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, 2009





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.)No29
      Chang’An South Road Xi’an Shaanxi P.R. China
                        
                        710061(ADDRESS
      OF PRINCIPAL EXECUTIVE OFFICE)
                        
                        (ZIP
      CODE)




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





Former
name, former address and former fiscal year,


(if changed since last report)





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





Indicate
by check mark if the registrant is a well-known seasoned issuer, as defined in
Rule 405 of the Securities Act Yes  ̈ 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  ̈ 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  ̈





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





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


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





Indicate
by check mark if disclosure of delinquent filers pursuant to Item 405 of
Regulation S-K is not contained herein, and will not be contained, to the best
of registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any amendments to
this Form 10-K. Indicate by a check mark whether the registrant is a large
accelerated filer (as defined in Rule 12b-2 of the Exchange Act). Yes  ̈ No x





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





APPLICABLE
ONLY TO CORPORATE ISSUERS:





As of
April 14, 2010, the Company had 65,756,567 shares of Common Stock, without par
value, outstanding .





The
aggregate market value of the voting and non-voting common equity held by
non-affiliates computed by reference to, as of  April 14, 2010 was
approximately $701,309 based on a closing bid price of $0.02 and a total
of  35,065,404  shares held by non-affiliates.





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





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




DOCUMENTS
INCORPORATED BY REFERENCE: None








TABLE
      OF CONTENTS
              PAGEPART
      IItem
      1.
              Business
              4Item
      1A.
              Risk
      Factors
              8Item
      1B.
              Unresolved
      Staff Comments
              12Item
      2.
              Properties
              12Item
      3.
              Legal
      Proceedings
              12Item
      4.
              RESERVED
              13PART
      II
              
              13Item
      5.
              Market
      For Registrant’s Common Equity, Related Stockholder Matters and Issuer
      Purchases of Equity Securities.
              13Item
      6.
              Selected
      Consolidated Financial Information
              14Item
      7.
              Management’s
      Discussion And Analysis Of Financial Condition And Results Of
      Operations
              14Item
      7A.
              Quantitative
      And Qualitative Disclosures About Market Risk
              18Item
      8.
              Financial
      Statements And Supplementary Data
              18Item
      9.
              Changes
      In And Disagreements With Accountants Or Accounting And Financial
      Disclosure
              18Item
      9A.
              Control
      And Procedures
              19Item
      9B.
              Other
      Information
              19PART
      III
              
              19Item
      10.
              Directors
      And Executive Officers Of The Registrant
              19Item
      11.
              Executive
      Compensation
              21Item
      12.
              Security
      Ownership Of Certain Beneficial Owners And Management And Related
      Stockholder Matters
              22Item
      13.
              Certain
      Relationships And Related Transactions, And Director
      Independence
              23Item
      14.
              Principal
      Accountant Fees And Services
              24PART
      IV.
              
              24Item
      15.
              Exhibits,
      Financial Statement Schedules
              24


2





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





Certain
financial information included in this annual report has been derived from
data originally prepared in Renminbi (RMB), the currency of the
People's Republic of China ("China" or "PRC"). For purposes of this annual
report, conversion at year-end exchange rates of US$1.00 to RMB6.827. for
assets and liabilities, and weighted average rate US$1.00 to RMB6.8311.for
revenue and  expenses in year 200 9 . There is no assurance that RMB
amounts could be converted into US dollars at that rate.  Please see
Note 3 “Summary of Significant Accounting Policy Item (l) for
Foreign Currency Translation ” of the accompanying financial
statements.


3


PART
I





ITEM
1.    BUSINESS





HISTORY





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





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





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





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





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





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





On July
26, 2007, Chaoying Biotech entered into an acquisition agreement with the
Chinese Partner.  On July 28, 2007, Chaoying Biotech invested RMB15
millions to acquire an 83.33% equity ownership of Shandong Chaoying Culture and
Entertainment Co., Ltd (“SD Chaoying”) from the Chinese Partner. SD Chaoying is
a corporation organized in the Shandong province of P.R.China. On September 5,
2007, Shandong Commercial government approved this acquisition and ownership of
SD Chaoying was transferred to Chaoying Biotech from the Chinese Partner. The
business of SD Chaoying will primarily focus on culture and entertainment,
including make-up, personal care, human body building and slimming, gambling,
saunas for massage and bath, karaoke, catering, and lodging, etc. SD Chaoying
will have a specific emphasis on casino gambling, which has been approved by
Shandong Administration for Civil Affairs. As of December 31, 2009, SD Chaoying
had substantially completed the construction of two residential buildings and
had recognized revenue from sales of housing units from these buildings for the
year then ended.  The main structure of the commercial entertainment
center has also been completed, with the exterior, rooftop, the surrounding
supporting projects and the community landscaping yet to be completed, but which
are expected to be completed in the year 2010 prior to the commencement of
operations by merchant tenants.


4


BUSINESS
OVERVIEW





Cybrdi is
a holding company incorporated with 80% equity in Chaoying Biotech, which is
engaged in biotechnology manufacturing, and research and development.. Through
Chaoying Biotech, Cybrdi also controls SD Chaoying, a cultural and entertainment
company 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.  Starting in 2010, our sole domestic sales
representative in China will be Xi’an AiLiNa Biotechnology Co., Ltd,, and the
only overseas sales representative will be Biomax.  We will mainly
distribute our products through these two sales representatives.





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





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




Specifically,
our products and services include:




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





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





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





Culture, Entertainment, and
Real Estate Business




Chaoying
Biotech owns 83.33% of SD Chaoying, a culture and entertainment company with a
special license for casino gambling. SD Chaoying is developing a Culture and
Entertainment Square in Changle City of Shangdong Province on the 33,333 square
meter land it owns the right to use. The usage areas of the Square will be
approximately 19,145 square meters. With the entertainment facilities of
restaurants spas, hotel rooms, movie theaters, cosmetic and personal care
salons, body buildup gyms, the Square will become local cultural and
entertainment center. The facility construction project annexed with four
multi-family residential buildings (about 14,188 square meters), and two of them
had been completed and some of the housing units had been sold.  The
total cost for the construction is estimated to be $8.2 million.  At
present, SD Chaoying has invested approximately $4.8 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.


5


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





The
accompanying consolidated financial statements have been prepared assuming the
Company will continue as a going concern, which contemplates the realization of
assets and the satisfaction of liabilities in the normal course of
business.  The Company has incurred significant losses and has not
demonstrated the ability to generate sufficient cash flows from operations to
satisfy its liabilities and sustain operations.  The Company had an
accumulated deficit of $1,097,141 and $500,195 as of December 31, 2009 and 2008
respectively, including net losses of $596,946 and $198,873 for the years ended
December 31, 2009 and 2008, respectively.  In addition, current
liabilities exceeded current assets by $2,163,830 and $2,320,020 at December 31,
2009 and 2008, respectively.  These matters raise substantial doubt
about the Company’s ability to continue as a going concern.





The
Company finances its operations primarily through short-term bank borrowings and
advances from related parties and/or officers/shareholders.  In order
to complete the construction of SD Chaoying cultural and entertainment center,
approximately $3.4 million (equivalent to RMB 23 million) of liquidity is
expected to be needed.  The Company, taking into account the available
banking facilities, internal financial resource, and supports from related
companies, believes it has sufficient working capital to meet its present
obligation for at least the next twelve months.  Management is taking
actions to address the company's financial condition and deteriorating liquidity
position.  The following sets forth management’s plans for dealing
with the adverse effects of the conditions:





(a)           Sale
of housing inventories:  Proceeds to be received from the sale of the
remaining housing of the two completed residential buildings are expected to
amount to approximately $1.4 million.





(b)           Additional
bank borrowing:  SD Chaoying is in discussion with a local bank for
approximately $2.2 million of short-term loans.





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





(d)           Additional
advances from related companies:  Shaanxi Chaoying Beauty &
Cosmetics Group are anticipated to provide up to $730,000 of capital to support
operational use.





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





MARKETING





Marketing strategy
in,ShanXi,Chaoyina: By leveraging existing hospital relationships and
Shaanxi Chaoying's marketing channels, we have marketed TMA products, medical
care products and other services within the Chinese market. There are two
primary regions in China where we focus our marketing: the northern provinces
which include the cities of Beijing, Tian Jing and Hebei Province, and the
eastern provinces which include the cities of Shanghai, Jiangsu , Guangdong,
Fujian, Shanxi, Hunan, Hubei ,Zhejiang Province and Shangdong Province.. Our
domestic sales accounted for approximately18.5% of our total sales
of ChaoYing Biotech in the fiscal year of 2009   Starting in
2010, our sole domestic sales representative in China will be Xi’an AiLiNa
Biotechnology Co., Ltd,, and the only overseas sales representative will be
Biomax.  We will mainly distribute our products through these two
sales representatives.





Marketing strategy in
ShanDong,Chaoyina:with the progress of the
project construction, we have sold more than half of residential housing units,
and the merchants for the culture and entertainment center are also under way,
Our residential housing sales accounted for approximately  68.58% of
our total sales revenue in the fiscal year of 2009. Shandong’s main focus in
2010 will be to occupy the culture and entertainment center with merchant
tenants and commence the operation.


6





International Marking
Strategy: By leveraging our know-how and current infrastructure of our
operations in China, we attempt to expand our international distribution
network. With the comparatively low cost for our products and services and our
patented technology, we have a competitive advantage in the international
market. In 2001, we set up Cybrdi Maryland to develop our business in the United
States. The expansion of our business in the international arena came on March
10, 2007, when we entered into a Sales Agent Agreement with BioMax, a re-seller
located in the United States. Under the Sales Agent Agreement, BioMax acts as
our exclusive agent dealing with the distribution of our products and services
in all countries and regions except theP.R.C mainland.  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.  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 2009, BioMax accounted for
about 25.536% of our sales revenue, which also represents our export
sales.





BACKLOG





Chaoying
Biotech’s backlog of sales orders totaled approximately $305,824 on December 31,
2009.




MARKET
OPPORTUNITIES AND COMPETITION




China
Biotech Trends





Biotechnology
research has been supported by the Chinese government, having been designated a
“key industry” in China's scientific development plan since 1986. However, most
biotech investments have been made in the areas of basic research in government
funded laboratories or government linked companies which are focused on major
scientific discoveries in gene functions. Cybrdi received government
grants of $8,421(equivalent toRMB57,523)and
$11,515 (equivalent toRMB80,000) during the years ended December 31, 2009
and 2008, respectively.





Competition





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





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





INTELLECTUAL
PROPERTY





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




Name of Patent
                                  
                                  Number of Patent
                                  
                                  AwardedTissue
      Microarrays (TMAs)
                                  
                                  ZL01128783.7
                                  
                                  June 1st 2005A way to test content of special
      antibody in body
      fluid in a certain part
                                  
                                  ZL01131756.6
                                  
                                  December 15th 2004Diabetes autoimmune antibody test
      kit multiplex Chip,
      equipment and method
                                  
                                  ZL02145561.9
                                  
                                  November 17th 2004Diabetes immunization antibody
      testing protein
      chips and its own preparation, detection
      methods
                                  
                                  ZL02145535.X
                                  
                                  October 27th
      2004


7


RESEARCH
AND DEVELOPMENT





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





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





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





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





We spent
$24,393 and $12,562 in research and development in the 2009 and 2008 fiscal
years, respectively.





ENVIRONMENTAL
LAW COMPLIANCE





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





EMPLOYEES





As of
December 31, 2009, we had 43 full-time employees, with 38 employees at Chaoying
Biotech and 5 at SD Chaoying. All of the Company’s employees are engaged
full-time.  The Company believes that its relations with its employees
are good.





AVAILABLE
INFORMATION





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





ITEM
1A.   RISK FACTORS





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





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





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


8





OUR
BUSINESS IS HEAVILY DEPENDENT ON THE ECONOMIC GROWTH OF CHINA





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





WE
HAVE LOANED APPROXIMATELY $0.17 MILLION TO NON-AFFILIATED THIRD
PARTIESS





In order
to maximize returns on available cash, the Company has
outstanding unsecured loans totaling approximately $0.17 million,
representing 1.7% of the Company's assets. The loans were placed to earn
interest income. However, in the event of a default, the Company risks
substantial loss of their ability to continue to finance ongoing
operations. Litigation could be costly to enforce the loan obligations and
may deprive us of the use of the cash for a significant period of
time. Included in the balance was $83,871 of interest receivable, which was
net of $83,871 of allowance for doubtful amount.





RELIANCE
ON SINGLE CUSTOMER





We
generated 25.53% of our revenue of tissue array from sales to a single customer.
Should this customer face financial difficulty, refuse to pay our invoices as
they become due or direct their business to a competitor, our business
operations will suffer a material adverse effect.





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





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





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


THE
JURISDICTIONS IN WHICH WE OPERATE.





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





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





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





COMPETITION





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





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





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


9





UNANTICPATED OBSTACLES TO EXECUTION
OF OUR BUSINESS PLAN.





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





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





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





CURRENCY
EXCHANGE





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





RESEARCH
AND DEVELOPMENT CAN BE COSTLY





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





RELIANCE
ON CURRENT MANAGEMENT





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





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





WE
MAY HAVE DIFFICULTY ATTRACTING TALENT IN FOREIGN COUNTRIES.





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





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





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





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


10





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




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





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





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





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




As directed by Section 404 of the
Sarbanes-Oxley Act of 2002 or SOX 404, the SEC adopted rules requiring public
companies to include a report of management on the company’s internal controls
over financial reporting in their annual reports, including Form 10-K.We
have established disclosure controls and procedures effective for the purposes
set forth in the definition thereof in Exchange Act Rule 13a-15(e) as of
December 31, 2009.Commencing by the fiscal year ended December 31, 2010, the independent
registered public accounting firm auditing a company’s financial statements must
also attest to and report on management’s assessment of the effectiveness of the
company’s internal controls over financial reporting as well as the operating
effectiveness of the company’s internal controls.However, there can be no assurance that we will
receive a positive attestation from our independent auditors. In the event we
are unable to receive a positive attestation from our independent auditors with
respect to our internal controls, investors and others may lose confidence in
the reliability of our financial statements.Also projections of any
evaluation of effectiveness to future periods are subject to the risk that
controls may become inadequate because of changes in conditions, or that the
degree or compliance with the policies or procedures may
deteriorate.





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




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




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


11





RISKS
RELATED TO OUR COMMON STOCK





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





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





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





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





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





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





ITEM
1B.    UNRESOLVED STAFF COMMENTS





Not
Applicable.





ITEM
2.    DESCRIPTION OF PROPERTY





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





In
connection with our entertainment facility, as discussed previously, we
purchased 33,333 square meters land, in Changle County, Weifang, Shandong
Province. SD Chaoying 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 a potential liability
from waste disposal in the Casmalia Disposal Site at Santa Barbara County,
California.  We were given a choice of either signing
an agreement that would toll the statute of limitations for eighteen (18)
months in order to allow us to resolve any liability with the government
without incurring costs associated with being named a defendant in a
lawsuit, or becoming an immediate defendant in a lawsuit. We signed the
tolling agreement. On November 20, 2001, the tolling agreement was extended
for an additional 18 months. On May 20, 2003 the tolling agreement was
again extended for an additional 18 months and on November 24, 2004 the
tolling agreement was again extended for additional 18 months. On June 29,
2004, we received a proposed settlement from the EPA in the amount of
$21,131, which had been accrued as other payable. We are waiting for
communication from the government concerning payment of the
final settlement.  As of and subsequent to December 31, 2009, the
Company had not received further correspondences from the EPA regarding this
matter.


12





ITEM
4.    RESERVED




PART
II





ITEM
5.    MARKET FOR COMMON EQUITY AND RELATED STOCKHOLDER
MATTERS





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




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





YEAR
                  PERIOD
                  
                  HIGH
                  
                  
                  LOW2009
                  First
      Quarter
                  
                  
                  0.02
                  
                  
                  
                  0.01Second
      Quarter
                  
                  
                  0.01
                  
                  
                  
                  0.01Third
      Quarter
                  
                  
                  0.04
                  
                  
                  
                  0.01Fourth
      Quarter
                  
                  
                  0.05
                  
                  
                  
                  0.012008
                  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 securities Transfer Corporation, whose address is 2591
Dallas Parkway, Suite 102, Frisco Tx. 75034.  Their telephone number
is 469 633 0101 .





(b)
Stockholders





As
of April 14, 2010, there were approximately 1,333  record holders
of our common stock.  As of April 14, 2010, we have not paid any cash
dividends on shares of our common stock and do not plan to do so. We
currently plan to retain future earnings to fund the development and growth
of our business.





(c)
Dividend Policy.





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





(d)
Securities authorized for issuance under equity compensation plans





None.





ISSUANCE
OF UNREGISTERED SHARES





In March
2010, 12,000,000 shares of common stock of the Company to Mr. Yanbiao Bai, Chief
Executive Officer and President of the Company, and 3,300,000 shares of common
stock of the Company to Ms. Xue Bu, Chief Financial and Operating Officer of the
Company as compensation for services rendered.  Compensation cost of
$306,000 will be recorded during the first quarter of 2010 at $0.02 per share,
the market price of the Company’s common stock on January 15,
2010.  Those shares were issued on March 29, 2010
accordingly.


13


ITEM
6.  SELECTED FINANCIAL INFORMATION





Following
is a summary of our operations and financial condition from 2005 through
2009. You are urged to review the detailed audited financial statements and
accompanying footnotes for a complete understanding of our operations.




2009
                                        
                                        
                                        2008
                                        
                                        
                                        2007Net
      sales
                                        
                                        $
                                        1,473,621
                                        
                                        
                                        $
                                        505,565
                                        
                                        
                                        
                                        670,616Net
      income(loss) fromcontinuing
      operations
                                        
                                        $
                                        (562,352)
                                        
                                        
                                        $
                                        (198,873
                                        )
                                        
                                        
                                        (288,684
                                        )Net
      income(loss) fromdiscontinuing
      operations
                                        
                                        $
                                        —
                                        
                                        
                                        $
                                        —Net
      income(loss)
                                        
                                        $
                                        (596,946)
                                        
                                        
                                        $
                                        (198,873
                                        )
                                        
                                        
                                        (288,684
                                        )Net
      income(loss) percommon
      share
                                        
                                        $
                                        —
                                        
                                        
                                        $
                                        
                                        
                                        
                                        
                                        (0.01
                                        )Total
      assets
                                        
                                        $
                                        10,225,922
                                        
                                        
                                        $
                                        10,306,252
                                        
                                        
                                        
                                        8,299,856Long-term
      debt
                                        
                                        $
                                        —
                                        
                                        
                                        $
                                        —Working
      capital
                                        
                                        $
                                        (2,163,830)
                                        
                                        
                                        $
                                        (2,320,020
                                        )
                                        
                                        
                                        (353,709
                                        )Stockholders'
      equity
                                        
                                        $
                                        3,887,319
                                        
                                        
                                        $
                                        4,495,301
                                        
                                        
                                        
                                        4,269,635





No cash
dividends have been paid during any of the 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.


14


RESULTS
OF OPERATIONS





Revenues





Cybrdi
generates three categories of revenues: sales of tissue chip & kits products
and tissue product related services, and housing.  The total revenues
for the year ended December 31, 2009 was $1,473,621, an increase of
approximately 191.48% from $505,565 for the year ended December 31,
2008.





Tissue
Chip Product: sales decreased from $492,495 to $462,989 a decrease of
approximately 5.99%.  These sales were generated from our China subsidiary,
Chaoying Biotech, The decrease in net sales of tissue chip & kit product was
primarily because a result of decreased sales orders from the Company’s primary
distributor in the U.S.  With regards to domestic sales, we have
established our technology and market share, although, we expect to face
additional competition...





Tissue
Product Related Services: No technical service order was received for the year
of 2009, resulting in no services revenues for the year of 2009 as compared to
$13,070 for the year of 2008.  This decrease was primarily attributable to
reduced service demand in China.





Housing:
During the fourth quarter of 2009, SD Chaoying completed the construction of the
two six-story multi-family residential buildings with contained a total of 72
housing units, 37 of which qualified as being recognized as sales revenue
aggregating $1,010,632 for the year ended December 31, 2009.  Since SD
Chaoying is required to continue its involvement with the property after the
sale, including installations of utility systems, improvements and amenities,
and community landscaping, profit from the sale was recognized using the
percentage of completion method as required by ASC Topic 360-20, “Property,
Plant, and Equipment – Real Estate Sales”.  For the year ended
December 31, 2009, 88% of the profit from the sale was recorded.





Gross
Margin





Gross
margin as a percent of sales was 20.45% and 50.12% for the year ended December
31, 2009 and 2008, respectively.  The decrease was mainly due to a
decrease in gross margin of Chaoying Biotechnology from 50.12% to 35.44%, while
the diluting effect caused by the lower gross margin of SD Chaoying at
20.45%.  Gross profit of ChaoYing Biotechnology for the year ended
December 31, 2009 decreased to $164,049 from $253,397 for the year ended
December 31, 2008, mainly due to decrease in unit sales price of tissue chip
sold to the Company’s US distributor, combined with a higher unit cost allocated
from fixed costs as a result of a lower production volume during the year of
2009 as compared to the year of 2008.  Gross profit of SD Chaoying for
the year ended December 31, 2009 was 137,259,Under
normal circumstances, the rates of margin of real estate development is lower
than other industries,





Operating
Expenses





While our
revenue from tissue arrays decreased in 2009, we also reduced our selling
expenses as a result of decreased advertising and sample gifts for promotional
activities in 2009 as compared to 2008.





In
addition, the Company had an increase in general and administrative expenses of
$239,606 to $812,180 for the year of 2009 compared to $572,574 for the year of
2008.  The increase in general and administrative expenses was
primarily due to Chaoying Biotech assessing Bad Debt Expense of $515,836 on
interest receivable from QuanYe.  Additionally, general and
administrative expenses at SD Chaoying increased by $108,931, mainly including
$58,187 operating taxes in relates to the revenue in 2009, as well the $40,949
entertainment expense which increased from $12,900 for the year of 2008 as the
business grows.





Other
Income





We
generated $2,239 in interest income for the year ended December 31, 2009,
$71,437 less than the $73,676 for the year ended
December  31,2008.  In 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 RMB 29.3 million
(equivalent to $3,754,437) since January 2006. As of DECEMBER 31, 2009, the
unpaid principal amount of the loan was RMB 0.6.millions (equivalent to
$87,886), decreased by RMB 6.2 millions (equivalent to $908,159) from RMB 6.8
millions (equivalent to $996,045) as of December 31, 2008. In addition, due to
the expiration of the loan agreement and the uncertainty of collection, no
interest income was recorded for the loan during the year ended December 31,
2009.





For the
year ended December 31, 2009, other income, net, amounted to $(93,228) as
compared to $113,428 for the year ended December 31, 2008, a decrease of
$206,656 or 182%. Other income, net, for the years ended December 31, 2009 and
2008 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.  The net other expense of $93,228 for
the year ended December 31, 2009 was mainly attributable to an accounting error
of $73,195 on the balance of advance to Tianjin Yanfeng Real Estate Co., Ltd., a
related party to the Company.


15


Income
Taxes





The
Company had not recorded a provision for U.S. federal income tax for year ended
December 31, 2009 and 2008 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, 2009 and 2008. Under the Enterprise Income Tax (“EIT”) of the PRC,
prior to 2007, Chinese enterprises are generally subject to an income tax at an
effective rate of 33% (30% statutory income taxes plus 3% local income taxes) on
income reported in the statutory financial statements after appropriate tax
adjustments, unless the enterprise is located in a specially designated region
for which more favorable effective tax rates are
applicable.  Beginning January 1, 2008, the new EIT law has replaced
the existing laws for Domestic Enterprises (“DEs”) and Foreign Invested
Enterprises (“FIEs”).  The new standard EIT rate of 25% will replace
the 33% rate previously applicable to both DES and FIEs.  The two year
tax exemption, six year 50% tax reduction and tax holiday for
production-oriented FIEs will be eliminated.  The Company is currently
evaluating the effect of the new EIT law on its financial position. According to
Western Developing Plan of the PRC, Chaoying Biotech enjoys a 50% reduction in
preferential policy of EIT, but not less than 15%. As a result, Chaoying
Biotech’s effective EIT tax rate has been 15% since 2008.  Income tax
benefit (expense) for the years ended December 31, 2009 and 2008 was mainly a
result of accrual and intra-period allocation of deferred taxes.  A
100% valuation reserve was recognized since it is more likely than not that all
of the deferred tax assets will not be realized.





Net
Loss





As a
result of the above, we incurred a net loss for 2009 of $596,946 compared to a
net loss for 2008 of $198,873.





LIQUIDITY
AND CAPITAL RESOURCES





We had a
working capital deficit (current assets less current liabilities) of $2,163,830
as of December 31, 2009 as compared to a working capital balance of $2,320,020
as of December 31, 2008. The slight increase was primarily due to an increase of
approximately $1 million in housing inventory from the substantial completion of
the two multi-family residential buildings at SD Chaoying, which waspartially
offset by increase in short-term loans at SD Chaoying for loans obtained from
Changle Rural Credit Union and Mr. Fengguo Liu, an unrelated party.





Cash
provided by operating activities was $118,481 for the year ended
December 31, 2009 as compared to $649,493 for the year ended December 31,
2008. The primary reason for this decrease was primarily qa result of
an increase in net loss from $198,873 for the year ended December 31, 2008 to
$596,946 for the year ended December 31, 2009.





As
compared to 2008, cash flows from investing activities for 2009 increased by
$3,949,543 from $(3,464,460) to $485,083. This increase was primarily due to
decrease of $3,209,229 in payments for construction-in-progress due to the
construction completion of the two multi-family residential buildings and being
transferred to housing inventories, and which were partially offset by $671,427
of increase in repayment proceeds received from loan to Quen Ye.





Financing
activities for the year ended December 31, 2009, includes the net cash provided
by shareholders or officers to assist our company's operations, the proceeds
from short-term borrowings, and the proceeds from loan from related companies.
As compared to the fiscal year 2008, cash flows from financing activities for
2009 decreased by $2,708,158 from $2,587,530 to $(120,628).  The
decrease was mainly due to $731,762 increase in repayments of loan from related
companies, and $842,766 decrease in proceeds from loans from related
companies.  Decrease in cash flows from financing activities was also
resulted from $1,390,698 repayment of the currently maturity of long-term debt
owed to Changle Rural Credit Union.  The long-term debt was originally
due on May 20, 2009.  However, we obtained an extension for 80 days to
August 10, 2009.  We paid off the debt and its associated interest on
August 10, 2009.  We obtained a new short-term loan from the Changle
Rural Credit Union with the principal amount of $1,391,533 (equivalent to
RMB 9.5 million) at December 30, 2009, secured by the Company’s land
use right in SD Chaoying with book value of $2.93 million (equivalent to RMB 20
million).  The term of the debt was from August 25, 2009 to August 24, 2010
(total twelve months).  The  interest rate for this debt is
7.965% per year.





The
accompanying consolidated financial statements have been prepared assuming the
Company will continue as a going concern, which contemplates the realization of
assets and the satisfaction of liabilities in the normal course of
business.  The Company has incurred significant losses and has not
demonstrated the ability to generate sufficient cash flows from operations to
satisfy its liabilities and sustain operations.  The Company had
accumulated deficit of $1,097,141 and $500,195 as of December 31, 2009 and 2008,
including net losses of $596,946 and $198,873 for the years ended December 31,
2009 and 2008, respectively.  In addition, current liabilities
exceeded current assets by $2,163,830 and $2,320,020 at December 31, 2009 and
2008, respectively.  These matters raise substantial doubt about the
Company’s ability to continue as a going concern.


16


The
Company finances its operations primarily through short-term bank borrowings and
advances from related parties or officers/shareholders.  In order to
complete the construction of SD Chaoying cultural and entertainment center,
approximately $3.4 million (equivalent to RMB 23 million) of liquidity is
expected to be needed.  The Company, taking into accounts the
available banking facilities, internal financial resource, and supports from
related companies, believes it has sufficient working capital to meet its
present obligation for at least the next twelve months.  Management is
taking actions to address the company's financial condition and deteriorating
liquidity position.  The following sets forth management’s plans for
dealing with the adverse effects of the conditions:





(a)           Sale
of housing inventories:  Proceeds to be received from the sale of the
remaining housing of the two completed residential buildings are expected to
amount to approximately $1.4 million.


(b)           Additional
bank borrowing:  SD Chaoying is in discussion with a local bank for
approximately  $2.2 million of short-term loan.


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





(d)           Additional
advances from related companies:  Shaanxi Chaoying Beauty &
Cosmetics Group is anticipated to provide up to $730,000 of capital to support
operational use.





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





OFF-BALANCE
SHEET ARRANGEMENTS





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





RECENT
ACCOUNTING PRONOUNCEMENTS





In July
2009, the FASB’s ASC became the single, official source of authoritative,
non-governmental GAAP in the United States. The historical GAAP hierarchy was
eliminated and the ASC became the only level of authoritative GAAP, other than
guidance issued by the Securities and Exchange Commission (the “SEC”). This
guidance is effective for interim and annual periods ending after September 15,
2009. The Company adopted the provisions of this guidance for the year ended
December 31, 2009. The Company’s accounting policies were not affected by the
conversion to the ASC. However, references to specific accounting standards have
been changed to refer to the appropriate section of the ASC.





In
December 2007, the FASB issued guidance now incorporated in ASC Topic 810
“Consolidation” (formerly SFAS No. 160). The guidance clarifies the accounting
for noncontrolling interests and establishes accounting and reporting standards
for the noncontrolling interest in a subsidiary, including classification as a
component of stockholders’ equity. This guidance was effective for the Company’s
fiscal year beginning January 1, 2009. The Company has adopted this guidance in
its consolidated financial statements for the year ended December 31,
2009.





In March
2008, the FASB issued guidance now incorporated in ASC Topic 815 “Derivatives
and Hedging” (formerly SFAS No. 161). The guidance is intended to improve
financial reporting about derivative instruments and hedging activities by
requiring enhanced disclosures to enable investors to better understand how and
why an entity uses derivative instruments and the instruments’ effects on an
entity’s financial position, financial performance and cash flows. The guidance
is effective for financial statements issued for fiscal years and interim
periods beginning after November 15, 2008 with early application encouraged.
This pronouncement is related to disclosure and did not have a material impact
on the Company’s consolidated financial statements.





In
December 2008, the FASB issued guidance now incorporated in ASC Topic 860
“Transfers and Servicing” (formerly FASB Staff Position (“FSP”) SFAS 140-4 and
FASB Interpretation (“FIN”) 46R). The guidance increases disclosure requirements
for public companies and is effective for reporting periods (interim and annual)
that end after December 15, 2008. The guidance requires public entities to
provide additional disclosures about transferors’ continuing involvements with
transferred financial assets. It also requires public enterprises, including
sponsors that have a variable interest in a variable interest entity, to provide
additional disclosures about their involvement with variable interest entities.
This pronouncement is related to disclosure only and did not have a material
impact on the Company’s consolidated financial statements.





In April
2009, the FASB issued guidance now incorporated in ASC Topic 825 “Financial
Instruments” (formerly FSP SFAS 107-1). The guidance requires that the fair
value disclosures required for financial instruments be included in interim
financial statements. In addition, the guidance requires public companies
to disclose the method and significant assumptions used to estimate the fair
value of those financial instruments and to discuss any changes of method or
assumptions, if any, during the reporting period. The guidance was effective for
the Company’s year ended December 31, 2009. This pronouncement is related to
disclosure only and did not have a material impact on the Company’s consolidated
financial statements.


17





In May
2009, the FASB issued guidance now incorporated in ASC Topic 855 “Subsequent
Events” (formerly SFAS No. 165). This guidance establishes general standards of
accounting for and disclosures of events that occur after the balance sheet date
but before the consolidated financial statements are issued or are available
to be issued. Among other items, the guidance requires the disclosure of
the date through which an entity has evaluated subsequent events and the basis
for that date. The Company has adopted this guidance in its consolidated
financial statements for the year ended December 31, 2009. See Note 20 for
disclosure.





In June
2009, the FASB issued guidance now incorporated in ASC Topic 810 “Consolidation”
(formerly SFAS No. 167) amending the consolidation guidance applicable to
variable interest entities and the definition of a variable interest entity, and
requiring enhanced disclosures to provide more information about a company’s
involvement in a variable interest entity. This guidance also requires ongoing
assessments of whether an enterprise is the primary beneficiary of a variable
interest entity. This guidance is effective for the Company’s fiscal year
beginning January 1, 2010. The Company is currently reviewing the impact of the
guidance on its consolidated financial statements.





INFLATION





Inflation
has not had a material impact on our business.





CURRENCY
EXCHANGE FLUCTUATIONS





The net
sales, costs and expenses generated by our activities in China are priced in
Chinese renminbi. Approximately 99.9% of our assets are located in China, the
remaining 0.1% in assets are located in the United States. Since 1994, the
exchange rate for Renminbi against the United States dollar has remained
relatively stable; with an exchange rate approximately RMB8.28 to US$1.00. On
July 21, 2005, China announced a revaluation of RMB and reduced its peg to the
US dollar. China is planning to move to a managed float against a basket of
currencies. The exchange rate has been adjusted to approximately RMB6.827 to
US$1.00 as of DECEMBER 31, 2009. 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 8 appears after the signature page to
this report.





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




On April
29, 2009, the Company’s former independent accountants, MS Group CPA LLC (“MS
Group”) resigned as independent accountants of the Company.  The
change of independent accountants was approved by the Board of Directors of the
Company.





The
former independent accountant’s reports on the Company’s financial statements
for the last two fiscal years did not contain any adverse opinions or disclaimer
opinions, nor were the reports qualified or modified as to uncertainty, audit
scope or accounting principles. Furthermore, the accountant’s reports did not
include any disclosure of uncertainty regarding the Company’s ability to
continue as a going concern.





In the
past two fiscal years ended December 31, 2008 and 2007, and in the subsequent
interim period through April 29, 2009 (the date of the resignation of the former
accountant), there were no disagreements with MS Group on any matter of
accounting principles or practices, financial statement disclosure or auditing
scope and procedure which, if not resolved to the satisfaction of the former
accountant, would have caused it to make reference to the subject matter of the
disagreement in connection with its report.  MS Group did not perform
any services with respect to the Company’s financial statements for any interim
period after December 31, 2008.





The
Company furnished a letter addressed to the Securities and Exchange Commission
stating that MS Group agreed with the above statements.





On April
29, 2009, the Company engaged KCCW Accountancy Corp. (“KCCW”) as Company’s new
independent accountants. During two most recent years ended December 31, 2008
and 2007, and any subsequent interim period through April 29, 2009, the Company
did not consult with KCCW, the newly engaged accountant, regarding any matter
described in Item 304(a)(2)  of Regulation SK, including any issue
related to Company’s financial statements or the type of audit opinion that
might be rendered for the Company.


18




ITEM
9A(T).
            Controls and
      Procedures





Evaluation
of Disclosure Controls and Procedures





Based on
their evaluation as of December 31, 2009, our Chief Executive Officer and Chief
Financial Officer have concluded that our disclosure controls and procedures (as
defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of
1934, as amended) were effective to ensure that the information required to be
disclosed by us in this Annual Report on Form 10-K was recorded, processed,
summarized and reported within the time periods specified in the SEC’s rules and
instructions for Form 10-K.





Management’s
Report on Internal Control over Financial Reporting





Our
management is responsible for establishing and maintaining adequate internal
control over financial reporting (as defined in Rule 13a-15(f) under the
Securities Exchange Act of 1934, as amended). Our management assessed the
effectiveness of our internal control over financial reporting as of December
31, 2009.





Our
internal control over financial reporting is a process designed by or under the
supervision of our principal executive and principal financial officers to
provide reasonable assurance regarding the reliability of financial reporting
and the preparation of financial statements for external purposes in accordance
with generally accepted accounting principles. Our internal control over
financial reporting includes policies and procedures that (1) pertain
to the maintenance of records that, in reasonable detail, accurately and fairly
reflect transactions and dispositions of assets; (2) provide reasonable
assurance that transactions are recorded as necessary to permit preparation of
financial statements in accordance with generally accepted accounting
principles, and that receipts and expenditures are being made only in accordance
with authorizations of management and the directors of the Company; and
(3) provide reasonable assurance regarding prevention or timely detection
of unauthorized acquisition, use, or disposition of the Company’s assets that
could have a material effect on our financial statements.





In making
this assessment, our management used the criteria set forth by the Committee of
Sponsoring Organizations of the Treadway Commission (“COSO”) in ‘Internal
Control – Integrated Framework’. Our management has concluded that, as of
December 31, 2009, our internal control over financial reporting is effective
based on these criteria.





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





There
were no changes in our internal controls over financial reporting during the
year ended December 31, 2009 that have materially affected, or are
reasonably likely to materially affect our internal controls over financial
reporting.





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





ITEM 9B.
              OTHER
      INFORMATION.





(Not
applicable).  There was no information required to be filed on Form
8-k during the fourth quarter of the Company's fiscal year ended DECEMBER 31,
2009 and not reported. .




PART
III





ITEM10.
            DIRECTORS, EXECUTIVE OFFICERS AND
      CORPORATE GOVERNANCE





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


19




DATE
      OFNAME AND PRINCIPAL POSITION
              
              AGE
              
              APPOINTMENTYanBiao
      Bai, Chairman, CEO and
      President
              
              49
              
              2003Xue
      Bu, Director, Treasurer & Chief
              
              46
              
              2005





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





Mr. YanBiao Bai, Chairman,
CEO and President





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





Xue Bu, Director,
Treasurer  & Chief Operating Officer





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





INVOLVEMENT
IN CERTAIN LEGAL PROCEEDINGS





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





l
            Any bankruptcy petition filed by
      or against any business of which such person was a general partner or
      executive officer either at the time of bankruptcy or within two years
      prior to that time; or





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





l
            Being subject to any order,
      judgment, or decree, not subsequently reversed, suspended or vacated, of
      any court of competent jurisdiction, permanently or temporarily enjoining,
      barring, suspending or otherwise limiting his involvement in any type of
      business, securities or banking activities;
  or





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





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


20


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





FAMILY
RELATIONSHIPS





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





SECTION
16(A) BENEFICIAL OWNERSHIP REPORTING REQUIREMENTS





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




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





BOARD
COMMITTEES





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





CODE
OF ETHICS





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




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





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





·
            Compliance with applicable
      governing laws, rules and
regulations;





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





·
            Accountability for adherence to
      this Code.





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.


21





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





SUMMARY
COMPENSATION TABLE





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




SUMMARY COMPENSATION TABLELONG-TERMANNUAL COMPENSATION
                                          
                                          
                                          COMPENSATIONAWARDSRESTRICTED
                                          
                                          
                                          SECURITIESSTOCK
                                          
                                          
                                          UNDERLYING
                                          
                                          
                                          ALL OTHERNAMEANDPRINCIPALPOSITION
                                          
                                          YEAR
                                          
                                          SALARY
                                          
                                          
                                          BONUS
                                          
                                          
                                          AWARD
                                          
                                          
                                          OPTIONS
                                          
                                          
                                          COMPENSATIONYanBiao
      Bai, Chairman, CEO
                                          
                                          2009
                                          
                                          $
                                          100,000
                                          
                                          
                                          $
                                          100,000and
      President
                                          
                                          2008
                                          
                                          $
                                          100,000
                                          
                                          
                                          $
                                          
                                          
                                          
                                          $
                                          -0-
                                          
                                          
                                          $
                                          -0-
                                          
                                          
                                          $
                                          -0-2007
                                          
                                          $
                                          100,000
                                          
                                          
                                          $
                                          -0-
                                          
                                          
                                          $
                                          -0-
                                          
                                          
                                          $
                                          -0-
                                          
                                          
                                          $
                                          -0-2006
                                          
                                          $
                                          -0-
                                          
                                          
                                          $
                                          -0-
                                          
                                          
                                          $
                                          -0-
                                          
                                          
                                          $
                                          -0-
                                          
                                          
                                          $
                                          -0-Xue
      Bu, Director, Treasurer
                                          
                                          2009
                                          
                                          $
                                          11,531
                                          
                                          
                                          $
                                          42,859&
      Chief Operating Officer
                                          
                                          2008
                                          
                                          $
                                          11,409
                                          
                                          
                                          $
                                          -0-
                                          
                                          
                                          $
                                          -0-
                                          
                                          
                                          $
                                          -0-
                                          
                                          
                                          $
                                          -0-2007
                                          
                                          $
                                          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.





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 April 14, 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 April 14, 2009, there were issued and outstanding
65,756,567 shares of Common Stock. There are no outstanding options or
warrants.


22





NAME
      OF OFFICER
                                        
                                        
                                        
                                        
                                        
                                        
                                        PERCENTAGE
      OFOR DIRECTOR
                                        
                                        TITLE
                                        
                                        TITLE OF CLASS
                                        
                                        NO. OF SHARES
                                        
                                        
                                        OWNERSHIPYanBiao
      Bai
                                        
                                        Chairman/CEO/Pres
                                        
                                        Common
                                        
                                        
                                        21,125,397
                                        (1)
                                        
                                        
                                        32.13
                                        %Lei
      Liu
                                        
                                        Former
      Director
                                        
                                        Common
                                        
                                        
                                        6,234,766
                                        (2)
                                        
                                        
                                        12.36
                                        %Xue
      Bu
                                        
                                        COO/Treasurer/Dir
                                        
                                        Common
                                        
                                        
                                        3,300,000
                                        
                                        
                                        
                                        5.02
                                        %All
      officersand
      directorsas
      a group(3
      people)
                                        
                                        
                                        
                                        Common
                                        
                                        
                                        30,691,163
                                        
                                        
                                        
                                        46,67
                                        %





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





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





ITEM 13
            CERTAIN RELATIONSHIPS AND RELATED
      TRANSACTIONS, AND DIRECTOR
INDEPENDENCE




Certain Relationships and
Related Transactions




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





1. Lease
with Chaoying Cosmetics: We lease office space from Chaoying Cosmetics for a
monthly rent of $5,855 (equivalent to RMB 40,000). This lease has recently been
renewed and will expire on December 31, 2012.





2. Loan
from Chaoying Cosmetics in the amount of $447,352 (equivalent to RMB 3.05
million). This loan is non-interest bearing, unsecured, and has no repayment
terms.





3. Loan
from Yanfeng Biotech in the amount of $336,898 (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 $366,193 (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 $73,239 (equivalent to RMB 0.5 million).
This loan is non-interest bearing, unsecured, and has no repayment
terms.





6. Loan
to Shaanxi NuoQi in the amount of $146,477 (equivalent to RMB 1.0 million). This
loan is non-interest bearing, unsecured, and has no repayment
terms.





As of
December 31, 2009, advances from our officers and shareholders amounted to
$635,670, which are non-interest bearing, unsecured, and due on
demand.





7. On
December 15, 2009, the Board of Directors adopted resolutions that authorized
bonuses in the amounts of $14,639 and $6,274 to Mr. Yanbiao Bai, Chief Executive
Officer, and Ms. Xue Bu, Chief Financial and Operating Officer, respectively, to
compensate their performance and contributions to the Company in the year
2009.





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





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.


23





ITEM
14.            PRINCIPAL
ACCOUNTANT FEES AND SERVICES





The
following is a summary of the fees billed to us by KCCW Accountancy Corp, the
Company’s current auditors; and MS Group CPA LLC, the Company’s former auditors
(for the fiscal year ended December 31, 2008):





Services
                  
                  2009
                  
                  
                  2008Audit
      Fees
                  
                  $
                  40000
                  
                  
                  $
                  65000Audit
      Related FeesTax
      Fees
                  
                  
                  12500All
      Other Fees
                  
                  
                  -
                  
                  
                  
                  -TOTAL
                  
                  $
                  52500
                  
                  
                  $
                  65,000




Audit
fees consist of the aggregate fees billed for services rendered for the audit of
our annual financial statements, the reviews of the financial statements
included in our Forms 10-Q and for any other services that are normally provided
by our independent auditors in connection with our statutory and regulatory
filings or engagements.




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




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




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





It is the
policy of the Company that all services other than audit, review or attest
services must be pre-approved by the Board of Directors.  No such
services have been performed by Company’s auditors.




PART
IV





ITEM
15             EXHIBITS
AND FINANCIAL STATEMENT SCHEDULES





(a)
    Exhibits




3.1
              
              Articles of Incorporation of
      Registrant, as amended (incorporated by reference to Exhibit 3.1 to
      Registrant's Annual
      Report of from 10-K
      for the year ended October 31, 1981and Exhibit "A" and Exhibit "B" to
      Registrant's Proxy Statement dated February 17,
      1988).3.2
              
              By-Laws of Registrant, as amended
      (incorporated by reference to Exhibit 3.2 to Registrant's
      Quarterly Report on
      form 10-Q for the
      quarter ended April 30, 1989).*3.3
              
              Amended Articles of Incorporation
      as amended increasing the number of authorized shares filed as an exhibit
      to Form 8-k filed
      February 15, 2005.*3.4
              
              Articles
      of Merger filed with the Maryland Secretary of State filed as an exhibit
      to Form 8-k filed February 15, 2005.*3.5
              
              Amendment to Articles of
      Incorporation changing name to Cybrdi, Inc. filed as an exhibit to Form
      8-k filed April 6, 2005.*10.1
              
              Registrant's Executive Stock
      Option Plan (incorporated by reference to Exhibit "B" to Registrant's
      Proxy Statement dated February 21,
      1989).*10.2
              
              Amendment to Registrant's 1989
      Stock Option Plan (incorporated by reference to Exhibit 10.5 to
      Registrant's
      Annual Report on
      Form 10-K for the year ended October 31,
  1995).


24





*10.3
                
                Amendment to Registrant's
      Executive Stock Option Plan (incorporated by reference to Exhibit 10.1 to
      Registrant's Quarterly Report on Form 10Q for
      the quarter ended April 30,
    2001).*10.4
                
                Form of Indemnification Agreement
      between Registrant and its Directors and selected officers and agents
      (incorporated by reference to Exhibit "C" to
      Registrant's Proxy Statement dated February 17,
    1988).*10.5
                
                Employment Agreement effective as of
      November 1, 1993 between Registrant and Marshall I. Kass (incorporated
      by reference to
      Exhibit 10.1 to Registrant's Quarterly Report on Form 10-Q for quarter
      ended January 31, 1994).*10.6
                
                Amendment to EmploymentAgreement between
      Registrant and Marshall I. Kass dated November 1, 1998
      (incorporated by
      reference to Exhibit 10.8 to Registrant's Annual Report on Form 10-K for
      the year ended October 31, 1998).*10.7
                
                Agreement and Plan of Merger
      among CertronCorporation, Certron Acquisition Corp. and Cybrdi, Inc. filed as an
      exhibit to
      Cybrdi’s Report on Form 8-k filed
      February 15, 2005.*10.8
                
                Sales Agency Agreement between
      Shaanxi Chao Ying Biotech Co., Ltd. and Biomax Co., Ltd. (incorporated byreference
      to Exhibit 10.1 to
      Registrant's Quarterly Report on Form 10-QSB for the quarter ended
      September 30, 2007)*10.9
                
                Equity Transfer Agreement dated
      July 26, 2007 by and between Shaanxi Chaoying Personal Care Group Co.,
      Inc. and ShaanxiChaoying
      Biotechnology Co., Ltd (incorporated by reference to Exhibit 10.1 to
      Registrant's Quarterly Report on Form 10-QSB for the quarter ended
      September 30, 2007)31.1
                
                Rule
      13(a)-14(a)/15(d)-14(a) Certification31.2
                
                Rule
      13(a)-14(a)/15(d)-14(a) Certification32.1
                
                Certification
      Under Section 906 of the Sarbanes-Oxley Act of 200232.2
                
                Certification
      Under Section 906 of the Sarbanes-Oxley Act of
  2002





*   Previously
filed


25


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, 2010
                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/ Yanbiao Bai
                  April
      14, 2010Xue
      Bu, Director, Treasurer & COO
                  
                  /s/
      Xue Bu
                  April
      14, 2010


26





CYBRDI,
INC. AND SUBSIDIARIES





CONSOLIDATED
FINANCIAL STATEMENTS





DECEMBER 31, 2009 AND
2008








CYBRDI,
INC. AND SUBSIDIARY


CONTENTS





PAGEF-2
                
                REPORT
      OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM – KCCW ACCOUNTANCY
      CORPF-3
                
                REPORT
      OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM – MS GROUP CPA
      LLCF-4
                
                CONSOLIDATED
      BALANCE SHEETS AS OF DECEMBER 31, 2009 AND 2008F-5
                
                CONSOLIDATED
      STATEMENTS OF OPERATIONS FOR THE YEARS ENDED DECEMBER 31, 2009 AND
      2008F-6
                
                CONSOLIDATED
      STATEMENTS OF CHANGES IN EQUITY FOR THE YEARS ENDED DECEMBER 31, 2009 AND
      2008F-7
                
                CONSOLIDATED
      STATEMENTS OF CASH FLOWS FOR THE YEARS ENDED DECEMBER 31, 2009 AND
      2008F-8
                
                NOTES
      TO CONSOLIDATED FINANCIAL
STATEMENTS


F-1




REPORT
OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
 
 To the
Board of Directors and Stockholders of:
 Cybrdi,
Inc.
 
 We have
audited the accompanying consolidated balance sheet of Cybrdi, Inc. (the
“Company”) as of December 31, 2009, and the related consolidated statements of
operations, changes in equity, and cash flows for the year then
ended.  These consolidated financial statements are the responsibility
of the Company's management.  Our responsibility is to express an
opinion on these consolidated financial statements based on our
audits.  The consolidated financial statements of the Company for the
year ended December 31, 2008 were audited by other auditor whose report, dated
April 10, 2009, expressed an unqualified opinion on those
statements.
 
 We
conducted our audit in accordance with standards of the Public Company
Accounting Oversight Board (United States).  Those standards require
that we plan and perform the audits to obtain reasonable assurance about whether
the consolidated financial statements are free of material
misstatement.  The Company is not required to have, nor were we
engaged to perform, an audit of its internal control over financial
reporting.  Our audits included consideration of internal control over
financial reporting as a basis for designing audit procedures that are
appropriate in the circumstances, but not for the purpose of expressing an
opinion on the effectiveness of the Company’s internal control over financial
reporting.  Accordingly, we express no such opinion.  An
audit includes examining, on a test basis, evidence supporting the amounts and
disclosures in the consolidated financial statements.  An audit also
includes assessing the accounting principles used and significant estimates made
by management, as well as evaluating the overall consolidated financial
statement presentation.  We believe that our audits provide a
reasonable basis for our opinion.
 
 In our
opinion, the consolidated financial statements referred to above present fairly,
in all material respects, the financial position of Cybrdi, Inc. as of December
31, 2009 and the consolidated results of their operations and their cash flows
for the year then ended in conformity with accounting principles generally
accepted in the United States of America.
 
 The
accompanying consolidated financial statements have been prepared assuming that
the Company will continue as a going concern.  As described in Note 3
of the consolidated financial statements, the Company has incurred recurring
losses, accumulated deficit, and working capital deficit at December 31, 2009
and 2008.  These matters raise substantial doubt about the Company’s
ability to continue as a going concern.  Management’s plans in regard
to these matters are also described in Note 3 to the consolidated financial
statements.  The consolidated financial statements do not include any
adjustments that might result from the outcome of this uncertainty.
 
 /s/ KCCW
Accountancy Corp.
 
 Diamond
Bar, California
 March 21,
2010
  KCCW Accountancy
Corp.
  Tel: +1
909 348 7228 • Fax: +1 626 529 1580 • info@kccwcpa.com
  F-2
 
  PCA
(10/09)1
   MS Group CPA LLC
 6 Center
Street Edison New Jersey 08817 USA
 TEL:
732-885-1555 E-MAIL:
admin@mscpausa.com
   REPORT OF
INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
   To the
Board of Directors and Stockholders of
 Cybrdi,
Inc. and Subsidiaries
  We have
audited, before the effects of the reclassifications described in Note 4 (c),
the consolidated balance sheet of Cybrdi, Inc. and Subsidiaries as of December
31, 2008, and the related consolidated statements of operations, changes in
equity, and cash flows for the year then ended. The 2008 consolidated financial
statements before the effects of the reclassifications discussed in Note 4 (c)
are not presented herein. The 2008 consolidated financial statements are the
responsibility of the company's management. Our responsibility is to express an
opinion on these consolidated financial statements based on our
audit.
  We
conducted our audit 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. An audit
includes examining, on a test basis, evidence supporting the amounts and
disclosures in the consolidated financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audit provides a reasonable basis for our
opinion.
  In our
opinion, the 2008 consolidated financial statements, before the effects of the
reclassifications described in Note 4 (c), present fairly, in all material
respects, the consolidated financial position of Cybrdi, Inc and Subsidiaries as
of December 31, 2008, and the results of their operations and their cash flows
for the year then ended in conformity with generally accepted accounting
principles in the United States of America.
  We were
not engaged to audit, review, or apply any procedures to the reclassifications
described in Note 4 (c ) and, accordingly, we do not express an opinion or any
other form of assurance about whether such adjustments are appropriate and have
been properly applied. Those reclassifications were audited by KCCW Accountancy
Corp.
   
 
 MS Group
CPA LLC
 
 Edison,
New Jersey
 
 April;
15, 2010
  Date of
Original Report: April 10, 2009
  APPENDIX
9D-1
  F-3


CYBRDI, INC. AND SUBSIDIARIESCONSOLIDATED BALANCE SHEETSAs of December 31,2009
                          
                          
                          2008ASSETSCURRENT
      ASSETSCash
      and equivalents
                          
                          $
                          861,457
                          
                          
                          $
                          381,357Accounts
      receivable
                          
                          
                          14,646
                          
                          
                          
                          15,674Inventories
                          
                          
                          1,334,463
                          
                          
                          
                          393,354Deferred
      tax assets
                          
                          
                          -
                          
                          
                          
                          5,550Due
      from related companies
                          
                          
                          219,716
                          
                          
                          
                          146,574Loan
      to unaffiliated company
                          
                          
                          171,758
                          
                          
                          
                          996,702Other
      receivables and prepaid expenses
                          
                          
                          161,891
                          
                          
                          
                          189,706TOTAL
      CURRENT ASSETS
                          
                          
                          2,763,931
                          
                          
                          
                          2,589,578PROPERTY,
      PLANT AND EQUIPMENT, NET
                          
                          
                          371,116
                          
                          
                          
                          483,345CONSTRUCTION
      IN PROGRESS
                          
                          
                          6,739,726
                          
                          
                          
                          3,919,343INTANGIBLE
      ASSETS, NET
                          
                          
                          312,519
                          
                          
                          
                          3,862,433OTHER
      ASSETS
                          
                          
                          38,630
                          
                          
                          
                          38,657DEFERRED
      TAX ASSETS
                          
                          
                          -
                          
                          
                          
                          20,131TOTAL
      ASSETS
                          
                          $
                          10,225,922
                          
                          
                          $
                          10,913,487LIABILITIES AND EQUITYCURRENT
      LIABILITIESShort-term
      loan
                          
                          $
                          1,538,011
                          
                          
                          $
                          -Accounts
      payable
                          
                          
                          49,938
                          
                          
                          
                          4,928Accrued
      expenses
                          
                          
                          1,265,695
                          
                          
                          
                          904,743Deferred
      revenue
                          
                          
                          28,871
                          
                          
                          
                          -Current
      maturity of long term debt
                          
                          
                          -
                          
                          
                          
                          1,392,451Customers
      deposits
                          
                          
                          116,731
                          
                          
                          
                          50,525Due
      to related parties
                          
                          
                          1,786,113
                          
                          
                          
                          2,054,646Deferred
      tax liabilities
                          
                          
                          9,490
                          
                          
                          
                          -Other
      payables
                          
                          
                          132,912
                          
                          
                          
                          41,644TOTAL
      LIABILITIES
                          
                          
                          4,927,761
                          
                          
                          
                          4,909,598EQUITYPreferred
      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
                          
                          
                          3,571,864
                          
                          
                          
                          3,571,864Reserve
      funds
                          
                          
                          336,885
                          
                          
                          
                          336,885Accumulated
      deficit
                          
                          
                          (1,097,141
                          )
                          
                          
                          (500,195
                          )Accumulated
      other comprehensive income
                          
                          
                          1,075,711
                          
                          
                          
                          1,086,747TOTAL
      STOCKHOLDERS’ EQUITY
                          
                          
                          3,887,319
                          
                          
                          
                          4,495,301NONCONTROLLING
      INTEREST
                          
                          
                          1,410,842
                          
                          
                          
                          1,508,588TOTAL
      EQUITY
                          
                          
                          5,298,161
                          
                          
                          
                          6,003,889TOTAL
      LIABILITIES AND EQUITY
                          
                          $
                          10,225,922
                          
                          
                          
                          10,913,487





See notes
to consolidated financial statements.


F-4





CYBRDI, INC. AND SUBSIDIARIESCONSOLIDATED STATEMENTS OF OPERATIONSFor the Years Ended December 31,2009
                              
                              
                              2008RevenueHousing
                              
                              $
                              1,010,632
                              
                              
                              $
                              -Tissue
      array products
                              
                              
                              462,989
                              
                              
                              
                              492,495Service
      rendered
                              
                              
                              -
                              
                              
                              
                              13,070Total
      revenue
                              
                              
                              1,473,621
                              
                              
                              
                              505,565Cost
      of SalesHousing
                              
                              
                              873,337
                              
                              
                              
                              -Products
                              
                              
                              298,920
                              
                              
                              
                              252,168Service
      rendered
                              
                              
                              -
                              
                              
                              
                              -Total
      cost of sales
                              
                              
                              1,172,257
                              
                              
                              
                              252,168Gross
      Profit
                              
                              
                              301,364
                              
                              
                              
                              253,397Operating
      Expenses:Selling
      and distribution expenses
                              
                              
                              27,143
                              
                              
                              
                              67,542General
      and administrative expenses
                              
                              
                              812,180
                              
                              
                              
                              572,574Research
      and development expenses
                              
                              
                              24,393
                              
                              
                              
                              12,562Total
      Operating Expenses
                              
                              
                              863,716
                              
                              
                              
                              652,678Loss
      from Operations
                              
                              
                              (562,352
                              )
                              
                              
                              (399,281
                              )Other
      Income/(Expense)Interest
      income
                              
                              
                              2,239
                              
                              
                              
                              73,676Other
      (expense) income, net
                              
                              
                              (93,228
                              )
                              
                              
                              113,428Loss
      on disposal of fix assets
                              
                              
                              (6,207
                              )
                              
                              
                              (2,450
                              )Total
      Other (Expense) Income, Net
                              
                              
                              (97,196
                              )
                              
                              
                              184,654Loss
      before Income Taxes
                              
                              
                              (659,548
                              )
                              
                              
                              (214,627
                              )Income
      Tax Benefit (Expense)
                              
                              
                              (35,144
                              )
                              
                              
                              25,218Net
      loss
                              
                              
                              (694,692
                              )
                              
                              
                              (189,409
                              )Net
      (loss) income attributable to the noncontrolling interest
                              
                              
                              (97,746
                              )
                              
                              
                              9,464Net
      loss attributable to CYBRDI, INC. AND SUBSIDIARIES
                              
                              $
                              (596,946
                              )
                              
                              $
                              (198,873
                              )Net
      Loss Per Common ShareBasic
      and Diluted
                              
                              $
                              (0.01
                              )
                              
                              $
                              (0.00
                              )Weighted
      Average Number of Shares OutstandingBasic
      and Diluted
                              
                              
                              50,456,567
                              
                              
                              
                              50,456,567





See notes
to consolidated financial statements.


F-5


CYBRDI,
INC. AND SUBSIDIARIES


CONSOLIDATED
STATEMENTS OF CHANGES IN EQUITY





Common StockholdersAccumulatedOther
                  
                  
                  Total CommonCommon Stock
                  
                  
                  Reserve
                  
                  
                  Accumulated
                  
                  
                  Comprehensive
                  
                  
                  Stockholders'
                  
                  
                  Noncontrolling
                  
                  
                  TotalShares
                  
                  
                  Amount
                  
                  
                  Fund
                  
                  
                  Deficit
                  
                  
                  Income
                  
                  
                  Equity
                  
                  
                  Interest
                  
                  
                  EquityBalance
      as of December 31, 2007
                  
                  
                  50,456,567
                  
                  
                  $
                  3,571,864
                  
                  
                  $
                  336,885
                  
                  
                  $
                  (301,321
                  )
                  
                  $
                  662,209
                  
                  
                  $
                  4,269,636
                  
                  
                  $
                  1,499,124
                  
                  
                  $
                  5,768,760Net
      loss
                  
                  
                  -
                  
                  
                  
                  -
                  
                  
                  
                  -
                  
                  
                  
                  (198,873
                  )
                  
                  
                  -
                  
                  
                  
                  (198,873
                  )
                  
                  
                  9,464
                  
                  
                  
                  (189,409
                  )Net
      changes in foreign currency translation adjustment
                  
                  
                  -
                  
                  
                  
                  -
                  
                  
                  
                  -
                  
                  
                  
                  -
                  
                  
                  
                  424,538
                  
                  
                  
                  424,538
                  
                  
                  
                  -
                  
                  
                  
                  424,538Balance
      as of December 31, 2008
                  
                  
                  50,456,567
                  
                  
                  
                  3,571,864
                  
                  
                  
                  336,885
                  
                  
                  
                  (500,195
                  )
                  
                  
                  1,086,747
                  
                  
                  
                  4,495,301
                  
                  
                  
                  1,508,588
                  
                  
                  
                  6,003,889Net
      loss
                  
                  
                  -
                  
                  
                  
                  -
                  
                  
                  
                  -
                  
                  
                  
                  (596,946
                  )
                  
                  
                  -
                  
                  
                  
                  (596,946
                  )
                  
                  
                  (97,746
                  )
                  
                  
                  (694,692
                  )Net
      changes in foreign currency translation adjustment
                  
                  
                  -
                  
                  
                  
                  -
                  
                  
                  
                  -
                  
                  
                  
                  -
                  
                  
                  
                  (11,036
                  )
                  
                  
                  (11,036
                  )
                  
                  
                  -
                  
                  
                  
                  (11,036
                  )Balance
      as of December 31, 2009
                  
                  
                  50,456,567
                  
                  
                  $
                  3,571,864
                  
                  
                  $
                  336,885
                  
                  
                  $
                  (1,097,141
                  )
                  
                  $
                  1,075,711
                  
                  
                  $
                  3,887,319
                  
                  
                  $
                  1,410,842
                  
                  
                  $
                  5,298,161




F-6





CYBRDI
INC. AND SUBSIDIARIES


CONSOLIDATED
STATEMENTS OF CASH FLOWS (UNAUDITED)


For the Years Ended December 31,2009
                                  
                                  
                                  2008CASH
      FLOWS FROM OPERATING ACTIVITIESNet
      Loss
                                  
                                  $
                                  (596,946
                                  )
                                  
                                  $
                                  (198,873
                                  )Adjustments
      to Reconcile Net Loss to Net CashProvided
      by Operating Activities:Depreciation
      and amortization
                                  
                                  
                                  170,501
                                  
                                  
                                  
                                  174,088Minority
      interest
                                  
                                  
                                  (97,746
                                  )
                                  
                                  
                                  (25,218
                                  )Bad
      debt expense
                                  
                                  
                                  83,821
                                  
                                  
                                  
                                  -Loss
      on disposal of fixed assets
                                  
                                  
                                  6,207
                                  
                                  
                                  
                                  2,450Deferred
      taxes
                                  
                                  
                                  35,144
                                  
                                  
                                  
                                  9,463Changes
      in Operating Assets and Liabilities:Accounts
      receivable
                                  
                                  
                                  1,017
                                  
                                  
                                  
                                  (11,296
                                  )Inventories
                                  
                                  
                                  (19,980
                                  )
                                  
                                  
                                  22,525Other
      receivable and prepaid expenses
                                  
                                  
                                  27,673
                                  
                                  
                                  
                                  (31,623
                                  )Accounts
      payable and accrued expenses
                                  
                                  
                                  406,318
                                  
                                  
                                  
                                  741,920Deferred
      revenue
                                  
                                  
                                  28,854
                                  
                                  
                                  
                                  -Other
      payables
                                  
                                  
                                  91,241
                                  
                                  
                                  
                                  (6,877
                                  )Customer
      deposits
                                  
                                  
                                  66,200
                                  
                                  
                                  
                                  (27,066
                                  )Net
      Cash Provided by Operating Activities
                                  
                                  
                                  202,302
                                  
                                  
                                  
                                  649,493CASH
      FLOWS FROM INVESTING ACTIVITIESRepayment
      proceeds from loan to unaffiliated companies
                                  
                                  
                                  739,971
                                  
                                  
                                  
                                  68,544Payments
      for construction in progress
                                  
                                  
                                  (243,060
                                  )
                                  
                                  
                                  (3,452,289
                                  )Advance
      to affiliated companies
                                  
                                  
                                  (76,989
                                  )
                                  
                                  
                                  -Purchase
      of property, plant, and equipment
                                  
                                  
                                  (28,702
                                  )
                                  
                                  
                                  (80,715
                                  )Proceeds
      from disposal of fixed assets
                                  
                                  
                                  10,042
                                  
                                  
                                  
                                  -Net
      Cash Provided by (Used in) Investing Activities
                                  
                                  
                                  401,262
                                  
                                  
                                  
                                  (3,464,460
                                  )CASH
      FLOWS FROM FINANCING ACTIVITIESProceeds
      from short-term loan
                                  
                                  
                                  1,537,088
                                  
                                  
                                  
                                  -(Repayments
      of) Proceeds from long-term debt
                                  
                                  
                                  (1,390,698
                                  )
                                  
                                  
                                  1,392,451Proceeds
      from loans from related companies
                                  
                                  
                                  447,084
                                  
                                  
                                  
                                  1,289,850Repayments
      of loan from related companies
                                  
                                  
                                  (878,336
                                  )
                                  
                                  
                                  (146,574
                                  )Proceeds
      from shareholders/officers
                                  
                                  
                                  164,233
                                  
                                  
                                  
                                  101,167Repayment
      to shareholders/officers
                                  
                                  
                                  -
                                  
                                  
                                  
                                  (49,364
                                  )Net
      Cash (Used in) Provided by Financing Activities
                                  
                                  
                                  (120,628
                                  )
                                  
                                  
                                  2,587,530NET
      INCREASE (DECREASE) IN CASH & CASH EQUIVALENTS
                                  
                                  
                                  482,936
                                  
                                  
                                  
                                  (227,437
                                  )EFFECT
      OF EXCHANGE RATE CHANGE ON CASH & CASH EQUIVALENTS
                                  
                                  
                                  (2,836
                                  )
                                  
                                  
                                  (28,262
                                  )CASH
      & CASH EQUIVALENTS, BEGINNING BALANCE
                                  
                                  
                                  381,357
                                  
                                  
                                  
                                  637,056CASH
      & CASH EQUIVALENTS, ENDING BALANCE
                                  
                                  $
                                  861,457
                                  
                                  
                                  $
                                  381,357SUPPLEMENTAL
      DISCLOSURES OF CASH FLOW INFORMATIONInterest
      paid
                                  
                                  $
                                  143,675
                                  
                                  
                                  $
                                  121,321Income
      taxes paid
                                  
                                  $
                                  -
                                  
                                  
                                  $
                                  -NONCASH
      INVESTING TRANSACTIONSConstruction-in-progress
      incurred by accrued construction payable
                                  
                                  $
                                  449,025
                                  
                                  
                                  $
                                  1,595,403





See notes
to consolidated financial statements.


F-7


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-8





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





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





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





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.


F-9





3.           GOING
CONCERN


The
accompanying consolidated financial statements have been prepared assuming the
Company will continue as a going concern, which contemplates the realization of
assets and the satisfaction of liabilities in the normal course of
business.  The Company has incurred significant losses and has not
demonstrated the ability to generate sufficient cash flows from operations to
satisfy its liabilities and sustain operations.  The Company had an
accumulated deficit of $1,097,141 and $500,195 as of December 31, 2009 and 2008
respectively, including net losses of $596,946 and $198,873 for the years ended
December 31, 2009 and 2008, respectively.  In addition, current
liabilities exceeded current assets by $2,163,830 and $2,320,020 at December 31,
2009 and 2008, respectively.  These matters raise substantial doubt
about the Company’s ability to continue as a going concern.





The
Company finances its operations primarily through short-term bank borrowings
and/or advances from related parties or officers/shareholders.  In
order to complete the construction of SD Chaoying cultural and entertainment
center, approximately $3.4 million (equivalent to RMB 23 million) of liquidity
is expected to be needed.  The Company, taking into accounts the
available banking facilities, internal financial resource, and supports from
related companies, believes it has sufficient working capital to meet its
present obligation for at least the next twelve months.  Management is
taking actions to address the company's financial condition and deteriorating
liquidity position.  The following sets forth management’s plans for
dealing with the adverse effects of the conditions:





(a)
            Sale
      of housing inventories:  Proceeds to be received from the sale
      of the remaining housing of the two completed residential buildings are
      expected to amount to approximately $1.4
  million.


(b)
            Additional
      bank borrowing:  SD Chaoying is in discussion with a local bank
      for approximately $2.2 million of short-term
  loan.


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


(d)
            Additional
      advances from related companies:  Shaanxi Chaoying Beauty &
      Cosmetics Group are anticipated to provide up to $730,000 of capital to
      support operational use.





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


F-10





4.           SUMMARY
OF SIGNIFICANT ACCOUNTING POLICIES





(a)
              Principle of
      consolidation


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





(b)
              Use of
      estimates


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





(c)
              Reclassifications


Certain
amounts reflected in the consolidated financial statements for the year ended
December 31, 2008 have been reclassified to conform to the presentation for the
year ended December 31, 2009.





(d)
              Cash and cash
      equivalents


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





(e)
              Inventories


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





(f)
            Property, plant and
      equipment


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


F-11





Buildings
              
              20
      yearsPlant
      and machinery
              
              10
      yearsMotor
      vehicles
              
              10
      yearsOffice
      equipment
              
              5
      yearsLeasehold
      improvements
              
              Lower
      of term of lease or 5 yearsSoftware
      - website
              
              3
      years





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





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





(g)
            Accounts and other
      receivables


Accounts
and other receivables are recognized and carried at original invoice amount less
allowance for any uncollectible amounts.  An estimate for doubtful
accounts is made when collection of the full amount is no longer
probable.  As of December 31, 2009 and 2008, the Company had not
recorded an allowance for uncollectible accounts.





(h)
              Research and development
      costs


Research
and development costs are charged to operations when incurred and are included
in operating expenses.  The amounts charged in 2009 and 2008 were
$24,393 and $12,562, respectively.





(i)
              Advertising
      costs


Advertising
costs are charged to operations when incurred and are included in operating
expenses. Advertising expenses were $10,675 and $10,756 for the years ended
December 31, 2009 and 2008, respectively.





(j)
              Fair value of financial
      instruments


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


F-12





(k)
              Revenue
      recognition


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





(l)
              Foreign currency
      translation


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





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





(m)
              Income
    Taxes


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





(n)
              Comprehensive income
      (loss)


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


F-13





(o)
              Intangible
      assets


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





(p)
              Government
      grants


Government
grants and awards given to the Company’s PRC subsidiary after successful
completion of product development projects, or development the encouraged real
estate project are recognized as income upon receipts of the awards. The
government grants were $8,421 and $129,253 for the years ended December 31, 2009
and 2008, respectively.





(q)
              Recent Accounting
      Pronouncements


In July
2009, the FASB’s ASC became the single, official source of authoritative,
non-governmental GAAP in the United States. The historical GAAP hierarchy was
eliminated and the ASC became the only level of authoritative GAAP, other than
guidance issued by the Securities and Exchange Commission (the “SEC”). This
guidance is effective for interim and annual periods ending after September 15,
2009. The Company adopted the provisions of this guidance for the year ended
December 31, 2009. The Company’s accounting policies were not affected by the
conversion to the ASC. However, references to specific accounting standards have
been changed to refer to the appropriate section of the ASC.





In
December 2007, the FASB issued guidance now incorporated in ASC Topic 810
“Consolidation” (formerly SFAS No. 160). The guidance clarifies the accounting
for noncontrolling interests and establishes accounting and reporting standards
for the noncontrolling interest in a subsidiary, including classification as a
component of stockholders’ equity. This guidance was effective for the Company’s
fiscal year beginning January 1, 2009. The Company has adopted this guidance in
its consolidated financial statements for the year ended December 31,
2009.





In March
2008, the FASB issued guidance now incorporated in ASC Topic 815 “Derivatives
and Hedging” (formerly SFAS No. 161). The guidance is intended to improve
financial reporting about derivative instruments and hedging activities by
requiring enhanced disclosures to enable investors to better understand how and
why an entity uses derivative instruments and the instruments’ effects on an
entity’s financial position, financial performance and cash flows. The guidance
is effective for financial statements issued for fiscal years and interim
periods beginning after November 15, 2008 with early application encouraged.
This pronouncement is related to disclosure and did not have a material impact
on the Company’s consolidated financial statements.


F-14





In
December 2008, the FASB issued guidance now incorporated in ASC Topic 860
“Transfers and Servicing” (formerly FASB Staff Position (“FSP”) SFAS 140-4 and
FASB Interpretation (“FIN”) 46R). The guidance increases disclosure requirements
for public companies and is effective for reporting periods (interim and annual)
that end after December 15, 2008. The guidance requires public entities to
provide additional disclosures about transferors’ continuing involvements with
transferred financial assets. It also requires public enterprises, including
sponsors that have a variable interest in a variable interest entity, to provide
additional disclosures about their involvement with variable interest entities.
This pronouncement is related to disclosure only and did not have a material
impact on the Company’s consolidated financial statements.





In April
2009, the FASB issued guidance now incorporated in ASC Topic 825 “Financial
Instruments” (formerly FSP SFAS 107-1). The guidance requires that the fair
value disclosures required for financial instruments be included in interim
financial statements. In addition, the guidance requires public companies to
disclose the method and significant assumptions used to estimate the fair value
of those financial instruments and to discuss any changes of method or
assumptions, if any, during the reporting period. The guidance was effective for
the Company’s year ended December 31, 2009. This pronouncement is related to
disclosure only and did not have a material impact on the Company’s consolidated
financial statements.





In May
2009, the FASB issued guidance now incorporated in ASC Topic 855 “Subsequent
Events” (formerly SFAS No. 165). This guidance establishes general standards of
accounting for and disclosures of events that occur after the balance sheet date
but before the consolidated financial statements are issued or are available to
be issued. Among other items, the guidance requires the disclosure of the date
through which an entity has evaluated subsequent events and the basis for that
date. The Company has adopted this guidance in its consolidated financial
statements for the year ended December 31, 2009. See Note 20 for
disclosure.





In June
2009, the FASB issued guidance now incorporated in ASC Topic 810 “Consolidation”
(formerly SFAS No. 167) amending the consolidation guidance applicable to
variable interest entities and the definition of a variable interest entity, and
requiring enhanced disclosures to provide more information about a company’s
involvement in a variable interest entity. This guidance also requires ongoing
assessments of whether an enterprise is the primary beneficiary of a variable
interest entity. This guidance is effective for the Company’s fiscal year
beginning January 1, 2010. The Company is currently reviewing the impact of the
guidance on its consolidated financial statements.


F-15





5.           INVENTORIES


Inventories
consisted of the following:





As of December 31,2009
                    
                    
                    2008Raw
      materials
                    
                    $
                    24,206
                    
                    
                    $
                    37,271Work
      in process
                    
                    
                    -
                    
                    
                    
                    759Finished
      goods
                    
                    
                    303,015
                    
                    
                    
                    355,324Housing
      inventory
                    
                    
                    1,007,242
                    
                    
                    
                    -Total
                    
                    $
                    1,334,463
                    
                    
                    $
                    393,354





6.           LOAN
TO UNAFFILIATED COMPANY





Loans to
an unaffiliated company consists of loans to QuanYe Security Co., Ltd
(“QuanYe”), an unrelated People’s Republic of China (“PRC”) registered company
located in Xian PRC. QuanYe is engaged in the pawnshop business and their
primary business is offering alternative financing to small, local companies.
According to the loan agreement, QuanYe had received loans from Chaoying Biotech
for a total amount of RMB29.3Million (equivalent to $3,754,437) since January
2006. As of December 31, 2009, the principal balance and interest receivable for
this loan had been reduced to RMB0.6 Million (equivalent to $87,886) and
RMB572,591 (equivalent to $83,871), respectively, net of allowance of $83,871
for doubtful interest receivable.  As of December 31, 2008, the
principal balance and interest receivable for this loan amounted to RMB6.8
Million (equivalent to $996,702) and RMB1,145,181 (equivalent to $167,854),
respectively.





The
Company’s management believes and views QuanYe as suitable 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 that associated with a bank deposit.





7.           PROPERTY,
PLANT AND EQUIPMENT





Property,
plant and equipment consisted of the following:





As of December 31,2009
                    
                    
                    2008Buildings
                    
                    $
                    14,648
                    
                    
                    $
                    14,658Machinery
      and equipments
                    
                    
                    523,751
                    
                    
                    
                    502,222Motor
      vehicles
                    
                    
                    327,705
                    
                    
                    
                    383,627Office
      equipments
                    
                    
                    87,106
                    
                    
                    
                    92,455Leasehold
      improvement
                    
                    
                    250,198
                    
                    
                    
                    267,946Subtotal
                    
                    
                    1,203,408
                    
                    
                    
                    1,366,088Less:
      Accumulated depreciation
                    
                    
                    (832,292
                    )
                    
                    
                    (882,743
                    )Net
      value
                    
                    $
                    371,116
                    
                    
                    $
                    483,345


F-16





Depreciation
expense for the years ended December 31, 2009 and 2008 were $76,811 and $81,970,
respectively.





8.            CONSTRUCTION
IN PROGRESS





Construction
in progress of $6,739,726 and $3,919,343 as of December 31, 2009 and 2008
respectively mainly consisted of land under development and construction of the
entertainment, culture, and casino facility in Shandong Province, which will be
transferred to fixed assets in SD Chaoying when construction is
completed.





9.           INTANGIBLE
ASSETS, NET





Intangible
assets consisted of the following:





As of December 31,2009
                    
                    
                    2008Patent
                    
                    $
                    937,454
                    
                    
                    $
                    938,073Software
                    
                    
                    105,112
                    
                    
                    
                    105,181Land
      use right
                    
                    
                    
                    
                    
                    
                    3,455,900Subtotal
                    
                    
                    1,042,566
                    
                    
                    
                    4,499,154Less:
      Accumulated amortization
                    
                    
                    (730,047
                    )
                    
                    
                    (636,721
                    )Net
      value
                    
                    $
                    312,519
                    
                    
                    $
                    3,862,433


Amortization
expenses for the years ended December 31, 2009 and 2008 were $93,689
and  $92,118, respectively.





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





For the Years Ended December 31,
                  
                  Amount2010
                  
                  $
                  93,6892011
                  
                  
                  93,6892012
                  
                  
                  93,6892013
                  
                  
                  31,4522014
                  
                  
                  -Total
                  
                  $
                  312,519


F-17





10.           CUSTOMER
DEPOSITS





In the
fourth quarter of 2007, the management of the company determined to pre-sell
partial of SD Chaoying’s residential properties.  Accordingly, the
customer deposits consisted of the following:,




As of December 31,2009
                  
                  
                  2008Residential
      properties down payments
                  
                  $
                  116,731
                  
                  
                  $
                  46,904Tissue
      array sales
                  
                  
                  -
                  
                  
                  
                  3,621Total
                  
                  $
                  116,731
                  
                  
                  $
                  50,525





11.           SHORT
–TERM  LOAN





The
Company has short-term loan of $1,391,534 (equivalent to RMB9.5million) from
Changle Rural Credit Union, which is a bank located in Shandong Province of the
PRC. This short-term loan had been.pledged by the Company’s land use right in SD
Chaoying which is worth approximately $2.9 million (equivalent to RMB20
million).  The term of the debt was from August 25, 2009 to August 24,
2010 (total twelve months). The  interest rate for this debt is 7.965% per
annum.  Additionally, there is another short-term loan of $146,477
(equivalent to RMB 1.0 million) from Fengguo Liu, an unrelated party
as of December 31, 2009.  The term of the loan was from November 20,
2009 to May 20, 2009 with an interest rate of 14.4% per year.





12.           RELATED
PARTY TRANSACTIONS





Due from related
parties


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




As of December 31,2009
                  
                  
                  2008Loan
      to Shaanxi NuoQi Health Food Co., Ltd. (“Shaanxi NuoQi”)
                  
                  $
                  146,477
                  
                  
                  $
                  -Loan
      to Tianjing Yanfeng Real Estate Co., Ltd. (“Tianjing
    Yanfeng”)
                  
                  
                  73,239
                  
                  
                  
                  146,574$
                  219,716
                  
                  
                  $
                  146,574





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


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


F-18





Due to related
parties


Due to
related parties consisted of the following:




As of December 31,2009
                
                
                2008Loan
      from Shaanxi Chaoying Beauty & Cosmetics Group Co.,
    Ltd.
                
                $
                447,352
                
                
                $
                879,443Loan
      from Shaanxi Yanfeng Real Estate Co., Ltd.
                
                
                366,193
                
                
                
                366,434Loan
      from Xi'an Yanfeng Biotechnology Co., Ltd.
                
                
                336,898
                
                
                
                337,120Advance
      from officers and shareholders
                
                
                635,670
                
                
                
                471,649Total
      loan from related companies, net
                
                $
                1,786,113
                
                
                $
                2,054,646





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





Lease
agreement


The
Company’s subsidiary in PRC leased an office space under an operating lease
agreement from Shaanxi Chaoying Beauty & Cosmetics Group Co., Ltd. for a
lease term originally expired on December 31, 2009, and had been extended to
December 31, 2012. There is no renewal option on the lease. The rent payment
under this operating lease was $5,855 (equivalent to RMB
40,000) per month. The future minimum rental payment for this lease as of
December 31, 2009 was $70,267 (equivalent to RMB480,000).





Total
rental expense charged to operations amounted to $70,267 and $69,089 for the
years ended December 31, 2009 and 2008, respectively.





13.           COMMITMENTS,
CONTINGENCIES, AND LEGAL PROCEEDINGS





There are
no material pending legal proceedings to which the Company is a party. The
Company was notified by a letter dated June 2, 2000 received June 6, 2000 stated
that the Company may have a potential liability from waste disposal in the
Casmalia Disposal Site at Santa Barbara County, California. The Company was
given a choice of either signing an agreement that would toll the statute of
limitations for eighteen (18) months in order to allow us to resolve any
liability with the government without incurring costs associated with being
named a defendant in a lawsuit, or becoming an immediate defendant in a lawsuit.
We signed the tolling agreement. On November 20, 2001, the tolling agreement was
extended for an additional 18 months. On May 20, 2003 the tolling agreement was
again extended for an additional 18 months and on November 24, 2004 the tolling
agreement was again extended for additional 18 months. On June 29, 2004, the
Company received a proposed settlement from the EPA in the amount of $21,131,
which had been accrued as other payable. The Company is waiting for
communication from the government concerning payment of the final
settlement.  As of and subsequent to December 31, 2009, the Company
had not receive further correspondences from the EPA regarding this
matter.


F-19





14.           STOCKHOLDERS’
EQUITY





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





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





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





15.           RESERVE
FUNDS





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


F-20





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





In the
years ended December 31 2009 and 2008, 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, 2009 and 2008. The reserve
funds balance consisted of the following:





As of December 31,2009
                  
                  
                  2008Statutory
      Surplus Reserve
                  
                  $
                  224,590
                  
                  
                  $
                  224,590Statutory
      Common Welfare Fund Reserve
                  
                  
                  112,295
                  
                  
                  
                  112,295Total
                  
                  $
                  336,885
                  
                  
                  $
                  336,885





16.           GOVERNMENT
GRANT





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





In 2008,
Chaoying Biotech 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 2009 and 2008. 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..


F-21





(b)
            Corporation Income Tax (“CIT”)
      ofthe Company’s subsidiary in
      PRC





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





In the
years ended December 31, 2009 and 2008, 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, 2009 and 2008.





The
(provision) / recovery for income taxes from continuing operations on income
consisted of the following for the years ended December 31, 2009 and
2008:





2009
                  
                  
                  2008Current
                  
                  $
                  (43,546
                  )
                  
                  $
                  -Deferred
                  
                  
                  8,402
                  
                  
                  
                  25,218Total
      income tax (expense) benefit
                  
                  $
                  (35,144
                  )
                  
                  $
                  25,218





The
following is a reconciliation of the statutory tax rate to the effective tax
rate for the years ended December 31, 2009 and 2008:





2009
                    
                    
                    2008U.S.
      statutory corporate income tax rate
                    
                    
                    34
                    %
                    
                    
                    34
                    %PRC
      tax rate difference
                    
                    
                    (9
                    )%
                    
                    
                    (9
                    )%Net
      effect of tax exmption/non-taxable income/non-deductible
      expenses
                    
                    
                    (16
                    )%
                    
                    
                    (37
                    )%Valuation
      allowance
                    
                    
                    (4
                    )%
                    
                    
                    -Effective
      tax rate
                    
                    
                    5
                    %
                    
                    
                    (12
                    )%





The tax
effect of temporary differences that give rise to the Company’s deferred tax
assets and liabilities as of December 31, 2009 and 2008 were as
follows:


F-22





As of December 31,2009
                                                                                                            
                                                                                                            
                                                                                                            2008Deferred
      income taxes assets :Fix
      asset depreciation
                                                                                                            
                                                                                                            $
                                                                                                            17,077
                                                                                                            
                                                                                                            
                                                                                                            $
                                                                                                            15,591Loss
      carryforward
                                                                                                            
                                                                                                            
                                                                                                            8,236
                                                                                                            
                                                                                                            
                                                                                                            
                                                                                                            8,236Inventory
      recognition
                                                                                                            
                                                                                                            
                                                                                                            -
                                                                                                            
                                                                                                            
                                                                                                            
                                                                                                            3,066Deferred
      educaton fee
                                                                                                            
                                                                                                            
                                                                                                            -
                                                                                                            
                                                                                                            
                                                                                                            
                                                                                                            446Less:
      Valuation allowance
                                                                                                            
                                                                                                            
                                                                                                            (25,313
                                                                                                            )
                                                                                                            
                                                                                                            
                                                                                                            -Total
      Deferred income taxes assets
                                                                                                            
                                                                                                            $
                                                                                                            -
                                                                                                            
                                                                                                            
                                                                                                            $
                                                                                                            27,339Deferred
      income taxes liabilitiesExpenses
      not deductible for income taxes
                                                                                                            
                                                                                                            $
                                                                                                            (9,490
                                                                                                            )
                                                                                                            
                                                                                                            $
                                                                                                            -Fix
      assets depreciation
                                                                                                            
                                                                                                            
                                                                                                            -
                                                                                                            
                                                                                                            
                                                                                                            
                                                                                                            (1,046
                                                                                                            )Deferred
      education fee
                                                                                                            
                                                                                                            
                                                                                                            -
                                                                                                            
                                                                                                            
                                                                                                            
                                                                                                            (612
                                                                                                            )Total
      deferred income taxes liabilities
                                                                                                            
                                                                                                            
                                                                                                            (9,490
                                                                                                            )
                                                                                                            
                                                                                                            
                                                                                                            (1,658
                                                                                                            )Net
      deferred income taxes assets
                                                                                                            
                                                                                                            $
                                                                                                            (9,490
                                                                                                            )
                                                                                                            
                                                                                                            $
                                                                                                            25,681Reported
      as:Current
      deferred income tax assets
                                                                                                            
                                                                                                            $
                                                                                                            -
                                                                                                            
                                                                                                            
                                                                                                            $
                                                                                                            5,550Current
      deferred income tax liabilities
                                                                                                            
                                                                                                            
                                                                                                            (9,490
                                                                                                            )
                                                                                                            
                                                                                                            
                                                                                                            -Long-term
      deferred income tax assets
                                                                                                            
                                                                                                            
                                                                                                            -
                                                                                                            
                                                                                                            
                                                                                                            
                                                                                                            20,131Net
      deferred income tax assets
                                                                                                            
                                                                                                            $
                                                                                                            (9,490
                                                                                                            )
                                                                                                            
                                                                                                            $
                                                                                                            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.





Major
Customers:


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





Years Ended
                  
                  Number of
                  
                  
                  PercentageDecember 31,
                  
                  Customers
                  
                  
                  of Total2009
                  
                  
                  1
                  
                  
                  
                  25.53
                  %2008
                  
                  
                  1
                  
                  
                  
                  69.76
                  %





Major
Suppliers:


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


F-23





Number of
                  
                  
                  PercentageYears Ended
                  
                  Suppliers
                  
                  
                  of Total2009
                  
                  
                  6
                  
                  
                  
                  100.00
                  %2008
                  
                  
                  4
                  
                  
                  
                  91.54
                  %





Geographical
Risks





Approximately
95.57% of the Company’s assets and 100% of the Company’s operations were in the
PRC for the year ended December 31, 2009. 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





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





Years Ended December 31,2009
                  
                  
                  2008Revenues:Chaoying
      Biotech
                  
                  $
                  462,989
                  
                  
                  $
                  505,565SD
      Chaoying
                  
                  
                  1,010,632
                  
                  
                  
                  -Others
                  
                  
                  -
                  
                  
                  
                  -Total
      Revenues
                  
                  $
                  1,473,621
                  
                  
                  $
                  505,565





Years Ended December 31,2009
                  
                  
                  2008Segment
      (Loss) / Income:Chaoying
      Biotech
                  
                  $
                  (360,045
                  )
                  
                  $
                  (33,399
                  )SD
      Chaoying
                  
                  
                  (61,305
                  )
                  
                  
                  30,025Others
                  
                  
                  (238,198
                  )
                  
                  
                  (211,253
                  )Loss
      before Income Taxes
                  
                  $
                  (659,548
                  )
                  
                  $
                  (214,627
                  )




F-24





Years Ended December 31,2009
                  
                  
                  2008Total
      Assets:Chaoying
      Biotech
                  
                  $
                  1,836,951
                  
                  
                  $
                  3,477,617SD
      Chaoying
                  
                  
                  8,386,621
                  
                  
                  
                  7,421,284Others
                  
                  
                  2,350
                  
                  
                  
                  14,586Total
      assets
                  
                  $
                  10,225,922
                  
                  
                  $
                  10,913,487





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





Years Ended December 31,2009
                    
                    
                    2008China
                    
                    $
                    1,097,381
                    
                    
                    $
                    152,903United
      States
                    
                    
                    376,240
                    
                    
                    
                    352,662Total
      revenue
                    
                    $
                    1,473,621
                    
                    
                    $
                    505,565





All
revenues are from external customers.  One major customer from the
United States accounted for 25.53% and 69.76% of our total revenues for the
years ended December 31, 2009 and 2008.  All long-lived assets are
located in China.





20.           SUBSEQUENT
EVENTS





In
accordance with ASC Topic 855, the Company has evaluated subsequent events and
transactions up to and including March 2, 2010 and where necessary, has made the
appropriate disclosure.




F-25