Cybrdi (CYDI) 10-Q 2009 Q2 Quarterly report

United States

Securities and Exchange Commission

Washington, D.C.  20549

FORM 10-Q

x QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended June 30, 2009

OR

o TRANSITION REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES EXCHANGE ACT OF 1934

Commission File No: 09081

CYBRDI, INC.

(Exact name of registrant as specified in its charter)

CALIFORNIA	95-2461404
(State or other jurisdiction of incorporation or organization)	(I.R.S. Employer ID 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: (011) 86-29-8237-3068

N/A

Former name, former address and former fiscal year,

(if changed since last report)

Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes x No o

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

Large accelerated filer o Accelerated filer o Non-accelerated filer o  (Do not check if a smaller reporting company) Smaller reporting company x

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

The number of shares of common stock, no par value per share, outstanding as of August 10, 2009 was 50,456,567.

CYBRDI, INC.

FORM 10-Q

QUARTERLY PERIOD ENDED June 30, 2009

INDEX

TABLE OF CONTENTS

		Page
PART I – FINANCIAL INFORMATION
Item 1:	Financial Statements	3
Item 2:	Management’s Discussion and Analysis of Financial Condition and Results of Operations	11
Item 3:	Quantitative and Qualitative Disclosures About Market Risk	16
Item 4T:	Controls and Procedures	16
PART II – OTHER INFORMATION
Item 1:	Legal Proceedings	17
Item 1A:	Risk Factors	17
Item 2:	Unregistered Sales of Equity Securities and Use of Proceeds	17
Item 3:	Defaults Upon Senior Securities	17
Item 4:	Submission of Matters to a Vote of Security Holders	17
Item 5:	Other Information	17
Item 6:	Exhibits	17

2

PART I. FINANCIAL INFORMATION

Item 1 Financial Statements

CYBRDI, INC. AND SUBSIDIARIES

CONSOLIDATED BALANCESHEETS

ASSETS	June 30, 2009			December 31, 2008
	(Unaudited)			(Audited)
CURRENT ASSETS
Cash and equivalents	$	474,877		$	381,357
Accounts receivable		14,310			15,674
Inventories		369,252			393,354
Deferred tax assets		5,543			5,550
Loan to related companies		329,363			146,574
Amount due from stockholders/officers		460,108			460,661
Loan to unaffiliated company		819,828			996,702
Other receivables and prepaid expenses		216,248			189,706
TOTAL CURRENT ASSETS		2,689,530			2,589,578
PROPERTY, PLANT AND EQUIPMENT, NET		479,814			522,002
CONSTRUCTION IN PROGRESS		7,813,822			7,375,243
INTANGIBLE ASSETS, NET		359,197			406,533
DEFERRED TAX ASSETS		20,107			20,131
TOTAL ASSETS	$	11,362,470		$	10,913,487
LIABILITIES AND EQUITY
CURRENT LIABILITIES
Short-term loan	$	146,398		$	-
Accounts payable		12,963			4,928
Accrued expenses		689,978			904,743
Current maturities of long term debt		1,342,980			1,392,451
Customers deposits		407,510			50,525
Loan from related companies		1,900,244			1,582,997
Amount due to stockholders/officers		988,822			932,310
Other payables		134,510			41,644
TOTAL LIABILITIES		5,623,405			4,909,598
EQUITY
Preferred Stock, $1.00 per value, 500,000 shares authorized,
zero shares issued and outstanding		-			-
Common Stock, no par value, 150,000,000 shares authorized,
50,456,567 shares issued and outstanding		3,571,864			3,571,864
Reserve funds		336,885			336,885
Accumulated deficit		(731,274	)		(500,195	)
Accumulated other comprehensive income		1,094,045			1,086,747
TOTAL STOCKHOLDERS’ EQUITY		4,271,519			4,495,301
NONCONTROLLING INTEREST		1,467,547			1,508,588
TOTAL EQUITY		5,739,066			6,003,889
TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY	$	11,362,470		$	10,913,487

The accompanying notes are an integral part of these consolidated financial statements.

3

CYBRDI, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED)

	Three Months Ended			Three Months Ended			Six Months Ended			Six Months Ended
	June 30, 2009			June 30, 2008			June 30, 2009			June 30, 2008
Revenue
Products	$	122,241		$	111,897		$	224,842		$	229,916
Service rendered		-			1,052			-			12,864
Total revenue		122,241			112,949			224,842			242,780
Cost of Sales
Products		70,138			67,132			148,655			119,650
Service rendered		-			-			-			-
Total cost of sales		70,138			67,132			148,655			119,650
Gross Profit		52,103			45,817			76,187			123,130
Operating Expenses:
Selling and distribution expenses		22,564			12,879			37,990			20,699
General and administrative expenses		118,084			129,882			288,694			262,206
Total Operating Expenses		140,648			142,761			326,684			282,905
Loss from Operations		(88,545	)		(96,944	)		(250,497	)		(159,775	)
Other Income/(Expense)
Interest income		765			15,605			1,714			28,968
Other (expense) income, net		(347	)		(283	)		3,804			121,405
Loss on disposal of fix assets		-			-			(189	)		-
Total Other Income, Net		419			15,322			5,329			150,373
Loss before Income Taxes		(88,126	)		(81,622	)		(245,168	)		(9,402	)
Income Tax Expense		-			-			-			-
Net loss		(88,126	)		(81,622	)		(245,168	)		(9,402	)
Net (loss) income attributable to the noncontrolling interest		(18,726	)		(8,609	)		(41,041	)		24,403
Net loss attributable to CYBRDI, INC. AND SUBSIDIARIES	$	(69,400	)	$	(73,013	)	$	(204,127	)	$	(33,805	)
Net Loss Per Common Share
Basic and Diluted	$	(0.00	)	$	(0.00	)	$	(0.00	)	$	(0.00	)
Weighted Average Number of Shares Outstanding
Basic and Diluted		50,456,567			50,456,567			50,456,567			50,456,567

The accompanying notes are an integral part of these consolidated financial statements.

4

CYBRDI INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)

	Six Months Ended			Six Months Ended
	June 30, 2009			June 30, 2008
CASH FLOWS FROM OPERATING ACTIVITIES
Net Loss	$	(204,127	)	$	(33,805	)
Adjustments to Reconcile Net Loss to Net Cash
Provided by Operating Activities:
Depreciation and amortization		101,899			84,874.00
Loss on disposal of fixed assets		189			3,324
Minority interest		(41,041	)		24,403
Changes in Operating Assets and Liabilities:
Accounts receivable		1,345			(1,956	)
Inventories		23,621			(15,089	)
Other receivable and prepaid expenses		(26,761	)		(3,751	)
Accounts payable and accrued expenses		(205,565	)		(766,184	)
Other payables		92,883			(10,584	)
Customer deposits		356,920			13,797
Net Cash Provided by (Used in) Operating Activities		99,363			(704,971	)
CASH FLOWS FROM INVESTING ACTIVITIES
Purchase of property, plant, and equipment		(14,730	)		(7,410	)
Payments for construction in progress		(465,190	)		(1,266,232	)
Advance for loan to affiliated companies		(182,901	)		-
Proceeds from loan to unaffiliated companies		175,615			68,544
Net Cash Used in Investing Activities		(487,206	)		(1,205,098	)
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from short-term loan		146,346			-
(Repayments) Proceeds from long-term debt		(47,782	)		1,385,021
Proceeds from loan from related companies		319,035			520,934
Proceeds from shareholders/officers		57,610			32,031
Repayment to shareholders/officers		(2,050	)		(225,143	)
Net Cash Provided by Financing Activities		473,160			1,712,843
Net Increase (Decrease) in Cash and Equivalents		85,318			(197,226	)
Effect of Exchange Rate Changes on Cash and Equivalents		8,203			29,229
Cash and Equivalents, at Beginning of Period		381,357			637,056
Cash and Equivalents, at Ending of Period	$	474,877		$	469,058

The accompanying notes are an integral part of these consolidated financial statements.

5

CYBRDI, INC. AND SUBSIDIDARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

NOTE A - BASIS OF PRESENTATION

1. Interim Financial Statements

The unaudited consolidated financial statements of Cybrdi Inc. and subsidiaries have been prepared in accordance with U.S. generally accepted accounting principles for interim financial information and pursuant to the requirements for reporting on Form 10-Q. Accordingly, they do not include all the information and footnotes required by accounting principles generally accepted in the United States of America for annual financial statements. However, the information included in these interim financial statements reflects all adjustments (consisting solely of normal recurring adjustments) which are, in the opinion of management, necessary for the fair presentation of the consolidated financial position and the consolidated results of operations. Results shown for interim periods are not necessarily indicative of the results to be obtained for a full year. The consolidated balance sheet information as of December 31, 2008 was derived from the audited consolidated financial statements included in the Company’s Annual Report on Form 10-K. These interim financial statements should be read in conjunction with that report.  Certain comparative amounts have been reclassified to conform to the current period's presentation.

The consolidated financial statements include the accounts of Cybrdi, Inc. and its wholly-owned subsidiaries and joint ventures. All material intercompany balances and transactions have been eliminated.

2. Description of Business

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.

On February 10, 2005, the Company, through a wholly-owned subsidiary, acquired all the ownership interest 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 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. (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 extendedupon 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.

6

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, 2008, SD Chaoying is still in the development stage and there is no actual business transaction. The development and construction of the facility is anticipated to be completed in December 2009.

3. 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.

4. 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.

7

5. Reverse Merger

On February 10, 2005, (the "Closing Date") the Company closed on an Agreement and Plan of Merger (the "Agreement") among Certron Corporation (“Certron”), a California corporation, Certron Acquisition Corp., a Maryland corporation and a wholly-owned subsidiary of Certron ("Acquisition Sub"), and Cybrdi, Inc., a Maryland corporation (“Cybrdi – Maryland”) relating to the acquisition by Certron of all of the issued and outstanding capital stock of Cybrdi -Maryland in exchange for shares of common stock of Certron that will aggregate approximately 93.8% of the issued and outstanding common stock of Certron. Pursuant to the terms of the Agreement, at the Closing Date (a) Acquisition Sub has been merged with and into Cybrdi - Maryland, with Cybrdi - Maryland being the surviving corporation, (b) the common stock of Cybrdi-Maryland has been cancelled and converted into the right to receive shares of the common stock of Certron at an exchange ratio of 1.566641609 per share. This resulted in the issuance of 47,328,263 shares of the Certron’s common stock, and (c) each share of the common stock of Acquisition Sub has been converted in to and become one share of the common stock of Cybrdi-Maryland. The share exchange has been accounted for as a reverse merger under the purchase method of accounting. Accordingly, Cybrdi, Inc. will be treated as the continuing entity for accounting purposes and the historical financial statements presented will be those of Cybrdi, Inc.

In connection with the Agreement, on February 10, 2005, the Company amended its articles of incorporation to authorize the issuance of 150 million shares of common stock no par value and 500,000 shares of preferred stock, $1.00 par value per share, none of which are issued or outstanding.

Concurrent with the filing of the Articles of Merger, all of the Company then existing officers and directors tendered their resignation and Yanbiao Bai was appointed as its Chairman of the Board of Directors.  Mr. Bai then nominated the balance of the Board of Directors.

6. Government Grant

During the first quarter of 2009, Chaoying Biotech  received a grant in the amount of $4,390 (equivalent to RMB 30,000) from the government The Company included the government grants in the other income, net in the accompanying statements of operations.

7. 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 the 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 income taxes.

8. Recent Accounting Pronouncements

In May 2008, the Financial Accounting Standards Board (“FASB”) issued Statement of Financial Accounting Standards (“SFAS”) No.162, “The Hierarchy of Generally Accepted Accounting Principles”. SFAS 162 indicates the entity (not its auditor) that is responsible for selecting accounting principles for financial statements that are presented in conformity with GAAP. Accordingly, the GAAP hierarchy should reside in the accounting literature established by the FASB and is issuing SFAS 162 to achieve that result. SFAS 162 also identifies the sources of accounting principles and the framework for selecting the principles to be used in the preparation of financial statements of nongovernmental entities that are presented in conformity with generally accepted accounting principles (GAAP) in the United States (the GAAP hierarchy).SFAS 162 is effective 60 days following the SEC’s approval of the Public Company Accounting Oversight Board amendments to AU Section 411, The Meaning of Present Fairly in Conformity With Generally Accepted Accounting Principles.  The adoption of SFAS 162 did not have significant impact on the Company's consolidated financial position, results of operations or cash flows.

8

In December 2007, the Financial Accounting Standard Board (“FASB”) issued SFAS No. 160, “Non-controlling Interests in Consolidated Financial Statements-an amendment of ARB No. 51” which clarifies that a non-controlling interest in a subsidiary is an ownership interest in the consolidated entity that should be reported as equity in the consolidated financial statements. This statement also changes the way the consolidated income statement is presented. It requires consolidated net income to be reported at amounts that include the amounts attributable to both the parent and the non-controlling interest. In addition, it requires disclosure, on the face of the consolidated statement of income, of the amounts of consolidated net income attributable to the parent and to the non-controlling interest. SFAS No. 160 is effective for fiscal years, and interim periods within those fiscal years beginning on or after December 15, 2008 (that is, January 1, 2009, for entities with calendar year-ends). Earlier adoption is prohibited.  The adoption of SFAS 160 has changed the financial statement presentation regarding non-controlling interests, but does not have significant impact on the Company's consolidated financial position, results of operations or cash flows.

In December 2007, Statement of Financial Accounting Standards No. 141(R), Business Combinations, was issued. SFAS No. 141R replaces SFAS No. 141, Business Combinations. SFAS 141R retains the fundamental requirements in SFAS 141 that the acquisition method of accounting (which SFAS 141 called the purchase method) be used for all business combinations and for an acquirer to be identified for each business combination. SFAS 141R requires an acquirer to recognize the assets acquired, the liabilities assumed, and any non-controlling interest in the acquiree at the acquisition date, measured at their fair values as of that date, with limited exceptions. This replaces SFAS 141‘s cost-allocation process, which required the cost of an acquisition to be allocated to the individual assets acquired and liabilities assumed based on their estimated fair values. SFAS 141R also requires the acquirer in a business combination achieved in stages (sometimes referred to as a step acquisition) to recognize the identifiable assets and liabilities, as well as the non-controlling interest in the acquire, at the full amounts of their fair values (or other amounts determined in accordance with SFAS 141R). SFAS 141R applies prospectively to business combinations for which the acquisition date is on or after the beginning of the first annual reporting period beginning on or after December 15, 2008 (that is, January 1, 2009, for entities with calendar year-ends). An entity may not apply it before that date.  The impact of adopting SFAS 141R will depend on the nature and terms of future acquisitions.

NOTE B – ASSETS

The June 30, 2009 balance sheet included total current assets of $2,689,530 and non-current assets of $8,672,940. Of these amounts, $474,877 in cash and equivalents and $14,310 in accounts receivable are planned for funding current operations and for future business expansion.

Other current assets also included inventories, deferred tax assets,Loan to related companies, Amount due from stockholders/officers, loan to unaffiliated company, and other receivable and prepaid expenses. Inventories are mainly finished goods. Other components of inventories include raw materials, work in process, and packaging material. 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.

As of June 30, 2009, current assets also included the deferred tax assets of $5,543 which resulted primarily from (i) deferred depreciation of leasehold improvement costs of Chaoying Biotech, (ii) deferred overhead costs of expenditures relating to Chaoying Biotech and (iii) the amortization of organizational costs of SD Chaoying.

9

The other primary assets included in current assets are loans to an unaffiliated company, QuanYe Security Co., Ltd (“QuanYe”), an unrelated PRC registered company located in Xian, PRC. QuanYe is engaged in the pawnshop business and its primary business is offering alternative financing sources to small, local companies. According to the loan agreement, QuanYe has received loans from Chaoying Biotech in a total amount of RMB 29.3 million (equivalent to $3,849,185) since January 2006. The remaining amount of RMB 7.3 million (equivalent to $1,069,989) was extended to and expired on March 24, 2008. As of March 31, 2009, the loan balance had been reduced to RMB 5.6 Million (equivalent to $819,828).  The interest rate for these loans initially was initially 8% per year, and subsequently reduced to 5% since October 9, 2006.

Management views the QuanYe loan as an alternative financing source, and believes it is an efficient way to use its cash on hand.  The regular market interest rate in the PRC is 0.72% per annum.  Cybrdi expects to obtain higher interest income for its unused funds through these types of loan arrangements. However, despite these advantages, these advances are unsecured and thus have a higher default risk than a bank deposit.

Included in-non-current assets are property, plant and equipment, construction in progress, intangible assets and deferred tax assets. Property, plant and equipment mainly consist of building, office equipments, motor vehicles, leasehold improvement, software-website, and machinery used for product manufacturing located in the People’s Republic of China (“PRC”).  Depreciation on property, plant and equipment is computed using the straight –line method over the estimated useful life of the assets. The majority of the assets have estimated useful lives of 10 years. Building and office equipment have estimated useful lives of 20 and 5 years, respectively.  The “construction in progress” amount of $7,813,822 mainly consists of the cost of land use right and the associated development and construction costs of an entertainment center and residential properties in Shandong Province, which will be transferred to fixed assets or properties for sale in SD Chaoying when it is finished.  Intangible assets include a tissue chip patent. Effective January 1, 2002, with the adoption of 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.

As of June 30, 2009, the deferred tax asset included in non-current assets in the accompanying balance sheet includes the deferred tax asset and liability in the amounts of $20,351 and $244 respectively. The deferred tax asset results from (i) deferred depreciation of leasehold improvement and (ii) deferred amortization of organizational costs. Without the foregoing, the deferred tax liability results mainly from differences in the depreciation of fixed assets between their book basis and their tax basis.

NOTE C - LIABILITIES

As of June 30, 2009, the balance sheet included total liabilities of $5,623,405 which consisted of current liabilities. Included in the current liabilities was current maturities of long term debt of $1,342,980 (equivalent to RMB9,173,494) from Changle Rural Credit Union, which is a bank located in Shandong Province of the PRC. This long-term debt had been secured by the Company’s land use right in SD Chaoying with book value at $3.5 million (equivalent to RMB 23.6 million) as of June 30, 2009. The term of debt was from January 31, 2008 to May 30, 2009 (total sixteen months), and was further extended to August 20, 2009.  The interest rate for this debt is 1.3 times of the basic interest rate from “The People’s Bank of China” in PRC.  On August 7, 2009, SD Chaoying paid off the loan principal and interest.  Also included in the current liabilities was $1,900,244 of loans from related companies, Xi’an Yanfeng Biotechnology Co., Ltd., Shaanxi Yanfeng Real Estate Co. Ltd, and Shaanxi Chaoying Beauty & Cosmetics Group Co., Ltd. These loans are non-interest bearing and have no set repayment terms. Also included in the current liabilities was $988,822 due to stockholders who are also the Company’s officers. The amounts were mainly an advance to assist with its operations in prior years. This advance is also non-interest bearing and has no set repayment terms.

10

NOTE D – STOCKHOLDERS’ EQUITY

As a result of the reverse merger (see Note A item 5), the common stock of Cybrdi-Maryland has been cancelled and converted into shares of common stock of Certron at an exchange ratio of 1.566641609 per share. This resulted in the issuance of 47,328,263 shares of Certron’s common stock to the Cybrdi shareholders. As of June 30, 2009, the Company had 50,456,567 shares of common stock issued and outstanding. Historical information of the surviving company is that of Cybrdi – Maryland.

As of June 30,2009, the balance sheet included total equity of $5,739,066 of which $1,467,547 in the amount of non-controlling interest , which represents the 20% minority interest in Chaoying Biotech and 16.67% minority interest in SD Chaoying.

NOTE E – INCOME TAXES

In accordance with the relevant tax laws and regulations of the PRC, Chaoying Biotech is entitled to full exemption from Corporation Income Tax (“CIT”) for the first two years and a 50% reduction in CIT for the next three years, commencing from the first profitable year after offsetting all tax losses carried forward from the previous five years.  The year 2003 was Chaoying Biotech’s first profitable year, thus the Company began to record 50% CIT provision for the first quarter of 2005. Commencing in January 2008, the Chinese government had adjusted the CIT rate to 25% instead of 33%.  According to Western Developing Plan of the PRC, the Company enjoys a 50% reduction in preferential policy of CIT, but the effective tax rate shouldn't less than 15%. So the company’s effective tax rate approximates to 15% in the year 2009.

The Company’s income tax expense includes U.S. and PRC income taxes. There were no U.S. current taxes for six months ended June 30, 2009 according to net loss incurred in the U.S. Company which will not be anticipated to have any tax benefit in the future since no revenue is expected to be generated in the U.S as a result of discontinuing the U.S. operating company in Maryland in October 2007.  There were also no PRC current taxes for the six months ended June 30, 2009 due to net loss incurred.

Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operation

The following discussion and analysis should be read in conjunction with the company’s Financial Statements and Notes thereto appearing elsewhere in this Report on Form 10-Q as well as the company’s other SEC filings, including our annual report on Form 10-K for the year ended December 31, 2008.

PLAN OF OPERATIONS

The Company focuses on biogenetics commercialization and healthcare product applications. The Company’s primary business includes sales of tissue microarray products and services. Tissue chips, also called micro tissue arrays, provide high-throughput molecular profiling and parallel analysis of biological and molecular characteristics for hundreds of pathologically controlled tissue specimens. Tissue arrays can 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 microarray for a wide variety of scientific uses, including drug discovery and development purposes.

The Company’s business strategy and focus in the near future include

·      Enhancing R&D in TMAs and technical service

·      Expanding its product portfolio and virtual tissue array data bank (vTMAB)

·      Launching the health diagnosis kit for obesity and skin disease

·      Participating in the culture and entertainment field

11

With its sophisticated research in genes, the Company can provide the professional health diagnostic service for its customers. The Company can check the reasons for obesity and other skin diseases like freckles by its genetic analysis, which offers more accurate and specialized diagnosis than other similar services in the current market.  Such information can be utilized to guide customers to set up the right health or fitness program.At present, the Company provide genetic test for the mechanism of obesity or skin diseases.

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

Commencing in the third quarter of 2007, the Company developed a new genedetective tissue array, called New Kits, and began to offer them to its customers.

On July 28, 2007 the Company acquired an 83.33% equity ownership of SD Chaoying from its Chinese partner, which will be primarily engaged in developing and operating culture and entertainment business. The culture and entertainment business will consist primarily of a spa activities, cosmetic personal care, hotel and casino. Its Chinese partner is a principal shareholder of the Company and Mr. Bai, its chief executive officer and a director is also a principal of its Chinese partner.  SD Chaoying began constructing the facility in September 2007., The total useable land and net building area for the project consists of approximately 50,000 and 33,000 square meters, respectively of which 52% will constitute property for business use and 48% for residential use, The construction is anticipated to be completed in December  2009, SD Chaoying intends to focus on Spa activities, cosmetic personal care, hotel and casino gambling, which has been approved by Shandong Administration for Civil Affairs.

12

RESULTS OF OPERATIONS

FOR THE THREE MONTHS ENDED June 30, 2009 COMPARED TO THREE MONTHS ENDED June 30, 2008

	Three Months Ended					Three Months Ended					2009 Vs 2008
	June 30, 2009					June 30, 2008					Increase/ (decrease)
	(Unaudited)					(Unaudited)
Revenue
Products	$	122,241				$	111,897				$	10,344		9	%
Service rendered		-					1,052					(1,052	)	-100	%
Total revenue		122,241					112,949					9,292		8	%
Cost of Sales							-
Products		70,138		57	%		67,132		60	%		3,006		4	%
Service rendered		-					-					-
Total cost of sales		70,138					67,132					3,006		4	%
Gross Profit		52,103		43	%		45,817		41	%		6,286		14	%
Operating Expenses:
Selling and distribution expenses		22,564					12,879					9,685		75	%
General and administrative expenses		118,084					129,882					(11,798	)	-9	%
Total Operating Expenses		140,649					142,761					(2,112	)	-1	%
Loss from Operations		(88,546	)				(96,944	)				8,398		-9	%
							-
Other Income/(Expense)
Interest income		765					15,605					(14,840	)	-95	%
Other expense, net		(347	)				(283	)				(64	)	22	%
Loss on disposal of fix assets		-					-					-
Total Other Income, Net		419					15,322					(14,903	)	-97	%
Loss before Income Taxes		(88,127	)				(81,622	)				(6,505	)	8	%
Income Taxes Benefit		-					-
Loss before Minority Interest		(88,127	)				(81,622	)				(6,505	)	8	%
Minority Interest		(18,726	)				(8,609	)				(10,117	)	118	%
Net Loss	$	(69,402	)			$	(73,013	)			$	3,611		-5	%

13

Net Sales

The Company generated two categories of revenues: tissue chip & kits products and services. The net sales increased $9,292 to $122,241 for the three months ended June 30, 2009 from $112,949 for the three months ended June 30, 2008, an increase of 8%.

Tissue Chip & Kit Products: The net sales increased $10,344 to $122,241 for the three months ended June 30, 2009 as compared to $111,897 for the three months ended June 30, 2008, an increase of 9%.The increase in net sales of tissue chip & kit product was primarily because of increased sales orders from the Company’s primary distributor in the U.S.  Regarding domestic sales, we have established our technology and market share, although, we are facing more serious competition, and such competition is expected to continue.

Services: No technical service order was received for the three months ended June 30, 2009, resulting in no services revenues for the three months ended June 30, 2009 as compared to $1,052 for the three months ended June 30, 2008. This decrease was primarily attributable to reduced service demand in China.

Gross Margin

Gross margin as a percentage of sales increased to 43% for the three months ended June 30, 2009 from 41% for three months ended June 30, 2008.  Gross profit for the three months ended June 30, 2009 increased $6,286 to $52,103 from $45,817 for the three months ended June 30, 2008, an increase of 14%. The reason for the increase was primarily due to increased unit sales price of tissue chip sold to the Company’s US distributor during the quarter ended June 30, 2009 as compared to the same quarter of 2008.  Products sold in April and May contained certain additional information as requested by customers, resulting in higher unit sales price.

Operating Expenses

The Company’s operating expenses decreased $2,112 to $140,649 for the three months ended June 30, 2009 from $142,761 for the three months ended June 30, 2008, a decrease of 1%. This was primarily due to a decrease in general and administrative expenses of $11,789 to $118,084 for the three months ended June 30, 2009 compared to $129,882 for the three months ended June 30, 2008.  Such decrease was partially offset by an increase in selling expenses of $9,685 to $22,564 for the three months ended June 30, 2009 compared to $12,879 for the three months ended June 30, 2008. The increase in selling expenses was primary due to Shandong Chaoying begin to occur the selling expenses sinceOctober, 2008. Selling expense for the three months ended June 30, 2009 at Shandong Chaoying was $25,757 as compared to $0 during the same quarter prior year.  Included in the selling expenses was advertisement of $14,949 and salary of salesperson of $10,808.

Other Income

Interest income decreased by $14,840 to $765 for the three months ended June 30, 2009 as compared to $15,605 for the three months ended June 30, 2008, a decrease of 95%. Interest income was mainly earned from the loans to QuanYe in 2008. Due to the expiration of the loan agreement and the uncertainty of collection, no interest income was recorded for the loan during the three months ended June 30, 2009.

Other (expense) income, net decreased by $64 to $(347) for the three months ended June 30, 2009 compared to $(283) for the three months ended June 30, 2008, a decrease of 23%.

Income Taxes

The Company did not record U.S. and PRC current income tax for three months ended June 30, 2009, and 2008, since there was no taxable income during these periods.

14

FOR THE SIX MONTHS ENDED JUNE 30, 2009 COMPARED TO SIX MONTHS ENDED JUNE 30, 2008

	Six Months Ended					Six Months Ended					2009 Vs 2008
	June 30, 2009					June 30, 2008					Increase/ (decrease)
	(Unaudited)					(Unaudited)
Revenue
Products	$	224,842				$	229,916				$	(5,075	)	-2	%
Service rendered		-					12,864					(12,864	)	-100	%
Total revenue		224,842					242,780					(17,939	)	-7	%
Cost of Sales
Products		148,655		66	%		119,650		52	%		29,005		24	%
Service rendered		-		0	%		-		0	%		-
Total cost of sales		148,655		66	%		119,650		49	%		29,005		24	%
Gross Profit		76,187		34	%		123,130		51	%		(46,944	)	-38	%
Operating Expenses:
Selling and distribution expenses		37,990					20,699					17,290		84	%
General and administrative expenses		288,694					262,206					26,488		10	%
Total Operating Expenses		326,684					282,905					43,778		15	%
Loss from Operations		(250,497	)				(159,775	)				(90,722	)	57	%
Other Income/(Expense)
Interest income		1,714					28,968					(27,255	)	-94	%
Other income, net		3,804					121,405					(117,601	)	-97	%
Loss on disposal of fix assets		(189	)				-					(189	)
Total Other Income		5,329					150,373					(145,045	)	-96	%
(Loss) Income before Income Taxes		(245,168	)				(9,402	)				(235,766	)	####
Income Taxes Expenses		-					-					-
(Loss) Income before Minority Interest		(245,168	)				(9,402	)				(235,766	)	####
Minority Interest		(41,041	)				24,403					(65,444	)	-268	%
Net (Loss) Income	$	(204,127	)			$	(33,805	)			$	(170,322	)	504	%

Net Sales

The Company generated two categories of revenues: tissue chip & kits products and services. Net sales decreased $5,075 to $224,842 for the six months ended June 30, 2009 from $242,780 for the six months ended June 30, 2008, a decrease of 7%.

Tissue Chip & Kit Products: Net sales decreased $17,939 to $224,842 for the six months ended June 30, 2009 as compared to $229,916 for the six months ended June 30, 2008, a decrease of 2%.The decrease in net sales of tissue chip & kit product was primarily because the chip development industry is becoming more mature in China and we have more competitors. Regarding domestic sales, we have established our technology and market share, although, we are facing more serious competition, and such competition is expected to continue.

15

Services: No technical service order was received for the six months ended June 31, 2009, resulting in no services revenues for the six months ended June 30, 2009 as compared to $12,864 for the six months ended June 30, 2008. This decrease was primarily attributable to reduced service demand in China.

Gross Margin

Gross margin as a percentage of sales decreased to 34% for the six months ended June 30, 2009 from 51% for six months ended June 30, 2008.  Gross profit for the six months ended June 30, 2009 decreased $46,944 to $76,187 from $123,130 for the six months ended June 30, 2008, a decrease of 38%. The reason for the decrease was primarily due to decreased unit sales price of tissue chip sold to the Company’s PRC clients, due to the increased competition in the domestic market. The average unit sales price of kit products sold to the Company’s US distributor was reduced during the first half of 2009 . In addition, our production reduced with the condition of the fixed costs remained unchanged, which resulted in higher unit cost during the first quarter of 2009 until it became normal in the second quarter.

Operating Expenses

The Company’s operating expenses increased $43,778 to $326,684 for the six months ended June 30, 2009 from $282,905 for the six months ended June 30, 2008, an increase of 15%. This was primarily due to an increase in general and administrative expenses of $26,488 to $288,694 for the six months ended June 30, 2009 compared to $262,206 for the six months ended June 30, 2008. Such increase was mainly due to increase in employee education expense, depreciation, labor insurance at Chaoying Biotech, and increase in salary for management at SD Chaoying, partially offset by decreases in travel and payroll expenses at Choaying Biotech.  In addition, the Company also had an increase in selling expenses of $17,290 to $37,990 for the six months ended June 30, 2009 compared to $20,699 for the six months ended June 30, 2008. The increase in selling expenses was primary due to Shandong Chaoying begin to occur the selling expenses sinceOctober, 2008. Selling expense for the six months ended June 30, 2009 at Shandong Chaoying was $29,693 as compared to $0 during the same quarter prior year. Increase in selling expense was partially offset by decrease at Chaoying Biotech decreased by $12,402 to $8,297 for the six months ended June 30, 2009 from $20,699 for the six months ended June 30, 2008

Other Income

Interest income decreased by $27,255 to $1,714 for the six months ended June 30, 2009 as compared to $28,968 for the six months ended June 30, 2008, a decrease of 94%. Interest income was mainly earned from the loans to QuanYe in 2008. Due to the expiration of the loan agreement and the uncertainty of collection, no interest income was recorded for the loan during the six months ended June 30, 2009.

Other (expense) income, net decreased by $117,601 to $3,804 for the six months ended June 30, 2009 compared to $121,405 for the six months ended June 30, 2008, a decrease of 97%. The reason was primarily attributable to SD Chaoying receiving a government grant of $115,879 (equivalent to RMB 818,000) for the six months ended June 30, 2008 as a one-time transaction.

Income Taxes

The Company did not record U.S. and PRC current income tax for six months ended June 30, 2009, and 2008, since there was no taxable income during these periods.

16

LIQUIDITY AND CAPITAL RESOURCES

Operating working capital (total current asset deduct total current liabilities) decreased by $613,855 from $(2,320,020) as of December 31, 2008 to $(2,933,875) as of June 30, 2009. The decrease was primarily due to increases in short-term loan, customer deposits, loan from related parties, amount due to stockholders/officers, and other payables by $146,398, $356,985, $317,247, 56,552, and $92,866, respectively.  Contrarily, accrued expenses and current maturities of long-term debt decreased by $214,765 and $49,471, respectively.  Cash and cash equivalents and loan to related companies increased $93,720 and $182,789 as of June 30, 2009, respectively as compared to the amount at December 31, 2008.  Loan to unaffiliated company decreased by $176,874 as of June 30, 2009 due to repayments of loan received from QuanYe.

For investing activities, the Company incurred net cash outflow during the six months ended June 30, 2009. The primary reason was due to the payments of $465,190 used for the construction in progress of the SD Chaoying project during the six months ended June 30, 2009, and $182,901 loaned to affiliated companies.

For financing activities, the Company obtained a short-term loan from an individual, and increased proceeds from the Company’s related party, Shaanxi Chaoying Beauty & Cosmetics Group Co., Ltd. in the amounts of $146,346 and $319,035 during the six mouths ended June 30, 2009, respectively. The loan obtained from the individual was for three months and had expired on May 20, 2009, with 1.2% monthly interest rate. On May 20, 2009, the loan agreement was extended to August 20, 2009. The Company intends to repay the loan from the individual when due. Loans from related party are non-interest bearing and have no set repayment terms.  Accordingly, the Company had positive cash provided by financing activities for the six months ended June 30, 2009.

Included in the current liabilities was $1,900,244 of loans from related companies, Xi’an Yanfeng Biotechnology Co., Ltd., Shaanxi Yanfeng Real Estate Co. Ltd, and Shaanxi Chaoying Beauty & Cosmetics Group Co., Ltd. These loans are non-interest bearing and have no set repayment terms. Also included in the current liabilities was $988,822 due to stockholders who are also the Company’s officers. The amounts were mainly an advance to assist with its operations in prior years. This advance is also non-interest bearing and has no set repayment terms.  Unless the Company increases its revenues or obtains financing from another source, the Company will likely be unable to repay these amounts.

As of June 30, 2009, we owed Changle Rural Credit Union a current maturity of long term debt of $1,342,980 due on May 20, 2009.  We obtained an extension for 80 days to August 20, 2009 with verbal agreement with the bank.  We have paid off the debt and its associated interest on August 7, 2009.

The Company has a construction project in Shandong for SD Chaoying which it anticipates completing by the end of July 2009. In order to finance this project, the Company anticipates borrowing additional funds from related parties, other banks, and to utilize the funds received from the repayment of loan proceeds from Quan Ye. There can be no assurance, however, that the Company will be able to obtain the necessary financing for the construction of the project.  In the event that the Company is unable to secure such financing from unaffiliated parties, we believe that our cash and cash equivalents and revenue from operations, as well as additional financing from related parties when needed, will be sufficient to finance our operations for the coming year.

INFLATION

Inflation has not had a material impact on our business.

17

CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS

Certain statements in this quarterly report on Form 10-Q contain or may contain forward-looking statements that are subject to known and unknown risks, uncertainties and other factors which may cause actual results, performance or achievements to be materially different from any future results, performance or achievements expressed or implied by such forward-looking statements. These forward-looking statements were based on various factors and were derived utilizing numerous assumptions and other factors that could cause its actual results to differ materially from those in the forward-looking statements. These factors include, but are not limited to, economic, political and market conditions and fluctuations, government and industry regulation, interest rate risk, U.S. and global competition, and other factors. Most of these factors are difficult to predict accurately and are generally beyond its control. You should consider the areas of risk described in connection with any forward-looking statements that may be made herein. Readers are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date of this report. Readers should carefully review this quarterly report in its entirety, including but not limited to its financial statements and the notes thereto. Except for its ongoing obligations to disclose material information under the Federal securities laws, the Company undertakes no obligation to release publicly any revisions to any forward-looking statements, to report events or to report the occurrence of unanticipated events. For any forward-looking statements contained in any document, the Company claims the protection of the safe harbor for forward-looking statements contained in the Private Securities Litigation Reform Act of 1995.

Item 3. Quantitative and Qualitative Disclosures about Market Risk

A smaller reporting company is not required to provide the information required by this Item.

Item 4. Controls and Procedures

Evaluation of Disclosure Controls and Procedures. Under the supervision and with the participation of  our  management,  including our Chief Executive Officer, Yanbiao Bai, and Principal Financial Officer, Xue Bu, we  evaluated  the  effectiveness  of the design and operation  of our  disclosure  controls  and  procedures  (as  defined  in  Rule 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934 (the "Exchange Act")) as of the end of the  period  covered  by this  report.  Based upon that evaluation, our Chief Executive Officer and Principal Financial Officer concluded that our disclosure controls and procedures as of the end of the period covered by this report were effective such that the  information  required to be disclosed by us in reports  filed under the  Securities  Exchange  Act of 1934 is (i)  recorded, processed,  summarized  and reported  within the time  periods  specified in the SEC's rules and forms and (ii) accumulated and  communicated to our management to allow timely decisions  regarding  disclosure.  A controls system cannot provide absolute assurance, however, that the objectives of the controls system are met, and no evaluation of controls can provide absolute assurance that all control issues and instances  of  fraud, if any, within a company have been  detected.

Changes in  Internal  Control  Over  Financial  Reporting.  During the most recent quarter ended March 31, 2009, there has been no change in our internal control over financial  reporting  (as defined in Rule  13a-15(f) and 15d-15(f) under the Exchange Act) ) that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.

18

PART II. OTHER INFORMATION

Item 1. Legal Proceedings

There is no material pending legal proceedings to which the Company is a party. The Company was notified by a letter dated June 2, 2000 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 the company 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. The Company 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. The Company is waiting for communication from the government concerning payment of the proposed settlement. As of June 30, 2009, the Company has accrued a sufficient amount to cover any potential liabilities from this matter.

Item 1A.  Risk Factors

A smaller reporting company is not required to provide the information required by this Item.

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds

None.

Item 3. Defaults Upon Senior Securities.

None.

Item 4. Submission of Matters to a Vote of Security Holders

None.

Item 5. Other Information

None

Item 6. Exhibits

31.1	Certification of Chief Executive Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
31.2	Certification of Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
32.1	Certification of Chief Executive Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
32.2	Certification of Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

19

SIGNATURE

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.

	CYBRDI, INC.
DATE:  August 13, 2009	By	/s/ Yanbiao Bai
		Yanbiao Bai, Chief Executive Officer and president
	By:	/s/Xue Bu
		Xue Bu, Principal Financial Officer

20