND RELATED STOCKHOLDER MATTERS





Our current stock symbol is "CYDI.PK". Our common stock was previously quoted on the Over-the-Counter-Bulletin Board. ("OTCBB"). Prior to our merger with Cybrdi we traded on the OTCBB under the symbol "CRTN". Following our acquisition of Cybrdi, Inc., we requested a symbol change and were assigned CYDI.





In February 2011, due to the transformation of its market makers to use the platform provided by OTC Markets Group to quote OTC securities, the Company began trading on the OTCQB, a marketplace developed by the OTC Markets Group, as of the reporting date, under the ticker symbol CYDI. The OTCQB is a market tier for U.S. listed companies that are in compliance with their SEC reporting obligations.





12




The following table sets forth, for the periods indicated, the range of high and low bid quotations for our common stock as quoted on the OTCBB and the Pink Sheets. The reported bids quotations reflect inter-dealer prices without retail markup, markdown or commissions, and may not necessarily represent actual transactions.





YEAR

PERIOD

HIGH


LOW2010

First Quarter


0.025



0.020Second Quarter


0.050



0.015Third Quarter


0.045



0.021Fourth Quarter


0.030



0.0122009

First Quarter


0.020



0.010Second Quarter


0.010



0.010Third Quarter


0.040



0.010Fourth Quarter


0.050



0.010





(a) Transfer Agent





Our transfer agent is  Securities Transfer Corporation, whose address is 2591 Dallas Parkway, Suite 102, Frisco Tx. 75034.  Their telephone number is 469 633 0101 .





(b) Stockholders





As of March 31, 2011, there were approximately 1,318  record holders of our common stock.  As of March 31, 2011, we have not paid any cash dividends on shares of our common stock and do not plan to do so. We currently plan to retain future earnings to fund the development and growth of our business.





(c) Dividend Policy.





We have not  paid cash dividends or made distributions in the past, and we do not anticipate that we will pay cash dividends or make distributions in the foreseeable future. We currently intend to retain and reinvest future earnings, if any, to finance our operations.





(d) Securities authorized for issuance under equity compensation plans





None.





ISSUANCE OF UNREGISTERED SHARES





In March 2010, 12,000,000 shares of common stock of the Company to Mr. Yanbiao Bai, Chief Executive Officer and President of the Company, and 3,300,000 shares of common stock of the Company to Ms. Xue Bu, Chief Financial and Operating Officer of the Company as compensation for services rendered.  Compensation cost of $306,000 was recorded during the first quarter of 2010 at $0.02 per share, the market price of the Company’s common stock on January 15, 2010.




ITEM 6.  SELECTED FINANCIAL INFORMATION





We are a “smaller reporting company” and, as such, are not required to provide this information.





ITEM 7.  MANAGEMENT DISCUSSION AND ANALYSIS





This annual report contains forward-looking statements within the meaning of the federal securities laws. These include statements about our expectations, beliefs, intentions or strategies for the future, which we indicate by words or phrases such as "anticipate," "expect," "intend," "plan," "will," "we believe," "Cybrdi believes," "management believes" and similar language. The forward-looking statements are based on the current expectations of Cybrdi and are subject to certain risks, uncertainties and assumptions, including those set forth in the discussion under "Description of Business" and "Management's Discussion and Analysis," including the discussion under "Risk Factors" thereunder. The actual results may differ materially from results anticipated in these forward-looking statements. We base the forward-looking statements on information currently available to us, and we assume no obligation to update them.




13





CRITICAL ACCOUNTING POLICIES AND ESTIMATES





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





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





Revenue recognition: Revenue represents the invoiced value of goods sold recognized upon the delivery of goods to customers and service income is recognized when services are provided. Deferred revenue represents the undelivered portion of invoiced value of goods sold to customers. Sales transactions not meeting all the conditions of the full accrual method are accounted for using the deposit method of accounting. Under the deposit method, all costs are capitalized as incurred, and payments received from the buyer are recorded as customer deposits.





Principles of consolidation: The consolidated financial statements include the accounts of Cybrdi, Inc. and its wholly-owned subsidiaries and joint ventures.





RESULTS OF OPERATIONS





FOR THE YEAR ENDED DECEMBER 31, 2010 COMPARED TO THE YEAR ENDED DECEMBER 31, 2009





Net Sales





Cybrdi generates two categories of revenues, including sales of tissue chip & kits products and residential housing.  The total revenues for the year ended December 31, 2010 was $819,733, a  decrease of approximately 43% from $1,473,621 for the year ended December 31, 2009.





Tissue Chip Product:  Net sales increased $60,223 from $462,989 for the year ended December 31, 2009 to $523,212 for the year ended December 31, 2010, an increase of approximately 13%.  These net sales were generated from our China subsidiary, Chaoying Biotech.  The increase in net sales of tissue chip & kit product was primarily because we adjusted domestic market at the beginning of 2010.  Starting from 2010, our sole domestic sales representative in China has become Xi’an AiLiNa Biotechnology Co., Ltd., and the only overseas sales representative is Biomax.  We mainly distribute our products through these two sales representatives.





Housing: During the fourth quarter of 2009, SD Chaoying completed the construction of two six-story multi-family residential buildings containing a total of 72 housing units, 37 of which qualified as being recognized as sales revenue aggregating $1,010,632 for the year ended December 31, 2009.  For the year ended December 31, 2010, additional 9 qualified for being recognized as sales revenue aggregating $296,521. .Since SD Chaoying is required to continue its involvement with the property after the sale, including installations of utility systems, improvements and amenities, and community landscaping, profit from the sale was recognized using the percentage of completion method as required by ASC Topic 360-20, “Property, Plant, and Equipment – Real Estate Sales”..





Gross Margin





Gross margin as a percent of sales was 23.02% and 20.45% for the year ended December 31, 2010 and 2009, respectively.  Despite the increase in gross margin at the consolidation level, the gross margin for each of the Company’s two divisions was lower than the prior year.  Gross margin of SD Chaoying slightly decreased from 13.59% for 2009 to 13.30% for 2010, while gross margin of Chaoying Biotech decreased from 35.44% to 28.53%.  Gross profit of SD Chaoying decreased $97,843 from $137,295 for the year ended December 31, 2010 to $39,452 for 2009, mainly due to fewer residential housing units sold in 2010.  Gross profit of ChaoYing Biotechnology for the year ended December 31, 2010 decreased $14,788 to $149,281 from $164,069 for the year ended December 31, 2009, mainly due to decrease in unit sales price of tissue chip sold to the Company’s US distributor, combined with a higher unit cost allocated from fixed costs as a result of a lower production volume during the year of 2010 as compared to the year of 2009.  Comparing gross margin of the two divisions, the dilutive effect from the SD Chaoying’s 13.30% on Chaoying Biotech’s 28.53% in 2010 was less significant as the dilutive effect derived from SD Chaoying’s 13.59% as compared to Chaoying Biotech’s 35.44% in 2009.  As a result, the overall gross margin slightly increased in 2010.





Operating Expenses





The Company’s operating expenses increased $198,271 to $1,061,987 for the year ended December 31, 2010 from $863,716 for the year ended December 31, 2009, an increase of 23%.  This was primarily due to an increase in general and administrative expenses of $139,554 to $951,734 for the year ended December 31, 2010 compared to $812,180 for the year ended December 31, 2009.  The increase was mainly resulted from the compensation expense of $306,000 recorded during the first quarter of 2010 for 12,000,000 shares and 3,300,000 shares of common stocks issued to the Company’s two key executives, respectively.




14




Selling expenses increased $26,180 to $53,323 for the year ended December 31, 2010 compared to $27,143 for the year ended December 31, 2009.  The increase in selling expenses was primarily due to the higher advertising expenses incurred at SD Chaoying as a result of the opening of the recreation center in late 2010.





Other Income





Net other income increased by $108,969 to $31,720 for the year of 2010 as compared to net other expense of $97,196 for the year 2009.  Other income was mainly comprised of $28,168 generated from the sale of non-operating real property of Chao Ying Biotech for the first quarter of 2010.  Thenet book value of non-operating real property was $38,636 and net proceeds from the sale amounted to $66,804.





Income Taxes





The Company had not recorded a provision for U.S. federal income tax for year ended December 31, 2010 and 2009 due to a net operating loss incurred, and it was not required to accrue income taxes due to the net operation loss for the year ended DECEMBER 31, 2010 and 2009.  According to Western Developing Plan of the PRC, Chaoying Biotech enjoys a 50% reduction in preferential policy of EIT, but not less than 15%. As a result, Chaoying Biotech’s effective EIT tax rate has been 15% since 2008.  SD Chaoying is subject to the standard EIT rate of 25%.  The Company had net losses and no income tax provision was recorded for the years ended December 31, 2010 and 2009.  A 100% valuation reserve was recognized since it is more likely than not that all of the deferred tax assets will not be realized.





Net Loss





As a result of the above, we incurred a net loss of $750,740 for 2010 as compared to $596,946 for 2009.





LIQUIDITY AND CAPITAL RESOURCES





We had a working capital deficit (current assets less current liabilities) of $3,123,937 and $2,163,830 as of December 31, 2010 and 2009.  The increase was primarily due to a decrease in inventories from $1.3 million as of December 31, 2009 to $1.1 million as of December 31, 2009 primarily due to the selling of additional housing inventories at SD Chaoying during 2010.  The increase of loan from related parties from $1.8 million at December 31, 2009 to $2.0 million at December 31, 2010 also attributed to the increase in working capital deficit.





Cash provided by operating activities was $81,148 for the year ended December 31, 2010 as compared to $202,302 for the year ended December 31, 2009.  The primary reason for this decrease was primarily result of an increase in net loss from $694,692 for the year ended December 31, 2009 to $750,740 for the year ended December 31, 2010.





As compared to 2009, cash flows from investing activities for 2010 decreased by $966,702 from $401,262 to $(565,440). This decrease was primarily due to $583,346 of cash used in construction-in-progress for the entertainment center at SD Chaoying in 2010.





Financing activities for the year ended December 31, 2010 included the net cash provided by affiliates to assist our company's operations,. Net cash provided by financing activities increased by $306,596 from $120,628 of net cash used in financing activities in 2009 to $185,968 of net cash provided by financing activities in 2010.





The accompanying consolidated financial statements have been prepared assuming the Company will continue as a going concern, which contemplates the realization of assets and the satisfaction of liabilities in the normal course of business.  The Company has incurred significant losses and has not demonstrated the ability to generate sufficient cash flows from operations to satisfy its liabilities and sustain operations.  The Company had accumulated deficit of $1,847,882 and $1,097,141 as of December 31, 2010 and 2009, including net losses of $750,740 and $596,946 for the years ended December 31, 2010 and 2009, respectively.





The Company finances its operations primarily through short-term bank borrowings and advances from related parties or officers/shareholders.  In order to complete the construction of SD Chaoying cultural and entertainment center, approximately $2.8 million (equivalent to RMB 19 million) of capital is expected to be needed.  The Company, taking into accounts the available banking facilities, internal financial resource, and supports from related companies, believes it has sufficient working capital to meet its present obligation for at least the next twelve months.  Management is taking actions to address the company's financial condition and deteriorating liquidity position.  The following sets forth management’s plans for dealing with the adverse effects of the conditions:




15




(a)           Sale of housing inventories:  Proceeds to be received from the sale of the remaining housing of the two completed residential buildings are expected to amount to approximately $1.1 million.





(b)          Rental and management fee revenue from the cultural and entertainment center:  Annual rental revenue is estimated to be approximately $650,000 per year.  Management fee revenue will be charged to commercial tenants at 3% of annual gross revenue.





(c)           Additional advances from related companies and affiliates:  Mr. Bai, our Chief Executive Officer, advanced $97,317 to the Company in 2010 to finance operations and the costs to maintain the Company’s public status in the U.S.  In addition, Shaanxi Chaoying Beauty & Cosmetics Group, which is also an affiliate,  is anticipated to provide up to $730,000 of capital to support operational use.  During the year 2010, Shaanxi Chaoying Beauty & Cosmetics Group advanced $88,632 to the Company to finance its operations.





The Company may require additional funds and may seek to raise such funds though public and private financings or from other sources.  There is no assurance that the above management’s plans will be realized or the additional financing will be available at all or that, if available, such financing will be obtainable on terms favorable to the Company or that any additional financing will not be dilutive.  The consolidated financial statements do not include any adjustments that might result from the outcome of those uncertainties.





OFF-BALANCE SHEET ARRANGEMENTS





We do not have any off-balance sheet arrangements that have or are reasonably likely to have a current or future effect on our financial condition or results of operations.





RECENT ACCOUNTING PRONOUNCEMENTS





In December 2009, FASB issued new guidance regarding improvements to financial reporting by enterprises involved with variable interest entities.  The new guidance provides an amendment to its consolidation guidance for variable interest entities and the definition of a variable interest entity and requires enhanced disclosures to provide more information about an enterprise’s involvement in a variable interest entity.  This amendment also requires ongoing assessments of whether an enterprise is the primary beneficiary of a variable interest entity and is effective January 1, 2010.  The adoption of this guidance had no impact on our consolidated financial position or results of operations.





In January 2010, FASB issued an amendment regarding improving disclosures about fair value measurements.  This new guidance requires some new disclosures and clarifies some existing disclosure requirements about fair value measurement.  The new disclosures and clarifications of existing disclosures are effective for interim and annual reporting periods beginning after December 15, 2009, except for the disclosures about purchases, sales, issuances and settlements in the roll forward of activity in Level 3 fair value measurements.  Those disclosures are effective for fiscal years beginning after December 15, 2010 and for interim periods within those fiscal years.  There was no impact from the adoption of this guidance to our consolidated financial position or results of operations as the amendment only addresses disclosures.





In April 2010, FASB issued an amendment to Stock Compensation.  The amendment clarifies that an employee stock-based payment award with an exercise price denominated in the currency of a market in which a substantial portion of the entity’s equity shares trades should not be considered to contain a condition that is not a market, performance, or service condition.  Therefore, an entity would not classify such an award as a liability if it otherwise qualifies as equity.  The amendments are effective for fiscal years, and interim periods within those fiscal years, beginning on or after December 15, 2010.  The adoption of this guidance had no impact on our consolidated financial position or results of operations since our stock-based payment awards have an exercise price denominated in the same currency of the market in which our Company shares are traded.





INFLATION





Inflation has not had a material impact on our business.





CURRENCY EXCHANGE FLUCTUATIONS





The net sales, costs and expenses generated by our activities in China are priced in Chinese renminbi. Approximately 99% of our assets are located in China, the remaining less than 1% in assets are located in the United States.  Since 1994, the exchange rate for Renminbi against the United States dollar has remained relatively stable; with an exchange rate approximately RMB8.28 to US$1.00. On July 21, 2005, China announced a revaluation of RMB and reduced its peg to the US dollar. China is planning to move to a managed float against a basket of currencies. The exchange rate has been adjusted to approximately RMB 6.6023 to US$1.00 as of DECEMBER 31, 2010.  The Chinese Renminbi has increased significantly in value as compared to the U.S. dollar. However, there can be no assurance that Renminbi will not be subject to devaluation. We may not be able to hedge effectively against Renminbi devaluation, so there can be no assurance that future movements in the exchange rate of Renminbi and other currencies will not have an adverse effect on our financial condition.




16




ITEM 7A.
QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.





Not Applicable.





ITEM 8.
FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA.





The information required by Item 8 appears after the signature page to this report.





ITEM 9.
CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE





None.





ITEM 9A.
Controls and Procedures





Evaluation of Disclosure Controls and Procedures





Based on their evaluation as of December 31, 2010, our Chief Executive Officer and Chief Financial Officer have concluded that our disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as amended) were effective to ensure that the information required to be disclosed by us in this Annual Report on Form 10-K was recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and instructions for Form 10-K.





Management’s Report on Internal Control over Financial Reporting





Our management is responsible for establishing and maintaining adequate internal control over financial reporting (as defined in Rule 13a-15(f) under the Securities Exchange Act of 1934, as amended). Our management assessed the effectiveness of our internal control over financial reporting as of December 31, 2010.





Our internal control over financial reporting is a process designed by or under the supervision of our principal executive and principal financial officers to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. Our internal control over financial reporting includes policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect transactions and dispositions of assets; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of 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 directors of the Company; and (3) 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 our financial statements.





In making this assessment, our management used the criteria set forth by the Committee of Sponsoring Organizations of the Treadway Commission (“COSO”) in ‘Internal Control – Integrated Framework’. Our management has concluded that, as of December 31, 2010, our internal control over financial reporting is effective based on these criteria.





This annual report does not include an attestation report of the company's registered public accounting firm regarding internal control over financial reporting. Management's report was not subject to attestation by the company's registered public accounting firm pursuant to rules of the Securities and Exchange Commission that permit the company to provide only management's report in this annual report.





There were no changes in our internal controls over financial reporting during the year ended December 31, 2010 that have materially affected, or are reasonably likely to materially affect our internal controls over financial reporting.





Our management, including our Chief Executive Officer and Chief Financial Officer, does not expect that our disclosure controls and procedures or our internal controls will prevent all error and all fraud. A control system, no matter how well conceived and operated, can provide only reasonable, not absolute, assurance that the objectives of the control system are met. Further, the design of a control system must reflect the fact that there are resource constraints, and the benefits of controls must be considered relative to their costs. Because of the inherent limitations in all control systems, no evaluation of controls can provide absolute assurance that all control issues and instances of fraud, if any, within Cybrdi, Inc. have been detected.




17




ITEM 9B.
OTHER INFORMATION.





(Not applicable).  There was no information required to be filed on Form 8-k during the fourth quarter of the Company's fiscal year ended December 31, 2010 and not reported. .





PART III





ITEM10.DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE





The following table sets forth the names, ages, principal offices and positions and the date each such person became a director or executive officer. Executive officers are elected annually by our Board of Directors. Each executive officer holds his office until he resigns, is removed by the Board or his successor is elected and qualified.. Each director holds his office until his successor is elected and qualified or his earlier resignation or removal.





DATE OFNAME AND PRINCIPAL POSITION

AGE

APPOINTMENTYanBiao Bai, Chairman, CEO and President

50

2003Xue Bu, Director, Treasurer andChief Operating Officer

47

2005





Below are brief descriptions of the backgrounds and experiences of our current officers and directors:





Mr. YanBiao Bai, Chairman, CEO and President





YanBiao Bai graduated from the Second Military Medical University in 1984, receiving a legal qualification certificate.  He is an experienced entrepreneur and corporate executive. Since 1999 he has served as Chairman of Shaanxi Chaoying Group, a chain of cosmetic and personal care training schools and franchises located in China. Since 2003, he has served as Chairman of the Board of Directors of Cybrdi, Inc. In 2006 he assumed the role as CEO. Long interested in Chinese traditional and modern medicine, Mr. Bai is working to apply his marketing and management expertise to the emerging biotech field in China, focusing on rapidly marketable products and services. In 2005, Mr. Bai was awarded one of the Shaanxi Province "Outstanding Young Industrialist Award," among other titles and honors. The Board believes that Mr. Bai has the experience, qualifications, attributes and skills necessary to serve on the Board because of his over 11 years of experience in the biotech industry, his having provided leadership and strategic direction to the Company and his unparalleled knowledge of the Company and its business.Mr. Bai is not a member of the Board of any other public company or any investment company, neither has he been a member of the boards of directors of such companies for the past five years.





Xue Bu, Director, Treasurer  & Chief Operating Officer





Ms. Xue Bu has served as an officer and director of Cybrdi, Inc. since February 2005. She obtained her B.S. in 1986 from The Fourth Military Medical University as well as an MBA degree from Xi'an Jiaotong University. Ms. Bu was the Vice President of Beijing Chaoying Real Estate Company from 1999 to 2001. Since 2001, she has served as the Deputy General Manager of Chaoying. Ms. Bu is the wife of YanBiao Bai. The Board believes that Ms. Bu has the experience, qualifications, attributes and skills necessary to serve on the Board because of her 6 years of experience with the Company and her knowledge of our business. Mr. Bai is not a member of the Board of any other public company or any investment company, neither has he been a member of the boards of directors of such companies for the past five years.





INVOLVEMENT IN CERTAIN LEGAL PROCEEDINGS





None of our directors, executive officers, or control persons has been involved in any of the following events during the past ten years:





l
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 bankruptcy or within two years prior to that time; or





l
Any conviction in a criminal proceeding or being subject to a pending criminal proceeding (excluding traffic violations and other minor offenses); or





l
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




18




l
Being found by a court of competent jurisdiction (in a civil violation), the SEC or the Commodity Future Trading Commission to have violated a federal or state securities or commodities law, and the judgment has not been reversed, suspended, or vacated; or





l
Being the subject of, or a party to, any Federal or State judicial or administrative order, judgment, decree, or finding, not subsequently reversed, suspended or vacated, relating to an alleged violation of: any Federal or State securities or commodities law or regulation; or any law or regulation respecting financial institutions or insurance companies including, but not limited to, a temporary or permanent injunction, order of disgorgement or restitution, civil money penalty or temporary or permanent cease-and-desist order, or removal or prohibition order; or any law or regulation prohibiting mail or wire fraud or fraud in connection with any business entity. This violation does not apply to any settlement of a civil proceeding among private litigants; or





l
Being the subject of, or a party to, any sanction or order, not subsequently reversed, suspended or vacated, of any self-regulatory organization (as defined in Section 3(a)(26) of the Exchange Act (15 U.S.C. 78c(a)(26))), any registered entity (as defined in Section 1(a)(29) of the Commodity Exchange Act (7 U.S.C. 1(a)(29))), or any equivalent exchange, association, entity or organization that has disciplinary authority over its members or persons associated with a member.




FAMILY RELATIONSHIPS





Ms. Xue Bu, the Treasurer and Chief Operating Officer, is the wife of Yanbiao Bai the Chairman, CEO and President.





SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING REQUIREMENTS





For companies registered pursuant to section 12(g) of the Exchange Act, Section 16(a) of the Exchange Act 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 shareholders are required by SEC regulation to furnish us with copies of all Section 16(a) forms they file. To our knowledge, based solely on a review of the copies of reports filed with the Securities and Exchange Commission, Section 16(a) filing requirements applicable to our officers, directors and greater than ten percent beneficial owners were met during the Company's last fiscal year and there has been no change in beneficial ownership.





All officers and directors owning shares of common stock have filed the required reports under Section 16(A) of the Act.





BOARD COMMITTEES





Our board of directors is currently composed of two directors: Mr. Yan Biao Bai and Mr. Xue Bu. All board action requires the approval of a majority of directors in attendance at a meeting at which a quorum is present.  We currently do not have standing audit, nominating or compensation committees.  Our entire board of directors handles the functions that would otherwise be handled by each of the committees.





CODE OF ETHICS





The Company has a Code of Business Conduct and Ethics, which is applicable to all directors, officers and employees of the Company. The Code is designed to deter wrongdoing and to promote:





·
Honest and ethical conduct, including the ethical handling of actual or apparent conflicts of interest between personal and professional relationships;





·
Full, fair, accurate, timely and understandable disclosure in reports and documents that we file with, or submit to, the SEC, and in other public communications that we made;





·
Compliance with applicable governing laws, rules and regulations;





·
The prompts internal reporting of violations of the Code to the appropriate person or persons; and





·
Accountability for adherence to this Code.




19





ITEM 11.
EXECUTIVE COMPENSATION





COMPENSATION PHILOSOPHY





Our board of directors has historically determined the compensation to be paid to our executive officers based on our financial and operating performance and prospects, and contributions made by the officers’ to our success.  Each of the named officers will be measured by a series of performance criteria by the board of directors, on a yearly basis.  Such criteria will be based on certain objective parameters such as job characteristics, required professionalism, management skills, interpersonal skills, related experience, personal performance and overall corporate performance.





Our board of directors has not adopted or established a formal policy or procedure for determining the amount of compensation paid to our executive officers.  As our executive leadership and board of directors grow, our board of directors may decide to form a compensation committee charged with the oversight of executive compensation plans, policies and programs.





Our compensation program for our executive officers and all other employees is designed such that it will not incentivize unnecessary risk-taking. We provide our executive officers solely with a base salary to compensate them for services rendered during the year.  Our policy of compensating our executives with a cash salary has served us well.  Except for the stock issuances in 2010, we have not believed it necessary to provide our executives discretionary bonuses, equity incentives, or other benefits in order for us to continue to be successful.  Senior executives do not have the incentive to take unnecessary risks in order to receive a bonus.   However, as the Company grows and the operations become more complex, the Board of Directors may deem it in the best interest of the Company to provide such additional compensation to existing executives and in order to attract new executives.











SUMMARY COMPENSATION TABLE





The following table sets forth all cash compensation paid or to be paid by Cybrdi, as well as certain other compensation paid or accrued, for each of the last three fiscal years of our company to each named executive officer.





SUMMARY COMPENSATION TABLE

LONG-TERMANNUAL COMPENSATION


COMPENSATION AWARDSSTOCK AND


SECURITIESOPTION


UNDERLYING


ALL OTHERNAME AND PRINCIPAL POSITION

YEAR

SALARY


BONUS


AWARD


OPTIONS


COMPENSATIONYanBiao Bai, Chairman, CEO

2010

$
100,000


$
-0-



12,000,000


$
-0-


$
-0-and President

2009

$
100,000


$
100,000



-0-


$
-0-


$
-0-Xue Bu, Director, Treasurer

2010

$
11,746


$
-0-



3,300,000


$
-0-


$
-0-& Chief Operating Officer

2009

$
11,638


$
42,859



-0-


$
-0-


$
-0-




EMPLOYEE STOCK OPTION PLAN





None





COMPENSATION OF INDEPENDENT DIRECTORS





None





EMPLOYMENT AGREEMENTS





There are no written employment agreements with any of the Company's officers.





However, Mr. Bai serves as our President and Chief Executive Officer with annual compensation of $100,000. Any future increases in his salary must be approved by the Company's board of directors.





No compensation had been paid to any director solely in connection with their role as a director.





20


ITEM 12.
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS





The following table sets forth, as of March 31, 2011 information with respect to the beneficial ownership of our common stock by (i) persons known by us to beneficially own more than five percent of the outstanding shares, (ii) each director, (iii) each executive officer and (iv) all directors and executive officers as a group. As of March 31, 2011, there were issued and outstanding 65,756,567 shares of Common Stock. There are no outstanding options or warrants.





NAME OF OFFICER






PERCENTAGE OFOR DIRECTOR

TITLE

TITLE OF CLASS

NO. OF SHARES


OWNERSHIPYanBiao Bai

Chairman/CEO/Pres

Common


21,125,397
(1)


32.13
%Lei Liu

Former Director

Common


6,234,766
(2)


12.36
%Xue Bu

COO/Treasurer/Dir

Common


3,300,000



5.02
%All officers, directors,and former directoras a group(3 people)



Common


30,691,163



46,67
%








(1) Includes shares held by Shaanxi Chaoying Beauty & Cosmetic Group of which Mr. Bai owns 64% and is the president.





(2) Includes 4,370,462 shares issued to Immuno-Oncogenomics, Inc., an affiliated entity of Lei Liu, and 1,864,304 shares which will be owned individually by Lei Liu.





ITEM 13
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE





Certain Relationships and Related Transactions





We occasionally borrow money from or loan money to our affiliated companies in PRC, our shareholders and officers. These affiliated companies include Shaanxi Chaoying Beauty & Cosmetics Group Co., Ltd. (“Chaoying Cosmetics”) of which our CEO Mr. YanBiao Bai owns 64% equity and is president; Shaanxi Yanfeng Real Estate Co., Ltd. (“Shaanxi Yanfeng”) of which Mr. Bai is Chairman; Xi’an Yanfeng Biotechnology Co., Ltd. (“Yanfeng Biotech”) of which Mr. Bai is the Chairman; Tianjing Yanfend Real Estate Co., Ltd. (“Tianjing Yanfend”) of which Mr. Bai is Chairman; and Shaanxi NuoQi Health Food Co., Ltd (“Shaanxi NuoQi”), of which our Chief Financial and Operating Officer Ms. Xue Bu is the Chairman.  The related transactions with these affiliated companies include:





Due from related parties





Due from related parties consisted of loans or advances to the following:





As of December 31,2010


2009Loan to Shaanxi NuoQi Health Food Co., Ltd. (“Shaanxi NuoQi”)

$
128,743


$
146,477Loan to Tianjing Yanfeng Real Estate Co., Ltd. (“Tianjing Yanfeng”)


75,731



73,239$
204,474


$
219,716




As of December 31,2009


2008Loan to Shaanxi NuoQi Health Food Co., Ltd. (“Shaanxi NuoQi”)

$
146,477


$
-Loan to Tianjing Yanfeng Real Estate Co., Ltd. (“Tianjing Yanfeng”)


73,239



146,574$
219,716


$
146,574





Ms. Xue Bu, Chief Operating Officer and Director of the Company, is the Chairman of Shaanxi NuoQi.  Loan to Shaanxi NuoQi was guaranteed by a third-party individual, interest free, and with a term from September 6, 2009 to December 5, 2010.


Mr. Yanbiao Bai, Chief Executive Officer and Chairman of the Company, is the Chairman of Tianjing Yanfeng.  Loan to Tianjing Yanfeng was unsecured, interest free, and is due on demand.





Due to related parties





Due to related parties consisted of the following:




21




As of December 31,2010


2009Loan from Shaanxi Chaoying Beauty & Cosmetics Group Co., Ltd.

$
552,471


$
447,352Loan from Shaanxi Yanfeng Real Estate Co., Ltd.


378,656



366,193Loan from Xi'an Yanfeng Biotechnology Co., Ltd.


348,363



336,898Advance from officers and shareholders


744,184



635,670Total loan from related companies, net

$
2,023,674


$
1,786,113




As of December 31,2009


2008Loan from Shaanxi Chaoying Beauty & Cosmetics Group Co., Ltd.

$
447,352


$
879,443Loan from Shaanxi Yanfeng Real Estate Co., Ltd.


366,193



366,434Loan from Xi'an Yanfeng Biotechnology Co., Ltd.


336,898



337,120Advance from officers and shareholders


635,670



471,649Total loan from related companies, net

$
1,786,113


$
2,054,646





Mr. Yanbiao Bai owns 64% and is the CEO and Chairman of Shaanxi Chaoying Beauty & Cosmetics Group.  Mr. Bai is the Chairman of Shaanxi Yangfeng Real Estate and Xi’an Yanfeng Biotechnology.  The above amounts due to relate parties were unsecured, interest free, and due on demand.





Lease agreement





The Company’s subsidiary in PRC leased an office space under an operating lease agreement from Shaanxi Chaoying Beauty & Cosmetics Group Co., Ltd. for a lease term originally expired on December 31, 2009, and had been extended to December 31, 2012. There is no renewal option on the lease. The rent payment under this operating lease was $5,855910 (equivalent to RMB 40,000) per month. The future minimum rental payment for this lease as of December 31, 200910 was $70,267920 (equivalent to RMB 480,000).





Total rental expense charged to operations amounted to $70,267920 and $69,08970,267 for the years ended December 31, 200910 and 200809, respectively.





Stock compensation





On January 15, 2010, the Board of Directors authorized incentive compensation to key management of the Company for services it has provided to the Company in the form of the issuance of shares of common stock of the Company 12,000,000 shares of common stock of the Company to Mr. Yanbiao Bai, Chief Executive Officer and President of the Company, and 3,300,000 shares of common stock of the Company to Ms. Xue Bu, Chief Financial and Operating Officer of the Company.  Compensation cost of $306,000 were recorded during the first quarter of 2010 at $0.02 per share, the market price of the Company’s common stock on January 15, 2010, the grant date.





Director Independence





None of the members of the Company’s Board of Directors is an independent director, pursuant to the definition of “independent director” under the Rules of the NASDAQ Stock Market.





ITEM 14.
PRINCIPAL ACCOUNTANT FEES AND SERVICES XXX





The following chart sets forth public accounting fees paid and payable to KCCW Accountancy Corp. (“KCCW”) during the years ended December 31, 2010 and 2009:





Services

2010


2009Audit Fees

$
40,000


$
40,000Audit Related FeesTax Fees


2,500



12,500All Other Fees


-



-TOTAL

$
42,500


$
52,500




22




Audit fees were for professional services rendered by KCCW for the audit of our annual financial statements and the review of the financial statements included in our quarterly reports on Forms 10-Q, and services that are normally provided by KCCW in connection with statutory and regulatory filings or engagements for that fiscal year.





Audit related fees consist of the aggregate fees billed for professional services rendered for assurance and related services that reasonably related to the performance of the audit or review of our financial statements that were not otherwise included in audit fees.





Tax fees consist of the aggregate fees billed for professional services rendered for tax compliance, tax advice and tax planning. These services include assistance regarding federal, state and local tax compliance and consultation in connection with various transactions and acquisitions.





All other fees consist of the aggregate fees billed for products and services provided by our independent auditors and not otherwise included in audit fees, audit related fees or tax fees.





It is the policy of the Company that all services other than audit, review or attest services must be pre-approved by the Board of Directors.





PART IV





ITEM 15
EXHIBITS AND FINANCIAL STATEMENT SCHEDULES





(a)     Exhibits





3.1
Articles of Incorporation of Registrant, as amended (incorporated by reference to Exhibit 3.1 to Registrant's Annual Report of from 10-K for the year ended October 31, 1981and Exhibit "A" and Exhibit "B" to Registrant's Proxy Statement dated February 17, 1988).3.2
By-Laws of Registrant, as amended (incorporated by reference to Exhibit 3.2 to Registrant's Quarterly Report on form 10-Q for the quarter ended April 30, 1989).*3.3
Amended Articles of Incorporation as amended increasing the number of authorized shares filed as an exhibit to Form 8-k filed February 15, 2005.*3.4
Articles of Merger filed with the Maryland Secretary of State filed as an exhibit to Form 8-k filed February 15, 2005.*3.5
Amendment to Articles of Incorporation changing name to Cybrdi, Inc. filed as an exhibit to Form 8-k filed April 6, 2005.*10.1
Registrant's Executive Stock Option Plan (incorporated by reference to Exhibit "B" to Registrant's Proxy Statement dated February 21, 1989).*10.2
Amendment to Registrant's 1989 Stock Option Plan (incorporated by reference to Exhibit 10.5 to Registrant's Annual Report on Form 10-K for the year ended October 31, 1995).*10.3
Amendment to Registrant's Executive Stock Option Plan (incorporated by reference to Exhibit 10.1 to Registrant's Quarterly Report on Form 10Q for the quarter ended April 30, 2001).*10.4
Form of Indemnification Agreement between Registrant and its Directors and selected officers and agents (incorporated by reference to Exhibit "C" to Registrant's Proxy Statement dated February 17, 1988).*10.5
Employment Agreement effective as of November 1, 1993 between Registrant and Marshall I. Kass (incorporated by reference to Exhibit 10.1 to Registrant's Quarterly Report on Form 10-Q for quarter ended January 31, 1994).*10.6
Amendment to Employment Agreement between Registrant and Marshall I. Kass dated November 1, 1998 (incorporated by reference to Exhibit 10.8 to Registrant's Annual Report on Form 10-K for the year ended October 31, 1998).




23




*10.7
Agreement and Plan of Merger among Certron Corporation, Certron Acquisition Corp. and Cybrdi, Inc. filed as an exhibit to Cybrdi’s Report on Form 8-k filed February 15, 2005.*10.8
Sales Agency Agreement between Shaanxi Chao Ying Biotech Co., Ltd. and Biomax Co., Ltd. (incorporated by reference to Exhibit 10.1 to Registrant's Quarterly Report on Form 10-QSB for the quarter ended September 30, 2007)*10.9
Equity Transfer Agreement dated July 26, 2007 by and between Shaanxi Chaoying Personal Care Group Co., Inc. and Shaanxi Chaoying Biotechnology Co., Ltd (incorporated by reference to Exhibit 10.1 to Registrant's Quarterly Report on Form 10-QSB for the quarter ended September 30, 2007)31.1
Rule 13(a)-14(a)/15(d)-14(a) Certification31.2
Rule 13(a)-14(a)/15(d)-14(a) Certification32.1
Certification Under Section 906 of the Sarbanes-Oxley Act of 200232.2
Certification Under Section 906 of the Sarbanes-Oxley Act of 2002








*   Previously filed










SIGNATURES





Pursuant to the requirements of Section 13 or 15(d) of the Securities and Exchange Act, the Registrant has duly caused this Report to be signed on its behalf by the undersigned thereunto duly authorized.





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





Date:  March 31, 2011
By:
/s/ Yan Biao BaiBy: YanBiao BaiTitle: Chief Executive Officer and Director





Pursuant to the requirements of the Securities and Exchange Act of 1934, this Report has been signed below by the following person on behalf of the Registrant and in the capacities and on the dates indicated.





NAME AND PRINCIPAL POSITION

SIGNATURE

DATEYanBiao Bai, Chairman, CEO and President

/s/YanBiao Bai

March 31, 2011Xue Bu, Director, Treasurer & COO

/s/Xue Bu

March 31, 2011




24





CYBRDI, INC. AND SUBSIDIARIES


TABLE OF CONTENTS





PAGEF-2

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRMF-3

CONSOLIDATED BALANCE SHEETS AS OF DECEMBER 31, 2010 AND 2009F-4

CONSOLIDATED STATEMENTS OF OPERATIONS FOR THE YEARS ENDED DECEMBER 31, 2010 AND 2009F-5

CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY FOR THE YEARS ENDED DECEMBER 31, 2010 AND 2009F-6

CONSOLIDATED STATEMENTS OF CASH FLOWS FOR THE YEARS ENDED DECEMBER 31, 2010 AND 2009F-7

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS





F-1





REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM





To the Board of Directors and Stockholders of:


Cybrdi, Inc.





We have audited the accompanying consolidated balance sheet of Cybrdi, Inc. (the “Company”) as of December 31, 2010, and the related consolidated statements of operations, changes in equity, and cash flows for the year then ended.  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 audit in accordance with standards of the Public Company Accounting Oversight Board (United States).  Those standards require that we plan and perform the audits 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 consolidated financial statements.  An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall consolidated 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 Cybrdi, Inc. as of December 31, 2010 and the consolidated results of their operations and their cash flows for the year then ended in conformity with accounting principles generally accepted in the United States of America.





The accompanying consolidated financial statements have been prepared assuming that the Company will continue as a going concern.  As described in Note 3 of the consolidated financial statements, the Company has incurred recurring losses, accumulated deficit, and working capital deficit at December 31, 2010 and 2009.  These matters raise substantial doubt about the Company’s ability to continue as a going concern.  Management’s plans in regard to these matters are also described in Note 3 to the consolidated financial statements.  The consolidated financial statements do not include any adjustments that might result from the outcome of this uncertainty.





/s/ KCCW Accountancy Corp.





Diamond Bar, California


March 21, 2011





F-2




CYBRDI, INC. AND SUBSIDIARIESCONSOLIDATED BALANCE SHEETSAs of December 31,2010


2009ASSETSCURRENT ASSETSCash and equivalents

$
585,020


$
861,457Accounts receivable,net


-



14,646Inventories


1,090,154



1,334,463Due from related companies


204,474



219,716Loan to unaffiliated company


90,877



171,758Other receivables and prepaid expenses


96,949



161,891TOTAL CURRENT ASSETS


2,067,474



2,763,931PROPERTY, PLANT AND EQUIPMENT, NET


1,314,979



371,116CONSTRUCTION IN PROGRESS


6,557,391



6,739,726INTANGIBLE ASSETS, NET


226,219



312,519OTHER ASSETS


-



38,630TOTAL ASSETS

$
10,166,063


$
10,225,922LIABILITIES AND EQUITYCURRENT LIABILITIESShort-term loan

$
1,590,355


$
1,538,011Accounts payable


4,609



49,938Accrued expenses


505,054



400,249Deferred revenue


21,749



28,871Customers deposits


150,522



116,731Due to related parties


2,023,674



1,786,113Deferred tax liabilities


9,812



9,490Other payables


77,209



132,912TOTAL CURRENT LIABILITIES


4,382,984



4,062,315CONSTRUCTION PAYABLE


808,427



865,446TOTAL LIABILITIES


5,191,411



4,927,761EQUITYPreferred Stock, $1.00 per value, 500,000 shares authorized, zero shares issued and outstanding


-



-Common Stock, no par value, 150,000,000 shares authorized, 65,756,567 and 50,456,567 shares issued and outstanding


3,877,864



3,571,864Reserve funds


336,885



336,885Accumulated deficit


(1,847,882
)


(1,097,141
)Accumulated other comprehensive income


1,287,737



1,075,711TOTAL STOCKHOLDERS’ EQUITY


3,654,604



3,887,319NONCONTROLLING INTEREST


1,320,048



1,410,842TOTAL EQUITY


4,974,652



5,298,161TOTAL LIABILITIES AND EQUITY

$
10,166,063


$
10,225,922





See notes to consolidated financial statements.





F-3





CYBRDI, INC. AND SUBSIDIARIESCONSOLIDATED STATEMENTS OF OPERATIONSFor the Years Ended December 31,2010


2009RevenueTissue array products

$
523,212


$
462,989Housing


296,521



1,010,632Total revenue


819,733



1,473,621Cost of SalesTissue array products


373,931



298,920Housing


257,069



873,337Total cost of sales


631,000



1,172,257Gross Profit


188,733



301,364Operating Expenses:Selling and distribution expenses


53,323



27,143General and administrative expenses


951,734



812,180Research and development expenses


56,930



24,393Total Operating Expenses


1,061,987



863,716Loss from Operations


(873,254
)


(562,352
)Other Income/(Expense)Net interest (expense) income


(1,367
)


2,239Other income (expense), net


34,886



(93,228
)Loss on disposal of fix assets


(1,799
)


(6,207
)Total Other Income (Expense), Net


31,720



(97,196
)Loss before Income Taxes


(841,534
)


(659,548
)Income Tax Expense


-



(35,144
)Net loss


(841,534
)


(694,692
)Net loss attributable to the noncontrolling interest


(90,794
)


(97,746
)Net loss attributable to CYBRDI, INC. AND SUBSIDIARIES

$
(750,740
)

$
(596,946
)Net Loss Per Common ShareBasic and Diluted

$
(0.01
)

$
(0.01
)Weighted Average Number of Shares OutstandingBasic and Diluted


64,963,234



50,456,567





See notes to consolidated financial statements.





F-4





CYBRDI, INC. AND SUBSIDIARYCONSOLIDATED STATEMENTS OF CHANGES IN EQUITYCommon StockholdersAccumulatedOther


Total CommonCommon Stock


Reserve


Accumulated


Comprehensive


Stockholders'


Noncontrolling


TotalShares


Amount


Fund


Deficit


Income


Equity


Interest


EquityBalance as ofDecember 31, 2007


50,456,567


$
3,571,864


$
336,885


$
(301,321
)

$
662,209


$
4,269,636


$
1,499,124


$
5,768,760Net loss


-



-



-



(198,873
)


-



(198,873
)


9,464



(189,409
)Net changes in foreign currency translation adjustment


-



-



-



-



424,538



424,538



-



424,538Balance as of December 31, 2008


50,456,567



3,571,864



336,885



(500,194
)


1,086,747



4,495,301



1,508,588



6,003,889Net loss


-



-



-



(596,946
)


-



(596,946
)


(97,746
)


(694,692
)Net changes in foreign currency translation adjustment


-



-



-



-



(11,036
)


(11,036
)


-



(11,036
)Balance as ofDecember 31, 2009


50,456,567


$
3,571,864


$
336,885


$
(1,097,141
)

$
1,075,711



3,887,319


$
1,410,842



5,298,1610Issuance of common shares for compensation


15,300,000



306,000















306,000







306,000Net loss


-



-



-



(750,741
)


-



(750,741
)


(90,794
)


(841,535
)Net changes in foreign currency translation adjustment


-



-



-



-



212,026



212,026



-



212,026Balance as of December 31, 2010

$
65,756,567


$
3,877,864


$
336,885


$
(1,847,882
)

$
1,287,737


$
3,654,604


$
1,320,048


$
4,974,652


See notes to consolidated financial statements.





F-5





CYBRDI INC. AND SUBSIDIARIESCONSOLIDATED STATEMENTS OF CASH FLOWSFor the Years Ended December 31,2010


2,009CASH FLOWS FROM OPERATING ACTIVITIESNet Loss

$
(750,740
)

$
(596,946
)Adjustments to Reconcile Net Loss to Net Cash Provided by Operating Activities:Issuance of common shares for compensation


306,000Depreciation and amortization


172,569



170,501Bad debt expense


88,422



83,821Gain on sale of other assets


(28,408
)


-Minority interest


(90,794
)


(97,746
)Loss on disposal of fixed assets


1,799



6,207Deferred taxes benefit


-



35,144Changes in Operating Assets and Liabilities:Accounts receivable


10,951



1,017Inventories


282,626



(19,980
)Other receivable and prepaid expenses


68,727



27,673Accounts payable and other current liabilities


(3,282
)


497,559Deferred revenue


(5,810
)


28,854Customer deposits


29,088



66,200Net Cash Provided by Operating Activities


81,148



202,302CASH FLOWS FROM INVESTING ACTIVITIESNet proceeds from disposal of other assets


68,835



10,042Advance for loan to affiliated companies


21,202



(76,989
)Purchase of property, plant, and equipment


(72,131
)


(28,702
)Payments for construction in progress


(583,346
)


(243,060
)Repayment proceeds from loan to unaffiliated companies


-



739,971Net Cash (Used in) Provided by Investing Activities


(565,440
)


401,262CASH FLOWS FROM FINANCING ACTIVITIESProceeds from loans from related companies


185,968



447,084Proceeds from short-term loan


-



1,537,088Proceeds from shareholders/officers


-



164,233Repayments of loan from related companies


-



(878,336
)(Repayments) Proceeds from long-term debt


-



(1,390,698
)Repayment to shareholders/officers


-



-Net Cash Provided by (Used in) Financing Activities


185,968



(120,628
)NET (DECREASE) INCREASE IN CASH & CASH EQUIVALENTS


(298,324
)


482,936EFFECT OF EXCHANGE RATE CHANGE ON CASH & CASH EQUIVALENTS


21,887



(2,836
)CASH & CASH EQUIVALENTS, BEGINNING BALANCE


861,457



381,357CASH & CASH EQUIVALENTS, ENDING BALANCE

$
585,020


$
861,457





See notes to consolidated financial statements.





F-6





CYBRDI, INC. AND SUBSIDIARY


NOTES TO CONSOLIDATED FINANICAL STATEMENTS


FOR THE YEARS ENDED DECEMBER 31, 2010 AND 2009





1.           ORGANIZATION AND PRINCIPAL ACTIVITIES





Cybrdi, Inc. (f/k/a Certron Corporation) (the “Company” or “Cybrdi”) was incorporated on August 1, 1966, under the laws of the State of California. Until around June 2004, the Company’s business consisted  of the distribution of magnetic media products, primarily blank audio and video cassettes. Due to continuing intense price competition and technological changes in the marketplace for its products, the Company lost its remaining significant customers and disposed of or wrote off its remaining inventory. As a result of these occurrences, the Company concluded that its audio and videotape businesses were no longer viable and some of its product lines were obsolete.





In November 2004, the Company, formed a wholly-owned  subsidiary Certron Acquisition Corp., a  Maryland corporation ("Acquisition Sub") to acquired all the ownership interest in Cybrdi, Inc., a privately held company incorporated in the State of Maryland ("Cybrdi Maryland"). The Company acquired Cybrdi Maryland in exchange for 47,328,263 shares of common stock in a merger transaction.  As a result of the merger, the former shareholders of Cybrdi Maryland acquired approximately 93.8% of the outstanding shares of the Company’s common stock. As a result of the ownership interests of the former shareholders of Cybrdi Maryland, for financial statement reporting purposes, the transaction was treated as a reverse acquisition, with Cybrdi Maryland deemed the accounting acquirer and Certron Corporation deemed the accounting acquiree. Historical information of the surviving company is that of Cybrdi Maryland.





Cybrdi Maryland was established in 2001 to acquire an interest in biogenetic products commercialization and related services entities in Asia. On March 5, 2003, Cybrdi Maryland acquired an 80% interest Shaanxi Chao Ying Biotechnology Co., Ltd. (“Chaoying Biotech”), a sino-foreign equity joint venture established in July 2000 in the People's Republic of China (“PRC”), through the exchange of 99% of the Company’s shares to the existing shareholders of Chaoying Biotech. For financial statement reporting purposes, the merger was treated as a reverse acquisition, with Chaoying Biotech deemed the accounting acquirer and Cybrdi Maryland deemed the accounting acquiree.





Chaoying Biotech is a sino-foreign equity joint venture between Shaanxi Chaoying Beauty & Cosmetics Group Co., Ltd. Ltd. (the “Chinese Partner”, a PRC corporation) and Immuno-Onco Genomics Inc. (the “Foreign Partner”, a USA corporation).  The joint venture agreement has a 15 year operating period starting from its formation in July 2000 and it may be extended upon mutual consent. The principal activities of Chaoying Biotech are research, manufacture and sale of various high-quality tissue arrays and the related services in the PRC.





Most of the Company’s activities are conducted through Chaoying Biotech. Chaoying Biotech, with its principal operations located in China, aims to take advantage of China's abundant scientific talent, low wage rates, less stringent biogenetic regulation, and the huge genetic population as it introduces its growing list of tissue micro array products.





On February 10, 2005, the Company completed the merger with Cybrdi Maryland and changed its name to Cybrdi, Inc.





On July 26 , 2007, Chaoying Biotech entered into an acquisition agreement with  its Chinese partner, which is a principal shareholder of the company, Mr. Bai, the Company’s chief executive officer and  a director is also a principal of its Chinese partner On July 28,2007, Chaoying Biotech invested RMB15 millions (equivalent to US$1,983,078) to acquire an 83.33% equity ownership of Shandong Chaoying Culture and Entertainment Co., Ltd. (“SD Chaoying”) from its Chinese partner, SD Chaoying is a corporation organized in Shandong Province P.R.China. On September 5, 2007, Shandong Commercial government had approved this acquisition and the ownership title of SD Chaoying had been transferred to Chaoying Biotech from its Chinese partner. The future business of SD Chaoying will primarily focus on culture and entertainment, including spa activities, cosmetic and personal care, body building, gambling, catering,  and lodging, etc. SD Chaoying will have a specific emphasis on  casino gambling, which has been approved by Shandong Administration for Civil Affairs. As of December 31, 2009, SD Chaoying had substantially completed the construction of two residential buildings and had recognized revenue from sales of housing for the year then ended.  The main structure of the commercial entertainment center has also been completed, except for the exterior, rooftop, the surrounding supporting projects and the community landscaping, which are expected to be completed in the year 2010 prior to the commencement of operations by merchant tenants.




F-7





On March 10, 2007 the Company entered into a Sales Agency Agreement with BioMax, Ltd., a reseller located in USA. In addition, the Company terminated its branch office in USA to reduce the general and administrative costs of Cybrdi Maryland in October 2007.





2.           BASIS OF PRESENTATION


The accompanying consolidated financial statements are prepared in accordance with generally accepted accounting principles in the United States of America (“US GAAP”).  This basis of accounting differs from that used in the statutory accounts of the Subsidiary, which were prepared in accordance with the accounting principles and relevant financial regulations applicable to enterprises with foreign investment in the PRC (“PRC GAAP”). Necessary adjustments were made to the Subsidiary’s statutory accounts to conform to US GAAP were included in these consolidated financial statements.




3.           GOING CONCERN


The accompanying consolidated financial statements have been prepared assuming the Company will continue as a going concern, which contemplates the realization of assets and the satisfaction of liabilities in the normal course of business.  The Company has incurred significant losses and has not demonstrated the ability to generate sufficient cash flows from operations to satisfy its liabilities and sustain operations.  The Company had an accumulated deficit of $1,847,882 and $1,097,141 as of December 31, 2010 and 2009 respectively, including net losses of $750,740 and $596,946 for the years ended December 31, 2010 and 2009, respectively.  In addition, current liabilities exceeded current assets by $3,123,937 and $2,163,830 at December 31, 2010 and 2009, respectively.  These matters raise substantial doubt about the Company’s ability to continue as a going concern.





The Company finances its operations primarily through short-term bank borrowings and/or advances from related parties or officers/shareholders.  In order to complete the construction of SD Chaoying cultural and entertainment center, approximately $2.8 million (equivalent to RMB 19 million) of liquidity is expected to be needed.  The Company, taking into accounts the available banking facilities, internal financial resource, and supports from related companies, believes it has sufficient working capital to meet its present obligation for at least the next twelve months.  Management is taking actions to address the company's financial condition and deteriorating liquidity position.  The following sets forth management’s plans for dealing with the adverse effects of the conditions:





(a) Sale of housing inventories:  Proceeds to be received from the sale of the remaining housing of the two completed residential buildings are expected to amount to approximately $1.1 million.





(b) Rental and management fee revenue from the cultural and entertainment center:  Annual rental revenue is estimated to be approximately $650,000 per year.  Management fee revenue will be charged to commercial tenants at 3% of annual gross revenue.





(c) Additional advances from related companies and affiliates:  Mr. Bai, our Chief Executive Officer, advanced $97,317 to the Company in 2010 to finance operations and the costs to maintain the Company’s public status in the U.S.  In addition, Shaanxi Chaoying Beauty & Cosmetics Group, which is also an affiliate, is anticipated to provide up to $730,000 of capital to support operational use.  During the year 2010, Shaanxi Chaoying Beauty & Cosmetics Group advanced $88,632 to the Company to finance its operations.





The Company may require additional funds and may seek to raise such funds though public and private financings or from other sources.  There is no assurance that the above management’s plans will be realized or the additional financing will be available at all or that, if available, such financing will be obtainable on terms favorable to the Company or that any additional financing will not be dilutive.  The consolidated financial statements do not include any adjustments that might result from the outcome of those uncertainties.





F-8





4.           SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES





(a)
Principle of consolidation


The accompanying consolidated financial statements present the financial position, results of operations and cash flows of the Company and all entities in which the Company has a controlling voting interest. The consolidated financial statements also include the accounts of any variable interest entities in which the Company is considered to be the primary beneficiary and such entities are required to be consolidated in accordance with accounting principles generally accepted in the United States (“US GAAP”). The consolidated financial statements include the financial statements of Cybridi, Inc. and its subsidiary.  All significant intercompany transactions and balances are eliminated in consolidation.





(b)
Use of estimates


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





(c)
Reclassifications


Certain amounts reflected in the consolidated financial statements for the year ended December 31, 2009 have been reclassified to conform to the presentation for the year ended December 31, 2010.





(d)
Cash and cash equivalents


For financial reporting purposes, the Company considers all highly liquid investments purchased with an original maturity of three months or less to be cash equivalents.





(e)
Inventories


Inventories are stated at the lower of cost or market.  Cost of raw materials is determined on the basis of first in first out method (“FIFO”).  Finished goods are determined on the weighted average basis and are comprised of direct materials, direct labor and an appropriate proportion of overhead.





(f)
Property, plant and equipment


Property, plant and equipment are stated at cost less accumulated depreciation and amortization.  Depreciation on property, plant and equipment is calculated on the straight-line basis to write off the cost of assets over their respective estimated useful lives.  Leasehold improvements are amortized over the estimated useful life of the improvement or the lease term, whichever is shorter.  Estimated useful lives of the property, plant and equipment are as follows:





Buildings

20 yearsPlant and machinery

10 yearsMotor vehicles

10 yearsOffice equipment

5 yearsLeasehold improvements

Lower of term of lease or 5 yearsSoftware - website

3 years





The cost and related accumulated depreciation of assets sold or otherwise retired are eliminated from the accounts and any gain or loss is included in the statements of operations.  The cost of maintenance and repairs is charged to expenses as incurred, whereas significant renewals and betterments are capitalized.





Long-term assets of the Company are reviewed annually as to whether their carrying value has become impaired, pursuant to the guidelines established in FASB ASC Topic 360, “Property, Plant, and Equipment” (formerly SFAS No. 144).  The Company also re-evaluates the periods of amortization to determine whether subsequent events and circumstances warrant revised estimates of useful lives.





(g)
Accounts and other receivables


Accounts and other receivables are recognized and carried at original invoice amount less allowance for any uncollectible amounts.  An estimate for doubtful accounts is made when collection of the full amount is no longer probable.  As of December 31, 2010 and 2009, the Company had not recorded an allowance for uncollectible accounts.





(h)
Research and development costs


Research and development costs are charged to operations when incurred and are included in operating expenses.  The amounts charged in 2010 and 2009 were $56,930 and $24,393, respectively.




F-9





(i)
Advertising costs


Advertising costs are charged to operations when incurred and are included in operating expenses. Advertising expenses were $32,275 and $10,675 for the years ended December 31, 2010 and 2009, respectively.





(j)
Fair value of financial instruments


The carrying amounts of cash and equivalents, accounts receivable, inventories, loan to unaffiliated company, other receivables and prepaid expenses, accounts payable, accrued expenses, other payables, customers deposit , loan from related company and amounts due to shareholders/officers approximate fair value due to the short-term maturities of the assets and liabilities.





(k)
Revenue recognition


Revenue represents the invoiced value of goods sold recognized upon the delivery of goods to customers and service income is recognized when services are provided. Deferred revenue represents the undelivered portion of invoiced value of goods sold to customers. Sales transactions not meeting all the conditions of the full accrual method are accounted for using the deposit method of accounting.  Under the deposit method, all costs are capitalized as incurred, and payments received from the buyer are recorded as customer deposits.





(l)
Foreign currency translation


The accompanying consolidated financial statements are presented in United States dollars.  The functional currency of the Company’s PRC subsidiary is Renminbi (RMB).  The financial statements are translated into United States dollars from RMB at year-end exchange rates as to assets and liabilities and weighted average exchange rates as to revenues and expenses.  Capital accounts are translated at their historical exchange rates when the capital transactions occurred.





The RMB is not freely convertible into foreign currency and all foreign exchange transactions must take place through authorized institutions.  No representation is made that the RMB amounts could have been, or could be, converted into USD at the rates used in translation.





(m)
Income Taxes


Income taxes are provided for the tax effects of transactions reported in the financial statements and consist of taxes currently due plus deferred taxes related primarily to differences between the basis of assets and liabilities for financial and income tax reporting. The deferred tax assets and liabilities represent the future tax return consequences of those differences, which will either be taxable or deductible when the assets and liabilities are recovered or settled. Deferred taxes also are recognized for operating losses that are available to offset future federal and state income taxes.





(n)
Comprehensive income (loss)


FASB ASC Topic 220, “Comprehensive Income” (formerly SFAS No. 130), established standards for the reporting and display of comprehensive income, its components and accumulated balances in a full set of general purpose financial statements.  ASC Topic 220 defines comprehensive income to include all changes in equity except those resulting from investments by owners and distributions to owners.  Among other disclosures, ASC Topic 220 requires that all items that are required to be recognized under current accounting standards as components of comprehensive income be reported in a financial statement that is presented with the same prominence as other financial statements. The Company’s only current component of comprehensive income is the foreign currency translation adjustment.





(o)
Intangible assets


Intangible assets include a patent.  With the adoption of FASB ASC Topic 350, “Intangibles” (formerly SFAS No. 142), intangible assets with a definite life are amortized on a straight-line basis.  The patent is being amortized over its estimated life of 10 years.  Intangible assets with a definite life are tested for impairment whenever events or circumstances indicate that a carrying amount of an asset (asset group) may not be recoverable.  An impairment loss would be recognized when the carrying amount of an asset exceeds the estimated undiscounted cash flows used in determining the fair value of the asset.  The amount of the impairment loss to be recorded is calculated by the excess of the asset’s carrying value over its fair value.  Fair value is generally determined using a discounted cash flow analysis.  Costs related to internally develop intangible assets are expensed as incurred.




F-10





(p)
Government grants


Government grants and awards given to the Company’s PRC subsidiary after successful completion of product development projects, or development the encouraged real estate project are recognized as income upon receipts of the awards. The government grants were $4,300 and $8,421 for the years ended December 31, 2010 and 2009, respectively.





(q)
Recent Accounting Pronouncements


In December 2009, FASB issued new guidance regarding improvements to financial reporting by enterprises involved with variable interest entities.  The new guidance provides an amendment to its consolidation guidance for variable interest entities and the definition of a variable interest entity and requires enhanced disclosures to provide more information about an enterprise’s involvement in a variable interest entity.  This amendment also requires ongoing assessments of whether an enterprise is the primary beneficiary of a variable interest entity and is effective January 1, 2010.  The adoption of this guidance had no impact on our consolidated financial position or results of operations.





In January 2010, FASB issued an amendment regarding improving disclosures about fair value measurements.  This new guidance requires some new disclosures and clarifies some existing disclosure requirements about fair value measurement.  The new disclosures and clarifications of existing disclosures are effective for interim and annual reporting periods beginning after December 15, 2009, except for the disclosures about purchases, sales, issuances and settlements in the roll forward of activity in Level 3 fair value measurements.  Those disclosures are effective for fiscal years beginning after December 15, 2010 and for interim periods within those fiscal years.  There was no impact from the adoption of this guidance to our consolidated financial position or results of operations as the amendment only addresses disclosures.





In April 2010, FASB issued an amendment to Stock Compensation.  The amendment clarifies that an employee stock-based payment award with an exercise price denominated in the currency of a market in which a substantial portion of the entity’s equity shares trades should not be considered to contain a condition that is not a market, performance, or service condition.  Therefore, an entity would not classify such an award as a liability if it otherwise qualifies as equity.  The amendments are effective for fiscal years, and interim periods within those fiscal years, beginning on or after December 15, 2010.  The adoption of this guidance had no impact on our consolidated financial position or results of operations since our stock-based payment awards have an exercise price denominated in the same currency of the market in which our Company shares are traded.





5.           INVENTORIES


Inventories consisted of the following:





As of December 31,2010


2009Raw materials

$
4,609


$
24,206Work in process


-Finished goods


299,216



303,015Housing inventory


786,329



1,007,242Total

$
1,090,154


$
1,334,463





6.           LOAN TO UNAFFILIATED COMPANY





Loans to an unaffiliated company consists of loans to QuanYe Security Co., Ltd (“QuanYe”), an unrelated People’s Republic of China (“PRC”) registered company located in Xian PRC. QuanYe is engaged in the pawnshop business and their primary business is offering alternative financing to small, local companies. According to the loan agreement, QuanYe had received loans from Chaoying Biotech for a total amount of RMB29.3Million (equivalent to $3,754,437) since January 2006.  As of December 31, 2010, the principal balance and interest receivable for this loan had been reduced to RMB0.6 Million (equivalent to $90,877) and RMB 1,145,181 (equivalent to $173,452), respectively, net of allowance of $173,452 for doubtful interest receivable.  As of December 31, 2009, the principal balance and interest receivable for this loan had been reduced to RMB 0.6 Million (equivalent to $87,886) and RMB 572,591 (equivalent to $83,871), respectively, net of allowance of $83,871 for doubtful interest receivable.




F-11





7.           PROPERTY, PLANT AND EQUIPMENT





Property, plant and equipment consisted of the following:





As of December 31,2010


2009Buildings

$
955,883


$
14,648Machinery and equipments


613,448



523,751Motor vehicles


325,588



327,705Office equipments


83,763



87,106Leasehold improvement


276,882



250,198Subtotal


2,255,565



1,308,521Less: Accumulated depreciation and amortization


940,586



937,404Net value

$
1,314,979


$
371,116





Depreciation expense for the years ended December 31, 2010 and 2009 were $78,008 and $76,811, respectively.





8.           CONSTRUCTION IN PROGRESS





Construction in progress of $6,557,391 and $6,739,726 as of December 31, 2010 and 2009 respectively mainly consisted of land under development and construction of the entertainment, culture, and casino facility in Shandong Province, which will be transferred to fixed assets in SD Chaoying when construction is completed.





9.           INTANGIBLE ASSETS, NET





Intangible assets consisted of the following:





As of December 31,2010


2009Patent

$
969,359


$
937,454Software


108,689



105,112Subtotal


1,078,048



1,042,566Less: Accumulated amortization


(851,829
)


(730,047
)Net value

$
226,219


$
312,519





Amortization expenses for the years ended December 31, 2010 and 2009 were $94,560 and $93,689, respectively.





Expected amortization expenses for intangible assets in the next five years are as follows:





For the Years Ended December 31,

Amount2011

$
94,5602012


94,5602013


31,5552014


-2015


-Total

$
220,675





F-12





10.         CUSTOMER DEPOSITS





Customer deposits consisted of residential properties down payments amounted to $150,522 and $116,731 as of December 31, 2010 and 2009, respectively.





11.         SHORT –TERM  LOAN





The Company has short-term loan of $1,438,893 (equivalent to RMB9.5million) from Changle Rural Credit Union, which is a bank located in Shandong Province of the PRC. This short-term loan had been.pledged by the Company’s land use right in SD Chaoying which is worth approximately $3.0 million (equivalent to RMB20 million).   Additionally, there is another short-term loan of $151,462 (equivalent to RMB 1.0 million) from Fengguo Liu, an unrelated party as of December 31, 2010.





12.         RELATED PARTY TRANSACTIONS





Due from related parties





Due from related parties consisted of loans or advances to the following:


As of December 31,2010

2009Loan to Shaanxi NuoQi Health Food Co., Ltd. (“Shaanxi NuoQi”)

$
128,743


$
146,477Loan to Tianjing Yanfeng Real Estate Co., Ltd. (“Tianjing Yanfeng”)


75,731



73,239$
204,474


$
219,716





Ms. Xue Bu, Chief Operating Officer and Director of the Company, is the Chairman of Shaanxi NuoQi.  Loan to Shaanxi NuoQi was guaranteed by a third-party individual, interest free, and with a term from September 6, 2009 to December 5, 2010.  The term was extended through verbal agreement between the Company and Shaanxi NuoQi after the maturity of the loan.





Mr. Yanbiao Bai, Chief Executive Officer and Chairman of the Company, is the Chairman of Tianjing Yanfeng.  Loan to Tianjing Yanfeng was unsecured, interest free, and is due on demand.





Due to related parties





Due to related parties consisted of the following:


As of December 31,2010


2009Loan from Shaanxi Chaoying Beauty & Cosmetics Group Co., Ltd.

$
552,471


$
447,352Loan from Shaanxi Yanfeng Real Estate Co., Ltd.


378,656



366,193Loan from Xi'an Yanfeng Biotechnology Co., Ltd.


348,363



336,898Advance from officers and shareholders


744,184



635,670Total loan from related companies, net

$
2,023,674


$
1,786,113





Mr. Yanbiao Bai owns 64% and is the CEO and Chairman of Shaanxi Chaoying Beauty & Cosmetics Group.  Mr. Bai is the Chairman of Shaanxi Yangfeng Real Estate and Xi’an Yanfeng Biotechnology.  The above amounts due to relate parties were unsecured, interest free, and due on demand.





F-13





Lease agreement





The Company’s subsidiary in PRC leased an office space under an operating lease agreement from Shaanxi Chaoying Beauty & Cosmetics Group Co., Ltd. for a lease term originally expired on December 31, 2009, and had been extended to December 31, 2012. There is no renewal option on the lease. The rent payment under this operating lease was $5,910 (equivalent to RMB 40,000) per month. The future minimum rental payment for this lease as of December 31, 2010 was $70,920 (equivalent to RMB 480,000).





Total rental expense charged to operations amounted to $70,920 and $70,267 for the years ended December 31, 2010 and 2009, respectively.





13.         COMMITMENTS, CONTINGENCIES, AND LEGAL PROCEEDINGS





There are no material pending legal proceedings to which the Company is a party. The Company was notified by a letter dated June 2, 2000 received June 6, 2000 stated that the Company may have a potential liability from waste disposal in the Casmalia Disposal Site at Santa Barbara County, California. The Company was given a choice of either signing an agreement that would toll the statute of limitations for eighteen (18) months in order to allow us to resolve any liability with the government without incurring costs associated with being named a defendant in a lawsuit, or becoming an immediate defendant in a lawsuit. We signed the tolling agreement. On November 20, 2001, the tolling agreement was extended for an additional 18 months. On May 20, 2003 the tolling agreement was again extended for an additional 18 months and on November 24, 2004 the tolling agreement was again extended for additional 18 months. On June 29, 2004, the Company received a proposed settlement from the EPA in the amount of $21,131, which had been accrued as other payable. The Company is waiting for communication from the government concerning payment of the final settlement.  As of and subsequent to December 31, 2010, the Company had not receive further correspondences from the EPA regarding this matter.





14.         STOCKHOLDERS’ EQUITY





On February 10, 2005, the Company completed the merger with Cybrdi Maryland and changed its name to Cybrdi, Inc. The Company acquired Cybrdi Maryland in exchange for 47,328,263 shares of common stock of the Company. Subsequent to the merger, the former shareholders of Cybrdi Maryland own approximately 93.8% of the outstanding shares of the Company’s common stock. The Company has 50,456,567 shares of common stock issued and outstanding after the issuance of new shares. As a result of the ownership interests of the former shareholders of Cybrdi Maryland, for financial statement reporting purposes, the merger was treated as a recapitalization event for Cybrdi Maryland and as a reverse acquisition, with Cybrdi Maryland deemed the accounting acquirer and Certron Corporation deemed the accounting acquiree. Historical information of the surviving company is that of Cybrdi Maryland.





In 2004, the Cybrdi Maryland completed a private placement arrangement and had issued 5,590,645 ordinary common shares for a net proceed of approximately $1,006,316. In connection with this private placement, the Company incurred a total of $491,596 legal and professional expenses, of which $311,113 were deferred through December 31, 2003, and the full amount were written off against additional paid in capital upon consummation of the transaction. As of December 31, 2009, the Company had 50,456,567 shares of common stock issued and outstanding.





On January 15, 2010, the Board of Directors adopted resolutions that authorized incentive compensation to key management of the Company for services it has provided to the Company.  As set forth in the Board of Directors’ resolution dated January 15, 2010, the incentive compensation shall be paid by the issuance of 12,000,000 shares of common stock of the Company to Mr. Yanbiao Bai, Chief Executive Officer and President of the Company, and 3,300,000 shares of common stock of the Company to Ms. Xue Bu, Chief Financial and Operating Officer of the Company.  Compensation cost of $306,000 will be recorded during the first quarter of 2010 at $0.02 per share, the market price of the Company’s common stock on January 15, 2010, the grant date.





15.         RESERVE FUNDS





The Company’s subsidiary in PRC is required to maintain certain statutory reserves by appropriating from the profit after taxation in accordance with the relevant laws and regulations in the PRC and articles of association of the subsidiary before declaration or payment of dividends.  The reserves form part of the equity of the Company.




F-14





The appropriation to the statutory surplus reserve and statutory common welfare fund reserve represent 10 percent and 5 percent of the profits after taxation, respectively.  In accordance with the laws and regulations in the PRC, the appropriation to statutory reserve ceased when the balances of the reserve reach 50 percent of the registered capital of the Company.





In the years ended December 31 2010 and 2009, the Company’s PRC subsidiaries either incurred net loss or accumulated net loss after offset with prior year losses. Accordingly, they were not required to reserve additional statutory surplus and common welfare fund for the years ended December 31, 2010 and 2009. The reserve funds balance consisted of the following:





As of December 31,2010


2009Statutory Surplus Reserve

$
224,590


$
224,590Statutory Common Welfare Fund Reserve


112,295



112,295Total

$
336,885


$
336,885





16.        GOVERNMENT GRANT





In 2010, Chaoying Biotech received certain government grants in the aggregate amount of $4,300 (equivalent to RMB29,103).





In 2009, Chaoying Biotech received certain government grants in the aggregate amount of $8,421 (equivalent to RMB57,523) of which $4,392 (equivalent to RMB30,000) for support of " Human genome SNPs Detection Technology and Engineering" research, and $4,318 (equivalent to RMB30,000) was paid for researching  the project of “TMA technology research center capacity construction”.





17.         TAXATION





(a)         Corporation Income Tax





The Company and its US subsidiary will file consolidated federal income tax return and state income taxes return individually. The operations in the United States of America had operational losses in year 2010 and 2009. The possible future deferred tax benefits arise from the net operating loss carry forward has been fully offset by a full valuation allowance, since more likely than not that all these benefits will not be realized in the future..





(b)         Corporation Income Tax (“CIT”) of the Company’ssubsidiary in PRC





Under the Enterprise Income Tax (“EIT”) of the PRC, prior to 2007, Chinese enterprises are generally subject to an income tax at an effective rate of 33% (30% statutory income taxes plus 3% local income taxes) on income reported in the statutory financial statements after appropriate tax adjustments, unless the enterprise is located in a specially designated region for which more favorable effective tax rates are applicable.  Beginning on January 1, 2008, the new EIT law has replaced the existing laws for Domestic Enterprises (“DEs”) and Foreign Invested Enterprises (“FIEs”).  The new standard EIT rate of 25% will replace the 33% rate previously applicable to both DES and FIEs.  The two year tax exemption, six year 50% tax reduction and tax holiday for production-oriented FIEs will be eliminated.  The Company is currently evaluating the effect of the new EIT law on its financial position. According to Western Developing Plan of the PRC, Chaoying Biotech enjoys a 50% reduction in preferential policy of EIT, but not less than 15%. As a result, Chaoying Biotech’s effective EIT tax rate has been 15% since 2008.





In the years ended December 31, 2010 and 2009, the Company’s PRC subsidiaries either incurred net loss or had accumulated net loss after offset with prior year loss. Accordingly, they were not required to accrue and pay any income taxes for the year ended December 31, 2010 and 2009.  A 100% valuation reserve was recognized since it is more likely than not that all of the deferred tax assets will not be realized.




F-15





18.         CONCENTRATIONS OF BUSINESS AND CREDIT RISK





Financial Risks:





The Company provides credit in the normal course of business. The Company performs ongoing credit evaluations of its customers and maintains allowances for doubtful accounts based on factors surrounding the credit risk of specific customers, historical trends, and other information.





Major Customers:





The following summarizes sales to major customers (each comprising 10% or more of revenue):





`

Number of


PercentageDecember 31,

Customers


of Total2010


1



53
%2009


1



26
%





Major Suppliers:





The following summarizes purchases of raw materials from major suppliers (each comprising 10% or more of purchases):





Number of


PercentageYears Ended

Suppliers


of Total2010


3



49
%2009


6



100
%





19.           SEGMENT REPORTING





As defined in ASC Topic 280, “Segment Reporting” (formerly SFAS No. 131), the Company has three operating segments, and two reportable segments, including Chaoying Biotech and SD Chaoying.  Chaoying Biotech is primarily in the business of researching, producing, and selling of high-quality tissue arrays and providing related services.  SD Chaoying mainly focused on real estate development and intended to operate a cultural and entertainment center which will encompass a wide variety of recreational and commercial activities.  Earnings performance is measured using segment operating income.





Years Ended December 31,2010


2009Revenues:Chaoying Biotech

$
523,212


$
462,989SD Chaoying


296,521



1,010,632Others


-



-Total Revenues

$
819,733


$
1,473,621





Years Ended December 31,2010


2009Segment (Loss) / Income:Chaoying Biotech

$
(213,373
)

$
(360,045
)SD Chaoying


(144,217
)


(61,305
)Others


(483,944
)


(238,198
)Loss before Income Taxes

$
(841,534
)

$
(659,548
)




F-16





Years Ended December 31,2010


2009Total Assets:Chaoying Biotech

$
1,739,433


$
1,836,951SD Chaoying


8,424,499



8,386,621Others


2,131



2,350Total assets

$
10,166,063


$
10,225,922





The following sets forth geographic information relating to the Company’s revenues from external customers attributed to the Company’s country of domicile, China, and attributed to foreign countries.





Years Ended December 31,2010


2009China

$
388,612


$
1,097,381United States


431,121



376,240Total revenue

$
819,733


$
1,473,621





All revenues are from external customers.  One major customer from the United States accounted for 53% and 26% of our total revenues for the years ended December 31, 2010 and 2009.  All long-lived assets are located in China.





F-17