Cybrdi, Inc. - FORM 10-K - April 13, 2012

Attached files

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EXCEL - IDEA: XBRL DOCUMENT - Cybrdi, Inc.	Financial_Report.xls
EX-32.1 - EXHIBIT 32.1 - Cybrdi, Inc.	exhibit32-1.htm
EX-31.2 - EXHIBIT 31.2 - Cybrdi, Inc.	exhibit31-2.htm
EX-32.2 - EXHIBIT 32.2 - Cybrdi, Inc.	exhibit32-2.htm
EX-31.1 - EXHIBIT 31.1 - Cybrdi, Inc.	exhibit31-1.htm

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549

FORM 10-K

[ ] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934
FOR THE YEAR ENDED DECEMBER 31, 2011

[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934
FOR THE TRANSITION PERIOD FROM _______TO __________

COMMISSION FILE NO. 09081

CYBRDI INC.
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)

CALIFORNIA	95-2461404
(STATE OR OTHER JURISDICTION OF	(I.R.S. EMPLOYER
INCORPORATION OR ORGANIZATION)	IDENTIFICATION NO.)

No 29 Chang’An South Road Xi’an Shaanxi P.R. China	710061
(ADDRESS OF PRINCIPAL EXECUTIVE OFFICE)	(ZIP CODE)

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

_______________________________________________________
Former name, former address and former fiscal year,
(if changed since last report)

Indicate by a check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15 (d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.

Yes [X] No [ ]

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

Yes [ ] No [X]

Indicate by check mark if the Registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act

Yes [X] No [ ]

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities and Exchange Act 0f 1934 during the preceding 12 months (of for such shorter period that the registrant was required to file such reports) and (2) has been subject to such filing requirements for the past 90 days.

Yes [X] No [ ]

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).

Yes [ ] No [X]

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

Large accelerated filer [ ]

Accelerated filer [ ]

Non-accelerated filer [ ]

Smaller Reporting Company [X]

Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of registrant's knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendments to this Form 10-K. Indicate by a check mark whether the registrant is a large accelerated filer (as defined in Rule 12b-2 of the Exchange Act).

Yes [ ] No [X]

Indicate by a check mark whether the registrant is a shell Company (as defined by Rule 12b-2 of the Act).

Yes [ ] No [X]

APPLICABLE ONLY TO CORPORATE ISSUERS:

As of April 11, 2012, the Company had 120,225,323 shares of Common Stock, without par value, outstanding.

The aggregate market value of the voting and non-voting common equity held by non-affiliates computed by reference to, as of June 30, 2011 was approximately $330,649 based on a closing bid price of $0.008 at June 30, 2011 and a total of 41,331,170 shares held by non-affiliates.

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

Indicate by check mark whether the registrant has filed all documents and reports required to be filed by Section 12, 13 or 15(d) of the Securities Exchange Act of 1934 subsequent to the distribution of securities under a plan confirmed by a court.

Yes [ ] No [ ] Not Applicable [X]

DOCUMENTS INCORPORATED BY REFERENCE: None

	TABLE OF CONTENTS	PAGE
PART I		4
Item 1.	Business	4
Item 1A.	Risk Factors	9
Item 1B.	Unresolved Staff Comments	14
Item 2.	Properties	14
Item 3.	Legal Proceedings	14
Item 4.	Mine Safety Disclosure	14
PART II		15
Item 5.	Market For Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities.	15
Item 6.	Selected Consolidated Financial Information	16
Item 7.	Management’s Discussion And Analysis Of Financial Condition And Results Of Operations	16
Item 7A.	Quantitative And Qualitative Disclosures About Market Risk	20
Item 8.	Financial Statements And Supplementary Data	20
Item 9.	Changes In And Disagreements With Accountants Or Accounting And Financial Disclosure	20
Item 9A.	Control And Procedures	20
Item 9B.	Other Information	21
PART III		21
Item 10.	Directors And Executive Officers Of The Registrant	21
Item 11.	Executive Compensation	24
Item 12.	Security Ownership Of Certain Beneficial Owners And Management And Related Stockholder Matters	25
Item 13.	Certain Relationships And Related Transactions, And Director Independence	25
Item 14.	Principal Accountant Fees And Services	27
PART IV.		28
Item 15.	Exhibits, Financial Statement Schedules	28

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

Certain financial information included in this annual report has been derived from data originally prepared in Renminbi (RMB), the currency of the People's Republic of China ("China" or "PRC"). For purposes of this annual report, conversion at year-end exchange rates of US$1.00 to RMB 6.2939 for assets and liabilities, and average rate of US$1.00 to RMB 6.4630 for revenue and expenses in year 2011. There is no assurance that RMB amounts could be converted into US dollars at that rate. Please see Note 3 “Summary of Significant Accounting Policy Item (l) for Foreign Currency Translation” of the accompanying financial statements.

PART I

ITEM 1.

BUSINESS

HISTORY

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

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

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

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

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

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

On July 26, 2007, Chaoying Biotech entered into an acquisition agreement with the Chinese Partner. On July 28, 2007, Chaoying Biotech invested RMB15 millions to acquire an 83.33% equity ownership of Shandong Chaoying Culture and Entertainment Co., Ltd (“SD Chaoying”) from the Chinese Partner. SD Chaoying is a corporation organized in the Shandong province of P.R.China. On September 5, 2007, Shandong Commercial government approved this acquisition and ownership of SD Chaoying was transferred to Chaoying Biotech from the Chinese Partner. The business of SD Chaoying will primarily focus on culture and entertainment, including make-up, personal care, human body building and slimming, gambling, saunas for massage and bath, karaoke, catering, and lodging, etc. SD Chaoying will have a specific emphasis on casino gambling, which has been approved by Shandong Administration for Civil Affairs. As of December 31, 2010, SD Chaoying had substantially completed the construction of two residential buildings and had recognized revenue from sales of housing units from these buildings for the year then ended. The main structure of the commercial entertainment center has also been completed, with the exterior, rooftop, the surrounding supporting projects and the community landscaping yet to be completed, but which are expected to be completed in 2012 prior to the commencement of operations by merchant tenants if we can obtain an estimated $2.8 million to complete construction..

On March 10, 2007 the Company entered into a Sales Agency Agreement with BioMax, Ltd., a reseller located in the United States.

On April 29, 2011, Chaoying Biotech invested $154,732 (equivalent to RMB 1 million) to restore the operation of the Institute of Shaanxi Chaoying Clinical Pathology (“IOSCCP”), a wholly-owned subsidiary established on July 31, 2003, whose main business includes pathology research and consulting, consulting and diagnostic clinical pathology and pathology-related research and development of new technologies, and basic training in pathology. Its sole shareholder has been Chaoying Biotech. However, Chaoying Biotech withdrew the original investment from IOSCCP in September 2007 as we believed that both internal and external conditions of IOSCCP were not mature at that time. In light of foreseeable benefits and new business opportunities for this entity, we resumed its business and re-invested $154,732 (equivalent to RMB 1 million) in it in April 2011.

BUSINESS OVERVIEW

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

Biotechnology Manufacturing, R&D Business

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

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

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

Our manufacturing facility and a pathology and molecule laboratory is located at an approximately 18,000 square foot facility that we own in Shaanxi province. At this facility, we have established the standard tissue chip production, processing procedure and a quality control system. We have also established an electronic management system to effectively manage biologic information databank.

Specifically, our products and services include:

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

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

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

Culture, Entertainment, and Real Estate Business

Chaoying Biotech owns 83.33% of SD Chaoying, a culture and entertainment company with a special license for casino gambling. SD Chaoying is developing a Culture and Entertainment Square in Changle City of Shandong Province on the 33,333 square meter land it owns the right to use. The usage areas of the Square will be approximately 19,145 square meters. With the entertainment facilities of restaurants spas, hotel rooms, movie theaters, cosmetic and personal care salons, body buildup gyms, the Square will become local cultural and entertainment center. A portion of the cultural and entertainment part of the facility opened in January 2011 and the balance remains under construction. The project includes four multi-family residential buildings (about 14,188 square meters), and two of them had been completed. Of 74 total units, 2 units were sold in 2011, 9 were sold in 2010 and 37 were sold in 2009.

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

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

The accompanying consolidated financial statements have been prepared assuming the Company will continue as a going concern, which contemplates the realization of assets and the satisfaction of liabilities in the normal course of business. The Company has incurred significant losses and has not demonstrated the ability to generate sufficient cash flows from operations to satisfy its liabilities and sustain operations. The Company had an accumulated deficit of $2,447,643 and $1,847,882 as of December 31, 2011 and 2010, respectively, including net losses of $599,761 and $750,740 for the years ended December 31, 2011 and 2010, respectively. In addition, current liabilities exceeded current assets by $2,931,175 and $2,315,510 at December 31, 2011 and 2010, respectively. These matters raise substantial doubt about the Company’s ability to continue as a going concern.

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

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

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

(c) Additional advances from related companies and affiliates: Mr. Bai, our Chief Executive Officer, advanced $77,239 to the Company in 2011 to finance operations and the costs to maintain the Company’s public status in the U.S. In addition, Shaanxi Chaoying Beauty & Cosmetics Group, which is also an affiliate, is anticipated to provide up to $730,000 of capital to support operational use. During 2011, Shaanxi Chaoying Beauty & Cosmetics Group advanced $61,891 to the Company to finance its operations.

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

MARKETING

Marketing strategy in ShaanXi,Chaoyina: By leveraging existing hospital relationships and Shaanxi Chaoying's marketing channels, we have marketed TMA products, medical care products and other services within the Chinese market. There are two primary regions in China where we focus our marketing: the northern provinces which include the cities of Beijing, Tian Jing and Hebei Province, and the eastern provinces which include the cities of Shanghai, Jiangsu , Guangdong, Fujian, Shanxi, Hunan, Hubei ,Zhejiang Province and Shangdong Province. Our domestic sales accounted for approximately 9% of our total sales of ChaoYing Biotech in the fiscal year of 2011 Starting in 2010, our sole domestic sales representative in China has been Xi’an AiLiNa Biotechnology Co., Ltd,, and the only overseas sales representative has been Biomax. We mainly distribute our products through these two sales representatives.

Marketing strategy in Shandong Chaoying: with the progress of the project construction, we have sold more than half of residential housing units, and the merchants for the culture and entertainment center are also under way, our residential housing sales accounted for none of our total sales revenue in the fiscal year of 2011. Shandong Chaoying’s main focus in 2012 will be to occupy the culture and entertainment center with merchant tenants and commence the operation.

International Marking Strategy: By leveraging our know-how and current infrastructure of our operations in China, we attempt to expand our international distribution network. With the comparatively low cost for our products and services and our patented technology, we have a competitive advantage in the international market. In 2001, we set up Cybrdi Maryland to develop our business in the United States. The expansion of our business in the international arena came on March 10, 2007, when we entered into a Sales Agent Agreement with BioMax, a re-seller located in the United States. Under the Sales Agent Agreement, BioMax acts as our exclusive agent dealing with the distribution of our products and services in all countries and regions except the P.R.C mainland. We expect our business in the international market will continue to grow through the efforts of BioMax. BioMax has played an important role in introducing us to the leading pharmaceutical companies and institutes outside of China. Through BioMax, we have gradually built up our sales channels in the United States, Canada, Germany, Italy, Belgium, Japan and Taiwan. In the fiscal year of 2011 and 2010, BioMax accounted for about 92% and 82% of our sales revenue, respectively, which also represents our export sales.

MARKET OPPORTUNITIES AND COMPETITION

China Biotech Trends

Biotechnology research has been supported by the Chinese government, having been designated a “key industry” in China's scientific development plan since 1986. However, most biotech investments have been made in the areas of basic research in government funded laboratories or government linked companies which are focused on major scientific discoveries in gene functions. Cybrdi received government grants of $0 and $4,300 (equivalent to RMB 29,103) during the years ended December 31, 2011 and 2010, respectively.

Competition

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

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

INTELLECTUAL PROPERTY

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

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

RESEARCH AND DEVELOPMENT

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

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

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

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

We spent $0 and $16,826 in research and development in the 2011 and 2010 fiscal years, respectively.

ENVIRONMENTAL LAW COMPLIANCE

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

EMPLOYEES

As of December 31, 2011, we had 36 full-time employees, with 22 employees at Chaoying Biotech, 8 employees at IOSCCP, and 6 employees at SD Chaoying. All of the Company’s employees are engaged full-time.

AVAILABLE INFORMATION

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

ITEM 1A.

RISK FACTORS

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

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

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

OUR BUSINESS IS HEAVILY DEPENDENT ON THE ECONOMIC GROWTH OF CHINA

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

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

In order to maximize returns on available cash, the Company has outstanding unsecured loans totaling approximately $0.09 million, representing 0.9% of the Company's assets. The loans were placed to earn interest income. However, in the event of a default, the Company risks substantial loss of their ability to continue to finance ongoing operations. Litigation could be costly to enforce the loan obligations and may deprive us of the use of the cash for a significant period of time. As of December 31, 2011, the principal balance and interest receivable for this loan had been reduced to $0, net of allowance of $95,330 and $181,951 for doubtful principal balance and interest receivable, respectively, after charging $92,836 of bad debt expense for the year ended December 31, 2011. As of December 31, 2010, the principal balance and interest receivable for this loan had been reduced to RMB 0.6 Million (equivalent to $90,877) and $0, respectively, net of allowance of $173,452 for doubtful interest receivable. The interest rate for these loans initially was initially 8% per year, and subsequently reduced to 5% since October 9, 2006.

RELIANCE ON SINGLE CUSTOMER

We generated 92% of our revenue of tissue array from sales to a single customer in 2011. Should this customer face financial difficulty, refuse to pay our invoices as they become due or direct their business to a competitor, our business operations will suffer a material adverse effect.

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

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

OUR BUSINESS MAY BE AFFECTED BY UNEXPECTED CHANGES IN REGULATORY REQUIREMENTS IN THE JURISDICTIONS IN WHICH WE OPERATE.

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

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

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

COMPETITION

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

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

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

UNANTICIPATED OBSTACLES TO EXECUTION OF OUR BUSINESS PLAN.

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

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

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

CURRENCY EXCHANGE

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

RESEARCH AND DEVELOPMENT CAN BE COSTLY

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

RELIANCE ON CURRENT MANAGEMENT

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

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

WE MAY HAVE DIFFICULTY ATTRACTING TALENT IN FOREIGN COUNTRIES.

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

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

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

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

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

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

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

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

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

As directed by Section 404 of the Sarbanes-Oxley Act of 2002 or SOX 404, the SEC adopted rules requiring public companies to include a report of management on the company’s internal controls over financial reporting in their annual reports, including Form 10-K. We have established disclosure controls and procedures effective for the purposes set forth in the definition thereof in Exchange Act Rule 13a-15(e) as of December 31, 2011. Also projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree or compliance with the policies or procedures may deteriorate.

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

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

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

RISKS RELATED TO OUR COMMON STOCK

YANBIAO BAI CONTROLS THE OUTCOME OF MATTERS SUBMITTED TO SHAREHOLDERS FOR APPROVAL.

As of April 11, 2012, Mr. Bai owns approximately 65.6% of our outstanding common stock (including approximately 2.7% owned by his wife). As a result, he can control all matters requiring shareholder approval, including the appointment of our directors and the approval of significant corporate transactions. His ownership and control may also have the effect of delaying or preventing a future change in control, impeding merger, consolidation, takeover or other business combination or discourage a potential acquirer from making a tender offer.

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

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

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

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

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

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

ITEM 1B.

UNRESOLVED STAFF COMMENTS

Not Applicable.

ITEM 2.

DESCRIPTION OF PROPERTY

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

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

ITEM 3.

LEGAL PROCEEDINGS

There are no material pending legal proceedings to which we are a party. We received a notice on June 6, 2000 to inform us that we may have a potential liability from waste disposal in the Casmalia Disposal Site at Santa Barbara County, California. We were given a choice of either signing an agreement that would toll the statute of limitations for eighteen (18) months in order to allow us to resolve any liability with the government without incurring costs associated with being named a defendant in a lawsuit, or becoming an immediate defendant in a lawsuit. We signed the tolling agreement. On November 20, 2001, the tolling agreement was extended for an additional 18 months. On May 20, 2003 the tolling agreement was again extended for an additional 18 months and on November 24, 2004 the tolling agreement was again extended for additional 18 months. On June 29, 2004, we received a proposed settlement from the EPA in the amount of $21,131, which had been accrued as other payable. We are waiting for communication from the government concerning payment of the final settlement. As of and subsequent to December 31, 2011, the Company had not received further correspondences from the EPA regarding this matter.

On June 7, 2011, Weifang Shili Hesin Engineering Equipment Co., Ltd. (the “Plaintiff”) filed a complaint against SD Chaoying at the Basic People's Court of Changle County in Shandong Province, China, for alleged damages caused by SD Chaoying for not performing appropriately and completely the obligations in accordance with the agreement signed by both parties on April 28, 2011. Pursuant to the agreement, SD Chaoying agreed to transfer: (1) the rights of development, construction, and land of the #1 and #2 residential buildings for RMB 7.6 million, or $1,207,518, and (2) the 12 unsold residential units in the #3 and #4 residential buildings at a price as agreed upon. As of December 31, 2011, the Plaintiff paid $95,330 (equivalent to RMB 600,000) deposit as agreed upon, and prepaid $185,912 (equivalent to RMB 1,170,114), both of which were recorded as Other Payables under current liabilities. Plaintiff was seeking for the discharge of the original agreement signed, the return of prepayment of $185,912 (equivalent to RMB 1,170,114), repayment of the deposit plus 100% penalty, totaling $190,660 (equivalent to RMB 1,200,000), and for attorneys’ fees and costs. The Company disputed Plaintiff’s claim for a land use right certificate of underlying construction base of the #1 and #2 residential buildings, which certificate was inseparable from other part of the land and was not specifically stated in the agreement. The Company also disputed Plaintiff’s entitlement to the amounts claimed and instructed the Company’s legal counsel to contest the action, while concurrently pursuing opportunities for reasonable settlement. The case went to trial on July 7, 2011. On November 15, 2011, the Basic People's Court of Changle County pronounced its judgment against Plaintiff and that SD Chaoying had no liability. However, the plaintiff still has a right to appeal the judgment to the Intermediate Court in Weifang City, Shandong Province, China within 15 days after receiving verdict from the court. The verdict was released by the court on March 23, 2012. An appeal was filed by the Plaintiff after the verdict was released. As of December 31, 2011, the Company has recorded an estimate of loss contingencies of $37,134 for the year ended December 31, 2011, which was reasonably estimated by the Company’s legal counsel. The Company recorded the estimated liability and loss contingencies according to FASB ASC 450-20-25-2 under Topic 450, “Contingencies Loss Contingencies Recognition”.

ITEM 4.

MINE SAFETY DISCLOSURE

Not applicable.

PART II

ITEM 5.

MARKET FOR COMMON EQUITY AND RELATED STOCKHOLDER MATTERS

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

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

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

YEAR	PERIOD	HIGH	LOW
2011	First Quarter	0.030	0.0121
	Second Quarter	0.0121	0.008
	Third Quarter	0.02	0.003
	Fourth Quarter	0.05	0.0021


2010	First Quarter	0.025	0.020
	Second Quarter	0.050	0.015
	Third Quarter	0.045	0.021
	Fourth Quarter	0.030	0.012

(a) Transfer Agent

Our transfer agent is Securities Transfer Corporation, whose address is 2591 Dallas Parkway, Suite 102, Frisco, Tx. 75034. Their telephone number is 972-963-0012.

(b) Stockholders

As of April 11, 2012, there were approximately 1,317 record holders of our common stock. As of April 11, 2012, we have not paid any cash dividends on shares of our common stock and do not plan to do so. We currently plan to retain future earnings to fund the development and growth of our business.

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

(d) Securities authorized for issuance under equity compensation plans

None.

ITEM 6.

SELECTED FINANCIAL INFORMATION

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

ITEM 7.

MANAGEMENT DISCUSSION AND ANALYSIS

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

CRITICAL ACCOUNTING POLICIES AND ESTIMATES

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

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

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

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

RESULTS OF OPERATIONS

FOR THE YEAR ENDED DECEMBER 31, 2011 COMPARED TO THE YEAR ENDED DECEMBER 31, 2010

Net Sales

Cybrdi generates two categories of revenues, including sales of tissue chip & kits products and residential housing. The total revenues for the year ended December 31, 2011 was $546,258, a decrease of approximately 33.4% from $819,733 for the year ended December 31, 2010.

Tissue Chip Product: Net sales increased $29,599 from $523,212 for the year ended December 31, 2010 to $552,811 for the year ended December 31, 2011, an increase of approximately 5.7% . These net sales were generated from our China subsidiary, Chaoying Biotech. The increase in net sales of tissue chip & kit product was primarily due to a stable increase of oversea sales in 2011. Starting from 2010, our sole domestic sales representative in China has become Xi’an AiLiNa Biotechnology Co., Ltd., and the only overseas sales representative is BioMax. We mainly distribute our products through these two sales representatives.

Housing: SD Chaoying completed the construction of the two six-story multi-family residential buildings with a total of 72 housing units in year 2009, 9 and 37 of which qualified as being recognized as sales revenue aggregating $296,521 and $1,010,632 for the years ended December 31, 2010 and 2009. An additional two residential units were sold in 2011. Since SD Chaoying is required to continue its involvement with the property after the sale, including installations of utility systems, improvements and amenities, and community landscaping, profit from the sale was recognized using the percentage of completion method as required by ASC Topic 360-20, “Property, Plant, and Equipment – Real Estate Sales”. As a result, net sales from housing decreased by $303,074 to a loss of ($6,553) in the year ended December 31, 2011 from $296,521 for the year ended December 31, 2010. As of December 31, 2011, only 93.20% of revenues can be recognized based on the current percentage of completion.

Gross Margin

Gross margin as a percent of sales was 0.29% and 23.02% for the years ended December 31, 2011 and 2010, respectively. The gross margins for both the Company’s two divisions were lower than the prior year. The gross margin of SD Chaoying decreased significantly, while the gross margin of Chaoying Biotech decreased from 28.53% to 23.75% . Gross profit of SD Chaoying decreased $169,207 from $39,452 for the year ended December 31, 2010 to ($129,755) for the year ended December 31, 2011, mainly due to weak sales in the residential housing segment in 2011. Gross profit of Chaoying Biotechnology for the year ended December 31, 2011 decreased $17,969 to $131,312 for the year ended December 31, 2011 from $149,281 for the year ended December 31, 2010, mainly due to weak sales in Chinese domestic market as well as a decrease in unit sales price of tissue chip sold to the Company’s US distributor, combined with a higher unit cost allocated from fixed costs as a result of a lower production volume during 2011 as compared to the year of 2010. In addition, the commencement of the business in the commercial property segment has not generated revenue but has incurred costs directly associated with the business. As a result, the overall gross margin decreased in 2011.

Operating Expenses

The Company’s operating expenses decreased $330,410 to $731,577 for the year ended December 31, 2011 from $1,061,987 for the year ended December 31, 2010. This was primarily due to a decrease of $58,286 in other general and administrative expenses from $216,023 for the year ended December 31, 2010 to $157,737 for the current year, a decrease of $35,418 in selling and distribution expense from $53,323 for the year ended December 31, 2010 to $17,905 for the current year, and a decrease of compensation expense of $306,000 recorded during the first quarter of 2010 for 12,000,000 shares and 3,300,000 shares of common stocks issued to the Company’s two key executives, partially offset by an accrual of loss contingencies of $37,134 for the year ended December 31, 2011, an increase in salaries and wages of $12,180 from $169,844 for the year ended December 31, 2010 to $182,024 for the current year, and an increase of $23,220 in professional fees to $88,695 for the year ended December 31, 2011 as compared to $65,475 for the year ended December 31, 2010., .

Other Income

Net other income decreased by $40,853 to ($9,133) for the year ended December 31, 2011, a 128.8% decrease, as compared to $31,720 for the year 2010. The higher balance of other income for the year ended December 31, 2010 was mainly due to $28,168 generated from the sale of non-operating real property of Chao Ying Biotech for the first half of 2010. The net book value of non-operating real property was $38,636 and net proceeds from the sale amounted to $66,804. Other expense for the year ended December 31, 2011 was primarily attributable to $13,550 foreign exchange translation losses from overseas sales for the year ended December 31, 2011. The sales from overseas sales increased by 16.7% from $431,121 for the year ended December 31, 2010 to $502,983 for the current year.

Income Taxes

The Company had not recorded a provision for U.S. federal income tax for year ended December 31, 2011 and 2010 due to a net operating loss incurred, and it was not required to accrue income taxes due to the net operation loss for the year ended December 31, 2011 and 2010. According to Western Developing Plan of the PRC, Chaoying Biotech enjoys a 50% reduction in preferential policy of EIT, but not less than 15%. As a result, Chaoying Biotech’s effective EIT tax rate has been 15% since 2008. SD Chaoying is subject to the standard EIT rate of 25%. The Company had net losses and no income tax provision was recorded for the years ended December 31, 2011 and 2010. A 100% valuation reserve was recognized since it is more likely than not that all of the deferred tax assets will not be realized.

Net Loss

As a result of the above factors, net loss before minority interests decreased $102,381, or 12.2%, from $841,534 for the year ended December 31, 2010 to $739,153 for the year ended December 31, 2011.

LIQUIDITY AND CAPITAL RESOURCES

Operating working capital deficit (total current asset deduct total current liabilities) increased by $615,665 from $2,315,510 as of December 31, 2010 to $2,931,175 as of December 31, 2011. The increase was primarily due to a decrease in due from related companies of $125,032 from $204,474 as of December 31, 2010 to $79,442 as of December 31, 2011, a decrease of $90,877 in loan to unaffiliated company from $90,877 as of December 31, 2010 $0 as of December 31, 2011, and a decrease of $21,860 in other receivables and prepaid expenses from $96,949 as of December 31, 2010 to $75,089 as of December 31, 2011, partially offset by an increase of 196,028 in cash and equivalents from $585,020 as of December 31, 2010 to $781,048 as of December 31, 2011. The $288,811 increase in other payables from $77,209 as of December 31, 2010 to $366,020 as of December 31, 2011, the $188,382 increase in accrued expenses from $505,054 as of December 31, 2010 to $693,436 as of December 31, 2011, and the $117,535 increase in deferred revenue from $21,749 as of December 31, 2010 to $139,284 as of December 31, 2011 also caused the increase in our working capital deficit.

For investing activities, the Company incurred net cash outflow during the year ended December 31, 2011. The primary reason was due to $587,705 used in the construction in progress of the SD Chaoying project during the year ended December 31, 2011, and $84,827 used in purchase of operating equipments, partially offset by proceeds of $136,535 received from repayment of loan to affiliated companies as of December 31, 2011.

For financing activities, the Company obtained net proceeds of $307,481 from its related parties of the Company for the year ended December 31, 2011.

The accompanying consolidated financial statements have been prepared assuming the Company will continue as a going concern, which contemplates the realization of assets and the satisfaction of liabilities in the normal course of business. The Company has incurred significant losses and has not demonstrated the ability to generate sufficient cash flows from operations to satisfy its liabilities and sustain operations. The Company had accumulated deficit of $2,447,643 and $1,847,882 as of December 31, 2011 and 2010, including net losses of $599,761 and $750,740 for the years ended December 31, 2011 and 2010, respectively.

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

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

(c) Additional advances from related companies and affiliates: Mr. Bai, our Chief Executive Officer, advanced $77,239 to the Company in 2011 to finance operations and the costs to maintain the Company’s public status in the U.S. In addition, Shaanxi Chaoying Beauty & Cosmetics Group, which is also an affiliate, is anticipated to provide up to $730,000 of capital to support operational use. During the year 2011, Shaanxi Chaoying Beauty & Cosmetics Group advanced $61,891 to the Company to finance its operations.

OFF-BALANCE SHEET ARRANGEMENTS

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

RECENT ACCOUNTING PRONOUNCEMENTS

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

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

In May 2011, FASB issued an amendment (ASU No. 2011-04) to Fair Value Measurement (ASC Topic 820). In 2006, the FASB and the International Accounting Standards Board (IASB) published a Memorandum of Understanding, which has served as the foundation of the Board’s efforts to a common set of high quality global accounting standards. Consistent with the Memorandum of Understanding and the Board’s commitment to achieving the goal, the amendments in this Update are the result of the work by the FASB and the IASB to develop common requirements for measuring fair value and for disclosing information about fair value measurements in accordance with U.S. GAAP and IFRS. The adoption of this guidance had no impact on our consolidated financial position or results of operations.

In May 2011, FASB issued an amendment (ASU No. 2011-05) to Comprehensive Income (ASC Topic 220). The amendment require that all nonowner changes in stockholders’ equity be presented either in a single continuous statement of comprehensive income or in two separate but consecutive statements. In the two-statement approach, the first statement should present total net income and its components followed consecutively by a second statement that should present total other comprehensive income, the components of other comprehensive income, and the total of comprehensive income. The Company had adopted this guidance to our consolidated financial statements as of and for the year ended December 31, 2011.

In September 2011, FASB issued an amendment (ASU No. 2011-08) to Intangibles–Goodwill and Other (ASC Topic 350). The amendments in the Update permit an entity to first assess qualitative factors to determine whether it is more likely than not that the fair value of a reporting unit is less than its carrying amount as a basis for determining whether it is necessary to perform the two-step goodwill impairment test described in Topic 350. If, after assessing the totality of events or circumstances, an entity determines it is not more likely than not that the fair value of a reporting unit is less than its carrying amount, then performing the two-step impairment test is unnecessary. However, if an entity concludes otherwise, then it is required to perform the first step of the two step impairment test by calculating the fair value of the reporting unit and comparing the fair value with the carrying amount of the reporting unit, as described in paragraph 350-20-35-4. If the carrying amount of a reporting unit exceeds its fair value, then the entity is required to perform the second step of the goodwill impairment test to measure the amount of the impairment loss, if any, as described in paragraph 350-20-35-9. The Company had adopted this guidance to our consolidated financial statements as of and for the year ended December 31, 2011.

In December 2011, FASB issued an Update (ASU No. 2011-10) to Property, Plant, and Equipment (ASC Topic 360). Under the amendments in this Update, when a parent (reporting entity) ceases to have a controlling financial interest (as described in Subtopic 810-10) in a subsidiary that is in substance real estate as a result of default on the subsidiary’s nonrecourse debt, the reporting entity should apply the guidance in Subtopic 360-20 to determine whether it should derecognize the in substance real estate. Generally, a reporting entity would not satisfy the requirements to derecognize the in substance real estate before the legal transfer of the real estate to the lender and the extinguishment of the related nonrecourse indebtedness. That is, even if the reporting entity ceases to have a controlling financial interest under Subtopic 810-10, the reporting entity would continue to include the real estate, debt, and the results of the subsidiary’s operations in its consolidated financial statements until legal title to the real estate is transferred to legally satisfy the debt. The adoption of this guidance had no impact on our consolidated financial position or results of operations.

In December 2011, FASB issued an Update (ASU No. 2011-11) to Balance Sheet (ASC Topic 210) regarding disclosures about offsetting assets and liabilities. Pursuant to this Update, entities are required to disclose both gross information and net information about both instruments and transactions eligible for offset in the statement of financial position and instruments and transactions subject to an agreement similar to a master netting arrangement. This scope would include derivatives, sale and repurchase agreements and reverse sale and repurchase agreements, and securities borrowing and securities lending arrangements. The adoption of this guidance had no impact on our consolidated financial position or results of operations.

INFLATION

Inflation has not had a material impact on our business.

CURRENCY EXCHANGE FLUCTUATIONS

The net sales, costs and expenses generated by our activities in China are priced in Chinese renminbi. Approximately 99% of our assets are located in China, the remaining less than 1% in assets are located in the United States. Since 1994, the exchange rate for Renminbi against the United States dollar has remained relatively stable; with an exchange rate approximately RMB 8.28 to US$1.00. On July 21, 2005, China announced a revaluation of RMB and reduced its peg to the US dollar. China is planning to move to a managed float against a basket of currencies. The exchange rate has been adjusted to approximately RMB 6.2939 to US$1.00 as of DECEMBER 31, 2011. The Chinese Renminbi has increased significantly in value as compared to the U.S. dollar. However, there can be no assurance that Renminbi will not be subject to devaluation. We may not be able to hedge effectively against Renminbi devaluation, so there can be no assurance that future movements in the exchange rate of Renminbi and other currencies will not have an adverse effect on our financial condition.

ITEM 7A.

QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.

Not Applicable.

ITEM 8.

FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA.

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

ITEM 9.

CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE

None.

ITEM 9A.

Controls and Procedures

Evaluation of Disclosure Controls and Procedures

Based on their evaluation as of December 31, 2011, our Chief Executive Officer and Chief Financial Officer have concluded that our disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as amended) were effective to ensure that the information required to be disclosed by us in this Annual Report on Form 10-K was recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and instructions for Form 10-K.

Management’s Report on Internal Control over Financial Reporting

Our management is responsible for establishing and maintaining adequate internal control over financial reporting (as defined in Rule 13a-15(f) under the Securities Exchange Act of 1934, as amended). Our management assessed the effectiveness of our internal control over financial reporting as of December 31, 2011.

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

In making this assessment, our management used the criteria set forth by the Committee of Sponsoring Organizations of the Treadway Commission (“COSO”) in ‘Internal Control – Integrated Framework’. Our management has concluded that, as of December 31, 2011, our internal control over financial reporting is effective based on these criteria.

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

There were no changes in our internal controls over financial reporting during the year ended December 31, 2011 that have materially affected, or are reasonably likely to materially affect our internal controls over financial reporting.

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

ITEM 9B.

OTHER INFORMATION.

(Not applicable). There was no information required to be filed on Form 8-k during the fourth quarter of the Company's fiscal year ended December 31, 2011 and not reported. .

PART III

ITEM 10.

DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE

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


		DATE OF
NAME AND PRINCIPAL POSITION	AGE	APPOINTMENT

Yanbiao Bai, Chairman, CEO and President	51	2003
Ren Yonghong, Treasurer and Chief Operating Officer	36	August 2011

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

Mr. Yanbiao Bai, Chairman, CEO and President

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

Ren Yonghong, Director, Treasurer & Chief Operating Officer

Mr. Ren became a Director and the Treasurer and Chief Operating Officer in August 2011. He joined the Company from Shaanxi Chaoying Beauty and Cosmetic Co, Ltd. Since 2000, Mr. Ren has worked with Chaoying Beauty and Cosmetic Co, Ltd., where he was the general manager since March 2009 and the deputy manager from October 2005 to March 2009. He attended Baoji University of Arts and Science, graduating with a Bachelor degree in Chinese in July 1996.

There are no family relationships between Mr. Ren and any director or executive officer of the Company which would require disclosure under item 401(d) of Regulation S-K and no transactions between Mr. Ren or any of his immediate family members and the Company which would require disclosure under Item 404(a) of Regulation S-K. Mr. Ren is not a director of any other public company.

INVOLVEMENT IN CERTAIN LEGAL PROCEEDINGS

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

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

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

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

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

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

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

FAMILY RELATIONSHIPS

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

SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING REQUIREMENTS

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

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

BOARD COMMITTEES

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

CODE OF ETHICS

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

Honest and ethical conduct, including the ethical handling of actual or apparent conflicts of interest between personal and professional relationships;
Full, fair, accurate, timely and understandable disclosure in reports and documents that we file with, or submit to, the SEC, and in other public communications that we made;
Compliance with applicable governing laws, rules and regulations;
The prompts internal reporting of violations of the Code to the appropriate person or persons; and

ITEM 11.

EXECUTIVE COMPENSATION

COMPENSATION PHILOSOPHY

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

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

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

SUMMARY COMPENSATION TABLE

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

SUMMARY COMPENSATION TABLE
					LONG-TERM
	ANNUAL COMPENSATION				COMPENSATION AWARDS
						STOCK AND		SECURITIES
						OPTION		UNDERLYING		ALL OTHER
NAME AND PRINCIPAL POSITION	YEAR		SALARY		BONUS	AWARD		OPTIONS		COMPENSATION
Yanbiao Bai, Chairman, CEO	2011	$	100,000	$	-0-	-0-	$	-0-	$	-0-
and President	2010	$	100,000	$	-0-	12,000,000	$	-0-	$	-0-
Xue Bu, Former Director, Treasurer	2011	$	2,850	$	-0-	-0-	$	-0-	$	-0-
& Chief Operating Officer	2010	$	11,746	$	-0-	3,300,000	$	-0-	$	-0-
Yonghong Ren, Director, Treasurer	2011	$	1,650	$	-0-	-0-	$	-0-	$	-0-
& Chief Operating Officer	2010	$	-0-	$	-0-	-0-	$	-0-	$	-0-

EMPLOYEE STOCK OPTION PLAN

None

COMPENSATION OF INDEPENDENT DIRECTORS

None

EMPLOYMENT AGREEMENTS

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

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

Mr. Ren receives a base salary of $4,500 annually. In addition to the base salary, Mr. Ren may be entitled to a bonus, the amount and terms of which shall be set from time to time in writing by the Company’s board of directors

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

ITEM 12.

SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS

The following table sets forth, as of April 11, 2012 information with respect to the beneficial ownership of our common stock by (i) persons known by us to beneficially own more than five percent of the outstanding shares, (ii) each director, (iii) each executive officer and (iv) all directors and executive officers as a group. As of April 11, 2012, there were issued and outstanding 120,225,323 shares of Common Stock. There are no outstanding options or warrants.

NAME OF OFFICER			NO. OF	PERCENTAGE OF
OR DIRECTOR	TITLE	TITLE OF CLASS	SHARES	OWNERSHIP
YanBiao Bai	Chairman/CEO/Pres	Common	78,894,153(1)	65.62%
Lei Liu		Common	6,234,766(2)	5.19%
Ren Yongong	COO/Treasurer/Director	Common	0	0%
All officers and directors as a group (3 people)		Common	78,894,153	65.62%

__________________________
(1) Includes shares held by Shaanxi Chaoying Beauty & Cosmetic Group of which Mr. Bai owns 64% and is the president. Includes 3,300,000 shares held by Xue Bu, the wife of Mr. Bai and the former Director, Chief Operating Officer and Treasurer of the Company.

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

ITEM 13.

CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE

Certain Relationships and Related Transactions

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

Due from related parties

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

		As of December 31,
		2011		2010
Loan to Shaanxi NuoQi Health Food Co., Ltd.	$	-	$	128,743
Loan to Tianjing Yanfeng Real Estate Co., Ltd.		79,442		75,731
	$	79,442	$	204,474

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

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

Due to related parties

Due to related parties consisted of the following:

		As of December 31,
		2011		2010
Loan from Shaanxi Chaoying Beauty & Cosmetic $		101,686	$	552,471
Loan from Shaanxi Yanfeng Real Estate Co., Ltd.		397,210		378,656
Loan from Xi'an Yanfeng Biotechnology Co., Ltd.		365,433		348,363
Advance from officers and shareholders		985,852		744,184
Total loan from related companies, net	$	1,850,181	$	2,023,674

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

Lease agreement

The Company’s subsidiary in PRC leased an office space under an operating lease agreement from Shaanxi Chaoying Beauty & Cosmetics Group Co., Ltd. for a lease term originally expired on December 31, 2009, and had been extended to December 31, 2012. There is no renewal option on the lease. The rent payment under this operating lease was $6,189 (equivalent to RMB 40,000) per month. The future minimum rental payment for this lease as of December 31, 2011 was $74,269 (equivalent to RMB 480,000). Total rental expense charged to operations amounted to $74,269 and $70,920 for the years ended December 31, 2011 and 2010, respectively.

Stock compensation

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

Conversion of Debt

On June 30, 2011, the Company entered into a written Debt Conversion Agreement with Shaanxi Chaoying Beauty & Cosmetics Group Co., Ltd. , Shaanxi NuoQi Healthfood Co., Ltd., and Mr. Yanbiao Bai, Chairman and CEO of the Company (the "Debt Conversion Agreement"). Both Shaanxi Chaoying Beauty & Cosmetics Group Co., Ltd. and Shaanxi NuoQi Healthfood Co., Ltd. are affiliates with the Company. In the Debt Conversion Agreement, the Company agreed to repay a total of $605,723 (RMB 3,920,000) debt due to Shaanxi Chaoying Beauty & Cosmetics Group Co., Ltd. by issuing the Company’s common stock. Simultaneously upon the execution of the repayment, Shaanxi Chaoying Beauty & Cosmetics Group Co., Ltd. agreed to transfer to Mr. Yanbiao Bai the number of shares to be issued through the debt repayment. The number of shares to be transferred to Mr. Yanbiao Bai was further offset by a number of shares equivalent to $169,973 (RMB 1,100,000) due by Shaanxi NuoQi Health Food Co., Ltd., a company wholly-controlled by Ms. Xue Bu, the spouse of Mr. Yanbiao Bai and former COO and Director of the Company, to offset its debt due to the Company. The Agreement was approved by the Company’s Board of Directors on June 30, 2011. As a result of the debt conversion and offset, the number of common stock issued to Mr. Yanbiao Bai was 54,468,756 shares, which was determined based on the closing price of $0.008 per share on June 30, 2011. The share issuance for repayment of debt as agreed upon and approved was executed on August 17, 2011.

Director Independence

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

ITEM 14.

PRINCIPAL ACCOUNTANT FEES AND SERVICES XXX

The following chart sets forth public accounting fees paid and payable to KCCW Accountancy Corp. (“KCCW”) during the years ended December 31, 2011 and 2010:

Services		2011		2010
Audit Fees	$	40,000	$	40,000
Audit Related Fees
Tax Fees				2,500
All Other Fees		-		-
TOTAL	$	40,000	$	42,500

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

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

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

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

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

PART IV

ITEM 15

EXHIBITS AND FINANCIAL STATEMENT SCHEDULES

(a)

Exhibits

3.1	Articles of Incorporation of Registrant, as amended (incorporated by reference to Exhibit 3.1 to Registrant's Annual Report of from 10-K for the year ended October 31, 1981and Exhibit "A" and Exhibit "B" to Registrant's Proxy Statement dated February 17, 1988).
3.2	By-Laws of Registrant, as amended (incorporated by reference to Exhibit 3.2 to Registrant's Quarterly Report on form 10-Q for the quarter ended April 30, 1989).
*3.3	Amended Articles of Incorporation as amended increasing the number of authorized shares filed as an exhibit to Form 8-k filed February 15, 2005.
*3.4	Articles of Merger filed with the Maryland Secretary of State filed as an exhibit to Form 8-k filed February 15, 2005.
*3.5	Amendment to Articles of Incorporation changing name to Cybrdi, Inc. filed as an exhibit to Form 8-k filed April 6, 2005.
*10.1	Registrant's Executive Stock Option Plan (incorporated by reference to Exhibit "B" to Registrant's Proxy Statement dated February 21, 1989).
*10.2	Amendment to Registrant's 1989 Stock Option Plan (incorporated by reference to Exhibit 10.5 to Registrant's Annual Report on Form 10-K for the year ended October 31, 1995).
*10.3	Amendment to Registrant's Executive Stock Option Plan (incorporated by reference to Exhibit 10.1 to Registrant's Quarterly Report on Form 10Q for the quarter ended April 30, 2001).
*10.4	Form of Indemnification Agreement between Registrant and its Directors and selected officers and agents (incorporated by reference to Exhibit "C" to Registrant's Proxy Statement dated February 17, 1988).
*10.5	Employment Agreement effective as of November 1, 1993 between Registrant and Marshall I. Kass (incorporated by reference to Exhibit 10.1 to Registrant's Quarterly Report on Form 10-Q for quarter ended January 31, 1994).
*10.6	Amendment to Employment Agreement between Registrant and Marshall I. Kass dated November 1, 1998 (incorporated by reference to Exhibit 10.8 to Registrant's Annual Report on Form 10-K for the year ended October 31, 1998).
*10.7	Agreement and Plan of Merger among Certron Corporation, Certron Acquisition Corp. and Cybrdi, Inc. filed as an exhibit to Cybrdi’s Report on Form 8-k filed February 15, 2005.
*10.8	Sales Agency Agreement between Shaanxi Chao Ying Biotech Co., Ltd. and Biomax Co., Ltd. (incorporated by reference to Exhibit 10.1 to Registrant's Quarterly Report on Form 10-QSB for the quarter ended December 31, 2007)
*10.9	Equity Transfer Agreement dated July 26, 2007 by and between Shaanxi Chaoying Personal Care Group Co., Inc. and Shaanxi Chaoying Biotechnology Co., Ltd (incorporated by reference to Exhibit 10.1 to Registrant's Quarterly Report on Form 10-QSB for the quarter ended December 31, 2007)
*10.10	Debt Conversion Agreement among Cybrdi, Inc., Shaanxi Chaoying Beauty & Cosmetics Group Co., Ltd., Shaanxi NuoQi Healthfood Co., Ltd., and Yanbiao Bai, dated as of June 30, 2011. (incorporated by reference to Exhibit 10.1 to Registrant's Quarterly Report on Form 10-Q for the quarter ended September 30, 2011
31.1	Rule 13(a)-14(a)/15(d)-14(a) Certification
31.2	Rule 13(a)-14(a)/15(d)-14(a) Certification
32.1	Certification Under Section 906 of the Sarbanes-Oxley Act of 2002
32.2	Certification Under Section 906 of the Sarbanes-Oxley Act of 2002

* Previously filed

SIGNATURES

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

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

Date: April 11, 2012	By:	/s/ Yan Biao Bai
		By: YanBiao Bai
		Title: Chief Executive Officer and Director

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

NAME AND PRINCIPAL POSITION	SIGNATURE	DATE

YanBiao Bai, Chairman, CEO and President	/s/YanBiao Bai	April 11, 2012

Ren Yonghong, Director, Treasurer & COO	/s Ren Yonghong	April 11, 2012

CYBRDI, INC. AND SUBSIDIARIES
TABLE OF CONTENTS

PAGE
F-2	REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
F-3	CONSOLIDATED BALANCE SHEETS AS OF DECEMBER 31, 2011 AND 2010
F-4	CONSOLIDATED STATEMENTS OF INCOME AND COMPREHENSIVE INCOME FOR THE YEARS ENDED DECEMBER 31, 2011 AND 2010
F-5	CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY FOR THE YEARS ENDED DECEMBER 31, 2011 AND 2010
F-6	CONSOLIDATED STATEMENTS OF CASH FLOWS FOR THE YEARS ENDED DECEMBER 31, 2011 AND 2010
F-7	NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the Board of Directors and Stockholders of:
Cybrdi, Inc.

We have audited the accompanying consolidated balance sheet of Cybrdi, Inc. (the “Company”) as of December 31, 2011 and 2010, and the related consolidated statements of operations, changes in equity, and cash flows for the years then ended. These consolidated financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on these consolidated financial statements based on our audits.

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

In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the consolidated financial position of Cybrdi, Inc. as of December 31, 2011 and 2010, and the consolidated results of its operations and cash flows for the years then ended in conformity with accounting principles generally accepted in the United States of America.

The accompanying consolidated financial statements have been prepared assuming that the Company will continue as a going concern. As described in Note 3 of the consolidated financial statements, the Company has incurred recurring losses, accumulated deficit, and working capital deficit at December 31, 2011 and 2010. These matters raise substantial doubt about the Company’s ability to continue as a going concern. Management’s plans in regard to these matters are also described in Note 3 to the consolidated financial statements. The consolidated financial statements do not include any adjustments that might result from the outcome of this uncertainty.

/s/ KCCW Accountancy Corp.

Diamond Bar, California
March 21, 2012

F-2

CYBRDI, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS

		As of December 31,
		2011			2010
ASSETS
CURRENT ASSETS
Cash and equivalents	$	781,048		$	585,020
Inventories		1,053,038			1,090,154
Due from related companies		79,442			204,474
Loan to unaffiliated company,net		-			90,877
Other receivables, net and prepaid expenses		75,089			96,949
Advance to suppliers		832			-
TOTAL CURRENT ASSETS		1,989,449			2,067,474
PROPERTY, PLANT AND EQUIPMENT, NET		1,310,529			1,314,979
CONSTRUCTION IN PROGRESS		6,829,329			6,557,391
INTANGIBLE ASSETS, NET		782,215			226,219

TOTAL ASSETS	$	10,911,522		$	10,166,063

LIABILITIES AND EQUITY

CURRENT LIABILITIES
Short-term loan	$	1,668,282		$	1,590,355
Accounts payable		4,942			4,609
Accrued expenses		693,436			505,054
Deferred revenue		139,284			21,749
Customers deposits		188,186			150,522
Due to related parties		1,850,181			2,023,674
Deferred tax liabilities		10,293			9,812
Other payables		366,020			77,209
TOTAL CURRENT LIABILITIES		4,920,624			4,382,984
CONSTRUCTION PAYABLE		894,750			808,427
TOTAL LIABILITIES		5,815,374			5,191,411

EQUITY
Preferred Stock, $1.00 per value, 500,000 shares authorized, no shares issued and outstanding		-			-
Common Stock, no par value, 150,000,000 shares authorized, and 120,225,323 and 65,756,567 shares issued and outstanding, respectively		4,313,614			3,877,864
Additional paid-in capital		172,308			-
Reserve funds		336,885			336,885
Accumulated deficit		(2,447,643	)		(1,847,882	)
Accumulated other comprehensive income		1,540,329			1,287,737
TOTAL STOCKHOLDERS’ EQUITY		3,915,493			3,654,604
NONCONTROLLING INTEREST		1,180,655			1,320,048
TOTAL EQUITY		5,096,148			4,974,652

TOTAL LIABILITIES AND EQUITY	$	10,911,522		$	10,166,063

See notes to consolidated financial statements.

F-3

CYBRDI, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME AND COMPREHENSIVEINCOME

		For the Years Ended December 31,
		2011			2010
Revenue
Housing	$	(6,553	)	$	296,521
Commercial rental		-			-
Tissue array products		552,811			523,212
Total revenue		546,258			819,733
Cost of Sales
Housing		58,930			257,069
Commercial rental		64,272			-
Tissue array products		421,499			373,931
Total cost of sales		544,701			631,000

Gross Profit		1,557			188,733

Operating Expenses:
Salaries and wages		182,024			169,844
Compensation Expenses		-			306,000
Depreciation and amortization		148,541			146,074
Bad debt expense		99,541			88,422
Estimates of loss contingencies		37,134			-
Professional fees		88,695			65,475
Selling and distribution expenses		17,905			53,323
Other general and administrative expenses		157,737			216,023
Research and development expenses		-			16,826
Total Operating Expenses		731,577			1,061,987

Loss from Operations		(730,020	)		(873,254	)

Other Income
Net interest (expense) income		5,459			(1,367	)
Other income (expense), net		(14,592	)		34,886
Loss on disposal of fix assets		-			(1,799	)
Total Other Income, Net		(9,133	)		31,720

Loss before Income Taxes		(739,153	)		(841,534	)
Income Tax Benefit (Expense)		-			-
Net loss		(739,153	)		(841,534	)
Net loss attributable to the noncontrolling interest		(139,392	)		(90,794	)
Net loss attributable to CYBRDI, INC.		(599,761	)		(750,740	)
Foreign currency translation gain		252,592			212,026
Comprehensive income	$	(347,169	)	$	(538,714	)

Net Loss Per Common Share
Basic and Diluted	$	(0.01	)		(0.01	)

Weighted Average Number of Shares Outstanding
Basic and Diluted		85,879,746			65,161,567

See notes to consolidated financial statements.

F-4

CYBRDI, INC. AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY

	Common Stockholders
												Accumulated
					Additional							Other		Total Common
	Common Stock				Paid-in		Reserve		Accumulated			Comprehensive		Stockholders'			Noncontrolling			Total
	Shares		Amount		Capital		Fund		Deficit			Income		Equity			Interest			Equity
Balance as of December 31, 2009	50,456,567	$	3,571,864	$	-	$	336,885	$	(1,097,142	)	$	1,075,711		3,887,318		$	1,410,842			5,298,160

Issuance of common shares for compensation	15,300,000		306,000		-									306,000						306,000

Net loss	-		-		-		-		(750,740	)		-		(750,740	)		(90,794	)		(841,534	)

Net changes in foreign currency translation adjustment	-		-		-		-		-			212,026		212,026			-			212,026

Balance as of December 31, 2010	65,756,567		3,877,864		-		336,885		(1,847,882	)		1,287,737		3,654,604			1,320,048			4,974,652

Issuance of common shares for compensation																				-

Net loss	-		-		-		-		(599,761	)		-		(599,761	)		(139,392	)		(739,153	)

Debt conversion to equity	54,468,756		435,750		172,308		-		-			-		608,058			-			608,058
Net changes in foreign currency translation adjustment	-		-		-		-		-			252,592		252,592			(1 )			252,591
Balance as of December 31, 2011	120,225,323	$	4,313,614	$	172,308	$	336,885	$	(2,447,643	)	$	1,540,329	$	3,915,493		$	1,180,654		$	5,096,148

See notes to consolidated financial statements.

F-5

CYBRDI INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS

		For the Years Ended December 31,
		2011			2010
CASH FLOWS FROM OPERATING ACTIVITIES
Net Loss	$	(599,761	)	$	(750,740	)
Adjustments to Reconcile Net Loss to Net Cash
Provided by Operating Activities:
Issuance of common shares for compensation		-			306,000
Depreciation and amortization		268,211			172,569
Bad debt expense		99,541			88,422
Estimates of loss contingencies		37,134			-
Minority interest		(139,392	)		(90,794	)
Gain on sale of other assets		-			(28,408	)
Loss on disposal of fixed assets		-			1,799
Changes in Operating Assets and Liabilities:
Accounts receivable		-			10,951
Inventories		88,164			282,626
Other receivable and prepaid expenses		18,398			68,727
Accounts payable and other current liabilities		502,686			(3,282	)
Deferred revenue		86,535			(5,810	)
Customer deposits		29,496			29,088
Net Cash Provided by Operating Activities		391,012			81,148

CASH FLOWS FROM INVESTING ACTIVITIES
Net proceeds from disposal of other assets		-			68,835
Advance for loan to affiliated companies		-			21,202
Repayment proceeds from loan to affiliated companies		136,535			-
Purchase of property, plant, and equipment		(84,827	)		(72,131	)
Payments for construction in progress		(587,705	)		(583,346	)
Net Cash Used in Investing Activities		(535,997	)		(565,440	)

CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from loans from related companies		136,160			185,968
Proceeds from shareholders/officers		171,321			-
Net Cash Provided by Financing Activities		307,481			185,968

NET INCREASE(DECREASE) IN CASH & CASH EQUIVALENTS		162,496			(298,324	)
EFFECT OF EXCHANGERATECHANGEON CASH & CASH EQUIVALENTS		33,532			21,887
CASH & CASH EQUIVALENTS, BEGINNING BALANCE		585,020			861,457

CASH & CASH EQUIVALENTS, ENDING BALANCE	$	781,048		$	585,020

SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION
Interest paid	$	180,630		$	145,150
Income taxes paid	$	-		$	-

NONCASH INVESTING TRANSACTIONS
Construction-in-progress incurred/(decreased) by accrued(repayment of) construction payable	$	86,323		$	(57,019	)
Debt-Equity Conversion	$	608,058		$	-

See notes to consolidated financial statements.

F-6

CYBRDI, INC. AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANICAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 2011 AND 2010

1.	*ORGANIZATION AND PRINCIPAL ACTIVITIES*

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

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

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

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

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

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

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

F-7

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

2.	*BASIS OF PRESENTATION*

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

3.	*GOING CONCERN*

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

(c) Additional advances from related companies and affiliates: Mr. Bai, our Chief Executive Officer, advanced $77,239 to the Company in 2011 to finance operations and the costs to maintain the Company’s public status in the U.S. In addition, Shaanxi Chaoying Beauty & Cosmetics Group, which is also an affiliate, is anticipated to provide up to $730,000 of capital to support operational use. During the year 2011, Shaanxi Chaoying Beauty & Cosmetics Group advanced $61,891 to the Company to finance its operations.

F-8

4.	*SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES*

(a)	*Principle of consolidation*

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

(b)

Use of estimates

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

(c)

Reclassifications

Certain amounts reflected in the consolidated financial statements for the year ended December 31, 2010 have been reclassified to conform to the presentation for the year ended December 31, 2011.

(d)

Cash and cash equivalents

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

(e)

Inventories

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

F-9

(f)

Property, plant and equipment

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

Buildings	20 years
Plant and machinery	10 years
Motor vehicles	10 years
Office equipment	5 years
Leasehold improvements	Lower of term of lease or 5 years
Software - website	3 years

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

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

(g)

Accounts and other receivables

Accounts and other receivables are recognized and carried at original invoice amount less allowance for any uncollectible amounts. An estimate for doubtful accounts is made when collection of the full amount is no longer probable. As of December 31, 2011 and 2010, the Company had not recorded an allowance for uncollectible accounts.

(h)

Research and development costs

Research and development costs are charged to operations when incurred and are included in operating expenses.

(i)

Advertising costs

Advertising costs are charged to operations when incurred and are included in operating expenses. Advertising expenses were $7,526 and $32,275 for the years ended December 31, 2011 and 2010, respectively.

(j)

Fair value of financial instruments

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

F-10

(k)

Revenue recognition

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

(l)

Foreign currency translation

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

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

(m)

Income Taxes

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

(n)

Comprehensive income (loss)

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

(o)

Intangible assets

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

F-11

(p)

Government grants

Government grants and awards given to the Company’s PRC subsidiary after successful completion of product development projects, or development the encouraged real estate project are recognized as income upon receipts of the awards. The government grants were $0 and $4,300 for the years ended December 31, 2011 and 2010, respectively.

(q)

Recent Accounting Pronouncements

F-12

5.	*INVENTORIES*

Inventories consisted of the following:

		As of December 31,
		2011		2010
Raw materials	$	16,831	$	4,609
Finished goods		273,529		299,216
Housing inventory		762,678		786,329
Total	$	1,053,038	$	1,090,154

F-13

6.	*LOAN TO UNAFFILIATED COMPANY*

Loans to an unaffiliated company consists of loans to QuanYe Security Co., Ltd (“QuanYe”), an unrelated People’s Republic of China (“PRC”) registered company located in Xian PRC. QuanYe is engaged in the pawnshop business and their primary business is offering alternative financing to small, local companies. According to the loan agreement, QuanYe had received loans from Chaoying Biotech for a total amount of RMB 29.3Million (equivalent to $3,754,437) since January 2006. A remaining balance of RMB 7.3 million (equivalent to $1,144,559) was extended to and expired on March 24, 2008. As of December 31, 2011, the principal balance and interest receivable for this loan had been reduced to $0, net of allowance of $95,330 and $181,951 for doubtful principal balance and interest receivable, respectively, after charging $92,836 of bad debt expense for the year ended December 31, 2011. As of December 31, 2010, the principal balance and interest receivable for this loan had been reduced to RMB 0.6 Million (equivalent to $90,877) and $0, respectively, net of allowance of $173,452 for doubtful interest receivable. The interest rate for these loans initially was initially 8% per year, and subsequently reduced to 5% since October 9, 2006.

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

7.	*PROPERTY, PLANT AND EQUIPMENT*

Property, plant and equipment consisted of the following:

		As of December 31,
		2011			2010
Buildings	$	1,005,988		$	955,883
Machinery and equipments		711,490			613,448
Motor vehicles		341,542			325,588
Office equipments		88,328			83,763
Leasehold improvement		305,543			276,882
Subtotal		2,452,891			2,255,565
Less: Accumulated depreciation		(1,142,362	)		(940,586	)
Net value	$	1,310,529		$	1,314,979

Depreciation expense for the years ended December 31, 2011 and 2010 were $151,639 and $78,008, respectively.

F-14

8.	*CONSTRUCTION IN PROGRESS*

Construction in progress of $6,829,329 and $6,557,391 as of December 31, 2011 and 2010 respectively mainly consisted of land under development and construction of the entertainment, culture, and casino facility in Shandong Province, which will be transferred to fixed assets in SD Chaoying when construction is completed.

9.	*INTANGIBLE ASSETS, NET*

Intangible assets consisted of the following:

		As of December 31,
		2011			2010
Patent	$	1,016,858		$	969,359
Software		114,015			108,689
Land use rights		664,615			-
Subtotal		1,795,488			1,078,049
Less: Accumulated amortization		(1,013,273	)		(851,829	)
Net value	$	782,215		$	226,219

Amortization expenses for the years ended December 31, 2011 and 2010 were $116,572 and $94,560, respectively.

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

For the Years Ended December 31,		Amount
2012	$	116,572
2013		50,592
2014		17,547
2015		17,547
2016		17,547
Thereafter		541,944
Total	$	761,749

F-15

10.

CUSTOMER DEPOSITS

Customer deposits consisted of residential properties down payments amounted to $188,186 and $150,522 as of December 31, 2011 and 2010, respectively.

11.

SHORT –TERM LOAN

The Company has a short-term loan of $1,509,398 (equivalent to RMB 9.5 million) from Changle Rural Credit Union, which is a bank located in Shandong Province of the PRC. The original term of the loan was from August 25, 2009 to August 24, 2010 with an interest rate of 7.965% per annum. In August 2011, the Company renewed this short-term loan with the same amount of $1,509,398 (equivalent to RMB 9.5 million) with Changle Rural Credit Union. The term of the renewal loan started from August 31, 2011 with maturity date on August 20, 2012. The adjustable interest rate is a rate per annum equal to the Prime Rate plus 50% of prime rate. The prime rate is based on six-month-to-one-year loan interest rate released by The People's Bank of China. The interest rate for the short-term loan was 9.840% as of December 31, 2011. This short-term loan had been secured by the Company’s land use right and construction-in-progress of SD Chaoying with a book value of $3.18 million (equivalent to RMB 20.03 million) and $4.35 million (equivalent to RMB 27.35 million) as of December 31, 2011, respectively.

Additionally, there is another short-term loan of $158,884 (equivalent to RMB 1.0 million) from Fengguo Liu, an unrelated party as of December 31, 2011.

12.

RELATED PARTY TRANSACTIONS

Due from related parties

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

		As of December 31,
		2011		2010
Loan to Shaanxi NuoQi Health Food Co., Ltd. (“Shaanxi NuoQi”)	$	-	$	128,743
Loan to Tianjing Yanfeng Real Estate Co., Ltd. (“Tianjing Yanfeng”)		79,442		75,731
	$	79,442	$	204,474

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

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

F-16

Due to related parties

Due to related parties consisted of the following:

		As of December 31,
		2011		2010
Loan from Shaanxi Chaoying Beauty & Cosmetics Group Co., Ltd.	$	101,686	$	552,471
Loan from Shaanxi Yanfeng Real Estate Co., Ltd.		397,210		378,656
Loan from Xi'an Yanfeng Biotechnology Co., Ltd.		365,433		348,363
Advance from officers and shareholders		985,852		744,184
Total loan from related companies, net	$	1,850,181	$	2,023,674

Lease agreement

Total rental expense charged to operations amounted to $74,269 and $70,920 for the years ended December 31, 2011 and 2010, respectively.

13.

COMMITMENTS, CONTINGENCIES, AND LEGAL PROCEEDINGS

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

F-17

On June 7, 2011, Weifang Shili Hesin Engineering Equipment Co., Ltd. (the “Plaintiff”) filed a complaint against SD Chaoying at the People's Court of Changle County in Shandong Province, China, for alleged damages caused by SD Chaoying for not performing appropriately and completing the obligations in accordance with the agreement signed by both parties on April 28, 2011. Pursuant to the agreement, SD Chaoying agreed to transfer: (1) the rights of development, construction, and land of the #1 and #2 residential buildings for RMB 7.6 million, or $1,207,518, and (2) the 12 unsold residential units in the #3 and #4 residential buildings at a price as agreed upon. As of December 31, 2011, the Plaintiff paid $95,330 (equivalent to RMB 600,000) deposit as agreed upon, and prepaid $185,912 (equivalent to RMB 1,170,114), both of which were recorded as Other Payables under current liabilities. Plaintiff was seeking for the discharge of the original agreement signed, the return of prepayment of $185,912 (equivalent to RMB 1,170,114), repayment of the deposit plus 100% penalty, totaling $190,660 (equivalent to RMB 1,200,000), and for attorneys’ fees and costs. The Company disputed Plaintiff’s claim for a land use right certificate of underlying construction base of the #1 and #2 residential buildings, which certificate was inseparable from other part of the land and was not specifically stated in the agreement. The Company also disputed Plaintiff’s entitlement to the amounts claimed and instructed the Company’s legal counsel to contest the action, while concurrently pursuing opportunities for reasonable settlement. The case went to trial on July 7, 2011. On November 15, 2011, the People's Court of Changle County pronounced its judgment against Plaintiff and that SD Chaoying had no liability. However, the plaintiff still has a right to appeal the judgment to the superior court in Weifang City, Shandong Province, China within 15 days after receiving verdict from the court. The verdict was released by the court on March 23, 2012. An appeal was filed by the Plaintiff after the verdict was released. As of December 31, 2011, the Company has recorded an estimate of loss contingencies of $37,134 for the year ended December 31, 2011, which was reasonably estimated by the Company’s legal counsel. The Company recorded the estimated liability and loss contingencies according to FASB ASC 450-20-25-2 under Topic 450, “Contingencies Loss Contingencies Recognition”.

14.

STOCKHOLDERS’ EQUITY

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

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

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

On June 30, 2011, the Company entered into a written Debt Conversion Agreement with Shaanxi Chaoying Beauty & Cosmetics Group Co., Ltd. (a related party), Shaanxi NuoQi Healthfood Co., Ltd. (a related party), and Mr. Yanbiao Bai, Chairman and CEO of the Company. In the Agreement, the Company agreed to repay a total of $605,723 (RMB 3,920,000) debt due to Shaanxi Chaoying Beauty & Cosmetics Group Co., Ltd. by issuing the Company’s common stock. Simultaneously upon the execution of the repayment, Shaanxi Chaoying Beauty & Cosmetics Group Co., Ltd. agreed to transfer to Mr. Yanbiao Bai the number of shares to be issued through the debt repayment. The number of shares transferred to Mr. Yanbiao Bai was further offset by a number of shares equivalent to $169,973 (RMB 1,100,000) due by Shaanxi NuoQi Health Food Co., Ltd., a company wholly-controlled by Ms. Xue Bu, the spouse of Mr. Yanbiao Bai and former COO and Director of the Company, to offset its debt due to the Company. The Agreement was approved by the Company’s Board of Directors on June 30, 2011. As a result of the debt conversion and offset, the number of shares of common stock issued to Mr. Yanbiao Bai was 54,468,756 shares, which was determined based on the closing price of $0.008 per share on June 30, 2011. The share issuance for repayment of debt as agreed upon and approved was executed on August 17, 2011.

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15.

RESERVE FUNDS

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

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

In the years ended December 31 2011 and 2010, the Company’s PRC subsidiaries either incurred net loss or accumulated net loss after offset with prior year losses. Accordingly, they were not required to reserve additional statutory surplus and common welfare fund for the years ended December 31, 2010 and 2009. The reserve funds balance consisted of the following:

		As of December 31,
		2011		2010
Statutory Surplus Reserve	$	224,590	$	224,590
Statutory Common Welfare Fund Reserve		112,295		112,295
Total	$	336,885	$	336,885

16.

GOVERNMENT GRANT

In 2011, the Company did not receive any grant from the Chinese government, whereas Chaoying Biotech received certain government grants in the aggregate amount of $4,300 (equivalent to RMB 29,103) in year 2010.

*17.*	*TAXATION*

*(a)*	*Corporation Income Tax*

The Company and its US subsidiary will file consolidated federal income tax return and state income taxes return individually. The operations in the United States of America had operational losses in year 2011 and 2010. The possible future deferred tax benefits arise from the net operating loss carry forward has been fully offset by a full valuation allowance, since more likely than not that all these benefits will not be realized in the future.

(b)

Corporation Income Tax (“CIT”) of the Company’s subsidiary in PRC

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

In the years ended December 31, 2011 and 2010, the Company’s PRC subsidiaries either incurred net loss or had accumulated net loss after offset with prior year loss. Accordingly, they were not required to accrue and pay any income taxes for the year ended December 31, 2011 and 2010. A 100% valuation reserve was recognized since it is more likely than not that all of the deferred tax assets will not be realized.

F-19

18.

CONCENTRATIONS OF BUSINESS AND CREDIT RISK

Financial Risks:

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

Major Customers:

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

		Percentage
December 31,	Number of Customers	of Total
2011	1	92.1%
2010	1	52.6%

Major Suppliers:

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

		Percentage
December 31,	Number of Suppliers	of Total
2011	2	79.6%
2010	3	49.0%

19.

SEGMENT REPORTING

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

F-20

		Years Ended December 31,
		2011			2010
Revenues:
Chaoying Biotech	$	552,811		$	523,212
SD Chaoying		(6,553	)		296,521
Others		-			-
Total Revenues	$	546,258		$	819,733

		Years Ended December 31,
		2011			2010
Segment (Loss) / Income:
Chaoying Biotech	$	(252,126	)	$	(213,373	)
SD Chaoying		(253,153	)		(144,217	)
Others		(233,874	)		(483,944	)
Loss before Income Taxes	$	(739,153	)	$	(841,534	)

		Years Ended December 31,
		2011		2010
Total Assets:
Chaoying Biotech	$	1,507,130	$	1,739,433
SD Chaoying		9,276,414		8,424,499
Others		127,978		2,131
Total assets	$	10,911,522	$	10,166,063

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

		Years Ended December 31,
		2011		2010
China	$	43,275	$	388,612
United States		502,983		431,121
Total revenue	$	546,258	$	819,733

All revenues are from external customers. One major customer from the United States accounted for 92% and 53% of our total revenues for the years ended December 31, 2011 and 2010. All long-lived assets are located in China.

F-21

Attached files

Cybrdi, Inc. Reports

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