UNITED
STATES


SECURITIES
AND EXCHANGE COMMISSION


WASHINGTON,
D.C. 20549





FORM
10-K


(Mark
One)





[X]
            ANNUAL
      REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF
      1934





For the
fiscal year ended December 31, 2008





[  ]
            TRANSITION
      REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF
      1934





For the
transition period from_________ to __________





Commission
file number: 001-16381








ARRAYIT
CORPORATION


(Exact
name of small business issuer as specified in its charter)











NEVADA
            76-0600966(State
      or other jurisdiction of
            (IRS
      Employerincorporation
      or organization)
            Identification
      No.)





524 East Weddell Drive,
Sunnyvale, CA 94089


(Address
of principal executive offices)





408-744-1331


(Registrant's
telephone number)





Securities
registered under Section 12(b) of the Exchange Act:





NONE





Securities
registered under Section 12(g) of the Exchange Act:





Common
Stock, $0.001 par value per share


(Title of
Class)





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 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  [ 
]





Check if
there is no disclosure of delinquent filers in response to Item 405 of
Regulation S-B not contained in this form, and no disclosure will be contained,
to the best of the registrant's knowledge, in definitive proxy or information
statements incorporated by reference in Part III of this Form 10-K or any
amendment to this Form 10-K. [   ]





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





Large
accelerated
filer                                           [
]                                           Accelerated
filer                                                      [
]





1





Non-accelerated
filer                                           [
]                                           Smaller
reporting
company                                                      [X]


(Do not
check if a smaller  reporting company)





Indicate
by check mark whether the registrant is a shell company (as defined in Rule
12b-2 of the Exchange Act). Yes [   ] No [X].





The
issuer's revenues for the most recent fiscal year ended December 31, 2008 were
$4,063,149.





The
aggregate market value of the voting and non-voting common equity held by
non-affiliates computed by reference to the closing value of the Registrant's
common stock on March 20, 2009, was approximately $1,224,948.34





As of
March 20, 2009, the issuer had 17,499,262 shares of common stock, $0.001 par
value per share outstanding.




Documents
Incorporated by Reference: NONE





Transitional
Small Business Disclosure Format: Yes [   ] No [X]







2





ARRAYIT
CORPORATION


FORM
10-K


YEAR
ENDED DECEMBER 31, 2008


INDEX





Part
I





Item
      1. BusinessItem
      1A. Risk FactorsItem
      2. PropertiesItem
      3. Legal ProceedingsItem
      4. Submission of Matters to a Vote of Security Holders





Part
II





Item
      5. Market for Registrant’s Common Equity, Related Stockholder Matters and
      Issuer Purchases of Equity SecuritiesItem
      6. Selected Financial DataItem
      7. Management's Discussion and Analysis or Plan of
    OperationItem
      8. Financial Statements and Supplementary Data
            F-1Item
      9. Changes in and Disagreements with Accountants on Accounting and
      Financial DisclosureItem
      9A. Controls and ProceduresItem
      9B. Other Information





Part
III





Item
      10. Directors, Executive Officers and Corporate GovernanceItem
      11. Executive CompensationItem
      12. Security Ownership of Certain Beneficial Owners and Management and
      Related Stockholder MattersItem
      13. Certain Relationships and Related TransactionsItem
      14. Principal Accountant Fees and Services




Part
IV





Item
      15. Exhibits, Financial Statement Schedules





3










PART
I





ITEM 1.
BUSINESS





SPECIAL
NOTE REGARDING FORWARD-LOOKING STATEMENTS





CERTAIN
STATEMENTS IN THIS ANNUAL REPORT ON FORM 10-K (THIS "FORM 10-K"), INCLUDING
STATEMENTS UNDER "ITEM 1. BUSINESS," AND "ITEM 7. MANAGEMENT'S DISCUSSION AND
ANALYSIS", CONSTITUTE "FORWARD LOOKING STATEMENTS" WITHIN THE MEANING OF SECTION
27A OF THE SECURITIES ACT OF 1934, AS AMENDED, AND THE PRIVATE SECURITIES
LITIGATION REFORM ACT OF 1995 (COLLECTIVELY, THE "REFORM ACT"). CERTAIN, BUT NOT
NECESSARILY ALL, OF SUCH FORWARD-LOOKING STATEMENTS CAN BE IDENTIFIED BY THE USE
OF FORWARD-LOOKING TERMINOLOGY SUCH AS "BELIEVES", "EXPECTS", "MAY", "SHOULD",
OR "ANTICIPATES", OR THE NEGATIVE THEREOF OR OTHER VARIATIONS THEREON OR
COMPARABLE TERMINOLOGY, OR BY DISCUSSIONS OF STRATEGY THAT INVOLVE RISKS AND
UNCERTAINTIES. SUCH FORWARD-LOOKING STATEMENTS INVOLVE KNOWN AND UNKNOWN RISKS,
UNCERTAINTIES AND OTHER FACTORS WHICH MAY CAUSE THE ACTUAL RESULTS, PERFORMANCE
OR ACHIEVEMENTS OF ARRAYIT CORPORATION (THE "COMPANY", “TeleChem”, “Arrayit”,
"WE", "US" OR "OUR") TO BE MATERIALLY DIFFERENT FROM ANY FUTURE RESULTS,
PERFORMANCE OR ACHIEVEMENTS EXPRESSED OR IMPLIED BY SUCH FORWARD-LOOKING
STATEMENTS. REFERENCES IN THIS FORM 10-K, UNLESS ANOTHER DATE IS STATED, ARE TO
DECEMBER 31, 2008.





Corporate
History:





Integrated
Media Holdings, Inc.(IMHI) is a Delaware corporation, on February 5, 2008,
entered into a Plan and Agreement of Merger (the “Merger”) by and among ,
TeleChem International, Inc. (“TeleChem”), the majority shareholders of TeleChem
(“Shareholders”), Endavo Media and Communications, Inc., a Delaware corporation
(“Endavo”) and TCI Acquisition Corp., a Nevada corporation, and wholly owned
subsidiary of IMHI (“Merger Sub”).  IMHI, TeleChem, Endavo, Merger Sub
and Shareholders are referred to collectively herein as the
“Parties”.




Effective
February 21, 2008, IMHI completed the Plan and Agreement of Merger by and among
us, TeleChem International, Inc., the majority shareholders of TeleChem, Endavo
Media and Communications, Inc., a Delaware corporation and TCI Acquisition
Corp., a Nevada corporation, and wholly owned subsidiary of
IMHI.  Consummation of the merger did not require a vote of our
shareholders.  IMHI issued 103,143 shares of Series C Convertible
Preferred Stock to the Shareholders of TeleChem in exchange for 100% of the
equity interests of TeleChem resulting in TeleChem being a wholly owned
subsidiary .  The former shareholders of TeleChem now own
approximately 73.5% of the outstanding interest and voting rights of
IMHI.  The Preferred Stock is convertible into 36,100,000 shares of
common stock after, but not before, the effective date of the reverse split of
the outstanding Integrated Media common stock.  Finally, in connection
with the merger, we changed the address of our principal executive offices to
524 East Weddell Drive, Sunnyvale, CA 94089.  Simultaneously with the
merger we transferred our wholly-owned subsidiary, Endavo to an
individual.  As a result, the transaction will be accounted for as a
reverse merger, where Telechem is the accounting acquirer resulting in a
recapitalization of our equity.





Effective
Thursday, March 19, 2009, the final steps of the business combination with
Integrated Media Holdings, Inc. were completed and the Company’s common stock
began trading on the OTC Bulletin Boards as “ARYC”. In addition, the Company
changed its name to “Arrayit Corporation”, was reincorporated to Nevada from
Delaware, and reverse-split its common stock and Series A Convertible Preferred
stock in the ratio of one for thirty shares.





The
reincorporation will be effected by the merger of IMHI, with and into
its  wholly owned subsidiary, Arrayit.  Arrayit will be the
surviving entity.




On the
Effective Time, each of IMHI’s common stockholders will be entitled to receive
one fully paid and non-assessable share of common stock or preferred stock of
Arrayit for each share of our common stock or preferred stock, respectively,
outstanding as of the Effective Time and (ii) IMHI will cease its corporate
existence in the State of Delaware.  We anticipate that the shares of
the Company will cease trading on the first trading date following the Effective
Time and shares of Arrayit will begin trading in their place but under a new
CUSIP number and trading symbol.














4




General Business
Description, Operating History and Change in Control


THE
COMPANY





Arrayit
began as a division of TeleChem International in 1996 with the advent of Dr.
Mark Schena’s use of microarrays as genetic research tools. Arrayit was able to
generate a large customer base in a relatively short time frame by capitalizing
on increased Internet access and Arrayit’s online business
model.  Genetic research was advancing at a dramatic pace in the 1990s
as more advanced tools became commercially
available.   Microarray technology, including printing, detection
and scanning instrumentation, was a timely addition to the geneticist’s
repertoire of advanced tools, including automated sequencing, PCR, and expanded
computing capability.   The sequencing of the genomes of various
simple organisms and later, sequencing of the more complex genomes of humans,
have led to yet another revolution in genetic discovery: gene function and
variations with regard to disease states and
diagnostics.   Microarray tools, having undergone FDA-validation
in the 2000s, remain an important component of the new genomic industry upon
which Arrayit will capitalize.





Arrayit
Products and Services





In the
late 1990’s, Arrayit focused on developing microarray slides, kits and reagents
using an open platform strategy in order to establish a market
niche.  In
other words, Arrayit decided to make products that integrate with components
from other vendors, enabling research laboratories to utilize microarray
products from multiple vendors, in contrast to the closed platform format of the
earliest competitors.  Research customers especially enjoy the
flexibility and continue to buy Arrayit’s products.Arrayit’s
patented printing technology has become an industry standard for microarray
manufacturing.   Arrayit’s revenues from the printing patent and
its own family of printing instrumentation illustrate the Company’s success at
meeting the unmet needs of the microarray industry.   Arrayit now
sells both small-scale microarray robots (SpotBot®) and high throughput versions
(NanoPrint). The SpotBot® and NanoPrint product lines have been further advanced
to accommodate more stringent requirements in manufacturing protein
microarrays.   As the industry grows, Arrayit is expanding its
product line to include integrated platforms and pre-printed microarray slides
with specific content.





Arrayit
is now expanding its Microarray Services capabilities as well, in connection
with increased demand for microarrays of all kinds, and a trend toward
outsourcing high end technical manufacturing. With the investment proposed in
this plan, Arrayit will create a variety of microarray based diagnostic tests
using Arrayit’s
patented Healthcare technology, the Variation Identification Platform (VIP),technology.  As microarrays move into
clinical diagnostics and genetic screening applications, the Company also
expects to earn license and royalty fees in these areas.





Arrayit
has been a microarray technology market driver for more than a decade. A full
microarray product list with descriptions, scientificpublications,
protocols and pricing is available at http://Arrayit.com.





THE
MICROARRAY INDUSTRY





The
microarray industry is comprised of four areas:  basic research into
the function of genes in plants and animals, research on the human genome,
development of diagnostics for personalized medicine, and diagnostic screening
tools for drug development programs that identify toxicity patterns in patient
populations.





The basic
research segment constitutes a significant portion of the industry that has
grown dramatically since first introduced in the mid-nineties by Arrayit’s Dr.
Mark Schena.  Arrayit currently sells the majority of its products to
this segment of the industry.   The human genetic research
segment constitutes the fastest growing segment, making up the current balance
of Arrayit’s sales. However, the impact of diagnostics in personalized medicine
is expected to be far greater than the above, because of its impact on the very
costly healthcare industry.   Better patient outcome and lower
healthcare cost to medical providers will provide opportunities in a vast number
of disease states as the industry grows.   Diagnostic tests will
become a part of every individual patient’s care plan across the costly spectrum
of disease states, including cardiovascular, oncology, neurology, and other
genetic diseases that affect large numbers of the population.





Competition
within the Microarray Research and Development Industry





Arrayit
competes with large and small, public and private companies. The industry has
been historically dominated by Affymetrix which achieved strong market
penetration by being the first public company to commercialize and promote
microarray applications.  A more recent entry to the market, Illumina, has
taken significant market share from Affymetrix.  However, both competitors
face mid to long term scientific and technological challenges because they are
limited by what they can deposit onto a microarray--DNA.  Arrayit’s
patented printing technology can deposit any kind of molecule into a microarray,
including DNA, proteins, antibodies,





5





diagnostic
elements and other compounds.  These next generation microarrays
represent the largest growth opportunity in the industry.  Arrayit has
a long-term advantage in its unique line of personal and high throughput
microarray printers, highest sensitivity microarray scanners, top quality
consumables, patented diagnostic methods, collaborative corporate culture, and
competitive pricing.





The
following companies compete with Arrayit in the research and development portion
of the microarray market:





All price
per share and market cap values calculated as of March 5, 2009.





Agilent
Technologies, Inc., Santa Clara, California (A)


Price per
share                                $12.54                      Market
Cap                      $4.33B


Agilent
provides bio-analytical and electronic solutions to the communications,
electronics, life sciences and chemical analysis industries.  The
microarray division is a small portion of their total
business.  Agilent’s process places spots in a microarray by means of
an ink jet technology and is limited to DNA microarrays.





Affymetrix,
Inc., Santa Clara, California (AFFX)


Price per
share                                $1.93                      Market
Cap                      $135.49M


Affymetrix
provides consumables and systems for genetic analysis in life
sciences.  Their process creates a microarray by means of photo
lithography and is limited to DNA microarrays.





Illumina,
Inc., San Diego, California (ILMN)


Price per
share                                $32.00                      Market
Cap                      $3.87B


Illumina
provides a line of products and services to serve the sequencing, genotyping and
gene expression markets.  Their process places chemically reacted
beads into a microarray format, and is limited to DNA microarrays.




Health
Care Industry Segment




A 13 year
combined effort of scientists around the world and the expenditure of over $2.7
billion led to the completion of the mapping of the entire human genome in
2003.  This project identified all 25,000 genes that are common to all
humans.  This was the beginning of the study of these genes and the
variations in the genes that produce unique human characteristics and how some
of these variations lead to or identify disease.


Because
each gene has the potential for numerous variations, the possible combinations
number in the billions.  As daunting as the task was to map the human
genome, the identification of all the variations of these genes and the
implications to human health was even more overwhelming.  Dr. Mark
Schena, the company president, has worked to develop the tools and methods to
take on this task using microarray technology.  Now laboratories and
research facilities around the globe use microarrays daily to isolate genetic
variations that identify specific characteristics.  With the isolation
of these variations, a whole new world of opportunities has been
opened.





With the
tools and reagents that were developed to create microarrays and analyze the
results as a foundation, very specific diagnostic opportunities are
emerging.  The pioneering diagnostic slides are processed for one
patient at a time, and it is becoming obvious that it will be universally
beneficial to test millions of people for a specific disease and determine if
they have the disease undetected, or will develop that disease, or in order to
identify what disease is associated with symptoms.  However, testing
millions of patient samples, one at a time, would overwhelm the testing
facilities and be cost prohibitive.





To solve
this problem, Dr. Schena developed and patented a method to place up to 100,000
individual patient samples on a single microscope slide and have that slide
immersed in a solution that contains the known markers for a specific disease,
such as childhood hearing loss, Parkinson’s Disease, Alzheimer’s Disease,
etc.  Should any one of those 100,000 patient samples contain the
marker for the disease being tested it would produce a red spot, if no disease,
a green spot.  This procedure also identifies carriers as yellow
spots. Because of the sophistication of this patent, one lab could test hundreds
of thousands of patient samples a day after receiving a sample of DNA from each
patient.  It is the only method available to the industry that can
accomplish this.  Dr. Schena’s procedure is protected by the following
patents:





USPatent
6,913,879


Australia
2002218740


Europe
1343911


Korea
10-0756015


New
Zealand 523560


Singapore
94899


Taiwan
I280282


Other
worldwide patents pending.





THE
ARRAYIT OPPORTUNITY FOR DIAGNOSTICS





With the
completion of the human genome sequencing project, genetic research is
increasing its focus on identifying the variations of the specific genes in the
genome.  These variations are what define individual characteristics,
including disease states or a statistical propensity for disease.  The
implications are far-reaching and impact not only the research community, but
also the individual patients and the medical
providers.   Diagnostic tests that detect diseases very early in
their progression will provide options for earlier treatments that may improve
the patient’s quality of life and prognosis by delaying or preventing disease
progression or even death.  Medical providers will incur major cost
savings by avoiding costly late stage disease treatments.








6




Product
and Services Categories





The
Foundational Tools





While the
upcoming diagnostic opportunities will be the pay back for years of research and
development, they are only possible because of the development of the microarray
equipment and consumables by Arrayit.





Patented Printing TechnologyArrayit
      manufactures the world’s most widely used microarray printing technology
      consisting of Professional, 946, Stealth and ChipMaker® pins and
      printheads. Arrayit’s patented printing technology allows the high-speed
      manufacture of DNA, protein, antibody, lipid, carbohydrate and many other
      types of microarrays for research and diagnostic applications including
      gene expression, genotyping, protein profiling and many
    more.InstrumentationInstrumentation
      including NanoPrintTM and SpotBot® provide for automated microarray
      printing.  NanoPrintTM allows high-end manufacturing, whereas
      SpotBot systems are the only personal microarrayers in the industry that
      enable affordable desktop use.
              
              Other
      instruments include TrayMix Hybridization Stations, InnoScan laser
      scanners, SpotLightTM CCD fluorescence scanners, and SpotWare colorimetric
      scanners.  High speed centrifuges, air jets, vacuum products,
      laboratory tools and bioinformatics computers complete the instrumentation
      line which are all designed to facilitate the quality and speed of
      microarray research.ConsumablesArrayit
      provides the microarray industry with variety of consumables, including
      substrates, reagents, solutions, kits and clean room
supplies.
              
              Arrayit
      Super Microarray Substrates have been adopted by major Life Science
      companies and are used industry wide.  They are polished
      atomically flat glass printing surfaces with proprietary coupling
      chemistry.
              
              Arrayit
      buffers and solutions are optimized to increase the quality of microarray
      manufacturing, processing, and use.
              Purification
      kitsprovide
      both a high yield and superior purity. Applications include: DNA
      microarrays, fluorescent probe purification, sequencing and others.
      Arrayit kits utilize proprietary binding membranes and purification
      chemistries for optimal
performance.





Healthcare
      PlatformsArrayit’s
      patented Healthcare technology, the Variation Identification Platform
      (VIP), allows diagnostic tests to be performed by depositing as many as
      100,000 biological samples into a single microarray. VIP manufacturing and
      clean room technology platforms are also sold to customers who license the
      technology from Arrayit.  VIP platforms enable the manufacture
      of extremely high-quality microarrays with superior precision and
      accuracy. These microarrays containing 100,000 individual features allow
      the simultaneous genotyping of 100,000 different patients in a single
      test.











7





Advertising,
Marketing and Sales





Paul K.
Haje has led a successful advertising, sales and marketing program for Arrayit
since 1999.  Arrayit is the most highly recognized independent brand
name in the microarray industry. This was accomplished through visibility in
major broadcast television news media, full page advertisements in top
scientific journals, trade shows and workshops, vendor fairs, direct mail
campaigns, feature articles in major trade publications and e-mail
newsletters.  All advertising and marketing efforts drive traffic to
the Arrayit.com website and web based store resulting in sales.





The
Arrayit.com web site, which regularly receives more than 1,500 unique visitors
per day and 40,000 visitors per month and over 1 million hits per month, is
considered by many to be the portal of the microarray industry.  As an
additional enticement for researchers, Arrayit hosts an E-library providing a
searchable reference database for all microarray publications.





The
Company’s sales strategy has been successful by providing personalized sales and
support.  The sales force is currently comprised of three
persons.  The Company plans to hire additional experienced sales
professionals with microarray, diagnostics and pharmaceutical contacts who will
capitalize on the company’s powerful microarray technologies. The company
anticipates a sales force of approximately ten within three years.





Strategic
Distributorships





The
Company utilizes 38 international distributors in South America, Europe, Japan,
the Middle East, South Africa, China, Singapore, Korea, India, Taiwan, Israel
and other locations world-wide. The Company has generally chosen one
representative in each geographical area, and has worked closely with that
organization to promote the Company’s product line.  These global
distributors purchase directly from Arrayit for resale on net 30 day terms, and
represent approximately 45% of the Company’s 2008 revenues.  These
foreign receivables are insured through Euler Hermes ACI.





Facilities





Arrayit’s
corporate offices and research facilities are located at 524 East Weddell Drive,
Sunnyvale, California 94089. The corporate headquarters covers 8,000 square feet
which in addition to the executive offices, shipping and receiving, include a
microarray manufacturing cleanroom demonstration facility, two (2) microarray
manufacturing clean-rooms, a substrate manufacturing cleanroom, preparation and
packing facilities, and quality control and quality assurance work
stations.









Regulatory
Matters








We are
not subject to direct governmental regulation other than the laws and
regulations generally applicable to businesses in the jurisdictions in which we
operate. In addition, we believe we are in compliance with all relevant
environmental laws.







8




Employees


We presently has ten employees.





Comment
Letters Issued by the SEC





During
2008 and 2009, the SEC has issued comment letters relating to its previously
filed form 14C.  We are in the process of responding to these comment
letters





ITEM 1A. RISK
FACTORS





Our
securities are highly speculative and should only be purchased by persons who
can afford to lose their entire investment in our Company. If any of the
following risks actually occur, our business and financial results could be
negatively affected to a significant extent. The Company's business is subject
to many risk factors, including the following:





We
Will Need Additional Financing To Continue Our Business Plan





Current
collaboration agreements present Arrayit with near term opportunities for
substantial growth.  Capital is required to take advantage of these
opportunities.





An
immediate opportunity exists with OZ Systems of Arlington, Texas.  The
government mandates hearing loss tests for all infants born in the
USA.  OZ Systems has relationships and long-term contracts with
hospitals worldwide to test for hearing loss.  They currently test
over four million (4,000,000) infants per year for hearing loss.





Arrayit
has fully developed, tested and validated a hearing loss screen using our
patented VIP technology that can replace the existing OZ test, creating
immediate revenue for Arrayit. The test is highly accurate and can be performed
at a fraction of current cost, yet billable at current market prices, making
this an equally attractive opportunity for OZ to transition its existing
contracts to the new test.





An
audiologist uses an auditory signal and behavioral monitoring of the child’s
response to the sound for the current OZ hearing loss test.  The test
is analyzed and results reported back to the attending physician, who informs
the parents.  This test has fair accuracy and requires $1,500 of
confirmatory testing if a determination of hearing loss is
indicated.  The Arrayit hearing loss test is based on Arrayit’s
patented VIP technology.  It can screen 100,000 children in a single
test for fourteen (14) different forms of hearing loss, including a form of
hearing loss that does not occur until the child reaches six years of age. The
Arrayit test will require FDA approval prior to release.





Arrayit’s
diagnostic test can be accomplished in a CLIA approved
laboratory.  The DNA samples will be collected from the patients by
the hospital, and forwarded to Arrayit’s CLIA approved laboratory. The tests
will be conducted in volume on a single microarray using Arrayit’s patented VIP
method.





The
information derived from the test is not urgent; nor is the hearing loss
condition life threatening.  This allows Arrayit time to conduct the
tests in volume as the requirement to report to the attending physician is
within three months of the sample collection. The test results will be reported
electronically to OZ Systems which in-turn will advise the attending physician
and counsel the parents as necessary.





The
agreement proposes a 50/50 split of proceeds with Oz Systems.  All
patient identity would be protected in the patient tracking technology software
provided by Oz Systems.  Oz Systems would conduct all patient follow
through and interface with the physicians.  The test would retail for
around $80 and Arrayit’s out of pocket costs would be in the range of $2-3 per
test.





Other mid
to long term opportunities for Arrayit Diagnostic tests arise from
collaborations with Stage One Diagnostics of Little Rock, Arkansas and
BioSystems International of Paris, France.





Stage One
is currently isolating antibodies related to ovarian cancer at their laboratory
in Arkansas.  When that phase of the research is completed, Arrayit
will print microarrays with these known antibodies.  That slide, when
immersed in a solution of patient’s blood, would conclusively indicate whether
that patient has ovarian cancer, even before any symptoms occur.  As
the market moves toward preventative medicine, Arrayit believes a simple test
conducted at the site of care would be a valuable and widely utilized screen for
ovarian cancer.  This project is in the late stages of
development.  Arrayit will have the marketing rights for the product
and produce the kit for the healthcare providers.  How the proceeds
will be shared is yet to be determined.





BioSystems
International (BSI) is producing antibodies of blood plasma, taken from human
sources, for which Arrayit is developing a microarray that potentially has the
capability to identify predictors and biomarkers for such difficult to diagnose
diseases as Parkinson’s disease and Alzheimer’s disease, among
others.  Once these biomarkers are identified, a diagnostic slide
could then be developed
for broad use across the healthcare industry.  Arrayit will also
benefit from licensing of these antibodies for such downstream
applications.





Arrayit
has begun collaboration with the Parkinson’s Institute to test known Parkinson’s
Disease patients’ blood to identify biomarkers for Parkinson’s Disease from the
human plasma proteome microarray marketed as PlasmaScan.  Arrayit is
also working with Stanford University to test known Alzheimer’s patients’ blood
to identify biomarkers for Alzheimer’s Disease using PlasmaScan.





The chart
below outlines the cash required to expand the laboratory facilities at Arrayit
and capitalize on these opportunities.





Manufacturing
Set-up Expense for Diagnostic Tests





Diagnostic
      Test Opportunities Expense for Setup (thousands$)Hearing loss Ovarian
      Cancer Parkinson’s DiseaseLaunch
      date
                
                March
      1, 2009
                
                
                Jun
      1, 2009
                
                
                Sept
      1, 2009$
                ’000
                
                
                $
                ’000
                
                
                $
                ’000Clean
      Room
                
                
                200New
      lab Equip
                
                
                1,000CLIA
      Certification
                
                
                150FDA
      Approval
                
                
                50
                
                
                
                50
                
                
                
                50Approval
      Time
                
                6
      months
                
                
                6
      months
                
                
                6
      monthsSales
      Team Dev
                
                
                50
                
                
                
                150
                
                
                
                150Kit
      Development
                
                
                50
                
                
                
                150
                
                
                
                50Totals
                
                
                1,500
                
                
                
                350
                
                
                
                250





Because
the equipment sales require up front monies to build the systems, additional
cash will be required for this growth and for building the inventory of supplies
in the range of $700,000.








9








We
Have A Limited Operating History As A Public Company Upon Which You Can Assess
Our Prospects And We Are Subject To The Risks Associated With Any New Public
Company.





As a
result of our short history of operations as a public company, there is little
historical information regarding our operations upon which you can base your
investment decision. In addition, we are subject to all of the business risks
and uncertainties associated with any newly public business
enterprise.   Additionally, our management has limited experience
operating a public company.   As such, our Company may not be
able to continue to meet its continued filing requirements and may be late in
its periodic filings, which late filings may cause the Company to be delisted
from the Over-The-Counter Bulletin Board.  If this were to happen, any
investment in the Company could become devalued or worthless.





Our
Growth Will Place Significant Strains On Our Resources.





The
Company's growth, if any, is expected to place a significant strain on the
Company's managerial, operational and financial
resources.  Furthermore, assuming the Company receives additional
contracts, and obtains additional partners, it will be required to manage
multiple relationships with other third parties. These requirements will be
exacerbated in the event of further growth of the Company or in the number of
its contracts, partnerships and employees. There can be no assurance that the
Company's systems, procedures or controls will be adequate to support the
Company's operations or that the Company will be able to achieve the rapid
execution necessary to successfully offer its services and continue its business
plan. The Company's future operating results, if any, will also depend on its
ability to add additional personnel commensurate with the growth of its
business, if any. If the Company is unable to manage growth effectively, the
Company's business, results of operations and financial condition will be
adversely affected.





An Interruption In or Breach of Our
Information Systems May Result In Lost Business and Increased
Expenses.




We rely
heavily upon communications and information systems to conduct our business. Any
failure, interruption or breach in security of or damage to our information
systems or the third-party information systems on which we rely could prevent us
from conducting our business operations and/or if such failure resulted in the
release of non-public and confidential information, could make us subject to
litigation or actions for damages.







The Inability To Attract And Retain
Qualified Employees Could Significantly Harm Our
Business.




We
continually need to attract, hire and successfully integrate additional
qualified personnel in an intensely competitive hiring environment in order to
manage and operate our business. The market for skilled management, professional
and loan servicing personnel is highly competitive. Competition for qualified
personnel may lead to increased hiring and retention costs. If we are unable to
attract, successfully integrate and retain a sufficient number of skilled
personnel at manageable costs, it will harm our business, results of operations
and financial condition.




There
Are Risks That We Will Not Be Able To Implement Our Business
Strategy.




Our
financial position, liquidity, and results of operations depend on our
management’s ability to execute our business strategy. Key factors such as
technology advancement, government regulations, outcome of researches and access
to capital market all play an important role in our execution of business
strategy.





We
Incur Significant Costs As A Result Of Operating As A Fully Reporting Company In
Connection With Section 404 Of The Sarbanes Oxley Act, And Our Management Is
Required To Devote Substantial Time To Compliance Initiatives.





We
anticipate incurring significant legal, accounting and other expenses in
connection with our status as a fully reporting public company. The
Sarbanes-Oxley Act of 2002 (the "Sarbanes-Oxley Act") and new rules subsequently
implemented by the SEC have imposed various new requirements on public
companies, including requiring changes in corporate governance practices. As
such, our management and other personnel will need to devote a substantial
amount of time to these new compliance initiatives. Moreover, these rules and
regulations will increase our legal and financial compliance costs and will make
some activities more time-consuming and costly. In addition, the Sarbanes-Oxley
Act requires, among other things, that we maintain effective internal controls
for financial reporting and disclosure of controls and procedures. In
particular, for fiscal year 2009, Section 404 will require us to obtain a report
from our independent registered public accounting firm attesting to the
assessment made by management.  Our testing, or the subsequent testing
by our independent registered public accounting firm, may reveal deficiencies in
our internal controls over financial reporting that are deemed to be material
weaknesses. Our compliance with Section 404 will require that we incur
substantial accounting expense and expend significant management efforts. We
currently do not have an internal audit group, and we may need to hire
additional accounting and financial staff with appropriate public company
experience and technical accounting knowledge. Moreover, if we are not able to
comply with the requirements of Section 404 in a timely manner, or if we or our
independent registered public accounting firm identifies deficiencies in our
internal controls over financial reporting that are deemed to be material
weaknesses, the market price of our stock could decline, and we could be subject
to sanctions or investigations by the SEC or other regulatory authorities, which
would require additional financial and management resources.





10




There
Is Currently Only A Limited Market For Our Common Stock, And The Market For Our
Common Stock May Continue To Be Illiquid, Sporadic And Volatile.





There is
currently only a limited market for our common stock, and as such, we anticipate
that such market will be illiquid, sporadic and subject to wide fluctuations in
response to several factors moving forward, including, but not limited
to:





(1)
            actual
      or anticipated variations in our results of operations;(2)
            our
      ability or inability to generate new revenues;(3)
            the
      number of shares in our public
float;





(4)
            increased
      competition;(6)
            conditions
      and trends in the market for automobiles and vehicle
    leasing.





Furthermore,
because our common stock is traded on the Over-The-Counter Bulletin Board, our
stock price may be impacted by factors that are unrelated or disproportionate to
our operating performance. These market fluctuations, as well as general
economic, political and market conditions, such as recessions, interest rates or
international currency fluctuations may adversely affect the market price of our
common stock. Additionally, at present, we have a limited number of shares in
our public float, and as a result, there could be extreme fluctuations in the
price of our common stock. Further, due to the limited volume of our shares
which trade and our limited public float, we believe that our stock prices (bid,
ask and closing prices) are entirely arbitrary, are not related to the actual
value of the Company, and do not reflect the actual value of our common stock
(and in fact reflect a value that is much higher than the actual value of our
common stock). Shareholders and potential investors in our common stock should
exercise caution before making an investment in the Company, and should not rely
on the publicly quoted or traded stock prices in determining our common stock
value, but should instead determine the value of our common stock based on the
information contained in the Company's public reports, industry information, and
those business valuation methods commonly used to value private
companies.




Investors
May Face Significant Restrictions On The Resale Of Our Common Stock Due To
Federal Regulations Of Penny Stocks.





Our
common stock will be subject to the requirements of Rule 15(g)9, promulgated
under the Securities Exchange Act as long as the price of our common stock is
below $5.00 per share. Under such rule, broker-dealers who recommend low-priced
securities to persons other than established customers and accredited investors
must satisfy special sales practice requirements, including a requirement that
they make an individualized written suitability determination for the purchaser
and receive the purchaser's consent prior to the transaction. The Securities
Enforcement Remedies and Penny Stock Reform Act of 1990, also requires
additional disclosure in connection with any trades involving a stock defined as
a penny stock.





Generally,
the Commission defines a penny stock as any equity security not traded on an
exchange or quoted on NASDAQ that has a market price of less than $5.00 per
share. The required penny stock disclosures include the delivery, prior to any
transaction, of a disclosure schedule explaining the penny stock market and the
risks associated with it. Such requirements could severely limit the market
liquidity of the securities and the ability of purchasers to sell their
securities in the secondary market.





In
addition, various state securities laws impose restrictions on transferring
"penny stocks" and as a result, investors in the common stock may have their
ability to sell their shares of the common stock impaired.





ITEM 2.
PROPERTIES





The
Company has corporate headquarters and operates out of leased premises in
Sunnyvale, California.





ITEM 3. LEGAL
PROCEEDINGS





Civil
Action number 01-2226 between TeleChem International, Inc., Pediatrix Screening,
Inc. and Pediatrix Screening LP went to jury trial in the United States District
Court in the Western District of Pennsylvania in the summer of
2007.  The jury awarded TeleChem $5 million in damages for Pediatrix's
breach of contract, fraudulent misrepresentation, and punitive
damages.  The jury awarded Pediatrix $1,085,001 for TeleChem's breach
of contract.  Pediatrix appealed the jury's decision, and requested
that the damages award





11





to
TeleChem be reduced.  This appeal was denied.  Pediatrix put
$5 million in bond, and submitted an appeal to the Third Circuit Court of
Appeals to request that the damages award to TeleChem be reduced.  The
parties await the Third Circuit Court's response.





There are
no other legal proceedings, although we may, from time to time, be party to
certain legal proceedings and other various claims and lawsuits in the normal
course of our business, which, in the opinion of management, are not material to
our business or financial condition.








ITEM 4. SUBMISSION OF
MATTERS TO A VOTE OF SECURITY HOLDERS





The
Company had no matters submitted to a vote of security holders during the fiscal
quarter ended December 31, 2008.





PART
II





ITEM 5. MARKET FOR
REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF
EQUITY SECURITIES





Market
Information and Holders





Our
common stock now trades publicly on the OTC Bulletin Board under the symbol
"ARYC". Previous to March 19, 2009, our common stock traded under the symbol
"IMHI". The OTCBB is a regulated quotation service that displays real-time
quotes, last-sale prices and volume information in over-the-counter equity
securities. The OTCBB securities are traded by a community of market makers that
enter quotes and trade reports. This market is extremely limited and any prices
quoted are not a reliable indication of the value of our common
stock.




The
following table sets forth the quarterly high and low bid prices per share of
our common stock by the OTCBB during the last two fiscal years. The quotes
represent inter-dealer quotations, without adjustment for retail mark-up,
markdown or commission and may not represent actual transactions. The trading
volume of our securities fluctuates and may be limited during certain periods.
As a result of these volume fluctuations, the liquidity of an investment in our
securities may be adversely affected.





QUARTER
      ENDED
                      
                      HIGH
                      
                      
                      LOWDecember
      31, 2008
                      
                      $
                      1.50
                      
                      
                      $
                      0.54September
      30, 2008
                      
                      $
                      4.47
                      
                      
                      $
                      0.90June
      30, 2008
                      
                      $
                      3.00
                      
                      
                      $
                      1.20March
      31, 2008
                      
                      $
                      4.50
                      
                      
                      $
                      0.21December
      31, 2007
                      
                      $
                      0.60
                      
                      
                      $
                      0.21September
      30, 2007
                      
                      $
                      3.30
                      
                      
                      $
                      0.42June
      30, 2007
                      
                      $
                      4.50
                      
                      
                      $
                      1.05March
      31, 2007
                      
                      $
                      11.70
                      
                      
                      $
                      3.00





As of
March 9, 2009, we had 17,499,262 shares of common stock issued and outstanding
held by approximately xx  shareholders of record; 3,697,611shares of
Series A Convertible Preferred Stock issued and outstanding and 103,143 shares
of Series B Convertible Preferred Stock issued and outstanding.





Dividends





We have
never declared or paid any cash dividends on our common stock, and we do not
anticipate paying any dividends in the foreseeable future.  We intend
to devote any earnings to fund the operations and the development of our
business.





Common
Stock





Holders
of shares of common stock are entitled to one vote per share on each matter
submitted to a vote of shareholders. In the event of liquidation, holders of
common stock are entitled to share pro rata in the distribution of assets
remaining after payment of liabilities, if any. Holders of common stock have no
cumulative voting rights, and, accordingly, the holders of a majority of the
outstanding shares have the ability to elect all of the directors. Holders of
common stock have no preemptive or other rights to subscribe for shares. Holders
of common stock are entitled to such dividends as may be declared by the Board
out of funds legally available therefore. The outstanding shares of common stock
are validly issued, fully paid and non-assessable.




RECENT
SALES OF UNREGISTERED SECURITIES





All sales
of unregistered common stock that occurred in 2008 has been previously reported
in our public filings with the Securities and Exchange Commission and is
described in detail in Management' Discussion and Analysis below.





ITEM 6. SELECTED FINANCIAL
DATA





Not
required.





12








ITEM 7. MANAGEMENT'S
DISCUSSION AND ANALYSIS OR PLAN OF OPERATION





THIS
REPORT CONTAINS FORWARD LOOKING STATEMENTS WITHIN THE MEANING OF SECTION 27A OF
THE SECURITIES ACT OF 1933 AND SECTION 21E OF THE SECURITIES EXCHANGE ACT OF
1934. THESE FORWARD LOOKING STATEMENTS ARE SUBJECT TO CERTAIN RISKS AND
UNCERTAINTIES THAT COULD CAUSE ACTUAL RESULTS TO DIFFER MATERIALLY FROM
HISTORICAL RESULTS OR ANTICIPATED RESULTS, INCLUDING THOSE SET FORTH UNDER "RISK
FACTORS" IN THIS MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS" AND ELSEWHERE IN THIS REPORT. THE FOLLOWING DISCUSSION
AND ANALYSIS SHOULD BE READ IN CONJUNCTION WITH "SELECTED FINANCIAL DATA" AND
THE COMPANY'S FINANCIAL STATEMENTS AND NOTES THERETO INCLUDED ELSEWHERE IN THIS
REPORT.





Critical
Accounting Policies




The
preparation of financial statements in conformity with accounting principles
generally accepted in the United States of America requires the Company to make
estimates and assumptions that affect amounts reported in the accompanying
consolidated financial statements and related footnotes.  These estimates
and assumptions are evaluated on an on-going basis based on historical
developments, market conditions, industry trends and other information the
Company believes to be reasonable under the circumstances.  There can be no
assurance that actual results will conform to the Company’s estimates and
assumptions, and that reported results of operations will not be materially
adversely affected by the need to make accounting adjustments to reflect changes
in these estimates and assumptions from time to time.  The following
policies are those the Company believes to be the most sensitive to estimates
and judgments.  The Company’s significant accounting policies are more
fully described in Note 2 to our consolidated financial
statements.





PLAN
OF OPERATIONS FOR THE NEXT TWELVE MONTHS





Throughout
the remainder of fiscal 2009, we plan to continue investing to support our
long-term growth initiatives. We plan to partner with other alliances, enter new
markets and further expand our presence in existing markets.





COMPARISON
OF OPERATING RESULTS




RESULTS
OF OPERATIONS FOR THE YEAR ENDED DECEMBER 31, 2008, COMPARED TO THE YEAR ENDED
DECEMBER 31, 2007





For the
year ended December 31, 2008, revenues were $4,063,149, compared to $3,821,490
for the year ended December 31, 2007, an increase of $241,659 or approximately
6% from the prior period.


The
increase in revenues was principally due to the Company’s expansion into new
markets during fiscal 2008, versus 2007.





Cost of
sales decreased $19,795 or 1% to $2,643,974 for the year ended December 31,
2008, compared to $2,663,769 for the year ended December 31, 2007.





Gross
profit increased $261,454 or 23% to $1,419,175 for the year ended December 31,
2008 compared to $1,157,721 for the year ended December 31,
2007.  Gross profit increased largely due to the  increase
in total revenue which was offset by the decrease in total cost of
revenues.





General
and administrative expenses were $1,346,046 and $1,240,709, for the years ended
December 31, 2008 and December 31, 2007, respectively, constituting an increase
of $105,337 or approximately 9% from the prior period.  The increase
in general and administrative expenses was due to mainly to expenses associated
with the Company being a public company and the Company’s public company
reporting obligations, including legal fees and accounting fees.





Other
income and expense was a net other expense of $2,020,548 and net other income of
$202,818 for the years ended December 31, 2008 and December 31, 2007,
respectively.  Other expense for 2008 included interest expense of
$721,408 and loss on derivatives $1,299,139   Other income and
expense for the year ended December 31, 2007, included interest expense of
$521,502 and gain on derivatives of $724,320.  The main reason for the
$199,906 or 38% increase in interest expense for the year ended December 31,
2008, compared to the year ended December 31, 2007, was due to debts assumed
with the merger during 2008.





The
Company had net loss of $2,029,692 for the year ended December 31, 2008,
compared to net loss of $1,775,438 for the year ended December 31, 2007, a
increase in net loss of $254,255 or 14% from the prior period.  The
main reason for the increase in net loss was the loss on derivative liability
during the year ended December 31, 2008.




LIQUIDITY
AND CAPITAL RESOURCES





We had
total assets of $1,155,079 and total liabilities of $13,555,760 as of December
31, 2008. We had total negative working capital of $11,097,357 as of December
31, 2008.





We had
net cash provided by operating activities of $75,979 which is mainly due to loss
on derivatives and increase in account payable and accrued
liabilities.





We had
$75,979 of net cash provided by financing activities for the year ended December
31, 2008, which included $ 185,329 of proceeds from note payable, offset by
$109,350 of payments on notes payables.





We relied
on our officers and directors or any of our shareholders to supplement our
operations or provide us with financing.  If we are unable to increase
revenues from operations, to raise additional capital from conventional sources
and/or additional sales of stock in the future, we may be forced to curtail or
cease our operations. In the future, we may be required to seek additional
capital by selling debt or equity securities. The sale of additional equity or
debt securities, if accomplished, may result in dilution to our then
shareholders. We provide no assurance that financing will be available in
amounts or on terms acceptable


to us, or
at all.





13





ITEM 8.
FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA




















ARRAYIT
CORPORATION








CONSOLIDATED
FINANCIAL STATEMENTS








For the
Years Ended December 31, 2008 and 2007











14





ARRAYIT
CORPORATION








INDEX TO
FINANCIAL STATEMENTS











PAGEIndependent
      auditors’ reportConsolidated
      balance sheetsConsolidated
      statement of operationsConsolidated
      statement of  changes in stockholders’ equity
      (deficit)Consolidated
      statement of cash flowsNotes
      to financial statements








15





REPORT
OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM





To the
Board of Directors and Stockholders of


Arrayit
Corporation.


Sunnyvale,
California





We have
audited the accompanying consolidated balance sheets of Arrayit Corporation as
of December 31, 2008 and 2007, and the related consolidated statements of
operations, changes in stockholders’ equity (deficit), and cash flows for the
years then ended. These financial statements are the responsibility of the
Company’s management. Our responsibility is to express an opinion on these
financial statements based on our audits.




We
conducted our audits in accordance with the standards of the Public Company
Accounting Oversight Board (United States). Those standards require that we plan
and perform the audit to obtain reasonable assurance about whether the financial
statements are free of material misstatement. The company is not required to
have, nor were we engaged to perform, an audit of its internal control over
financial reporting. Our audit included consideration of internal control over
financial reporting as a basis for designing audit procedures that are
appropriate in the circumstances, but not for the purpose of expressing an
opinion on the effectiveness of the company’s internal control over financial
reporting. Accordingly, we express no such opinion. An audit also includes
examining, on a test basis, evidence supporting the amounts and disclosures in
the financial statements, assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
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 consolidated financial position of Arrayit
Corporation as of December 31, 2008 and 2007, and the consolidated results of
its operations and its cash flows for the years then ended in conformity with
accounting principles generally accepted in the United States of
America.




The
accompanying financial statements have been prepared assuming that the company
will continue as a going concern. As discussed in Note 3 to the financial
statements, the company has suffered recurring losses and has working capital
and stockholder deficits. Those conditions raise substantial doubt about its
ability to continue as a going concern. Management’s plans regarding those
matters are also described in Note 3. The financial statements do not include
any adjustments that might result from the outcome of this
uncertainty.








/s/
Berman Hopkins Wright & LaHam, CPAs and Associates, LLP





Winter
Park, Florida


April 15,
2009











16





ARRAYIT
CORPORATION


CONSOLIDATED
BALANCE SHEETS


As at
December 31, 2008 and 2007


2008
                
                
                2007Current
      assets:Cash
                
                $
                0
                
                
                $
                0Accounts
      receivable, net
                
                
                261,656
                
                
                
                294,186Inventory
                
                
                484,368
                
                
                
                309,246Prepaid
      expenses
                
                
                0
                
                
                
                120000Total
      current assets
                
                
                746,024
                
                
                
                723,432Property
      and equipment, net
                
                
                41,451
                
                
                
                55,395Assets
      of discontinued operations
                
                
                247,945
                
                
                
                247,945Restricted
      cash
                
                
                100,735
                
                
                
                103,836Deposits
                
                
                18,924
                
                
                
                18,924Total
      assets
                
                $
                1,155,079
                
                
                $
                1,149,532Liabilities
      and Stockholders' DeficitCurrent
      liabilities:Accounts
      payable and accrued liabilities
                
                $
                5,994,084
                
                
                $
                4,796,835Bank
      overdraft
                
                
                9,110
                
                
                
                29,495Due
      to related parties
                
                
                349,950
                
                
                
                337,616Accrued
      expenses
                
                
                444,669
                
                
                
                0Customer
      deposits
                
                
                62,798
                
                
                
                29,580Derivative
      liability
                
                
                1,525,684
                
                
                
                0Notes
      payable, current portion including related parties
                
                
                3,457,087
                
                
                
                3,222,218Total
      current liabilities
                
                
                11,843,382
                
                
                
                8,415,744Notes
      payable, long term
                
                
                248,412
                
                
                
                327,340Liabilities
      of discontinued operations
                
                
                1,463,966
                
                
                
                1,463,966Total
      liabilities
                
                
                13,555,760
                
                
                
                10,207,050Stockholders'
      deficitPreferred
      "A"
                
                
                3,698
                
                
                
                3,810Preferred
      "C"
                
                
                103
                
                
                
                103Common
      stock
                
                
                17,499
                
                
                
                16,419APIC
                
                
                (4,701,848
                )
                
                
                (3,387,409
                )Accumulated
      deficit
                
                
                (7,720,133
                )
                
                
                (5,690,441
                )Total
      stockholders' deficit
                
                
                (12,400,681
                )
                
                
                (9,057,518
                )Total
      liabilities and stockholders' deficit
                
                $
                1,155,079
                
                
                $
                1,149,532











See
accompanying notes to financial statements.





17







ARRAYIT
CORPORATION


CONSOLIDATED
STATEMENTS OF OPERATIONS


For the
years ended December 31, 2008 and 2007





2008
                
                
                2007Total
      revenues
                
                $
                4,063,149
                
                
                $
                3,821,490Cost
      of sales
                
                
                2,643,974
                
                
                
                2,663,769Gross
    margin
                
                
                1,419,175
                
                
                
                1,157,721Selling,
      general, and administrative expense
                
                
                1,346,046
                
                
                
                1,240,709Legal
      expense
                
                
                82,274
                
                
                
                1,895,268Interest
      expense
                
                
                721,408
                
                
                
                521,502Loss
      (gain) on derivative liability
                
                
                1,299,139
                
                
                
                -724,320Net
      loss for the year
                
                $
                (2,029,692
                )
                
                $
                (1,775,438
                )Net
      loss per common share -basic
      and diluted
                
                $
                (0.12
                )
                
                $
                (0.11
                )Weighted
      average shares - basic and diluted
                
                
                17,499,262
                
                
                
                16,419,252








See
accompanying notes to the financial statements.











18





ARRAYIT
CORPORATION


CONSOLIDATED
STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITY (DEFICIT)


For the
years ended December 31, 2008 and 2007





Additional
              
              TotalPreferred
      Series A
              
              Preferred
      Series C
              
              Common
      Stock
              Paid
      In
              Retained
              Stockholders'Description
              Number
              Dollar
              
              Number
              Dollar
              
              Number
              Dollar
              Capital
              Earnings
              EquityBalance,
      December 31, 2006
              2,884,117
              $2,884
              
              -
              -
              
              16,368,710
              $16,369
              $   31,832,986
              $  (37,820,426)
              $    (5,968,187)Issuance
      of common stock for services
              
              
              
              
              
              
              360,994
              $      361
              $        52,139
              
              $           52,500Issuance
      for compensation
              
              
              
              
              
              
              
              
              $        784,615
              
              $         784,615Issuance
      of common stock for unpaid rent
              
              
              
              
              
              
              30,345
              $        30
              $            4,370
              
              $             4,400Settlement
      of unpaid note interest
              -
              -
              
              -
              -
              
              951,283
              $      951
              $         51,750
              -
              $           52,701Conversion
      of notes to common stock
              
              
              
              
              
              
              1,439,438
              $   1,439
              $         48,560
              
              $           49,999Surrender
      for cancellation of common stock on disposal of WV Fiber
              
              
              
              
              
              
              (3,246,000)
              $(3,246)
              $    (486,900)
              
              $        (490,146)Common
      stock issued for cash
              
              
              
              
              
              
              514,482
              $      514
              $        106,893
              
              $          107,407Preferred
      sharess issued for services
              112,651
              $   113
              
              
              
              
              
              
              $        208,687
              
              $           208,800Re-acquisition
      of Series A Preferred on disposal of WV Fiber
              (646,774)
              $(647)
              
              
              
              
              
              
              $       (930,708)
              
              $       (931,355)Re-issuance
      of Series A Preferred for acquisitions in 2006
              1,460,268
              $1,460
              
              
              
              
              
              
              $       1,106,912
              
              $      1,108,372Issuance
      of Series C Preferred
              
              
              
              103,143
              $   103
              
              
              
              $        98,897
              
              $           99,000Eliminiate
      IMHI equity under reverse merger accounting
              
              
              
              
              
              
              
              
              (36,265,610)
              37,820,426
              1,554,816Net
      loss for the year endedDecember
      31, 2007
              -
              -
              
              -
              -
              
              -
              -
              -
              (5,690,441)
              (5,690,441)Balance,
      December 31, 2007
              3,810,262
              $3,810
              
              103,143
              $  103
              
              16,419,252
              $16,419
              $(3,387,409)
              $(5,690,441)
              $  (9,057,517)Restate
      share capital
              (112,651)
              (113)
              
              
              
              
              1,080,010
              $1,080
              $  (1,314,439)
              
              $  (1,313,359)Net
      Income for the year endedDecember
      31, 2008
              
              
              
              
              
              
              
              
              
              $  (2,029,693)
              $  (2,029,693)Balance,
      December 31, 2008
              3,697,611
              $3,698
              
              103,143
              $  103
              
              17,499,262
              $17,499
              $  (4,701,848)
              $  (7,720,134)
              $  (12,400,569)





See
accompanying notes to the financial statements





.





19








ARRAYIT
CORPORATION


CONSOLIDATED
STATEMENTS OF CASH FLOWS


For the
years ended December 31, 2008 and 2008





2008
                
                
                2007Cash
      flows from operating activities:Net
      loss
                
                
                
                -2,029,692
                
                
                
                (1,775,438
                )Adjustments
      to reconcile net loss to net cashprovided
      by (used in) operating activities:Depreciation
                
                
                13,943
                
                
                
                20,090Gain
      (loss) on derivatives
                
                
                1,299,139
                
                
                
                (724,320
                )Changes
      in operating assets and liabilities(Increase)
      decrease in assetsAccounts
      receivable
                
                
                32,529
                
                
                
                13,850Inventories
                
                
                (175,122
                )
                
                
                339,008Prepaids
                
                
                120,000
                
                
                
                (117,920
                )Restricted
      cash
                
                
                3,102
                
                
                
                (2,133
                )AdvancesIncrease
      (decrease) in liabilitiesAccounts
      payable & accrued liabilities
                
                
                786,914
                
                
                
                1,776,640Due
      to related parties
                
                
                12,333
                
                
                
                206,709Bank
      overdraft
                
                
                (20,384
                )
                
                
                29,495Customer
      deposits
                
                
                33,217Net
      cash provided by (used in) for operating activities
                
                
                75,979
                
                
                
                (234,019
                )Cash
      flows from investing activities:Purchase
      of property and equipment
                
                
                -
                
                
                
                (3,833
                )Proceeds
      from disposal of equipmentNet
      cash provided by (used in) for investing activities:
                
                
                
                
                
                
                (3,833
                )Cash
      flows from financing activities:Proceeds
      from notes payable
                
                
                109,350
                
                
                
                201,444Payments
      from notes payable
                
                
                (185,329
                )
                
                
                (20,519
                )Net
      cash provided by (used in) financing activities
                
                
                (75,979
                )
                
                
                180,925Net
      increase (decrease)  in cash
                
                
                0
                
                
                
                (56,927
                )Cash,
                Beginning
      of year
                
                
                -
                
                
                
                56,927Cash,
                End
      of year
                
                $ nil
                
                
                $ nilSupplemental
      cash flow informationCash
      Paid for interest
                
                
                $
                159,892
                
                
                $
                453,738








See
accompanying notes to the financial statements.





20




ARRAYIT
CORPORATION


NOTES TO
CONSOLIDATED FINANCIAL STATEMENTS


As at
December 31, 2008 and 2007











NOTE 1 – ORGANIZATION





Effective
Thursday, March 19, 2009, the final steps of the business combination with
Integrated Media Holdings, Inc. were completed and the Company’s common stock
began trading on the OTC Bulletin Boards as “ARYC”. In addition, the Company
changed its name to “Arrayit Corporation”, was reincorporated to Nevada from
Delaware, and reverse-split its common stock and Series A Convertible Preferred
stock in the ratio of one for thirty shares.  Arrayit has a December
31 year end.





Effective
February 21, 2008, TeleChem International, Inc. (“TeleChem”) completed the Plan
and Agreement of Merger between Integrated Media Holdings Inc. (“IMHI”),
TeleChem, the majority shareholders of TeleChem, Endavo Media and
Communications, Inc., a Delaware corporation and TCI Acquisition Corp., a Nevada
corporation, and wholly-owned subsidiary of IMHI.  Consummation of the
merger did not require a vote of the IMHI shareholders.  IMHI issued
103,143 shares of Series C Convertible Preferred Stock to the shareholders of
TeleChem in exchange for 100% of the equity interests of TeleChem resulting in
TeleChem being a wholly owned subsidiary of the Company.  The former
shareholders of TeleChem then owned approximately 99.51% of the outstanding
interest and voting rights of the parent company.  The Preferred Stock
is convertible into 36,100,000 shares of common stock after, but not before, the
effective date of the reverse split of the outstanding IMHI common
stock.








NOTE
2- DESCRIPTION OF BUSINESS AND SUMMARY OF SIGNIFICANT ACCOUNTING
POLICIES




Description
of Business





Arrayit
Corporation is a Nevada Corporation, formerly known as TeleChem International,
Inc., that entered into the life sciences in 1996.  Arrayit is a
leading edge developer, manufacturer and marketer of next-generation life
science tools and integrated systems for the large scale analysis of genetic
variation, biological function and diagnostics. Using Arrayit’s proprietary
technologies, the Company provides a comprehensive line of products and services
that currently serve the sequencing, genotyping, gene expression and protein
analysis markets, and the Company expects to enter the market for molecular
diagnostics.





Arrayit
has earned respect as a leader in the health care and life sciences industries
with its proven expertise in three key areas:  the development and
support of microarray tools and components, custom printing and analysis of
microarrays for research, and the identification and development of diagnostic
microarrays and tools for early detection of treatable disease
states.





As a
result, Arrayit has provided tools and services to thousands of the leading
genomic research centers, pharmaceutical companies, academic institutions,
clinical research organizations, government agencies and biotechnology companies
worldwide.





The
Company’s patented tools and trade secrets provide researchers around the world
with the performance, throughput, cost effectiveness and flexibility necessary
to perform the billions of genetic tests needed to extract valuable medical
information. The Company believes this information will enable researchers to
correlate genetic variation and biological function, which will enhance drug
discovery, drug





21





development
and clinical research, allowing diseases to be detected earlier and permitting
better choices of drugs for individual patients.




Arrayit’s
principal office is in Sunnyvale, California. Arrayit presently has ten
employees.


Summary
of Significant Accounting Policies






Use of
Estimates




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




Cash and
Cash Equivalents




Cash
includes all cash and highly liquid investments with original maturities of
three months or less. The Company maintains cash in bank deposit accounts which,
at times, exceed federally insured limits. The Company has not experienced any
losses on these accounts.





Investments
in certificates of deposit with our bankers that contain prohibition on their
redemption are treated as non-current assets and included in restricted
cash.





Property
and Equipment





Property
and equipment are recorded at cost less accumulated depreciation. Depreciation
and amortization on property and equipment are determined using the
straight-line method over the three to five year estimated useful lives of the
assets.





Impairment
of Long-Lived Assets




Arrayit
reviews its long-lived assets for impairment when events or changes in
circumstances indicate that the book value of an asset may not be recoverable.
Arrayit evaluates, at each balance sheet date, whether events and circumstances
have occurred which indicate possible impairment. The Company uses an estimate
of future undiscounted net cash flows of the related asset or group of assets
over the estimated remaining life in measuring whether the assets are
recoverable. If it is determined that an impairment loss has occurred based on
expected cash flows, such loss is recognized in the statement of
operations.





Inventory





Inventories
are stated at the lower of cost or market, cost determined on the basis of
FIFO.










22





Revenue
Recognition





Revenue
is recognized when title and risk of loss are transferred to customers upon
delivery based on terms of sale and collectability is reasonably
assured.




Shipping
and Handling Costs





Shipping
and handling costs billed to customers are recorded as revenue. Shipping and
handling costs paid to vendors are recorded as cost of sales.





Fair
Value of Financial Instruments





The
carrying amounts reported in the accompanying balance sheets of all financial
instruments approximates their fair values because of the immediate or
short-term maturity of these financial instruments or comparable interest rates
of similar instruments.





Allowance
for Doubtful Accounts





The
Company records an allowance for estimated losses on customer accounts. The
allowance is increased by a provision for bad debts, which is charged to
expense, and reduced by charge-offs, net of recoveries.





Patent
Costs





Costs
incurred with registering and defending patent technology are charged to expense
as incurred.





Income
Taxes




Prior to
February 21, 2008, the financial statements of TeleChem did not include a
provision for Income Taxes because the taxable income of Telechem was included
in the Income Tax Returns of the Stockholders under the Internal Revenue Service
"S" Corporation elections.





Upon
completion of the February 21, 2008 transaction with IMHI as more fully
described  in  Note  1, TeleChem ceased to be
treated as an
"S"  Corporation  for  Income  Tax  purposes.  Effective
March 19, 2009, Arrayit Corporation became a Nevada C Corporation.





Deferred
taxes are computed using the asset and liability method. Under the asset and
liability method, deferred tax assets and liabilities are recognized for future
tax consequences attributable to differences between the financial statement
carrying amounts of existing assets and liabilities and their respective tax
bases. Deferred tax assets and liabilities are measured using enacted tax rates
expected to apply to taxable income in the years in which those temporary
differences are expected to be recovered or settled. The effect on deferred tax
assets and liabilities of a change in tax rates is recognized in income in the
period that includes the enactment date. Deferred tax assets are not recognized
unless it is more likely than not that the asset will be realized in future
years.




The
Company applies the provisions of FASB, Interpretation No. 48, or FIN 48,
“Accounting for Uncertainty in Income Taxes – an Interpretation of FASB
Statement 109.” FIN 48 prescribes a recognition threshold and a measurement
attribute for the financial statement recognition and measurement of tax
positions taken or expected to be taken in a tax return. For those benefits to
be recognized, a tax position must be more likely than not to be sustained upon
examination by taxing authorities. The amount recognized is measured as the
largest amount of benefit that has a greater than 50% likelihood of being
realized upon ultimate settlement.




When
applicable, the Company will include interest and penalties related to uncertain
tax positions in income tax expense.









23




Loss per Common and Common
Equivalent Share




The
computation of basic loss per common share is computed using the weighted
average number of common shares outstanding during the year. The computation of
diluted earnings per common share is based on the weighted average number of
shares outstanding during the year plus common stock equivalents which would
arise from their exercise using the treasury stock method and the average market
price per share during the year.  No common stock equivalents were
outstanding during 2007.





Recent
Accounting Prononcements





In
December, 2007, the FASB issued FAS No. 141(R), Business Combinations, and SFAS
No. 160, Accounting and Reporting of Noncontrolling Interests
in  Consolidated Financial Statements, an amendment of ARB No. 51. FAS
No. 141(R)  is required to be adopted concurrently with SFAS No.
160.These standards are  effective for fiscal years beginning after
December 15, 2008 and will apply  prospectively to business
combinations completed on or after that date.  Early adoption is
prohibited. FAS 141(R) requires changes in accounting
for  acquisitions and FAS 160 will change the accounting for minority
interests.  The adoption of this statement is not expected to have a
material effect on the Company's financial statements.





In March
2008, the FASB issued SFAS No. 161, “Disclosures about Derivative Instruments
and Hedging Activities” (“SFAS No. 161”).  SFAS No. 161 amends and
expands the disclosure requirements of FASB Statement 133, “Accounting for
Derivative Instruments and Hedging Activities” (“SFAS No. 133”) to require
qualitative disclosures about objectives and strategies for using derivatives,
quantitative disclosures about fair value amounts of and gains and losses on
derivative instruments, and disclosures about credit risk-related contingent
features in derivative agreements.  The Statement is effective for
financial statements issued for fiscal years and interim periods beginning after
November 15, 2008.  Early application is encouraged.  The
Company is currently assessing the financial impact of SFAS 161 on its financial
statements.





In May
2008, the FASB issued FASB FSP APB 14-1, “Accounting for Convertible Debt
Instruments That May Be Settled in Cash upon Conversion (Including Partial Cash
Settlement)”. FSP APB 14-1 requires the issuer of certain convertible debt
instruments that may be settled in cash (or other assets) on conversion to
separately account for the liability (debt) and equity (conversion option)
components of the instrument in a manner that reflects the issuer’s
non-convertible debt borrowing rate.  Such separate accounting also
requires accretion of the resulting discount on the liability component of the
debt to result in interest expense equal to an issuer’s nonconvertible debt
borrowing rate. In addition, the FSP provides for certain changes related to the
measurement and accounting related to derecognition, modification or exchange.
FSP APB 14-1 is effective for fiscal years beginning after December 15, 2008 on
a retroactive basis.  The impact of this standard cannot be determined
until the transactions occur.





In May
2008, the FASB issued FAS No. 162, "The Hierarchy of Generally
Accepted  Accounting Principles". FAS No. 162 identifies the sources
of accounting  principles and the framework for selecting the
principles to be used in the  preparation of financial statements of
nongovernmental entities that are  presented in conformity with
generally accepted accounting principles in the  United States. It is
effective 60 days following the SEC's approval of the Public Company Accounting
Oversight Board amendments to AU Section 411, "The Meaning of Present Fairly in
Conformity With Generally Accepted  Accounting  Principles".
The adoption of this statement is not expected effect on the Company's financial
statements.




NOTE
3- GOING CONCERN





At
December 31, 2008 Arrayit has a working capital deficit of $11,097,358, a
stockholders' deficit of $12,400,689, and recurring net losses. These factors
create substantial doubt about Arrayit’s ability to continue as a going concern.
The financial statements do not include any adjustment that might be necessary
if Arrayit is unable to continue as a going concern.





24





The
ability of Arrayit to continue as a going concern is dependent on Arrayit
generating cash from the sale of its common stock or obtaining debt financing
and attaining future profitable operations. Management's plans include selling
its equity securities and obtaining debt financing to fund its capital
requirement and ongoing operations; however, there can be no assurance Arrayit
will be successful in these efforts.








NOTE
4 – CASH AND RESTRICTED CASH





Cash on
hand and bank overdrafts represent cash that may freely be used in the conduct
of our business.





At
December 31, 2008 and 2007, restricted cash was composed of a $100,000
Certificate of Deposit and accrued interest of $735 and $3,836, respectively,
lodged with our bankers as security for a $100,000 letter of deposit we were
mandated to lodge with the Pennsylvania court, as part of the Pediatrix legal
action more fully described in Note 10.  Upon finalization of the
legal action, the letter of credit will be returned and the bankers will release
the restrictions on the Certificate of Deposit.








NOTE
5 – ACCOUNTS RECEIVABLE





Accounts
receivable are shown net of an Allowance for Doubtful
Accounts.   As more fully explained in Note 6 below, receivable
has been reduced by Accounts Receivable loans sold with recourse.





2008
                
                
                2007Gross
      Accounts Receivable
                
                $
                772,295
                
                
                $
                581,449Less:Allowance
      for doubtful
                
                
                (125,000
                )
                
                
                (65,714
                )Loan
      value of receivables sold with recourse (see note 6)
                
                
                (385,639
                )
                
                
                (221,549
                )Total
                
                $
                261,656
                
                
                $
                294,186











NOTE
6 – ACCOUNTS RECEIVABLE SOLD WITH RECOURSE





Pursuant
to an agreement dated July 5, 2007, the Company has sold some of its Accounts
Receivable to a financial institution with full recourse.  The
financial institution retains a 15% portion of the proceeds from the receivable
sales as reserves, which are released to the Company as the Receivables are
collected.  The maximum commitment under this facility is $500,000,
and is limited to receivables that are less than 31 days outstanding. The
facility bears interest at prime plus 7% currently 11.50% at December 31, 2008,
and is secured by an unconditional guarantee of the Company and a first charge
against the Accounts Receivable.  At December 31, 2008, the balance
outstanding under the recourse contracts was $385,639 net of a hold back reserve
of $79,742 (2007 net - $ 230,498).   Because of the Company’s
credit policies, repossession losses and refunds in the event of default have
not been significant and losses under the present recourse obligations are not
expected to be significant, it is at least reasonably possible that the
Company’s estimate will change within the near term.




25








NOTE
7 – FIXED ASSETS





Property
and equipment consisted of the following at December 31, 2008 and
2007:





2008
                
                
                2007Fixed
      Assets – Cost
                
                $
                303,870
                
                
                $
                303,870Less:Accumulated
      Depreciation
                
                
                (262,419
                )
                
                
                (248,475
                )Total
                
                $
                41,451
                
                
                $
                55,395





Depreciation
expense totalled $13,944 and $20,090 respectively in fiscal 2008 and
2007.








NOTE
8 – ACCOUNTS PAYABLE AND ACCRUED LIABILILITES





Accounts
payable and accrued liabilities, consisted of the following at December 31, 2008
and 2007:





2008
                
                
                2007Accounts
      payable
                
                $
                4,252,197
                
                
                $
                4,242,153Accrued
      liabilities
                
                
                1,741,887
                
                
                
                554,682Total
                
                $
                5,994,084
                
                
                $
                4,796,835








NOTE
9 – DUE TO RELATED PARTIES





Pursuant
to a consulting agreement with Dr. Mark Schena, the Company is obligated to pay
a royalty of 5% of gross sales to him as a royalty for unfettered use of his
patents and knowledge.   Amounts outstanding at December 31, 2008
and 2007 of $349,950 and $337,616 respectively are unsecured, non-interest
bearing and due on demand.







26










2008
                
                
                2007Discounted
      convertible notes payable due to SovCap. SovCap is affiliated with a
      former officer and director of the Company and is a significant
      stockholder of the Company. These notes have a face interest rate of 18%.
      The notes are unsecured and are due on demand. The notes are convertible
      at a rate of 75% of the average closing bid price of the Company's common
      stock for the five trading days ending on the trading day immediately
      preceding the conversion date. During 2008 none of the principal was
      converted into common stock.
                
                
                405,300
                
                
                
                405,300Notes
      payable due to SovCap, unsecured bearing interest at 6%
-8%
                
                
                118,500
                
                
                
                118,500Notes
      payable due to SovCap,  unsecured bearing interest at 8% and due
      on February 22, 2007.  The Company is presently in default of
      the payments on these notes, and as a result, the notes are accruing
      interest at the default rate of 26%.
                
                
                1,425,000
                
                
                
                1,425,000Note
      payable to Dorn & Associates. Payable in 36 monthly instalments of
      $890 at an interest rate of 5%. The Company is presently in default of the
      payment terms on this note, and has classified the entire note balance as
      current.  These notes are unsecured
                
                
                25,177
                
                
                
                25,177Convertible
      notes due to a former officer and shareholder of the Company, These notes
      bear interest at 12%, are unsecured, and due on demand. The Company is
      presently in default of the payment terms on these notes. The notes are
      convertible into approximately 10,251 shares at approximately $8.00 per
      share.
                
                
                74,174
                
                
                
                74,174Notes
      payable to an individual with interest at 10% collateralized by
      receivables and due on demand.
                
                
                17,826
                
                
                
                17,826Note
      payable to a financial group, unsecured with interest rate at 12% and due
      on demand.
                
                
                25,000
                
                
                
                25,000Notes
      payable to certain individual accredited investors with interest of 15% or
      18% per annum and are payable on demand after 180 days from the issue
      date. Notes are convertible into units of common stock and warrants at a
      rate of one unit for every $5.00 converted.  Notes in the
      principal amount of $1,183,500 were sold as a part of the sale of WV
      Fiber, Inc.
                
                
                44,500
                
                
                
                44,500Notes
      payable to former officer and other individual accredited investors,
      unsecured without specific terms of repayment
                
                
                60,250
                
                
                
                60,250Notes
      payable due to SovCap, unsecured
                
                
                165,416
                
                
                
                161,250Notes
      payable, interest free, unsecured due on demand from a
      shareholder
                
                
                23,500
                
                
                
                0Notes
      payable to Wells Fargo, payable in 60 monthly instalments of $8,572
      including interest at 10.25%, through November 2012
                
                
                323,283
                
                
                
                392,952Notes
      payable, interest at 8%, unsecured due on demand from Arrayit
      creditors
                
                
                42,827
                
                
                
                44,545Notes
      payable, interest at 5%, unsecured, due on demand from minority
      shareholders
                
                
                109,350
                
                
                
                0Notes
      payable, interest at 8%, unsecured due on demand from the former TeleChem
      shareholders and their families
                
                
                845,396
                
                
                
                959,3383,705,499
                
                
                
                3,753,812*
      Notes payables included in liabilities of discontinued
      operations
                
                
                (208,419
                )
                
                
                (204,254
                )Notes
      payable including related parties
                
                
                3,497,080
                
                
                
                3,549,558








27




Scheduled
maturities of notes payable for years succeeding December 31, 2008 are as
follows:





Year
                
                Amount2009
                
                $
                74,8712010
                
                $
                80,0842011
                
                $
                85,6602012
                
                $
                82,699











NOTE
11 – SEGMENT REPORTING





Arrayit
has two reportable segments:





Biotech -
life sciences and disease diagnostics





Chemical
- chemical trading




28





Inventory
at December 31, 2008 and 2007, which consisted primarily of finished goods or
finished parts requiring assembly, was comprised of:





2008
                
                
                2007Biotech
                
                $
                445,534
                
                
                $
                256,237Chemical
                
                
                38,834
                
                
                
                53,009Total
                
                $
                484,368
                
                
                $
                309,246








Gross
Profit for the years ended December 31, 2008 and 2007, was comprised
of:





Sales
                    
                    
                    2008
                    
                    
                    2007Biotech
                    
                    $
                    3,721,751
                    
                    
                    $
                    3,310,412Chemical
                    
                    
                    341,399
                    
                    
                    
                    511,078Total
      Sales
                    
                    
                    4,063,149
                    
                    
                    
                    3,821,490Cost
      of SalesBiotech
                    
                    
                    2,079,375
                    
                    
                    
                    2,185,948Chemical
                    
                    
                    564,599
                    
                    
                    
                    477,821Total
      Cost of Sales
                    
                    
                    2,643,974
                    
                    
                    
                    2,663,769Gross
      ProfitBiotech
                    
                    
                    1,642,375
                    
                    
                    
                    1,124,464Chemical
                    
                    
                    (223,200
                    )
                    
                    
                    33,257Total
      Gross Profit
                    
                    $
                    1,419,175
                    
                    
                    $
                    1,157,721









NOTE
12 - COMMITMENTS AND CONTINGENCIES




Pediatrix
Screening, Inc., et al. V. TeleChem International, Inc.





The
controversy at issue arose from a failed grant collaboration between Pediatrix
and TeleChem, involving TeleChem’s proprietary microarray technology and
subsequent agreement by the parties to commercialize this microarray technology
through the formation of a joint corporation.  Pediatrix brought a
lawsuit in the United States District Court for the Western District of
Pennsylvania alleging multiple claims for breach of contract in connection with
both the grant collaboration and Pre-Incorporation
Agreement.  TeleChem counterclaimed alleging breach of the
Pre-Incorporation Agreement, as well as fraudulent misrepresentation and trade
secret misappropriation, inter
alia, stemming from the failed grant collaboration and subsequent
Pre-Incorporation Agreement.





On August
11, 2007, the jury returned a verdict finding that, while both parties were in
breach of contract, Pediatrix also engaged in fraudulent misrepresentation and
awarded TeleChem $500,000 in damages and $3,500,000 in punitive damages for the
fraudulent misrepresentation claim and $1,000,000 in damages on the breach of
contract claim.   The jury also awarded Pediatrix $1,085,000 in
damages for Pediatrix’s breach of contract claim against TeleChem.





Pediatrix’s
Rule 59 motion to amend the judgement was denied by the District
Court.  Pediatrix appealed the jury verdict on fraudulent
misrepresentation and the $4,000,000 in damages awarded thereunder to the U.S.
Court of Appeals for the Third Circuit.  Pediatrix has indicated that
it will not pursue on appeal the breach of contract verdict and damage award
against it.   TeleChem did not appeal any portion of the jury
verdict.





29





The
appeal is currently pending before the U.S. Court of Appeals for the Third
Circuit.








Long Term
Lease Commitments





The
Company leases its office facility in Sunnyvale, California under operating
leases that expire November 30, 2012.





Future  minimum  lease  payments  as  of  December  31,  2008  are  as  follows:





YEAR  ENDING





2009                  150,024





2010                  150,024





2011                  150,024





2012                  137,522








$  587,594





Rent
expense was approximately $134,838 for the year ended December 31, 2008
and


$169,988
for the year ended December 31, 2007.








Note 13-  Discontinued operations





On
April11, 2007 IMHI disposed of our wholly-owned subsidiary, WV Fiber,
LLC.  During the fourth quarter of 2007, IMHI approved a plan to
dispose of its wholly- owned subsidiaries, Endavo and
Bidchaser.





In
conjunction with the discontinuance of operations,  IMHI recognized a
loss of $3,142,419 in 2007 to record the impairment of goodwill The assets and
liabilities of the discontinued operations are presented separately under the
captions “Assets of discontinued operations” and “Liabilities of discontinued
operations,” in the accompanying Balance Sheets at December 31, 2008 and 2007,
and consist of the following:














2008
              
              
              2007Assets of
      discontinued operations:Cash
              
              $
              99,996
              
              
              $
              99,996Accounts
      receivable
              
              
              -Prepaid
      expenses
              
              
              -Property and
      equipments
              
              
              -Other
      noncurrent assets
              
              
              147,949
              
              
              
              147,949Total assets
      of discontinued operations
              
              $
              247,945
              
              
              $
              247,945Liabilities of
      Discontinued operationsAccounts
      payable and accrued expenses
              
              $
              1,463,965
              
              
              $
              1,463,965








30





Note
14 - Stockholders' Equity (Deficit)




Conversion
of Debt to Common Stock




During
2007, certain creditors converted $102,701 (2006 -$169,500) of loans and accrued
interest into 2,390,731 shares of common stock (adjusted for reverse split)
and  a subsidiary’s landlord converted $4,400 of unpaid rent into
30,345 shares of common stock.





No
conversion of debt occurred during 2008.




Common
Shares Issued for Service




During
2007, IMHI has issued 360,994 common shares and 112,651 Series A Preferred
shares to consultants under consulting agreements . The associated expenses are
$52,500 and $208,800 respectively.





Series
A Convertible Preferred Stock





The
Series A Preferred Stock has no stated dividend rate and has a liquidation
preference of $.001 per share. The Series A Preferred Stock also has voting
rights that entitle the preferred shareholders to vote with the common
shareholders as if the preferred stock had converted to common. The conversion
ratio of the preferred into common is not subject to revision upon reverse stock
dividends or splits that reduce the total shares outstanding.





As of
December 31, 2008, there are 3,810,262 shares of Series A Convertible Preferred
Stock issued and outstanding.





The
Series C Preferred Stock has no stated dividend rate.  The Series A
Preferred Stock also has voting rights that entitle the preferred shareholders
to vote with the common shareholders as if the preferred stock had converted to
common. The conversion ratio of the preferred into common is not subject to
revision upon reverse stock dividends or splits that reduce the total shares
outstanding.








The
103,143 Series C Preferred Stock was issued on February 21, 2008 as part of the
merger with TeleChem.   These Series C Preferred shares are
convertible into 36,100,000 common shares at the rate of 350:1.





On August
15, 2008 the articles of designation for the Series C Preferred Stock were
amended to limit the conversion to common to shares to 10% of the holders’
original holdings in any quarter.







Options
and warrants





On
January 19, 2008 IMHI issued 1,250,000 warrants, expiring on January 19, 2013,
exercisable at $0.01.  Warrants that were issued generally do not have
a life that exceeds ten years. Information regarding warrants and options
to purchase common shares is summarized below:





Number
      of Options and Warrants
                
                
                Weighted
      Average Exercise Price Per ShareOutstanding
      at December 31, 2006
                
                
                11,965,000
                
                
                $
                0.09Granted
                
                
                -
                
                
                
                -Cancelled/forfeited
                
                
                (3,013,000
                )
                
                
                -Expired
                
                
                -
                
                
                
                -Exercised
                
                
                -
                
                
                
                -Outstanding
      at December 31, 2007
                
                
                8,952,000
                
                
                $
                0.10Granted
                
                
                1,250,000
                
                
                $
                0.01Cancelled/forfeited
                
                
                (8,952,000
                )
                
                
                -Expired
                
                
                -
                
                
                
                -Exercised
                
                
                -
                
                
                
                -Outstanding
      at December 31, 2008
                
                
                1,250,000
                
                
                $
                0.09





31





The
following table summarizes information about outstanding warrants and options
for common stock at December 31, 2008:





Range
      of Exercise
                
                
                Number
      Outstanding
                
                
                Weighted
      Average Remaining Contractual Life (years)
                
                
                Weighted
      Average Exercise Price
                
                
                Number
      Exercised
                
                
                Average
      Exercise Price$
                0.01
                
                
                
                1,250,000
                
                
                
                5
                
                
                
                0.01
                
                
                
                0
                
                
                $
                0.01$
                0.01
      - $0.05
                
                
                
                421,362
                
                
                
                5
                
                
                
                0.03
                
                
                
                0
                
                
                $
                0.70$
                0.09
      - $0.10
                
                
                
                1,673,512
                
                
                
                6
                
                
                
                0.08
                
                
                
                0
                
                
                $
                0.10$
                0.10
      - $0.60
                
                
                
                4,870,781
                
                
                
                7
                
                
                
                9.34
                
                
                
                0
                
                
                $
                0.37$
                0.60
      - $0.42
                
                
                
                236,345
                
                
                
                7
                
                
                
                1.19
                
                
                
                0
                
                
                $
                1.19










Note
15 – Reverse Merger Accounting




On
      February 6, 2008, Integrated Media Holdings, Inc., a Delaware corporation
      (“IMHI” or the “Company”), filed a Current Report on Form 8-K (the
      “Original Filing”) announcing, among other things, the merger of TeleChem
      International, Inc. (“TeleChem”) a privately held Delaware
      corporation  (“TeleChem”) with and into a wholly-owned
      subsidiary of IMHI (the “Merger”), and that as a result TeleChem became a
      wholly owned subsidiary of IMHI.
              
              It is the intention of the parties for IMHI to divest itself of
      those operations designated as Discontinued Operations in IMHI's December
      31, 2007 Form 10-KSB, upon completion of the merger.
              
              For
      accounting purposes, this transaction was treated as an acquisition of
      IMHI and a recapitalization of TeleChem. TeleChem is the accounting
      acquirer and the results of its operations carryover. Accordingly, the
      operations of IMHI are not carried
over.


(a)Issue Preferred Shares for TeleChem's
net assets and consultants fees


Issue
Warrants for Consultants
  Effective
February 21, 2008, we completed the Plan and Agreement of Merger by and among
us, TeleChem International, Inc., the majority shareholders of TeleChem, Endavo
Media and Communications, Inc., a Delaware corporation and TCI Acquisition
Corp., a Nevada corporation, and wholly owned subsidiary of the
Company.  Consummation of the merger did not require a vote of our
shareholders.  We issued 103,143 shares of Series C Convertible
Preferred Stock to the Shareholders of TeleChem in exchange for 100% of the
equity interests of TeleChem resulting in TeleChem being a wholly owned
subsidiary and also as compensation for services in connection with the
acquisition..
  The
former shareholders of TeleChem and the consultants now own approximately 98.51%
of the outstanding interest and voting rights of the parent
company.  The Preferred Stock is convertible into 36,100,000 shares of
common stock after, but not before, the effective date of the reverse split of
the outstanding Integrated Media common stock, with conversions in any quarter
being limited to 25% of the original issued Series C preferred shares to the
holder.
  The value
of the 3,143 Series C preferred shares issued to consultants, convertible at 350
to one common shares was determined by applying the close on the OTCBB of $0.09
to yield $99,000
  On
January 19, 2008 IMHI issued 1,250,000 warrants to some IMHI noteholders,
expiring on January 19, 2013 exercisable at $0.01, in connection with the
Arrayit business combination.  At February 21, 2008 the market value
of the IMHI shares was $0.09, yielding an expense of $100,000.
  (b)Elimination of IMHI’s
Stockholders’ Equity.
 
 In
accordance with reverse acquisition accounting, the financial statements
subsequent to the date of the transaction will be presented as a continuation of
Arrayit and as a result the stockholders' equity of IMHI which is equal to the
book value of net assets, has been eliminated as follows:
  Total
Elimination
  IMHI
additional paid in
capital                      36,265,610
 IMHI accumulated
deficit                           (37,820,426)
 Adjusted book value of IMHI net
assets       (1,554,816)
  (f)Restatement of Share Capital
      Under Reverse Merger Accounting
                
                In
      accounting for this reverse merger, the legal share capital is that of
      IMHI (the legal parent) and the value of the share capital is calculated
      as described above.
                
                Upon
      completion of this transaction, Arrayit will have 17,499,262 of its $US
      0.001 par value common share issued and outstanding and 3,697,611 of its $
      0.001 pare value Series A preferred shares issued and outstanding and nil
      of its $ 0.001 par value Series C preferred shares issued and
      outstanding.
                
                In
      addition, Arrayit will have 1,250,000 warrants and options to purchase
      common shares after reflecting the cancellation of 1,750,000 common stock
      purchase warrants surrendered as consideration for the disposition of the
      former Endavo subsidiary of
IMHI.
  32




NOTE
16 – INCOME TAXES




At
December 31, 2008, the Company had net operating loss (NOL) carry-forwards
available to offset future taxable income of approximately $12 million including
approximately $11.5 million from IMHI at date of the merger. The utilization of
the NOL carry-forwards is dependent upon the tax laws in effect at the time the
NOL carry-forwards can be utilized. It is also likely that utilization of the
NOL carry-forwards are limited based on changes in control from the merger. A
valuation allowance has been recorded against the deferred tax asset due to the
uncertainty surrounding its realization caused by the Company’s recurring
losses. The NOL carryforwards will expire in 2018.




Prior to
merger, the financial statements of TeleChem did not include a provision for
income taxes because the taxable income of Telechem was included in the income
tax returns of the stockholders under Internal Revenue Service "S" Corporation
elections. Upon completion of the merger, Telecom ceased to be treated as an “S”
Corporation for income tax purposes income tax purposes.




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





None.





ITEM 9A. CONTROLS AND
PROCEDURES





Management’s
Annual Report on Internal Control over Financial Reporting





Our
management is responsible for establishing and maintaining adequate internal
control over our financial reporting. Internal control over financial reporting
is a process designed to provide reasonable assurance to our management and
board of directors regarding the reliability of financial reporting and the
preparation of financial statements for external purposes in accordance with
U.S. generally accepted accounting principles.





Under the
supervision and with the participation of our management, including our Chief
Executive Officer and Chief Financial Officer, we conducted an evaluation of the
effectiveness of our internal control over financial reporting. Management’s
review and evaluation of the company’s internal controls over financial
reporting did not involve a recognized framework for financial controls and was
limited to the identification of risks associated with the limited number of
personnel employed by the company and the direct involvement of the CEO and
CFO  in most business functions. In its assessment of the
effectiveness of internal control over financial reporting as of December 31,
2008, our management determined that there were control deficiencies that
constituted material weaknesses, as described below.





Lack of Effective Corporate
Governance Policies and Procedures.We do not have effective policies
regarding the independence of or directors and do not have independent
directors. The lack of independent directors means that there is no effective
review, authorization, or oversight of management or management’s actions by
persons that were not involved in approving or executing those actions. We have
no conflicts of interest policies and there is no provision for the review and
approval of transactions between the Company and interested members of
management.





Lack of Effective Policies Regarding
the General Accounting System.We do not have any documented processes
for the input, accumulation, or testing of financial data that would provide
assurance that all transactions are accurately and timely recorded or that the
financial reports will be prepared on a periodic basis.





Management
has determined that the Company does not have the financial resources or
personnel to address any of the material weaknesses identified or to conduct a
more robust evaluation of its controls. As resources become available,
management will develop and implement remedial actions to address the material
weaknesses it has identified.





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




Changes
in internal control over financial reporting





There
were no changes in our internal control over financial reporting during our most
recent fiscal quarter that materially affected, or were reasonably likely to
materially affect, our internal control over financial reporting.





ITEM 9B. OTHER
INFORMATION





None.





33





PART
III





ITEM 10. DIRECTORS,
EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE





The
following sets forth our officers and Directors as of the date of this
filing:








Name
                Position
                Year
      of AppointmentRene
      Schena
                Chairman,
      Director and CEO
                2007Todd
      J Martinsky
                Vice
      President and Director
                2007Mark
      Schena, Ph.D
                President,
      Chief Technology Officer, Secretary and Treasury
                2007Paul
      Haje
                Director
      of Advertising and Public Relations
                2007








Ms. Schena
holds a degree in Language Studies from the University of California Santa Cruz.
She has 23 years experience in international business, including translation,
contract documentation and commodities trading with a subsidiary of ConAgra from
1985 to 1988, and as a chemical import and distribution specialist, department
manager, and later President of NuSource Chemical Corporation.





She
founded TeleChem International, Inc. in 1993, continuing the import and export
chemical distribution specialty, expanding into government bid business, and
moving into the biotech sector in 1996.  TeleChem is a market leader
in DNA microarray technology, providing tools and expertise for the explosive
functional genomics and diagnostic screening markets.  In 2002 and
again in 2003, TeleChem made Inc. Magazine’s list of the top 500 fastest growing
privately held companies in the USA. In 2005, the Silicon Valley Business
Journal recognized Ms Schena as the President of the 11 th  largest
woman-owned business enterprise in the Silicon Valley.  Ms. Schena’s
long-term contacts in the chemical industry, strong business background and
management expertise are key contributions to TeleChem's
infrastructure.





Mr.
Martinsky , Co-founder of TeleChem International, Inc., previously served
as director of education and consulting at the Codd and Date Consulting
Group.  Mr. Martinsky has led the Arrayit Division to play a
significant role in the microarray industry. He has authored several book
chapters and other scientific literature and has become an internationally
recognized lecturer, writer, consultant and teacher.  In addition to
providing consulting services, Mr. Martinsky has spearheaded Arrayit’s technical
support team since 1997. Along with his daily technical and business
direction of the Arrayit Product line, Mr. Martinsky established successful
alliances with corporate partners in manufacturing, reagents, equipment and
distribution.  He is responsible for an educational outreach program
that ensures that the broadly patented Arrayit Micro Spotting Device is applied
in the field with optimal scientific and technological accuracy. He is currently
serving on the panel that is crafting future regulatory requirements for
microarray manufacturing for the United States Pharmacopeia.




Dr. Schena
is a world-renowned biochemist whose research focuses on microarray technology,
genomics, proteomics, genotyping, molecular diagnostics, and gene
expression.  Dr. Schena and his colleagues at Stanford University
published the first paper on microarrays in 1995 (Science 270, 467-470),
catalyzing the explosive proliferation of microarray technology at academic and
commercial institutions internationally.  The 95’ Science paper is the
most highly cited paper in the history of Arabidopsis research and a recent
article in The Scientist places Dr. Schena at positions 1 and 2 on the
“microarray family tree”, confirming his role as the founder of microarray
technology and substantiating his status as the Father of Microarray Technology.
More than 20,000 laboratories in 35 countries are using microarrays to explore
basic questions in biology, chemistry, agriculture and medicine, and the
proliferation of the technology has resulted in more than 26,000 publications
since the original 95’ Science publication.




Dr.
Schena is currently a Visiting Scholar and Consultant in the Arrayit® Life
Sciences Division at TeleChem International, Inc.  Dr. Schena is also
the Chairman of NGS-Arrayit, Inc and the Founder and President of Mark Schena
Inc., an educational consulting company providing consulting services to a
host





34





of
leading organizations such as Affymetrix,  AlphaGene, Arrayit,
Biodot,  Cartesian Technologies,
Clontech,  diaDexus,  General Scanning, Genomic
Solutions,  GSI Lumonics,  Incyte Pharmaceuticals, Irell and
Manella, Johnson & Johnson, Morrison & Foerster, Motorola, Packard
Instruments, Perkins Coie, Roche, Synteni, Technology Mentors, TeleChem
International, Wilson Sonsini, Goodrich & Rosati, and others.  Dr.
Schena resides with Ms. Rene Schena, the Chairman & CEO of TeleChem
International, Inc., in Los Altos, California.







Mr. Haje
joined TeleChem in 1999 as the Director of Advertising and Public
Relations.  He has successfully produced 63 major trade shows in the
USA and Canada, 17 workshops, 11 VIP events, 76 unique full page print
advertising campaigns, 18 direct mail campaigns, e-mail blasts, web site imagery
and two full color company catalogs.  In 2003, Mr. Haje won the 2003
Signet Advertising Award for Best Full Page Ad in the life sciences
sector.  Mr. Haje represented the company at the United States Food
and Drug Administration’s Microarray Quality Control projects I and II, drawing
important attention in the scientific press to the company and its H25K Whole
Human Genome Chip.  H25K was one of only seven microarray platforms
allowed to participate in the project, including Affymetrix, Agilent, Illumina,
GE Healthcare and Applied BioSystems.  Mr. Haje has promoted the
Arrayit brand name through company exposure on prime time television, in cover
stories, feature articles, trade publications, newsletters and web
broadcasts.  TV includes PBS NOVA, ABC Night Line, CNBC Business
Odyssey.  He has regularly booked cover stories and feature articles
in Science, The Scientist, Nature, Genetic Engineering News, BioTechniques,
Genome Technology, American Chemical Society, JAMA, PharmaGenomics, Genomics and
Proteomics, BioScience Technology, BioArray News, BioInform, and Genome
Web.





Independence
of Directors




We are
not required to have independent members of our Board of Directors, and do not
anticipate having independent Directors until such time as we are required to do
so.





Audit
Committee and Financial Expert




The
Company is not required to have an audit committee and as such, does not have
one.





Code
of Ethics for the CEO and CFO




On Feb
21, 2008, the Board of Directors of the Company adopted a Code of Ethics for the
Company’s senior officers.  The Board of Directors believes that these
individuals must set an exemplary standard of conduct, particularly in the areas
of accounting, internal accounting control, auditing and
finance.  This code sets forth ethical standards to which the
designated officers must adhere and other aspects of accounting, auditing and
financial compliance.








SECTION
16 (A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE





Section
16(a) of the securities Exchange Act of 1934, as amended, requires our
directors, executive officers and persons who own more than 10% of a class of
our equity securities which are registered under the Exchange Act of 1324, as
amended, to file with the Securities and Exchange Commission initial reports of
ownership and reports of changes of ownership of such registered securities.
Such executive officers, directors and greater than 10% beneficial owners are
required by Commission regulation to furnish us with copies of all Section 16(a)
forms filed by such reporting persons.




35





ITEM 11. EXECUTIVE
COMPENSATION





SUMMARY
COMPENSATION TABLE








Name
      and Principal Position
                Year
                
                Salary
                
                
                Bonus
                
                
                Stock
      Awards
                
                
                Options
      Awards
                
                
                All
      Other Compensation
                
                
                Total($)
                
                
                ($)
                
                
                ($)
                
                
                ($)
                
                
                ($)
                
                
                ($)Rene
      A Schena
                2008
                
                $
                45,000
                
                
                
                -
                
                
                
                -
                
                
                
                -
                
                
                
                -
                
                
                $
                45,000Chairman,
      Director and CEO
                2007
                
                $
                22,500
                
                
                
                -
                
                
                
                -
                
                
                
                -
                
                
                
                -
                
                
                $
                22,500Todd
      J Martinsky
                2008
                
                
                -
                
                
                
                -
                
                
                
                -
                
                
                
                -
                
                
                $
                5,707
                
                
                $
                5,707Vice
      President and Director
                2007
                
                
                
                
                
                
                -
                
                
                
                -
                
                
                
                -
                
                
                $
                1,900
                
                
                $
                1,900Mark
      Schena, Ph.D
                2008
                
                
                
                
                
                
                -
                
                
                
                -
                
                
                
                -
                
                
                $
                250,000
                
                
                $
                250,000President,
      Chief Technology Officer, Secretary & Treasury
                2007
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                $
                250,000
                
                
                $
                250,000William
      L. Sklar (3)
                2008
                
                
                -
                
                
                
                -
                
                
                
                -
                
                
                
                -
                
                
                $
                18,000
                
                
                $
                18,000CFO
                2007
                
                
                -
                
                
                
                -
                
                
                
                -
                
                
                
                -
                
                
                
                -
                
                
                
                -Paul
      Haje
                2008
                
                $
                96,845
                
                
                
                -
                
                
                
                -
                
                
                
                -
                
                
                
                -
                
                
                $
                96,845Director
      of Advertising and Public Relations
                2007
                
                $
                99,448
                
                
                
                -
                
                
                
                -
                
                
                
                -
                
                
                
                -
                
                
                $
                99,448








Our
compensation and benefits programs are administered by our Board of Directors
and intended to retain and motivate individuals with the necessary experience to
accomplish our overall business objectives within the limits of our available
resources.  Consequently, the guiding principles of our compensation
programs are:






            simplicity,
      clarity, and fairness to both the employee and the
  Company;
            preservation
      of Company resources, including available cash;
  and






            opportunity
      to receive fair compensation if the Company is
  successful.





Each
element of our compensation program contributes to these overall goals in a
different way.






            Base
      Salary and Benefits are designed to provide a minimum threshold to attract
      and retain employees identified as necessary for our
    success.
            Cash
      Bonuses and equity awards are designed to provide supplemental
      compensation when the Company achieves financial or operational goals
      within the limits of our available
resources.








36





All
compensation payable to the Chief Executive Officer and the other named
executive officers is reviewed annually by the Board of Directors and changes or
awards are approval by the Board of Directors.





Board
Compensation





The
following table sets forth summary information concerning the compensation we
paid to directors during the year ended December 31, 2008:





Name
                
                Fees
      Earned or Paid in Cash
                  ($)
                
                
                Stock
      Awards
                  ($)
                
                
                Option
      Awards
                  ($)
                
                
                All
      Other Compensation
                  ($)
                
                
                Total
                  ($)Rene
      Schena (1)
                
                
                -
                
                
                
                -
                
                
                
                -
                
                
                
                -
                
                
                
                -Mark
      Schena (1)
                
                
                -
                
                
                
                -
                
                
                
                -
                
                
                
                -
                
                
                
                -Todd
      Martinsky (1)
                
                
                -
                
                
                
                -
                
                
                
                -
                
                
                
                -
                
                
                
                -Bill
      Sklar (1)
                
                
                -
                
                
                
                -
                
                
                
                -
                
                
                
                -
                
                
                
                -








(1) None
of the Board members received any additional consideration for their services to
the Board of Directors other than what they were paid as officers of the
Company, as provided above, and as such, they have not been included in the
table above.








37








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





Beneficial
ownership of the common stock is determined in accordance with the rules of
the Securities and Exchange Commission and includes any shares of common stock
over which a person exercises sole or shared voting or investment powers, or of
which a person has a right to acquire ownership at any time within 60 days of
March 24, 2009.  Except as otherwise indicated, and subject to applicable
community property laws, the persons named in this table have sole voting and
investment power with respect to all shares of common stock held by them. 
Applicable percentage ownership in the following table is based on 82,079,504
shares of common stock outstanding as of March 24, 2009 plus, for each
individual, any securities that individual has the right to acquire within 60
days of March 24, 2009.





The
following table sets forth a description of any substantial interest, direct or
indirect of each person who has been a director or executive officer of the
registrant at any time since the beginning of the last fiscal
year.  The address of each person, unless otherwise noted, is 524 East
Weddell Drive, Sunnyvale, California 94089. Additionally we have included
information about persons more than 5% of the total voting rights.







Common
      Stock
                        
                        
                        
                        
                        
                        Series
      A Preferred Stock
                        
                        
                        Series
      C Preferred Stock
                        
                        
                        Total
      Voting Shares Based on All Voting Shares Outstanding
                        
                        
                        Total
      %Officers
      and DirectorsRene
      A Schena,
                        
                        
                        0
                        
                        
                        
                        
                        
                        
                        0
                        
                        
                        
                        42,857
                        
                        
                        
                        14,999,950
                        
                        
                        
                        16.8
                        %Chief
      Executive Officer,Chief
      Financial Officer and DirectorMark
      Schena, Director
                        
                        
                        0
                        
                        
                        
                        
                        
                        
                        0
                        
                        
                        
                        14,286
                        
                        
                        
                        5,000,100
                        
                        
                        
                        5.6
                        %William
      L. Sklar, Director
                        
                        
                        19,996
                        
                        
                        
                        
                        
                        
                        98,807
                        
                        
                        
                        0
                        
                        
                        
                        968,539
                        
                        
                        
                        1.1
                        %Todd
      Martinsky, Director
                        
                        
                        0
                        
                        
                        
                        
                        
                        
                        0
                        
                        
                        
                        28,571
                        
                        
                        
                        9,999,850
                        
                        
                        
                        11.2
                        %Paul
      K. Haje
                        
                        
                        0
                        
                        
                        
                        
                        
                        
                        0
                        
                        
                        
                        14,286
                        
                        
                        
                        5,000,100
                        
                        
                        
                        5.6
                        %Director
      of Advertising and Public RelationsGreater
      Than 5% ShareholdersWV
      Fiber, LLC (2)
                        
                        
                        4,055,448
                        
                        
                        
                        
                        
                        
                        0
                        
                        
                        
                        0
                        
                        
                        
                        4,055,448
                        
                        
                        
                        4.6
                        %Mashrua
      Shipping & Transport Ltd. (3)
                        
                        
                        1,000,000
                        
                        
                        
                        
                        
                        
                        0
                        
                        
                        
                        0
                        
                        
                        
                        1,000,000
                        
                        
                        
                        1.1
                        %WEM
      Equity Capital Investments, Ltd. (4)
                        
                        
                        71,946
                        
                        
                        
                        (1
                        )
                        
                        
                        355,505
                        
                        
                        
                        0
                        
                        
                        
                        3,484,797
                        
                        
                        
                        3.9
                        %Briarpatch,
      Ltd. (5)
                        
                        
                        71,946
                        
                        
                        
                        (1
                        )
                        
                        
                        355,505
                        
                        
                        
                        0
                        
                        
                        
                        3,484,797
                        
                        
                        
                        3.9
                        %Donald
      Sapaugh
                        
                        
                        44,003
                        
                        
                        
                        (1
                        )
                        
                        
                        217,432
                        
                        
                        
                        0
                        
                        
                        
                        2,131,352
                        
                        
                        
                        2.4
                        %Hunter
      Carr
                        
                        
                        43,452
                        
                        
                        
                        (1
                        )
                        
                        
                        214,707
                        
                        
                        
                        0
                        
                        
                        
                        2,104,639
                        
                        
                        
                        2.4
                        %First
      Sage Equity, Inc. (6)
                        
                        
                        50,137
                        
                        
                        
                        (1
                        )
                        
                        
                        247,739
                        
                        
                        
                        0
                        
                        
                        
                        2,428,430
                        
                        
                        
                        2.7
                        %Phillip
      Johnson
                        
                        
                        41,781
                        
                        
                        
                        (1
                        )
                        
                        
                        206,449
                        
                        
                        
                        0
                        
                        
                        
                        2,023,691
                        
                        
                        
                        2.3
                        %Jukka
      Tolonen
                        
                        
                        40,151
                        
                        
                        
                        (1
                        )
                        
                        
                        198,398
                        
                        
                        
                        0
                        
                        
                        
                        1,944,768
                        
                        
                        
                        2.2
                        %Fairfield
      Financing, Inc. (7)
                        
                        
                        50,137
                        
                        
                        
                        (1
                        )
                        
                        
                        247,739
                        
                        
                        
                        0
                        
                        
                        
                        2,428,430
                        
                        
                        
                        2.7
                        %All of the Officers and
      Directors as a Group (5 Persons)
                        
                        
                        19,996
                        
                        
                        
                        
                        
                        
                        
                        98,807
                        
                        
                        
                        100,000
                        
                        
                        
                        35,968,539
                        
                        
                        
                        40.40







(1)  Held
under the terms of a custodian agreement that grants exclusive voting,
dispositive and any other economic rights to the beneficial owners named in the
agreements and provides that no beneficial owner is affiliated with any other
beneficial owner and the beneficial owners are not acting and will not act as a
group.


(2)  The
Company is not aware of the individual with investment authority over the shares
beneficially owned by WV Fiber, LLC, which entity is currently in
Bankruptcy.


(3)  The
Company is not aware of the individual with investment authority over the shares
beneficially owned by Mashrua Shipping & Transport Ltd.


(4)  The
natural person with dispositive authority over securities of the company is
William E. McIlwain at the above address.


(5)  The
natural person with dispositive authority over securities of the company is Brad
Fleming at the above address.


(6)  The
natural person with dispositive authority over securities of the company is Joe
Wiley.


(7)  The
natural person with dispositive authority over securities of the company is O.
Preston Smith.








ITEM 13. CERTAIN
RELATIONSHIPS AND RELATED TRANSACTIONS





Pursuant
to a consulting agreement with Dr. Mark Schena, the Company is obligated to pay
a royalty of 5% of gross sales to him as a royalty for unfettered use of his
patents and knowledge.   Amounts outstanding at December 31, 2008
and 2007 of $349,950 and $337,616 respectively are unsecured, non-interest
bearing and due on demand.





ITEM 14. PRINCIPAL
ACCOUNTANT FEES ANDSERVICES





Audit
Fees





The
aggregate fees billed for each of the fiscal years ended December 31, 2008 and
2007 for professional services rendered by the principal accountants for the
audit of the Company's annual financial statements and the review of the
Company's quarterly financial statements were $100,408 and $98,456,
respectively.





Audit
Related Fees


None.





Tax
Fees


None for
2008 and $4,050 for  2007





All
Other Fees


None for
2008 and $13,600 for 2007







38





ITEM 15. EXHIBITS, FINANCIAL
STATEMENT SCHEDULES





(a)
Exhibits





Exhibit
      No.
            Description
      of Exhibit3.1(2)
            Amended
      and Restated Articles of Incorporation3.2(2)
            Amended
      and Restated Bylaws3.3(3)
            Amendment
      to the Bylaws of the Company




10.1(1)
            Agreement
      and Plan of Reorganization among IMHI, Telechem, dated Feb 21, 2008
      (without Exhibits).14.1*
            Code
      of Ethics dated Feb 21, 2008





21.1*
            Subsidiaries31.1*
            Certificate
      of the Chief Executive Officer and Principal Accounting Officer pursuant
      Section 302 of the Sarbanes-Oxley Act of 200232.1*
            Certificate
      of the Chief Executive Officer and Principal Accounting Officer pursuant
      to Section 906 of the Sarbanes-Oxley Act of
2002


*
Filed herein.





(1) Filed
as exhibits to the Company’s Form 8-K/A filed with the Commission on July 28,
2008, and incorporated herein by reference.





(2) Filed
as exhibits to the Company’s Definitive Schedule 14C filing, filed with the
Commission on xxxx, and incorporated
herein by reference.





(3) Filed
as an exhibit to the Company’s Form 8-K, filed with the Commission on xxx, and incorporated
herein by reference.








39








SIGNATURES





In
accordance with Section 13 or 15(d) of the Securities Exchange Act of 1934, the
Registrant caused this report to be signed on its behalf by the undersigned,
thereunto duly authorized.




Arrayit
Corporation





DATED: 
      April 15, 2009
            By: /s/ Rene SchenaRene
      SchenaChariman,
      Director and CFO





In
accordance with the Securities Exchange Act of 1934, this report has been signed
below by the following persons on behalf of the Registrant and in the capacities
and on the dates indicated.





NAME
            TITLE
            DATE/s/ Rene Schena
            
            April
      15, 2009Rene
      Schena
            Chariman,
      Director and CEO/s/
      Todd Martinsky
            
            April
      15, 2009Todd
      Martinsky
            V.President
      and Director/s/
      Mark Schena
            
            April
      15, 2009Mark
      Schena
            President
      and Director








40