<?xml version="1.0" encoding="us-ascii"?><InstanceReport xmlns:xsd="http://www.w3.org/2001/XMLSchema" xmlns:xsi="http://www.w3.org/2001/XMLSchema-instance"><Version>2.4.0.8</Version><ReportLongName>0007 - Disclosure - 1. DESCRIPTION OF BUSINESS</ReportLongName><DisplayLabelColumn>true</DisplayLabelColumn><ShowElementNames>false</ShowElementNames><RoundingOption /><HasEmbeddedReports>false</HasEmbeddedReports><Columns><Column FlagID="0"><Id>1</Id><IsAbstractGroupTitle>false</IsAbstractGroupTitle><LabelSeparator>

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</LabelSeparator><Level>1</Level><ElementName>us-gaap_AccountingPoliciesAbstract</ElementName><ElementPrefix>us-gaap_</ElementPrefix><IsBaseElement>true</IsBaseElement><BalanceType>na</BalanceType><PeriodType>duration</PeriodType><IsReportTitle>false</IsReportTitle><IsSegmentTitle>false</IsSegmentTitle><IsCalendarTitle>false</IsCalendarTitle><IsEquityPrevioslyReportedAsRow>false</IsEquityPrevioslyReportedAsRow><IsEquityAdjustmentRow>false</IsEquityAdjustmentRow><IsBeginningBalance>false</IsBeginningBalance><IsEndingBalance>false</IsEndingBalance><IsReverseSign>false</IsReverseSign><FootnoteIndexer /><Cells><Cell FlagID="0" ContextID="" UnitID=""><Id>1</Id><IsNumeric>false</IsNumeric><IsRatio>false</IsRatio><DisplayZeroAsNone>false</DisplayZeroAsNone><NumericAmount>0</NumericAmount><RoundedNumericAmount>0</RoundedNumericAmount><NonNumbericText /><FootnoteIndexer /><CurrencyCode /><CurrencySymbol /><IsIndependantCurrency>false</IsIndependantCurrency><ShowCurrencySymbol>false</ShowCurrencySymbol><DisplayDateInUSFormat>false</DisplayDateInUSFormat></Cell></Cells><ElementDataType>xbrli:stringItemType</ElementDataType><SimpleDataType>string</SimpleDataType><IsTotalLabel>false</IsTotalLabel><UnitID>0</UnitID><Label>Accounting Policies [Abstract]</Label></Row><Row FlagID="0"><Id>2</Id><IsAbstractGroupTitle>false</IsAbstractGroupTitle><LabelSeparator>

</LabelSeparator><Level>2</Level><ElementName>us-gaap_BusinessDescriptionAndBasisOfPresentationTextBlock</ElementName><ElementPrefix>us-gaap_</ElementPrefix><IsBaseElement>true</IsBaseElement><BalanceType>na</BalanceType><PeriodType>duration</PeriodType><IsReportTitle>false</IsReportTitle><IsSegmentTitle>false</IsSegmentTitle><IsCalendarTitle>false</IsCalendarTitle><IsEquityPrevioslyReportedAsRow>false</IsEquityPrevioslyReportedAsRow><IsEquityAdjustmentRow>false</IsEquityAdjustmentRow><IsBeginningBalance>false</IsBeginningBalance><IsEndingBalance>false</IsEndingBalance><IsReverseSign>false</IsReverseSign><FootnoteIndexer /><Cells><Cell FlagID="0" ContextID="From2012-01-01to2012-12-31" UnitID=""><Id>1</Id><IsNumeric>false</IsNumeric><IsRatio>false</IsRatio><DisplayZeroAsNone>false</DisplayZeroAsNone><NumericAmount>0</NumericAmount><RoundedNumericAmount>0</RoundedNumericAmount><NonNumbericText>&lt;p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"&gt;&lt;font style="font: 8pt Times New Roman, Times, Serif"&gt;Cellular
Biomedicine Group, Inc., (formerly known as EastBridge Investment Group Corporation; also formerly known as ATC Technology Corporation)
(&amp;#147;Company&amp;#148;) was incorporated in the State of Arizona on June 25, 2001. The Company's principal activity through June
30, 2005 was to manufacture mobile entertainment products.&lt;/font&gt;&lt;/p&gt;

&lt;p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in; text-align: justify"&gt;&lt;font style="font: 8pt Times New Roman, Times, Serif"&gt;&amp;#160;&lt;/font&gt;&lt;/p&gt;

&lt;p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"&gt;&lt;font style="font: 8pt Times New Roman, Times, Serif"&gt;In 2005,
the Company decided to exit the mobile entertainment market and dedicate its activities to providing investment related services
in Asia, with a strong focus on high GDP growth countries, such as China. the Company concentrated its efforts in the Far East
(Hong Kong, mainland China, Australia) and in the United States. The Company now provides consulting services necessary for small
to medium-size companies to obtain capital to grow their business through its EastBridge Investment Corp subsidiary (&amp;#147;EastBridge
Sub&amp;#148;). The Company assists its clients in locating investment banking, financial advisory and other financial services necessary
to become public companies in the United States or find joint venture partners or raise capital to expand their businesses. The
EastBridge Sub locates consultants which assist with marketing, sales and strategic planning services for its clients to prepare
them to enter the United States capital market.&lt;/font&gt;&lt;/p&gt;

&lt;p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in; text-align: justify"&gt;&lt;font style="font: 8pt Times New Roman, Times, Serif"&gt;&amp;#160;&lt;/font&gt;&lt;/p&gt;

&lt;p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"&gt;&lt;font style="font: 8pt Times New Roman, Times, Serif"&gt;In January
2007, the Company formed Fiber One Limited (&amp;#147;Fiber One&amp;#148;) in Hong Kong as a wholly owned subsidiary of the Company
to provide calibration and maintenance services to fiber optic companies in Asia, mainly in China and Japan. On June 11, 2007,
the Company distributed 5.0% of Fiber One's stock to its shareholders of record on June 11, 2007. Accordingly, the results of
Fiber One have been consolidated with those of the Company from the date of formation of Fiber One. In December 2008, the Company
discontinued operations of Fiber One and two other subsidiaries. Accordingly, all results associated with these entities have
been retroactively restated and reflected as discontinued operations in the accompanying consolidated statements of operations.
The Company formed other subsidiaries to facilitate its clients&amp;#146; entry into the US capital markets and intends to merge
these subsidiaries with the operating entities of its clients in the future. These subsidiaries were dissolved in 2012.&lt;/font&gt;&lt;/p&gt;

&lt;p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in; text-align: justify"&gt;&lt;font style="font: 8pt Times New Roman, Times, Serif"&gt;&amp;#160;&lt;/font&gt;&lt;/p&gt;

&lt;p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"&gt;&lt;font style="font: 8pt Times New Roman, Times, Serif"&gt;Through December
31, 2012 the Company was solely focused on in marketing consulting services to the many small to mid-size Asian and U.S. companies
that require financial services to assist them in expanding in their local markets. The Company had twelve (12) clients as of
December 31, 2012 that it provides consulting services to.&lt;/font&gt;&lt;/p&gt;

&lt;p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"&gt;&lt;font style="font: 8pt Times New Roman, Times, Serif"&gt;&amp;#160;&lt;/font&gt;&lt;/p&gt;

&lt;p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"&gt;&lt;font style="font: 8pt Times New Roman, Times, Serif"&gt;&lt;i&gt;Merger
with Cellular Biomedicine Group Ltd.&lt;/i&gt;&lt;/font&gt;&lt;/p&gt;

&lt;p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in; text-align: justify"&gt;&lt;font style="font: 8pt Times New Roman, Times, Serif"&gt;&lt;i&gt;&amp;#160;&lt;/i&gt;&lt;/font&gt;&lt;/p&gt;

&lt;p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"&gt;&lt;font style="font: 8pt Times New Roman, Times, Serif"&gt;On November
13, 2012, &lt;font style="background-color: white"&gt;EastBridge Investment Group Corporation (&amp;#147;&lt;u&gt;EastBridge&lt;/u&gt;&amp;#148; or &amp;#147;&lt;u&gt;Parent&lt;/u&gt;&amp;#148;)
&lt;/font&gt;and &lt;font style="background-color: white"&gt;CBMG Acquisition Limited, a British Virgin Islands company and the Company&amp;#146;s
wholly-owned subsidiary (&amp;#147;&lt;u&gt;Merger Sub&lt;/u&gt;&amp;#148;)&lt;/font&gt; entered into an Agreement and Plan of Merger (&amp;#147;&lt;u&gt;Merger
Agreement&lt;/u&gt;&amp;#148;) by and among &lt;font style="background-color: white"&gt;EastBridge, Merger Sub and Cellular Biomedicine Group
Ltd., a British Virgin Islands company (&amp;#147;&lt;u&gt;CBMG BVI&lt;/u&gt;&amp;#148;), as amended on January 15, 2013, January 31, 2013 and February
6, 2013, pursuant to which the parties agreed that Merger Sub shall merge with and into CBMG BVI, with CBMG BVI as the surviving
entity. The transactions under the Merger Agreement as amended are referred to as the &amp;#147;&lt;u&gt;Merger&lt;/u&gt;&amp;#148;.&lt;/font&gt; The
Merger was subject to customary closing conditions, including, among other things, (a) approval by the shareholders of CBMG BVI,
(b) resignations of the departing directors and officers of EastBridge, Merger Sub and CBMG BVI, and (c) execution of certain
ancillary agreements, including, but not limited to, executive employment agreements with EastBridge, compliance certificates,
lock up agreement and opinions of counsel, as referenced in Article VII of the Merger Agreement.&lt;/font&gt;&lt;/p&gt;

&lt;p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in; text-align: justify"&gt;&lt;font style="font: 8pt Times New Roman, Times, Serif"&gt;&lt;i&gt;&amp;#160;&lt;/i&gt;&lt;/font&gt;&lt;/p&gt;

&lt;p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"&gt;&lt;font style="font: 8pt Times New Roman, Times, Serif"&gt;On December
20, 2012 CBMG BVI obtained shareholder approval by holding an extraordinary general meeting of the shareholders, in which holders
of a majority of its capital stock approved the merger pursuant to British Virgin Islands law. Since the Merger was structured
as a triangular merger in which a wholly owned merger subsidiary of EastBridge merged with CBMG BVI, no shareholder approval on
the part of the EastBridge shareholders was required under Delaware law.&amp;#160; We note that although EastBridge issued in excess
of 20% of its shares in the merger, since its shares are not listed on a national exchange, no shareholder approval requirement
applied to this transaction under any exchange rules.&amp;#148;&lt;/font&gt;&lt;/p&gt;

&lt;p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in; text-align: justify"&gt;&lt;font style="font: 8pt Times New Roman, Times, Serif"&gt;&lt;i&gt;&amp;#160;&lt;/i&gt;&lt;/font&gt;&lt;/p&gt;

&lt;p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"&gt;&lt;font style="font: 8pt Times New Roman, Times, Serif"&gt;While the
Merger Agreement was agreed upon on November 13, 2012 by all parties, it was not consummated and effective until February 6, 2013,
when all of the requirements of the Merger were satisfied (refer to Note 14 &amp;#150; Subsequent Events for further details of these
requirements).&lt;/font&gt;&lt;/p&gt;</NonNumbericText><FootnoteIndexer /><CurrencyCode /><CurrencySymbol /><IsIndependantCurrency>false</IsIndependantCurrency><ShowCurrencySymbol>false</ShowCurrencySymbol><DisplayDateInUSFormat>false</DisplayDateInUSFormat></Cell></Cells><ElementDataType>nonnum:textBlockItemType</ElementDataType><SimpleDataType>na</SimpleDataType><ElementDefenition>The entire disclosure for the business description and basis of presentation concepts.  Business description describes the nature and type of organization including but not limited to organizational structure as may be applicable to holding companies, parent and subsidiary relationships, business divisions, business units, business segments, affiliates and information about significant ownership of the reporting entity.  Basis of presentation describes the underlying basis used to prepare the financial statements (for example, US Generally Accepted Accounting Principles, Other Comprehensive Basis of Accounting, IFRS).</ElementDefenition><ElementReferences>No definition available.</ElementReferences><IsTotalLabel>false</IsTotalLabel><UnitID>0</UnitID><Label>1. DESCRIPTION OF BUSINESS</Label></Row></Rows><Footnotes /><IsEquityReport>false</IsEquityReport><ReportName>1. DESCRIPTION OF BUSINESS</ReportName><MonetaryRoundingLevel>UnKnown</MonetaryRoundingLevel><SharesRoundingLevel>UnKnown</SharesRoundingLevel><PerShareRoundingLevel>UnKnown</PerShareRoundingLevel><ExchangeRateRoundingLevel>UnKnown</ExchangeRateRoundingLevel><HasCustomUnits>true</HasCustomUnits><IsEmbedReport>false</IsEmbedReport><IsMultiCurrency>false</IsMultiCurrency><ReportType>Sheet</ReportType><RoleURI>http://ebigcorp.com/role/DescriptionOfBusiness</RoleURI><NumberOfCols>1</NumberOfCols><NumberOfRows>2</NumberOfRows></InstanceReport>
