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, 2008
 
 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 RoadXi’anShaanxiP.R.China
                
                710061(ADDRESS OF
      PRINCIPAL EXECUTIVE OFFICE)
                
                (ZIP
      CODE)
 REGISTRANT'S TELEPHONE NUMBER,
INCLUDINGAREA
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 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:
 
 Indicate
the number of shares outstanding of each of the issuer's classes of Common Stock
as of the latest practicable date:
50,456,567 shares of Common Stock, without par value, as of April 9,
2009.
 
 State
issuer's revenues for its most recent fiscal year ended December 31, 2008: $
505,565.
 
 The
aggregate market value of the voting and non-voting common equity held by
non-affiliates computed by reference to, as of April 9, 2009 was
approximately $350,654 based on a closing bid price of $0.01 and a total of
35,065,404 shares held by non-affiliates.
 
 (APPLICALBE ONLY TO REGISTRANTS INVOLVED
IN BANKRUPTCYPROCEEDINGS DURING THE PRECEDING FIVE
YEARS)
 
 Indicate by check mark whether the
registrant has filed alldocuments andreports required to be filed by Section
12, 13 or 15(d) of the SecuritiesExchange Act of 1934 subsequent to the
distribution of securities under a planconfirmed by a court.Yes
o     No
o     Not
Applicable x
  DOCUMENTS INCORPORATED BY
REFERENCE:None
  
 
 TABLE OF CONTENTS
              PAGEPART IItem
      1.
              Business
              1Item
      1A.
              Risk
      Factors
              4Item
      1B.
              Unresolved
      Staff Comments
              8Item
      2.
              Properties
              8Item
      3.
              Legal
      Proceedings
              8Item
      4.
              Submission
      Of Matters To A Vote Of Security Holders
              8PART
      II
              
              8Item
      5.
              Market
      For Registrant’s Common Equity, Related Stockholder Matters and Issuer
      Purchases of Equity Securities.
              8Item
      6.
              Selected
      Consolidated Financial Information
              9Item
      7.
              Management’s
      Discussion And Analysis Of Financial Condition And Results Of
      Operations
              9Item
      7A.
              Quantitative
      And Qualitative Disclosures About Market Risk
              13Item
      8.
              Financial
      Statements And Supplementary Data
              13Item
      9.
              Changes
      In And Disagreements With Accountants Or Accounting And Financial
      Disclosure
              13Item
      9A.
              Control
      And Procedures
              13Item
      9B.
              Other
      Information
              14PART
      III
              
              14Item
      10.
              Directors
      And Executive Officers Of The Registrant
              14Item
      11.
              Executive
      Compensation
              15Item
      12.
              Security
      Ownership Of Certain Beneficial Owners And Management And Related
      Stockholder Matters
              16Item
      13.
              Certain
      Relationships And Related Transactions, And Director
      Independence
              17Item
      14.
              Principal
      Accountant Fees And Services
              17PART
      IV.
              
              18Item
      15.
              Exhibits,
      Financial Statement Schedules
              18
  
  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 derivedfrom data originally prepared in
Renminbi (RMB), the currency of the People'sRepublic of China ("China" or "PRC").
For purposes of this annual report,conversion at year-end exchange rates of
US$1.00 to RMB6.8225.for assets andliabilities, and weightedaverage rate US$1.00 to RMB6.9476.for revenue andexpenses in year 2008. There is no assurance that RMB amounts
could be converted into US dollars at that rate.Please see Note 3“Summary ofSignificantAccountingPolicyItem (l) for ForeignCurrencyTranslation”of the accompanying financial
statements.
  
 
 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 forCivil Affairs. As ofDecember31, 2008, SD Chaoying was still in the
development stage with no actual business plan implemented.While two of the four planned
residential buildings are anticipated to be completed in the second quarter of
2009, the
development and
construction ofthecasino and entertainment
building is anticipated to be completed in 2009.
 
 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 with a special license for casino gambling.
  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.
 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.
 
 GENETIC ANALYSIS:
      During the year ended December 31, 2008, we created a new technology which
      uses exfoliated cells to test the susceptibility of genes in an attempt to
      assist in determining, among other things, whether a person will be likely
      diagnosed with diseases of obesity, freckles or different types of cancer.
      . We can check the causes of obesity and skin diseases such as freckles
      with our genetic analysis, and thus help offer an accurate and specialized
      diagnosis. The result of this analysis and report can also be used in the
      design of a health or fitness program for individual customers. We
      currently provide these services to our customers at hospitals or cosmetic
      chain salons owned by our affiliated companies.  The cost for
      this report is RMB200 per person.
 
 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. The facility construction project annexed with four
multi-family residential buildings (about 14,188 square meters), and two of them
are expected to be completed and ready for sale by the second quarter of 2009.
The total cost for the construction is estimated to be totally $5.3
million.  At present, SD Chaoying has invested approximately $3.9
million in the construction. The proceeds of the sales of the residential units
will be applied to the casino and resort construction.. The special permit for
the casino business we acquired from Shandong Administration for Civil Affairs
will provide us an advantage for attracting people from surrounding
areas.  We believe 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 buildings, which will be completed first.  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.
  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.
 
 MARKETING
 
 Marketing strategy in China:
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, Zhejiang Province and Shangdong Province. We currently
market and intend to continue to market our products and services through our
own direct sales efforts and by utilizing independent distributors. Our domestic
sales accounted for approximately 30.2% of our total sales in the fiscal year of
2008.
 
 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.  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 2008, BioMax accounted for
about 69.76% of our sales revenue, which also represents our export
sales.  As a result, in October 2007, the Company closed its office at
Maryland in an effort to reduce general and administrative costs. We expect our
business in the international market will continue to grow through the efforts
of BioMax.
 
 BACKLOG
 
 Chaoying
Biotech’s backlog of sales orders totaled approximately $353,655 on December 31,
2008.
  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. Cybrdireceivedgovernment grants of
$11,515(equivalent toRMB80,000) ,$64,307(equivalent toRMB489,000) and
$12,168(equivalent
toRMB97,000) ,during the years2008, 2007 and
2006.
 
 Competition
 
 Our TMA products are facing increased
competition. While in the past,the highcosts and strict patient information
protocol associated with tissue collectionin most developedeconomies made it difficult for
companies with competingproducts of similar quality to compete,
cost differences are now narrowing.Furthermore, established genomics firms
such as Ambion and Clinomics customarilyoutsourced most TMA production, yet now
are beginning to offer the
wide productseries variety demanded by the global
research community. This results inincreased price and service competition
for us under either in-house and/orthrough OEM
programs.
 
 At the other end of the price spectrum,
low-priced tissue chips are
providingbetter quality and adequate density. The
production of qualified TMAs requiresexpertise in several scientific areas
including pathology, immunology, molecularand biology. Producers of TMA must also
meet in hygienic standards,
qualitycontrols, and special materials
processing and shipping procedures not only inthe 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 hadpreviously established their own
production teams for in-house research needsprior to the introduction of our
TMAs.
  
 
 
 INTELLECTUAL
PROPERTY
 
 We regard our service marks, trademarks,
tradesecrets, patents and
similarintellectual property as critical to our
success. We rely on patent,trademarkand trade secret law, as well as
confidentiality and license agreements withcertain of our employees, customers and
others to protect our proprietaryrights. 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
              
              ZL01131756.6
              
              December 15th
      2004body fluid in a certain
      partDiabetes autoimmune antibody test
      kit
              
              ZL02145561.9
              
              November 17th
      2004multiplex Chip, equipment and
      methodDiabetes immunization antibody
      testingprotein chips and its own
      preparation,
              
              ZL02145535.X
              
              October27th
2004detection
      methods
  RESEARCH AND
DEVELOPMENT
 
 Our strategy is to incrementally advance
from our current technological baseinto complementary, rapidly commercialized
products and services. New productdevelopment can represent an expansion
of existing TMA technical knowledge or anew commercial application of current
knowledge.
 
 We currently perform all of our own
research and development
activities. We haveour own researchdevelopment and laboratory facilities
located at ourShaanxifacility and retain our own professional
research and development team. We mayalso enter into agreements for research
and development activities with thirdparties in the
future.
 
 We plan to continue to attempt to
enhance research and development in TMAs andtechnical services by expanding our
virtual tissue array data bank (vTMAB) tomeet expected growing demand from
various research institutions and medicaluniversities and colleges. Offering our
products and services on a pricecompetitive basis will be a key to
meeting this growing market demand.
 
 Our strategic focuses in the near future
also include the biotechnologycosmetics and healthcare products, and health diagnosis for obesity
and skindisease.
 
 We spent
$12,562 in research and development in the 2008 fiscal year.
 
 EMPLOYEES
 
 As of
December 31, 2008, we had 42 full-time employees, with 35 employees at Chaoying
Biotech and 7 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 FormForm 10-Q,
current reports on Form
8-K, andany amendments to these reports, are
available to the public from the SEC'swebsite at http://www.sec.gov as soon as
reasonably practicable after theCompany electronically files such
reports with the Securities and ExchangeCommission. Any document that the Company
files with the SEC may also be readand copied at the SEC's public reference
room. Please call the SEC at1-800-SEC-0330 for further information
on the public reference room. We willalso supply this information toany shareholder requesting
copies of any of theforegoing free of charge. Shareholders
should contact our office at(301)644-3901 if they desire copies of
any of our filings with the Securitiesand Exchange
Commission.
 
 ITEM
1A.   RISK FACTORS
 
 You shouldconsider each of the following risk
factors and any other informationset forth in this Form10-Kand our other reports that we have
filed with theSecurities and Exchange Commission),
including the Company's financialstatements and related notes, in
evaluating the Company's
business andprospects. The risks and uncertainties
described below are not the only onesthat impact on the Company's operations
and business. Additional risks anduncertainties not presently known to the
Company, or that the Companycurrentlyconsiders immaterial, may also impair
its business or operations. If any of thefollowing risks actually occur, our
business and financial condition, results orprospects could be
harmed.
  
 
 RISKS ASSOCIATED WITH THE COMPANY'S
BUSINESS AND OPERATIONSIN THE MEDICAL TECHNOLOGY
FIELD
 
 The Company has a limited history with
respect to the manufacture, sale anddistribution of TMAs. Medical technology
is constantly evolving and there can beno assurance that our TMAa will keep
pace with medical breakthroughs. TheCompany's ability to achieve and
maintain profitability and positive cash flowover 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 andother developing companies and (ii) its ability to
evaluate the merits of
 pursuing the beauty supply business and
its success in developing franchiseopportunities despite no prior
experience.
 
 OUR BUSINESS IS HEAVILY DEPENDENT ON THE
ECONOMIC GROWTH OF CHINA
 
 At thecurrent time, our business is heavily
dependent on the economy anddeveloping middle and upper class in
China. Should the country suffer aneconomic downturn or should the
government imposed restrictions on the growth ofprivatecompanies and the abilityof a large consumer class to earn money
in theprivatesector our business will suffer. To the
extent that any of the foregoingshould occur, our revenues will decline
significantly.
 
 WE HAVE LOANEDAPPROXIMATELY$1MILLION TO NON-AFFILIATED THIRD
PARTIESS
 
 In order to maximize returns on
available cash, the Company has outstandingunsecured loans totaling approximately
$1million, representing9.67% of the Company's assets. The loans
were placed to secure additional interestincome. However, in the event
of a default, the Company
risks substantial lossof their ability to continue to finance
ongoing operations. Litigation could be
 costly to enforce the loan obligations
and may depriveusof the use ofthe cash for a significant period of
time.
 
 RELIANCE ONSINGLE CUSTOMER
 
 We
generated 69.76% of our revenue 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 additionalfinancing. Financing may be in the form
of traditional bank financing or throughthesale of our common stock. There can be
no assurance that we will be able tosecure adequate bank financing or if
available, will be on terms acceptable tothe Company. If we attempt to sell
shares of our common stock, existingshareholders will face dilution and likely a reduction in the price
of ourcommon 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 wemanufactureandsell the products. We believe that we
are currently incompliance with applicable governmental
rules and procedures. However, there canbe no assurance that changes in the
regulatory environment will
not make itdifficult for us to comply or result in
a substantial increase in our operatingcosts 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 projector give any assurance, with respect to
its ability to control development andoperating costs and/or expenses in the
future. Consequently, even if the Companyis 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 greaterresources than us. These competitors may
be able to respond more quickly to newor emerging technologies and changes in
customer requirements and devote greaterresources 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 inour customer base, the breadth of our service offerings, and
otheropportunities. This expansion could
strain our management, operations, systemsand financial resources. To manage any
future growth of our operations andpersonnel, we must improve and
effectively utilize operational, management,marketing and financial systems and
successfully recruit, hire, train and managepersonnel and maintain close
coordination among our technical, finance,marketing, sales and recruitment staffs.
We also will need to manage anincreasing number of complex relationships with
customers, strategic partners,advertisers and other third parties. Our
failure to manage growth could disruptour 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 ofourpotential business endeavors are capital
intensive and may be subject tostatutory or regulatory requirements.
Management believes thatouractivities and strategies are achievable in light of current
economic andlegal conditions with the skills,
background, and knowledge of the Company'sprincipals and advisors. Management
reserves the right to make significantmodifications to the Company's stated
strategies depending on
future events.
 
 CERTAIN POLITICAL AND ECONOMIC
CONSIDERATIONS RELATING TO THE PRC COULDADVERSELY AFFECT OUR
COMPANY.
 
 The government of the People's Republic
of China has welcomed foreign investmentand the expansion of business
opportunitiesin theprivatesector. There can beno assurance that this policy will
continue or alternatively, that this policywill not be modified to make it more
restrictive to transfer funds from China tothe United States or any other country.
Moreover, politicalinstability couldadversely impact our ability to fully
implement our business plan as politicalinstability 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 adverselyimpact 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 requireus to continue to devote significant
resources to research and development.There can be no assurance that we will
have sufficient cash flow to make thiscommitmenton a going forward
basis.
 
 RELIANCE ON CURRENT
MANAGEMENT
 
 We are reliant on our current management
team to help us fully implement ourbusiness plan. The loss of any of their
services could have a material adverseimpact on the implementation of our
business plan and our
future growth. We donot carry any type of key man
insurance.
 
 Ourbusiness may experience periods of
rapid growth that will placesignificant demands on its managerial,
operational and financial resources. Inorder to manage this possible growth, the Company must continue to
improve andexpand its management, operational and
financial systems and controls. TheCompany will need to expand, train and
manage its employee base. No assurancescan be given that the Company will be
able to timely and
effectively meet suchdemands.
 
 WE MAY HAVE DIFFICULTY ATTRACTING TALENT
IN FOREIGN COUNTRIES.
 
 Our research and development program
requires us to recruit highly skilledpersonnel. There can be no assurance
that we will be able to attract thesepersonnel for work either in the United
States or China. If we cannot attractskilled personnel, our operations will
likely suffer and any competitive edgethat 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 ECONOMYAND SALES OF RESIDENTIAL HOUSING ARE
ALSO SENSITIVE TO DOWNTURNS IN THE REALESTATE 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 theeconomy 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 ADVERSELYAFFECTOUR FINANCIAL CONDITION, RESULTS OF
OPERATIONS OR CASH FLOWS FROM THESE PLANNED FACILITIES.
  Our ongoing and future construction
projectsentail 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 delayscaused 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, unanticipatedcost 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.
 
 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 securitiesare
subject to extensive regulation by theShandong Administration for Civil
Affairs.Theyhave 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.
 
 RISKS RELATED TOOURCOMMON STOCK
 
 THECOMPANY DOES NOT EXPECT TO PAY CASH
DIVIDENDS IN THEFORESEEABLE FUTURE.
 
 Wehavenever paid cash dividends on its common
stock and haveno plans to doso in theforeseeable future. The Company intends
to retain earnings, if any, todevelop 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 adoptedby the SEC commonly known as the "Penny
Stock Rules".Ourcommon stockqualifies as penny stock and is covered
by Section 15(g) of the Securities andExchange Act of 1934, as amended (the
"1934 Act"), which imposes
additionalsales practice requirements on
broker/dealers who sellourcommonstock in the market.The "Penny
Stock" rules govern how broker/dealers can deal with their clients and "penny
stock". For sales ofourcommon stock,the broker/dealer must make a special suitability
determination and receive fromclients a written agreement prior to
making a sale. The additional burdensimposed upon broker/dealers by the
"penny stock" rules may discouragebroker/dealers from effecting
transactions inourcommon stock,
whichcould severely limit its market price
and liquidity. This could preventinvestors from resellingourcommon stock and may cause the price of
the commonstock to decline.
 
 Although publicly traded,ourcommon stock has substantially
lessliquidity than the average trading
market for a stock quoted on other nationalexchanges, and our price may fluctuate
dramatically in the future.
 
 Our Common Stock is currently quoted on
the Pink Sheets. Our Common Stock waspreviously listed for tradingon theOver-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. Apublic trading market having the desired
characteristics of depth,
liquidity andorderliness depends on the presence in
the marketplace of willing buyers andsellers of our common stock at any given
time. This presence depends on theindividual decisions of investors and
general economic and marketconditionsover which we have no control. Due to
limited trading volume, the market priceof the Company's common stock may
fluctuate significantly in the future, andthese fluctuations may be unrelated to
the Company's performance. General market price declines or overall market volatility in
the future could adversely affectthe price of the Company's common stock,
and the current market price may not beindicative 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 $5757 per month in rent (equivalent to RMB 40,000 per month). This lease
will expire on December 31, 2009.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 plans to build 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
apotential liability from waste disposal
in the Casmalia Disposal Site at SantaBarbara County,
California.  We were given a choice of either signing anagreement that would toll the statute of
limitations for eighteen (18) months inorder to allow us to resolve any liability with the
government without incurringcosts associated with being named a
defendant in a lawsuit, or becoming animmediate defendant in a lawsuit. We
signed the tolling agreement. On November20, 2001, the tolling agreement was
extended for an additional
18 months. On May20, 2003 the tolling agreement was again
extended for an additional 18 monthsand on November 24, 2004 the tolling
agreement was again extended for additional18 months. On June 29, 2004, we received
a proposed settlement from
the EPA inthe amount of $21,131. We are waiting
for communication from the governmentconcerning payment of the proposed
settlement. As of December 31,2008, we haveaccrued a sufficient amount to cover any
potential liabilities from this matter.
 
 
 ITEM
4.    SUBMISSION OF MATTERS TO A VOTE OF SECURITY
HOLDERS
 
 There were no matters submitted during
the fiscal yearcovered by this
report.
 
 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 onthe Over-the-Counter-Bulletin Board.
("OTCBB"). Prior to our merger with Cybrdiwe traded on the OTCBB under the symbol
"CRTN". Following our acquisition of
 Cybrdi, Inc.,we requested a symbol change and were
assigned CYDI.
  The following table sets forth, for the
periods indicated, the range of high andlow bid quotations for our common stock
as quoted on the OTCBB and the PinkSheets. The reported bids quotations
reflectinter-dealer prices
without retailmarkup, markdown or commissions, and may
not necessarily represent actualtransactions.
 
 YEAR
              
              PERIOD
              
              HIGH
              
              
              LOW2007
              
              First
      Quarter
              
              
              0.10
              
              
              
              0.08Second
      Quarter
              
              
              0.08
              
              
              
              0.03Third
      Quarter
              
              
              0.11
              
              
              
              0.04Fourth
      Quarter
              
              
              0.13
              
              
              
              0.032008
              
              First
      Quarter
              
              
              0.08
              
              
              
              0.03Second
      Quarter
              
              
              0.08
              
              
              
              0.05Third
      Quarter
              
              
              0.06
              
              
              
              0.03Fourth
      Quarter
              
              
              0.06
              
              
              
              0.02
  
  (a) Transfer Agent
 
 Our transfer agent is American Stock
Transfer & Trust Company Inc., whoseaddress is 6201 15th Ave. Brooklyn, NY
11219. Their telephone number is(212)936-5100.
 
 (b) Stockholders
 
 As ofMarch 31, 2009, there were approximately 1,333 record
holders of ourcommon stock.As ofMarch 31, 2009, we have not paid any cash
dividends onshares of our common stock and do not
plan to do so. We currently plan to retainfuture 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 wedo not anticipate that we will pay cash
dividends or make distributionsin the foreseeable future. We currently
intend to retain and reinvest futureearnings, if any, to finance our
operations.
 
 (d) Securities authorized for issuance
under equity compensation
plans
 
 None.
 
 ISSUANCE OF UNREGISTERED
SHARES
 
 None.
 
 ITEM
6.  SELECTED FINANCIAL INFORMATION
 
 Following is a summary of our operations
and financial condition from 2004through 2008. You are urged to review the detailed
audited financial statementsand accompanying footnotes for a
complete understanding of our operations.
  2008
                
                
                2007
                
                
                2006
                
                
                2005
                
                
                2004Net sales
                
                $
                505,565
                
                
                $
                670,616
                
                
                $
                546,286
                
                
                $
                1,427,799
                
                
                $
                1,533,043Net income(loss)
      fromcontinuing
      operations
                
                $
                (198,873
                )
                
                $
                (288,684
                )
                
                $
                (187,055
                )
                
                $
                5,128
                
                
                $
                488,833Net income(loss)
      fromdiscontinuing
      operations
                
                $
                --
                
                
                $
                --
                
                
                $
                --
                
                
                $
                --
                
                
                $
                --Net
      income(loss)
                
                $
                (198,873
                )
                
                $
                (288,684
                )
                
                $
                (187,055
                )
                
                $
                5,128
                
                
                $
                488,833Net income(loss)
      percommon
      share
                
                $
                --
                
                
                $
                (0.01
                )
                
                $
                --
                
                
                $
                --
                
                
                $
                0.02Total
assets
                
                $
                10,306,252
                
                
                $
                8,299,856
                
                
                $
                5,653,841
                
                
                $
                6,103,632
                
                
                $
                5,737,261Long-term
    debt
                
                $
                --
                
                
                $
                --
                
                
                $
                --
                
                
                $
                --
                
                
                $
                --Working
    capital
                
                $
                (2,320,020
                )
                
                $
                (353,709
                )
                
                $
                4,258,523
                
                
                $
                4,796,714
                
                
                $
                4,416,664Stockholders'
      equity
                
                $
                4,495,301
                
                
                $
                4,269,635
                
                
                $
                4,159,095
                
                
                $
                4,224,142
                
                
                $
                4,099,661
 
 No cash
dividends have been paid during any of the five-year periods stated
above.
 
 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.
  
 
 
 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
 
 Revenues
 
 Cybrdi
generates two categories of revenues: revenues from the sale of our tissue chip
products and from services. The total revenues for the year ended December 31,
2008 was $505,565, a decrease of approximately 25% from $670,616 for the year
ended December 31, 2007.
 
 Tissue
Chip Product: sales decreased from $622,498 to $492,495, a decrease of
approximately 20.88%.  While sales at our U.S. based subsidiary,
declined from approximately $192,131 to $0, revenues from China increased from
$478,485 to $492,495. This increase was primarily due to our China subsidiary,
Chaoying Biotech, selling more tissue arrays directly to its international
clients in 2008 as compared to 2007.  Since we closed down the
operations of Cybrdi Maryland in October 2007, we suffered decreased sales of
tissue arrays in from Cybrdi Maryland in 2008 as compared to year
2007.
 
 Services:
Fewer technical service orders were received during 2008 as compared to 2007
resulting in a decrease of $35,048 in service revenue from $48,118 to $13,070 a
decrease of 72.84%. Our office in the United States used to be our major source
of service revenue. Since its operations had been turned down in October 2007,
we have no service revenue in our USA subsidiary for the year ended December 31,
2008 as compared to the year ended December 31, 2007.
 
 Gross
Margin
 
 Gross
margin as a percent of sales was 50.12% and 57.22% for the year ended December
31, 2008 and 2007, respectively. Gross profit for the year ended December 31,
2008 decreased to $253,397 from $383,751 for the year ended December 31, 2007.
The reason for the decrease was primarily due to decreased sales quantities and
unit sales price of tissue chip sold to the Company’s PRC clients, and kit
products with lower individual unit sales prices that were sold to the Company’s
US distributor in 2008 as compared to 2007
 
 Operating
Expenses
 
 While we
decreased our revenue from tissue arrays sold in 2008, we also decreased our
selling expenses as a result of decreased advertising and sample gifts to prompt
our sales in 2008 as compared to 2007.
 
 In
addition, the general and administrative expenses for the year ended December
31, 2008 was $585,136 for the year ended December 31, 2008, $103,709 less than
the amount of $688,845 for the year ended December 31, 2007. The reduced amount
was primarily due to the termination of the Cybrdi-Maryland operations in
October 2007. The Company also had a decrease in selling expenses of $77,037 to
$67,542 for the year ended December 31, 2008, compared to $144,579 for the year
ended December 31, 2007. The decrease in selling expenses was also the result of
the termination of the Cybrdi-Maryland operations in October 2007. For the year
ended December 31, 2007, the selling, expenses had included $47,688 of
expenditures from Cybrdi-Maryland.
  
 
 Other
Income
 
 We
generated $73,676 in interest income in year 2008. Most of this interest income
was due to loans which we have made to QuanYe Security Co.,Ltd ("QuanYe"), an
unrelated 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 has received
loans from Chaoying Biotech in the aggregate amount of RMB29.3Million
(equivalent to $3,754,437) since January 2006. As of December 31, 2008, the
aggregate amount of outstanding loans was RMB6.8.Millions (equivalent to
$996,702). Management believes and views QuanYe as an alternative financial
institution and it is an optimal way to use its cash on hand. The regular market
interest rate in the PRC is 0.72% per annum. Cybrdi expects to obtain higher
interest income for its unused fund through these types of loan arrangements.
However, these advances are unsecured and have a default risk higher than a bank
deposit.
 
 For the
year ended December 31, 2008, other income, net, amounted to $113,428 as
compared to $45,173 for the year ended December 31, 2007, an increase of $68,255
or 151.10%. Other income, net, for the years ended December 31, 2008 and 2007
were primarily associated with the government grant, abnormal inventory
expenditure, and business taxes paid to the PRC government for interest income
received from Quanye in China.
 
 Income
Taxes
 
 The
Company had not recorded a provision for federal income tax for year ended
December 31, 2008 and 2007 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, 2008 and 2007. In accordance with the relevant tax laws and
regulations of the People's Republic of China, Chaoying Biotech is entitled to
full exemption from Corporation Income Tax ("CIT") for the first two years and a
50% reduction in CIT for the next three years, commencing from the firstprofitable year after offsetting all tax
losses carried forward from theprevious five years. As of 2003,
Chaoying Biotech's first profitable year, theCompany begins to record 50% CIT
provision from the first
quarter of 2005. Commencing in January 2008, the Chinese government had adjusted
the CIT rate to 25% instead of 33%.According to Western Developing Plan of the
PRC ,the Company enjoys a 50% reduction in preferential policy of CIT,but the
effective tax rate shouldn't less than 15%.So the
company’s effective tax rate approximately 15%
in the year 2008.
 
 Net
Loss
 
 As a
result of the above, we incurred a net loss for 2008 of $198,873 compared to a
net loss for 2007 of $288,684.
 
 LIQUIDITY
AND CAPITAL RESOURCES
 
 We had a
working capital balance (current assets less current liabilities) of
($2,320,020) as of December 31, 2008 as compared to a working capital balance of
($353,710) as of December 31, 2007. The decrease was primarily due to an
increase in the amount of loans from Changle Rural Credit Union in the aggregate
amount of $1,392,451(equivalent to RMB9.5million) and the increase in net loans
from related companies in amount of $1,436,423 (equivalent to RMB9.8
million).
 
 Cash provided by operating
activities was$649,493for the year ended December31, 2008as compared to $92,369 for the year
ended December 31, 2007.Theprimary reason for thisincrease was our inability topaya number ofaccrued expenses for the yearended December 31,
2008as compared tothe yearended December 31, 2007.
 
 As
compared to year 2007, cash used in investing activities for 2008 was increased
by $1,991,798 from $1,472,662 to $3,464,460. This increase was primarily due to
$3,533,004 in capital expenditures for the year ended December 31, 2008 as
compared to capital spending of $3,779,594 for the year ended December 31, 2007.
The capital expenditures in year 2007 had been somewhat offset with the proceeds
of $2,306,481 we received from the repayment of a loan to an unaffiliated
company. .
 
 Financing
activities for the year ended December 31, 2008, includes the net cash provided
by shareholders or officers to assist our company's operations, the proceeds
from current maturity of long-term debt, and the proceeds from loan from related
companies. As compared to the fiscal year 2007, cash provided by financing
activities for 2008 increased by $1,704,494 from $883,036 to $2,587,530. This
increase was primarily due to the proceeds from current maturity of long-term
debt, and the net proceeds from loan from related companies in of $1,392,451 and
1,143,276 in year 2008, respectively.
 
 We expect
that QuanYe Security Co., an unaffiliated company, to pay in full the loan in
the amount of approximately $1,164,556, including the principal and interest of
$996,702 (equivalent to RMB6.8 million) and $167,854 (equivalent to
RMB1,145,181), respectively to us in the second quarter of 2009.
  
 
 With a
working capital balance of ($2,320,020) we are seeking additional loans from
related companies, shareholders, or a bank pledging our land use right and
construction in progress in SD Chaoying. In addition, commencing in the fourth
quarter of 2007 , we began to pre-sell parts of SD Chaoying's residential
properties which are still under the construction which we hope will increase
revenues.  As of December 31, 2008, we owed Changle Rural Credit Union
a current maturity of long term debt of $ 1,392,451 due on May 30, 2009. We
pledged SD Chaoying’s land use right worth of approximately $3.2 million dollars
to secure the payment of the loan.  As per the loan agreement, we can
discuss with the bank an extension of the terms of this current maturity of long
term debt fifteen days before the expiration date.  While we expect to
extend it for another year, there is not assurance the loan will be
extended.   We believe we will have sufficient resources to
finance our operations for the coming year.
 
 CRITICAL
ACCOUNTING POLICIES
 
 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. In preparing our financial statements we are required to
formulate working policies regarding valuation of our assets and liabilities and
to develop estimates of those values.  In our preparation of the
financial statements for 2008, there were no estimates made which were (a)
subject to a high degree of uncertainty and (b) material to our
results.  Moreover, we made no material changes to our critical
accounting policies in connection with the preparation of financial statements
for 2007.
 
 Income
per share: Basic income per share excludes dilution and is computed by dividing
the income attributable to common shareholders by the weighted-average number of
common shares outstanding for the period. Diluted income per share reflects the
potential dilution that could occur if securities or other contracts to issue
common stock were exercised or converted into common stock or resulted in the
issuance of common stock that shared in the income of the Company. Diluted
income per share is computed by dividing the income available to common
shareholders by the weighted average number of common shares outstanding for the
period and dilutive potential common shares outstanding unless consideration of
such dilutive potential common shares would result in anti-dilution. Common
stock equivalents were not considered in the calculation of diluted income per
share as their effect would have been anti-dilutive for the periods ended
December 31, 2004 and 2003.
 
 Critical
Accounting Policies: 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.
 
 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
 
 Recent Accounting
Pronouncements:
 
 In
December 2007, the Financial Accounting Standard Board (“FASB”) issued SFAS No.
160, "Non-controlling Interests in Consolidated Financial Statements-an
amendment of ARB No.51" which clarifies that a non-controlling interest in a
subsidiary is an ownership interest in the consolidated entity that should be
reported as equity in the consolidated financial statements. This statement also
changes the way the consolidated income statement is presented. It requires
consolidated net income to be reported at amounts that include the amounts
attributable to both the parent and the non-controlling interest. In addition,
it requires disclosure, on the face of the consolidated statement of income, of
the amounts of consolidated net income attributable to the parent and to the
non-controlling interest. SFAS No. 159 is effective for fiscal years, and
interim periods within those fiscal years beginning on or after December 15,
2008 (that is, January 1, 2009, for entities with calendar year-ends). Earlier
adoption is prohibited. The Company is currently in the process of evaluating
the effect, if any, the adoption of SFAS No. 160 will have on its consolidated
results of operations, financial position, and financial
disclosure.
 
 In
December 2007, the Financial Accounting Standard Board (“FASB”) issued SFAS No.
141R (revised 2007), “Business Combinations” which replaces FASB Statement No.
141,”Business Combinations”. The Statement 141R retains the fundamental
requirements in Statement 141 that the acquisition method of accounting (which
Statement 141 called the purchase method) be used for all business combinations
and for an acquirer to be identified for each business combination. The
Statement 141R defines the acquirer as the entity that obtains control of one or
more businesses in the business combination and establishes the acquisition date
as date that the acquirer achieves control. Statement 141 did not define the
acquirer, although it included guidance on identifying the acquirer, as does in
Statement 141R. The scope of Statement 141R is broader than that of Statement
141, which applied only to business combinations in which control was obtained
by transferring consideration. By applying the same method accounting – the
acquisition method- to all transactions and other events in which on entity
obtains control over one or more other businesses, the Statement 141R improves
the comparability of the information about business combinations provided in
financial reports. SFAS No.141R applies prospectively to business combinations
for which that acquisition date is on or after the beginning of the first annual
reporting period beginning on or after December 15, 2008. An entity may not
apply it before that date. The Company is currently in the process of evaluating
the effect, if any, for the future acquisition and combinations.
  
 
 In
February 2007, the Financial Accounting Standard Board (“FASB”) issued SFAS No.
159, “The Fair Value Option for Financial Assets and Financial
Liabilities-Including an amendment of FASB Statement No. 115” which permits all
entities to choose to measure eligible items at fair value at specified election
dates. A business entity shall report unrealized gains and losses on items for
which the fair value option has been elected in earnings (or another performance
indicator if the business entity does not report earnings) at each subsequent
reporting date. SFAS No. 159 is effective as of the beginning of an entity’s
first fiscal year that begins after November 15, 2007. Early adoption is
permitted as of the beginning of a fiscal year that begins on or before November
15, 2007, provided the entity also elects to apply the provisions of FASB
Statement No. 157, “Fair Value Measurements”. The Company is currently in the
process of evaluating the effect, if any, the adoption of SFAS No 159 and 157
will have on its consolidated results of operations, financial position, and
cash flows.
 
 INFLATION
 
 Inflation has not had a material impact
on our business.
 
 CURRENCYEXCHANGE
FLUCTUATIONS
 
 The net
sales, costs and expenses generated by our activities in China are priced in
Chinese renminbi. Approximately $10.3 million of our assets are located inside
China, the remaining $16,244 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
RMB6.8225 to US$1.00 as of December 31, 2008. 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.
 
 ITEM
      7A.
              QUANTITATIVE
      AND QUALITATIVE DISCLOSURES ABOUT MARKET
RISK.
 
 Not
      Applicable.
 
 ITEM
      8.
              FINANCIAL
      STATEMENTS AND SUPPLEMENTARY DATA.
 
 The information required by Item
8appears after the signature page to
thisreport.
 
 ITEM
      9.
              CHANGES
      IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL
      DISCLOSURE
  NONE
  ITEM
      9a
                CONTROLS
      AND PROCEDURES
 We are
responsible for establishing and maintaining adequate internal control over
financial reporting in accordance with Exchange Act Rule 13a-15. With the
participation of our Chief Executive Officer and Chief Financial Officer, our
management conducted an evaluation of the effectiveness of our internal control
over financial reporting as of December 31, 2008 based on the criteria
established in Internal
Control-Integrated Frameworkissued by the Committee of Sponsoring
Organizations of the Treadway Commission. Based on this evaluation, management
concluded that our internal control over financial reporting was effective as of
December 31, 2008, based on those criteria. 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. 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 the Company have been detected.
 
 This
annual report does not include an attestation report of the Company’s registered
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 temporary rules of the Securities and
Exchange Commission
  
 
 ITEM 9B.
                OTHER
      INFORMATION.
 
 (Not applicable).There was no information required to befiled on Form 8-k during
the fourth quarter of the Company's fiscal yearended December 31, 2008 and not
reported..
  PARTIII
 
 ITEM 10.
              DIRECTORS,
      EXECUTIVE OFFICERSAND CORPORATE GOVERNANCE
 
 The following table sets forth the
names, ages, principal offices and positionsand the date each such person became a
director or executive officer. Executiveofficers are elected annually by our Board of Directors. Each
executive officerholds his office until he resigns, is
removed by the Board or his successor iselected and qualified. Directors are
elected annually by our stockholders at the
 annual meeting. Each director holds his
office until his successor
is electedand qualified or his earlier resignation
or removal.
 
 DATE OFNAME AND PRINCIPAL
      POSITION
                
                AGE
                
                APPOINTMENTYanBiao Bai, Chairman, CEO and
      President
                
                48
                
                2003Xue Bu, Director, Treasurer &
      Chief
                
                45
                
                2005
  Below are brief descriptions of the
backgrounds and experiences of our currentofficers 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.  Heis an experienced entrepreneur
andcorporate executive. Since 1999 he has
served as Chairman of Shaanxi ChaoyingGroup, a chain of cosmetic and personal
care training schools and franchiseslocated 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 inChinese traditional and modern medicine,
Mr. Bai is working to apply hismarketing and management expertise to the emerging biotech
field in China,focusing on rapidly marketable products
and services.In2005[insert year],Mr. Baiwasawardedone of the Shaanxi Province "Outstanding
Young Industrialist Award," among othertitles and honors.
 
 Xue
Bu, Director,
Treasurer  & Chief Operating Officer
 
 Ms. Xue Bu has served as an officer and
director of Cybrdi, Inc. since February2005. She obtained her B.S.
in1986 from The Fourth Military Medical
Universityas well asan MBA degree from Xi'an JiaotongUniversity. Ms. Bu was the
Vice Presidentof Beijing Chaoying Real Estate Company
from 1999 to 2001. Since 2001, she hasserved as the Deputy General Manager of
Chaoying. Ms. Bu is the wife of YanBiaoBai.
 
 INVOLVEMENT IN CERTAIN LEGAL
PROCEEDINGS
 
 No event listed in Sub-paragraphs of
Subparagraph (f)of Item 401 of Regulation S-K, has
occurred with respect to any of our present
 executive officers or directors or any
nominee for director during the past fiveyears which is material to an evaluation
of the ability or integrity
of suchdirector or officer.
 
 FAMILY RELATIONSHIPS
 
 Ms. Xue Bu, the Treasurer and Chief
Operating Officer, is the wife of YanbiaoBai the Chairman, CEO and
President.
 
 SECTION 16(A) BENEFICIAL
OWNERSHIP REPORTING
REQUIREMENTS
 
 For companies registered pursuant to
section 12(g) of the Exchange Act, Section16(a) of the Exchange Act requires our
executive officers and directors, andpersons, who beneficially own more than
ten percent of our equity securities, tofile reports of ownership and changes in
ownership with the Securities andExchange Commission. Officers, directors
and greater than ten percentshareholders are required by SEC
regulation to furnish us with copies of allSection 16(a) forms theyfile. To our knowledge, based solely on
a review of thecopies of reports filed with the
Securities and Exchange Commission, Section16(a) filing requirements applicable to
our officers, directors and greater thanten percent beneficial owners were met
during the Company's last
fiscal year andthere 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 toall 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.
 
 
 ITEM
      11.
              EXECUTIVE
      COMPENSATION
 
 COMPENSATION
PHILOSOPHY
 
 Our board
of directors have 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 have 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.
 
 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.  To date, 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.  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 byCybrdi, as well as certain other
compensation paid or accrued, for each of thelast three fiscal years of our company
to each named executive officer.
  SUMMARY
      COMPENSATION TABLE
                  LONG-TERMANNUAL
      COMPENSATION
                
                
                COMPENSATION
      AWARDSRESTRICTED
                
                
                SECURITIESSTOCK
                
                
                UNDERLYING
                
                
                ALL
      OTHERNAME
      AND PRINCIPAL POSITION
                
                YEAR
                
                SALARY
                
                
                BONUS
                
                
                AWARD
                
                
                OPTIONS
                
                
                COMPENSATIONYanBiao
      Bai, Chairman, CEO
                
                2008
                
                $
                100,000
                
                
                $
                -0-
                
                
                $
                -0-
                
                
                $
                -0-
                
                
                $
                -0-and
      President
                
                2007
                
                $
                100,000
                
                
                $
                -0-
                
                
                $
                -0-
                
                
                $
                -0-
                
                
                $
                -0-2006
                
                $
                -0-
                
                
                $
                -0-
                
                
                $
                -0-
                
                
                $
                -0-
                
                
                $
                -0-Dr.
      Lei Liu, Former Director
                
                2007
                
                $
                60,000
                
                
                $
                -0-
                
                
                $
                -0-
                
                
                $
                -0-
                
                
                $
                -0-Former
      Pres: Cybrdi Maryland
                
                2006
                
                $
                80,000
                
                
                $
                -0-
                
                
                $
                -0-
                
                
                $
                -0-
                
                
                $
                -0-2005
                
                $
                60,000
                
                
                $
                -0-
                
                
                $
                -0-
                
                
                $
                -0-
                
                
                $
                -0-Xue
      Bu, Director, Treasurer
                
                2008
                
                $
                11,409
                
                
                $
                -0-
                
                
                $
                -0-
                
                
                $
                -0-
                
                
                $
                -0-&
      Chief Operating Officer
                
                2007
                
                $
                10,812
                
                
                $
                -0-
                
                
                $
                -0-
                
                
                $
                -0-
                
                
                $
                -0-2006
                
                $
                5,770
                
                
                $
                -0-
                
                
                $
                -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.
 
 Mr. Lei
Liu had received an annual compensation of $60,000 and 80,000 for year 2007 and
2006. Since Cybrdi Maryland was closed in October 2007, Mr. Lei Liu no longer
services in the Company and no longer receives compensation from the
Company.
 
 No
compensation had been paid to any director solely in connection with their role
as a director.
  
  ITEM 12.
              SECURITY
      OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED
      STOCKHOLDER MATTERS
 
 The
following table sets forth, as of March 31, 2009 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, 2009, there were issued and outstanding
50,456,567 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
                
                
                9,156,397
                (1)
                
                
                18.15
                %Lei Liu
                
                Former
    Director
                
                Common
                
                
                6,234,766
                (2)
                
                
                12.36
                %Xue Bu
                
                COO/Treasurer/Dir
                
                Common
                
                
                0
                
                
                
                0All
officersand
    directorsas a group(3 people)
                
                
                
                Common
                
                
                15,391,163
                
                
                
                30.50
                %
 (1)
Represents 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; and 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. The related transactions with these affiliated companies
include:
 
 1. Lease
with Chaoying Comestics: We lease office space from Chaoying Cosmestics for a
monthly rent of $5,757 (equivalent to RMB 40,000). This lease has recently been
renewed and will expire on December 31, 2009.
 
 2. Loan
from Chaoying Comestics  in the amount of $879,443 (equivalent to RMB
6 million). This loan is non-interest bearing, unsecured, and has no repayment
terms.
 
 3. Loan
from Yanfeng Biotech in the amount of $337,120 (equivalent to RMB 2.3 million).
This loan is non-interest bearing, unsecured, and has no repayment
terms.
 
 4. Loan
from Shaanxi Yanfeng in the amount of $366,434 (equivalent to RMB2.5 million) .
This loan is non-interest bearing, unsecured, and has no repayment
terms.
 
 5. Loan
to Tianjing Yanfeng in the amount of $146,574 (equivalent to RMB 1 million).
This loan is non-interest bearing, unsecured, and has no repayment
terms.
 
 As of
December 31, 2008, we owed our CEO Mr. Bai a loan of $93,798, and advance to our
COO Mrs. Xue Bai in amount of 6,262, which are non-interest bearing, unsecured,
and due on demand.  In addition, Lei Liu spent $351,653 and $1,260 on
behalf of Cybrdi Maryland, and Cybrdi Public.
 
 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
 
 Audit
Fees
 
 We
accrued an aggregate of approximately $65,000 in fees for professional services
rendered by MS Group CPA LLC in connection with the review of our Quarterly
Reports and audit of our financial statements for the year ended December 31,
2008 and 2007.
  
 
 Audit-Related
Fees
 
 None           Tax
Fees
 
 None
 
 All Other
Fees
 
 None
 
 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.  No such
services have been performed by MS Group CPA LLC.
  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'sAnnual Report of from 10-K for the
      year ended October 31, 1981and Exhibit "A" and Exhibit "B" to Registrant's
      ProxyStatement 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-Qfor 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-kfiled 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 datedFebruary 21,
      1989).*10.2
                Amendment to Registrant's 1989
      Stock Option Plan (incorporated by reference to Exhibit 10.5 to
      Registrant's AnnualReport 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'sQuarterly 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 byreference 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
      byreference 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
      (incorporatedby reference to Exhibit 10.8 to
      Registrant's Annual Report on Form 10-K for the year ended October 31,
      1998).*10.7
                Agreement and Plan of Merger among
      Certron Corporation, Certron Acquisition Corp. and Cybrdi, Inc. filed as
      an exhibitto 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
      referenceto 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. andShaanxi Chaoying
      Biotechnology Co., Ltd (incorporated by reference to Exhibit 10.1 to
      Registrant's Quarterly Report onForm 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:  April
      14, 2009
                  By:
                  /s/
      YanBiao 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/YanBaio
      Bai
                April 14,
      2009Xue
      Bu, Director, Treasurer & COO
                
                /s/Xue
      Bu
                April
      14, 2009






CYBRDI,
INC. AND SUBSIDIARY





CONSOLIDATED
FINANCIAL STATEMENTS





DECEMBER 31, 2008 AND
2007















CYBRDI,
INC. AND SUBSIDIARY


CONTENTS





PAGE





F-2
            REPORT
      OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRMF-3
            CONSOLIDATED
      BALANCE SHEETS AS OF DECEMBER 31, 2008 AND DECEMBER 31,
    2007F-4
            CONSOLIDATED
      STATEMENTS OF OPERATIONS FOR THE YEARS ENDED DECEMBER 31, 2008 AND
      2007F-5
            CONSOLIDATED
      STATEMENTS OF STOCKHOLDERS’ EQUITY AND COMPREHENSIVE INCOME FOR THE YEARS
      ENDED DECEMBER 31, 2008 AND 2007F-6
            CONSOLIDATED
      STATEMENTS OF CASH FLOWS FOR THE YEARS ENDED DECEMBER 31, 2008 AND
      2007F-7
      TO F-21
            NOTES
      TO CONSOLIDATED FINANCIAL
STATEMENTS




F-1




REPORT OF
INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM






To the
Board of Directors and Stockholders of




Cybrdi,
Inc. and Subsidiaries






We have
audited the accompanying consolidated balance sheets of Cybrdi, Inc. and
Subsidiaries as of years ended December 31, 2008 and 2007, and the related
consolidated statements of operations, stockholders’ equity and comprehensive
income, and cash flows for each of the years in the two-year period ended
December 31, 2008. The management of Cybrdi, Inc. and Subsidiaries is
responsible for these consolidated financial statements. Our responsibility is
to express an opinion on these consolidated financial statements based on our
audits.




We
conducted our audits in accordance with the standards of the Public Company
Accounting Oversight Board (United States). Those standards require that we plan
and perform the audit to obtain reasonable assurance about whether the
consolidated financial statements are free of material misstatement. The company
is not required to have, nor were we engaged to perform, an audit of its
internal control over financial reporting. Our audit 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 also
includes examining, on a test basis, evidence supporting the amounts and
disclosures in the financial statements, assessing the accounting principles
used and significant estimates made by management, as well as evaluating the
overall consolidated financial statements 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. and
Subsidiaries as of December 31, 2008 and 2007, and the results of its operations
and its cash flows for each of the years in the two-year period ended December
31, 2008 in conformity with accounting principles generally accepted in the
United States of America.






MS
      Group CPA LLCMS
      Group CPA LLCEdison,
      New JerseyApril
      10, 2009




F-2




CYBRDI, INC. AND SUBSIDIARIES


CONSOLIDATED BALANCE SHEETS







As of December
      31,ASSETS
              
              2008
              
              
              2007CURRENT
    ASSETSCash and
      equivalents
              
              $
              381,357
              
              
              $
              637,056Accounts
      receivable
              
              
              15,674
              
              
              
              3,364Inventories
              
              
              393,354
              
              
              
              390,421Deferred income
      taxes assets
              
              
              5,550
              
              
              
              -Loan to
      unaffiliated company
              
              
              996,702
              
              
              
              1,000,740Other receivables
      and prepaid expenses
              
              
              189,706
              
              
              
              145,805TOTAL CURRENT
      ASSETS
              
              
              1,982,343
              
              
              
              2,177,386PROPERTY, PLANT AND EQUIPMENT,
      NET
              
              
              522,002
              
              
              
              493,273CONSTRUCTION IN
      PROGRESS
              
              
              3,919,343
              
              
              
              1,929,002INTANGIBLE ASSETS,
      NET
              
              
              3,862,433
              
              
              
              3,700,195DEFERRED INCOME TAXES
      ASSETS
              
              
              20,131
              
              
              
              -TOTAL
ASSETS
              
              
              10,306,252
              
              
              
              8,299,856LIABILITIES AND STOCKHOLDERS’
      EQUITYCURRENT
      LIABILITIESAccounts
      payable
              
              
              4,928
              
              
              
              3,917Accrued
      expenses
              
              
              904,743
              
              
              
              1,700,363Current maturity
      of long term debt
              
              
              1,392,451
              
              
              
              -Customers
      deposits
              
              
              50,525
              
              
              
              74,321Loan from related
      companies, net
              
              
              1,436,423
              
              
              
              274,175Amount due to
      stockholders/officers
              
              
              471,649
              
              
              
              432,494Other
      payables
              
              
              41,644
              
              
              
              45,826TOTAL CURRENT
      LIABILITIES
              
              
              4,302,363
              
              
              
              2,531,096MINORITY
      INTERESTS
              
              
              1,508,588
              
              
              
              1,499,125TOTAL
      LIABILITIES
              
              
              5,810,951
              
              
              
              4,030,221STOCKHOLDERS’
      EQUITYPreferred Stock,
      $1.00 per value, 500,000 shares authorized,zero shares
      issued and outstanding
              
              
              -
              
              
              
              -Common Stock, no
      par value, 150,000,000 shares authorized,50,456,567 shares
      issued and outstanding
              
              
              -
              
              
              
              -Additional
      paid-in capital
              
              
              3,571,864
              
              
              
              3,571,864Reserve
      funds
              
              
              336,885
              
              
              
              336,885Accumulated
      deficit
              
              
              (500,195
              )
              
              
              (301,323
              )Accumulated other
      comprehensive income
              
              
              1,086,747
              
              
              
              662,209TOTAL STOCKHOLDERS’
      EQUITY
              
              
              4,495,301
              
              
              
              4,269,635TOTAL LIABILITIES AND
      STOCKHOLDERS’ EQUITY
              
              $
              10,306,252
              
              
              $
              8,299,856


F-3




CYBRDI, INC. AND SUBSIDIARIES
 CONSOLIDATED STATEMENTS OF
OPERATION


For the Years Ended December
      31,2008
              
              
              2007RevenueProducts
              
              $
              492,495
              
              
              $
              622,498Service
      rendered
              
              
              13,070
              
              
              
              48,118Total
      revenue
              
              
              505,565
              
              
              
              670,616Cost of
    SalesProducts
              
              
              252,168
              
              
              
              282,310Service
      rendered
              
              
              -
              
              
              
              4,555Total
      cost of sales
              
              
              252,168
              
              
              
              286,865Gross
Profit
              
              
              253,397
              
              
              
              383,751Operating
      Expenses:Selling and
      distribution expenses
              
              
              67,542
              
              
              
              144,579General and
      administrative expenses
              
              
              585,136
              
              
              
              688,845Total Operating
      Expenses
              
              
              652,678
              
              
              
              833,424Loss from
      Operations
              
              
              (399,281
              )
              
              
              (449,673
              )Other
      Income/(Expense)Interest
      income
              
              
              73,676
              
              
              
              114,319Other (expense)
      income, net
              
              
              113,428
              
              
              
              45,173Loss on disposal
      of fix assets
              
              
              (2,450
              )
              
              
              (8,322
              )Total Other Income,
      Net
              
              
              184,654
              
              
              
              151,170Loss before Income
      Taxes
              
              
              (214,627
              )
              
              
              (298,503
              )Income Taxes
      Benefit
              
              
              25,218
              
              
              
              -Loss before Minority
      Interest
              
              
              (189,409
              )
              
              
              (298,503
              )Minority
      Interest
              
              
              9,464
              
              
              
              (9,819
              )Net Loss
              
              $
              (198,873
              )
              
              $
              (288,684
              )Other Comprehensive
      Income:Foreign Currency Translation
      Gain
              
              
              424,538
              
              
              
              429,292Comprehensive
      Income
              
              $
              225,664
              
              
              $
              140,608Net Loss Per Common
      ShareBasic and
      Diluted
              
              
              (0.00
              )
              
              $
              (0.01
              )Weighted Average Number of Shares
      OutstandingBasic and
      Diluted
              
              
              50,456,567
              
              
              
              50,456,567




F-4


CYBRDI, INC. AND SUBSIDIARIES
 CONSOLIDATED STATEMENTS OF STOCKHOLDERS'
EQUITY AND COMPREHENSIVE INCOME
 FOR THE YEARS ENDED
DECEMBER 31, 2008 AND 2007




Retained
              
              
              AccumulatedAdditional
              
              
              
              
              
              Earnings
      /
              
              
              OtherCommon
      Stock
              
              
              Paid-in
              
              
              Reserve
              
              
              (Accumulated
              
              
              ComprehensiveNo of
      Shares
              
              
              Amount
              
              
              Capital
              
              
              Fund
              
              
              Deficit)
              
              
              Income
              
              
              TotalBalance as
      ofDecember 31,
      2006
              
              
              50,456,567
              
              
              $
              -
              
              
              $
              3,601,932
              
              
              $
              336,885
              
              
              $
              (12,639
              )
              
              $
              232,917
              
              
              $
              4,159,095Deficit resulting
      from acquisitionof Sandong Chao
      Ying
              
              
              -
              
              
              
              -
              
              
              
              (30,068
              )
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              (30,068
              )Net
      loss
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              (288,684
              )
              
              
              -
              
              
              
              (288,684
              )Foreign
      currencytranslation
      gain
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              429,292
              
              
              
              429,292Balance as
      ofDecember 31,
      2007
              
              
              50,456,567
              
              
              
              -
              
              
              
              3,571,864
              
              
              
              336,885
              
              
              
              (301,323
              )
              
              
              662,209
              
              
              
              4,269,635Net
      loss
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              (198,873
              )
              
              
              -
              
              
              
              (198,873
              )Foreign
      currency
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              -translation
      gain
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              424,538
              
              
              
              424,538Balance as
      ofDecember 31,
      2008
              
              
              50,456,567
              
              
              $
              -
              
              
              $
              3,571,864
              
              
              $
              336,885
              
              
              $
              (500,197
              )
              
              $
              1,086,747
              
              
              $
              4,495,300








F-5




CYBRDI, INC. AND SUBSIDIARIES
 CONSOLIDATED STATEMENTS OF
CASHFLOW


For the Years Ended December
      31,2008
              
              
              2007CASH FLOWS FROM OPERATING
      ACTIVITIESNet
      Loss
              
              $
              (198,873
              )
              
              $
              (288,684
              )Adjustments
      to Reconcile Net Loss to Net CashProvided
      by Operating Activities:Depreciation and
      amortization
              
              
              174,088
              
              
              
              165,983Loss on disposal
      of fixed assets
              
              
              2,450
              
              
              
              8,322Minority
      interest
              
              
              9,463
              
              
              
              (9,819
              )Income taxes
      benefit
              
              
              (25,218
              )
              
              
              -Changes
      in Operating Assets and Liabilities:Accounts
      receivable
              
              
              (11,296
              )
              
              
              34,238Inventories
              
              
              22,525
              
              
              
              1,229Other receivable
      and prepaid expenses
              
              
              (31,623
              )
              
              
              64,098Accounts
      payable
              
              
              692
              
              
              
              3,252Accrued
      expenses
              
              
              741,228
              
              
              
              28,103Other
      payables
              
              
              (6,877
              )
              
              
              11,326Customer
      deposits
              
              
              (27,066
              )
              
              
              74,321Net
      Cash Provided by Operating Activities
              
              
              649,493
              
              
              
              92,369CASH FLOWS FROM INVESTING
      ACTIVITIESPurchase of
      property, plant, and equipment
              
              
              (80,715
              )
              
              
              (46,551
              )Payment for
      construction in progress
              
              
              (3,452,289
              )
              
              
              (1,929,002
              )Purchase
      intangible assets
              
              
              -
              
              
              
              (1,804,041
              )Proceeds from
      property disposal
              
              
              -
              
              
              
              451Proceeds from
      loan to unaffiliated companies
              
              
              68,544
              
              
              
              2,306,481Net
      Cash Used in Investing Activities
              
              
              (3,464,460
              )
              
              
              (1,472,662
              )CASH FLOWS FROM FINANCING
      ACTIVITIESProceeds from
      current maturity of long term debt
              
              
              1,392,451
              
              
              
              -Proceeds from
      loan from related companies
              
              
              1,289,850
              
              
              
              274,175Payment to
      related companies
              
              
              (146,574
              )
              
              
              -Proceeds from
      minority shareholders contribution
              
              
              -
              
              
              
              354,319Proceeds from
      shareholders/officers
              
              
              101,167
              
              
              
              478,836Payment to
      shareholders/officers
              
              
              (49,364
              )
              
              
              (224,294
              )Net
      Cash Provided by Financing Activities
              
              
              2,587,530
              
              
              
              883,036NET DECREASE IN CASH AND
      EQUIVALENTSNet Decrease in
      Cash and Equivalents
              
              
              (227,437
              )
              
              
              (497,257
              )Effect of
      Exchange Rate Changes on Cash and Equivalents
              
              
              (28,262
              )
              
              
              351,414Cash and
      Equivalents, at Beginning of Period
              
              
              637,056
              
              
              
              782,899Cash
      and Equivalents, at End of Period
              
              $
              381,357
              
              
              $
              637,056SUPPLEMENTARY
      DISCLOSURES OF CASH FLOW INFORMATIONInterest paid for
      the years ended December 31, 2008 and 2007,
      respectively
              
              $
              121,321
              
              
              $
              -Income taxes paid
      for the years ended December 31, 2008 and 2007,
      respectively
              
              $
              -
              
              
              $
              -SUPPLEMENTAL
      SCHEDULE OF NON-CASH INVESTING ACTIVITIESConstruction in
      progress incurred by accrued construction cost
              
              $
              1,595,403
              
              
              $
              1,428,196








F-6




CYBRDI,
INC. AND SUBSIDIARY


NOTES
TO CONSOLIDATED FINANICAL STATEMENTS


FOR
THE YEARS ENDED DECEMBER 31, 2008 AND 2007





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
extendedupon
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.




F-7





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 parter, 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 focuse 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, 2008, SD Chaoying is still
in the development stage and there is no actual business transaction. The
development and construction of the facility is anticipated to be completed in
December 2009.





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.
            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.




F-8




(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)
              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.




(d)
              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.





(e)
            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.




F-9





Long-term
assets of the Company are reviewed annually as to whether their carrying value
has become impaired, pursuant to the guidelines established in Statement of
Financial Accounting Standards (“SFAS”) No. 144, “Accounting for the Impairment
or Disposal of Long-Lived Assets”.  The Company also re-evaluate the
periods of amortization to determine whether subsequent events and circumstances
warrant revised estimates of useful lives.





(f)
            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, 2008 and 2007, the Company had not
recorded an allowance for uncollectible accounts.





(g)
              Research and development
      costs


Research
and development costs are charged to operations when incurred and are included
in operating expenses.  The amounts charged in 2008 and 2007 were
$12,562 and $38,090, respectively.




(h)
              Advertising
      costs


Advertising
costs are charged to operations when incurred and are included in operating
expenses. Advertising expenses were $10,756 and $18,077 for the years ended
December 31, 2008 and 2007, respectively.




(i)
              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.




(j)
              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.




F-10




(k)
              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.





(l)
              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.




(m)
              Comprehensive income
      (loss)


SFAS No.
130, “Reporting Comprehensive Income”, established standards for the reporting
and display of comprehensive income, its components and accumulated balances in
a full set of general purpose financial statements.  SFAS No. 130
defines comprehensive income to include all changes in equity except those
resulting from investments by owners and distributions to
owners.  Among other disclosures, SFAS No. 130 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.





(n)
              Intangible
      assets


Intangible
assets include the right to use a parcel of land and a
patent.   Effective January 1, 2002, with the adoption of 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. The right to use a parcel of land will be amortized over its estimated
life as incurred.  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-11





(o)
              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 $129,253 and $64,307 for the years ended December 31,
2008 and 2007, respectively.




(p)
            Recent Accounting
      Pronouncements




In May
2008, the Financial Accounting Standards Board (“FASB”) issued Statement of
Financial Accounting Standards (“SFAS”) No.162, “The Hierarchy of Generally
Accepted Accounting Principles”. SFAS 162 indicates that the entity (not its
auditor) that is responsible for selecting accounting principles for financial
statements that are presented in conformity with GAAP. Accordingly, the GAAP
hierarchy should reside in the accounting literature established by the FASB and
is issuing SFAS 162 to achieve that result. SFAS 162 also identifies the sources
of accounting principles and the framework for selecting the principles to be
used in the preparation of financial statements of nongovernmental entities that
are presented in conformity with generally accepted accounting principles (GAAP)
in the United States (the GAAP hierarchy).SFAS 162 is effective 60 days
following the SEC’s approval of the Public Company Accounting Oversight Board
amendments to AU Section 411, The Meaning of Present Fairly
in Conformity With Generally Accepted Accounting Principles. The Company is in
the process of evaluating the new disclosure requirements under SFAS
162.




In March
2008, the Financial Accounting Standards Board (“FASB”) issued Statement of
Financial Accounting Standards (“SFAS”) No.161,“Disclosures about Derivative
Instruments and Hedging Activities — An Amendment of SFAS No. 133” (“SFAS 161”).
SFAS 161 seeks to improve financial reporting for derivative instruments and
hedging activities by requiring enhanced disclosures regarding the impact on
financial position, financial performance, and cash flows. To achieve this
increased transparency, SFAS 161 requires (1) the disclosure of the fair value
of derivative instruments and gains and losses in a tabular format;(2) the
disclosure of derivative features that are credit risk-related; and
(3)cross-referencing within the footnotes. SFAS 161 is effective for financial
statements issued for fiscal years and interim periods beginning after November
15, 2008 (that is, January 1, 2009, for entities with calendar year-ends)., with
early application encouraged. The Company is in the process of evaluating the
new disclosure requirements under SFAS 161.









In
December 2007, the Financial Accounting Standard Board (“FASB”) issued SFAS No.
160, “Non-controlling Interests in Consolidated Financial Statements-an
amendment of ARB No. 51” which clarifies that a non-controlling interest in a
subsidiary is an ownership interest in the consolidated entity that should be
reported as equity in the consolidated financial statements. This statement also
changes the way the consolidated income statement is presented. It requires
consolidated net income to be reported at amounts that include the amounts
attributable to both the parent and the non-controlling interest. In addition,
it requires disclosure, on the face of the consolidated statement of income, of
the amounts of consolidated net income attributable to the parent and to the
non-controlling interest. SFAS No. 160 is effective for fiscal years, and
interim periods within those fiscal years beginning on or after December 15,
2008 (that is, January 1, 2009, for entities with calendar year-ends). Earlier
adoption is prohibited. The company is currently in the process of evaluating
the effect, if any, the adoption of SFAS No. 160 will have on its consolidated
results of operations, financial position, and financial
disclosure.




F-12






In
December 2007, Statement of Financial Accounting Standards No. 141(R), Business
Combinations, was issued. SFAS No. 141R replaces SFAS No. 141, Business
Combinations. SFAS 141R retains the fundamental requirements in SFAS 141 that
the acquisition method of accounting (which SFAS 141 called the purchase method)
be used for all business combinations and for an acquirer to be identified for
each business combination. SFAS 141R requires an acquirer to recognize the
assets acquired, the liabilities assumed, and any non-controlling interest in
the acquire at the acquisition date, measured at their fair values as of that
date, with limited exceptions. This replaces SFAS 141‘s cost-allocation process,
which required the cost of an acquisition to be allocated to the individual
assets acquired and liabilities assumed based on their estimated fair values.
SFAS 141R also requires the acquirer in a business combination achieved in
stages (sometimes referred to as a step acquisition) to recognize the
identifiable assets and liabilities, as well as the non-controlling interest in
the acquire, at the full amounts of their fair values (or other amounts
determined in accordance with SFAS 141R). SFAS 141R applies prospectively to
business combinations for which the acquisition date is on or after the
beginning of the first annual reporting period beginning on or after December
15, 2008 (that is, January 1, 2009, for entities with calendar year-ends). An
entity may not apply it before that date. The Company is currently evaluating
the impact that adopting SFAS 141R will have on its financial
statements.




4.           INVENTORIES





Inventories
consist of the following:




December
31,2008
              
              
              2007Raw
    materials
              
              $
              37,133
              
              
              $
              46,515Work in
    process
              
              
              759
              
              
              
              1,974Finished
    goods
              
              
              355,324
              
              
              
              341,577Packaging materials and
      other
              
              
              138
              
              
              
              355Total
              
              $
              393,354
              
              
              $
              390,421




5.           LOAN
TO UNAFFILIATED COMPANY





Loan to
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, 2008, the principal balance and receivable interest for this
loan had been reduced to RMB6.8 Million (equivalent to $996,702) and
RMB1,145,181 (equivalent to $167,854), respectively.





The
management of
the Company believes and views QuanYe as an alternative financial institution
and it is an optimal way to use its cash on hand.  The regular market
interest rate in the PRC is proximately 0.72% per annum. The Company expects to
obtain higher interest income for its unused fund through these types of loan
arrangements. However, these advances are unsecured and have a default risk
higher than a bank deposit.




F-13





6.           PROPERTY,
PLANT AND EQUIPMENT





Property,
plant and equipment consist of the following:




December
31,2008
              
              
              2007Buildings
              
              $
              76,602
              
              
              $
              71,644Machinery and
      equipments
              
              
              502,222
              
              
              
              476,820Motor
    vehicles
              
              
              383,627
              
              
              
              292,147Office
      equipments
              
              
              92,455
              
              
              
              84,809Leasehold
      improvement
              
              
              267,946
              
              
              
              250,604Software - website and
      other
              
              
              105,180
              
              
              
              92,891Subtotal
              
              
              1,428,032
              
              
              
              1,268,915Less: Accumulated depreciation and
      amortization
              
              
              906,030
              
              
              
              775,642Net
      value
              
              $
              522,002
              
              
              $
              493,273





Depreciation
and amortization expenses for the years ended December 31, 2008 and 2007 were
$81,970 and $81,819, respectively.




7.
            CONSTRUCTION
      IN PROGRESS





Construction
in progress of $3,919,343 mainly consists of a development and construction of
entertainment, culture, and casino in Shandong Province, which will be
transferred to fixes assets in SD Chaoying when construction is
completed.





8.           INTANGIBLE
ASSETS, NET





Intangible
assets consist of the following:




December
31,2008
              
              
              2007Patent
              
              $
              938,073
              
              
              $
              877,361Land use
    right
              
              
              3,455,900
              
              
              
              3,232,237Subtotal
              
              
              4,393,973
              
              
              
              4,109,598Less: Accumulated
      amortization
              
              
              531,540
              
              
              
              409,403Net
      value
              
              $
              3,862,433
              
              
              $
              3,700,195




Amortization
expenses for the years ended December 31, 2008 and 2007 were $92,118 and
$84,164, respectively.




F-14





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




For the Year Ended December
    31,
              
              Amount2009
              
              $
              92,1182010
              
              
              153,5312011
              
              
              153,5312012
              
              
              153,5312013
              
              
              92,153


9.           CUSTOMER
DEPOSITS





In the
fourth quarter of 2007, the management of the company determined to pre-sell
parts of SD Chaoying’s residential properties which are still under the
construction. Accordingly, the customer deposits consist of the
following:,




December
31,2008
              
              
              2007Residential properties
      pre-sold
              
              $
              46,904
              
              
              $
              52,092Tissue array
      sales
              
              
              3,621
              
              
              
              22,229Total
              
              $
              50,525
              
              
              $
              74,321




10           CURRENT
MATURITY OF LONG TERM DEBT





The
Company has current maturity of long term debt of $1,392,451 (equivalent to
RMB9.5million) from Changle Rural Credit Union, which is a bank located in
Shandong Province of the PRC. This long-term debt had been pledged by the
Company’s land use right in SD Chaoying which is worth approximately $3.2
million (equivalent to RMB22 million).the term of debt were from January 31,
2008 to May 30, 2009 (total sixteen months). The interest rate for this debt
will be 30% more of the basic interest rate from “The People’s Bank of China” in
PRC.  The basic monthly interest rate in China is 0.63% for the year
ended December 31, 2008.




F-15





11.           LOAN
FROM RELATED COMPANIES, NET




Loan from
related company represented the net amount of loan from/to related companies
which all located in P.R. China, and all loans are non-interest bearing,
unsecured, and have no set repayment terms. The net amount of loan from related
companies consists of the following:




December
31,2008
              
              
              2007Loan to Tanjing Yanfeng Real
      Estate Co., Ltd.
              
              $
              (146,574
              )
              
              $
              -Loan from Shaanxi Chaoying Beauty
      & Cosmetics Group Co., Ltd.
              
              
              879,443
              
              
              
              274,175Loan from Shaanxi Yanfeng Real
      Estate Co., Ltd.
              
              
              366,434
              
              
              
              -Loan from Xi'an Yanfeng
      Biotechnology Co., Ltd.
              
              
              337,120
              
              
              
              -Total loan from
      related companies, net
              
              $
              1,436,423
              
              
              $
              274,175


12.           AMOUNT
DUE TO STOCKHOLDERS/OFFICERS





As usual,
the shareholders and / or officers of the Company made advances to the Company
to assist with operations.  These advances are non-interest bearing,
unsecured, and have no set repayment terms. As of December 31, 2008 and 2007,
the Company had due to the shareholders and / or officers with the net amounts
of $471,649 and $ 432,494, respectively.




13.           COMMITMENTS,
CONTINGENCIES, AND LEGAL PROCEEDINGS





There is
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 has 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.
The Company is waiting for communication from the government concerning payment
of the proposed settlement. As of December 31, 2008 and 2007, the Company has
accrued a sufficient amount to cover any potential liabilities from this matter
under other payable.





The
Company’s subsidiary in PRC leased an office space under operating lease
agreement from its related party for a lease term originally expired on December
31, 2008 had been extended to December 31, 2009. There is no renewal option on
the lease. The rent payment under this operating lease was $5,757 per month (equivalent to
RMB 40,000 per month). The future minimum rental payment for this lease as of
December 31, 2009 was $69,089 (equivalent to RMB480,000).




F-16





Total
rental expense charged to operations amounted to 69,089 and $85,530 for the
years ended December 31, 2008 and 2007, respectively.





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, 2008, the Company had 50,456,567 shares of common stock issued and
outstanding.





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.





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.




F-17





In the
year 2008 and 2007, 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, 2008 and 2007. The reserve funds balance consisted
of the following:




December
31,2008
              
              
              2007Statutory Surplus
      Reserve
              
              $
              224,590
              
              
              $
              224,590Statutory Common Welfare Fund
      Reserve
              
              
              112,295
              
              
              
              112,295Total
              
              $
              336,885
              
              
              $
              336,885
  16.           GOVERNMENT
GRANT




In 2007,
Chaoying Biotech received certain government grants in the aggregate amount of
$64,307 (equivalent to RMB489,000) of which $59,178 (equivalent to RMB450,000)
was issued under the PRC program "Western Development Project", $1,184
(equivalent to RMB9,000) for support of genetic engineering research, and $3,945
(equivalent to RMB30,000)was paid a for hiring foreign technical management in
the field of antibody research..





In 2008,
Chaoying Biotech also received certain government grants in the aggregate amount
of $11,515 (equivalent to RMB80,000) of which $7,197 (equivalent to RMB50,000)
for support of genetic engineering research, and $4,318 (equivalent to
RMB30,000)was paid for hiring a foreign technical management in the field of
antibody research.  Simultaneously, SD Chaoying also received
$117,738(equivalent to
RMB818,000) government grants for developing the encouraged real estate project
in Shandong District China.





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 2008 and 2007. 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”)
      ofthe Company’s subsidiary in
      PRC





In
accordance with the relevant tax laws and regulations of the PRC, the Company’s
subsidiary is entitled to full exemption from CIT for the first two years and a
50% reduction in CIT for the next three years, commencing from the first
profitable year after offsetting all tax losses carried forward from the
previous five years.  As 2003 was the Company’s first profitable year,
the Company’s subsidiary was entitled to a full exemption from CIT for the year
starting 2003. The Company’s PRC subsidiary begins to record 50% CIT provision
from the first quarter of 2005. Effective tax rate is approximately 7.5% for the
year ended December 31, 2007. Commencing in January 2008, the Chinese government
had adjusted the regular CIT rate to 25%. According to Western Developing Plan
of the PRC, the Company enjoys a 50% reduction in preferential policy of CIT,
but not less than 15%. As a result, the company’s effective CIT tax rate was 15%
in the year 2008.




F-18





In the
year 2008 and 2007, 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, 2008 and 2007.




December 31,
      2008Deferred income taxes assets
      :Inventory
      recognition
              
              $
              3,066Fix asset
      depreciation
              
              
              15,591Deferred educaton
      fee
              
              
              446Loss
      carryforward
              
              
              8,236Total Deferred income taxes
      assets
              
              $
              27,339Deferred income taxes
      liabilitiesFix assets
      depreciation
              
              $
              (1,046
              )Deferred education
      fee
              
              
              (612
              )Total deferred income taxes
      liabilities
              
              
              (1,658
              )Net deferred income taxes
      assets
              
              $
              25,681Reported
as:Current deferred income taxes
      assets
              
              $
              5,550Long-term deferred income taxes
      assets
              
              
              20,131Net deferred income taxes
      assets
              
              $
              25,681
  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.




F-19


Major
Customers:


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




Year Ended
            
            Number of
            
            
            PercentageDecember
31,
            
            Customers
            
            
            of Total2008
            
            
            1
            
            
            
            69.76
            %2007
            
            
            1
            
            
            
            53.07
            %


Major
Suppliers:


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




Number of
              
              
              PercentageYear Ended
              
              Suppliers
              
              
              of Total2008
              
              
              4
              
              
              
              91.54
              %2007
              
              
              1
              
              
              
              87.53
              %





Geographical
Risks





Approximately
99.84% of the Company’s assets and 100% of the Company’s operations were in the
PRC for the year ended December 31, 2008. Accordingly, the Company’s
business, financial condition and results of operations may be influenced by the
political, economic and legal environment in PRC, and by the general state of
the economy of PRC. The Company’s operations in PRC are subject to special
considerations and significant risks not typically associated with companies in
the United States. These include risks associated with, among others, the
political, economic and legal environments and foreign currency exchange. The
Company's results may be adversely affected by, among other things, changes in
the political, economic and social conditions in PRC, and by changes in
governmental policies with respect to laws and regulations, changes in PRC's
biotechnology industry and regulatory rules and policies, anti-inflationary
measures, currency conversion and remittance abroad, and rates and methods of
taxation.





19.           SEGMENT
REPORTING





The
Company had operations in two geographic areas, China and the United States in
year 2007. The chief operating decision makers evaluate performance, make
operating decisions, and allocate resources based on consolidated financial
data. Gross profit, operating income, income from operation, and income taxes
are not allocated to specific individual departments within the organization. In
accordance with SFAS No. 131 “Disclosures about Segments of an Enterprise and
Related Information” The Company is considered a single reportable segment. The
Company is required to disclose certain information about revenue, information
about geographic areas, information about major customers, and information about
long-lived assets. In October 2007, the Company had closed down all its Maryland
operations and disposed all its Maryland long-lived assets in United States.
Accordingly, there are no long-lived assets in United States as of December 31,
2008.




Year Ended December 31,
      2008United
    States
              
              
              China
              
              
              TotalRevenue
              
              $
              -
              
              
              $
              505,565
              
              
              $
              505,565Long-lived
      assets
              
              $
              -
              
              
              $
              8,303,778
              
              
              $
              8,303,778
 
 Year Ended December 31,
      2007United
    States
              
              
              China
              
              
              TotalRevenue
              
              $
              192,131
              
              
              $
              478,485
              
              
              $
              670,616Long-lived
      assets
              
              $
              -
              
              
              $
              6,122,470
              
              
              $
              6,122,470


F-20




On
September 5, 2007, Chaoying Biotech had been approved to acquire the ownership
title of SD Chaoying from Chaoying Biotech’s Chinese partner. The future
business of SD Chaoying will primarily be focused on culture and entertainment,
including Spa activities, cosmetic and personal care, body building, gambling,
catering,  and lodging SD Chaoying will have a specific emphasis
on  casino gambling, which has been approved by Shandong
Administration for civil affairs. As of December 31, 2008, SD Chaoying is still
in the development stage and there is no actual business, the development and
construction of the facility is anticipated to be completed in December 2009.
Accordingly, there were no revenues in culture and entertainment business for
the year ended December 31, 2008.




Year Ended December 31,
      2008Tissue
    Arrays
              
              
              Culture
    &Related
      Business
              
              
              Entertainment
              
              
              TotalRevenue
              
              $
              505,565
              
              
              $
              -
              
              
              $
              505,565Total
assets
              
              $
              2,884,968
              
              
              $
              7,421,284
              
              
              $
              10,306,252Long - lived assets,
      net
              
              $
              898,768
              
              
              $
              7,405,010
              
              
              $
              8,303,778Total
      liabilities
              
              $
              2,049,039
              
              
              $
              3,761,912
              
              
              $
              5,810,951
  F-21