This report contains forward-looking statements. Actual results and events could differ materially from those projected, anticipated, or implicit, in the forward-looking statements as a result of the risk factors set forth below and elsewhere in this report.

With the exception of historical matters, the matters discussed herein are forward-looking statements that involve risks and uncertainties. Forward-looking statements include, but are not limited to, statements concerning anticipated trends in revenues and net income, projections concerning operations and available cash flow. Our actual results could differ materially from the results discussed in such forward-looking statements. The following discussion of our financial condition and results of operations should be read in conjunction with our financial statements and the related notes thereto appearing elsewhere herein.

Overview

We are a Nevada corporation that was incorporated on May 17, 2000. We were founded to design, develop, market and sell advanced lighting systems that utilize light emitting diodes as illumination elements. White diodes are a relatively new phenomenon that offer major advances in illumination technology. Our diodes consume 92% less energy than incandescent counterparts to produce comparable light output. In electrochemical (battery powered) applications, this diminution of energy consumption positions our lighting solutions as more durable and reliable than other interim lighting alternatives. In standard alternating current electrical applications, the calculated life of LEDs as lighting elements is over 20 years versus 750 hours for traditional incandescent light bulbs. These exceptional performance characteristics, diminutive energy consumption and extended life, have prompted diode implementation in traffic lights and automotive brake lights, but have not yet significantly occurred in our area of focus, diodal illumination (tm). Diodal illumination is the production of light through the use of white light emitting diodes. A light emitting diode is a chemical compound that produces a visible light when an electrical current is applied. This production of light through a diode is contrasted with light from a typical light bulb, in which light is produced as a by-product of a burning filament contained within a vacuum globe. The diode uses 92% less energy to produce comparable light to that of a traditional light bulb.

On January 15, 2008, we announced that the we had been selected to provide portable task lighting for the City of New York's new 911 Public Safety Answering Center. Selected by Evans Consoles, the manufacturer of the new 911 Dispatch Command Consoles, the Cyberlux Portable LED Task Light will illuminate the work environment of the new 911 public safety call taking and dispatching operators. We received an initial order from Evans Consoles for 355 units valued at over $64,000.

The milspec LED Task Light performs for over 50,000 hours without a lighting element replacement, and operates with up to 52% more energy efficiency on low lighting levels and up to 31% more energy efficiency on high lighting levels when compared to traditional fluorescent task lighting. Our milspec LED Task Lighting products provide up to 1000 lumens of illumination with 12 watts of power and utilize a patent-pending thermal management system for optimal lighting performance.

In addition, our milspec LED Task Light is the only LED task light available that is compatible with the Johnson Controls Personal Environments control center. The Johnson Control system is typically used by call center operators, including those in New York City, to control lighting, heating and air conditioning within their personal operating environment. The dual-arm milspec LED Task Light is adjustable and adaptable to any call center operator's lighting needs and is dimmed and controlled using the Johnson Controls system to vary the amount of light according to task.

On February 19, 2008, we announced that we had received the first commitment for 80 BrightEye and 60 WatchDog Visible and Covert Portable Illumination Systems from the United States Air Force (USAF). This initial USAF order for Cyberlux tactical lighting equipment equates to $3,318,646 in revenue, including spares and maintenance supplies. We projected that operations will be cash flow positive with the fulfillment of these first USAF orders.

The 2008 Department of Defense Appropriations legislation contains $8.0 million for the equipping of the USAF with our Portable Illumination Systems. As part of this $8.0 million budget, the USAF Air Mobility Command will first fulfill the requirements of the Operations, Installation and Mission Support commands for the BrightEye and WatchDog systems. The remaining $4.6 million appropriations will be allocated within the Air Mobility Command and other USAF commands during the remaining Fiscal Year 2008.

The BrightEye Portable Illumination System is designed as a portable visible and night-vision compatible illumination system for general mission tactical lighting, force protection, maintenance lighting, expeditionary base protection, disaster first responders, and other rapidly deployable high-intensity lighting applications. Using advanced optics, advanced solid-state lighting technology, and light-weight battery power, all contained in an easily transportable wheeled case, the BrightEye system is capable of eliminating the space-consuming bulk, noise and energy consumption of the current generator-powered incandescent lighting systems. Unique to the marketplace, the BrightEye system provides both white and night-vision compatible covert lighting, a capability not available in traditional lighting systems.

On March 24, 2008, we announced that that we had successfully completed the field demonstration of the new 4-meter tower-based BrightEye high-performance solid-state LED lighting system. The testing was conducted by Cyberlux and the United States Air Force Air Mobility Command at Fort Huachuca, the home to the U.S. Army Intelligence Center, located in Arizona. The new BrightEye 4M Tower Portable Illumination System is the latest product developed by Cyberlux to fulfill the United States Air Force requirements for portable, light-weight, battery-powered visible and covert night vision- compatible lighting systems for air field support, aircraft maintenance and forward air base in-theater lighting capability.

The BrightEye 4M Tower Portable Illumination System was tested in both visible and covert lighting modes to demonstrate advanced lighting capability during various scenarios, including force protection and broad area security lighting, first responder rapid set up capability, night vision-compatible illumination for aircraft maintenance, and general operational lighting for ground operation support of supply aircraft such as the C-130. All testing scenarios met the Air Mobility Command (AMC) expectations, including illumination levels, power system runtimes, system weight levels and deployment set-up times.

The 2008 Department of Defense Appropriations legislation contains $8.0 million for the equipping of the United States Air Force (USAF) with Cyberlux Portable Illumination Systems. Of the $8.0 million budget, the USAF Air Mobility Command will utilize $3.3M to fulfill initial Operations, Installation and Mission Support requirements. The remaining $4.6M will be allocated within the USAF for the purchase of various BrightEye systems including the Dual Lighthead Portable Illumination Systems and the new 4M Tower Portable Illumination System during the remaining Fiscal Year 2008.

In an earlier field test evaluation, the AMC determined that the BrightEye System is 97% smaller in footprint, weighs 94% less than the current diesel- powered incandescent lighting systems and saves an estimated 63% in daily operating costs. In addition, the AMC concluded that the BrightEye System provides versatile and economical tactical lighting capability as required by expeditionary forces across all U.S. armed services.

On April 8, 2008, we announced that that we had competed its National Program budget forecast for solid-state lighting systems for use within the Department of Defense (DOD) and submitted this forecast to its sponsorship in the House of Representatives and Senate for 2009 Fiscal Year (October 1, 2008 to September 30, 2009) budget consideration. We estimated the continuation of its Portable Illumination System National Program rollout within the DOD to be more than $25 million, which represents expanded demand for its tactical covert and visible lighting systems of over 300% from 2008 to 2009.

Although we delivered our BrightEye and WatchDog Systems to certain commands within the USAF and the National Guard and the USAF has committed $3.3 million of the $8.0 million 2008 National Program budget for Portable Illumination Systems, these equipment requests, and the remaining $4.7M 2008 budget, remain unshipped pending designation of the National Stocking Numbers (NSNs) by the Defense Logistics Agency. This protracted accounting delay has created the need for two short-term equity financings which have recently been concluded.

On April 17, 2008, we announced that we received a request from the National Guard to participate in the Vigilant Guard 2008 Disaster Response Exercise in Beaufort, South Carolina from April 21st through April 24th. The Vigilant Guard event is designed to simulate the chaotic aftermath of an earthquake or terrorist attack and will include 50 specific missions designed to test emergency response, search and rescue, evacuation and distribution of goods capabilities. We deployed a team of our specialists to operate the BrightEye 4M Tower Illumination Systems and the BrightEye Dual Lighthead Tactical Illumination Systems to provide rapid set-up and 'stadium-bright' lighting capability during the various exercises.

Over the last two years, we haave worked with select National Guard units and the National Guard Bureau to refine the capabilities of our portable visible and night-vision compatible illumination systems for general mission tactical lighting, disaster first response, force protection, maintenance lighting, expeditionary base protection and other rapidly deployable high-intensity lighting applications. Participation in the Vigilant Guard 2008 event, along with over 2,000 National Guardsmen from 11 states, is a continuation of the customer/manufacturer solutions-oriented relationship we have developed with the National Guard.

On April 24, 2008, we announced that we had received a purchase commitment for 10 BrightEye Dual Lighthead Tactical Illumination Systems from the Air National Guard. The initial Air National Guard order for 10 BrightEye Systems equates to $187,412 in revenue. In December 2007, the National Guard Bureau purchased 17 BrightEye Systems, a $313,004 purchase order, to equip the Nation's emergency response CERFP teams.

Over the last year, we have worked with select Air National Guard units to evaluate the BrightEye products in order to refine the capabilities of the Cyberlux portable visible and night-vision compatible illumination systems. The Air National Guard intends to deploy the 10 BrightEye Dual Lighthead Tactical Illumination Systems to Aviation Support Facilities across the country. The BrightEye Systems will be used for aircraft maintenance lighting, expeditionary base lighting and other high-intensity lighting applications that require rapid deployment and a small size/weight footprint.

On May 2, 2008, we announced that the U.S. Patent Office has recently awarded patent protection for 29 claims contained within two of our patent filings that address the apparatus and methods for providing multi-mode solid-state lighting. These 29 claims provide us with patent protection that extends to its WatchDog and BrightEye family of tactical lighting products, as well as other future product releases.

The claims awarded by the U.S. Patent Office address a broad array of solid-state lighting devices that are comprised of an array of light emitting diodes (LEDs) with a corresponding control circuit that provides the system with power sensing, motion sensing and ambient light sensing for system control, along with a localized electrical energy source that powers the array of LEDs for illumination, along with a reflector positioned proximate to the array of LEDs for reflecting and optimizing the light output of the LEDs.

In addition, the awarded claims address the method of operating an LED light device that operates by sensing electrical power information, sensing mode of illumination information provided by a user via a user interface, sensing LED intensity information provided by the user via the user interface, directing an array of LEDs to operate in either a spot-light mode of illumination, a flood-light mode of illumination, or a combined mode of illumination based upon the sensed mode of illumination information, and displaying the information to the user via a user interface based upon the sensed battery electrical power information, the sensed mode of illumination information, and the sensed LED intensity information.

The 29 claims awarded under our two patent filings create an extensible intellectual property platform for current tactical lighting system production and future lighting system development.

On May 12, 2008, we announced that we had received the next in a series of multi-million dollar commitments from the United States Air Force (USAF). The new commitment represents an additional 50 WatchDog Visible and Covert Portable Illumination Systems, an additional 30 BrightEye Dual Lighthead Portable Illumination Systems and 40 BrightEye 4M Tower Portable Illumination Systems. This USAF order for our tactical lighting equipment equates to $2,189,245 in revenue, including spares and maintenance supplies. We projected that with aggregate USAF orders of over $5.5 million, operations will be profitable upon fulfillment of these orders.

The 2008 Department of Defense Appropriations legislation allocates $8.0 million for the equipping of the USAF with our Portable Illumination Systems. As part of this $8.0 million budget, the USAF Air Mobility Command is fulfilling the requirements of the Logistics, Operations, Installation and Mission Support commands for the BrightEye and WatchDog systems. The remaining $2.5 million in appropriations will be allocated within other USAF commands during Fiscal Year 2008 which ends September 30th.

BrightEye Portable Illumination System family is designed as visible and night-vision compatible illumination systems for general mission tactical lighting, force protection, maintenance lighting, expeditionary base protection, disaster first responders, and other rapidly deployable high- intensity lighting applications. Using advanced optics, advanced solid-state lighting technology, light-weight Li-On battery power, all contained in an easily transportable wheeled case, the BrightEye system is capable of eliminating the space-consuming bulk, noise and energy consumption of the current generator-powered incandescent lighting systems. Unique to the marketplace, the BrightEye system provides both white and night-vision compatible covert lighting, a capability not available in traditional lighting systems.

On May 14, 2008, we announced that we had received purchase commitments from the New York Air National Guard, the New York National Guard Civilian Support Team, the Indiana National Guard and the Minnesota National Guard for BrightEye Tactical Illumination Systems. The BrightEye Systems are for immediate deployment to Iraq with the various state National Guard and Air National Guard units. The new orders total $163,005 in revenue.

Over the last year, we have supported the National Guard Bureau with the deployment of BrightEye systems to state-level National Guard and Air National Guard units. This effort has generated over $750,000 in orders and over $650,000 thus far in 2008, all incremental revenue to the $8.0 million Department of Defense Appropriations Budget for U.S. Air Force.

Over the last six months, the National Guard Bureau purchased 17 BrightEye Systems, a $313,004 purchase, to equip the Nation's emergency response CERFP teams and Air National Guard purchased 10 BrightEye Systems, a $187,412 purchase, to support the Aviation Support Facilities across the country. The BrightEye Systems will be used for maintenance lighting, expeditionary base lighting and general lighting applications that require rapid deployment and a small size/weight footprint. Most recently, Cyberlux has supported the Air National Guard's Emergency Medical Support (EMEDS) units with remote lighting capability provided by the BrightEye 4M Tower System, and the EMEDS units are now pursuing the BrightEye systems for field deployment.

The BrightEye Portable Illumination Systems are designed as visible and night-vision compatible illumination system for mission-critical tactical lighting requiring rapidly deployable, high-intensity lighting capability. Using advanced optics, advanced solid-state lighting technology, and light- weight advanced battery power, all contained in easily transportable wheeled cases, the BrightEye Systems are capable of eliminating the space-consuming bulk, noise and energy consumption of the current generator-powered incandescent lighting systems. Unique to the marketplace, the BrightEye Systems provide broad area visible white lighting and night-vision compatible IR lighting capable of operating all night on an advanced battery power system, capabilities not available in traditional lighting systems.

The BrightEye Systems are available through the General Services Administration (GSA) Federal Supply Schedule 56 for Specialty Lighting products under Cyberlux GSA Contract GS-07F-9409S.

On May 15, 2008, we announced that we had received an invitation from the Boeing Intelligence & Security Systems Division to attend the Secure Border Initiative (SBInet) supplier briefing scheduled for May 22, 2008 in Washington, D.C.

In September of 2007, we were awarded the SBInet Toolkit Supplier Contract to supply the BrightEye Portable Visible and Covert 10 Meter Tower Lighting System as part of the SBInet's mobile command infrastructure. The Company is one of only two lighting companies, and the only solid-state LED lighting solutions company, to be awarded the SBInet Toolkit Supplier Contract for portable lighting. In November, we fulfilled the first system order from The Boeing Company associated with the SBInet deployment plans for the Mexican and Canadian borders.

On June 3, 2008, we announced that the Defense Logistics Agency has awarded National Stocking Numbers to our Portable Illumination System line of products. The Defense Logistics Agency (DLA), the largest combat support agency within the Department of Defense (DOD), is the source for nearly every supply item, whether for combat readiness, emergency preparedness or the day-to-day operations of the Army, Air Force, Navy, Marine Corps and federal agencies. National Stocking Numbers (NSNs) are standardized, officially recognized item numbers used by the United States Government, the North Atlantic Treaty Organization (NATO) and many governments around the world to purchase and manage billions of dollars worth of procurement annually. The assignment of NSNs will enable us to easily and efficiently expand their military customer base to the global military marketplace.

Our Portable Illumination Systems are designed as visible and night-vision compatible illumination systems for mission-critical tactical lighting that requires rapidly deployable, high-intensity lighting capability. Using advanced optics, advanced solid-state lighting technology, and light-weight advanced battery power, all contained in easily transportable wheeled cases, the WatchDog and BrightEye tactical lighting systems provide broad area visible white lighting and night-vision compatible IR lighting capable of operating all night on an advanced battery power system, capabilities not available in traditional lighting systems.

Our Portable Illumination Systems were first available through the General Services Administration (GSA) Federal Supply Schedule 56 for Specialty Lighting products under Cyberlux GSA Contract GS-07F-9409S and will continue to be purchasable through the GSA. The new National Stocking Numbers assigned to the Cyberlux Portable Illumination System products are:

           WatchDog System            GSA P/N 2CP0150 NSN 6230015635690
           WatchDog System Spares Kit GSA P/N 2CP0169 NSN 6210015635711

           BrightEye Dual Lighthead
           System                     GSA P/N 2CP0170 NSN 6230015635725
           BrightEye Dual Lighthead
           System Spares Kit          GSA P/N 2CP0180 NSN 6210015635748

           BrightEye 4M Tower System  GSA P/N 2CP0190 NSN 6230015635774
           BrightEye 4M Tower System
           Spares Kit                 GSA P/N 2CP0191 NSN 6210015635807

           BrightEye 10M Tower System GSA P/N 2CP0182 NSN 6230015635832
           BrightEye 10M Tower System
           Spares Kit                 GSA P/N 2CP0183 NSN 6210015635839

           BrightEye Portable Power
           System                     GSA P/N 2CP0185 NSN 6115015635624

The 2008 Department of Defense Appropriations legislation established a National Program of $8.0 million for the equipping of the United States Air Force with our Portable Illumination Systems during Fiscal Year 2008 ending September 30th. The designation of the NSNs will enable us to meet these requirements as well as the additional requests for our equipment from other branches of the U.S. Armed Services as well as NATO.

On June 26, 2008, we announced that we had posted record revenues of $137,284 for the week ending June 20, 2008. We produced and shipped BrightEye Dual Lighthead System orders in record time for immediate deployment to Iraq with National Guard units from New York, Indiana and Minnesota. In addition, the Company verified that its production and distribution processes will support the output needed to fulfill the United States Air Force production requirements.

Over the last year, we have supplied BrightEye systems to state-level National Guard and Air National Guard units, generating $650,000 in revenue in 2008. The National Guard and Air National Guard revenue is incremental to the 2008 Department of Defense Appropriations legislation that allocates $8.0 million for the equipping of the United States Air Force with our Portable Illumination Systems.

On June 30, 2008, we announced that our Board of Directors has unanimously approved Mark D. Schmidt, President and Chief Operating Officer, to succeed Donald F. Evans as Chief Executive Officer, effective July 1, 2008. The appointment of Mr. Schmidt concludes a two-year internal transition plan during which time Mr. Schmidt managed our operations. Mr. Evans, who founded the Company in 1999 and has led us as Chairman and Chief Executive Officer since 2000, is beginning a planned phased retirement at age 73. In conjunction with his retirement plan, Mr. Evans' estate advisors have proposed to privately place or otherwise liquidate up to 25% of his Cyberlux equity holdings over the next three years.

In a related matter, the our Board of Directors also unanimously appointed John W. Ringo, our Corporate Counsel and Company Director, as the new Chairman of the Board of Directors.

On June 30, 2008, we announced that we had entered into a business development, sales and product solutions relationship with A and A Logistics, Inc. For over 17 Years, the founders of A and A Logistics, Inc. have delivered solutions on demand to the U.S. military, U.S. government agencies such as the Federal Emergency Management Agency (FEMA) and the U.S. Postal Service (USPS), state and local municipal government agencies, and foreign military organizations.

In addition to the consultative relationship A and A Logistics has with the U.S. Special Operations Command (USSOCOM), we were recently appointed to the Task Force on the Reconstruction of Afghanistan. Selected for the diversity of experience and the expertise of the A and A Logistics management team, the Company will focus on business development in Afghanistan and on accelerating the development of essential businesses and services for the mutual benefit of the people and government of Afghanistan and the private sector.

In representing us in business development and sales efforts A and A Logistics will assist customers such as USSOCOM and FEMA with requirements, concept and solution development, along with product delivery services including logistics support. With a focus on technology solutions that provide critical life-sustaining support for the Warfighter and the Emergency Responder, A and A Logistics currently provides customers with portable lighting products and generators, solar powered electrical systems, self-powered IED detection products, and water purification systems.

On August 22, 2008, we announced that we had received purchase orders from the Oklahoma National Guard for BrightEye Tactical Illumination Systems. These BrightEye Systems are for immediate deployment and will be used by the state's National Guard unit.

We have successfully sold our BrightEye Systems to 23 National Guard states within the National Guard Bureau, and we expect this momentum to continue until the majority of the states are outfitted with BrightEye tactical lighting systems.

On August 28, 2008, we announced that the U.S. Patent Office has recently awarded patent protection for 21 claims contained within our U.S. Patent Application for Portable Light Device, Application Number 11/336,562 filed on January 21, 2006. The new patent claims define specific areas of patent protection for our BrightEye and WatchDog portable lighting products and augment the 29 patent claims announced in May 2008. In combination, the 50 patent claims provide us with thorough patent protection for its WatchDog and BrightEye family of tactical lighting products, as well as any future products developed on this patent foundation.

The new claims awarded by the U.S. Patent Office address a lighting device comprised of an array of LEDs that operate in spot-light and flood-light modes of illumination, or in a spot-light/flood-light combined mode, with alterable intensity levels, controlled by an electrical power system and electrical sensor operation. Further, the new claims cover the user interface that allows the user to change operating modes continuously between spot-light and flood- light illumination and to display the battery power capacity on a percentage and time interval basis.

In addition, the claims address the specifics around the use of narrowing lenses as LED optics adapted to focus illumination in a cone angle between 4 and 50 degrees. This unique optical method and practice enable the spot-light and flood-light modes of illumination.

Lastly, the claims address the use of a computer and computer-executable programming instructions for operating a lighting device. The operations are defined as comprising the steps of sensing electrical power information, sensing modes of illumination information and sensing LED intensity information provided by a user via the user interface, directing the array of LEDs to operate in either a spot-light, flood-light or combined mode of illumination, directing the array of LEDs to operate at a desired intensity level, and displaying the power supply capacity message to the user based upon the sensed electrical power, mode of illumination and LED intensity information.

These newly awarded 21 patent claims provide us with a deeper, more extensible intellectual property platform for the current tactical lighting system products and for future lighting systems currently under development. Importantly, the . . .