SECURITIES
AND EXCHANGE COMMISSION
 Washington,
D.C. 20549
 
 FORM
10-K
 
 x ANNUAL REPORT
PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF
1934
 For the
fiscal year ended March 31, 2010
 
 OR
 o TRANSITION REPORT
UNDER SECTION 13 OF 15(d) OF THE EXCHANGE ACT OF 1934
  Commission
File Number 000-50541
 
 China
Development Group, Inc.
 (Exact
name of small business issuer as specified in its charter)
 
 Nevada
                
                88-0507007(State
      or other jurisdiction of
                  incorporation
      or organization)
                
                (IRS
      Employer Identification
Number)
 
 710 N.
Post Oak Road, Suite 410, Houston, TX 77024
 (Address
of principal executive offices)
 (832)
426-7907
 (Issuer's
telephone number)
 
 Securities
registered pursuant to Section 12(b) of the
Act:            None
 
 Securities
registered pursuant to Section 12(g) of the Act:  $.001 Par Value
Common Stock
 
 Check
whether the Issuer (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    Noo
 
 Check if
there is no disclosure of delinquent filers in response to Item 405 of
Regulation S-B is not contained in this form, and no disclosure will be
contained, to the best of registrant’s knowledge, in definitive proxy or
information statements incorporated by reference in Part III of this Form 10-K
or any amendment to this Form 10-K.o
 
 Issuer’s
revenues for the fiscal year ended March 31, 2010, were $0.00.
 
 The
Company’s common stock is not listed on any exchange and does not
trade.
 
 The
Registrant’s common stock outstanding as of July 14, 2010, was 23,682,763
shares.
 
 DOCUMENTS
INCORPORATED BY REFERENCE:
  
  
 CHINA
DEVELOPMENT GROUP, INC.
 
 (pka
ONCOLIN THERAPEUTICS, INC.)
 INDEX
TO FORM 10-K
 March
31, 2010
 
 Page
      No.Part
      I
                  
                  Item
      1.
                  
                  Description
      of Business
                  
                  4Item
      1A.
                  
                  Risk
      Factors
                  
                  7Item
      2.
                  
                  Properties
                  
                  12Item
      3.
                  
                  Legal
      Proceedings
                  
                  12Item
      4.
                  
                  Submission
      of Matters to a Vote of Security HoldersPart
      II
                  
                  Item
      5.
                  
                  Market
      for Common Equity, Related Stockholder Matters and Small Business Issuer
      Purchases of Equity Securities
                  
                  13Item
      6.
                  
                  Selected
      Financial Data
                  
                  13Item
      7.
                  
                  Management’s
      Discussion and Analysis or Plan of Operations
                  
                  14Item
      8.
                  
                  Financial
      Statements
                  
                  17Item
      9.
                  
                  Changes
      in and Disagreements with Accountants on Accounting and Financial
      Disclosure
                  
                  29Item
      9A.
                  
                  Controls
      and Procedures
                  
                  30Part
      III
                  
                  Item
      10.
                  
                  Directors,
      Executive Officers, Promoters and Control Persons, and Corporate
      Governance; Compliance with Section 16(a) of the Exchange
      Act
                  
                  31Item
      11.
                  
                  Executive
      Compensation
                  
                  32Item
      12.
                  
                  Security
      Ownership of Certain Beneficial Owners and Management and Related
      Stockholder Matters
                  
                  33Item
      13.
                  
                  Certain
      Relationships and Related Party Transactions, and Director
      Independence
                  
                  34Item
      14.
                  
                  Principal
      Accountant Fees and Services
                  
                  35Item
      15.
                  
                  Exhibits
                  
                  35
  Page
2
 
 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. Description of Business," and "Item 6. Management's
Discussion and Analysis or Plan of Operation", 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", "will", "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 China Development Group, Inc. ("the
Company", "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 March 31, 2010.
  Page
3
 
 PART
I
 
 ITEM
      1.
                DESCRIPTION
      OF BUSINESS
 
 Organization
 
 China
Development Group, Inc. (CDG) (formerly, Dragon Gold Resources, Inc., (Dragon
Gold) and Edgeline Holdings, Inc. (Edgeline) and Oncolin Therapeutics, Inc.
(Oncolin)) was incorporated in the State of Nevada on December 13, 2000, under
the name “Folix Technologies, Inc.”  Effective June 14, 2004, the
Company changed its name to Dragon Gold Resources, Inc.  The Company's
principal business was the development of a Linux based application server and
thin client computing systems.  During the year ended March 31, 2005,
the Company entered the mineral resource exploration business through the
acquisition of a 100% interest in Dragon Minerals Holdings Inc. (“DMHI”), a
private British Virgin Island company.  DMHI is involved in mineral
property acquisition and exploration in China.  On May 5, 2006, the
Company and DMHI terminated their agreement dated July 14, 2004.  On
June 19, 2007, the shareholders approved a change in the Company’s name to
Edgeline Holdings, Inc. and on March 7, 2008 to Oncolin Therapeutics, Inc. On
May 18, 2010 Oncolin changed its name to China Development Group,
Inc.
 
 On
May 31, 2007 (the “Closing Date”), Dragon Gold Resources, Inc., entered into and
closed an Agreement and Plan of Reorganization (the “Exchange Agreement”) with
Secure Voice Communications, Inc., a Texas corporation (“Secure Voice”) and the
stockholders of Secure Voice (the “Stock Transaction”).  As a result
of the Stock Transaction, Secure Voice became a wholly-owned subsidiary of
Dragon Gold when Dragon Gold agreed to issue an aggregate of 3,207,840,000
shares of its common stock to the former shareholders of Secure Voice (in
exchange for all the outstanding capital stock of Secure Voice), resulting in
the former shareholders of Secure Voice owning approximately 98.5% of the issued
and outstanding Dragon Gold common stock.  As the articles of
incorporation only authorized the issuance of 500,000,000 shares of common
stock, Dragon Gold issued 450,053,276 shares of common stock and was obligated
to issue an additional 2,757,786,724 shares of common stock.  At the
annual shareholders' meeting which was held on June 19, 2007, the shareholders
approved an 80-for-1 reverse split that did not reduce the number of authorized
shares of common stock.  Upon the approval of the 80-for-1 reverse
split, Dragon Gold issued the balance of these shares which equated to
34,472,334 shares on a post-split basis.
 
 As
of March 31, 2010, CDG had two wholly-owned subsidiaries as
follows:
 · Secure Voice
Communications, Inc. (“Secure Voice”) – This subsidiary was incorporated in the
State of Texas on May 9, 2007, with the initial primary focus being the
development and readying for market a SIP (Session Initiation Protocol) based
approach to defending voice traffic and voice packets against deliberate attacks
such as DoS (Denial of Service) developing information.
 
 · New
EnerSource, Inc. (“New EnerSource”) – This subsidiary was incorporated in the
State of Texas on August 28, 2007, with the primary purpose to engage in
enhanced oil recovery (“EOR”) projects.
 
 Business
Strategy
 
 The
Company is a developmental stage company focused primarily on developing
therapeutic products to treat cancer.  As such, substantially all of
our efforts will be devoted to performing research and experimentation,
conducting clinical trials, developing and acquiring intellectual property,
raising capital and recruiting and training personnel.  Currently, we
do not have any products in clinical trials or on the market.  We are
still in the early stages of identifying and conducting research on potential
products.
  Page
4
 
 PRODUCT
DEVELOPMENT
 
 Cancer
Market
 
 The
American Cancer Society estimates that nearly 1.4 million people in the U.S.
were diagnosed with cancer in 2007, excluding basal and squamous cell skin
cancers and in situ carcinomas except urinary bladder carcinomas. This is an
increase of approximately 12.5% from the estimated number of new cancer
diagnoses of approximately 1.2 million in the year 2000. We believe this growth
rate is unlikely to decrease in the foreseeable future as the causes of cancer
are multiple and poorly understood.
 
 Despite
continuous advances made in the field of cancer research every year, there
remains a significant unmet medical need as the overall five-year survival rate
for a newly diagnosed cancer patient averages 64% according to the American
Cancer Society. According to that same source, in 2004, cancer was the second
leading cause of mortality in the U.S. behind heart disease. The American Cancer
Society estimates that one in four deaths in the U.S. is due to
cancer.
 
 Brain
Cancer
 
 Malignant
gliomas are the most common primary brain tumor in adults, accounting for more
that 50% of the 20,500 new brain tumor cases in the United States each
year.  The most common glioma is glioblastoma multiforme, a highly
lethal tumor with a media survival of less than one year. The National Cancer
Institute estimates that approximately 20,500 new cases of glioblastoma were
diagnosed in 2007 with 12,740 deaths. Primary intervention is surgery followed
by radiation therapy and chemotherapy.  Because of its invasive nature
and resistance to currently available therapy there is an urgent need for novel
therapeutics to treat gliomas subsequent to primary debulking
surgery.
 
 United
States Regulatory Approval
 
 FDA
regulations require us to undertake a long and rigorous process before any of
our product candidates may be marketed or sold in the United
States.  This regulatory process typically includes the following
general steps:
 
 ·
              performance
      of satisfactory preclinical laboratory and animal studies under the FDA’s
      good laboratory practices
regulations;
 
 ·
              obtaining
      the approval of independent Institutional Review Boards at each clinical
      site to protect the welfare and rights of human subjects in clinical
      trials;
 
 ·
              submission
      to and acceptance by the FDA of an Investigational New Drug Application
      (IND) which must become effective before human clinical trials may begin
      in the United States;
 
 ·
              successful
      completion of a series of adequate and well-controlled human clinical
      trials to establish the safety, purity, potency and effectiveness of any
      product candidate for its intended
use;
 
 ·
              submission
      to, and review and approval by, the FDA of a marketing application (NDA)
      prior to any commercial sale or shipment of a product;
  and
 
 ·
              development
      and demonstration of manufacturing processes which conform to FDA-mandated
      current good manufacturing
practices.
 
 This
process requires a substantial amount of time and financial
resources.
  Page
5
 
 Preclinical
tests generally include laboratory evaluation of a product candidate, its
chemistry, formulation, stability and toxicity, as well as certain animal
studies to assess its potential safety and effectiveness.  We must
submit the results of these preclinical tests, together with manufacturing
information, analytical data and the clinical trial protocol, to the FDA as part
of an Investigational New Drug Application, which must become effective before
we may begin any human clinical trials.  An application automatically
become effective 30 days after receipt by the FDA, unless the FDA, within this
30-day time period, raises concerns or questions about the intended conduct of
the trials and imposes what is referred to as a clinical hold.  If one
or more of our products is placed on clinical hold, we would be required to
resolve any outstanding issues to the satisfaction of the FDA before we could
begin clinical trials.
 
 HIPAA
 Other
federal legislation may affect our ability to obtain certain health information
in conjunction with our research activities. The Health Insurance Portability
and Accountability Act of 1996, or HIPAA, mandates, among other things, the
adoption of standards designed to safeguard the privacy and security of
individually identifiable health information. In relevant part, the U.S.
Department of Health and Human Services, or HHS, has released two rules to date
mandating the use of new standards with respect to such health information. The
first rule imposes new standards relating to the privacy of individually
identifiable health information. These standards restrict the manner and
circumstances under which covered entities may use and disclose protected health
information so as to protect the privacy of that information. The second rule
released by HHS establishes minimum standards for the security of electronic
health information. While we do not believe we are directly regulated as a
covered entity under HIPAA, the HIPAA standards impose requirements on covered
entities conducting research activities regarding the use and disclosure of
individually identifiable health information collected in the course of
conducting the research.
 
 As a
result, unless they meet these HIPAA requirements, covered entities conducting
clinical trials for us may not be able to share with us any results from
clinical trials that include such health information.
 
 Background
 Currently,
treatment choices available to brain cancer patients are
limited.  Surgery is common, but not always
viable.  Chemotherapy and radiotherapy have shown some clinical
benefit but neither is successful in achieving long term remission.
 
 Although
many drugs, both approved and in clinical trials, show efficacy against brain
tumor cell lines, they are not viable since they do not cross the blood brain
barrier (body’s natural filter for brain blood supply) and therefore cannot
reach the target tumor.  Therefore, drugs that penetrate this blood
brain barrier with novel mechanisms are of great interest for this tumor
population.  It has long been known that tumors depend on energy production
pathways that are different from those of tumor cells.  This is
especially true for the progression of brain tumors which become regionally
hypoxic (oxygen starved) and stimulate signaling pathways to up-regulate
angiogenesis and shift metabolism to preferentially utilize glycolysis as its
source of energy and survival.  This metabolism shift along with a
large (100 fold) up regulation of glucose receptors on brain tumor cells make
inhibitors of this pathway a key target.
 
 Employees
 
 We
currently have one full time employee.  In order to implement our
business plan, we will be required to employ qualified technical and
administrative employees or retain the services of qualified consultants with
the technical expertise to evaluate the technologies which we are
seeking.
 
 Insurance
 We
currently do not have any insurance coverage to cover losses or risks incurred
in the ordinary course of business.
  Page
6
 
 Risk
Factors
 The
Company’s business, financial condition and results of operations could be
materially adversely affected if any of these risks materialized, which could
result in the trading price of our common stock to decline.
 
 The
Company is a development stage company and there can be no assurance the Company
will successfully implement its plans.
 The
Company is in the development stage and its operations are subject to the
considerable risks inherent in the establishment of a new business
enterprise.  As of March 31, 2010, the Company had experienced
cumulative losses equal to $2,845,757.  The Company’s likelihood of
success must be considered in light of the problems, expenses, difficulties,
complications and delays frequently encountered in connection with the formation
of a new business which seeks to obtain funds to finance its operations in a
highly competitive environment.  There can be no assurance that the
Company will successfully implement any of its plans in a timely or effective
manner or that the Company will ever be profitable. In addition, there can be no
assurances that we will choose to continue any of our current product candidates
because we intend to consider and, as appropriate,divest ourselves
of products or businesses thatmay no longer be a
strategic fit to our business strategy.
 
 The
Company has a history of operating losses and does not expect to be profitable
in the near future.
 The
Company has not generated any profits since its inception, has no source of
revenues, and has incurred significant operating losses.  Furthermore,
due to the nature of leading-edge niche technologies, the Company does not
expect to generate significant revenue until future years.  As the
Company begins to develop its business strategy, it expects its expenses to
increase in the next few years.
 
 Failure
to raise additional capital will prevent the Company from implementing its
business strategy.
 The
Company needs to obtain significant additional capital resources through equity
and/or debt financings.  As of March 31, 2010, the Company had minimal
assets in cash and cash equivalents and negative working
capital.   The Company does not have credit facilities available
with financial institutions or other third parties.  The Company can
provide no assurance it will be successful in seeking this or any additional
financing, and the failure to obtain any such financing may cause it to curtail
operations.
 
 The
Company’s management is currently unproven.
 The
Company has a limited history of operations under the management and control of
the new officers and directors of the Company.  The Company believes
that the combined skill, education and experience of the new management team
will be successful in its endeavors; however, there is no guarantee that the new
management team will be successful.
 
 We
have a limited operating history upon which to base an investment
decision.
 To
date, we have no products and we have not demonstrated an ability to perform the
functions necessary for the successful commercialization of any of our product
candidates.
 Our
operations have been limited to organizing and staffing our company, acquiring,
developing and securing our proprietary technologies and undertaking, through
third parties, pre-clinical trials of our product candidates.  These
operations provide a limited basis for you to assess our ability to
commercialize our product candidates and the advisability of investing in our
Securities.
 
 We
have a history of losses and expect to incur substantial losses and negative
operating cash flows for the foreseeable future, and we may never achieve or
maintain profitability.
 We
have no revenues and are not currently profitable.  We will likely
need to raise additional capital as early as six months or sooner after the
closing of additional financing.   Since our inception, we have
incurred significant net losses. As a result of ongoing operating losses, we had
an accumulated deficit of $2,845,757 as of March 31, 2010.
  Page
7
 
 Even if
we succeed in developing and commercializing one or more of our drugs, we expect
to incur substantial losses for the foreseeable future and may never become
profitable. We also expect to continue to incur significant operating and
capital expenditures and anticipate that our expenses will increase
substantially in the foreseeable future as we:
 
 ·
              seek
      regulatory approvals for our product
candidates;
 
 ·
              develop,
      formulate, manufacture and commercialize our drugs; implement additional
      internal systems and infrastructure; and hire additional clinical and
      scientific personnel; and
 
 ·
              expect
      to experience negative cash flow for the foreseeable future as we fund our
      operating losses and capital expenditures. As a result, we will need to
      generate significant revenues to achieve and maintain profitability. We
      may not be able to commercialize products from which to generate these
      revenues, and we may never achieve profitability in the
      future.
 
 If
we cannot raise additional funding, we will be unable to complete development of
our product candidates.
 We
will require additional funding in order to continue our research and product
development programs, including preclinical testing and clinical trials of our
product candidates, for operating expenses, and to pursue regulatory approvals
for product candidates. We also may require additional funding to establish
manufacturing and marketing capabilities in the future. We believe that our
existing capital resources and the proceeds from financing will be sufficient to
satisfy our current and projected funding requirements for at least the next six
months.  However, these resources will be insufficient to conduct
research and development programs as planned. If we cannot obtain adequate
funds, we may be required to curtail significantly one or more of our research
and development programs or obtain funds through arrangements with corporate
collaborators or others that may require us to relinquish rights to some of our
technologies or product candidates.
 
 Although
we intend to seek additional funding through public or private sales of our
securities, including equity securities or through strategic alliances, we have
no committed sources of additional capital.  We cannot assure you that
funds will be available to us in the future on favorable terms, if at
all.  In addition, we may continue to pursue opportunities to obtain
additional financing in the future. However, additional equity or debt financing
might not be available on reasonable terms, if at all, and any additional equity
financings will be dilutive to our stockholders.  If adequate funds
are not available to us on terms that we find acceptable, or at all, we may be
required to delay, reduce the scope of, or eliminate research and development
efforts or clinical trials on any or all of our product
candidates.  We may also be forced to curtail or restructure our
operations, obtain funds by entering into arrangements with collaborators on
unattractive terms or relinquish rights to certain technologies or product
candidates that we would not otherwise relinquish in order to continue
independent operations.
 
 The Company’s stock price is highly
volatile.
 The
market price of the Company's common stock has fluctuated and may continue to
fluctuate.  These fluctuations may be exaggerated since the trading
volume of its common stock is volatile.  These fluctuations may or may
not be based upon any business or operating results.  Its common stock
may experience similar or even more dramatic price and volume fluctuations in
the future.
 
 Additional
capital may dilute current stockholders.
 In
order to provide capital for the operation of the Company’s business, it may
enter into additional financing arrangements.  These arrangements may
involve the issuance of new common stock, preferred stock that is convertible
into common stock, debt securities that are convertible into common stock or
warrants for the purchase of common stock.  Any of these items could
result in a material increase in the number of shares of common stock
outstanding which would in turn result in a dilution of the ownership interest
of existing common shareholders.  In addition, these new securities
could contain provisions, such as priorities on distributions and voting rights,
which could affect the value of the Company’s existing common
stock.
 
 A
low market price may severely limit the potential market for the Company’s
common stock.
 The
Company’s common stock is currently trading at a price below $5.00 per share,
subjecting trading in the stock to certain SEC rules requiring additional
disclosures by broker-dealers.  These rules generally apply to any
non-Nasdaq equity security that has a market price of less than $5.00 per share,
subject to certain exceptions (a “penny stock”).
  Page
8
 
 For these
types of transactions, the broker-dealer must make a special suitability
determination for the purchaser and have received the purchaser's written
consent to the transaction prior to the sale.  The broker-dealer also
must disclose the commissions payable to the broker-dealer, current bid and
offer quotations for the penny stock and, if the broker-dealer is the sole
market maker, the broker-dealer must disclose this fact and the broker-dealer's
presumed control over the market.  Such information must be provided
to the customer orally or in writing before or with the written confirmation of
trade sent to the customer.
 Monthly
statements must be sent disclosing recent price information for the penny stock
held in the account and information on the limited market in penny
stocks.  The additional burdens imposed upon broker-dealers by such
requirements could discourage broker-dealers from effecting transactions in the
Company’s common stock.
 
 The Company is unlikely to pay
dividends on its common stock.
 The
Company does not anticipate paying any cash dividends on its common stock in the
foreseeable future.  While its dividend policy will be based on its
operating results and capital needs, the Company anticipates that all earnings,
if any, will be retained to finance its future operations.
 
 We
are subject to significant regulatory approval requirements, which could delay,
prevent or limit our ability to market our any product.
 Our
research and development activities, anticipated preclinical studies, clinical
trials and the manufacturing and marketing of our product candidates are subject
to extensive regulation by the FDA and other regulatory agencies in the United
States and by comparable authorities in Europe and elsewhere. We require the
approval of the relevant regulatory authorities before we may commence
commercial sales of our product candidates in a given market. The regulatory
approval process is expensive and time-consuming, and the timing of receipt of
regulatory approval is difficult to predict. Our product candidates could
require a significantly longer time to gain regulatory approval than expected,
or may never gain approval. We cannot be certain that, even after expending
substantial time and financial resources, we will obtain regulatory approval for
any of our product candidates. A delay or denial of regulatory approval could
delay or prevent our ability to generate product revenues and to achieve
profitability.
 Changes
in regulatory approval policies during the development period of any of our
product candidates, changes in, or the enactment of, additional regulations or
statutes, or changes in regulatory review practices for a submitted product
application may cause a delay in obtaining approval or result in the rejection
of an application for regulatory approval.
 Regulatory
approval, if obtained, may be made subject to limitations on the indicated uses
for which we may market a product. These limitations could adversely affect our
potential product revenues. Regulatory approval may also require costly
post-marketing follow-up studies. In addition, the labeling, packaging, adverse
event reporting, storage, advertising, promotion and record-keeping related to
the product will be subject to extensive ongoing regulatory requirements.
Furthermore, for any marketed product, its manufacturer and its manufacturing
facilities will be subject to continual review and periodic inspections by the
FDA or other regulatory authorities. Failure to comply with applicable
regulatory requirements may, among other things, result in fines, suspensions of
regulatory approvals, product recalls, product seizures, operating restrictions
and criminal prosecution.
 
 The
FDA and foreign regulatory authorities may impose significant restrictions on
the indicated uses and marketing of pharmaceutical products.
 FDA
rules for pharmaceutical promotion require that a company not promote an
unapproved drug or an approved drug for an unapproved use. In addition to FDA
requirements, regulatory and law enforcement agencies, such as the United States
Department of Health and Human Services’ Office of Inspector General and the
United States Department of Justice, monitor and investigate pharmaceutical
sales, marketing and other practices. For example, sales, marketing and
scientific/educational grant programs must comply with the Medicare-Medicaid
Anti-Fraud and Abuse Act, as amended, the False Claims Act, as amended, and
similar state laws. In recent years, actions by companies’ sales forces and
marketing departments have been scrutinized intensely to ensure, among other
things, that actions by such groups do not qualify as “kickbacks” to healthcare
professionals. A “kickback” refers to the provision of any item of value to a
healthcare professional or other person in exchange for purchasing,
recommending, or referring an individual for an item or service reimbursable by
a federal healthcare program. These kickbacks increase the expenses of the
federal healthcare program and may result in civil penalties, criminal
prosecutions, and exclusion from participation in government programs, any of
which would adversely affect our financial condition and business operations. In
addition, even if we are not determined to have violated these laws, government
investigations into these issues typically require the expenditure of
significant resources and generate negative publicity, which would also harm our
financial condition. Comparable laws also exist at the state
level.
  Page
9
 
 Weare, and in the future
may be, subject to new federal and state requirements to submit information on
our open and completed clinical trials to public registries and
databases.
 In
1997, a public registry of open clinical trials involving drugs intended to
treat serious or life-threatening diseases or conditions was established under
the Food and Drug Administration Modernization Act, or FDMA, in order to promote
public awareness of and access to these clinical trials. Under FDMA,
pharmaceutical manufacturers and other trial sponsors are required to post the
general purpose of these trials, as well as the eligibility criteria, location
and contact information of the trials. Since the establishment of this registry,
there has been significant public debate focused on broadening the types of
trials included in this or other registries, as well as providing for public
access to clinical trial results. A voluntary coalition of medical journal
editors has adopted a resolution to publish results only from those trials that
have been registered with a no-cost, publicly accessible database, such
as  www.clinicaltrials.gov . The Pharmaceuticals and Research
Manufacturers of America has also issued voluntary principles for its members to
make results from certain clinical studies publicly available and has
established a website for this purpose. Other groups have adopted or are
considering similar proposals for clinical trial registration and the posting of
clinical trial results. The state of Maine has enacted legislation, with penalty
provisions, requiring the disclosure of results from clinical trials involving
drugs marketed in the state, and similar legislation has been introduced in
other states. Federal legislation was introduced in the fall of 2004 to
expand  www.clinicaltrials.gov  and to require the inclusion
of study results in this registry. In some states, such as New York, prosecutors
have alleged that a lack of disclosure of clinical trial information constitutes
fraud, and these allegations have resulted in settlements with pharmaceutical
companies that include agreements to post clinical trial results. Our failure to
comply with any clinical trial posting requirements could expose us to negative
publicity, fines, and other penalties, all of which could materially harm our
business.
 
 Because
we are dependent on clinical research institutions and other contractors for
clinical testing and for research and development activities, the results of our
clinical trials and such research activities are, to a certain extent, beyond
our control.
 We
depend upon independent investigators and collaborators, such as universities
and medical institutions, to conduct our pre-clinical and clinical trials under
agreements with us.  These collaborators are not our employees and we
cannot control the amount or timing of resources that they devote to our
programs.  These investigators may not assign as great a priority to
our programs or pursue them as diligently as we would if we were undertaking
such programs ourselves.  If outside collaborators fail to devote
sufficient time and resources to our drug development programs, or if their
performance is substandard, the approval of our FDA applications, if any, and
our introduction of new drugs, if any, will be delayed.  These
collaborators may also have relationships with other commercial entities, some
of whom may compete with us.  If our collaborators assist our
competitors at our expense, our competitive position would be
harmed.
 
 If
our third-party clinical trial vendors fail to comply with strict regulations,
the clinical trials for our product candidates may be delayed or
unsuccessful.
 We
do not have the personnel capacity to conduct or manage the clinical trials that
we intend for our product candidates.  We rely on third parties to
assist us in managing, monitoring and conducting most of our clinical
trials.  If these third parties fail to comply with applicable
regulations or do not adequately fulfill their obligations under the terms of
our agreements with them, we may not be able to enter into alternative
arrangements without undue delay or additional expenditures, and therefore the
clinical trials for our product candidates may be delayed or
unsuccessful.
 Furthermore,
the FDA can be expected to inspect some or all of the clinical sites
participating in our clinical trials, or our third-party vendors’ sites, to
determine if our clinical trials are being conducted according to current good
clinical practices.  If the FDA determines that our third-party
vendors are not in compliance with applicable regulations, we may be required to
delay, repeat or terminate the clinical trials.  Any delay, repetition
or termination of our clinical trials could materially harm our
business.
 
 If
we are unable to retain and recruit qualified scientists or if any of our key
senior executives discontinue their employment with us, it will delay our
development efforts.
 We
are highly dependent on the principal members of our management and we intend to
hire scientific staff. The loss of any of these people could impede the
achievement of our development objectives. Furthermore, recruiting and retaining
qualified scientific personnel to perform research and development work in the
future will also be critical to our success. We may be unable to attract and
retain personnel on acceptable terms given the competition among biotechnology,
pharmaceutical and health care companies, universities and non-profit research
institutions for experienced scientists. In addition, we rely on a significant
number of consultants to assist us in formulating our research and development
strategy. All of our consultants are employed by employers other than us. They
may have commitments to, or advisory or consulting agreements with, other
entities that may limit their availability to us.
  Page
10
 
 We
have no marketing experience, sales force or distribution capabilities and, if
our product candidates are approved, we may not be able to commercialize them
successfully.
 Although
we do not currently have any products which have been approved for commercial
sale, our ability to produce revenues ultimately depends on our ability to sell
our products if and when they are approved by the FDA. We currently have no
experience in marketing or selling pharmaceutical products and we do not have a
marketing and sales staff or distribution capabilities. Our long-term strategy
involves establishing alliances with third parties to assist in marking and
distribution of our product candidates.  There is intense competition
for collaborative arrangement with pharmaceutical and biotechnology companies
for establishing relationships with academic research institutions, for
attracting investigators and sites capable of conducting our clinical trials and
for licenses of proprietary technology.  Moreover, these arrangements
are complex to negotiate and time-consuming to document.  Our future
profitability will depend in large part on our ability to enter into effective
marketing arrangements and our product revenues will depend on those marketers’
efforts, which may not be successful.
 
 If
we create a product for sale, governmental and third-party payors may subject
our potential products to sales and pharmaceutical pricing controls that could
limit our potential product revenues and delay profitability.
 The
continuing efforts of government and third-party payors to contain or reduce the
costs of health care through various means may reduce our potential revenues, if
we ever create a product that could be sold to the public. These payors’ efforts
could decrease the price that we receive for any potential products we may
develop and sell in the future. In addition, third-party insurance coverage may
not be available to patients for any potential products we develop. If
government and third-party payors do not provide adequate coverage and
reimbursement levels for our products, or if price controls are enacted, our
product revenues will suffer.
 
 Our
product candidates could infringe on the intellectual property rights of others,
which may lead to costly litigation, payment of substantial damages or royalties
and/or our inability to use essential technologies.
 The
biopharmaceutical industry has been characterized by extensive litigation and
administrative proceedings regarding patents and other intellectual property
rights. Whether a drug infringes a patent involves complex legal and factual
issues, the determination of which is often uncertain. Our competitors may
assert that our product candidates and methods infringe their patents. In
addition, they may claim that their patents have priority over ours because
their patents issued first. Because patent applications can take many years to
issue, there may be applications now pending of which we are unaware, which
could later result in issued patents that our instruments or methods may
infringe. There could also be existing patents that one or more of our
instruments or methods may inadvertently be infringing of which we are unaware.
As the number of competitors in the market grows, the possibility of a patent
infringement claim against us increases.
 Infringement
and other intellectual property claims, with or without merit, can be expensive
and time-consuming to litigate or otherwise dispose of and can divert
management’s attention from carrying on with our core business. In addition, if
we lose an intellectual property litigation matter, a court could require us to
pay substantial damages and/or royalties and/or prohibit us from using essential
technologies. Also, although we may seek to obtain a license under a third
party’s intellectual property rights to bring an end to any claims or actions
asserted or threatened against us, we may not be able to obtain a license on
reasonable terms or at all.
 
 If
we fail to adequately protect our intellectual property rights, our competitors
may be able to take advantage of our research and development efforts to develop
competing drugs.
 Our
commercial success will depend in part on obtaining patent protection for our
products and other technologies and successfully defending these patents against
third party challenges. Our patent position, like that of other biotechnology
and pharmaceutical companies, is highly uncertain. One uncertainty is that the
United States Patent and Trademark Office (“PTO”), or the courts, may deny or
significantly narrow claims made under patents or patent applications. This is
particularly true for patent applications or patents that concern biotechnology
and pharmaceutical technologies, such as ours, since the PTO and the courts
often consider these technologies to involve unpredictable sciences. Another
uncertainty is that any patents that may be issued or licensed to us may not
provide any competitive advantage to us and they may be successfully challenged,
invalidated or circumvented in the future. In addition, our competitors, many of
which have substantial resources and have made significant investments in
competing technologies, may seek to apply for and obtain patents that will
prevent, limit or interfere with our ability to make, use and sell our potential
products either in the U.S. or in international markets.
 
 Competition
and technological change may make our product candidates and technologies less
attractive or obsolete.
 As
noted in “The Company’s Business”, we compete with several pharmaceutical and
biotechnology companies on similar types of technologies for the medical
indications we are attempting to treat. We also may face competition from
companies that may develop or acquire competing technology from universities and
other research institutions. As these companies develop their technologies, they
may develop competitive positions which may prevent or limit our product
commercialization efforts.
 Our
competitors are established companies with greater financial and other resources
than we have. Other companies may succeed in developing products earlier than we
do, obtaining FDA approval for products more rapidly than we do or developing
products that are more effective than our product candidates
  Page
11


ITEM
      2.
              PROPERTIES
 
 The
Company’s current headquarters are located at 710 N. Post Oak Road, Suite 410,
Houston, Texas 77024.
 
 ITEM
      3.
              LEGAL
      PROCEEDINGS
 
 The
Company is not aware of any legal proceedings, pending or threatened, which it
is a party to.
  Page
12
 
 PART
II
 
 ITEM
      5.
              MARKET
      FOR COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND SMALL BUSINESS ISSUER
      PURCHASES OF EQUITY SECURITIES
 
 The
Company’s Common Stock was listed on the over-the-counter electronic bulletin
board (“OTCBB”) under the symbol “OCOL.OB” during the fiscal year ending March
31, 2009 and on the pink sheets under the symbol OCOL.PK during the fiscal year
ending March 31, 2010.  The following table sets forth the range of
high and low bid prices for the last three fiscal years which represent the
effect of 1a 1-for-20 reverse stock split.
 
 Year
      2010
                  
                  High
                  
                  
                  LowQuarter
      ended March 31, 2010
                  
                  $
                  0.00025
                  
                  
                  $
                  0.0001Quarter
      ended December 31, 2009
                  
                  $
                  0.000325
                  
                  
                  $
                  0.00008Quarter
      ended September 30, 2009
                  
                  $
                  0.0006
                  
                  
                  $
                  0.00015Quarter
      ended June 30, 2009
                  
                  $
                  0.0015
                  
                  
                  $
                  0.00026
  Year
      2009
                  
                  High
                  
                  
                  LowQuarter
      ended March 31, 2009
                  
                  $
                  0.00125
                  
                  
                  $
                  0.00115Quarter
      ended December 31, 2008
                  
                  $
                  0.000425
                  
                  
                  $
                  0.00035Quarter
      ended September 30, 2008
                  
                  $
                  0.002
                  
                  
                  $
                  0.0015Quarter
      ended June 30, 2008
                  
                  $
                  0.0115
                  
                  
                  $
                  0.0085
  ITEM
      6.
              SELECTED
      FINANCIAL DATA
  This
item does not apply to small reporting companies.
  Page
13
 
 ITEM
      7.
              MANAGEMENTS
      DISCUSSION AND ANALYSIS OR PLAN OF
OPERATION
 
 Overview
 As
a development stage company, substantially all of our efforts will be devoted to
performing research and experimentation, conducting clinical trials, developing
and acquiring intellectual properties, raising capital and recruiting and
training personnel.
 
 Results
of Operations – March 31, 2009 to March 31, 2010
 
 The
Company has had no revenue for the period from March 31, 2009 through March 31,
2010.
 
 The
Company’s expenses totaled $60,372 from March 31, 2009 through March 31, 2010,
which were primarily comprised of professional fees of $42,693,
compensation and related expenses of $6,400, interest expense of $9,498 and
other general and administrative expenses of $1,781.
 
 The
Company’s net operating loss for the period from March 31, 2009 through March
31, 2010 was $60,372 or $0.003 per share (basic and diluted).
 
 Results
of Operations - March 31, 2008 to March 31, 2009
 
 The
Company has had no revenue for the period from March 31, 2008 through March 31,
2009.
 
 The
Company’s expenses totaled $1,527,470 from March 31, 2008 through March 31,
2009, which were primarily comprised of professional fees of $575,303,
compensation and related expenses of $281,879, and other general and
administrative expenses of $186,687.
 
 The
Company’s net operating loss for the period from March 31, 2008 through March
31, 2009 was $1,048,705 or $0.095 per share (basic and diluted).
 
 Liquidity
and Capital Resources
 
 As of
March 31, 2010, the Company had cash in non-restrictive accounts of $14 and
negative working capital of $503,646.
 
 Net
cash used in operating activities was $4,462.   The Company
experienced an increase in accounts payable of $12,847,  increase
in accounts payable related party of $25,449 and an increase in accrued
liabilities of $9,498.
 
 For
the period, cash provided by financing activities totaled $4,176.
 
 To
execute its business strategy, the Company needs to obtain significant
additional capital resources through equity and/or debt
financings.  As of March 31, 2010, the Company had minimal assets in
cash and cash equivalents and negative working capital.
 
 Significant
Accounting Policies
 
 Principles
of Consolidation
 
 The
consolidated financial statements include the accounts of China Development
Group, Inc. (a Nevada corporation) and its wholly owned subsidiaries, Secure
Voice and New Enersource Inc. All significant inter-company accounts and
transactions have been eliminated.
  Page
14
 
 Use
of Estimates
  In
preparing financial statements in conformity with accounting principles
generally accepted in the United States of America, management is required to
make estimates and assumptions that affect the amounts reported in the
consolidated financial statements and accompanying notes. Actual results could
differ from those estimates.
  Development
stage
 
 The
Company complies with FASB ASC 915-15 for its characterization of the Company as
development stage.
 
 Property
and Equipment
  Property
and equipment are recorded at cost and are depreciated using the straight line
method over their estimated useful lives.  As of March 31, 2010, the
property and equipment consisted of personal computers.
 
 Loss
per Share
  In
accordance with FASB ASC 260, “Earnings per Share”, basic net loss per
common share is computed by dividing net loss for the period by the weighted
average number of common shares outstanding during the period. Under ASC 260,
diluted net income/(loss) per share is computed by dividing the net
income/(loss) for the period by the weighted average number of common and common
equivalent shares, such as stock options and warrants, outstanding during the
period. Such common equivalent shares have not been included in the computation
of net loss per share as their effect would be anti-dilutive.
  Income
Taxes
 
 Income
taxes are recorded in accordance with FASB ASC 740, “Accounting for Income
Taxes”. This statement requires the recognition of deferred tax assets and
liabilities to reflect the future tax consequences of events that have been
recognized in the financial statements or tax returns. Measurement of the
deferred items is based on enacted tax laws. In the event the future
consequences of differences between financial reporting bases and tax bases of
the Company's assets and liabilities result in a deferred tax asset, ASC 740
requires an evaluation of the probability of being able to realize the future
benefits indicated by such assets. A valuation allowance related to a deferred
tax asset is recorded when it is more likely than not that some portion or the
entire deferred tax asset will not be realized.
 
 The
Company has not filed tax returns for 2007-2010. As of March 31, 2010, there is
approximately $3,100,000 in accumulated losses for tax purposes. When the tax
returns are completed, these losses will give rise to deferred tax assets, a
significant portion of which are likely to be net operating loss carry forwards.
Due to the May 30, 2007 reverse merger, these net operating loss deferred tax
assets will be subject to limitations. Current tax laws limit the amount of loss
available to be offset against future taxable income when a substantial change
in ownership occurs. Therefore, the amount available to offset future taxable
income may be limited. Because of these potential limitations and the Company’s
history of losses, the Company has not recognized any deferred tax asset and
has placed a full valuation allowance on such assets.
 
 Stock-Based
Compensation
 
 The
Company accounts for stock-based compensation in accordance with FASB ASC 718,
which requires the measurement and recognition of compensation expense for all
share-based payments made to employees and directors based on estimated fair
values. Share-based payments awarded to consultants are accounted for in
accordance with FASB ASC 505-50, “Accounting for Equity Instruments That Are
Issued to Other Than Employees for Acquiring, or in Connection with Selling,
Goods or Services.”
  FASB ASC
718 requires companies to estimate the fair value of equity share option awards
on the date of grant using an option-pricing model. The value of the portion of
the award that is ultimately expected to vest is recognized as expense over the
requisite service periods in the Company’s consolidated statement of
operations.
  Stock-based
compensation expense recognized is based on the value of the portion of equity
share option award that is ultimately expected to vest. The Company generally
attributes the value of stock-based compensation to expense using the
straight-line method.
  The
Company estimates fair value of equity share option awards using the
Black-Scholes-Merton option-pricing formula (“Black-Scholes model”). This model
requires the Company to estimate expected volatility and expected life, which
are highly complex and subjective variables. The Company estimates expected term
using the safe-harbor provisions of FASB ASC 718, “Share-Based Payment.” The
Company estimated its expected volatility by taking the average volatility
determined for a peer group of similar publicly-traded companies.
 
 Fair
Value of Financial Instruments
 
 The fair
value of note payable, cash, accounts payable, and accrued expenses approximates
their carrying value due to the short-term nature of these financial
instruments. The Company does not have material financial instruments with
off-balance sheet risk.
  Page
15
 
 Table
of Contents
 
 INDEX
TO CONSOLIDATED FINANCIAL STATEMENTS
 
 PageReports
      of Independent Registered Public Accounting Firms
                
                F-1Consolidated
      Balance Sheets as of March 31, 2010 and 2009
                
                F-3Consolidated
      Statements of Operations  for the year ended March 31, 2010 and
      March 31, 2009 and for the period from May 9, 2007 (inception ) through
      March 31, 2010
                
                F-4Consolidated
      Statements of Changes in Shareholders’ Deficit for the period from May 9,
      2007 (inception) through March 31, 2010
                
                F-5Consolidated
      Statements of Cash Flows for the year ended March 31, 2010 and March 31,
      2009 and for the period from May 9, 2007 (inception ) through March 31,
      2010
                
                F-6Notes
      to Consolidated Financial Statements
                
                F-7
 Page
16
  ITEM
      8.
              FINANCIAL
      STATEMENTS
 
 REPORT
OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
 
 The Board
of Directors and Stockholders
 China
Development Group, Inc. and Subsidiaries (formerly Oncolin Therapeutics,
Inc.)
 (A
Development Stage Company)
 Houston,
Texas
 
 We have
audited the accompanying consolidated balance sheet of China Development Group,
Inc. and subsidiaries (formerly Oncolin Therapeutics, Inc.)as of March 31, 2010
and 2009 and the related consolidated statements of operations, stockholders'
deficit and cash flows for the years then ended and for the period from May 9,
2007, (inception) through March 31, 2010.  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 audit in accordance with the standards of the Public Company
Accounting Oversight Board (United States).  Those standards require
that we plan and perform the audit to obtain reasonable assurance about whether
the consolidated financial statements are free of material
misstatement.  The Company is not required to have, nor were we
engaged to perform, an audit of its internal control over financial
reporting.  Our audits included consideration of internal control over
financial reporting as a basis for designing audit procedures that are
appropriate in the circumstances, but not for the purpose of expressing an
opinion on the effectiveness of the Company’s internal control over financial
reporting.  Accordingly, we express no such opinion.  An
audit includes examining, on a test basis, evidence supporting the amounts and
disclosures in the consolidated financial statements.  An audit also
includes assessing the accounting principles used and significant estimates made
by management, as well as evaluating the overall consolidated financial
statement presentation.  We believe that our audits provide a
reasonable basis for our opinion.
 
 In our
opinion, the consolidated financial statements referred to above present fairly,
in all material respects, the financial position of China Development Group,
Inc. and subsidiaries as of March 31, 2010 and 2009, and the results of its
operations and its cash flows for the years then ended and for the period from
May 9, 2007, (inception) through March 31, 2010 in conformity with
accounting principles generally accepted in the United States of
America.
 
 The
accompanying financial statements have been prepared assuming the Company will
continue as a going concern.  As discussed in Note 1 to the
consolidated financial statements, the Company has never generated any revenue
and has negative working capital.  These factors raise substantial
doubt about the Company's ability to continue as a going
concern.  Management's plans in regard to these matters are also
described in Note 1.  The financial statements do not include any
adjustments that might result from the outcome of this uncertainty.
 
 /s/
Malone Bailey, LLP
 www.malonebailey.com
 Houston,
Texas
 
 July 14,
2010
  Page 17
(F-1)
 
 ITEM
      1.
              FINANCIAL
      STATEMENTS
 
 CHINA
DEVELOPMENT GROUP, INC. AND SUBSIDIARIES
 (formerly
ONCOLIN THERAPEUTICS, INC.)
 (A
DEVELOPMENT STAGE COMPANY)
 CONSOLIDATED
BALANCE SHEETS
 
 March 31,
                        2010
                      
                      March 31,
                        2009ASSETSCash
      and cash equivalents
                      
                      $
                      14
                      
                      
                      $
                      300Total
      current assets
                      
                      
                      14
                      
                      
                      
                      300Property
      and equipment, net
                      
                      
                      2,286
                      
                      
                      
                      4,002Total
      assets
                      
                      $
                      2,300
                      
                      
                      
                      4,302LIABILITIES
      AND SHAREHOLDERS' DEFICITCurrent
      liabilities:Accounts
      payable
                      
                      $
                      222,460
                      
                      
                      $
                      226,113Accounts
      payable – related parties
                      
                      
                      144,122
                      
                      
                      
                      102,173Accrued
      liabilities
                      
                      
                      37,600
                      
                      
                      
                      28,102Notes
      payable – related parties
                      
                      
                      99,478
                      
                      
                      
                      95,302Total
      liabilities
                      
                      
                      503,660
                      
                      
                      
                      451,690Shareholders'
      deficit:Common
      stock, $.001 par value, 500,000,000 shares
      authorized;  23,182,763 and23,102,763
      shares issued and outstanding at March 31, 2010 and
      2009  respectively
                      
                      
                      23,183
                      
                      
                      
                      23,103Additional
      paid-in capital
                      
                      
                      2,321,214
                      
                      
                      
                      2,314,894Deficit
      accumulated during the development stage
                      
                      
                      (2,845,757
                      )
                      
                      
                      (2,785,385
                      )Total
      shareholders’ deficit
                      
                      
                      (501,360
                      )
                      
                      
                      (447,388
                      )Total
      liabilities and shareholders' deficit
                      
                      $
                      2,300
                      
                      
                      $
                      4,302
 
 See
accompanying notes to consolidated financial statements
  Page 18
(F-2)
 
 CHINA
DEVELOPMENT GROUP, INC. AND SUBSIDIARIES
 (formerly
ONCOLIN THERAPEUTICS, INC.)
 (A
DEVELOPMENT STAGE COMPANY)
 CONSOLIDATED
STATEMENT OF OPERATIONS
 FOR
THE YEAR ENDED MARCH 31, 2010 AND 2009  AND FOR THE PERIOD FROM MAY 9,
2007 (INCEPTION) TO MARCH 31, 2010
 
 March 31, 2010
                      
                      
                      March 31, 2009
                      
                      
                      Inception (May 9,
                        2007) to March
                        31, 2010Operating
      expenses:Compensation
      and related expenses
                      
                      
                      6,400
                      
                      
                      
                      281,879
                      
                      
                      
                      1,015,724Office
      administration
                      
                      
                      65
                      
                      
                      
                      7,646
                      
                      
                      
                      21,070Professional
      fees
                      
                      
                      42,693
                      
                      
                      
                      575,303
                      
                      
                      
                      892,631Investor
      relations
                      
                      
                      -
                      
                      
                      
                      19,940
                      
                      
                      
                      292,444Merger
      expenses
                      
                      
                      -
                      
                      
                      
                      -
                      
                      
                      
                      8,113Impairment
      of license agreement
                      
                      
                      -
                      
                      
                      
                      -
                      
                      
                      
                      80,100Acquisition
      costs of subsidiary
                      
                      
                      -
                      
                      
                      
                      -
                      
                      
                      
                      220,000Depreciation
      and amortization
                      
                      
                      1,716
                      
                      
                      
                      20,668
                      
                      
                      
                      31,748Other
      expenses
                      
                      
                      -
                      
                      
                      
                      186,687
                      
                      
                      
                      292,026Total
      operating expenses
                      
                      
                      50,874
                      
                      
                      
                      1,092,123
                      
                      
                      
                      2,853,856Interest
      expense
                      
                      
                      9,498
                      
                      
                      
                      435,347
                      
                      
                      
                      470,666Gain
      on deconsolidation of subsidiary
                      
                      
                      -
                      
                      
                      
                      (478,765)
                      
                      
                      
                      (478,765
                      )Other
      expenses
                      
                      
                      9,498
                      
                      
                      
                      (43,418)
                      
                      
                      
                      (8,099
                      )Net
      loss
                      
                      $
                      (60,372
                      )
                      
                      $
                      (1,048,705
                      )
                      
                      $
                      (2,845,757
                      )Net
      loss per share:Basic
      and diluted
                      
                      
                      (0.00
                      )
                      
                      
                      (0.01)Weighted
      average number of common sharesoutstanding:Basic
      and diluted
                      
                      
                      23,102,982
                      
                      
                      
                      11,027,845
 
 See
accompanying notes to consolidated financial statements
  Page 19
(F-3)
 
 CHINA
DEVELOPMENT GROUP, INC. AND SUBSIDIARIES
 (formerly
ONCOLIN THERAPEUTICS, INC.)
 (A
DEVELOPMENT STAGE COMPANY)
 CONSOLIDATED
STATEMENT OF STOCKHOLDERS’ DEFICIT
 FOR
THE PERIOD FROM MAY 9, 2007 (INCEPTION) TO MARCH 31, 2010
 
 DeficitAccumulatedAdditional
                                      
                                      
                                      During
      theCommon
                                      
                                      
                                      Paid-in
                                      
                                      
                                      DevelopmentShares
                                      
                                      
                                      Stock
                                      
                                      
                                      Capital
                                      
                                      
                                      Stage
                                      
                                      
                                      TotalMay
      9, 2007 (inception)
                                      
                                      
                                      -
                                      
                                      
                                      $
                                      -
                                      
                                      
                                      $
                                      -
                                      
                                      
                                      $
                                      -
                                      
                                      
                                      $
                                      -Issuance
      of common stock for cash
                                      
                                      
                                      160,242
                                      
                                      
                                      
                                      160
                                      
                                      
                                      
                                      1,005
                                      
                                      
                                      
                                      -
                                      
                                      
                                      
                                      1,165Issuance
      of common stock for services
                                      
                                      
                                      121,041
                                      
                                      
                                      
                                      121
                                      
                                      
                                      
                                      759
                                      
                                      
                                      
                                      -
                                      
                                      
                                      
                                      880Common
      shares issued for reverse merger
                                      
                                      
                                      31,217
                                      
                                      
                                      
                                      31
                                      
                                      
                                      
                                      (31
                                      )
                                      
                                      
                                      -
                                      
                                      
                                      
                                      0Issuance
      of additional common stock in reverse merger
                                      
                                      
                                      1,723,617
                                      
                                      
                                      
                                      1,724
                                      
                                      
                                      
                                      (1,724
                                      )
                                      
                                      
                                      -
                                      
                                      
                                      
                                      0Post-merger
      capitalization
                                      
                                      
                                      2,036,117
                                      
                                      
                                      
                                      2,036
                                      
                                      
                                      
                                      9
                                      
                                      
                                      
                                      -
                                      
                                      
                                      
                                      2,045Cancellation
      of common stock issued
                                      
                                      
                                      (15,000
                                      )
                                      
                                      
                                      (15
                                      )
                                      
                                      
                                      15
                                      
                                      
                                      
                                      -
                                      
                                      
                                      
                                      0Issuance
      of common stock to acquire Intertech Bio
                                      
                                      
                                      25,000
                                      
                                      
                                      
                                      25
                                      
                                      
                                      
                                      219,975
                                      
                                      
                                      
                                      -
                                      
                                      
                                      
                                      220,000Issuance
      of common stock for services
                                      
                                      
                                      30,000
                                      
                                      
                                      
                                      30
                                      
                                      
                                      
                                      295,970
                                      
                                      
                                      
                                      -
                                      
                                      
                                      
                                      296,000Issuance
      of common stock for exercise of stock options
                                      
                                      
                                      27,360
                                      
                                      
                                      
                                      27
                                      
                                      
                                      
                                      195,246
                                      
                                      
                                      
                                      -
                                      
                                      
                                      
                                      195,273Issuance
      of stock options for services
                                      
                                      
                                      -
                                      
                                      
                                      
                                      -
                                      
                                      
                                      
                                      328,281
                                      
                                      
                                      
                                      -
                                      
                                      
                                      
                                      328,281Net
      loss
                                      
                                      
                                      -
                                      
                                      
                                      
                                      -
                                      
                                      
                                      
                                      
                                      
                                      
                                      
                                      (1,736,680
                                      )
                                      
                                      
                                      (1,736,680
                                      )Balance
      at March 31, 2008
                                      
                                      
                                      2,103,477
                                      
                                      
                                      $
                                      2,103
                                      
                                      
                                      $
                                      1,039,496
                                      
                                      
                                      $
                                      (1,736,680
                                      )
                                      
                                      $
                                      (695,081
                                      )Issuance
      of common stock for services
                                      
                                      
                                      217,775
                                      
                                      
                                      
                                      218
                                      
                                      
                                      
                                      275,169
                                      
                                      
                                      
                                      -
                                      
                                      
                                      
                                      275,387Issuance
      of common stock for exercise ofstock
      options
                                      
                                      
                                      13,123
                                      
                                      
                                      
                                      13
                                      
                                      
                                      
                                      74,762
                                      
                                      
                                      
                                      -
                                      
                                      
                                      
                                      74,775Issuance
      of stock options for services
                                      
                                      
                                      -
                                      
                                      
                                      
                                      -
                                      
                                      
                                      
                                      43,683
                                      
                                      
                                      
                                      -
                                      
                                      
                                      
                                      43,683Discount
      on convertible debt due tobeneficial conversion
      feature
                                      
                                      
                                      -
                                      
                                      
                                      
                                      -
                                      
                                      
                                      
                                      397,985
                                      
                                      
                                      
                                      -
                                      
                                      
                                      
                                      397,985Issuance
      of common stock for theconversion of
    debt
                                      
                                      
                                      20,728,388
                                      
                                      
                                      
                                      20,729
                                      
                                      
                                      
                                      393,839
                                      
                                      
                                      
                                      -
                                      
                                      
                                      
                                      414,568Issuance
      of common stock for cash
                                      
                                      
                                      40,000
                                      
                                      
                                      
                                      40
                                      
                                      
                                      
                                      89,960
                                      
                                      
                                      
                                      -
                                      
                                      
                                      
                                      90,000Net
      loss
                                      
                                      
                                      -
                                      
                                      
                                      
                                      -
                                      
                                      
                                      
                                      -
                                      
                                      
                                      
                                      (1,048,705
                                      )
                                      
                                      
                                      (1,048,705
                                      )Balance
      at March 31, 2009
                                      
                                      
                                      23,102,763
                                      
                                      
                                      $
                                      23,103
                                      
                                      
                                      $
                                      2,314,894
                                      
                                      
                                      $
                                      (2,785,385
                                      )
                                      
                                      $
                                      (447,388
                                      )Issuance
      of common stock for services
                                      
                                      
                                      80,000
                                      
                                      
                                      
                                      80
                                      
                                      
                                      
                                      6,320
                                      
                                      
                                      
                                      -
                                      
                                      
                                      
                                      6,400Net
      loss
                                      
                                      
                                      -
                                      
                                      
                                      
                                      -
                                      
                                      
                                      
                                      -
                                      
                                      
                                      
                                      (60,372
                                      )
                                      
                                      
                                      (60,372
                                      )Balance
      at March 31, 2010
                                      
                                      
                                      23,182,763
                                      
                                      
                                      $
                                      23,183
                                      
                                      
                                      $
                                      2,321,214
                                      
                                      
                                      $
                                      (2,845,757
                                      )
                                      
                                      $
                                      (501,360
                                      )
 
 See
accompanying notes to consolidated financial statements
  Page 20
(F-4)
  
 CHINA
DEVELOPMENT GROUP, INC. AND SUBSIDIARIES
 (formerly
ONCOLIN THERAPEUTICS, INC.)
 (A
DEVELOPMENT STAGE COMPANY)
 CONSOLIDATED
STATEMENT OF CASH FLOWS
 FOR
THE YEAR ENDED MARCH 31, 2010 AND 2009 AND FOR THE PERIOD FROM MAY 9, 2007
(INCEPTION) TO MARCH 31, 2010
 
 March 31,
                        2010
                      
                      
                      March 31,
                        2009
                      
                      
                      Inception
                        (May 9, 2007)
                        to March 31, 2010Cash
      flows from operating activities:Net
      loss
                      
                      $
                      (60,372
                      )
                      
                      $
                      (1,048,705
                      )
                      
                      $
                      (2,845,757
                      )Adjustments
      to reconcile net loss to cashused in operating
      activities:Depreciation
      and amortization
                      
                      
                      1,716
                      
                      
                      
                      11,779
                      
                      
                      
                      22,859Amortization
      of deferred financing costs
                      
                      
                      -
                      
                      
                      
                      12,915
                      
                      
                      
                      15,000Non-cash
      compensation expense relating to license agreement
                      
                      
                      -
                      
                      
                      
                      -
                      
                      
                      
                      119,900Amortization
      of debt discount
                      
                      
                      -
                      
                      
                      
                      397,985
                      
                      
                      
                      397,985Share-based
      compensation
                      
                      
                      6,400
                      
                      
                      
                      319,070
                      
                      
                      
                      919,881Impairment
      of license agreement
                      
                      
                      -
                      
                      
                      
                      -
                      
                      
                      
                      80,100Non-cash
      acquisition costs of subsidiary
                      
                      
                      -
                      
                      
                      
                      -
                      
                      
                      
                      220,000Changes
      in assets and liabilities:Other
      current assets
                      
                      
                      -
                      
                      
                      
                      30,750
                      
                      
                      
                      15,750Accounts
      payable
                      
                      
                      12,847
                      
                      
                      
                      180,227
                      
                      
                      
                      302,262Accounts
      payable related parties
                      
                      
                      25,449
                      
                      
                      
                      (9,610)
                      
                      
                      
                      127,622Accrued
      liabilities
                      
                      
                      9,498
                      
                      
                      
                      (60,060)
                      
                      
                      
                      74,168Net
      cash used in operating activities
                      
                      
                      (4,462
                      )
                      
                      
                      (165,649
                      )
                      
                      
                      (550,230
                      )Cash
      flows from investing activities:Investment
      in option agreement
                      
                      
                      -
                      
                      
                      
                      -
                      
                      
                      
                      (20,000
                      )Purchase
      of property and equipment
                      
                      
                      -
                      
                      
                      
                      -
                      
                      
                      
                      (5,145
                      )Net
      cash used in investing activities
                      
                      
                      -
                      
                      
                      
                      -
                      
                      
                      
                      (25,145
                      )Cash
      flows from financing activities:Proceeds
      from notes payable related parties
                      
                      
                      4,176
                      
                      
                      
                      -
                      
                      
                      
                      227,176Repayment
      of notes payable related parties
                      
                      
                      -
                      
                      
                      
                      -
                      
                      
                      
                      (13,000
                      )Proceeds
      from issuance of common stock
                      
                      
                      -
                      
                      
                      
                      90,000
                      
                      
                      
                      91,165Proceeds
      from exercise of stock options
                      
                      
                      -
                      
                      
                      
                      74,775
                      
                      
                      
                      270,048Net
      cash provided by financing activities
                      
                      
                      4,176
                      
                      
                      
                      164,775
                      
                      
                      
                      575,389Net
      change in cash
                      
                      $
                      (286
                      )
                      
                      $
                      (874)
                      
                      
                      $
                      14Cash
      and cash equivalents, beginning of period
                      
                      
                      300
                      
                      
                      
                      1,174
                      
                      
                      
                      -Cash
      and cash equivalents, end of period
                      
                      $
                      14
                      
                      
                      $
                      300
                      
                      
                      $
                      14Supplemental
      disclosures:Interest
      paid
                      
                      $
                      -
                      
                      
                      $
                      1,799
                      
                      
                      $
                      5,633Taxes
      paid
                      
                      
                      -
                      
                      
                      
                      -
                      
                      
                      
                      -Non-cash
      investing and financing activities:Cancellation
      of stock certificate
                      
                      $
                      -
                      
                      
                      $
                      -
                      
                      
                      $
                      300Issuance
      of note payable for license agreement
                      
                      
                      -
                      
                      
                      
                      -
                      
                      
                      
                      200,000Stock
      issued for prepaid investor relation services
                      
                      
                      -
                      
                      
                      
                      -
                      
                      
                      
                      73,800Debt
      Discount on Convertible Notes
                      
                      
                      -
                      
                      
                      
                      397,985
                      
                      
                      
                      397,985Conversion
      of Notes Payable & Accrued Interest
                      
                      
                      -
                      
                      
                      
                      414,568
                      
                      
                      
                      414,568
  See
accompanying notes to consolidated financial statements
  Page 21
(F-5)
 
 CHINA
DEVELOPMENT GROUP, INC.AND SUBSIDIARIES
 (formerly
ONCOLIN THERAPEUTICS, INC.)
 (A
DEVELOPMENT STAGE COMPANY)
 NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS
 
 Note
      1.
              Organization
      and Significant Accounting Policies
 
 Organization
and Nature of Business
 
 China
Development Group, Inc. (CDG) (formerly, Oncolin Therapeutics, Inc. (Oncolin),
formerly, Edgeline Holdings, Inc. (Edgeline), formerly, Dragon Gold Resources,
Inc., (Dragon Gold)) was incorporated in Nevada on December 13,
2000.
 
 Effective
May 9, 2007, Dragon Gold Resources, Inc. completed a reverse merger with Secure
Voice Communications, Inc., a Texas corporation (“Secure Voice”).  As
a result of the transaction, Secure Voice became a wholly-owned subsidiary of
Dragon Gold when Dragon Gold agreed to issue an aggregate of 3,207,840,000
shares of its common stock (pre-reverse split) to the former shareholders of
Secure Voice (in exchange for all the outstanding capital stock of Secure
Voice), resulting in the former shareholders of Secure Voice owning
approximately 98.5% of the issued and outstanding Dragon Gold common
stock.  As the articles of incorporation only authorized the issuance
of 500,000,000 shares of common stock, Dragon Gold issued 450,053,276 shares of
common stock (pre-reverse split) and was obligated to issue an additional
2,757,786,724 shares of common stock (pre-reverse split).  At the
annual shareholders’ meeting which was held on June 19, 2007, the shareholders
approved an 80-for-1 reverse split that did not reduce the number of authorized
shares of common stock.  Upon the approval of the 80-for-1 reverse
split, Dragon Gold issued the balance of these shares which equated to
34,472,334 shares on a post-split basis.
 
 On
February 15, 2008, the Company amended its Articles of Incorporation to change
the par value of the Company’s Common Stock from $0.08 to $0.001, to authorize
25,000,000 shares of blank-check preferred stock and to change the name of the
Company from “Edgeline Holdings, Inc.” to “Oncolin Therapeutics,
Inc.  The accompanying consolidated financial statements and related
notes give retroactive effect to the change in par value.
 
 On May
18, 2010, the Company amended its Articles of Incorporation to change the name
of the Company from “Oncolin Therapeutics, Inc.” to “China Development Group,
Inc. and implement a 20-for-1 reverse stock split. The accompanying
consolidated financial statements and related notes give effect to the reverse
stock split as of inception (May 9, 2007).
 
 As of
March 31, 2010, Oncolin had two wholly-owned subsidiaries as
follows:
 
 · Secure Voice –
This subsidiary was incorporated in the State of Texas on May 9, 2007, with the
initial primary focus being the development and readying for market a SIP
(Session Initiation Protocol) based approach to defending voice traffic and
voice packets against deliberate attacks such as DoS (Denial of Service)
developing information.
 
 · New
EnerSource, Inc. (“New EnerSource”) – This subsidiary was incorporated in the
State of Texas on August 28, 2007, with the primary purpose to engage in
enhanced oil recovery (“EOR”) projects.
 
 Intertech
Bio Corporation (“Intertech Bio”) – Intertech Bio was incorporated in the State
of Texas on August 8, 2007.  Its primary purpose was to focus on
developing products to treat cancer, infectious diseases and other medical
conditions associated with compromised immune systems. On February 23, 2009, the
Company distributed 75% of their ownership in Intertech Bio in exchange for the
assumption of certain liabilities and future obligations associated with the
ongoing operations of Intertech Bio.  CDG will retain an approximate
25% interest in Intertech Bio and will not be responsible for future costs
associated with Intertech Bio.
 
 Principles
of Consolidation
 
 The
consolidated financial statements include the accounts of China Development
Group, Inc. (a Nevada corporation) and its wholly owned subsidiaries, Secure
Voice and New Enersource Inc. All significant inter-company accounts and
transactions have been eliminated.
  Page 22
(F-6)
 
 Use
of Estimates
  In
preparing financial statements in conformity with accounting principles
generally accepted in the United States of America, management is required to
make estimates and assumptions that affect the amounts reported in the
consolidated financial statements and accompanying notes. Actual results could
differ from those estimates.
  Development
stage
 
 The
Company complies with FASB ASC 915-15 for its characterization of the Company as
development stage.
 
 Property
and Equipment
  Property
and equipment are recorded at cost and are depreciated using the straight line
method over their estimated useful lives.  As of March 31, 2010, the
property and equipment consisted of personal computers.
 
 Loss
per Share
  In
accordance with FASB ASC 260, “Earnings per Share”, basic net loss per
common share is computed by dividing net loss for the period by the weighted
average number of common shares outstanding during the period. Under ASC 260,
diluted net income/(loss) per share is computed by dividing the net
income/(loss) for the period by the weighted average number of common and common
equivalent shares, such as stock options and warrants, outstanding during the
period. Such common equivalent shares have not been included in the computation
of net loss per share as their effect would be anti-dilutive.
  Income
Taxes
 
 Income
taxes are recorded in accordance with FASB ASC 740, “Accounting for Income
Taxes”. This statement requires the recognition of deferred tax assets and
liabilities to reflect the future tax consequences of events that have been
recognized in the financial statements or tax returns. Measurement of the
deferred items is based on enacted tax laws. In the event the future
consequences of differences between financial reporting bases and tax bases of
the Company's assets and liabilities result in a deferred tax asset, ASC 740
requires an evaluation of the probability of being able to realize the future
benefits indicated by such assets. A valuation allowance related to a deferred
tax asset is recorded when it is more likely than not that some portion or the
entire deferred tax asset will not be realized.
 
 The
Company has not filed tax returns for 2007-2010. As of March 31, 2010, there is
approximately $3,100,000 in accumulated losses for tax purposes. When the tax
returns are completed, these losses will give rise to deferred tax assets, a
significant portion of which are likely to be net operating loss carry forwards.
Due to the May 30, 2007 reverse merger, these net operating loss deferred tax
assets will be subject to limitations. Current tax laws limit the amount of loss
available to be offset against future taxable income when a substantial change
in ownership occurs. Therefore, the amount available to offset future taxable
income may be limited. Because of these potential limitations and the Company’s
history of losses, the Company has not recognized any deferred tax asset and
has placed a full valuation allowance on such assets.
 
 Stock-Based
Compensation
 
 The
Company accounts for stock-based compensation in accordance with FASB ASC 718,
which requires the measurement and recognition of compensation expense for all
share-based payments made to employees and directors based on estimated fair
values. Share-based payments awarded to consultants are accounted for in
accordance with FASB ASC 505-50, “Accounting for Equity Instruments That Are
Issued to Other Than Employees for Acquiring, or in Connection with Selling,
Goods or Services.”
  FASB ASC
718 requires companies to estimate the fair value of equity share option awards
on the date of grant using an option-pricing model. The value of the portion of
the award that is ultimately expected to vest is recognized as expense over the
requisite service periods in the Company’s consolidated statement of
operations.
  Stock-based
compensation expense recognized is based on the value of the portion of equity
share option award that is ultimately expected to vest. The Company generally
attributes the value of stock-based compensation to expense using the
straight-line method.
  The
Company estimates fair value of equity share option awards using the
Black-Scholes-Merton option-pricing formula (“Black-Scholes model”). This model
requires the Company to estimate expected volatility and expected life, which
are highly complex and subjective variables. The Company estimates expected term
using the safe-harbor provisions of FASB ASC 718, “Share-Based Payment.” The
Company estimated its expected volatility by taking the average volatility
determined for a peer group of similar publicly-traded companies.
 
 Fair
Value of Financial Instruments
 
 The fair
value of note payable, cash, accounts payable, and accrued expenses approximates
their carrying value due to the short-term nature of these financial
instruments. The Company does not have material financial instruments with
off-balance sheet risk.
  Page 23
(F-7)
 
 Recent
Accounting Pronouncements
 
 The
Company does not expect the adoption of recently issued accounting
pronouncements to have a significant impact on our results of operations,
financial position or cash flow.
 
 Note
      2.
              Going
      Concern
 
 These
financial statements have been prepared on a going concern basis, which implies
the Company will continue to realize its assets and discharge its liabilities in
the normal course of business.  The Company has not generated revenue
since its inception and is unlikely to generate earnings in the immediate or
foreseeable future.  The continuation of the Company as a going
concern is dependent upon the continued financial support from its shareholders
and the ability of the Company to obtain necessary equity financing to continue
operations and the attainment of profitable operations.  As of March
31, 2010, the Company has accumulated losses of $2,845,757 since
inception.  These financial statements do not include any adjustments
to the recoverability and classification of recorded asset amounts and
classification of liabilities that might be necessary should the Company be
unable to continue as a going concern.  These factors raise
substantial doubt regarding the Company's ability to continue as a going
concern.
 
 Note
      3.
              Property
      and Equipment
 
 Property
and equipment consist of the following at March 31, 2010 and 2009,
respectively:
 
 2010
                      
                      
                      2009Computers
                      
                      $
                      5,145
                      
                      
                      $
                      5,145Less:
      accumulated depreciation
                      
                      
                      2,859
                      
                      
                      
                      1,143$
                      2,286
                      
                      
                      $
                      4,002
 
 Note
      4.
              Accounts
      Payable – Related Parties
  Certain
officers, directors and consultants, who are also stockholders of the Company,
have paid for goods and services, or incurred expenses, for the benefit of the
Company.  As of March 31, 2010 and 2009, the amounts owed to these related
parties were $144,122 and $102,173, respectively.
  Page 24
(F-8)
 
 Note
      5.
              Notes
      Payable – Related Parties
 
 Notes
payable related parties as of March 31, 2010 and March 31, 2009 consist of the
following:
 
 Description
                  
                  March 31, 2010
                  
                  
                  March 31, 2009On
      June 13, 2007, Oncolin entered into a note agreement with Tommy Allen, a
      shareholder of the Company in the principal amount of $20,000 at an annual
      interest rate of 10% and principal and accrued and unpaid interest due
      September 30, 2007.  Mr. Allen verbally agreed to extend the due
      date of the note and accrued interest to March 31, 2010.  No
      principal or interest payments have been made through the date of this
      filing.
                  
                  
                  7,000
                  
                  
                  
                  7,000On
      July 24, 2007, Oncolin entered into a note agreement with SCJ Resources
      Corporation, an entity owned 100% by the Company’s former CFO, in the
      principal amount of $25,000 at an annual interest rate of 10% and
      principal and accrued and unpaid interest due September 30, 2007.  In
      addition, the Company agreed to pay SCJ Resources Corporation a 10%
      transaction fee that will accrue interest from the date of the note. 
      This due date of the note is on June 1, 2008and therefore currently in
      default.  The Company is withholding payment pending the outcome of a
      litigation between SCJ Resources Corporation and an affiliate owned by the
      major shareholder of the Company. No principal or interest payments have
      been made through the date of this filing.
                  
                  
                  25,000
                  
                  
                  
                  25,000During
      FY 2010, the Company entered into a note agreement with Kevan Casey, a
      Director of the Company, in the principal amount of $4,676 and an annual
      interest rate of 0%. The principal and accrued and unpaid interests are
      due upon demand.
                  
                  
                  4,176
                  
                  
                  
                  -On
      September 30, 2008, Oncolin entered into a note agreement with J. Leonard
      Ivins, an officer of the Company, in the principal amount of $63,302 at
      annual interest rate of 10%.  The note was executed in exchange for
      the cancellation of Mr. Ivins’ employment agreement and all outstanding
      amounts due to him as of September 30, 2008 and therefore currently in
      default..  The note and accrued interest are due on January 30,
      2009.  No principal or interest payments have been made through the
      date of this filing.
                  
                  
                  63,302
                  
                  
                  
                  63,302Total
                  
                  $
                  99,478
                  
                  
                  $
                  95,302
  Page 25
(F-9)
 
 Note
      6.
              Common
      Stock
 
 Fiscal
2010
 
 On March
31, 2010, the Company issued 80,000 shares of its common stock to its CEO as
compensation.
 
 On May
18, 2010, the shareholders approved a 1-for-20 reverse split for the company
outstanding common stock.
 
 Fiscal
2009
 
 On May 1,
2008, the Company issued 7,500 shares of its common stock to a professional firm
for legal services valued at $51,000. In June
2008, the company sold 40,000 shares of common stock to individuals for cash
proceeds totaling $90,000.
 
 On August
4, 2008, the Company issued 121,875 shares to J. Leonard Ivins as part of the
settlement of amounts due him. The Company valued these shares at
$146,250.
 
 Also on
August 4, 2008, the Company issued 58,400 shares valued at $70,080 to third
parties for services rendered
 
 On
November 14, 2008, the Company issued 30,000 shares of its common stock to a
professional firm for legal services which the Company valued at
$8,057.
 
 On
October 28, 2008, the Company issued 20,728,389 shares of its restricted common
stock for conversion of debt and accrued interest with a carrying amount of
$414,568.  See Note 8.
 
 Also on
October 28, 2008, the Company issued 13,123 shares of its restricted common
stock for exercise of stock options for which the received $74,775 in
proceeds.
 
 Fiscal
2008
 
 Secure
Voice Communications, Inc. (Texas) issued 1,482,400 shares of common stock to
its founding stockholders in exchange for $1,000 in cash. On May 17, 2007,
Secure Voice Communications, Inc. (Texas) issued 82,500 shares of its common
stock for cash of $165 and 440,000 shares of its common stock for services which
it valued at $880. On May 31, 2007, Secure Voice Communications,
Inc. (Texas) exchanged 100% of its common stock for approximately 98.5% of
Oncolin as discussed in Note 1.
 
 On June
19, 2007, the shareholders approved a 1-for-80 (1:80) reverse stock split which
did not reduce the number of shares of common stock the Company is authorized to
issue, but increased the par value from $0.001 to $0.08 per share. Immediately
following the shareholder approval of the reverse stock split, the Company
completed the reverse stock split and issued the balance of the shares to be
issued to the Secure Voice shareholders to complete the transaction. The
following table summarizes the stock issuances.
 
 On
September 30, 2007, the Company issued 5,000 shares of its restricted common
stock to two companies for consulting services which the Company valued at
$82,000, the fair market value on the date of issuance.
 
 During
the quarter ended September 30, 2007, the Company issued 16,360 shares of its
common stock through the exercise of stock options for total proceeds of
$177,673.
 
 On
November 7, 2007, the Company acquired all of the outstanding capital stock from
the shareholders of Intertech Bio Corporation, a Texas corporation, through the
issuance of 25,000 shares of its restricted common stock, which the Company
valued at $220,000, the fair market value on the date of the acquisition. The
entire value of $220,000 was charged to expense as acquisition costs. In
addition, the Company issued 5,000 shares of its restricted common stock to two
individuals pursuant to their consulting agreements which the Company valued at
$46,000, the fair market value on the date of issuance. Administratively, the
Company has not issued the stock certificates to the shareholders of Intertech
Bio Corporation or the consultants as the Company is renegotiating the
transaction. The 30,000 shares of common stock are included in the issued and
outstanding calculations as if they had been issued.
 
 On
November 8, 2007, the Company issued 5,000 shares of its restricted common stock
to two individuals for consulting services which the Company valued at $46,000,
the fair market value on the date of issuance.
 
 On
November 15, 2007, the Company issued 15,000 shares of its restricted common
stock to Donald Picker, the Company’s Chief Operating Officer, pursuant to his
consulting agreement which the Company valued at $129,000, the fair market value
on the date of issuance.
 
 On
December 19, 2007, the Company issued 5,000 shares of its common stock to an
individual as payment for past and future legal services which the Company
valued at $39,000, the fair market value on the date of issuance.
 
 On
December 20, 2007, the Company received a certificate for 15,000 shares of its
common stock from a former shareholder of Secure Voice Communications,
Inc., which the Company has returned to the transfer agent to be
cancelled.
 
 In
January 2008, the Company issued 11,000 shares of the common stock for the
exercise of stock options for total proceeds of $17,600.
  Page 26
(F-10)
 
 Note
      7.
              Stock
      Options
 
 On May
31, 2007, the Board of Directors adopted the 2007 Stock Option Plan (the
“Plan”), which allows for the issuance of up to 6,000,000 stock options to
directors, executive officers, employees and consultants of the Company who are
contributing to the Company’s success.  The Plan was approved by the
shareholders on June 19, 2007.
 
 Fiscal
2009
 
 During
the first quarter of 2009, the Company granted 646,305 stock warrants for its
common stock to an individual for consulting services which the Company valued
at $39,444, all of which was recognized as expense during the year ended March
31, 2009.  All of the warrants expire in the first quarter of fiscal 2010
and are exercisable for amounts ranging from $0.19-$1.35 per share.  All of
the warrants vested immediately on the date of grant.
 
 In August
2008, the Company granted stock warrants for 300,000 shares of its common stock
to an individual for consulting services which the Company valued at
$12,715.  All of the options were forfeited upon termination of the
agreement with the consultant during fiscal 2009.  100,000 of the warrants
vested immediately on the grant date, resulting in expense of $4,238 during the
year ended March 31, 2009.
 
 Fiscal
2008
 
 During
the quarter ended September 30, 2007, the Company granted 327,199 stock options
to three individuals for consulting services which the Company valued at
$245,181 using the Black-Scholes option pricing model.
 
 In
January 2008, Company granted stock options for 220,000 shares of its common
stock to an individual for consulting services which the Company valued at
$76,355 using the Black-Scholes option pricing model.
 
 The
following table summarizes stock options issued and
outstanding:
 
 Options
                      
                      
                      Weighted
                        average
                        exercise
                        price
                      
                      
                      Aggregate
                        intrinsic
                        value
                      
                      
                      Weighted
                        average
                        remaining
                        contractual
                        life (years)Outstanding
      at May 9, 2007 (inception)
                      
                      
                      -
                      
                      
                      $
                      -
                      
                      
                      $
                      -
                      
                      
                      
                      -Granted
                      
                      
                      2,597,199
                      
                      
                      
                      0.31
                      
                      
                      
                      -
                      
                      
                      
                      -Exercised
                      
                      
                      (547,199
                      )
                      
                      
                      0.36
                      
                      
                      
                      -
                      
                      
                      
                      -Forfeited
                      
                      
                      -
                      
                      
                      
                      -
                      
                      
                      
                      -
                      
                      
                      
                      -Expired
                      
                      
                      -
                      
                      
                      
                      -
                      
                      
                      
                      -
                      
                      
                      
                      -Outstanding
      at March 31, 2008
                      
                      
                      2,050,000
                      
                      
                      
                      0.11
                      
                      
                      
                      874,886
                      
                      
                      
                      4.9Granted
                      
                      
                      946,305
                      
                      
                      
                      0.66
                      
                      
                      
                      -
                      
                      
                      
                      -Exercised
                      
                      
                      (262,460
                      )
                      
                      
                      0.30
                      
                      
                      
                      -
                      
                      
                      
                      -Forfeited
                      
                      
                      (2,350,000
                      )
                      
                      
                      0.10
                      
                      
                      
                      -
                      
                      
                      
                      -Expired
                      
                      
                      -
                      
                      
                      
                      -
                      
                      
                      
                      -
                      
                      
                      
                      -Outstanding
      at March 31, 2009
                      
                      
                      383,845
                      
                      
                      
                      1.07
                      
                      
                      
                      -
                      
                      
                      
                      0.25Granted
                      
                      
                      -
                      
                      
                      
                      -
                      
                      
                      
                      -
                      
                      
                      
                      -Exercised
                      
                      
                      -
                      
                      
                      
                      -
                      
                      
                      
                      -
                      
                      
                      
                      -Forfeited
                      
                      
                      -
                      
                      
                      
                      -
                      
                      
                      
                      -
                      
                      
                      
                      -Expired
                      
                      
                      (383,845)
                      
                      
                      
                      1.07
                      
                      
                      
                      -
                      
                      
                      
                      -Outstanding
      at March 31, 2010
                      
                      
                      -
                      
                      
                      $
                      -
                      
                      
                      $
                      -
                      
                      
                      
                      -
 
 From
inception, May 9, 2007, to March 31, 2008, the Company issued 2,597,199
non-qualified stock options at exercise prices ranging from $0.08 to $0.90 per
share to certain individuals for consulting services which the Company valued
using the Black-Scholes option pricing model with the following assumptions:
volatility of ranging from 232.61% to 318.12%, term of four years, risk free
interest rate of 4.23% and no expected dividends.
 
 From
April 1, 2008 to March 31, 2009, the Company issued 946,305 non-qualified stock
options at exercise prices ranging from $0.06 to $1.35 per share to certain
individuals for consulting services which the Company valued using the
Black-Scholes option pricing model with the following assumptions: volatility of
ranging from 114.99% to 143.21%, expected terms based on the simplified method
under SEC Staff Accounting Bulletin 107, risk free interest rates of 1.32% to
2.21% and no expected dividends.
 
 There was
no unrecognized compensation expense and stock option activity during the fiscal
year ended March 31, 2010.
  Page 27
(F-11)
 
 Note
      8.
              Income
      Taxes
 
 The
Company uses the liability method, where deferred tax assets and liabilities are
determined based on the expected future tax consequences of temporary
differences between the carrying amounts of assets and liabilities for financial
and income tax reporting purposes. During fiscal 2010 and 2009, the Company
incurred net losses and, therefore, has no tax liability. The net deferred tax
asset generated by the loss carry-forward has been fully reserved. The
cumulative net operating loss carry-forward is approximately $2,900,000 and
$2,850,000 at March 31, 2010 and 2009 and will expire beginning in
2028.
 
 At March
31, 2010 and 2009 deferred tax assets consisted of the following:
 
 2010
                      
                      
                      2009Deferred
      tax assetsNet
      operating losses
                      
                      $
                      988,000
                      
                      
                      $
                      970,000Less:
      valuation allowance
                      
                      
                      (988,000
                      )
                      
                      
                      (970,000
                      )Net
      deferred tax asset
                      
                      $
                      -
                      
                      
                      $
                      -
 
 Note
      9.
              Deconsolidation
      of Intertech Bio, Inc.
 
 On
February 24, 2009, the Company distributed its interest in Intertech Bio by
assigning 75% of the Intertech Bio common stock to the founders of Intertec Bio
in exchange for the assumption of certain liabilities and future obligations
associated with the ongoing operations of Intertech Bio. The Company did not
receive any consideration in the transaction. Since the Company no longer has a
controlling interest in Intertech Bio, their assets, liabilities and operating
results are no longer be included in the Company’s consolidated financial
statements as of February 24, 2009. As a result of the distribution, the Company
recognized a gain on deconsolidation of $478,765 for the year ended March 31,
2009, which represents prepaid expenses of $13,334, accounts payable and accrued
liabilities of $215,304 and a payable to the Company of $276,095 of Intertech
Bio that were written off. For the period from February
24, 2009 through March 31, 2009, Intertech Bio had no activity and accordingly
the Company did not recognize any income or loss from its equity method
investment.
 
 Note
      10.
              Subsequent
      Events
 
 In April
2010, the Company issued 500,000 shares of its common stock to J. Leonard Ivins
as a bonus for services rendered during the fiscal year ended March 31,
2010.  The fair market value of the common stock on the date of grant was
$40,000.
 
 On May
18, 2010, the shareholders adopted the 2010 Stock Option Plan (the “2010 Plan”),
which allows for the issuance of up to 2,250,000 stock options to directors,
executive officers, employees and consultants of the Company who are
contributing to the Company’s success.  The shareholders also approved a
1-for-20 reverse split for the company outstanding common
stock.
  Page 28
(F-12)
 
 ITEM
      9.
              CHANGES
      IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL
      DISCLOSURE
 
 None
 
 ITEM
      9A.
              MANAGEMENT'S
      ANNUAL REPORT ON INTERNAL CONTROL OVER FINANCIAL
  REPORTING
 
 Evaluation
of Disclosure Controls and Procedures
 The
Company’s Chief Executive Officer and Chief Financial Officer have evaluated the
effectiveness of the Company’s disclosure controls and procedures (as defined in
Rules 13a-15(e) and 15d-15(e) under the Exchange Act) as of March31, 2010. Based
upon such evaluation, the Chief Executive Officer and Chief Financial Officer
has concluded that, as of March31, 2010, the Company’s disclosure controls and
procedures were ineffective. This conclusion by the Company’s Chief Executive
Officer and Chief Financial Officer
does not relate to reporting periods after March31, 2010.
 
 Management’s
Report on Internal Control Over Financial Reporting
 
 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 as of March31, 2010 based on the framework stated by the
Committee of Sponsoring Organizations of the Treadway Commission. Furthermore,
due to our financial situation, we will be implementing further internal
controls as we become operative so as to fully comply with the standards set by
the Committee of Sponsoring Organizations of the Treadway Commission.
 
 Our
management is responsible for establishing and maintaining adequate internal
control over financial reporting, as such term is defined in Rules 13a-15(f) and
15d-15(f) of the Exchange Act. Our internal control system was designed to
provide reasonable assurance regarding the reliability of financial reporting
and the preparation of financial statements for external purposes, in accordance
with generally accepted accounting principles. Because of inherent limitations,
a system of internal control over financial reporting may not prevent or detect
misstatements. Also, projections of any evaluation of effectiveness to future
periods are subject to the risk that controls may become inadequate due to
change in conditions, or that the degree of compliance with the policies or
procedures may deteriorate.
 
 Based on
its evaluation as of March31, 2010, our management concluded that our internal
controls over financial reporting were ineffective as of March31, 2010. A
material weakness is a deficiency, or a combination of control deficiencies, in
internal control over financial reporting such that there is a reasonable
possibility that a material misstatement of the Company’s annual or interim
financial statements will not be prevented or detected on a timely
basis.
 
 The
material weakness relates to the monitoring and review of work performed by our
Chief Financial Officer and lack of segregation of duties. In the preparation of
audited financial statements, footnotes and financial data all of our financial
reporting is carried out by our Chief Financial Officer, and we do not have an
audit committee to monitor or review the work performed. The lack of segregation
of duties results from lack of accounting staff with accounting technical
expertise necessary for an effective system of internal control. In order to
mitigate this material weakness to the fullest extent possible, all financial
reports are reviewed by the Chief Executive Officer. All unexpected results are
investigated. At any time, if it appears that any control can be implemented to
continue to mitigate such weaknesses, it is immediately implemented. As soon as
our finances allow, we will hire sufficient accounting staff and implement
appropriate procedures for monitoring and review of work performed by our Chief
Financial Officer.
 
 This
annual report does not include an attestation report of the Company s registered
public accounting firm regarding internal control over financial reporting.
Management s report was not subject to attestation by our registered public
accounting firm pursuant to temporary rules of the SEC that permit us to provide
only management’s report in this Annual Report on Form 10-K.
 
 Changes
in Internal Control Over Financial Reporting
 
 No change
in the Company’s internal control over financial reporting occurred during the
year ended March 31, 2010, that materially affected, or is reasonably likely to
materially affect, the Company s internal control over financial
reporting.
  Page
29
 
 PART
III - OTHER INFORMATION
  ITEM 10
- DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS, CONTROL PERSONS AND CORPORATE
GOVERNANCE; COMPLIANCE WITH SECTION 16(a) OF THE EXCHANGE ACT
 
 The
Company’s executive officers and directors are as follows:
 
 Name
              
              Age
              
              PositionJ.
      Leonard Ivins
              
              71
              
              Chief
      Executive Officer and DirectorKevan
      Casey
              
              38
              
              Director
 
 J. Leonard
Ivins.  Mr. Ivins has served as the Company’s Chief Executive
Officer and a director since May 2007.  He has also served as the Chief
Executive Officer for the Company’s wholly-owned subsidiary since December
2007.  From November 2000 until September 2006, Mr. Ivins served as a
director of eLinear, Inc., an integrated technology solutions provider of
security, IP Telephony and network and storage solutions infrastructure. 
Mr. Ivins was also a member of the audit and compensation committees of
eLinear.  In September 2006, eLinear filed for protection under Chapter 7
of the Bankruptcy Code.  Since 1995, he has been a private investor. 
Previously, Mr. Ivins was a founder and co-owner of a privately held company
that was an FDIC and RTC contractor.  From 1979 to 1981, Mr. Ivins was a
turnaround and workout consultant to small, publicly held oil and gas companies.
From 1970 to 1975, Mr. Ivins was president of The Woodlands Development
Corporation and a director of Mitchell Energy and Development Corp.
 
 Kevan
Casey has served as a Director since 2008.   From October 2007
to March 2009 Mr. Casey served as Chairman of the Board of Striker Oil &
Gas, Inc.  Between July 2004 and September 2007, Mr. Casey was the
President and Chief Executive Officer of Striker Oil & Gas, Inc.  From
April 2003 until December 2005, Mr. Casey was chairman of eLinear, Inc., an
integrated technology solutions provider of security, IP Telephony and network
and storage solutions infrastructure listed on the American Stock
Exchange.  Mr. Casey co-founded NetView Technologies, Inc. in December 2001
and served as its president from its inception.  NetView was acquired by
eLinear, Inc. in April 2003.  In September 2006, eLinear filed a voluntary
petition in the United States Bankruptcy Court for the Southern District of
Texas, Houston Division, seeking relief under Chapter 7 of the United States
Code.  In 1998, Mr. Casey founded United Computing Group and United
Consulting Group, a value-added retailer and an information technology
consulting firm, where he served as president and chief executive officer. 
In December 1999, United Computing Group and United Consulting Group were
acquired by C1earWorks.net, Inc., and Mr. Casey continued as president of the
companies until December 2001.
 
 Compliance
with Section 16(a) of the Exchange Act
 Section 16(a)
of the Securities Exchange Act of 1934, as amended (the “Exchange Act”),
requires the Company’s Directors and officers, and persons who own more than 10%
of a registered class of the Company’s equity securities (“Section 16 Persons”),
to file with the Securities and Exchange Commission (the “SEC”) initial reports
of ownership and reports of changes in ownership of Common Stock and other
equity securities of the Company.  Section 16 Persons are required by SEC
regulation to furnish the Company with copies of all Section 16(a) reports
they file.  Section 16(a) of the Exchange Act requires our directors,
executive officers, and the persons who beneficially own more than ten percent
of our common stock, to file reports of ownership and changes in ownership with
the Securities and Exchange Commission.  None of our current executive
officers has filed a Form 3 as of the date hereof.
 
 Board
Composition
 The
Company’s board of directors currently consists of two members.  Each of
its directors is elected annually at its annual meeting.  There are no
family relationships between any of the Company’s officers and
directors.
 
 Independence
of Directors and Board Committees
 The board
has not established any committees and, accordingly, the board serves as the
audit, compensation, and nomination committee.
  Page
30
 
 Audit
Committee
 The Audit
Committee of the Board currently consists of the entire Board of Directors, but
it is expected that the Audit Committee will be constituted to consist of at
least two non-employee directors. The audit committee selects an independent
public accounting firm to be engaged to audit our financial statements, discuss
with the independent auditors their independence, review and discuss the audited
financial statements with the independent auditors and management and recommend
to our Board of Directors whether the audited financials should be included in
our Annual Reports to be filed with the SEC.
  Upon the
constitution of the Audit Committee, it is expected that all of the members of
the audit committee will be non-employee directors who: (1) met the criteria for
independence set forth in Rule 10A-3(b)(1) under the Exchange Act; (2) did not
participate in the preparation of our financial statements or the financial
statements of the Company.; and (3) are able to read and understand fundamental
financial statements, including a balance sheet, income statement and cash flow
statement. The board has determined that none of its directors qualify as an
audit committee financial expert as defined in Item 407(d) of Regulation
S-X.
 
 Option
Grants, Long-Term Incentive Plans and Employment Agreements
 
 The
Company currently does not have any stock options outstanding pursuant to any
stock option plan or long-term incentive plans.
 
 Code
of Ethics
 The
Company adopted a Code of Ethics that applies to all of its directors and
officers. The Code will be filed as an exhibit to a Current Report on Form 8-K.
Copies of the Company’s Code of Ethics are available, free of charge, by
submitting a written request to the Company at China Development Group, Inc.,
710 N. Post Oak Road, Suite 410, Houston, Texas 77401, Attention: J. Leonard
Ivins, Chief Executive Officer.
 
  Page
31
 
 ITEM
11 - Executive Compensation
 
 The
following Summary Compensation Table sets forth, for the years indicated, all
cash compensation paid, distributed or accrued for services, including salary
and bonus amounts, rendered in all capacities by our Chief Executive Officer and
all other executive officers who received or are entitled to receive
remuneration in excess of $100,000 during the stated periods.
  Name and Principal Position
                          Year
                          
                          Salary ($)
                          
                          
                          Bonus ($)
                          
                          
                          Option
                            Awards
                            ($)
                          
                          
                          Other
                            Compensation ($)
                          
                          
                          Total
                            ($)J.
      Leonard Ivins
                            Chief
      Executive Officer
                          2010
                          
                          
                          -0-
                          
                          
                          
                          6,400
                          
                          
                          
                          -0-
                          
                          
                          
                          -0-
                          
                          
                          
                          6,4002009
                          
                          
                          -0-
                          
                          
                          
                          -0-
                          
                          
                          
                          -0-
                          
                          
                          
                          146,250
                          
                          
                          
                          146,250
 
 Outstanding
Equity Awards at Fiscal Year End Table
 
 The table
below sets forth information with respect to our named executive officers
regarding the value of equity compensation as of March 31, 2010.
 
 Name
                  
                  Number of
                    Securities
                    Underlying
                    Unexercised
                    Options (#)
                    Exercisable
                  
                  
                  Number of Securities
                    Underlying
                    Unexercised Options
                    (#) Exercisable
                  
                  
                  Equity Incentive
                    Plan Awards:
                    Number of
                    Securities
                    Underlying
                    Unexercised
                    Unearned
                    Options (#)
                  
                  
                  Option Exercise
                    Price ($)
                  
                  
                  Option Expiration
                    DateJ.
      Leonard Ivins
                  
                  
                  -0-
                  
                  
                  
                  -0-
                  
                  
                  
                  -0-
                  
                  
                  
                  -0-
                  
                  
                  
                  n/a
 
 Employment
and Consulting Agreements
 
 J. Leonard Ivins.  In
May 2007, the Company and Mr. Ivins entered into an employment agreement where
it agreed to employ Mr. Ivins as its Chief Executive Officer.  The
employment agreement terminates in May 2010. Under his employment agreement, Mr.
Ivins has the right to terminate his employment agreement at any time upon
fourteen days written notice and the Company may terminate his employment
agreement immediately upon fourteen days written notice. The employment
agreement entitles Mr. Ivins to a monthly base salary of $5,000 and a stock
bonus of 1,600,000 shares of the Company’s Common Stock upon execution of his
employment agreement.
 
 In
December 2007, the Company’s wholly-owned subsidiary and Mr. Ivins entered into
an employment agreement where it agreed to employ Mr. Ivins as its chief
executive officer.  The employment agreement terminates in November
2010.  Under the employment agreement, both parties have the right to
terminate the agreement at any time upon 30 days written notice. 
Additionally, the Company’s wholly-owned subsidiary may terminate the agreement
immediately upon written notice for “cause” as defined therein.  The
employment agreement entitles Mr. Ivins to a monthly base salary of $7,000, a
monthly allowance of $1,350 for business related expenses and a stock bonus of
1,600,000 shares of the Company’s Common Stock.  Mr. Ivins waived the
base salary and monthly allowance provisions of his contract for the year ended
March 31, 2010.  Mr. Ivins was awarded his bonus on March 31,
2010.
 
 DIRECTOR
AND EXECUTIVE COMPENSATION
  Directors
who are also employees do not receive any additional compensation for serving as
a director.  No director received any fee for his services during the last
fiscal year.
  Page
32
 
 ITEM
12.  SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND
RELATED STOCKHOLDER MATTERS
 
 The
following table sets forth, as of March 31, 2010,the number and
percentage of outstanding shares of Company common stock owned by: (a) each
person who is known by us to be the beneficial owner of more than 5% of our
outstanding shares of common stock; (b) each of our directors; (c) the current
named executive officers as defined in Item 402 of Regulation S-B; and (d) all
current directors and executive officers, as a group.  As of March 31,
2009, there were 468,055,263 shares of common stock issued and
outstanding.
 
 Name and Address of Beneficial Owner 
      (1)
                      
                      Number of Shares
                      
                      
                      Percentage ofOwned
                      
                      
                      Class
      (2)Silver
      Star Holdings (3) Officers and Directors
                      
                      
                      19,408,385
                      
                      
                      
                      83.7
                      %J.
      Leonard Ivins
                      
                      
                      361,875
                      
                      
                      
                      1.6
                      %
 
 (1)
              Unless
      otherwise indicated, the mailing address of the beneficial owner is c/o
      China Development Group, Inc., 710 N. Post Oak Road., Suite 410, Houston,
      Texas 77024.
 
 (2)
              The
      percentage of beneficial ownership of Common Stock is based on 23,182,763
      shares of Common Stock outstanding as of July 14, 2010 and excludes all
      shares of Common Stock issuable upon the exercise of outstanding options,
      other than the shares of Common Stock issuable upon the exercise of
      options or warrants to purchase Common Stock held by the named person to
      the extent such options or warrants are exercisable within 60 days of July
      14, 2010.
 
 (3)
              The
      business address of Silver Star Holdings is PO Box 27949, Houston, Texas
      77227-7949.
  Page
33
  ITEM
13.               CERTAIN RELATIONSHIPS
AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE
 
 None.
  Page
34
 
 ITEM
14.               PRINCIPAL ACCOUNTANT
FEES AND SERVICES
 
 Audit
Fees.
 
 The
aggregate fees billed for professional services rendered by GBH CPAs, PC and
Thomas Leger & Co., LLP for the audit of our annual financial statements and
review of financial statements included in our Forms 10-Q for fiscal years 2009
and 2008 are set forth in the table below.
 
 2010
                      
                      
                      2009Malone Bailey
      LLP
                      
                      
                      5,000
                      
                      
                      
                      8,000GBH
      CPAs, PC
                      
                      
                      -
                      
                      
                      
                      15,000$
                      5,000
                      
                      
                      $
                      23,000
 
 Audit-Related
Fees.
 
 During
the fiscal years ended March 31, 2010 and 2009, no assurance or related
services were performed by either Malone & Bailey or GBH CPAs, PC that were
reasonably related to the performance of the audit or review of our financial
statements.
 
 Tax
Fees.
 
 During
the fiscal year ended March 31, 2010 and 2009, no fees were billed by
either Malone & Bailey or GBH CPAs, PC for tax compliance, tax advice or tax
planning services.
 
 All
Other Fees.
 
 During
the fiscal years ended March 31, 2010 and 2009, no fees were billed by
either Malone & Bailey or GBH CPAs, PC other than the fees set forth under
the caption “Audit Fees” above.
 
 Pre-Approval
Policies and Procedures of the Audit Committee.
 
 The Audit
Committee has the sole authority to appoint, terminate and replace our
independent auditor.  The Audit Committee may not delegate these
responsibilities.  The Audit Committee has the sole authority to
approve the scope, fees and terms of all audit engagements, as well as all
permissible non-audit engagements of our independent auditor.
  ITEM
15.               EXHIBITS AND
REPORTS
 
 Exhibit No.
              
              Description31.1
              
              Certification
      of J. Leonard Ivins.31.2
              
              Certification
      of J. Leonard Ivins.32.1
              
              Certification
      for Sarbanes-Oxley Act of J. Leonard Ivins.32.2
              
              Certification
      for Sarbanes-Oxley Act of J. Leonard
Ivins.
  Page
35
 
 SIGNATURES
  Pursuant
to the requirements of Section 13 or 15(d) of the Securities Exchange Act of
1934, the Registrant has duly caused this report to be signed on its behalf by
the undersigned, thereunto duly authorized
 
 CHINA
DEVELOPMENT GROUP, INC.
  By:
                  /s/
      J. Leonard IvinsJ.
      Leonard Ivins, Chief Executive OfficerDate:
      July 14, 2010
  Pursuant
to the requirements of the Securities Exchange Act of 1934, this report has been
signed below by the following persons on behalf of the Registrant and in the
capacities and on the dates indicated.
 
 Signature
              
              Title
              
              Date/s/
      J. Leonard Ivins
              
              Chief
      Executive Officer and
              
              July
      14, 2010J.
      Leonard Ivins
              
              Chairman of the Board/s/
      Kevan Casey
              
              Director
              
              July
      14, 2010Kevan
      Casey
  Page
36